Texas Insurance Law Newsbrief - January 14, 2025

In Jab v. Hiscox Ins. Co. 2024 U.S. Dist. LEXIS 234898 (S.D. Tex. December 31, 2024), some past and then-present employees of SiteJab conspired together to collect confidential client information and used it to steal some of SiteJab’s clients.  SiteJab claims to have lost nearly $1,000,000 in revenue as a result.  It filed a claim with its Business Owner’s Insurance Company, Hiscox, for this loss, citing its Business Personal Property and Business Income coverages.  Hiscox denied the coverage, and SiteJab sued for breach of contract, Insurance Code violations, Deceptive Trade Practices, and breach of duty of good faith and fair dealing.  Hiscox successfully moved for summary judgment.

The Court agreed with Hiscox that these coverages relied on the policy’s requirement for “direct physical damage to or direct physical loss of business personal property,” and SiteJab was unable to show such physical damage in this case.  “Site Jab lost intellectual property.  It did not sustain direct physical damage to its covered property.”  The Employee Dishonesty Coverage Extension similarly required “direct physical damage,” and “business personal property does not include electronic data.”  Hiscox accordingly was granted its motion for summary judgement.

Read Less

In Wapiti Energy, LLC v. Clear Spring Prop. & Cas. Co. 2025 U.S. Dist. LEXIS 4002 (S.D. Tex. January 8, 2025), a crude oil barge owned by Wapiti Energy was caught in Hurricane Ida in Louisiana (in 2021) and as a result, slipped its mooring, was set adrift, and was washed aground in marshland.  Its hull remained intact, and it had no leak or imminent threat of leak.  Wapiti expended $926,840.32 to have the oil in the barge removed and the barge towed, then submitted a claim for reimbursement to Clear Spring under its Protection and Indemnity (P & I) policy, for “liability for costs or expenses of, or incidental to, the removal of the wreck of the vessel named herein when such removal is compulsory by law.”  Clear Spring denied coverage, and only issued $250,000 for the remaining value of the hull under the hull coverage policy.  Wapiti sued in federal court to enforce the P & I coverage.

Clear Spring had denied P & I coverage, stating that the removal of the wreck was not compulsory, and the District Court initially agreed and dismissed Wapiti’s suit.  Wapiti appealed and Fifth Circuit remanded the case  stating that a reasonable owner making a cost-benefit analysis would remove a wreck rather than face trespassing liability on another’s land.  The case being remanded back to the District Court, it reversed its prior holding on whether the hull’s removal was compulsory. 

Clear Spring argued that the barge was not a “wreck” under the policy because it floated free of the marshland and was towed back to its mooring without needing repairs.  The District Court disagreed and sided with Wapiti, the barge was a “wreck” under the policy as “a sunken vessel damaged so extremely that it is unnavigable,” regardless of its lack of need of repairs.  The Court accordingly granted Wapiti’s motion for summary judgment as to the P & I policy covering the wreck and allowed litigation to continue to ascertain the amount of damages. 

Read Less