LENNAR CORP LENNAR CORP v. v. MARKEL AMERICAN INS. MARKEL AMERICAN INS. R. Brent Cooper R. Brent Cooper Tarron Gartner Tarron Gartner Cooper & Scully, P.C. Cooper & Scully, P.C. 900 Jackson Street, Suite 100 900 Jackson Street, Suite 100 Dallas, TX 75202 Dallas, TX 75202 Telephone: 214- Telephone: 214 -712 712- -9501 9501 Telecopy: 214- -712 712- -9540 9540 Telecopy: 214
APIE v. GARCIA APIE v. GARCIA 1994 TEXAS SUPREME COURT 1994 TEXAS SUPREME COURT MEDICAL MALPRACTICE CASE MEDICAL MALPRACTICE CASE FROM 1980 TO 1982 DR. GARCIA FROM 1980 TO 1982 DR. GARCIA PRESCRIBED HALDOL AND NAVANE PRESCRIBED HALDOL AND NAVANE ALLEGED TO HAVE CAUSED TARDIVE ALLEGED TO HAVE CAUSED TARDIVE DYSKINESIA DYSKINESIA 1980 ICA $100K OCCURRENCE 1980 ICA $100K OCCURRENCE POLICY POLICY 1981 1981- -82 ICA $500K OCCURRENCE 82 ICA $500K OCCURRENCE POLICIES POLICIES
APIE v GARCIA APIE v GARCIA 1983 APIE $500K CLAIMS MADE 1983 APIE $500K CLAIMS MADE POLICY POLICY 1983 NOTICE OF CLAIM SENT 1983 NOTICE OF CLAIM SENT JULY 1985 SETTLEMENT DEMAND JULY 1985 SETTLEMENT DEMAND FOR $100K ICA LIMIT AND $500 FOR $100K ICA LIMIT AND $500 APIE; LATER INCREASED TO $1.1M APIE; LATER INCREASED TO $1.1M AND $1.6M AND $1.6M $2.2M JUDGMENT $2.2M JUDGMENT
APIE v GARCIA APIE v GARCIA “ “THE THE CONSECUTIVE CONSECUTIVE POLICIES, POLICIES, COVERING DISTINCT POLICY COVERING DISTINCT POLICY PERIODS, COULD NOT BE ‘ ‘STACKED STACKED’ ’ PERIODS, COULD NOT BE TO MULTIPLY COVERAGE FOR A TO MULTIPLY COVERAGE FOR A SINGLE CLAIM INVOLVING SINGLE CLAIM INVOLVING INDIVISIBLE INJURY . .” ” INDIVISIBLE INJURY
APIE v GARCIA APIE v GARCIA “ “IF A SINGLE OCCURRENCE TRIGGERS IF A SINGLE OCCURRENCE TRIGGERS MORE THAN ONE POLICY, COVERING COVERING MORE THAN ONE POLICY, DIFFERENT POLICY PERIODS, , THEN THEN DIFFERENT POLICY PERIODS DIFFERENT LIMITS MAY HAVE APPLIED AT DIFFERENT LIMITS MAY HAVE APPLIED AT DIFFERENT TIMES. IN SUCH A CASE, THE DIFFERENT TIMES. IN SUCH A CASE, THE INSURED’ ’S INDEMNITY LIMIT SHOULD BE S INDEMNITY LIMIT SHOULD BE INSURED WHATEVER LIMIT APPLIED AT THE WHATEVER LIMIT APPLIED AT THE SINGLE POINT IN TIME DURING THE IN TIME DURING THE SINGLE POINT COVERAGE PERIODS OF THE TRIGGERED COVERAGE PERIODS OF THE TRIGGERED POLICIES WHEN THE INSURED’ ’S LIMIT S LIMIT POLICIES WHEN THE INSURED WAS HIGHEST… … WAS HIGHEST
APIE v GARCIA APIE v GARCIA … …THE INSURED IS GENERALLY IN THE INSURED IS GENERALLY IN THE BEST POSITION TO IDENTIFY THE BEST POSITION TO IDENTIFY THE POLICY OR POLICIES THAT THE POLICY OR POLICIES THAT WOULD MAXIMIZE COVERAGE. WOULD MAXIMIZE COVERAGE. ONCE THE APPLICABLE LIMIT IS ONCE THE APPLICABLE LIMIT IS IDENTIFIED, ALL THE INSURERS IDENTIFIED, ALL THE INSURERS WHOSE POLICIES POLICIES ARE TRIGGERED ARE TRIGGERED WHOSE MUST ALLOCATE FUNDING OF THE MUST ALLOCATE FUNDING OF THE INDEMNITY LIMIT AMONG INDEMNITY LIMIT AMONG THEMSELVES ACCORDING TO THEIR THEMSELVES ACCORDING TO THEIR SUBROGATION RIGHTS.” ” SUBROGATION RIGHTS.
