Insurance Law Blog

August 21, 2013
Dear Colleague,

On August 31, 2013, insureds across Texas will be celebrating the 6th birthday of Lamar Homes v. Mid-Continent. The pressing question is whether there will be a 7th birthday. That, of course, depends on the Supreme Court of Texas' ruling in Ewing Construction Co., Inc. v. Amerisure Insurance Co., which is likely to be issued in the very near future (maybe as soon as Friday). In Ewing, the Court is faced with two certified questions from the U.S. Fifth Circuit Court of Appeals, but the key question is the following:
Does a general contractor that enters into a contract in which it agrees to perform its construction work in a good and workmanlike manner, without more specific provisions enlarging this obligation, “assume liability” for damages arising out of the contractor’s defective work so as to trigger the Contractual Liability Exclusion?
If the Supreme Court answers the foregoing question in the negative, then Lamar Homes lives on in that coverage will be preserved for "property damage" resulting from defective construction -- even when the damage is to the subject matter of the parties' contract. On the other hand, should the Court favor Amerisure (like the District Court and now vacated Fifth Circuit opinion did), the sea change experienced in Texas following Lamar Homes could come to a screeching halt.

Ewing enjoyed a tremendous amount of support from amici curiae so we remain optimistic that the Supremes will get it right. (Notably, the Dallas Court of Appeals issued an opinion this week in Mid-Continent Casualty Co. v. Castagna in which it adopted the same position that Ewing took in the Supreme Court.) I have an application pending at Starbucks just in case. 

In the meantime, we also will be keeping our eye out for a ruling in Lennar Corp. v. Markel American Insurance Co., which is pending before the Supreme Court of Texas as well. In that case, the Supreme Court will rule on whether an insurer must be prejudiced by an insured's failure to adhere to a settlement-without-consent clause in an insuring agreement before the insurer can invoke it as a coverage defense. In addition, the Court is faced with questions regarding an insured's obligation to apportion its damage between covered and uncovered claims, as well as whether the duty to indemnify is an "all sums" or "pro rata" obligation. These thorny issues have been lurking for several years, and we hope the Court's opinion will shed new light on them.

As soon as the Court's decisions are released, you will hear the latest news from the Shidlofsky Law Firm via this new nifty Blog. Basically, this was just a test e-mail to make sure that all works well. Later this year, we will have an iPhone / Android App and we will have an estate bottled Cabernet Sauvignon. Okay, none of that is true. But, we will keep you posted on major insurance developments. So, stay tuned -- We've Got You Covered.


Lee Shidlofsky
Member of Shidlofsky Law Firm

Douglas P. Skelley
Senior Associate of Shidlofsky Law Firm