. .

Attorney(s) for Plaintiff:
Carl J. Kolb
Carl J. Kolb, P.C.
www.TexasLawyerMalpractice.com

$5,500,000 RECOVERY - DECEPTIVE TRADE PRACTICES - BREACH OF CONTRACT - FRAUD - DEFENDANT FAILS TO PROVIDE INSURANCE COVERAGE FOR CONSTRUCTION SUBCONTRACTOR IN SPITE OF PAYROLL CONTRIBUTIONS.

Bexar County, TX

In this action for fraud, deceptive trade practices, insurance code violations and breach of contract, the plaintiffs alleged that the defendant was responsible for purchasing and maintaining appropriate insurance coverage for its subcontractors. The defendant denied the allegations; arguing instead that an insurance requirement did not exist among the parties.

The plaintiff, Benny & Benny Construction Co., operated as a subcontractor for the defendant. Throughout the parties association, the defendant required the plaintiff to pay for insurance. Said payments were deducted by the defendant out of the plaintiff's weekly payroll. Thus, when the plaintiff was sued by one of the defendant's supervisors who had been injured on the job, the plaintiff expected that it was covered by an existing insurance policy and requested a copy of that policy from the defendant. Instead, the plaintiff was told that their existing insurance did not provide coverage in the event that the plaintiff's own act or omission created the liability at issue.

As a result, the plaintiff brought a declaratory judgment action to require the defendant to settle the supervisor's lawsuit. The plaintiff prevailed and the defendant did, in fact, settle the suit. Thereafter, in May, 2009, the Court certified a class on behalf of the subcontractors who found themselves similarly situated to the plaintiff having allegedly purchased insurance with payroll deductions taken by the defendant. Specifically, the plaintiffs alleged deceptive trade practices, breach of contract, fraud, and violations of the Texas Insurance Code.

Although the defense appealed the certification and denied that the insurance requirement was for the protection of the subcontractors, the suit ultimately settled with a $5,500,000 recovery for the plaintiff class.



Reference
Benny & Benny Construction Co., et al. vs. Highland Homes, Ltd.; Judge Barbara Nellermoe, 06-15-10.

Attorneys for plaintiff: Carl J. Kolb of Carl J. Kolb, P.C. in San Antonio, TX and Bill Ford and Lori Massey of Ford & Massey P.C. in San Antonio, TX. Attorney for defendant: John Weber of Fulbright & Jaworski in Austin, TX.



Commentary
This matter settled only two day before oral argument was to take place before the Fourth Court of Appeals. Evidence not only revealed that the defendant had become "self insured" using the payroll contributions of 1800 different subcontractors, but also that it had collected approximately $3,200,000 from the subcontractor class.



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