Mess in Texas: Insurer Recoupment of Settlement Payments

The Texas Supreme Court unanimously has held that an insurer may recover from its own insured monies advanced by the insurer to settle an uncovered liability claim ' though the justices sharply divided on the rationale. The case, <i>Excess Underwriters at Lloyd's, London v. Frank's Casing Crew &amp; Rental Tools, Inc.</i>, No. 02-0730 (Tex. May 27, 2005), picks up the cudgels on this issue from the California Supreme Court's opinion in <i>Blue Ridge Ins. Co. v. Jacobsen</i>, 22 P.3d 313 (Cal. 2001) and seemingly abandons the prior decision in <i>Texas Ass'n of Counties County Gov't Risk Mgmt. Pool v. Matagorda County</i>, 52 S.W.3d 128 (Tex. 2000), which had cast substantial doubt on the viability of an insurer-recoupment claim, at the time seeming to bring Texas in line with Massachusetts on this issue. <i>See Med. Malpractice Joint Underwriting Ass'n of Massa-chusetts v. Goldberg</i>, 680 N.E.2d 1121 (Mass. 1997). <i>Frank's Casing</i> also parts company with the recent holding of the Illinois Supreme Court in <i>General Agents Insurance Company Of America, Inc. v. Midwest Sporting Goods Company</i>, 828 N.E.2d 1092 (Ill. March 24, 2005), which had rejected a carrier's claim for recoupment of defense costs, though on a basis that would bar recoupment of settlement or indemnity payments, too.

25 minute readOctober 06, 2005 at 10:43 AM

By

Marc S. Mayerson