In Coreslab Structures (Texas), Inc. v. Scottsdale Insurance Company, the plaintiff appealed after an insurer’s summary judgment motion was granted. His lawsuit had made claims for bad faith, breach of contract, and violations of the Prompt Payment of Claims Act. The case arose when a tower in Houston suffered water damage in two rain events. Two lawsuits were brought, and the claims for damages were more than $38 million. Claims were made by Memorial Hermann Hospital System, which owned the tower, against Coreslab Structures and its subcontractor. The lawsuits were consolidated.
Coreslab asked the subcontractor to defend it in connection with the lawsuits, demanding a defense as an additional insured under the subcontractor’s insurance policy. Scottsdale Insurance Company was the insurer that had issued the subcontractor’s commercial general liability policy. It notified Coreslab there was no additional insured coverage for Coreslab on the subcontractor’s policy.
Once Scottsdale refused to pay for Coreslab’s defense, Coreslab’s own insurer, Lexington, paid Coreslab’s defense attorney. Coreslab sued Scottsdale, claiming that it was an additional insured under the subcontractor’s policy. It asked the court for a declaratory judgment that Scottsdale owed it a duty to pay off the defense costs in the lawsuits, and it claimed statutory bad faith, breach of contract, and a Prompt Payment of Claims Act violation. The two lawsuits settled, and the trial court severed Coreslab’s claims so that they proceeded in a separate lawsuit.