Dallas Fort Worth Insurance Lawyer Blog

Business people in Bedford, Colleyville, Grand Prairie, Arlington, Hurst, Euless, Fort Worth, or anywhere else in Texas will sometimes have mistakes in their commercial insurance policy. How do courts look at these situations?
The United States District Court, Northern District of Texas, Dallas Division, issued an opinion on a case May 26, 2010, where this was the issue. The opinion was issued by Judge Ed Kinkeade. The style of the case is Park Place Motorcars Mid Cities Ltd., and Park Place Motorcars of Texas, Inc. v. Affiliated FM Insurance Company.
The facts in this case are this: Park Place Motorcars Mid Cities Ltd. and Park Place Motorcars of Texas, Inc. (Park Place) operate a Mercedes dealership in Bedford, Texas, selling new and used vehicles. Park Place insured its motor vehicle inventory through two policies -- a "dealer open lot" policy and a "floored" policy, both of which were provided by other insurance companies. Affiliated FM Insurance Company (FM) provided coverage to Park Place for physical loss or damage to insured property and for business interruption loss for such insured property, subject to all policy terms, conditions, limitations and exclusions (the "Policy").
Park Place's property was damaged by a hail storm on April 13, 2007. Hail damaged some of Park Place's real property insured under the Policy, including a small portion of the roof and exterior siding, awnings, and sunshade tents. Hail also damaged approximately 244 of Park Place's motor vehicles. The damage to Park Place's motor vehicles was paid by its motor vehicle insurance companies. FM paid Park Place for the damage to Park Place's real property.
Park Place also submitted a claim to FM to recover under the Policy for lost business income directly resulting from hail damage to the motor vehicles. Park Place supported its claim with language from the Policy appearing to extend coverage to motor vehicles. Specifically, Section D of the Policy is titled "Extensions of Coverage" and according to the Policy's Declarations the following was added to Section D:
3. Motor Vehicles Exclusion
Section D., Property Excluded, Item 6., is amended to:
6. Motor vehicles licensed or unlicensed for highway use or owned by officers a
and employees of the Insured; satelites [sic], aircraft and watercraft except
while on land and in the process of being manufactured including storage of
aircraft or watercraft prior to being sold.
Park Place determined that because this Declaration involving motor vehicles falls under Section D-- "Exclusions of Coverage" --that motor vehicles are covered under the Policy.
But, FM denied Park Place's claim for lost business income because the Policy only provides business interruption coverage for losses "directly resulting from direct physical loss or damage insured by this policy to property not excluded." FM denied coverage on the basis that motor vehicles are excluded under the Policy and that Park Place's claim resulted from the hail damaged motor vehicles. FM reached the conclusion that motor vehicles are excluded under the Policy because of a typographical error in the Policy. The "Motor Vehicles Exclusion" in the Policy's Declarations amends Section D; however, the amendment should have been to Section E --"Property Excluded." FM also relied on the language "Motor Vehicle Exclusion" and "Property Exclusion" found in the Declarations to determine that motor vehicles are excluded under the Policy.
Park Place sued FM, seeking a declaration by the court that the Policy provides coverage for the business loss of the motor vehicles. They also alleged breach of contract, violations of the Texas Insurance Code, and bad faith.
In analysing the case, the court pointed out that under Texas law, the court's primary concern when interpreting a contract is to ascertain the parties true intentions as expressed in the instrument. To achieve this objective, the court should examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. No single provision taken alone will be given controlling effect; rather, all the provisions must be considered with reference to the whole instrument. Moreover, a typographical mistake must yield to the well established doctrine that written contracts will be construed according to the intention of the parties, notwithstanding errors and omissions, by perusing the entire document and to this end, words, names, and phrases obviously intended may be supplied.
Park Place argued that because "Section D" of the Policy is the "Extensions of Coverage" Section and contains the "Motor Vehicles Exclusion" Declaration that the Parties intended for the motor vehicles to be covered, or at the very least, that there is an ambiguity in the Policy that must be construed in favor of the insured, which means motor vehicles would be covered under the Policy. But, Park Place's interpretation of the Policy is not reasonable.
The court said the only reasonable interpretation is that the Parties' true intent was to exclude motor vehicles. In the "Motor Vehicles Exclusion" Declaration, the "D" in "Section D" is a typographical error. Instead, the "D" should be an "E" which would place the Section in the "Property Excluded" Section, not the "Extensions of Coverage" Section. This is clear because the title of the Declaration is "Motor Vehicles Exclusion," which on its face can only be reasonably interpreted as excluding motor vehicles from the Policy. Moreover, the title of the proper Section --"Property Excluded" --for the "Motor Vehicles Exclusion" follows the Section letter "D" which shows that the Parties intended to clarify the Section to which the Declaration pertained. The letter "D" is a typographical error and the words "Exclusion" and "Excluded" are the Parties' unambiguous expression of intent to exclude motor vehicles from coverage.
Moreover even if the Court determined that an ambiguity exists as Park Place alleges, FM's evidence establishes that the Parties' intended to exclude motor vehicles from coverage under the Policy. McQueary Henry Bowles Troy LLP (MHBT) was Park Place's insurance broker and negotiated the Policy with FM on behalf of Park Place. MHBT arranges Park Place's commercial property insurance, as well as most of its other insurance needs. Park Place's broker, Linda Stewart at MHBT, sent applications that included a property application, a statement of values, and loss runs that only referred to Park Place's building, business personal property, and business interruption. Nothing was requested by Stewart from Park Place regarding obtaining insurance for the actual vehicles for sale. Stewart testified that she never sought coverage for motor vehicles from FM or intended to place coverage for business interruption losses with FM for damage to Park Place's vehicles.
Thus, the Court concluded the Parties intended to exclude motor vehicles under the Policy and the Court ruled in favor of FM.

