Texas Roof Tile Case Remanded to District Court

by Trent Cotney

When a customer’s roof is damaged during a hailstorm, the repairs are covered by insurance, right? Well, in the case of a Texas couple and their lawsuit against State Farm Insurance Companies, the debate continues.

Details of the Case

In April 2017, hail damaged the tile roof of Carl and Mary Ellen Schnell’s home in Fort Worth, Texas. The couple filed a claim with State Farm Insurance Companies, with whom they held a homeowners insurance policy. That policy covered “accidental direct physical loss” to their house as well as increased repair costs required by building code enforcement and outlined in the policy’s Building Ordinance or Low provision (Option OL).

State Farm Insurance responded by estimating the damages at approximately $5,100. That estimate reflected damage to gutters and other roof system components. However, State Farm Insurance denied coverage to the tiles, stating those were a result of wear and tear not wind or hail. Because that amount was below the policy’s deductible, the company did not issue payment. The Schnells then requested an appraisal, a process included in their policy that called for each party to appoint an appraiser, along with a third party, to inspect and appraise the damage. In March 2020, the appraisers determined the damage to be more than $165,000, with approximately $32,000 being “building” damages and the rest allotted to building code enforcement damages.

This building code enforcement designation was allowed because the Schnells’ homeowners association would not allow them to replace only the broken tiles. They were required to replace the entire roof. The original manufacturer of the tiles (Monier) had been purchased by another company (Boral), which did not produce the exact tile. The building code administrator noted that the new tiles would not interlock with the existing tiles, causing improper drainage. As a result, spot repairs would not be sufficient.

The following month, State Farm Insurance issued a payment of approximately $21,000—the building damages dollar amount minus the deductible. However, the company refused to cover the building code enforcement damages. It claimed the new tiles would interlock with the old ones, so a completely new roof was not necessary.

The Schnells filed suit against State Farm Insurance in February 2021 for breach of contract and violations of the insurance code. State Farm Insurance moved for a summary judgment on the Schnells’ claims, which the U.S. District Court of the Northern District of Texas granted. The Schnells then appealed.

What the Appellate Court Determined

The case was then reviewed by the U.S. Court of Appeals for the Fifth District. On April 2, 2024, the three-judge panel unanimously agreed the Schnells’ homeowners’ policy called for building code enforcement damages to be covered. However, they noted there was conflicting information about whether the new tiles would interlock with the existing ones. Apparently, after stating they would not, the building code inspector had walked back his determination, saying he had not inspected the actual tiles and did not know whether the new ones would interlock. Nevertheless, because the building code inspector had originally determined they would not interlock, the Schnells were not required to prove if the tiles interlocked.

During the initial litigation, the inspector had made two declarations about the tiles. In the first, he reiterated the proposed new tiles were incompatible with the existing ones. But in his second, he noted he had not inspected the roof and had no opinion about their compatibility. He stated if the tiles did interlock, the Schnells could make spot repairs after all.

The appellate court determined the district court had made a mistake by accepting the building code inspector’s decision was based on the tiles’ compatibility and there remained a factual dispute regarding the interlocking question.

Regarding the Schnells’ insurance code claims, the appellate court noted State Farm Insurance’s initial admission of coverage and subsequent increase of payment after the appraisal was a violation. State Farm Insurance originally said the damage was a result of wear and tear, so the subsequent payment could be considered late.

With that in mind, the court vacated the summary judgment for breach of contract and insurance code violations. It affirmed some of the district court’s rulings in rejecting the plaintiffs’ claims that State Farm Insurance made misrepresentations. And it remanded the remainder of the case back to the district court. The factual details about the tiles’ compatibility remain in question.

Final Thoughts

The case is interesting on many levels. The building code enforcement damages are a significant consideration as homeowners attempt to meet code and comply with homeowner association rules. The inspector’s inconsistent declarations about the tiles’ compatibility are confounding because those mark the difference between a completely new roof and spot repairs. In addition, State Farm Insurance’s decision to provide payment after the inspection speaks to its faulty assertion the damage was caused only to wear and tear.

So now, seven years after the hailstorm, the case has been remanded to the district court for further review. As always, it is critical all parties are aware of and understand the provisions in every contract and insurance policy. But even then, issues like interlocking tiles can introduce complications that are hard to anticipate.

The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

Date : Jan. 01, 0001