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COURT OF APPEALS

SECOND DISTRICT OF TEXAS

FORT WORTH

NO. 2-06-397-CV

TAMMY POTEET AND APPELLANTS

CHELCEE POTEET

ROGER KAISER, SANDY KAISER, APPELLEES

FARMERS GROUP, INC.

D/B/A FARMERS INSURANCE GROUP,

FARMERS INSURANCE EXCHANGE,

AND FIRE INSURANCE EXCHANGE

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FROM THE 393RD DISTRICT COURT OF DENTON COUNTY

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MEMORANDUM OPINION^{^[1]}

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Before purchasing the home, Appellants hired an independent inspector, who found large amounts of rust debris in the burner chambers of the central heating units and reported that a Heating Ventilation and Air Conditioning (AHVAC@) mechanic should clean and inspect it, and Appellants made the completion of this cleaning and inspection a condition of sale. Appellants claim that the Kaisers assured them that they had it cleaned but that Mr. Kaiser actually cleaned the unit himself instead of hiring an HVAC professional. After the November 2002 discharge, Appellants hired a local air‑conditioning repair company to check the furnace; the technician, Bobby Joe Swafford, informed them that both heat exchanger units (i.e., furnaces) had cracks and that they should be replaced, which he later did for Appellants under their home warranty.

Appellants reported the incident to Farmers Group, who had the home inspected and initially determined, based on the information it had gathered at that time, that the discharge of soot was produced by the heat exchangers. Therefore, Farmers Group concluded that the soot had been caused by a covered event: Asudden and accidental damage from smoke.@ Farmers Group began funding remediation and repair, including Appellants= temporary relocation, carpet replacement, repainting the ceiling, and cleaning the home=s contents.

Appellants were dissatisfied with Farmers Group=s remediation efforts and claimed that the soot continued to cause them respiratory problems and that the home remained uninhabitable. Appellants allege that Farmers Group failed to hire a Certified Industrial Hygienist (ACIH@) to investigate, develop a remediation plan, and confirm that the soot had been cleaned up. Additionally, Appellants claim that Farmers Group informed Appellants that they had to pay for tests on the indoor air quality of the home if they wanted them.

After an adequate time for discovery, the party without the burden of proof may, without presenting evidence, move for summary judgment on the ground that there is no evidence to support an essential element of the nonmovant=s claim or defense. Tex. R. Civ. P. 166a(i). The motion must specifically state the elements for which there is no evidence. Id.; Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 207 (Tex. 2002). The trial court must grant the motion unless the nonmovant produces summary judgment evidence that raises a genuine issue of material fact. See Tex. R. Civ. P. 166a(i) & cmt.; Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002).

When reviewing a no evidence summary judgment, we examine the entire record in the light most favorable to the nonmovant, indulging every reasonable inference and resolving any doubts against the motion. Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex. 2006). If the nonmovant brings forward more than a scintilla of probative evidence that raises a genuine issue of material fact, then a no evidence summary judgment is not proper. Moore v. K Mart Corp., 981 S.W.2d 266, 269 (Tex. App.CSan Antonio 1998, pet. denied). Less than a scintilla of evidence exists when the evidence is so weak that it does nothing more than create a mere surmise or suspicion of a fact. Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983).

Causation

Proof other than expert testimony will constitute some evidence of causation only when a layperson=s general experience and common understanding would enable the layperson to determine from the evidence, with reasonable probability, the causal relationship between the event and the condition. Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 583 (Tex. 2006). Expert testimony is required when an issue involves matters beyond jurors= common understanding. Id.

Appellants argue that they produced more than a scintilla of probative evidence that the furnaces caused their damages based on the affidavit of HVAC technician Bobby Joe Swafford, the property claims investigation log produced by Farmers Group, excerpts from the deposition testimony of Tammy, and excerpts from the deposition testimony of Appellants= expert Miller.

