Haynes and Boone in Law360: RSUI Must Pay $7.5M Post-Hurricane Award: Texas High Court


The Texas Supreme Court on Friday upheld an appellate court decision awarding an apartment manager $7.5 million in insurance coverage from RSUI Indemnity Co. for damage caused during Hurricane Rita, ruling that an endorsement in the policy is ambiguous and must therefore be construed in the policyholder's favor.

In a 6-3 decision, the state high court held that The Lynd Co.'s interpretation of language in the policy's scheduled limit of liability endorsement is reasonable and that RSUI must therefore compensate the apartment owner for its actual losses from the 2005 hurricane...

Lynd's counsel at Haynes Boone LLP said in an emailed statement that the company "is thrilled with today’s decision, which allows it to recover the full amount sought under its insurance policy for its undisputed actual losses."

"The court found that Lynd’s interpretation of the policy was reasonable and properly applied that language in favor of Lynd, the insured," the attorneys said. "This is consistent with long-standing Texas law and public policy, and thus puts this case well within the mainstream of Texas jurisprudence.”

The case stems from a dispute over an excess policy RSUI issued to Lynd to back up a blanket policy issued by Westchester Fire Insurance Co. The Westchester policy insured several Lynd apartment buildings for up to $20 million and paid out in full when Hurricane Rita struck.

Lynd sought to recover another $4 million in excess losses from RSUI, but the insurer won a summary judgment that limited its liability to just $750,000.

On appeal, Lynd successfully argued that RSUI was wrongly trying to “mix and match” liability limits between actual value and scheduled value and was instead required to use the same valuation method for all losses stemming from the hurricane, rather than paying the lesser of the liability cap or actual damage on a property-by-property basis...

Lynd is represented by Nina Cortell, Ernest Martin and Jeremy Kernodle of Haynes and Boone LLP, Todd Lipscomb, Robert W. Loree and Cassandra Pruski of Loree & Lipscomb and Thomas H. Crofts Jr. of Crofts & Callaway PC.

Excerpted from Law360. To read the full article, click here (subscription required).

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