Commercial insurance policies are commonly issued to business people in the Dallas, Fort Worth area, and through out the state. Even business owners in Grand Praire, Arlington, or out in Weatherford, will have one of these policies. When a claim is made, there is often times a dispute as to the coverage provided in the policy.
The Court of Appeals of Texas, Houston (14th Dist.), decided a case on May 20, 2010, that does a pretty thorough job going thru an analysis of how these cases are looked at by the courts. The decision was handed down by Chief Justice, Adele Hedges. The style of the case is Essex Insurance Company v. Eldridge Land, L.L.C.
Some of the facts are that Eldridge Land L.L.C. (Eldridge) owned a vacant building. They had purchased a commercial property insurance policy from Essex Insurance Company (Essex). The policy contained a clause providing for damage "caused by or resulting from theft," and an exception to the theft damage exclusion for "damage caused by the breaking in or exiting of burglars." The relevant language was:
A. COVERED CAUSES OF LOSS
When Basic is shown in the Declarations, Covered Causes of Loss means the following:
....
8. Vandalism, meaning willful and malicious damage to, or destruction of the described property.
We will not pay for loss or damage:
a.....
b. Caused by or resulting from theft, except for building damage caused by the breaking in or exiting of burglars.
On March, 28,2006, Eldridge's property sustained considerable damage. Some intruders apparently forced their way into the building and damaged sheetrock, ceiling tiles, electrical conduit boxes, and wall coverings. They also removed copper wiring and copper pipe from the building. Eldridge thereafter filed a claim with Essex seeking coverage. Essex denied the claim based primarily on the policy exclusion for loss or damage caused by or resulting from theft. Essex admitted some of the claim was covered but that the amount did not exceed the $5,000 deductible.
The issue in this case was one of policy interpretation. The court stated, "Whether policy language is ambiguous is a question of law. Ambiguity does not arise simply because the parties offer conflicting interpretations; rather, ambiguity exists only when the contract is susceptible of two or more reasonble interpretations. Usually, if language in an insurance policy is deemed susceptible to more than one reasonable interpretation, the reasonable construction most favorable to the insured will be imposed. Consequently, we construe an ambiguous insurance policy strictly against the insurer and liberally in favor of the insured."
The court next went into more than a three page analysis of the facts in this case and the policy and the law. The reading is interesting, but ultimately illustrates why an experienced Insurance Law Attorney is needed in these cases.
In this case, the court concluded that the evidence established that all damage above the policy deductible were caused by or resulting from theft. As a result, there was no coverage above the deductible.

Let's say a guy in Grand Prairie, Arlington, De Soto, Mansfield, Fort Worth, or any other place in Texas hires a contractor to reroof his property. Next, someone gets injured. Is there coverage for the injured person's injuries?
The answer is the typical "it depends." In the case, Atlantice Casualty Insurance Company v. PV Roofing Corp., et al. Horatio Gonzalez (Horatio) was injured when a ladder he was moving hit an electrical line. This case was decided by Stephen Wm. Smith, United States Magistrate Judge, U.S. District Court, S.D. Texas, Houston Division, on May 20, 2010.
In this case, PV Roofing was the roofing contractor on the job site. PV hired an independent contractor, Bernardo Mejia, to complete the roofing job. On the day of the incident, Mejia went to the job site to do a final inspection and took Horatio with him. Horatio was not paid by either PV or Mejia for any servies in connection with the roofing job.
PV had a commercial general liability policy with Atlantic Casualty Insurance Company (Atlantic). The Atlantic policy had an exclusion in the policy excluding liabilty for "employees, contractors and employees of contractors." It also excluded claims "arising out of" actions or inactions by an independent contractor or subcontractor.
PV, Horatio, and Mejia, claimed that Horatio should be covered since he was not one of the above.
Atlantic pointed out that the policy endorsement defined "employee."
"Employee" shall include, but is not limited to, any person or persons hired, loaned, leased, contracted, or volunteering for the purpose of providing services to or on behalf of any insured, whether or not paid for such services and whether or not an independent contractor.
In the case, the uncontroverted facts are that Horatio went with Mejia to the job site on the day of the accident. They were the only persons at the job site. While Mejia was performing his final inspection, he noticed that some shingles needed repair. He climbed a ladder and made one repair. He needed to move the ladder to make another repair and asked Horatio to move the ladder. Horatio was injured when the ladder came in contact with high voltage lines. The court stated that these facts are sufficient to bring Horatio within the very broad definition of "employee" contained in the policy exclusion and thus, there was no coverage.