1. Affidavit of Bobby Joe Swafford

Swafford works for Arctic Cooling & Heating as an air conditioning and heating technician. He serviced Appellants= heating and air conditioning units and inspected them for leaks. Swafford also checked carbon monoxide levels in Appellants= house after running the heating units and found 10 parts per million of carbon monoxide.^{^[4]} In his affidavit, Swafford states that he found leaks in both of the Appellants= central heating units. He stated further that he Abelieve[d] that the elevated carbon monoxide levels and discoloration of the carpets were a direct result of the leaking heat exchangers.@

To the extent that Swafford testified as a nonexpert, we hold that the combustion process of a heating furnace is a matter beyond a juror=s common understanding; thus, a determination of causation in this case requires expert testimony. See id. And to the extent that Swafford testified as an expert on the heating systemCan issue not brought before the trial courtChis conclusions must be based on more than a belief, as a bare expert opinion does not satisfy the scintilla test. See Havner, 953 S.W.2d at 711; Weiss, 989 S.W.2d at 125. While Swafford mentions discoloration of carpet, he never mentions soot or how any soot resulted from the cracked heat exchangers. Thus, he failed to establish the necessary links between the holes in the heat exchangers and the resulting process that allegedly caused the damages complained of by Appellants. Appellants cannot defeat a no-evidence summary judgment on Swafford=s bare opinion regarding the cause of the injury. For these reasons, we conclude that Swafford=s affidavit does not raise a genuine issue of material fact on causation.

2. Farmers Group Investigation Log

The Kaisers objected to the use of the investigation log as summary judgment evidence, asserting that it contained double hearsay, but the trial court never ruled on the objections. Therefore, without a court order sustaining the objection, the investigation log is proper summary judgment evidence. See Stewart v. Sanmina Texas L.P., 156 S.W.3d 198, 207 (Tex. App.CDallas 2005, no pet.).

In their response, Appellants relied on Tammy=s affidavit to the extent that she claimed she saw a Abig ball of black smoke@ come out of the vent when the heater was running. She also described in her deposition the physical conditionsCheadaches, nausea, eyes burningCof the family members that night. However, the issue here is what caused the soot, not whether it caused any damage. And because the combustion process of a heating furnace is a condition that involves matters beyond jurors= common understanding, expert testimony is required to determine causation in this case. See Tamez, 206 S.W.3d at 583. Thus, this circumstantial evidence is not enough to preclude summary judgment.

4. Deposition Testimony of Robert Miller, Certified Industrial Hygienist

Appellants hired Miller to inspect their home and test for soot. In support of their response, Appellants attached only excerpts of Miller=s deposition. Miller admitted in his deposition that by testing and observing Appellants= house, his objective was to determine the presence of soot, not the cause of it. Further, Miller admitted that he did not perform a detailed examination of the reported cracks in the heat exchangers nor did he look for soot inside them. Thus, the evidence fails to show that Miller ever investigated whether there was in fact a combustion incident. After testing the house, Miller concluded that there was soot present in the house and opined that the cause of the soot was the home=s furnace and heating system. He based his determination on Tammy=s observations and the extent of his finding of soot in the house.

In their second issue, Appellants argue that the trial court erred in granting Farmers Group=s no-evidence motion for summary judgment, in which Farmers Group argued that Appellants had no evidence to support their breach of contract, negligent misrepresentation, and DTPA claims. In their third issue, Appellants argue that the trial court erred in granting Farmers Group=s traditional motion for summary judgment, in which Farmers Group asserted that the negligent misrepresentation and DTPA claims were negated as a matter of law.

Standard of Review

We will review Farmers Group=s no-evidence summary judgment under the same standard provided in the discussion above. See Tex. R. Civ. P. 166a(i) & cmt.; Grant, 73 S.W.3d at 215. To the extent we address Farmers Group=s traditional motion for summary judgment, we will conduct our review under the well established standard, which states that a defendant who conclusively negates at least one essential element of a cause of action is entitled to summary judgment on that claim. IHS Cedars Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143 S.W.3d 794, 798 (Tex. 2004); see Tex. R. Civ. P. 166a(b), (c). When reviewing a summary judgment, we take as true all evidence favorable to the nonmovant, and we indulge every reasonable inference and resolve any doubts in the nonmovant=s favor. IHS Cedars Treatment Ctr., 143 S.W.3d at 798.

