TEXAS UPDATE!
By
Chamberlain♦McHaney
TEXAS
LAWYERS
Texas Update! Desperately Seeks New Comedy
Writers. Ours are out front picketing our
building!
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Chamberlain♦McHaney
Scores Major Appellate Victory in Construction
Case:
Last week, in
a case covered by the local media, Chamberlain♦McHaney obtained the reversal
of a trial court judgment that awarded Target Corporation over $300,000 in
attorney fees and costs. The trial court had awarded Target its fees and
costs on both contractual and statutory grounds.
MRO Southwest, a commercial developer,
originally brought suit against Target Corporation alleging that Target’s
construction activities in building a new store had caused major flooding and
hundreds of thousands of dollars in damages to MRO’s shopping mall in San Antonio,
Texas. Target countersued MRO alleging that it was entitled to
recover its attorneys fees, expenses and costs incurred in defending
itself. The trial court agreed, granting judgment to
Target.
We appealed on behalf of
MRO, arguing that there was no contractual
or statutory basis for such an award. In response, Target argued that it
was entitled to fees due to MRO’s breach of the site development
contract and pursuant to a contractual indemnity clause. Finding Target’s
arguments to be off-target, the San Antonio Court of Appeals reversed the trial
court and rendered judgment in our favor. The court stated that Target
could not recover fees for breach of contract because it had neither alleged nor
proved a breach of contract claim against MRO and had not alleged nor proved that it
had sustained any damages other than its attorneys fees. Fees, in the absence of proof of
damages, are not recoverable. Moreover, Target could not recover
contractual indemnity because the claims arose out of Target’s, not
MRO’s, construction activities, and thus,
the contractual indemnity clause did not apply.
This case is notable because it
clarifies Texas law as to the recovery of fees in
construction litigation. It also amply demonstrates that good guys
ultimately win and bad guys lose. MRO Southwest v Target Corporation
(Tex. App.—San Antonio, no pet. hist).
Tim Poteet, David Chamberlain and Dick Ellis handled this case for the firm.
Chamberlain♦McHaney handles significant construction
cases throughout the State of Texas.
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From the Tx/Up!
Mailbag:
Dear
Tx/Up!
All great media outlets have memorable slogans. The New York Times has
“All the news that’s fit to print.” Fox News has “Fair and balanced.”
I don’t think Texas Update! can continue to claim that it is a
great media outlet until it has its own slogan. Ariel. Oklahoma City, Ok.
Dear Ariel: Actually, our staff has been
working on this for months. Here it is:
“Texas Update! Where Corduroy Pillows
Make Headlines.”
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Judge Rules Contractor
Not Responsible for Sky Falling. Chamberlain♦McHaney just won a summary judgment for
a general contractor who was alleged to have been responsible for a chandelier
falling on the plaintiff in a local restaurant and brewery. The plaintiff,
represented by the notorious Houston personal injury trial lawyer and
flamboyant billionaire, John O’Quinn, sought $4,000,000 in damages. After
pointing out that this unforeseeable mishap did not cause the plaintiff’s
brewski to spiel, we argued that the general contractor should not be held
vicariously liable for the acts of its independent electrical subcontractor nor
did the general contractor owe a duty to the plaintiff for the design,
fabrication or installation of the light fixture. The trial judge agreed,
pouring the plaintiff out of court. Gordon McHaney of our firm handled
this successful defense.
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There’s a riddle that has circulated up
and down Austin’s Congress Avenue for the last few years and it goes something
like this: Question: When is the only time an insurance company
can possibly lose a case before the Texas Supreme Court? Answer:
When there is an insurance company on the other side.
Well, we wouldn’t bet our ink and quill
on that proposition, but here’s a new Texas Supreme Court case that pits Liberty
Mutual against Mid-Continent Casualty. And in this case, it’s true.
Someone had to lose.
Texas Supreme Court Rules in
Favor of Insurer against Insurer: The underlying suit arose
from a head-on collision that occurred in a highway construction zone. The
general contractor, Kinsel, had primary and excess liability insurance through
Liberty Mutual (“LM”). Kinsel also was an
additional insured under its subcontractor Crabtree’s liability policy with
Mid-Continent Casualty Company (“MC”). Each primary policy had $1 million
limits and LM’s excess policy had $10 million limits. LM and MC shared
defense costs and initially agreed that Kinsel’s likely percentage of
responsibility was 10 % to 15%.
As discovery developed, LM increased its evaluation
to 60% and sought MC’s equal contribution to a settlement. MC
refused. LM settled Kinsel’s liability for $1.35 million, with MC adding
$150,000. MC also settled Crabtree’s liability for $300,000. LM then
sued MC to recover the latter’s “fair share” of the settlement amount. The
trial court ruled for LM, and MC appealed to the U.S. Fifth Circuit Court of Appeals, which
certified the controlling questions to the Texas Supreme Court. The Supremes
rejected LM’s legal theories, holding that (1) no right of equitable
contribution applied, and (2) LM could not enforce any right of subrogation
against MC.
As to contribution, the court reasoned
that the “other insurance” clauses in each company’s policy made their
respective contracts “several and independent.” Therefore, the carriers
had no contract and no common obligation, a necessary component of a common law
contribution right. Subrogation did not apply because those rights derive
from the insured, Kinsel, which received all its policy benefits—a defense and
complete indemnification. The Stowers doctrine did not apply, and there is
no other common law right that an insured may have against a carrier in a third
party liability context. Since Kinsel would have no claim against MC
neither would LM. Mid-Continent Cas Co v. Liberty Mutual
Ins. Co. (Tex 2007).
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Texas Appellate Court
Upholds Towing Company’s Right to Recover Wrecker Fees Directly from Driver’s
Liability Insurance Company: Last week, an appellate court in
Tyler, Texas, held that a towing company had the right to collect over $12,000
in wrecker and storage fees directly from the driver’s liability insurance
company.
Big rig driver, Henry Sweeny, took a
curve in Nacogdoches County a little too fast and tumped over his 18 wheeler,
spilling his entire load of delicious east Texas peas. Hopkins Towing
towed Henry’s damaged truck to its yard, but Henry refused to pay.
Hopkins then sued Henry’s liability carrier
(Canal Insurance Company) to recover those fees.
Despite the fact that Canal’s policy did
not provide coverage of third parties who perform towing and
storage
services, the court
held the fees were directly recoverable from the liability insurer pursuant to
the Texas Occupations Code. The statute provides: “An insurance company that pays a claim
for total loss on a vehicle in a vehicle storage facility is liable to the
operator of the facility for any money owed to the operator in relation to
delivery of the vehicle to or storage of the vehicle in the facility regardless
of whether an amount accrued before the insurance company paid the claim.”
Since Canal had declared the rig a total loss, it was required to pay
Hopkins Towing all fees for towing and
storage. Canal Ins Co. v
Hopkins Towing (Tex. App.—Tyler 2007, no pet.
hist).
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300! That’s the number of people who
attended and survived our 12th annual, full day, fully accredited
Ultimate Claims Handing Seminar in Dallas last month. Congrats to all our
graduates. We know your heads are just about to bust with all that new
information. Please mark your calendars to attend the bigger and
better 13th edition on October 10th, 2008.
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Chamberlain♦McHaney is A-V (highest peer review)
Rated by Martindale-Hubbell and is listed in A.M. Best’s Directory of
Recommended Attorneys.
David E. Chamberlain
Chamberlain♦McHaney
Texas Lawyers
Austin and San Antonio
512-474-9124