Assignment Of Insurance Claims

Someone in Grand Prairie, Arlington, Dallas, Fort Worth, Grapevine, Colleyville, Keller, North Richland Hills, Roanoke, Azle, Hurst, Euless, Bedford, or anywhere else in Texas who has a claim may run into a situation where they are considering to assign their claim to someone else. There are multiple reasons they might want to do this. Before actually assigning a claim it might be wise to read the following case.
The case is, Nautilus Insurance Company, et al. v. Concierge Care Nursing Centers, Inc., et al. This case was decided by the United States District Court for the Southern District of Texas, Houston Division, on December 23, 2010. Here is some background:
In 1999, Brae Burn Construction Company, Inc. (Brae Burn) entered into a contract to build a skilled nursing facility for Concierge Care Nursing Centers, Inc. (Concierge). Brae Burn entered into subcontracts with Nevco Waterproofing, Inc. (insured by Nautilus Insurance Company), Antex Roofing, Inc (insured by Travelers), Mitchell Chuoke Plumbing, Inc. (insured by Amerisure) and Conex Constructors, Inc. (insured by Evanston). In August 2000, a Certificate of Substantial Completion was issued, and Concierge took possession and control of the building.
Concierge claimed that the building eventually developed water leaks and mold. Concierge sued Brae Burn for the resulting damage to the building. In August 2006, Concierge and Brae Burn settled their lawsuit for $3 million. Concierge alleges that, as part of the settlement, Brae Burn assigned its claims against the subcontractors and their insurers to Concierge.
In 2008, Concierge, as Brae Burn’s purported assignee, filed a lawsuit against the subcontractors and the Insurers for indemnity. In May 2010, while dispositive motions were pending, Concierge dropped the lawsuit. Rather than wait for another lawsuit, the insurance companys filed this lawsuit seeking a declaration that Concierge does not have coverage under any of the relevant policies. Concierge then refiled its claims against the insurance companies. The insurance companies filed a Motion for Summary Judgment asserting, inter alia, that any purported assignment to Concierge of Brae Burn’s claims against the insurance companies is invalid under the anti-assignment provisions of the relevant insurance policies.
In its analysis, the court pointed out that each of the insurance companies policies includes a anti-assignment provision precluding assignment of any rights and duties under the policy without the insurance companies written consent. Concierge argues that these anti-assignments, do not apply absent a showing that the insurance companies have been prejudiced by the assignment, and do not apply because the insurance companies are estoped to assert the provisions. With reference to the estoppel arguement, Concierge did not plead estoppel and, therefore, the arguement is waived.
This court pointed out that higher courts have rejected the arguement that the insurance companies must show prejudice. The Fifth Circuit Court of Appeals has squarely rejected the arguement that the insurance company “must show prejudice in order to enforce the non-assignment clause.”
In this case, the anti-assignment provisions of the insurance policies preclude assignment of Brae Burn’s rights to Concierge absent written consent of the insurance companies. As a result, there was no valid assignment. The end result here is a ruling in favor of the insurance companies.
These cases can be confusing and serve as an example why an expereinced Insurance Law Attorney should be consulted before someone gets themselves in a position of discussing the appropriateness of assigning rights in insurance policies.