United States District Court, S.D. Texas, Houston Division
FINDINGS OF FACT & CONCLUSIONS
P. ELLISON, UNITED STATES DISTRICT JUDGE
Court submits the following Findings of Fact and Conclusions
of Law pursuant to Rule 52(a)(1) of the Federal Rules of
case concerns a primary insurer's duty to accept
settlement offers within its insurance layer. Specifically,
this case is brought by a secondary insurer who contends that
the primary insurer should have accepted a settlement offer
within the limits of the primary insurer's coverage.
American Guarantee and Liability Insurance company
("AGLIC," also referred to as "Zurich")
filed suit against Defendant ACE American Insurance Company
("ACE," also referred to as "Chubb") on
February 9, 2018, seeking relief under Texas state law. (Doc.
Court ruled on dispositive motions on May 23, 2019. The Court
denied ACE's Partial Motion for Summary Judgment (Doc.
No. 24) and granted AGLIC's Partial Motions for Summary
Judgment (Doc. Nos. 22, 46). The Court decided that all three
settlement offers at issue in this case were unconditional,
within ACE's policy limits, and included offers for full
release. The Court also found that AGLIC did not have an
obligation to mitigate damages. After the Court ruled on the
dispositive motions, the parties settled AGLIC's breach
of contract claims.
June 17, 2019, this Court commenced a bench trial on
AGLIC's state insurance law claims under Stowers
Furniture Co. v. American Indent. Co., 15 S.W.2d 544
(Tex. Comm'n App. 1929). Over the course of the five-day
trial, the Court received exhibits and heard sworn testimony.
Having considered the exhibits, testimony, and oral arguments
presented during the trial, post-trial filings, and having
considered the applicable law, the Court sets forth the
following Findings of Fact and Conclusions of Law.
FINDINGS OF FACT
AGLIC and ACE both insured The Brickman Group Ltd., LLC
("Brickman"), a landscaping company. Brickman's
insurance included a $500, 000 deductible/self-insured
retention ("SIR"), a $2, 000, 000 primary business
auto policy issued by ACE, a $10, 000, 000 excess policy
issued by AGLIC to immediately follow the ACE policy, and a
$40, 000, 000 excess policy issued by Great American
Insurance Company ("Great American") to follow the
AGLIC policy. (Tr. 987, 992; Skogstrom Depo).
Friday, May 16, 2014, Mark Braswell ("Braswell")
hit the back of a Brickman landscaping truck while riding his
bicycle and sustained fatal head injuries. The accident took
place on a sunny afternoon in the 18400 block of North
Bridgeland Lake Parkway in Cypress, Texas. (Pl Exh. 32).
Braswell's immediate survivors include his mother Sandra
Braswell, his wife of twenty years Michelle Braswell, his
13-year-old son Matthew Braswell, and his 9-year-old daughter
Mary Braswell. (Pl Exh. 49).
Braswell's survivors filed suit against Brickman and the
driver of the Brickman truck, Guillermo Bermea, in Cause No.
2015-38679, Michelle Lynn Braswell, et. Al. v. The
Brickman Group, Ltd., LLC in the 127th Judicial District
Court of Harris County, Texas (the "Underlying
Lawsuit"). (Pl Exh. 36).
Richard Mithoff represented the plaintiffs in the Underlying
Lawsuit. (Tr. 429; Mithoff Live). Andrew Leibowitz and Bo
Berry of the Berry Firm in Dallas represented Brickman and
Bermea in the investigation and lawsuit. (Tr. 200; Leibowitz
January 2016, Gabriel Adamo ("Adamo") took over
responsibility for the file on behalf of ACE. (Tr. 98; Adamo
Depo). Adamo's immediate supervisor was Robert Albin
("Albin"), an ACE Assistant Vice-President. Albin
was supervised by Russell Smith ("Smith"), an ACE
Vice-President. (Tr. 49; Adamo Depo).
AGLIC received notice of the accident and Underlying Lawsuit
in January 2016. Terese Kerrigan ("Kerrigan")
assumed responsibility for the file on behalf of AGLIC. (Tr.
402, 411; Kerrigan Live).
When Kerrigan and Adamo became involved, Brickman's
third-party administrator, ESIS, had primary responsibility
for adjustment of the claim. The ESIS representative working
on the claim was Cheryl Nowak ("Nowak"). (Tr. 180;
Nowak Depo). Denise Skogstrom ("Skogstrom") was
Brickman's Claim Manager.
