American Int’l Specialty Lines Ins. Co. v. Rentech Steel LLC

American Int’l Specialty Lines Ins. Co. v. Rentech Steel LLC, 620 F.3d 558 (5th Cir. 2010)

This case was an insurance coverage case posing a question of first impression under Texas law. The case arose out of a catastrophic industrial accident near Abilene, Texas. A gravely injured employee secured a jury verdict of more than $10 million in a trial handled by Beck Redden partner Curt Webb and another respected trial lawyer. That judgment was upheld on appeal by the Eastland Court of Appeals, in an appeal handled by Beck Redden partner Russell Post with the aid of colleague Erin Huber.  Rentech Steel, L.L.C. v. Teel, 299 S.W.3d 155 (Tex. App.—Eastland 2009, pet. dism’d).

Meanwhile, the insurer filed a declaratory judgment action in federal district court, arguing that a standard-form exclusion for obligations arising under worker’s compensation law excluded coverage for “non-subscriber” negligence claims against Texas employers who elect not to subscribe to the Texas worker’s compensation system. The federal district court rejected that argument based on the arguments of Beck Redden partner David Jones. The insurer appealed. The question had never been decided by the Texas Supreme Court, nor had it been addressed by the Fifth Circuit.  In this decision, the Fifth Circuit held that non-subscriber negligence claims are not obligations under worker’s compensation laws, and thus are not excluded from coverage by the worker’s compensation exclusion. Beck Redden partner Russell Post handled the appeal with the assistance of partners David Gunn and David Jones.