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One Hundred Thirty-One Carriers Jointly File Subrogation Lawsuit For Proceeds Paid From Winter Storm Uri

January 5, 2022 E-Alerts

One-hundred thirty-one plaintiffs filed a petition for damages against ERCOT and 36 additional Defendants in the 126th Travis County Judicial District Court on December 29, 2021. The petition alleges that ERCOT and the other 36 defendants were at fault for an electrical energy failure that occurred within the State of Texas beginning on February 15, 2021 and continuing throughout the following week. The petition also alleges that defendants are at fault for the energy failure that resulted in significant property damage to certain policy holders of the plaintiffs located in the State of Texas, and that plaintiffs are bona fide subrogees of their insureds – subrogating them to the rights and claims against any person or entity which may be liable for causing the damage sustained by Plaintiffs’ insured.

Theory of Recovery

The factual allegations assert that ERCOT’s system covers 200,000 square miles within the State of Texas for a total of 90% of the state’s electric load, which serves approximately 26 million customers. In total, ERCOT oversees power general on the grid that connects more than 46,500 miles of transmission lines and 710+ generation units, including generators fueled by gas, coal, nuclear, wind, and solar power. Defendants assert that their insureds are located within the boundaries of ERCOT’s system. The petition further alleges that despite being charged with “balancing all consumer demand in the ERCOT region and the power supplied by companies who generate electricity while maintaining system frequency of 60 Hz,” ERCOT has ostensibly refused to require generators to adhere to any minimum weatherization standards, since 2011. The Defendants claim that ERCOT and the generators unwillingness to accept or adopt any minimum weatherization standards runs contrary to the common law of Texas established by the Supreme Court of Texas in Sw. Gas & Elec. Co. v. Stanley, 123 Tex. 157, 162, 70 S.W. 2d 413, 415 (1934) and Bearden v. Lyntegar Elec. Co-op., Inc., 454 S.W. 2d 885, 887 (Tex. Civ. App.—Amarillo 1970, no writ) (a common law remedy exists for the tortious failure of an electric company to supply electricity). 

In addition, the petition alleges that the Texas Legislature established a duty to the public to maintain continuous and adequate utility service in the Texas Utility Code Section 186.002. Furthermore, the petition cites Tex. Utilities Co. v. Dear, 64 S.W. 2d 807, 811 (Tex. Civ. App.—Amarillo 1933, writ dism’d) where the court applied the doctrine of res ipsa loquitur and held “an electric company is liable for injuries caused by defects in its plant or system.”

Petition Sets Forth Facts, Damages and Cause of Action

For 81 pages, the petition painstakingly sets forth the facts surrounding Winter Storm Uri and the ensuing power failure. Finally, the petition asserts a negligence cause of action against ERCOT and a separate cause of action against the generator defendants, as well as a gross negligence claim against both. The petition is silent on the amount of damage sought by plaintiffs; however, it affirms that the amount is in excess of the minimum jurisdictional amount of the Court. The Texas Department of Insurance has reported that they expect an ultimate payout of $8.2 billion in insured Texas losses from Winter Storm Uri.

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