(Houston) - On January 31, 2001, a jury added $995,000.00 in lost business
income and attorneys' fees to District Judge Dale Wainwright earlier
award of 2.1 million to the owners of the Spring Creek Village Apartments
in Baytown as compensation for tornado damages. Judge Wainwright award
upheld a January 1999 independent umpires ruling.
The awards brings to a close the first round of a disputes to the amount
of loss caused by a February 1998 tornado. Spring Creeks original insurance
policy with Reliance Insurance Company of Illinois, stipulated that in
an event of the disagreement as to the amount of loss, they would enter
into the appraisal process. The appraisal provision in the policy in the
policy stated, the umpires decision would be binding as long as one of
the two parties agreed to the ruling.
The tornado damage was significant and Spring Creek's were not unreasonable.
The umpire realized this and found damages to be 2.1 million," says
Grant Cook, Partner, Thompson Knight Brown Parker & Leahy LLP, who
represented Spring Creek at trial. Reliance still did not want to honor
it's obligations. The best they could do was fight back with wild
Reliance and its excess carrier General Star Indemnity Co. refused the
umpire judgment, arguing that the award was inflated for several reasons,
including Spring Creek's failure to mitigate its damages in the months
following the storm. The refusal sent the claim before Judge Wainwright,
where La Salle National Bank joined Spring Creek in the suit. La Salle,
which holds Spring Creeks property mortgage , was represented at trail
by Brian Keller of Hick's Thomas and Lilienstern LLP.
"The judge disallowed all the arguments for not abiding by the umpires
ruling except one, the mitigating damages, which he allowed to be heard
by the jury," says Keller. "General Star decided to pursue the
failure to mitigate, but after four weeks , that was thrown out as well
for having no merit. In the end, all the jury had left before them was
the lost business income and attorney fees. Reliance and General got nothing
out of pursing this and lost more in the process more in the process than
they would if they had just accepted the umpire's award.
The judgment has not yet been entered," adds Keller. "But we
expect it will be for an amount in excess of $4 million including penalties
and prejudgment interest."
The second round of this dispute will be resolved in an up-coming trial
in which Spring Creek is expected to seek treble damages for bad faith
and statutory violations by both insurance companies.