© 2015 The Texas Lawbook.
By Natalie Posgate
(May 5) – When a commercial insurer faces litigation, the last desired option is usually to fight its case in front of jurors – who often have a negative perception of insurance companies. But recently, a group of Houston attorneys proved otherwise to their Texas insurer clients.
On April 21, attorneys from Winstead and Oldenettel & McCabe secured a take-nothing defense verdict for Landmark American Insurance Company and King-Phillips Insurance Agency.
The plaintiff, Houston-based Westview Drive Investments, claimed Landmark and King-Phillips had acted in bad faith and misrepresented it had full coverage when the leasing office of an apartment complex that WDI owned burned down to the ground in November 2008.
Landmark and King-Phillips only provided mortagee coverage, which covered the costs to rebuild the leasing office, so WDI sued and argued that the defendants owed approximately $5 million in actual and punitive damages after refusing to also cover the costs to replace various items lost in the fire, such as routine office equipment, maintenance equipment to make repairs in units and valuable paperwork on current and previous tenants.
“The crux of the matter was about what was represented to the plaintiff before the fire,” said Bruce Wilkin, a shareholder in Winstead’s Houston office and one of Landmark’s attorneys at trial. “We paid [WDI] everything [it] was owed, and the jury agreed that [it] wasn’t owed anything more.”
Jack Yetiv, a WDI executive and an attorney on the trial team, declined to comment on the case. WDI’s lead outside counsel, Houston attorney Michael Yanochik of Murr Yanochik, could not be reached for comment.
Rick Oldenettel and Kevin Long of the Houston firm, Oldenettel & McCabe, represented King-Phillips at trial.
Wilkin, who tried WDI’s case with fellow Winstead shareholder Steve Wedemeyer, said the main challenge at trial was disassociating commercial insurance companies with the common negative perception people hold about all insurance companies by explaining to the jury that the dispute was very specialized and unlike the everyday issues that people face with their health insurers or auto insurers.
“From a client’s perspective, they’re worried that if that negative view exists, it will hurt their chances at trial,” he said. “What this case shows is Texas juries will give you a fair shake. If you are right on the facts, you can win with a Texas jury.”
Beyond fighting insurance companies’ bad rap with the general public, Wilkin said another challenge at trial was presenting the complexities of the case to the jury in a digestible manner. He said one way the team achieved this obstacle was the decision to not call any of its own witnesses after WDI rested its case.
“We decided we had proved enough through cross-examination,” he said.
WDI bought the apartment property, called Westview Forest Apartments, and a few other properties in September 2008 through a foreclosure sale after the previous owner entered the properties into bankruptcy, according to court documents.
Wilkin said WDI reached out to the local retail insurance agent, King-Phillips, to transfer the insurance policy of the properties from the previous owner’s name to go under WDI’s name. King-Phillips then connected with Landmark, the surplus lines broker, or the entity that actually provided the policy.
Three weeks after the insurance policy was squared away and WDI paid its premiums, the Westview Forest Apartments leasing office burned down, “resulting in a total loss of the building and all of its contents,” WDI’s second amended petition says.
Two months later, WDI filed its insurance claim. Wilkin said Landmark paid $330,000 to cover the costs of rebuilding the leasing office, but refused to pay other claims WDI had requested, including “the contents of the leasing office” and “rents lost due to ‘business interruption’ caused by the loss of the leasing office and all its contents,” the petition says.
WDI claimed the insurance policy it got from Landmark and King-Phillips gave WDI “a security interest in all real and personal property at the WF Apts, and included a security interest in the active and dead files in the leasing office as well as in the rents relating to the WF Apt,” according to the petition.
After the two-week trial, the Harris County jury disagreed with WDI and awarded it nothing in damages. The jury deliberated for a half-day before returning the verdict, Wilkin said.
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