INSURER HIT WITH $34 MILLION JUDGMENT FOR FAILURE TO PAY MALPRACTICE CLAIM

Recently, a jury in Houston, Texas awarded $34 million in damages against OneBeacon Insurance Company after rejecting the insurer’s efforts to rescind the policy and finding “knowing” violations of the Texas Insurance Code.  In OneBeacon Ins. Co. v. T. Wade Welch & Associates, et al., No. H-11-3061, 2014 WL 5335362, (S.D. Tex. Oct. 17, 2014), DISH obtained a judgment of approximately $13 million against T. Wade Welch & Associates for malpractice related to the firm’s handling of a DISH lawsuit in Connecticut.  In the underlying lawsuit filed by a Russian media company against DISH, T. Wade Welch attorney Ross Wooten was sanctioned for failing to respond to discovery requests. The law firm then sued its malpractice insurer, OneBeacon, for its refusal to pay the claim and for unfair settlement practices under the Texas Insurance Code.

OneBeacon sought to rescind the policy on the basis that the firm failed to disclose the potential claim against it in its insurance application. The jury rejected this argument and entered a verdict of $8,000,000 in past and future lost profits, $5,000,000 in exemplary damages, and $7,500,000 in additional damages under the Texas Insurance Code for a finding that OneBeacon acted “knowingly.” DISH, which had intervened in the lawsuit, will also recover from OneBeacon the $13.5 million judgment that it secured against the law firm. OneBeacon Insurance Company was represented by Gordon Rees, LLP and Strasburger Price LLP.