Interpreting A Commercial Insurance Policy Issued In Texas

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.