City of College Station, Texas v. Star Ins. Co., No. 12-20746 (5th Cir. 2013)Annotate this Case
After SIC refused to defend or indemnify its insured, the City, in a lawsuit brought by WRI, the City settled the underlying litigation with WRI and sued SIC to recover defense costs, indemnification, and statutory penalty interest. The court concluded that SIC was liable for the City's defense costs where WRI's constitutional and tortious interference claims could produce liability that did not arise out of WRI's inverse condemnation action; the court remanded for the district court to allow the parties to introduce evidence regarding SIC's indemnity obligation where the pleadings did not raise a possibility of municipal liability independent of any just-compensation liability arising out of WRI's inverse condemnation action; the court remanded for the district court to assess the penalty interest under section 542.058 of the Texas Insurance Code; and, because it was not yet clear whether the City would prevail on its indemnity claim, or how much of the City's attorney's fees were attributable to litigating the indemnity claim, the court concluded that the district court could determine whether there was any fee award under section 38.001 of the Texas Civil Practice and Remedies Code. Accordingly, the court reversed and remanded for further proceedings.