Houston Partners Obtain Summary Judgment in Coverage Suit

June 5, 2017

On Thursday, June 1, Houston Partners Brian Martin, Kevin Risley, Diego Garcia and Cy Haralson obtained a summary judgment on behalf of their client, excess insurer U.S. Fire Insurance Co., in the Southern District of Texas. U.S. District Judge Lee H. Rosenthal granted their motion, getting U.S. Fire off the hook for a substantial portion of an $8 million judgment against Satterfield & Pontikes Construction Co.

S&P was found liable for $8 million worth of repairs needed on the courthouse in Zapata County, Texas in an arbitration award following a defective construction suit the county filed in 2011. The judgment was earmarked for specific repairs, with roughly $3 million going to cover mold damage.

S&P paid the judgment with $4.5 million from settlements with its subcontractors, roughly $450,000 of its own money and $3.1 million from two primary insurers: American Guarantee and Liability Insurance Co. and Amerisure Mutual Insurance Co. The Court held that U.S. Fire was not responsible for reimbursing S&P or the primary insurers for any portion of the judgment.  The court held that as a result of the settlement payments that S&P received from its subcontractors, a fungi and bacteria exclusion that excluded the mold damages, and the fact that $2 million of the judgment was for uncovered attorneys' fees, or costs and interest covered under the primary insurers’ “supplementary payments” provisions, U.S. Fire’s policy was not triggered by the loss.

The case is American Guarantee and Liability Insurance Co. et al. v. U.S. Fire Insurance Co., case number 4:15-cv-01926, in the U.S. District Court for the Southern District of Texas.