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Texas Supreme Court grants motion to dismiss in dispute between insurance company, law firm

By Takesha Thomas | Feb 8, 2019

AUSTIN, Texas (Legal Newsline) – The Texas Supreme Court has conditionally granted relief to an insurance company and has directed a trial court to grant a motion to dismiss a law firm's claims in a legal malpractice case.

On Jan. 25, the Supreme Court of Texas granted conditional relief to Houston Specialty Insurance Co. (HSIC) after it petitioned for writ of mandamus arguing that a trial court erred when it denied a motion to dismiss in a case involving a law firm and a third-party suit claim filed by the South Central Coal Co.

"In this mandamus proceeding, relator Houston Specialty Insurance Co. (“HSIC”) argues that the trial court erred by denying its Rule 91a motion to dismiss a declaratory judgment action because the declarations sought are of nonliability for legal malpractice," the ruling states. "We agree and conditionally grant relief."

HSIC had argued that the suit had no "basis of law" under Texas Rule of Civil Procedure 91a. The court agreed, directing the trial court to "grant HSIC’s Rule 91a motion to dismiss (law firm) Thompson Coe’s claims."

The court ruled that "each of Thompson Coe’s requested declarations are aimed at establishing a defense to a potential legal malpractice claim by HSIC. Under Abor (v. Black), they are legally invalid, have 'no basis in law,' and should have been dismissed."

According to the ruling, HSIC insured South Central Coal Co. allegedly mined coal in Oklahoma without permission or authorization from the property owners (identified as the Carters in the ruling) and then sold it for profit. 

HSIC alleges on the advice of legal firm Thompson, Coe, Cousins, & Irons LLP, it denied the coal company’s request for defense and denied coverage under the policy, the ruling states. South Central Coal Co. then filed a third-party claim against HSIC alleging breach of contract. South Central Coal Co. was granted a motion for partial summary judgment by the trial court. 

In the latest appeal, the Supreme Court found that HSIC established that the trial court abused its discretion by denying its motion to dismiss under the state's Rule of Civil Procedure and that HSIC has no adequate remedy by appeal. 

According to the ruling, HSIC alleged Thompson Coe committed legal malpractice during its representation in the Carter lawsuit. HSIC demanded that Thompson Coe pay more than $2.8 million, roughly the amount of the insurance settlement, to avoid litigation.

In response, Thompson Coe filed suit in Harris County district court. 

"The sole cause of action pleaded by Thompson Coe is a request for declaratory relief under the Uniform Declaratory Judgments Act," the ruling states.

The Carter lawsuit was settled between the Carters and South Central Coal Co. and with a settlement between HSIC and South Central Coal Co.

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