What if someone in Grand Prairie, Arlington, Duncanville, Mansfield, Burleson, Weatherford, Fort Worth, or some other city in Texas is involved in an accident, as an employee, with an underinsured driver? Does the employers underinsured portion of their insurance policy provide coverage?
This was the issue in a May 12, 2010 case decided by District Judge, T. John Ward, of the United States District Court, E.D. Texas, Marshall Division. The style of the case is, Dean and Parwana Amanzoui, Individually and as next friends of Fahim Amanzoui and Sabrina Amanzoui v. Universal Underwriters Insurance Company.
In this case, Parwana Amanzoui (Parwana) was riding in an automobile driven by her husband, Dean Amanzoui, and owned by her husband's employer, the Huffines Automotive Group (Huffines). At the time of the accident, Huffines carried its insurance with Universal Underwriters Insurance Group (Universal) pursuant to a multiple coverage policy. Coverage under the policy for underinsured motorist (UIM) was limited. "Insureds" for purposes of UIM coverage was expressly limited to three categories of persons: (1) persons designated on the declarations as subject to the UIM policy, (2) family members of persons designated in the UIM policy, and (3) persons occupying vehicles driven by someone falling within category no. 1 or no. 2. It was uncontested that Parwana was not included in this list.
Texas Insurance Code, Section 1952.101, was relied on by both sides of this case.
The material facts in this case were not in dispute. The sole issue was whether the policy language above provided coverage to Parwana.
Citing Section 1952.101, Parwana argued that Texas law does not allow Huffines to accept liability coverage for its "friends and family" while excluding occupants of otherwise covered vehicles and individuals who are otherwise "insured" under the policy. Thus, Universal's efforts to impose restrictions not found in the statute are improper and ineffective as attempts to void or narrow the scope of insurance coverage specified by the Texas legislature in drafting the statute.
The finding of this Court was that the policy was clear and unambiguous that Parwana was not entitled to recover UIM benefits. The Court explained by saying that Parwana can only be an insured if she qualified as an individual designated in the declarations, a family member of such individual, or a passenger in a covered auto driven by these individuals. She did not qualify.
The Court found that if Huffines had the legal right to reject the UIM coverage in toto per Section 1952.101, that it had the right to restrict UIM coverage to selected individuals. Further, the Texas Supreme Court, in a 1997 case, Grain Dealers Mutual Insurance Company v. McKee, has held that it is not against public policy to limit UIM insureds to certain individuals.
The important point in this case was the ruling by the Court that certain persons can, pursuant to the insurance contract, be covered by UIM coverage while others are excluded from the same coverage.
Whenever this isssue comes up, it is important to carefully read the policy.

Lots of business owners in Grand Prairie, Mesquite, Arlington, Fort Worth, Aledo, or any other town in Texas are going to have insurance coverage for the vehicles they use in their businesses. The question is: Do they have the right coverage for the vehicles?
The United States District Court, Southern District of Texas, issued a judgment on April 21, 2010 that addressed this issue. In this case, United States District Judge, Lynn N. Hughes, ended up telling one business that they did not have the insurance coverage they thought they had. The style of the case is, Canal Indemnity Company v. Williams Logging and Tree Services, Inc. et al.
Willie Williams owns a logging company, Williams Logging and Tree Services, Inc. One morning he was driving his company car, a 2003 GMC Sierra pickup, when he hit a motorcyclist. The injured man sued Williams in the 278th District Court, Walker County, Texas.
The title for the pickup is in Williams and his business name. Williams drove the truck to work and carrried tools and fuel in it for vehicles at work sites. He insured the pickup with a $50,000 per person accident policy. This policy paid in full.
Williams business, Williams Logging and Tree Services, Inc., also had purchased a surplus liability coverage policy with Canal Indemnity Company with a policy limit of $1,000,000. The Canal policy covered vehicles listed in the policy. The pickup was not listed. Logging argued that while the pickup was not listed, the attached MSC-90 endorsement and Form-F endorsement obliged Canal to pay.
The MCS-90 is a public liability endorsement that interstate motor carriers are required to have and proof that the carrier has the required minimum level of insurance.
The pickup, though, does not transport cargo for hire as contemplated in the Motor Carrier Act and regulations of the Federal Motor Carrier Safety Administration. While Logging's hauling trucks may be regulated by the Act, the pickup does not transport items for compensation. It transports Williams as a cost doing business. The fact that Logging has some fuel in cans or even tools to service other vehicles does not transform this "company car" into a motor vehicle.
Form F is the Texas state counterpart to the MCS-90. Texas law requires that motor carriers operating in the state have minimum bodily injury and property damage liability insurance. This law is Texas Transportation Code Annotated, Section 643.101. The law defines a commercial motor vehicle as one that is above 26,000 pounds, transports more than 15 people, or transports hazardous material. See Section 548.001 and 43 Texas Administrative Code, Section 18.2(6). The minimum insurance required is $500,000, per 43 Texas Administrative Code, Section 18.16(a)(8).
Based on the facts in this case that the pickup does not meet the requirements for the Canal policy to provide coverage, the court ruled against Williams.

