Maryland Casualty Co. v. Acceptance Indemnity Insurance
639 F.3d 701
5th Cir.2011Background
- Guidry, insured by two insurers (Maryland Casualty and Acceptance) with separate consecutive CGL policies, built a pool for Hugh McGee in Texas and later leaks and cracks developed.
- Maryland defended Guidry and settled McGee’s claims for 590,000, then pursued Maryland’s contribution and contractual subrogation rights against Acceptance in federal court.
- District court held Acceptance had a duty to defend Guidry and awarded Maryland a pro rata share of defense costs; subrogation went to trial and the jury ruled against Acceptance on pro rata recovery.
- Jury verdict found some property damage first occurred during one of Acceptance’s policy periods and rejected certain exclusions (earth movement and punitive damages) as to Coverage.
- Acceptance challenged the verdict post-trial, arguing Mid-Continent barred subrogation and objecting to jury instructions and sufficiency of the evidence.
- The Fifth Circuit affirmed, ruling Mid-Continent does not bar Maryland’s subrogation where Maryland’s defense was refused, and rejecting other post-trial challenges.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Mid-Continent bar subrogation here? | Maryland argues Mid-Continent does not preclude subrogation because they denied coverage and owe a right to contractual subrogation. | Acceptance argues Mid-Continent bars Maryland’s subrogation claim against a co-insurer who fully indemnified the insured. | Mid-Continent does not bar Maryland’s subrogation. |
| Did the district court abuse its discretion in defining occurrence? | Maryland supported including Lamar Homes language to define occurrence for jury clarity. | Acceptance sought a broader, non-conflicting exclusion language to prevent confusion. | No abuse; district court’s instruction was not an erroneous or misleading definition. |
| Is the evidence sufficient to support Questions Two and Four on plain-error review? | Maryland contends the jury’s findings are supported by evidence establishing timing of damage. | Acceptance argues the evidence is legally insufficient to support those findings. | Evidence supports Questions Two and Four; no plain error. |
Key Cases Cited
- Mid-Continent Life Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765 (Tex. 2007) (subrogation rights when insured fully indemnified may be limited)
- Lamar Homes, Inc. v. Mid-Cont. Casualty Co., 242 S.W.3d 1 (Tex. 2007) (occurrence/accidents definitions under CGL policies)
- Amerisure Ins. Co. v. Navigators Ins. Co., 611 F.3d 299 (5th Cir. 2010) (Mid-Continent not broad to bar contractual subrogation when denial of coverage)
- Trinity Universal Ins. Co. v. Employers Mut. Cas. Co., 592 F.3d 687 (5th Cir. 2010) (Mid-Continent does not govern defense-cost recovery among co-insurers)
- Wilshire Ins. Co. v. RJT Constr., LLC, 581 F.3d 222 (5th Cir. 2009) (focus on actual physical damage timing over negligent conduct)
- VRV Dev. L.P. v. Mid-Cont. Cas. Co., 630 F.3d 451 (5th Cir. 2011) (property damage timing defined by actual damage, not initial fault)
- Century Surety Co. v. Hardscape Construction Specialties, Inc., 578 F.3d 262 (5th Cir. 2009) (example of occurrence definition in policy language)
- Don’s Bldg. Supply, Inc. v. OneBeacon Ins. Co., 267 S.W.3d 20 (Tex. 2008) (clarifies timing of property damage under causation theory)
- Jowers v. Lincoln Elec. Co., 617 F.3d 346 (5th Cir. 2010) (instructional standards for jury charges and abuse of discretion)