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Lambrecht & Assocs. v. State Farm Lloyds

Court of Appeals of Texas, Twelfth District, Tyler

May 13, 2003, Delivered

NO. 12-01-00146-CV

Opinion

 [*18]  Appellant Lambrecht & Associates, Inc. ("Lambrecht") sought coverage from State Farm Lloyds ("State Farm") under a business insurance policy for the loss of computer data and the related loss of business income. Both Lambrecht and State Farm filed traditional motions for summary judgment on the question of coverage. In one issue on appeal, Lambrecht contends that the trial court erroneously granted State Farm's motion for summary judgment and denied Lambrecht's motion. We reverse the trial court's order granting summary judgment for State Farm and remand the case for further proceedings.

BACKGROUND

Lambrecht is an employment agency located in Tyler, Texas. Lambrecht's income is generated by matching prospective employers and employees for a fee. All of the staff at Lambrecht use computers to  [*19]  communicate with prospective employers and employees, either by printing and mailing information stored on the computers or by transmitting via electronic media or e-mail. In addition, the computers are used to input various [**2]  types of information used in Lambrecht's business. The computers used by Lambrecht's employees were networked into a large central computer that functioned as a server and was equipped with certain pre-packaged software programs, including MS Office, Microsoft Access, and Norton Anti-Virus. The server was also used by Lambrecht's office manager, Judi Ashley ("Ashley"), in the performance of her job responsibilities.

On or about February 9, 2000, Ashley noticed problems in the function of her computer. The computer began to have difficulty "booting up" and could not readily locate and retrieve stored information. The computer also began performing a number of "illegal functions" without command and ultimately "froze up." After the computer "froze," none of the information that had previously been stored could be retrieved, and no additional information could be loaded.

To restore its computer system, Lambrecht had to replace its server, purchase a new operating system and other pre-packaged software, and manually re-enter much of its data. As a result, Lambrecht's employees were unable to use their computers to communicate with prospective employers and employees until the server [**3]  was restored. The February 2000 monthly income statement showed a decrease in fee income, and Ashley attributed the decrease to Lambrecht's inability to use its computers during the time the server was not functioning.

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119 S.W.3d 16 *; 2003 Tex . App . LEXIS 9970 **

LAMBRECHT & ASSOCIATES, INC., APPELLANT v. STATE FARM LLOYDS, APPELLEE

Notice:   [**1]  (PUBLISH)

Subsequent History: Petition for Rehearing Denied September 4, 2003. Released for Publication November 19, 2003.

Prior History: APPEAL FROM THE 241ST JUDICIAL DISTRICT COURT OF SMITH COUNTY, TEXAS.

Disposition: Reversed and remanded.

CORE TERMS

accidental, coverage, records, virus, summary judgment, server, matter of law, insured, losses, physical loss, replace, summary judgment motion, entitled to judgment, trial court, electronic, software, papers, media, occurrence, injection, condition precedent, electronic media, computer system, employees, stored, pre-packaged, programming, duplicates, contends, viewpoint

Civil Procedure, Summary Judgment, Entitlement as Matter of Law, General Overview, Judgments, Burdens of Proof, Motions for Summary Judgment, Opposing Materials, Appeals, Standards of Review, De Novo Review, Summary Judgment Review, Standards of Review, Cross Motions, Governments, Courts, Court Personnel, Relief From Judgments, Insurance Law, Claim, Contract & Practice Issues, Policy Interpretation, Contracts Law, Defenses, Ambiguities & Mistakes, Ambiguous Terms, Coverage Favored, Entire Contract, Questions of Fact & Law, Property Insurance, Coverage, Commercial General Liability Insurance, Accidental Injuries, Life Insurance, Accidental Death, Intentional Acts, Reviewability of Lower Court Decisions, Preservation for Review, Record on Appeal, Evidence, Rule Application & Interpretation, Defenses, Demurrers & Objections, Affirmative Defenses, Payment, Exclusions, Pretrial Matters, Continuances, Criminal Law & Procedure, Trials, Discovery & Disclosure, Business & Corporate Compliance, Computer & Internet Law, Criminal Offenses, Data Crimes & Fraud, Fraud, Computer Fraud, Elements, Contracts Law, Contract Conditions & Provisions, Conditions Precedent, Contract Interpretation, Procedural Matters, Preliminary Questions