A good friend of yours is a developer in Grand Prairie, or maybe Arlington, Fort Worth, Dallas, or Weatherford. He develops a property with a lake and the lake was not properly designed. This improper design causes damage to homes around the lake and the homeowners sue your friend, the developer. Will his insurance defend him?
The above situation is kinda what happened in the case, Mid-Continent Casualty Company v. Academy Development, Inc., et al. This case decision was handed down on March 24, 2010, by the Federal District Court, Southern District, Houston Division, by Judge Gray H. Miller. In this case, Academy Development, Inc., Chelsea Harbour, Ltd., Legend Classic Homes, Ltd., and Legend Home Corporation (collectively "Academy") were sued on or about May 23, 2005 by a group of plaintiff's that purchased from the defendants in the Chelsea Harbour subdivision of Fort Bend County, Texas. This property was developed as a lake front community and nearly all of the homes were constructed on lots connected to one of the lakes in the community. The plaintiff's allege that Academy knew at the time it sold the homes to the plaintiffs that the lake walls were failing and that water was leaking from the lakes onto the adjacent home sites. The plaintiffs further alleged that Academy did not disclose this information to them. As a result, the plaintiffs brought claims of negligence, negligent misrepresentation, statutory fraud, and violations of the Texas Deceptive Trade Practices Act against Academy.
The fight here was over whether or not Mid-Continent Casualty Company (Mid-Continent)had a duty defend Academy in this lawsuit brought by the plaintiffs. The plaintiffs in this case amended their lawsuit papers at least eleven times. Mid-Continent agreed that they had a responsibility to defend Academy thru the eigth amendment but they said the wording of the allegations in the lawsuit papers changed enough that they no longer had a duty to defend Academy.
At this point the Judge had to get into a discussion about insurance contract provisions, their meanings, and how they related to or caused it to become necessary for Mid-Continent to defend the lawsuit. In this case there were multiple policies in effect but the language was similar. Also, the damages allegedly caused by Academy stretched over a period of time and at one point the allegations were for potential damages that had not yet occurred. All of this relevant for the Judge in determining the responsibility of Mid-Continent in defending the lawsuit.
In this case, the changed wording in the lawsuit, used by the plaintiffs, which occurred after the ninth amendment caused the Judge to rule in favor of Mid-Continent.
This case is another interesting reading for trying to understand how Courts look at insurance policies and determining their resposibilities when a claim is made.

Commercial business owners in Grand Prairie, Arlington, Fort Worth, Weatherford, and other places in Texas need to know the coverage provided by the commercial insurance policies they purchase. A recent Court decision went against a commercial business that thought they had insurance to cover the loss they experienced.
The Fort Worth Division of the United States District Court, Northern Division, recently handed down a decision that would at the least be interesting to home builders. The decision was issed on April 1, 2010, and it was in favor of the insurance company. The Federal Judge is John McBryde.
The style of this Federal case is, David Lewis Builders, Inc. v. Mid-Continent Casualty Company. In this case, David Lewis Builders, Inc. (Lewis) sued Mid-Continent Casualty Company (Mid-Continent) for a claim made against Lewis by Gary and Malisa Blake for whom Lewis had contracted to construct a house.
Mid-Continent had issued a commercial liability policy to Lewis. Mid-Continent denied the claim of Lewis stating that the policy did not cover contract damages or damages caused by property damage caused by Lewis' defects in workmanship. These were exclusions in the policy among others.
The case is an interesting read and one of the points made by the Court is that the basis of the claim against Lewis by the Blakes, was a breach of contract claim, not a tort liability claim. That the harm to the Blakes was for property damages and their remedy was for breach of the contract they had with Lewis and the property damages arising there from. Tort obligations are, in general, obligations that are imposed by law to avoid injury to others. So, if a person's conduct - such as negligently burning down a house - occurred, there would be tort liability and in this case the Mid-Continent policy would have to provide coverage. But the harm here resulted from Lewis failing to live up to their contractual obligation to the Blakes to properly construct for them a house. Because of these facts in the case and the exclusions in the Mid-Continent policy the Court refused to impose an obligation on Mid-Continent to provide coverage to Lewis for the claims being made by the Blakes.
This case is a good example of why a commercial business needs to be sure what kind of insurance coverage they have purchased to protect against losses.

