If Policy Says Building Coverage is "Not Provided" There Can be no Claim

Post 4728

Plaintiff Kota Me Patates LLC (“KMP”) filed a motion to compel appraisal
to abate this insurance coverage dispute. Defendant Nationwide Mutual
Fire Insurance Company responded with a separate motion for summary
judgment asserting that the policy does not cover KMP's claimed losses.

In Kota Me Patates LLC v. Nationwide Mutual Fire Insurance Company, No. 4:23-cv-01573,
United States District Court, S.D. Texas, Houston Division (December
21, 2023) the USDC's magistrate judge recommended a resolution of the
disputes.

BACKGROUND

KMP had a business insurance policy with Nationwide (the “Policy”),
effective from January 1, 2020 to January 1, 2021. The Policy states
that it “includes Buildings ..., Business Personal Property ..., or
both, depending on whether a Limit of Insurance is shown in the
Declarations for that type of property.” (emphasis added). The
referenced Declarations page explicitly states that coverage for KMP's
building is “NOT PROVIDED[.]”

On January 24, 2022, a year after expiration of the policy a
representative from the office of KMP's attorney contacted Nationwide to
report a claim for structural damage to KMP's property. The damage
allegedly resulted from a plant explosion two years earlier, on January
24, 2020.

KMP sued Nationwide in Texas state court. Nationwide removed the suit to
the USDC. In the meantime, Nationwide contacted KMP's counsel to obtain
more information about KMP's claim. Eventually, KMP's attorney sent a
formal notice of claim, stating that KMP intended to invoke the Policy's
appraisal provision. Nationwide requested more information, including
an opportunity to inspect the asserted damage and a sworn proof of loss.
KMP failed to provide the information that Nationwide requested.
Nationwide therefore denied coverage for the loss, noting that KMP
failed to provide a description of how, when and where the loss or
damage occurred, did not provide prompt notice of the loss or damage,
and failed to submit a signed, sworn proof of loss as requested.

Despite filing the suit months earlier, KMP's attorney finally sent
Nationwide a demand letter on October 2, 2022. The letter included an
estimate of $92,508.92 to repair KMP's structure. KMP then filed a
motion to compel appraisal and abate the suit. Nationwide instead filed a
motion for summary judgment.

ANALYSIS

Nationwide sought summary judgment on KMP's breach of contract claim on
multiple grounds, including that the Policy does not cover KMP's claim
for damages to its building. Given the clear Policy language, the Court
had no need to address Nationwide's alternative contentions.

The Policy provides zero coverage for any damage to the building.
Because Nationwide did not breach the Policy by denying coverage, it is
entitled to summary judgment on KMP's breach-of-contract claim.

ZALMA OPINION

The KMP claim was incompetent on many bases, not the least of which was a
claim for damage to a building that the policy explicitly said in bold
print that building coverage was "NOT PROVIDED." Add to that a two year
late report, no compliance with policy conditions, and a spurious
argument for tort damages and the Magistrate apparently had no choice
but to recommend granting Nationwide's motion and sending KMP and its
counsel home with a total loss. Counsel for KMP apparently failed to
read the Declarations page of the policy. A total waste of time for the
litigants and the court.

(c) 2024 Barry Zalma & ClaimSchool, Inc.


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http://zalma.com/blog/insurance-claims-library.

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