Legal Updates

The Supreme Court of Texas dealt a heavy blow to insurers with two opinions that will subject insurance companies to steep damages for violating Texas’ Prompt Pay statute (TPPCA) when the insurer invokes an appraisal clause and does not pay within the 60-day window required by statute.  Additional damages including up to 18% annual interest on past-due amounts pursuant are recoverable by the insured when the insurance company pays in accordance with an appraisal but is found liable under the policy. In Barbara Technologies Corp. v. State Farm Lloyds, the Texas Supreme Court reversed several years of precedent, while Ortiz v. State Farm Lloyds illustrates how the rule is applied.

In a major victory for federal contractors, a Louisiana appeals court affirmed a trial court’s determination that the Sewerage and Water Board (S&WB) is solely liable for damages to several homeowners stemming from the Uptown drainage work performed by three contractors under the auspices of the U.S. Corps of Engineers.  Notably, the court found that there was “no evidence that any of the contractors breached their contracts, negligently or otherwise.”

It is black-letter law that architects owe a professional duty of care to third parties, but recovery for design errors is limited in the absence of a contract.   In a recent federal decision, the court reaffirmed that an architect can be liable to a subsequent owner of property for damage caused by defective design but not for the defective design itself. 

The Louisiana Supreme Court rendered a split decision that will have major ramifications for insureds in Louisiana. The court’s decision in Creekstone Juban I, L.L.C. v. XL Insurance America, Inc., (La. May 8, 2019), permits insurance policies to require any litigation be brought in another state, even if the policy was issued in Louisiana covering losses occurring in Louisiana.

A recent federal court decision has significant ramifications for the validity of oral change orders and the enforceability of no-damages-for-delay clauses in construction contracts. In Alonso v. Westcoast Corp. (5th Cir. April 8, 2019), the U.S. Fifth Circuit addressed several areas of Louisiana construction law that directly impact how contractors prepare their contracts and administer their projects.