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February 25, 2017

February 24, 2017

This week the Texas Supreme Court has issued 7 opinions on a range of issues including: (1) use of a merit certificate in establishing expert qualifications of an architect in a faulty-design case, (2) sufficiency of evidence establishing “knowledge” in an oil-field contamination case, (3) scope of the Texas State Board of Examiners of Marriage and Family Therapists’ authority, (4) application of an insurance policy’s “insured-vs.-insured” exclusion, (5) interaction of a common-law sexual assault claim and the Texas Commission on Human Rights Act, (6) application of the Texas Citizens Participation Act to communications among pipeline employees, and (7) jurisdiction in an equal-and-uniform-taxation claim.

Great American Insurance Co. v. Robert Primo – 15-0317

In this case, the Texas Supreme Court addressed the issue of whether an insured-v.-insured exclusion in a directors-and-officers-liability policy applies and precludes coverage when a surety assigned rights by a non-profit association sues a former director of the association.

The policy at issued contained an insured-v.-insured exclusion that expressly provided that, “This Policy does not apply to any Claim made against any Insured by, or for the benefit of, or at the behest of [a director] or … any person or entity which succeeds to the interest of [the director].” Interpreting “succeeds to the interest” to mean that a successor assumes both the obligations and claims or rights of the director, the Court of Appeals held that Great American failed to establish that the surety “succeeded to the interest” of the former director because the surety did not establish that it took on the director’s obligations, claims, and rights; therefore, the exclusion did not apply.

Finding that the Court of Appeals had essentially and improperly limited the meaning of “succeeds to the interest,” the Texas Supreme Court reversed and rendered judgment for Great American.

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