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Click here for the full text of this decision FACTS:After Travelers Personal Security Insurance Co. denied Douglas and Rosalind McClelland’s claim, the McClellands filed suit alleging violations of the Texas Insurance Code and the Deceptive Trade Practices Act, and common law breach of contract. The jury returned a verdict, finding that plumbing leaks, which were covered under the McClellands’ insurance policy, had caused 80 percent of the damage to the McClellands’ home. The trial court entered judgment for damages from the breach-of-contract violation, but granted Travelers’ Motion for Judgment Notwithstanding the Verdict in part, entering judgment disregarding the jury’s verdict awarding additional damages to the McClellands based on the jury’s finding that Travelers had violated the Insurance Code by knowingly engaging in unfair or deceptive conduct. Travelers appeals from the breach-of-contract damage award, and the McClellands appeal the trial court’s partial granting of the Motion for Judgment Notwithstanding the Verdict. HOLDING:Affirmed. The Texas Supreme Court has said that it is “well-settled in Texas” that if an insurer pleads an “exclusion under the policy” the “insureds [are] obligated to introduce evidence to prove and secure jury findings that damage was caused solely by the [covered risk]; or segre[gate] the damage caused by the insured peril from that caused by . . . an excluded peril.” Travelers Indem. Co. v. McKillip, 469 S.W.2d 160 (Tex. 1971) (emphasis added). Therefore, this court asks whether the McClellands placed before the jury more than a scintilla of evidence segregating the damage caused by plumbing leaks versus the damage incurred by natural causes such that the evidence was legally sufficient to support the jury’s finding that 80 percent of the damages was attributable to the plumbing leaks. The jury could have found that the insured peril was sufficiently segregated from the excluded peril based on the expert’s testimony that the McClellands’s foundation only began to move (to the extent that it caused damage to the house) once the plumbing leaks began, and his diagram showing where “the plumbing leaks have affected in the house.” Looking at all the evidence in the light most favorable to the verdict, the court holds that the expert’s testimony and diagram amount to more than a scintilla of evidence providing a reasonable basis upon which the jury could have found that 80 percent of the damage to the house was due to plumbing leaks. Bad faith is not established if the evidence shows the insurer was merely incorrect about the factual basis for its denial of the claim, or about the proper construction of the policy. Lyons v. Millers Cas. Ins. Co., 866 S.W.2d 597 (Tex. 1993). Given that the McClellands’ own expert could not unequivocally state that it was plumbing leaks, and plumbing leaks alone, that were the cause of the foundation damage (thereby leaving the inference that the cause of the damage was not immediately reasonably clear), and that the McClellands can marshal no more evidence than Travelers’ proclivity to hire an expert of its own preference, the evidence will only bear the conclusion that this was a simple disagreement among experts about whether the cause of the loss is one covered by the policy, and will not support a judgment for bad faith. The court holds that, in looking at all the evidence in the light most favorable to the verdict, the evidence is legally insufficient to support the jury’s finding of additional damages. OPINION:Sam Nuchia, J.; Nuchia, Jennings and Higley, JJ.

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