Because the cause of the condition could have come from a combination of covered and non-covered perils, Appellants had the burden under the doctrine of concurrent causes to segregate the damages and determine which part of the damages were attributable solely to the covered peril. See Allison v. Fire Ins. Exchange, 98 S.W.3d 227, 258 (Tex. App.CAustin 2002, pet. granted, judgm=t vacated w.r.m.); Wallis v. United Servs. Auto Ass=n, 2 S.W.3d 300, 302B03 (Tex. App.CSan Antonio 1999, pet. denied). The doctrine of concurrent causation is not an affirmative defense or an avoidance issue; rather, it is a rule embodying the basic principle that the insureds are not entitled to recover under their insurance policies unless they prove the damage is covered by the policy. Allison, 98 S.W.3d at 258; Wallis, 2 S.W.3d at 303. Thus, it follows that Appellants can recover damages only for a loss that is covered under the policy. See Allison, 98 S.W.3d at 258; Wallis, 2 S.W.3d at 303. Because allocation is central to the claim for coverage, an insured=s failure to carry the burden of proof on allocation is fatal to the claim. Allison, 98 S.W.3d at 258; See also Wallis, 2 S.W.3d at 303B04. Although a plaintiff is not required to establish the amount of his damages with mathematical precision, there must be some reasonable basis upon which the jury=s finding rests. State Farm Fire & Cas. Co. v. Rodriguez, 88 S.W.3d 313, 321 (Tex. App .CSan Antonio 2002, pet. denied); Kelly v. Travelers Lloyds of Tex. Ins. Co., No. 14-05-00825-CV, 2007 WL 527911, at *3 (Tex. App.CHouston [14th Dist.] February 22, 2007, no pet.).

The initial reported damage from the soot was considered a covered event under the insurance contract, labeled in the insurance policy as Asudden and accidental damage from smoke.@ However, Farmers Group now claims that non-covered perils (i.e., not sudden or accidental), including candles and the fireplace could have caused or contributed to the alleged loss.

The insurance policy requires Farmers Group to investigate the claim, which it did, but the policy does not set out standards for the investigation. We decline to add these terms to the contract. See Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 162 (Tex. 2003) (stating that the court should neither rewrite nor add to the language of the insurance contact). Likewise, Appellants provided no authority, either by expert or case precedent, of any standard of insurance investigation that would render Farmers Group=s investigation a breach of contract. Standards for insurance investigations are available, however, and set forth in cases dealing with the duty of good faith and fair dealing. See State Farm Fire & Cas. Co. v. Simmons, 963 S.W.2d 42, 47 (Tex. 1998). Under this line of cases, it is the insurer, not the insured, that has the duty to reasonably investigate the claim. See id. However, Appellants did not make a bad faith argument in their response or in their brief.^{^[12]} Therefore, we hold that Appellants= evidence regarding the time it took for Farmers Group to hire a CIH is no evidence of a breach of contract.

Negligent Misrepresentation

1. Farmers Insurance Group=s Suit to Appoint an Umpire

Appellants argue that FIG, who did not issue the insurance policy to Appellants, filed a Abogus@ lawsuit to appoint an umpire as part of the appraisal process, thereby causing unnecessary delays in the investigation. To prove a claim for negligent misrepresentation, Appellants must have presented evidence that (1) Farmers made a representation in the course of action in which Appellants had a pecuniary interest, (2) the representation was false, (3) Farmers failed to exercise reasonable care in communicating the information, and (4) Appellants suffered damages by justifiably relying on the information. See Sloane, 825 S.W.2d at 442. Farmers Group challenged the second, third, and fourth elements.

To show evidence of a false representation (element two), Appellants presented FIG=s suit to appoint an umpire. Farmers Group maintains that FIG had no privity of contract with Appellants, but this assertion is contradicted by the petition in that suit, in which FIG stated that it had a homeowner=s policy in effect with Tammy at the time of the incident and that FIG in fact invoked the appraisal provision of that contract. However, FIE was the Farmers Group entity that actually issued the contract and also invoked the appraisal provision. There was some confusion over whether FIG was a business entity at all, but we hold that regardless of that determination, there is some evidence, as shown in the petition, to raise a fact issue that a representative entity of Farmers Group made false representations to Appellants.