DON’ ’S BUILDING S BUILDING DON 2008 TEXAS SUPREME COURT 2008 TEXAS SUPREME COURT GL COVERAGE WITH ONEBEACON GL COVERAGE WITH ONEBEACON FROM 1993- -96 96 FROM 1993 SUED FOR DAMAGE FROM EIFS SUED FOR DAMAGE FROM EIFS INSTALLATION ON HOMES INSTALLATION ON HOMES SUITS CLAIMED PROPERTY DAMAGE SUITS CLAIMED PROPERTY DAMAGE BEGAN “ “WITHIN SIX MONTHS TO WITHIN SIX MONTHS TO BEGAN ONE YEAR AFTER APPLICATION” ” ONE YEAR AFTER APPLICATION
DON’ ’S BUILDING S BUILDING DON ALL HOMES INVOLVED ALL HOMES INVOLVED INSTALLATION DURING ONEBEACON INSTALLATION DURING ONEBEACON POLICIES POLICIES ISSUE BEFORE THE COURT WAS ISSUE BEFORE THE COURT WAS WHAT TRIGGER THEORY TO WHAT TRIGGER THEORY TO ADOPT— —MANIFESTATION OR MANIFESTATION OR ADOPT ACTUAL INJURY ACTUAL INJURY COURT ADOPTED ACTUAL INJURY COURT ADOPTED ACTUAL INJURY TRIGGER TRIGGER
DON’ ’S BUILDING S BUILDING DON COURT LEFT OPEN THE ISSUE OF COURT LEFT OPEN THE ISSUE OF IMPACT OF CONTINUING INJURY IMPACT OF CONTINUING INJURY FOOTNOTE 45 FOOTNOTE 45 “ “BECAUSE AS TO ALL BECAUSE AS TO ALL OF THE UNDERLYING CLAIMS, THE OF THE UNDERLYING CLAIMS, THE EIFS WAS INSTALLED DURING THE EIFS WAS INSTALLED DURING THE THREE- -YEAR POLICY PERIOD OF THE YEAR POLICY PERIOD OF THE THREE ONEBEACON POLICIES, SEE SUPRA SEE SUPRA ONEBEACON POLICIES, NOTE 2 AND ACCOMPANYING TEST, NOTE 2 AND ACCOMPANYING TEST,
DON’ ’S BUILDING S BUILDING DON THIS CASE DOES NOT REQUIRE AN THIS CASE DOES NOT REQUIRE AN ANALYSIS OF COVERAGE ANALYSIS OF COVERAGE QUESTIONS IN CIRCUMSTANCES QUESTIONS IN CIRCUMSTANCES WHERE PROPERTY DAMAGE WHERE PROPERTY DAMAGE OCCURRED IN THE COURSE OF A OCCURRED IN THE COURSE OF A CONTINUING PROCESS, BUT BEGAN CONTINUING PROCESS, BUT BEGAN BEFORE THE INCEPTION OF THE BEFORE THE INCEPTION OF THE TERM OF THE POLICY IN ISSUE. TERM OF THE POLICY IN ISSUE.
DON’ ’S BUILDING S BUILDING DON NOR DO WE UNDERSTAND THE FIFTH NOR DO WE UNDERSTAND THE FIFTH CIRCUIT TO HAVE ASKED HOW CIRCUIT TO HAVE ASKED HOW ONEBEACON’ ’S INDEMNITY OBLIGATIONS S INDEMNITY OBLIGATIONS ONEBEACON ARE DETERMINED IF THE FACTS ARE DETERMINED IF THE FACTS ULTIMATELY SHOW THAT THE PROPERTY ULTIMATELY SHOW THAT THE PROPERTY DAMAGE BEGAN DURING THE DAMAGE BEGAN DURING THE ONEBEACON POLICY PERIOD BUT ONEBEACON POLICY PERIOD BUT CONTINUED BEYOND THAT PERIOD, CONTINUED BEYOND THAT PERIOD, PERHAPS INTO PERIODS COVERED BY PERHAPS INTO PERIODS COVERED BY OTHER POLICIES. OTHER POLICIES.
DON’ ’S BUILDING S BUILDING DON WE EXPRESS NO OPINION ON THESE WE EXPRESS NO OPINION ON THESE QUESTIONS, BUT SEE BUT SEE AM. AM. QUESTIONS, PHYSICIANS’ ’S INS. EXCH. V S INS. EXCH. V PHYSICIANS GARCIA, 876 S.W.2D 842, 855 (TEX. GARCIA, 876 S.W.2D 842, 855 (TEX. 1994) 1994)
DON’ ’S BUILDING S BUILDING DON ( ( “ “IF A SINGLE OCCURRENCE IF A SINGLE OCCURRENCE TRIGGERS MORE THAN ONE POLICY TRIGGERS MORE THAN ONE POLICY . . . ALL INSURERS WHOSE POLICIES . . . ALL INSURERS WHOSE POLICIES ARE TRIGGERED MUST ALLOCATE ARE TRIGGERED MUST ALLOCATE FUNDING OF THE INDEMNITY LIMIT FUNDING OF THE INDEMNITY LIMIT AMONG THEMSELVES ACCORDING AMONG THEMSELVES ACCORDING TO THEIR SUBROGATION RIGHTS.” ”) ) TO THEIR SUBROGATION RIGHTS.