What about a school district located in Grand Prairie, Arlington, Fort Worth, Weatherford, or somewhere else in Texas? Does that make a difference when deciding how to interpret an insurance policy? The answer is no, but here is a case involving a commercial policy purchased by a school district contractor.
The United States District Court, Northern District, Dallas Division, recently had to decide whether a commercial policy purchased by contractors of the Quinlan Independent School District (QUID) were liable in a claim made by the QISD against one of its contractors. The style of the case is Employers Mutual Casualty Company et al. v. Northern Insurance Company. This case was decided on March 11, 2010, by Senior District Judge, A. Joe Fish.
Dates are relevant in this case. In April 1998, QISD hired DalMac Construction Company (DalMac) to be the general contractor in charge of constructing Ford High School. DalMac hired C. Watts as its "dirt work" subcontractor on the project. QISD took possession of the school in August 1999. Beginning immediately and continuing over the next several years, QISD experienced problems with the building and eventually brought suit against DalMac. In turn, DalMac brought suit against various subcontractors, including C. Watts. C. Watts tendered the defense of the lawsuit to Employers Mutual Casualty Company (Employers). Employers policies went into effect on November 1, 1999. Employers agreed to defend C. Watts in the lawsuit but did so under a reservation of rights. Employers conceded they may have some liability in the lawsuit but that Northern Insurance Company (Northern), which had a policy in effect from November 1, 1998, to November 1, 1999, also had liability under their policy.
The primary issue in this case was whether or not Northern had any liability under its insurance policy on C. Watts. In this regard, the court restated existing law concerning an insurance company's obligations. Northern's obligation to defend in this lawsuit was dependent on the alligations asserted in the lawsuit. These allegations alleged plumbing problems arising from defects in dirt work and the foundation of the school. C. Watts had been the subcontractor doing the dirt work. The court then cited relevant portions of the insurance policy stating the responsibilities of Northern and how the responsibilities were relevant to the allegations in the lawsuit.
The ruling was ultimately in favor of there possibly being coverge under the Northern policy, thus they had to provide a defense for C. Watts in the lawsuit and share the costs and expenses of the lawsuit with C. Watts other insurance, Employers.
This case is yet another good read for understanding how courts decide coverage issues in insurance cases.

Most businesses in Grand Prairie, Arlington, Fort Worth, Dallas, or Weatherford, are going to have insurance policies to cover losses. In addition to the regular liability policy they will also have an "umbrella" policy. An umbrella policy is an insurance policy that covers amounts above those covered under one or more other primary policies, and which does not pay until the losses exceed a certain sum. It is sometimes also called an excess insurance policy.
The United States Court of Appeals for the Fifth Circuit, ruled on a case on March 25, 2010, that dealt with an umbrella policy. The style of the case is, Delta Seaboard Well Serv's Inc. v. American Int'l Specialty Lines Ins. Co.
Delta Seaboard Well Serv's, Inc. (Delta) is an oil and gas well serving company that plugs non-productive wells for operating companies. In 2003, Delta contracted with Fort Apache Energy, Inc. to plug a well. Sometime after plugging the well Fort Apache discovered that the gas pressure at the wellhead had not "bled off", a fact finding that would have required Delta to cease its plugging operation. Fort Apache sued Delta for negligently plugging the hole when there was still recoverable reserves in the hole.
During this time, Delta was insured by Gemini Insurance Company (Gemini). After this time, Delta had purchased an umbrella policy from American Int'l Specialty Lines Ins. Co. (American). Delta informed Gemini of the lawsuit and Gemini denied coverage. In the lawsuit against Delta, Delta was found liable for more than $2 million in damages to Fort Apache.
Delta then brought suit against American for a portion of the claim that Delta claimed was due under the umbrella policy. The facts of this case are not complicated but are extensive. The importance of the case is the reading of the Gemini policy and the reading of the American policy together to see whether or not the American policy becomes liable for any portion of the claim. The court ultimately ruled that there was no coverage under the umbrella policy.
This case demonstrates again how courts read the policies to see if there is coverage. For the company purchasing insurance it is important that they understand what it is they are buying and that they make clear to the agent they buy the insurance from, that they get the coverage they want.

