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Head Industrial Coatings & Services Inc. v. Maryland Insurance Co.7/29/1998
Honorable T.C. Chadick, Justice, Supreme Court of Texas (Retired)
Sitting by Assignment
Opinion by Justice Grant
Maryland Insurance Company and Head Industrial Coatings & Services, Inc. once again appeal from the entry of judgment. The Supreme Court remanded this case with directions to the trial court to enter judgment in accordance with its opinion. See Maryland Ins. Co. v. Head Indus. Coatings & Servs., Inc., 906 S.W.2d 218 (Tex. App.-Texarkana 1995), rev'd, 938 S.W.2d 27 (Tex. 1996). The trial court entered a judgment with which both sides take issue. Accordingly, both sides have filed an appeal.
Issues presented by Maryland:
Maryland contends that the trial court erred by ordering Maryland to pay interest on the original $1.8 million judgment (under the Supplementary Payments clause) and by ordering an incorrect interest rate of 10% instead of 6%.
Maryland also contends that the trial court erred by failing to order Head to pay costs of appeal to Maryland.
Issues raised by Head Industrial Coatings & Services:
Head contends that the trial court properly determined what policy benefits were Head's actual damages, but erred by cutting off Maryland's prejudgment interest on its contractual liability on December 9, 1993, the date of the first judgment in the underlying case.
THE UNDERLYING CASES AND JUDGMENTS
Head Industrial Coatings & Services was hired by Texas Utilities to do construction work. Texas Utilities and Head had contractually agreed that if an employee were hurt during construction, Head would indemnify Texas Utilities for any claims against Texas Utilities. Head had also agreed to obtain insurance and attempted to obtain such insurance from Maryland Insurance Company. The insurance agent (Gans & Smith), however, failed to obtain the correct policy, and Maryland did not issue the policy sought. Head was uninsured.
An employee (Nelson) was hurt. Nelson filed suit in 1989 against Texas Utilities and Head. Texas Utilities demanded indemnification and a defense. At that point, Maryland quite understandably claimed that no coverage existed-since it was wholly unaware that any error had occurred. Nelson's lawsuit continued, and in May 1992, the trial court rendered judgment in favor of Nelson against Texas Utilities and in favor of Texas Utilities on its indemnity cross-claim against Head for $1,889,395.37.
In 1991, Head had filed suit against Maryland, its insurance agent, and his agency. That suit was dismissed without prejudice in August 1992 by two settlement agreements:
First Agreement
Head assigned its rights against Maryland to Nelson and guaranteed him a $500,000 recovery.
Nelson promised not to execute against Head's assets.
Second Agreement
The agency guaranteed $500,000 to Head.
Head agreed to hold the agency harmless as to any amount in excess of $500,000 and to indemnify the agency for any claims brought against it by Maryland.
Head then filed (or refiled) a lawsuit against Maryland. Maryland cross-claimed against its agent and agency. In April 1993, the agent was deposed, and it became clear to Maryland that Head's claim should have been honored. A trial followed, in which Maryland admitted that the claim was valid and represented to the court and jury that it was willing to pay policy benefits. The jury found that Maryland had engaged in various acts in violation of the Insurance Code, but had not acted knowingly. The jury awarded Head $1,800,000 as damages.
The Nutshell Version of the Vari
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