Texas Ruling Clamps Down On Policyholders' Pretrial Pacts

Law360, Los Angeles (June 20, 2017, 7:25 PM EDT) -- After the Texas Supreme Court let an insurance company retry a coverage dispute because an insured's underlying construction defect loss didn't result from a "fully adversarial" trial, policyholders will think twice about striking pretrial deals designed to eliminate their financial stake in litigation, attorneys say.

In a unanimous opinion Friday, the Texas justices found that Great American Insurance Co. can fully relitigate issues weighing on its potential liability for an award entered against policyholder Terry Mitchell Builders Inc. in an underlying lawsuit filed by homeowners Glen and Marsha Hamel.

The justices found that the underlying judgment can't be enforced against Great...

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