News Summary
Mid-Continent Casualty Company has filed a lawsuit against Federal Insurance Company to recover $400,000 in defense costs linked to a dismissed defamation suit involving oil executive William Francis. The legal battle revolves around the complexities of insurance coverage, as federal insurance has claimed secondary liability responsibility. Mid-Continent argues they should not bear the financial burden alone after defending Francis against accusations made by a former associate. This ongoing case underscores the nuances of overlapping insurance policies amidst legal controversies.
Texas – Mid-Continent Casualty Company is demanding over $400,000 from Federal Insurance Company for reimbursement of defense costs incurred during a now-dismissed defamation lawsuit involving Texas oil executive William Francis. The complaint has been filed in the U.S. District Court for the Northern District of Texas as the two insurers dispute their responsibilities in this complex insurance coverage case.
The crux of the matter stems from a legal battle initiated by Adam Ferrari against William Francis, the CEO of Incline Energy Partners, L.P. Ferrari accused Francis of orchestrating a campaign to tarnish his reputation after Ferrari launched his own energy company. The allegations include Francis sending multiple false and defamatory communications, including emails and physical packages, meant to discredit Ferrari between 2021 and 2022. These communications were reportedly directed to various parties, including First International Bank and Trust, Dalmore Capital, 4 GRLZ Investments, and the Financial Industry Regulatory Authority.
Ferrari’s claims against Francis were serious. He accused the executive of making damaging statements that portrayed Ferrari as a felon and as someone who had fraudulently acted as the CEO of another company, thereby defrauding mineral owners and investors. He sought a range of damages, including actual, exemplary, consequential, and compensatory damages, as well as court costs and permanent injunctive relief. However, this underlying defamation lawsuit was later dismissed.
Despite the dismissal, the financial disagreement between Mid-Continent and Federal Insurance continues. Mid-Continent had defended Francis under a reservation of rights, incurring over $400,000 in defense costs after Federal Insurance declined to join in that defense. Mid-Continent is now pursuing a declaratory judgment that would clarify Federal Insurance’s obligation to defend Francis initially and subsequently reimburse Mid-Continent for the costs already absorbed in the legal battle.
The insurance policies from both companies add layers of complexity to this case. Mid-Continent provided a commercial general liability policy to Incline Niobrara Partners LP, which includes a coverage limit of $1 million per occurrence and $2 million in aggregate, stating it would defend the insured against lawsuits related to bodily injury or property damage. However, it also notes that it holds no obligation to defend against claims not covered by its policy. Notably, Incline Energy Partners, L.P. is not a named insured under the Mid-Continent policy.
On the other hand, Federal Insurance had issued a Directors and Officers and Entity liability policy specifically for Incline Energy Partners, L.P., which carries a limit of $10 million. Within this policy, there is an “other insurance” clause indicating that Federal Insurance would only contribute as excess to any valid insurance. Federal Insurance claims that its policy is secondary to the coverage provided by Mid-Continent, a view that Mid-Continent disputes vigorously in its complaint.
In seeking a resolution, Mid-Continent not only aims for a clear declaration of its rights under its liability policies but also seeks reimbursement of costs incurred and attorney’s fees. The ongoing case highlights the intricacies involved with overlapping insurance coverage and the financial implications that arise when multiple insurers partake in the defense of litigation.
While the defamation lawsuit itself has been resolved with a dismissal, the conflict over insurance coverage between Mid-Continent and Federal Insurance is far from settled. As legal proceedings continue, the outcome may set important precedents in the realm of insurance disputes involving complex liability issues.
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