Texas Insurance, Litigation, and News

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Texas courts address the busines auto policy, "advertising injury" coverage, workers compensation and bad faith, and Hurricane Ike.

In a case of first impression “in this state and perhaps the country,” the Texas Supreme Court recently determined that a business auto policy does not cover a claim by passengers on a commercial bus who contracted tuberculosis (TB) after a bus trip with a coughing driver, who was hospitalized for active TB. Lancer Ins. Co. v. Garcia Holiday Tours, et al., __ S.W.3d __ , 2011 WL 2586878 (Tex. 2011) (slip opinion).

Recently, the Fifth Circuit ruled that claims for misappropriation of trade secrets, unfair business practices, intentional interference with prospective economic advantage, breach of fiduciary duty, constructive trust, unjust enrichment, demand for an accounting, and interference with an at-will employment relationship fell outside a liability policy’s “advertising injury” coverage. Continental Cas. Co. v. Consolidated Graphics, Inc., __ F.3d __, 2011 WL 2644736 (5th Cir. 2011).

Last Thursday, the First Court of Appeals in Houston upheld a jury verdict for a workers compensation claimant who sued his former employer for breach of the settlement agreement that resolved the workers compensation dispute. City of Houston v. Rhule, __ S.W.3d __, 2011 WL 2936351 (Tex. App.—Houston [1st Dist.] 2011).

On Monday, the Dallas Court of Appeals upheld a summary judgment and a sanctions award in favor of the workers compensation carrier in a bad-faith lawsuit. Daniels v. Indemnity Ins. Co., __ S.W.3d __, 2011 WL 2772304 (Tex. App.—Dallas 2011).

In April, 10 members of a 12-member jury awarded the owner of an apartment complex $3.96 million against Lexington Insurance Company on the owner’s suit for breach of contract and Texas Insurance Code violations. Cause No. 09-CV-1238, Jaw the Point, LLC v. Lexington Insurance Company, in the 56th District Court of Galveston County, Texas.

In a decision last Monday, a trial court in the Southern District of Texas ruled that an insurance adjusting company must pay a deductible on each claim arising from its adjustment of Ike claims. Cause No. 4:10-CV-01657; All Tech Claims Management, LLC, v. Philadephia Indem. Ins. Co., in the Houston Divisions of the Southern District of Texas. (slip opinion).

In orders on motions to remand in two unrelated Hurricane Ike cases, a federal court in the Southern District of Texas denied both motions last Monday. Ponton v. Allstate Texas Lloyd’s, 2011 WL 2837592 (S.D. Tex. July 18, 2011) (slip opinion) and Emmanuel Deliverance Temple of Refuge, Inc. v. Scottsdale Ins. Co., 2011 WL 2837588 (S.D. Tex. July 18, 2011) (slip opinion).

A federal grand jury has delivered a superseding indictment against former Liberty County Judge Phil Fitzgerald, former Pct. 2 Commissioner Herman Lee Groce, and Mark Miksch, brother-in-law to Fitzgerald. In January 2011, all three men were indicted on FEMA-related fraud charges stemming from clean-up contracts for Hurricane Ike. This superseding indictment includes three new counts against Groce, alleging that Groce made false statements to federal investigators.

The House passed (406-22) legislation reauthorizing the National Flood Insurance Program (NFIP) until September 30, 2016.

Last Tuesday, Texas Attorney General Greg Abbott announced that Texas and 20 other states are supporting the Missouri lieutenant governor in his challenge of the federal health care reform law.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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