Background
Michael MacDougall and William Heyer, as co-independent executor of the Estate of George S. Heyer, Jr., owned neighboring homes in Austin’s Windsor Road neighborhood. Their backyards extended partway down an approximately 80-foot slope toward Shoal Creek. After heavy rains in May 2018 and May 2019, the slope collapsed twice, damaging the properties and leaving the homes near an unstable cliff. Engineers retained by the homeowners warned of a high risk of future movement, and Hayward Baker concluded that MacDougall’s residence was unsafe to inhabit until suitable stabilization measures were implemented.
Each homeowner had purchased an all-risk “High Value Homeowners Policy” from Privilege Underwriters Reciprocal Exchange (PURE). The policies insured against all risks of direct physical loss or damage unless excluded. PURE denied their claims under the Earth Movement exclusion, which listed “Landslides” among the excluded forms of earth movement. The homeowners sued for breach of contract, declaratory relief, and bad faith, later nonsuiting the bad-faith claims.
On cross-motions for summary judgment, the homeowners argued that the exclusion applied only when natural earth movement was the sole cause and presented evidence that a City of Austin storm drain contributed to the collapses. PURE argued that “Landslides” included human-caused landslides and, alternatively, presented expert evidence that the collapses resulted from natural conditions. The trial court granted the homeowners partial summary judgment on liability, denied PURE’s motion, and entered final judgment awarding MacDougall more than $17.8 million and Heyer more than $7.5 million, plus interest and attorney’s fees.
The Court’s Holding
The court held that “Landslides” was ambiguous and construed it against PURE to include only landslides caused solely by natural events. Although the ordinary dictionary meaning supported PURE’s broader reading, the court found the narrower reading reasonable based on the exclusion’s context, other policy exclusions, the standard ISO form, and decisions from other jurisdictions. Unlike the Earth Movement exclusion, the Nuclear Hazard and Pollution or Contamination exclusions expressly used “however caused” or “regardless of cause” language. The ISO form also expressly encompassed human or animal forces, language absent from these policies. Ambiguity and policy meaning were questions of law reviewed de novo.
That construction did not sustain summary judgment for the homeowners. Reviewing the competing summary-judgment evidence under Texas Rule of Civil Procedure 166a(c), the court held that PURE supplied more than a scintilla of probative evidence that natural events alone caused the collapses. Geologist Andrew Davidoff attributed them to weathered Del Rio clay, saturation, and natural fluvial processes; engineer Terrance Zich attributed them to geological conditions and precipitation rather than human activity. Their declarations created a genuine fact issue, notwithstanding the homeowners’ competing expert, Dean Read. The court therefore reversed the liability ruling and did not decide whether the concurrent causation doctrine required allocation of damages, leaving that issue for reconsideration on remand.
The court separately held that PURE waived its argument that the homeowners failed to prove an event triggering coverage. Because PURE did not specifically deny that condition precedent before summary judgment and first raised the argument in response to the motion to enter judgment and in its new-trial motion, it could not obtain reversal on that ground. The court did not reach PURE’s challenge to the 18% statutory-interest award because reversing liability necessarily required reversing the final judgment, including that award. It reversed and remanded for further proceedings.
Key Takeaways
- The undefined term “Landslides” was ambiguous in these policies and was construed to exclude only landslides caused solely by natural events.
- PURE’s expert declarations nevertheless created a fact issue about solely natural causation, defeating the homeowners’ summary judgment on liability.
- The court did not decide the concurrent-causation allocation issue or the merits of the statutory-interest dispute.
- PURE waived its untimely challenge to proof of an event triggering coverage, a circumstance-specific preservation ruling.
Why It Matters
The decision shows that a policyholder-friendly construction of an exclusion does not necessarily establish coverage as a matter of law. Competing expert evidence about causation may still require trial, particularly where the dispositive question is whether natural events alone caused the loss.
For coverage litigators, the opinion also underscores the importance of comparing causation language across the entire policy and applicable standard forms, while separately preserving every summary-judgment defense before the trial court rules. The judgment is reversed, but coverage and causation remain unresolved on remand.