Regarding element three, however, Appellants presented no evidenceCand never even mentionedCthat Farmers Group failed to exercise reasonable care in communicating the information. Thus, the trial court properly granted Farmers Group=s no-evidence motion on this claim because Appellants failed to present evidence on at least one of the challenged elements. See Tex. R. Civ. P. 166a(i).

2. Examination Under Oath

Appellants argue that Farmers Group made negligent misrepresentations by requesting and taking an alleged untimely EUO. However, we previously held that Farmers Group made a reasonable request for an EUO during its investigation, and Appellants presented no additional evidence to support a different conclusion. Without evidence that Farmers Group improperly requested the EUO, Appellants cannot prove that Farmers Group made any false representations regarding the EUO. Accordingly, we hold that the trial court properly granted the no-evidence summary judgment as to this claim. See id.

Appellants further list fourteen specific representations that are taken from Tammy=s affidavit that they argue constitute actionable misrepresentations under section 17.50(a)(1).^{^[16]} Because we take all evidence offered by the nonmovant as true, we will assume that Farmers Group made these representations to Appellant. See Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 14 (Tex. 1996).

Six of the representations (numbers six through ten and twelve in Appellants= brief) recount conversations with Sims and other Farmers Group representatives, in which Tammy claims the representatives refused to replace the carpet and were less than kind to Tammy throughout this process. The representations as stated in Appellants= response are as follows:

$ Greg Sims said I did not need the carpet replaced, but that it could be cleaned. He further said that I was just trying to get new carpet.

$ Greg Sims said that the carpet padding did not need to be replaced because there was nothing wrong with it even though it was obvious that soot had penetrated to the carpet pad. He told me I was uneducated and did not know what I was talking about.

$ Greg Sims told me I had to wait two weeks while he went on vacation before he would inspect the carpet.

$ I called Mr. Sims=[s] supervisor, Debbie Scrubbs, and she agreed that Mr. Sims deserved his vacation and that I would have to wait, she also said she agreed with Mr. Simm=s [sic] assessment and that I was just trying to get new carpeting.

$ Greg Sims insisted that my personal property was clean and that I had to take it back, but I told him that just like the carpet it was not clean. He got Ain my face@ and told me I was stupid and ignorant and that I had no choice but to take the stuff back.

$ Greg Sims refused to return my calls, so I had Dale call him and ask him to call me. He told me that the insurance would not pay for hotel, even though [my] house was still being cleaned. He said everything is clean, you can go back home. I called Debbie, Greg=s supervisor, and she told me in an angry voice that whatever Greg said she agreed with and Ajust deal with it.@

To the extent that the central complaint derived from these allegations is that Farmers Group misrepresented its ability to clean the carpet, we conclude that Appellants failed to produce any evidence. Tammy admitted that Farmers Group attempted to clean the carpet and that when that attempt proved futile, Farmers Group replaced the carpet. Therefore, Appellants have presented evidence only that Farmers Group was incorrect in its original assessment, not that it misrepresented its ability to clean the carpet.^{^[17]}

In three other representations (numbers two, three, and eleven in Appellants= brief), Appellants claim that Sims misrepresented the safety and health risks of living in the house after it was cleaned. These representations are as follows:

$ Greg Sims told me that the soot was not harmful and it was safe to stay in the house.

$ Greg Sims told me that it was safe to stay in the house despite the fact that there were obviously problems with the heaters.

$ Greg Sims said that the house posed no danger and we could stay there even though there was no carpet.

As stated above, Appellants failed to present any evidence regarding the health dangers specific to Appellants= house or risks to Appellants by moving back into the house; thus, Appellants presented no evidence of a misrepresentation that the house was free of health risks.

In Appellants= thirteenth listed representation, Tammy claims that Farmers Group misrepresented its duty to investigate the claim. As stated in Tammy=s affidavit, the representation is as follows:

$ Greg Sims said that the insurance company does not have to test [the] home [and that the] homeowner should have [the] home tested if she wants it tested.

