X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:In December 1993, Texas Contractors Surety & Casualty Agency signed an agreement to issue surety, performance and bid bonds on behalf of Dallas Fire Insurance Co. Dallas was to pay a straight commission plus a contingency profit commission, based on premiums collected offset by losses and expenses. Dallas Fire considered only direct expenses when calculating the offset in 1994 and 1995, but in 1996 it also used its indirect expenses. Furthermore, Dallas Fire recalculated its 1994 and 1995 figures and demanded that TCSCA reimburse it. TCSCA sued on a breach-of-contract basis and under Insurance Code Art. 21.21, 16(a) for deceptive acts. The jury found for Dallas Fire on the breach-of-contract claim but found for TCSCA on the Art. 21.21 claim. Dallas Fire appealed the latter ruling, but the court of appeals affirmed the judgment. Here, Dallas Fire argues that TCSCA has no Art. 21.21 claim because this court’s decision in Great American Insurance Co. v. North Austin Utility District No. 1, 908 S.W.2d 415 (Tex. 1995), excludes suretyship from “the business of insurance” under that article. HOLDING:Reversed and rendered. The court points out that the term “business of insurance” is defined differently in different parts of the Insurance Code. The court further points out its comments in Great American that suretyship business predates the insurance business “by thousands of years” and has different characteristics. “Absent a clear legislative directive, we conclude that suretyship, as historically understood in the insurance and suretyship fields, does not constitute the business of insurance under article 21.21,” the court held in Great American. The court finds that the Great American holding leaves “no room” for applying Art. 21.21 to parts of the surety business. “By limiting the scope of article 21.21 to”the business of insurance,’ the Legislature intended it to apply to a species of economic enterprise, not to particular contracts on a piecemeal basis.” OPINION:Per curiam.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.