LENNAR v MARKEL LENNAR v MARKEL HOMEOWNERS HOMEOWNERS’ ’ SUITS BASED ON SUITS BASED ON APPLICATION OF EIFS APPLICATION OF EIFS ALL INSURERS DENIED COVERAGE ALL INSURERS DENIED COVERAGE LENNAR REPLACED EIFS ON SOME LENNAR REPLACED EIFS ON SOME 465 HOMES THAT SUSTAINED 465 HOMES THAT SUSTAINED WATER DAMAGE WATER DAMAGE ALL INSURERS SETTLED EXCEPT ALL INSURERS SETTLED EXCEPT MARKEL MARKEL
LENNAR v MARKEL LENNAR v MARKEL JURY FOUND FOR LENNAR JURY FOUND FOR LENNAR $2,965,114.16 ACTUAL DAMAGES $2,965,114.16 ACTUAL DAMAGES $425,000.00 CREDIT FOR SETTLEMENT $425,000.00 CREDIT FOR SETTLEMENT WITH OTHER INSURERS WITH OTHER INSURERS $2,421,825.89 ATTORNEYS FEES $2,421,825.89 ATTORNEYS FEES $1,227,476.03 PREJUDGMENT INTEREST $1,227,476.03 PREJUDGMENT INTEREST
LENNAR v MARKEL LENNAR v MARKEL COURT OF APPEALS REVERSED ON COURT OF APPEALS REVERSED ON TWO GROUNDS: TWO GROUNDS: • NO CONSENT TO SETTLE BY MARKEL NO CONSENT TO SETTLE BY MARKEL • • NO SEGREGATION OF DAMAGES TO NO SEGREGATION OF DAMAGES TO • SHOW COSTS OF REPAIR AS OPPOSED SHOW COSTS OF REPAIR AS OPPOSED TO COSTS TO REMOVE EIFS TO SEE IF TO COSTS TO REMOVE EIFS TO SEE IF PROPERTY DAMAGE EXISTED PROPERTY DAMAGE EXISTED
LENNAR v MARKEL LENNAR v MARKEL ISSUES BEFORE SUPREME COURT: ISSUES BEFORE SUPREME COURT: • 1) NOT HAVING CONSENTED TO THE 1) NOT HAVING CONSENTED TO THE • HOMEBUILDER’ ’S REMEDIATION S REMEDIATION HOMEBUILDER PROGRAM, IS THE INSURER PROGRAM, IS THE INSURER NEVERTHELESS RESPONSIBLE FOR THE NEVERTHELESS RESPONSIBLE FOR THE COSTS IF IT SUFFERED NO PREJUDICE COSTS IF IT SUFFERED NO PREJUDICE AS A RESULT? AS A RESULT?
LENNAR v MARKEL LENNAR v MARKEL • 2) IS THE INSURER RESPONSIBLE FOR 2) IS THE INSURER RESPONSIBLE FOR • (i) COSTS INCURRED TO DETERMINE (i) COSTS INCURRED TO DETERMINE PROPERTY DAMAGE AS WELL AS TO PROPERTY DAMAGE AS WELL AS TO REPAIR IT, AND (ii) COSTS TO REPAIR IT, AND (ii) COSTS TO REMEDIATE DAMAGE THAT BEGAN REMEDIATE DAMAGE THAT BEGAN BEFORE AND CONTINUED AFTER THE BEFORE AND CONTINUED AFTER THE POLICY PERIOD? POLICY PERIOD?
LENNAR v MARKEL LENNAR v MARKEL CONSENT TO SETTLE CONSENT TO SETTLE- - BREACH MUST BE MATERIAL BREACH MUST BE MATERIAL MATERIALITY MUST SHOW MATERIALITY MUST SHOW PREJUDICE PREJUDICE JURY FOUND THAT MARKEL NOT JURY FOUND THAT MARKEL NOT PREJUDICED BY SETTLEMENTS PREJUDICED BY SETTLEMENTS CONCURRENCE BY BOYD CONCURRENCE BY BOYD QUESTION QUESTION- -WAS REAL PREJUDICE WAS REAL PREJUDICE SETTLEMENT WITH OTHER INSURER SETTLEMENT WITH OTHER INSURER
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