Today, the Texas Supreme Court issued one new decision — a summary application of one of last year’s more divisive insurance cases.
No new petitions were set for oral argument in the April sitting.
Grimes Constr., Inc. v. Great Am. Lloyds Ins. Co., No. 06-0322. Per Curiam Decision. In this duty-to-defend insurance dispute, the Court held that the outcome of this case was dictated by its previous decision in Lamar Homes, Inc. v. Mid-Continent Casualty Co., 242 S.W.3d 1 (Tex. 2007). [Majority Opinion — Dissenting Opinion — Dissent From Denial of Rehearing]
Lamar Homes was a certified question from the Fifth Circuit asking about how Texas law construed the duty to defend in certain insurance contracts. The Texas Supreme Court divided 6-3 on the question, the majority holding that the insurers did indeed owe the policyholder a contractual duty to defend. The division on the Court lingered through the rehearing stage, with the three dissenting Justices issuing a somewhat rare opinion dissenting to the Court’s denial of rehearing.
The Court today unanimously applied Lamar Homes to this similar case. Here, a builder sought to invoke his insurance contract’s duty to defend clause against certain claims that involved allegations of bad workmanship. The court of appeals (before Lamar Homes was decided) rejected that argument, relying in part on a distinction between contract-type claims and tort-type claims. The Texas Supreme Court unanimously reversed, explaining that “[W]e rejected similar arguments in Lamar Homes, concluding that labels of tort or contract could not override the language of the insuring agreement. 242 S.W.3d at 13. It remanded the cause to the trial court.