Texas Update! Desperately Seeks New Comedy Writers. Ours are out front picketing our building!
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Chamberlain♦McHaney Scores Major Appellate Victory in Construction Case: Last week, in a case covered by the local media, Chamberlain♦McHaney obtained the reversal of a trial court judgment that awarded Target Corporation over $300,000 in attorney fees and costs. The trial court had awarded Target its fees and costs on both contractual and statutory grounds.
MRO Southwest, a commercial developer, originally brought suit against Target Corporation alleging that Target’s construction activities in building a new store had caused major flooding and hundreds of thousands of dollars in damages to MRO’s shopping mall in San Antonio, Texas. Target countersued MRO alleging that it was entitled to recover its attorneys fees, expenses and costs incurred in defending itself. The trial court agreed, granting judgment to Target.
We appealed on behalf of MRO, arguing that there was no contractual or statutory basis for such an award. In response, Target argued that it was entitled to fees due to MRO’s breach of the site development contract and pursuant to a contractual indemnity clause. Finding Target’s arguments to be off-target, the San Antonio Court of Appeals reversed the trial court and rendered judgment in our favor. The court stated that Target could not recover fees for breach of contract because it had neither alleged nor proved a breach of contract claim against MRO and had not alleged nor proved that it had sustained any damages other than its attorneys fees. Fees, in the absence of proof of damages, are not recoverable. Moreover, Target could not recover contractual indemnity because the claims arose out of Target’s, not MRO’s, construction activities, and thus, the contractual indemnity clause did not apply.
This case is notable because it clarifies Texas law as to the recovery of fees in construction litigation. It also amply demonstrates that good guys ultimately win and bad guys lose. MRO Southwest v Target Corporation (Tex. App.—San Antonio, no pet. hist).
Tim Poteet, David Chamberlain and Dick Ellis handled this case for the firm. Chamberlain♦McHaney handles significant construction cases throughout the State of Texas.
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From the Tx/Up! Mailbag: Dear Tx/Up! All great media outlets have memorable slogans. The New York Times has “All the news that’s fit to print.” Fox News has “Fair and balanced.” I don’t think Texas Update! can continue to claim that it is a great media outlet until it has its own slogan. Ariel. Oklahoma City, Ok.
Dear Ariel: Actually, our staff has been working on this for months. Here it is: “Texas Update! Where Corduroy Pillows Make Headlines.”
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Judge Rules Contractor Not Responsible for Sky Falling. Chamberlain♦McHaney just won a summary judgment for a general contractor who was alleged to have been responsible for a chandelier falling on the plaintiff in a local restaurant and brewery. The plaintiff, represented by the notorious Houston personal injury trial lawyer and flamboyant billionaire, John O’Quinn, sought $4,000,000 in damages. After pointing out that this unforeseeable mishap did not cause the plaintiff’s brewski to spiel, we argued that the general contractor should not be held vicariously liable for the acts of its independent electrical subcontractor nor did the general contractor owe a duty to the plaintiff for the design, fabrication or installation of the light fixture. The trial judge agreed, pouring the plaintiff out of court. Gordon McHaney of our firm handled this successful defense.
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There’s a riddle that has circulated up and down Austin’s Congress Avenue for the last few years and it goes something like this: Question: When is the only time an insurance company can possibly lose a case before the Texas Supreme Court? Answer: When there is an insurance company on the other side.
Well, we wouldn’t bet our ink and quill on that proposition, but here’s a new Texas Supreme Court case that pits Liberty Mutual against Mid-Continent Casualty. And in this case, it’s true. Someone had to lose.
Texas Supreme Court Rules in Favor of Insurer against Insurer: The underlying suit arose from a head-on collision that occurred in a highway construction zone. The general contractor, Kinsel, had primary and excess liability insurance through Liberty Mutual (“LM”). Kinsel also was an additional insured under its subcontractor Crabtree’s liability policy with Mid-Continent Casualty Company (“MC”). Each primary policy had $1 million limits and LM’s excess policy had $10 million limits. LM and MC shared defense costs and initially agreed that Kinsel’s likely percentage of responsibility was 10 % to 15%.
As discovery developed, LM increased its evaluation to 60% and sought MC’s equal contribution to a settlement. MC refused. LM settled Kinsel’s liability for $1.35 million, with MC adding $150,000. MC also settled Crabtree’s liability for $300,000. LM then sued MC to recover the latter’s “fair share” of the settlement amount. The trial court ruled for LM, and MC appealed to the U.S. Fifth Circuit Court of Appeals, which certified the controlling questions to the Texas Supreme Court. The Supremes rejected LM’s legal theories, holding that (1) no right of equitable contribution applied, and (2) LM could not enforce any right of subrogation against MC.
As to contribution, the court reasoned that the “other insurance” clauses in each company’s policy made their respective contracts “several and independent.” Therefore, the carriers had no contract and no common obligation, a necessary component of a common law contribution right. Subrogation did not apply because those rights derive from the insured, Kinsel, which received all its policy benefits—a defense and complete indemnification. The Stowers doctrine did not apply, and there is no other common law right that an insured may have against a carrier in a third party liability context. Since Kinsel would have no claim against MC neither would LM. Mid-Continent Cas Co v. Liberty Mutual Ins. Co. (Tex 2007).
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Texas Appellate Court Upholds Towing Company’s Right to Recover Wrecker Fees Directly from Driver’s Liability Insurance Company: Last week, an appellate court in Tyler, Texas, held that a towing company had the right to collect over $12,000 in wrecker and storage fees directly from the driver’s liability insurance company.
Big rig driver, Henry Sweeny, took a curve in Nacogdoches County a little too fast and tumped over his 18 wheeler, spilling his entire load of delicious east Texas peas. Hopkins Towing towed Henry’s damaged truck to its yard, but Henry refused to pay. Hopkins then sued Henry’s liability carrier (Canal Insurance Company) to recover those fees.
Despite the fact that Canal’s policy did not provide coverage of third parties who perform towing and storage services, the court held the fees were directly recoverable from the liability insurer pursuant to the Texas Occupations Code. The statute provides: “An insurance company that pays a claim for total loss on a vehicle in a vehicle storage facility is liable to the operator of the facility for any money owed to the operator in relation to delivery of the vehicle to or storage of the vehicle in the facility regardless of whether an amount accrued before the insurance company paid the claim.” Since Canal had declared the rig a total loss, it was required to pay Hopkins Towing all fees for towing and storage. Canal Ins Co. v Hopkins Towing (Tex. App.—Tyler 2007, no pet. hist).
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300! That’s the number of people who attended and survived our 12th annual, full day, fully accredited Ultimate Claims Handing Seminar in Dallas last month. Congrats to all our graduates. We know your heads are just about to bust with all that new information. Please mark your calendars to attend the bigger and better 13th edition on October 10th, 2008.