What if you are a business owner in Arlington, Grand Prairie, Weatherford, Fort Worth, Dallas, or somewhere else in Texas, and your business is shut down for a while? How does your commercial policy help you with lost income?
This was the question in the case, Catlin Syndicate Limited v. Imperial Palace of Mississippi, Inc; Imperial Palace of Mississippi, LLC. This case was decided by the United States District Court for the Southern District of Mississippi. The date of its decision is March 15, 2010.
Catlin Syndicate Limited (Catlin) is an insurer. They insured the casino operator Imperial Palace of Mississippi (Imperial). As the result of damage caused by hurricane Katrina, Imperial suffered a business interruption. Imperial was shut down for several months. When Imperial reopened it made much greater revenue than before the hurricane because many of the nearby casinos remained closed, and people had fewer gambling choices. Catlin agreed to pay Imperial's claim but there was a dispute as to how the business interruption loss should be calculated.
Imperial declared a loss of $165 million based on both the pre-hurricane income and the post-hurricane revenue. Catlin believed the losses were only $65 million, based only on the pre-hurricane revenue. This discrepancy resulted from the parties' different interpretations of the policy's busines interruption provision, which states, in pertinent part:
Experience of the business -- In determining the amount of the Time Element loss as insured against by this policy, due consideration shall be given to experience of the business before the loss and the probable experience thereafter had no loss occurred.
The court looked at decisions in other cases where there was similar policy language. The court stated that "historical sales figures reflect a business's experience before the date of the damage or destruction and predict a company's probable experience had the loss not occurred," and that " the strongest and most reliable evidence of what a business would have done had the catastrophe not occurred is what it had been doing in the period just before the interruption."
Imperial tried to argue a distinction between the terms "damage destruction" and "loss". The court said this is a distinction without a difference in the context of business interruption provisions in an insurance contract. They pointed out that the Random House Webster's Unabridged Dictionary, says damage and destruction are two definitions for "loss".
This Mississippi Court ruled that in the business interruption provision in the Catlin policy, only historical sales figures should be considered when determining loss, and sales figures after reopening should not be taken into account. The Court also stated that Mississippi law and Texas law are essentially the same in this regards.
This case is not a real difficult case to understand. An Insurance Law Attorney should be able to explain this to a client relatively easily. Usually the commercial insurance cases are more complicated.

How an insurance policy is interpreted by Texas Courts is important. This is true whether you live in Grand Prairie, Arlington, Weatherford, Fort Worth, Mansfield, Dallas, or anywhere else in Texas.
A commercial insurance policy was recently interpreted by the United States District Court, Southern District of Texas, Houston Division. The style of this case is National Casualty Insurance Company v. Orion Transport, Inc. and Silvia Brune, Individually and as Representative of the Estate of James Brune, Deceased and Cody Brune and Cory Brune. The case was decided on February 22, 2010.
The undisputed facts in this case are that on February 4, 2009, Orion Transport, Inc. (Orion) hired welder, James Brune, to perform maintenance on its 1977 Heil Tanker Trailer. While Brune was performing the requested maintenance the trailer exploded injuring Brune, who later died of his injuries. The Brune estate and his survivors sued Orion and ETOCO. L.P., and ETOCO Management, LLC. in State District Court. National Casualty Insurance Company (National) brought this instant case in Federal District Court asking the court to rule that National had no duty or obligation under its policy of insurance with Orion to defend Orion or to pay any claims against Orion.
The court spent considerable time discussing procedural issues in the lawsuit and then addressed the basis for the lawsuit. The court restated well established law in this area that under a typical insurance policy an insurance company assumes two distinct responsibilities: one, the duty to defend and, two, the duty to indemnify. To make this clear, the duty to indemnify protects the insurance company customer from payment of damages they may be found legally obligated to pay, while the duty to defend protects the same customer against the expense of any lawsuit seeking damages. What is important here is that the insurance company owes neither duty when the type of claims made in a lawsuit are specifically excluded from policy coverage.
To determine whether or not National had a duty, the court uses the "eight corners" rule. The first four corners are the allegations in the papers related to the lawsuit and the second four corners are the words found in the insurance policy. The insured, or in this case, Orion, bears the initial burden of showing that coverage exists, and once established, the burden shifts to the insurer to show that policy exclusions apply.
In this case, it was alleged in the lawsuit papers that Orion used its Heil Tanker Trailer to haul salt water from a well owned by the Etoco defendants. It is also alleged that the salt water contained dangerous and explosive hydrocarbons. That Orion hauled the salt water to a disposal well and purportedly emptied the trailer. The Brunes alleged that a potentially explosive residue remained in the trailer. That the trailer was taken to Orions place of business where Brune was asked to do repairs and maintenance. While performing this work the trailer exploded.
National denied coverage and pointed to a Pollution Exclusion in the policy. This exclusion spoke to pollution and pollutants, and whether or not under the policy the pollutants were being stored.
An arguement over whether or not the salt water with hydrocarbons was a pollutant was resolved in Nationals favor. The next arguement was over whether or not the pollutant in the tanker was being "stored" in the tanker as that term is defined in the National insurance policy. For guidance the court looked to Webster's Ninth New Collegiate Dictionary. Webster's defined stored as "for preservation or later use or disposal." The court decided that was not the situation in this case and ruled that the Pollution Exclusion did not apply.
An experienced Insurance Law Attorney is needed for guidance in these situations. A complete reading of this case gives insight into how courts reach their decisions in these cases. An attorney can read the policy at issue in a situation and apply the reading of that policy to the facts and discuss likely outcomes.