$ The written estimates on proposals submitted to me indicated that my home would be cleaned and items replaced and/or fixed. They were not.

These statements that Farmers breached the insurance contract by acts of nonfeasance, without more, are not proper causes of action under DTPA. See Crawford, 917 S.W.2d at 14; Southstar Corp. v. St. Paul Surplus Linens Co., 42 S.W.3d 187, 194 (Tex. App.CCorpus Christi 2001, no pet.) (holding that a breach of an insurance contract claim for failing to defend insured, without more, is not actionable under the DTPA). When the essence of a claim is that one party made certain representations that it would perform under the contract and then failed to do so, that is not in itself actionable under the DTPA. See Crawford, 917 S.W.2d at 14B15. The reasoning is that a plaintiff=s damages in these situations are not caused by the statements themselves, but rather by the defendant=s failure to act. See id.

Following that reasoning, Farmers Group=s representations that it would completely repair the home and recondition it to be Ajust like new@ did not cause Appellants= damages. Appellants= damages, if any, were caused by Farmers Group=s failure to perform. Thus, Farmers Group has negated these claims as a matter of law. See Southstar Corp., 42 S.W.3d at 194 (holding that because claims were mere breach of contract claims, movant had negated DTPA claims as a matter of law).

Appellants list multiple instances in which they claim Farmers Group=s actions were unconscionable. Specifically, Appellants complain that they had no say in the investigation, that the house was unsafe and contained soot, that Farmers Group requested an untimely EUO, and that Farmers Group filed a Abogus@ appraisal lawsuit. However, Appellants make no attempt to articulate how Farmers Group took advantage of them to an unfair degree other than to make the conclusory statement that Athe timetable demonstrates that Appellants were helpless.@ The only action Appellants have presented any evidence on is the abandoned appraisal processCa process in which Appellants were represented by counsel. And, because Appellants were represented by counsel, they were not Ahelpless@ as they described.

In our previous discussion of the appraisal process, we held that even though Appellants, too, could have enforced the appraisal provision and chose not to do so, they were not precluded from bringing a cause of action. However, while this reasoning might not preclude a claim for the breach of the appraisal provision, it does militate against the notion that Appellants were Ahelpless.@ Because they had this option and because they were represented by counsel during this process, we hold that Appellants presented no evidence that they were taken advantage of to a grossly unfair degree. See Head, 159 S.W.3d at 745.

Conclusion

^{^[1]}See Tex. R. App. P. 47.4.

^{^[2]}Farmers Insurance Exchange, a Farmers Group entity, issued the insurance policy.

^{^[3]}Although the insurance policy was issued and the appraisal provision invoked by Farmers Insurance Exchange, Farmers Insurance Group actually filed the suit in district court to appoint an appraisal umpire.

^{^[4]}Swafford failed, however, to provide any context for this finding, such as what the levels were before running the unit.

^{^[5]}Appellants also attached a clarification document supplementing Miller=s deposition. In that document, Miller states that the holes in the furnaces, which he admitted that he did not inspect in detail, and the history of the incident as related to him by Tammy support the Alikelihood@ that the furnaces caused the damages and that his observations did not indicate another plausible source. He also states that he believes that candles were not the cause of carbon monoxide symptoms. This clarification establishes few more details than the excerpts attached to the motion. The end result remains that Miller conducted no tests to determine the source of the soot and any opinion as to the source is based on an assumption that a combustion incident occurred.

Miller also stated that elevated levels of carbon monoxide usually come from leakage in the heating system. However, there was no evidence in the excerpts provided that Miller ever tested for carbon monoxide or what elevated levels he is referring to. Further, Miller never connected this statement to any evidence regarding soot.

^{^[6]}Farmers Group attached Miller=s entire deposition to its combined motion for summary judgment. But because Farmers Group filed only on no-evidence grounds as to the breach of contract claims, we will not consider any evidence attached to Farmers Group=s motion on the issue of breach of contract, including the entire Miller deposition record, unless that evidence creates a fact issue. See Binur v. Jacobo, 135 S.W.3d 646, 651 (Tex. 2004).

