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What happens when an insurer does not act reasonably in deciding whether to settle a claim within policy coverage and policy limits?  A federal jury in Houston recently delivered a verdict finding that a primary liability insurer breached its so-called Stowers duty, absolving the excess insurer of any responsibility for an $11.2 million verdict in the underlying liability action. In Westport Insurance Corp. v. Pennsylvania National Mutual Insurance Co., Westport, the primary professional liability insurer for an insurance agency, Insurance Alliance, sought to have the agency’s umbrella insu

What happens when winter weather disrupts a major airline’s operations and strands thousands of passengers for days on end?  Unlike Southwest Airlines’ planes in December 2022, the first lawsuit regarding the meltdown has arrived early. Tens of thousands of flights were delayed or cancelled during the December holiday break in 2022 because of abnormally cold weather across most of the United States. Southwest Airlines was the most impacted airline and the last airline to resume normal operations. The extensive delays and cancellations by Southwest were attributed to staffing issues and fa

To void coverage, is it necessary for an insurer to prove that a policyholder had an intent to deceive when making material representations in an insurance application? The Texas Supreme Court has agreed to hear this issue, with potential widespread implications. In 2017, Sergio Arce applied for a life insurance policy with American National.  In response to a question on the application about whether he had ever been diagnosed with or treated for or given medical advice regarding hepatitis C, Sergio answered, no.  However medical records showed that Sergio was diagnosed with hepatitis C in

What lessons can members of the design and construction industry learn from the sudden and cataclysmic failure of FTX, the crypto-currency exchange? There are many, but we will focus on three of the most significant ones. On November 11, 2022, FTX and various related entities filed for Chapter 11 bankruptcy petition in Delaware.  In support of the Petition for Bankruptcy, John J. Ray, III, the newly appointed Chief Executive Officer the FTX debtors filed a declaration with the bankruptcy court. Among the conclusions Ray reached on his first day as CEO was the following. Never in my career hav

What happens to nuclear verdicts on appeal? The El Paso Court of Appeals recently issued a sobering opinion, overruling a $7 million verdict. In Claxton v. Rayner, Claxton’s windshield was hit by a portion of the load that Rayner was transporting on behalf of his employer, Even Better Logistics (EBL).   While Rayner was transporting an oversized load from Dayton to Abilene, he took the wrong exit and ended up on a route that was not part of his TxDOT required route.  The TxDOT route was selected because he was transporting an oversized load. Rayner allegedly did not realize he was on the