The first thing a person wants to know who has insurance is; Does my policy protect me? This is true no matter if you are living in Grand Prairie, Fort Worth, Arlington, Mansfield, Dallas, or out in Weatherford, Texas.
The United States District Court, Southern District, Corpus Christi Division, had that decision to make in a case styled, National Fire Insurance Company of Hartford, et, al. v. Radiology Associates, LLP, et al., and issued an opinion on March 3, 2010. In this case, a couple sued Radiology Associates, LLP. (Radiology) and one of their employees, Brian K. Riley. Radiology had three insurance companies providing policies for them and Radiology presented the lawsuit to all three companies to provide a legal defense and settle any potential claims.
The facts in the case were that, Mrs. Pecore, a patient of Radiology, was to have a trans-vaginal ultrasound. It was alleged that during this exam, Riley inserted a finger into Mrs. Pecore's vagina without permission and that Radiology should have informed Mrs. Pecore she had a right to have a chaparone present during the exam and that if a chaparone had been present the "assault" to Mrs. Pecore would not have occurred. There was nothing about the precedure involving the trans-vaginal exam that would have called for Riley to have committed the act he is accused of commiting.
This lawsuit between Radiology and its three insurers was a dispute over whether or not the type of claim being asserted by the Pecores was the type of claim covered by any of the policys of insurance.
The three insurance companies were, National Fire Insurance Company of Harford (National), Continental Casualty Company (Continental), and American Physicians Insurance Company (API). The court dismissed the claims against National and Continental but allowed the lawsuit to proceed against API.
In determining the insurance companies duty to defend the lawsuit being asserted by Mr. and Mrs. Pecore, the court cited Texas law, stating "The duty to defend arises when the facts alleged in the complaint, if taken as true, potentially state a cause of action within the terms of the policy". They also said that an insurance company is obligated to defend one of its insureds as long as the complaint alleges at least one cause of action within the policy's coverage. And that the duty to defend is determined by examining the latest amended pleading upon which the insurance company bases its refusal to defend the lawsuit.
The Pecores claim was an assault or wrong committed in the course of medical treatment. These types of wrongs were specifically excluded from coverage in the National and Continental policies. These medical treatment causes of action were not specifically excluded under the type of coverage that may be covered in the API insurance policy.
The court pointed out that even though API is judged to have a duty to provide a defense for Radiology, that does not mean they will have a duty to pay any claim or judgement against Radiology.
This case is a good read for trying to understand the distinction in a claim that has potential medical malpractice implications and one that has assault allegations together in the same case.

A decision in a Dallas, Texas, case was handed down on January 22, 2010. The results should have been the same in Fort Worth, Grand Prairie, Arlington, or Weatherford. This case was decided by the United States District Court, Northern District, Dallas Division.
The style of the case is Gemini Insurance Company v. Trident Roofing Company, L.L.C. The lawsuit arises from an incident where the Roman Catholic Diocese of Dallas and Our Lady of the Lake Catholic Church hired Trident Roofing Company, L.L.C., to perform roofing work on a Church building. In doing the roof work, Trident performed "torch down roofing". "Torch down roofing" is defined in the insurance policy as "the use of any roofing system that requires the applying of a direct flame (torch) to asphalt/modified bitumen or in the application of any other roofing material." The Church sued Trident after a fire started while Trident was using this roofing method.
Trident looked to their insurance policy with Gemini Insurance Company and demanded that Geminin protect them in the lawsuit including paying for defense costs and indemnity costs. Gemini denied coverage citing an exclusion in the insurance contract for work performed using "torch down roofing". The specific language in the policy states: "It is agreed no coverage is afforded for any liability or claim that arise(s) out of, is related to, or connected with the following: TORCH DOWN ROOFING."
When an insurance company denies coverage relying on the policy's exclusions to deny coverage, the insurer bears the burden of proving that the exclusions apply. Thus, in determining whether Gemini has a duty to defend or indemnify Trident, the Court has to compare the allegations in the lawsuit to see if the allegations fall within the scope of the policy's exclusions.
Here, Texas law applies, and Texas Courts construe the phrase "arise out of", broadly in the context of insurance exclusions. The Court stated "The Texas Supreme Court has held that "arise out of" means that there is simply a "casual connection or relation," which means that there is but-for causation, though not necessarily direct or proximate causation. That is, if it were not for the existence of the underlying event or circumstance, the damage could have existed without the damage ever occurring. A claim need only bear an incidental relationship to the described conduct to "arise out of" that conduct. Furthermore, the Fifth Circuit of Appeals had broadly construed language identical or similar to the phrase "arising in connection herewith" contained in indemnity agreements to "unambiguously encompass all activities reasonbly incident to or anticipated by the principle activity of the contract."
The Court decided the case in favor of the insurance company, Gemini. There were many allegations made against Trident in the lawsuit, all of which, Trident pointed out as being reasons why Gemini should be defending and paying the claim. The Court concluded by stating that the damage caused to parts of the Church's building and structure were caused by Trident's presence on the Church's site, and thus "arose out of" or are "connected with" Trident's torch down roofing job. Therefore, Gemini does not owe a duty to defend or to indemnify Trident in the lawsuit.

