TEXAS UPDATE

 

By CHAMBERLAIN McHANEY

 

TEXAS LAWYERS

       

 

            AROUND OUR CAPITOL:  In a rather shocking display of extemporaneous street speech, Texas Governor Rick Perry bid adieu to a news reporter on camera last week by saying:  “Adios, Mo Fo!”   Fortunately, Texas Update was not within earshot.   We have sensitivities, you know.

            Perry’s opponent in the upcoming Republican primary, Carol Strayhorn, vowed she would take Perry over her knee and spank him for such insolence.  Strayhorn bills herself in campaign ads as “One tough Grandma!”

            We’d pay to see Texas politics if it wasn’t free.

      

HASTE MAKES WASTE, BUT WILL IT SUPPORT AN AWARD OF PUNITIVE DAMAGES?  LAST FRIDAY, THE TEXAS SUPREME COURT faced the issue of whether legally sufficient evidence existed, based on corporate policy promoting speed in fiber-optic cable installation, to support exemplary damages against Qwest over on-site employees who cut AT&T’s nearby cable. In this case, AT&T sued Qwest after cable-laying crews cut AT&T’s cable three times. A jury found Qwest was negligent and that it had acted with malice in two of the cuts. The court of appeals affirmed. The Supreme Court reversed and held that clear and convincing evidence was lacking that Qwest management had actual knowledge that its policy to lay cable rapidly posed an extreme risk. Evidence showed fiber-optic cable was fragile and expensive and, if cut, could cause customers lost service. But cable cuts are frequent and anticipated and most calls were rerouted within seconds. Said the Court:  “We recognize that when haste risks waste to life and limb, it may justify exemplary damages. But we also recognize that in a competitive global economy time is often of the essence for businesses, jobs, and national productivity and prosperity. The Legislature’s balance of such competing interests requires courts to adhere to the standard that exemplary damages are available only if a corporation ignores an extreme risk of harm.”  Qwest International Communications Inc., et al. v. AT&T Corp. (Tex. 2005).

 

            TEXAS UPDATE went shopping for camouflage trousers the other day and couldn’t find any.

 

Another Chamberlain-McHaney Courthouse Victory:  Attorney Tim Poteet obtained a defense verdict in a jury trial in Travis County District Court on claims by a national home builder that a painting contractor caused a fire that destroyed a home under construction by improperly storing oily rags that spontaneously combusted, causing over $700,000 in damages.  Despite the testimony of four opposing experts and the joint efforts of the plaintiff and an adverse co-defendant, the electrical contractor, the jury after seven days of evidence agreed that the opponents had not proven their claims and they found no liability.

 

And CHAMBERLAIN-McHANEY passed yet another milestone the other day when it opened its 6,000^th lawsuit file.  In the past couple of weeks, our firm also added four new clients, HANOVER INSURANCE CO, UNITED STATES LIABILITY INSURANCE CO, HORACE MANN INSURANCE CO, AND FLYING J.   FLYING J is one of the largest privately owned companies in the country according to FORBES Magazine.   Welcome!

 

AROUND OUR CAPITOL II: Governor Perry says his new school finance plan will increase school spending and lower taxes… all at the same time!  TEXAS UPDATE says that’s Deja Moo---we’ve heard that bull before.

 

            The Texas Supreme Court’s May 27, 2005 opinion in Excess Underwriters at Lloyd's, London V. Frank's Casing Crew & Rental Tools, Inc., may have a significant impact on the defense of liability insurance cases in Texas.  The Court held that liability carriers may in some circumstances recover amounts paid in settlement from the insured.  A right of reimbursement may exist when the liability insured either demands or agrees that the carrier pay a claim and there is no coverage for the claim, provided the carrier has sent a reservation of rights.  In such circumstances a “right of reimbursement is implied in law,” whether or not the insured “agrees” that the insurer may seek reimbursement.

             As a result, settlement negotiations in questionable coverage cases may now require two stages, one for settlement between the insured and the claimant and one for settlement between the insured and the carrier.  The defense lawyer’s conflict may preclude involvement in the second stage, so “personal counsel” and “coverage counsel” may be required to negotiate that aspect of any settlement.  The “personal counsel” probably would request that the carrier release any right of reimbursement before agreeing to a settlement.  “Coverage counsel” probably would want to preserve that right in any settlement.  These ancillary lawyers are certainly not uncommon in CD cases, but since the court now has recognized what had been an uncertain right of reimbursement, those lawyers’ involvement will probably be formalized in pertinent cases.  Settlements may be more favorable for carriers now, because they have more leverage with both claimants and insureds. 

 

            Two antennas got married.  The reception was great.

 

                                  TEXAS UPDATE IS BROUGHT TO YOU AS A SERVICE OF THIS FIRM.   Adios, my friend!

 

David E. Chamberlain

Chamberlain McHaney

Austin & San Antonio

512.474.9124