Retired Supreme Court Justice Dissents From 5th Circuit Majority's "Cramped" Interpretation of Policy

Certain Underwriters at Lloyds London v. Law, # 08-20159 (5th Cir. June 2, 2009) 

Sandra Day O'Connor magnanimously offered to help reduce the case backlog before the 5th Circuit Court of Appeals and sat by designation to review this lower court judgment in favor of the policyholder.  Thieves climbed onto the roof of a commercial building in Houston, broke open panels to the air conditioning housing, and stole copper coils from inside the units. 

The insured owner had insurance that excluded damage caused by theft, "except for building damage caused by the breaking in or exiting of burglars."  The term "building" is defined to include "fixtures, including outdoor fixtures," which everyone agreed would include these air conditioning units.  Nevertheless, the insurer denied the claim arguing that these thieves were not "burglars" breaking into or exiting the "building."

The lower court ruled in favor of coverage.  On appeal, the three-judge panel reversed this judgment and rendered that the policyholder take nothing, with Justice O'Connor (Ret.) dissenting.  Justice O'Connor found that Texas law required a little more insured-friendly interpretation than that adopted by the majority.  She reasoned that the air conditioners, as outdoor fixtures, were part of the building, and the burglars went into and exited the air conditioner housing panels.  A simple case based on the plain language of the policy.

However, the majority disagreed, "with the utmost respect," and held that "breaking in" to a building "unambigously contemplates nothing more expansive that an attempt to enter bodily into the interior space of the building as bounded by walls, floors, and ceilings."  Any other interpretation, said the majority, was "tortured."  

"But," Justice O'Connor (Ret.) admonishes, "nothing in the policy demands such a cramped understanding of intrusion to apply only to a building's 'inner space.' "  Texas law urges a more liberal reading in favor of policyholders than this.

I believe some of our courts could benefit from this instruction from the Honorable Associate Justice (Ret.), and I hope she will not give up on us in Texas.