Most people would not realize how much time and money is spent with insurance companies fighting with other insurance companies. Most of these fights result from situations where a person or company has more than one policy. An example would be where an Arlington resident buys some insurance in Grand Prairie, Dallas, Fort Worth, or maybe out in Weatherford or wherever but also buys another policy at the same time or later on from another company or agent. Next, an incident happens, the result of which is the policyholder has to file a claim or seek coverage through the policies of insurance. Then what happens is, the companies start fighting with each other about which one has to pay the claim or pay the costs of defending the claim asserted. The following case is yet another example of this type of situation.
The United States Fifth Circuit Court of Appeals handed down a decision is one of these cases on January 4, 2010. The style of the case is, Trinity Universal Insurance Company; Utica National Insurance; National American Insurance Company, Subrogees of Lacy Masonery Inc., v. Employers Mutual Casualty Company.
In this case, Employers Mutual Casualty Company (EMC) and the others issued commercial general liability insurance policies to Lacy Masonry, Inc. Lacy was sued. Trinity defended and eventually settled the case on behalf of Lacy. Utica defended and eventually settled the case on behalf of Lacy. And, finally, National defended and eventually settled the case on behalf of Lacy. EMC refused to defend or participate in the settlement.
Trinity, Utica, and National, then sued EMC for EMC's pro rata share of the settlement and defense costs. EMC claimed they did not have a duty to defend and thus no duty to pay a pro rata share of settlement monies or defense costs. The court analysed the policy language and eventually ruled that EMC should have participated in the defense of Lacy. Because of the language in the EMC policy and earlier court decisions related to the policy language, the court partially agreed with EMC, that EMC did not have to contribute to the settlement costs. However, this language did nothing to protect EMC from having to handle its pro rate share of the defense costs because EMC clearly had a duty to atleast defend Lacy in the lawsuit.
A reading of the case distinguishes and explains in an understandable manner the reasoning of the court in this matter. Each situation and policy put together have to be analysed and then applied to the insurance laws in Texas to be able to fully understand the difference between one situation and another.

The United States Court of Appeals for the Fifth Circuit, decided another case this month dealing with the duty of an insurance company to defend a lawsuit filed against one of its insureds. The decision on this case was handed down by the court on January 4, 2010. The case was an appeal from the United States District Court for the Southern District of Texas. The Fifth Circuit, located in Louisiana, handles appeals that would arise out of Dallas, Fort Worth, Arlington, Grand Prairie, small towns like Weatherford, and all other places in Texas.
In the opening paragraph of the decision the court makes the following statement, "We have occasion once again to take up the seemingly simple task of determining whether an insurance company owes a duty to defend an underlying liability lawsuit, and because the insurer in this case indeed has such a duty, it is also an occasion to again remind: when in doubt, defend." As stated in this blog in the past, the courts draw a distinction between the obligation of an insurance company to defend an insured who has been sued and the obligation of an insurance company to pay a claim.
The case at issue here is styled, Essex Insurance Company v. Hines. The policy was a "Commercial General Liability Coverage" and another one called a "Commercial Property Coverge" policy. The facts here are relevant to deciding the existence or lack there of, as it relates to coverage in the wording in the policy. What Essex was failing to see was how Texas law applies in the difference between the duty to defend and the duty to pay under a policy of insurance.
Under Texas law, an insurer has a duty to defend a policyholder in actions brought by a third party who asserts claims "potentially" covered by the insurance policy. The key word here being, "potentially." When determining whether an insurance company owes a duty to defend its policyholder, Texas courts follow the "eight corners" rule, which directs the court to examine only "the allegations in the pleadings" which is the first four courners, and "the language of the insurance policy", which is the second four corners.
The insurance company argued that the policy did not cover the type of loss the third party was sueing about. The court was saying that maybe the insurance company was right, but the allegations in the lawsuit were sufficient to raise the possibility that coverage would be triggered and thus the insurance company should be providing a defense to Hines.
Anytime someone is sued and they have a policy of insurance that "might" provide coverage, they should take the lawsuit papers to their insurance company. If the insurance company refuses to defend the lawsuit then an experienced Insurance Law Attorney should be contacted.