Texas Supreme Court Affirms $6M Verdict for Gardere Client Lennar Corp.

Online, August 27, 2013 (Newswire.com) - The Supreme Court of Texas has ruled in favor of Gardere Wynne Sewell LLP client Lennar Corp. in a closely watched insurance dispute by affirming an earlier judgment of more than $6 million for Lennar, effectively ending 12 years of related litigation.

The case, Lennar Corp. v. Markel American Insurance Co., No. 11-0394, involved property damage to homes built with a synthetic stucco material known as EIFS that trapped water and caused rot and structural damage. Homebuilder Lennar stopped using the faulty product and undertook to repair the property damage on hundreds of homes that it had built.

Markel American Insurance Co., which had provided a $25 million commercial umbrella liability policy to Lennar, denied coverage for the repairs based on the argument that Lennar had improperly settled with the homeowners without Markel's consent and that Lennar had not allocated its continuous property damage among various policy periods. At trial, a jury found that Markel was not prejudiced by the settlements and awarded Lennar more than $6 million in damages. That verdict was reversed by Houston's 14th District Court of Appeals in April 2011.

In the opinion issued Aug. 23, the Texas Supreme Court reversed the Houston appeals court and reinstated the trial court verdict against Markel. Texas' highest Court held that an insured's failure to comply with a consent-to-settle provision in an insurance policy does not excuse the insurer's liability under the policy unless it was prejudiced by the settlement.

The Court also confirmed that it is the insurer's responsibility, not the insured's, to allocate repair costs among other insurers when a continuing property damage loss extends over several policy periods. The Court found that Lennar's "responsible efforts to correct defects in its home construction did not absolve Markel of responsibility for costs under its liability policy."

Lennar was represented at trial and before the Texas Supreme Court by Gardere Partners James Cooper and Stacy R. Obenhaus and former Gardere Lawyers John Slates and Samantha Trahan.

Gardere Wynne Sewell LLP, an Am Law 200 firm founded in 1909 and one of the Southwest's largest full-service law firms, has offices in Austin, Dallas, Houston and Mexico City. Gardere provides legal services to private and public companies and individuals in areas of corporate, private equity, litigation, energy, tax, real estate, financial services, government affairs, hospitality, intellectual property, labor and employment, and environmental.

For more information, contact Dorothy L. Seals at 214.999.4019 or [email protected].