Fredrich 2 Partners, LTD. (Fredrich) owned seven commercial buildings and insured them with American National Property & Casualty Company (American). A severe winter storm drove temperatures below freezing for four consecutive days. An insulated copper pipe in one of the buildings froze, ruptured, and caused water damage to two units in the building’s interior. At the time of the event, one unit was occupied and heated. The other was vacant and was not heated. The insulated copper pipe that froze and ruptured was in the attic space above the vacant unit.

Fredrich informed American of the loss and submitted a written claim. American refused to pay the loss, citing the exclusion in the policy for damage that resulted from frozen plumbing. The exclusion read as follows:

[B.] 2. We will not pay for loss or damage caused by or resulting from any of the following…
e. Frozen Plumbing …

Water, other liquids, powder or molten material that leaks or flows from plumbing, heating, air conditioning and other equipment (except fire protective systems) caused by or resulting from freezing, unless:

• (1) You do your best to maintain heat in the building or structure; or
• (2) You drain the equipment and shut off the supply if heat is not maintained.

Note: This second exception did not have any bearing on the appeal because Fredrich conceded that it did not drain the pipes.

Fredrich responded to American’s denial by seeking a declaratory judgment that American was obligated to cover the water damage. American answered and moved for summary judgment, stating that coverage was barred because neither exception to the exclusion applied. Fredrich’s competing motion for summary judgment asserted three bases for relief:

• Fredrich argued that by maintaining heat in the occupied unit, it satisfied the exception that required it to do its best to maintain heat in the building.
• Fredrich contended that, even if the phrase “do your best” was ambiguous, Fredrich satisfied the exception because the rules of policy construction that applied required construing this phrase narrowly and in Fredrich’s favor.
• Fredrich argued that, even if it failed to do its best to maintain heat in the building, the exclusion did not apply because the pipe would have frozen and ruptured, regardless of whether or not heat was maintained in the vacant unit.

The trial court granted Fredrich’s motion and denied American’s. However, it did not cite the basis or bases for its decision. American appealed.

The appellate court had to determine if any of the three grounds that Fredrich asserted supported the trial court’s decision because the trial court did not specify the basis or bases for its decision. It addressed Fredrich’s first assertion because, if Fredrich did its best to maintain heat in the building, the exception to the general exclusion would apply and the water damage would be covered.

The appellate court stated that, as a matter of law, Fredrich established that it did its best to maintain heat in the building where the water damage occurred. The undisputed evidence in the summary judgment record stated that the building’s occupied unit was heated during the storm. American argued that Fredrich did not do its best to maintain heat in the building, stating that “Fredrich did nothing to maintain heat in the building.” (emphasis added). The court disagreed. The summary judgment record established that Fredrich provided the electricity and gas to keep the building’s occupied unit heated during the storm. By doing so, it satisfied the obligation that it do its best to maintain heat in the building. Neither party contended that the word “maintain” was ambiguous. As a result, the appellate court applied it as written because “maintain” can be given a definite or certain legal meaning.

The court noted American’s further contention that Fredrich’s admission that the heat was not on in the unoccupied unit established that Fredrich did nothing to maintain heat in the building. However, the policy did not require that Fredrich maintain heat in each unit. It only required that Fredrich heat the building, the property that the policy covered.

The appellate court concluded that the trial court did not err in granting summary judgment to Fredrich on this basis and that it did not have to address American’s arguments on the other grounds that Fredrich asserted. It overruled American’s sole issue and affirmed the trial court’s judgment.

Court of Appeals of Texas, El Paso. American National Property & Casualty Company, Appellant, v. Fredrich 2 Partners, LTD., Appellee. No. 08-12-00133-CV. July 31, 2013. 408 S.W.3d 610