from the United States District Court for the Southern
District of Texas
OWEN, SOUTHWICK, and HIGGINSON, Circuit Judges.
STEPHEN A. HIGGINSON, CIRCUIT JUDGE.
Smith sued her insurer, Travelers, for contractual and
statutory violations arising from the denial of her
commercial property insurance claim. Travelers asserted a
limitations defense. While Smith concedes that Travelers sent
her an unambiguous denial letter, she insists that her causes
of action did not accrue until months later because Travelers
agreed, upon her request, to re-investigate the property
damage. Smith also urges that Travelers waived its
limitations defense by failing to raise it until litigation
had been underway for two years. The district court granted
summary judgment for Travelers. We affirm.
Lillian Smith ("Smith") had a contract with
Defendant-Appellee Travelers Casualty Insurance Company
("Travelers") for commercial property insurance.
According to Smith, a lightning strike caused damage to the
foundation and air conditioning unit on her property on
August 27, 2013. On September 5, 2013, she submitted a claim
to Travelers. Travelers acknowledged receipt of the claim two
days later, in a letter sent to Smith.
September and October, Travelers retained engineers to
inspect the damage and determine its cause. Travelers
regularly kept Smith apprised of the investigation. During
this time, Smith hired her own engineering consultant, with
whom Travelers kept in regular contact as well.
consultant took the position that the damage could only have
been caused by lightning. Travelers's consultants
disagreed; electrical engineers concluded that the AC unit
damage was attributable to "wear and tear" and
structural engineers traced the foundational cracking to
"compacting and shifting soils," both of which were
excluded from coverage under the policy. Smith refused to
accept those findings. She accused the engineers of being
"only hired to do work for the insurance companies"
and warned that she would "see [Travelers] in
November 13, 2013, Travelers sent a letter to Smith stating,
"Base[d] on the policy language . . ., the findings of
the inspection, and the expert reports received, we will be
unable to provide coverage for your claim as the damages
sustained are excluded in the policy[.]"The letter
explained that Travelers had "conducted a [lightning]
strike report to determine if there were any strikes in the
area" and found that the "closest recorded strike
was over 3 miles away." The letter also reported that
Travelers's consultant engineers had determined that the
property damage was caused by "wear and
tear/breakdown" and "shifting and earth
movement," which were both excluded from coverage under
the policy. The parties agree that this letter communicated
the denial of Smith's claim.
months passed during which Travelers made no payments to, and
heard nothing from, Smith with regard to the policy. On
August 11, 2014, Smith's counsel sent Travelers a letter,
which stated that it served as "notice of [Smith's]
claim" and an opportunity "to resolve this matter
without litigation." The letter explained that Smith had
hired another engineer who had examined the property in
December 2013 and determined (like her first engineer
did) that the damage was caused by a lightning strike.
Attached to the letter was Smith's second engineer's
report, dated April 24, 2014.
August 2014 letter from Smith's counsel alleged that
Travelers had committed various contractual and statutory
violations-for example, that Travelers had "failed to in
good faith attempt to bring about a prompt, fair, and
equitable settlement of a claim once its liability became
reasonably clear" and failed to "provide Ms. Smith
with an explanation as to why coverage was denied." The
letter also accused Travelers of "refus[ing] to pay a
claim without conducting a reasonable investigation." In
closing, the letter advised that Smith preferred to resolve
the matter "without filing suit," and stated a
settlement demand. "If this sum is not paid within 60
days of receipt of this notice," the letter warned,
"suit will be filed against you."
for Travelers responded to the letter on October 13, 2014.
Because this response is central to the issue on appeal, we
quote its relevant content in full:
Your letter fails to provide Travelers with proper notice of
a claim under the referenced statutes. The letter sets forth
only conclusory allegations of underpayment and does not
provide adequate details of any claimed violation of the
Insurance Code or DTPA. It does not identify any covered
damages that are claimed to have been underpaid, the amounts
by which any such damages are claimed to have been underpaid,
or any factual basis for your demand . . . .
While your letter does not contain any additional or
different information which would cause Travelers to change
its position in this matter, if you will provide me some
dates that the property is available for inspection, we will
hire a third engineer to conduct an investigation as to the
cause of claimed damage at the property in an attempt to
resolve this matter amicable [sic]. However, please be
advised that Travelers continues to reserve all its rights,
specifically including, but not limited to its contractual
right of appraisal in the event that the parties are unable
to reach agreement regarding the "amount of loss"
should the claimed damage be found to be a result from a
covered cause of loss.
April 9, 2015, Travelers emailed Smith a copy of its third
engineer's report, which supported Travelers's
original position that the property damage was not caused by
lightning. The email advised that Travelers's counsel
would "have a more formal response letter" sent to
Smith soon. None was ever sent.
receipt of the third engineer's report, Smith's
counsel sent an email to Smith that said, "Please review
and respond as it looks like we are worlds apart."
January 25, 2016, Smith filed suit against Travelers in Texas
state court, alleging breach of contract as well as multiple
causes of action under the Texas Deceptive Trade Practices
Consumer Protection Act ("DTPA") and the Texas
Insurance Code. In May, Travelers filed a state court answer
generally denying the allegations. The same month, Travelers
filed a notice of removal.
months later, the federal district court entered a Docket
Control Order that included deadlines for discovery, expert
reports, non-dispositive motion filing, the joint pretrial
order, and docket call. On the Docket Control Order form, the
word "None" was written next to a space indicating
a deadline for motions to amend pleadings.
months passed. In February 2017, the parties submitted a
joint motion to continue all Docket Control Order deadlines,
which the court granted.
15, 2017, Travelers filed its first federal court answer,
which asserted various affirmative defenses. The "Second
Defense" was entitled "Policy Provisions Limit or
Preclude Coverage." That defense stated, in relevant
Some or all of Plaintiff's claims are excluded or limited
by applicable policy terms, conditions, and exclusions
contained in the Policy. The insurance policy issued by
Travelers contains exclusions, provisions, conditions, and
endorsements that preclude or limit coverage, in whole or in
part, including, but not limited to, the following:
4. Legal Action Against Us
No one may bring a legal action against us under this
Coverage Form unless:
[. . .]
b. The action is brought within 2 years and one day from the
date the cause of action first accrues on the date of the
initial breach of our contractual duties as alleged in the
the next five months, the parties submitted two more joint
motions for continuance, both of which were granted. In late
January 2018, counsel for Travelers sent Smith's counsel
an email stating:
I would like to clean up pleadings. Will you agree to me
doing so? I think I need your consent under the rules so I do
not have to file a Motion to Leave. If not, I can file the
Motion to Leave, just thought this would be easier.
counsel responded, "Yes, I agree." On February 7,
Travelers filed its Second Amended Answer, which specified
that the amendment was "consistent with Plaintiff's
written consent." The Second Amended Answer included the
same Second Defense as the first answer did, and added the
Statute of Limitations
Pursuant to Fed.R.Civ.P. 8, Travelers pleads the affirmative
defense of statute of limitations barring Plaintiff's
claims and suit pursuant to Tex. Bus. & Com. Code
§17.565 and/or §15.50(c) and (d), and Tex. Insur.
Code §541.162, and Tex. Civ. Prac. & Rem. Code
§16.003(a), and the Policy's contractual limitations
for any alleged breach of contract action as ...