^{^[7]}Appellants attached to their response to Farmers Group=s motion a table summary of tests performed by Farmers Group=s inspectionCnot Miller=sCthat shows that there was discharge from the heater but also shows that there was some soot from the fireplace, grease, and candles. Furthermore, the table summary shows that the testing was unable to rule out candles, grease, and the fireplace as sources of soot in several areas of the house.

^{^[8]}Farmers Group now makes no claim as to what the actual cause was, just that Appellants never presented evidence that definitively identified the source.

^{^[9]}The appraisal provision states in part that AIf you and we fail to agree on the actual cash value, amount of loss or the cost of repair, either can make a written demand for appraisal. Each will then select a competent, independent appraiser and notify the other of the appraiser=s identity within 20 days of receipt of the written demand. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a Judge of a District Court of a judicial district where the loss occurred. . . .@

^{^[10]}Appellants argue that Farmers Group breached the appraisal provision by failing to complete the appraisal process and by not hiring a qualified appraiser. Because we concluded that Farmers Group breached the appraisal provision by abandoning the appraisal process, we need not address whether Appellants provided some evidence of Farmers Group=s failure to appoint a qualified appraiser.

^{^[11]}Article 21.55, which at the time of this lawsuit provided prompt payment guidelines almost identical to those in the insurance contract, was repealed in 2005 for purposes of re-codification only. See Act of June 21, 2003, 78th Leg., R.S., ch. 1274, ' 26, 2003 Tex. Gen. Laws 3611, 4138. No substantive changes were made to the prompt payment guidelines, which are now codified at section 542.055 of the Texas Insurance Code. See Tex. Ins. Code Ann. ' 542.055 (Vernon 2007); Act of June 21, 2003, 78th Leg., R.S., ch. 1274 ' 27, 2003 Tex. Gen. Laws 3611, 4139.

^{^[12]}Appellants mention in the last sentence of both their response to Farmers Group=s combined motion for summary judgment and in their brief on appeal that Farmers Group breached their duty of good faith and fair dealing, but they failed to argue or present any discussion at all in the body of their brief regarding these contentions. Therefore, we decline to address these issues in our decision. See Tex. R. App. P. 38.1(h).

^{^[13]}Appellants specifically listed subsections 1, 2, 3, 5, 12, 14, 22, and 23, which has now been renumbered as A24.A See Tex. Bus. & Com. Code Ann. ' 17.46.

^{^[14]}In their reply brief, Appellants point to Farmers Group=s amended answer to the trial court, in which Farmers Group stated that FIE had no privity of contract with Appellants. However, Appellants have failed to produce any evidence that this representation caused any harm.

^{^[15]}The trial court granted Farmers Group=s motion to strike expert Miller=s testimony or opinions on Amedical causation or physical injuries from soot in general or [Appellants=] alleged physical problems arising from the soot alleged to be present in this case.@

^{^[16]}Appellants failed in their response and again on appeal to connect any of these fourteen representations as well as the general allegations discussed in the preceding paragraphs to any of the section 17.46 violations listed in their brief.

^{^[17]}To the extent these are complaints regarding Farmers Group=s failure to repair the carpet in a timely manner, we hold that Appellants failed to argue this under the Insurance Code.

^{^[18]}Appellants mention that through its actions, Farmers Group is also in violation of the Insurance Code, but Appellants only point this out in the beginning of their DTPA argumentCstating that a violation of the Insurance Code is also a DTPA violationCand again in the last sentence of their response and brief. However, Appellants failed to make any argument regarding this misrepresentation and specific Insurance Code violations; thus, we will not address this issue in our decision. See Tex. R. App. P. 38.1(h). Moreover, Appellants specifically state that this is a laundry list violation, and the Texas Business Code is very specific that Afalse, misleading, or deceptive acts or practices@ for the purposes of section 17.50(1)(a) are limited to the specifically enumerated misrepresentations in section 17.46(b). See Tex. Bus. & Com. Code Ann. ' 17.46(d). Thus, because Appellants argue this only as a laundry list violation, we hold that they have presented no evidence.