Assessments of Liability and Damages
Nowak requested that defense counsel prepare a pre-trial
report to help the carriers with their evaluation and prepare
for mediation. (Tr. 189-192; Nowak Depo). She asked that this
include a verdict search of related cases in the venue to
help determine the anticipated verdict range. (Tr. 190-191;
July 2016, Brickman tendered its remaining SIR to ACE through
its third-party administrator, ESIS. At that point, ACE took
over handling Brickman and Bermea's defense and
settlement negotiations. (Tr. 277-278; Kerrigan Live).
defense counsel's view, they had a very strong liability
case. (Tr. 922; Berry Depo). The defense theory was that
Braswell was responsible for the accident because he was not
paying attention when he was cycling. (Tr. 154-155; Adamo
Depo). In support of this theory, the defense had evidence
that Braswell's injury was to the top of his head, not to
his face. His helmet had also cracked down the middle. This
indicates that his head was down and, therefore, he was not
looking ahead of him for obstacles. (Tr. 301; Kerrigan Live).
The mark that Braswell's helmet made on the Brickman
truck also supported this theory. (Tr. 722; Kerrigan Live).
The physical evidence was very compelling for the defense.
(Tr. 862; Leibowitz Depo).
known weaknesses in the defense case included the fact that
the Brickman driver, Bermea, would testify that, although it
was legal, he thought it was dangerous to park in an active
lane of travel on that road. (Tr. 145-146; Adamo Depo). The
defense did not put on any evidence to explain why Brickman
allowed trucks to stop on the road. (Tr. 454; Mithoff Live).
Bermea was also inconsistent in his recollection of how long
he had stopped on the road; he initially said that the truck
was parked for four to five minutes, but in his deposition
said one to two minutes. The plaintiffs at trial argued that
the truck was stopped for less than twenty seconds. (Tr. 295;
Kerrigan Live). This dispute strengthened the plaintiffs'
"stop short theory" that Bermea suddenly stopped to
pull over to do some work and Braswell hit the truck because
he didn't have enough time to react. (Tr. 296; Kerrigan
Relatedly, there were no cones out around the Brickman truck
at the time of the accident, and there was dispute about
whether flashers were on. (Tr. 432; Mithoff Live; Tr. 940;
Berry Depo (stating that he had hard evidence that the
flashers were on)). Again, this supported the stop short
theory because the plaintiffs could argue that, had the truck
been stopped for a few minutes, the driver would have had
time to put cones out before the accident occurred. (Tr.
432-433; Mithoff Live).
Another known substantial weakness was the fact that Braswell
and his family were very sympathetic. (Tr. 186; Nowak Depo
(testifying that sympathetic damages were a known factor that
led to potential exposure from the early stages of ESIS's
claim investigation); (Tr. 202-203; Leibowitz Depo). At
trial, the plaintiffs presented testimony from two former
fire chiefs about Braswell's commitment to service, his
love of family, and his bravery. (Tr. 438; Mithoff Live). The
plaintiffs also presented testimony about the day of the
accident and the trauma to the family. (Tr. 441; Mithoff
Live; PI. Exh. 229). Braswell and his wife were firefighters
and triathletes. Braswell was a Captain with the City of
Houston Fire Department and Assistant Chief with the Cy-Fair
Volunteer Fire Department. (Pl Exh. 49). He had been
recognized as a hero for rescuing a double amputee from a
burning building. (Tr. 438; Mithoff Live).
Braswell's wife and children sought counseling after
Braswell's death. (Pl Exh. 109). His daughter Mary
started cutting herself in October 2015, attempted to
overdose, and spent a week in a mental health hospital in
2016. Mary blamed herself for her father's death because
he was en route to pick her up from school when the accident
occurred. After the accident, she left letters for her
deceased father at a tree near the accident site. (Tr. 441;
trial judge and plaintiffs' counsel were also known
weaknesses. Leibowitz testified that the trial judge
"tended to favor the plaintiff side and more than likely
close rulings would go against us." (Tr. 204; Leibowitz
Depo). He testified that Mithoff "would represent his
clients very well and do an excellent job, and be one of the
better trial attorneys in Harris County." (Tr. 206;
Leibowitz prepared a Case Summary and Evaluation on August
10, 2016 (the "August Memo"). In the August Memo,
Leibowitz estimated the range of potential verdict to be
between $6, 000, 000 and $8, 000, 000. He said that the
plaintiffs' expert put economic damages between $2.85
million and $3, 365 million, which was "certainly
reasonable." He stated:
Based upon all the foregoing, we believe this is a defensible
case on behalf of Brickman. We believe that it is likely that
the jury will find that Defendants were not negligent.
However, even if a jury were to find that Defendants were
negligent, we believe that a jury would find a significant
amount of contributory negligence on the part of Mr. Braswell
with a very good chance of Plaintiffs negligence exceeding
50%. As you know, if a jury were to determine that Plaintiffs
contributory negligence exceeded 50% he would be barred from
any recovery. At this time, we believe that if we tried this
case 10 times that we would get a finding of no negligence on
behalf of Defendants or a verdict where Plaintiffs negligence
exceeds 50%, 7 out of 10 times. If Plaintiff s negligence
does not exceed 50%, we believe that in most cases a jury
would find Plaintiffs negligence to be in the range of
concluded that the case had a settlement value in the range
of $l, 250, ...