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August 26, 2010
SIGNIFICANT OPINION: TEXAS SUPREME COURT HOLDS NO COVERAGE FOR INSURED THAT BREACHED CONTRACT TO REPAIR DAMAGE TO WORK SITE AND SURROUNDING PROPERTY:
Gilbert Texas Construction LP, as general contractor, contracted with the Dallas Area Rapid Transit Authority (DART) to construct a light rail system. In the contract, Gilbert agreed to protect the work site and surrounding property. During construction, heavy rains caused flooding that damaged buildings adjacent to the construction site. The building owners, including RT Realty, sued Gilbert and others, alleging various theories of liability, including breach of contract. The owners contended they were third party beneficiaries of Gilbert’s agreement in the DART contract to be responsible for damage to neighboring property. Gilbert’s primary general liability insurer, Argonaut Insurance Company, provided a defense. Gilbert’s excess carrier, Underwriters, issued a reservation of rights generally questioning Gilbert’s coverage for breach of contract claims.
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