|Fanning Harper Martinson Brandt & Kutchin attorney Don Martinson quoted in Law360 article |
Texas Court Unlikely To Back Sweeping Liability Exclusions
|October 2, 2012 11:44 pm|
Law360, Houston (October 02, 2012, 11:11 PM ET) -- Insurers and construction companies are eagerly waiting for the Texas Supreme Court to weigh in on a federal lawsuit that could radically expand general commercial liability exclusions in the state, but experts from both industries say the high court is likely to call foul on the Fifth Circuit';s insurer-friendly ruling.
The state's high court is considering certified questions in Ewing Construction Co. Inc. v. Amerisure Insurance Co. following the Fifth Circuit's withdrawal of its own opinion, which was criticized as expanding so-called contractual liability exclusions to broadly wipe out coverage for errors arising in the context of most construction projects.
If nothing else, insurance companies agree that the Fifth Circuit's decision was odd. Don D. Martinson of Fanning Harper Martinson Brandt & Kutchin PC, who represents insurers, said his clients were equally surprised at the decision.
"Insurance companies love it, but we're surprised that the Fifth Circuit would go that far," he said.
In reaching its opinion, the Fifth Circuit relied on the Texas Supreme Court';s ruling in a previous case, Gilbert Texas Construction LP v. Underwriters at Lloyd';s London. Gilbert, a general contractor hired by the Dallas Area Rapid Transit Authority to build a light rail system through the city, had expressly agreed to protect the work site and surrounding property. But at one point, a large rainstorm flooded a building adjacent to the construction area.
The Texas high court held that on the facts of that case, because Gilbert had agreed by contract to protect property surrounding the work site and failed to do so, it was not entitled to coverage under its commercial general liability policy when the building's owner sued.
But according to Martinson, the Fifth Circuit';s ruling overreaches the high court';s findings in Gilbert, so the Texas high court is not likely to back its interpretation.
"Gilbert doesn't go that far," Martinson said. "The Texas Supreme Court has not expanded the scope of the exclusion clause in Gilbert as broadly as the Fifth Circuit, and it's unlikely that they would."
Martinson said that since the Fifth Circuit's initial decision, it's been "business as usual" for his insurance company clients. He said that although his clients are of the view that a breach of contract is an intentional act not subject to coverage, they are not hanging their hopes on the high court finding that Ewing's promise to build tennis courts in a "good and workmanlike manner" triggers the contractual liability exclusion to insurance coverage.
"It is hard for me to imagine that they are going to find that language constitutes an assumption of liability," he said.
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