Duty to Defend
Notice-Union Liability

Insurer must pay insured's defense costs despite late notice.
Ulico Cas. Co. v. Allied Pilots Ass'n.
No. 2-04-120 (Tex. App. Dec. 15, 2005)

    The Texas Court of Appeals, Second District, ruled an insurer owed defense costs to an insured under the terms of its policy even though the insured did not timely report its claim.

    A dispute arose over insurance coverage for defense costs under a claims-made policy. Ulico Casualty Co. contended it could not be liable for Allied Pilots Association's defense costs because waivers and estoppel could not create coverage for the Association's late-reported claim.

    Ulico also argued the trial court erred by vacating the jury's damages awarded and entering judgment for almost double the amount of the jury's award. The Association brought three cross-issues, all contending it was entitled to attorney's fees in its breach of contract suit against Ulico.

    The appeals court affirmed the trial court's judgment as to liability and damages. The court concluded waiver and estoppel applied in this instance and that the Association proved its damages as a matter of law.

    However, the appeals court remanded as to the Association's request for attorney's fees. The court held the Association was entitled to the attorney's fees under Texas Civil Practice and Remedies Code.

Strafford Texas Insurance Law & Litigation Alert
January 31, 2006