Policyholder wins ruling related to Hurricane Harvey damage

A federal appeals court on Friday reversed a lower court ruling in Lloyd’s favor in a property damage case stemming from Hurricane Harvey, ruling that the lower court judge had improperly excluded evidence in the case without the required analysis.

Stafford, Texas-based Majestic Oil Co. purchased a building in Pasadena, Texas, in 2014 which Lloyd’s underwriters insured in 2016, according to Friday’s ruling by the 5th U.S. Circuit Court of Appeals in New Orleans in Majestic Oil Inc. v. Certain Underwriters at Lloyd’s, et al.

The building’s roof leaked after 2017’s Hurricane Harvey, but a dispute arose as to what caused those leaks. An adjuster hired by Lloyd’s determined it was in poor condition before Harvey. An engineer hired by Majestic said that while it could not rule out that a 2017 storm could have caused the damage “it was more likely than not” caused by Harvey.

After Lloyd’s denied coverage for the damage, Majestic filed suit in U.S. District Court in Houston. The Majestic engineer submitted a second report that included a weather report he had not considered in preparing his first report, in which he said the 2017 storm could not have caused the damage.

The court granted Lloyd’s motion to strike the second report on the basis it was untimely because it contained a new opinion. It then granted Lloyd’s summary judgment in the case.

A three-judge appeals court panel held the second report should not have been struck without analysis. “In a nutshell, the court failed properly to apply the Federal Rules of Civil Procedure,” the opinion said. “The court’s order lacks any analysis of either the importance to the case of the new data” in the second report “or the potential prejudice to Lloyd’s of allowing the late disclosures,” it said. 

“Because we vacate the district court’s evidentiary rulings…we must also vacate the district court’s summary judgment order,” it said in remanding the case for further proceedings.

Attorneys in the case did not respond to requests for comment.