Hurricane Ike pounds the Galveston Seawall in September 2008

GALVESTON – Whether the Texas Windstorm Insurance Association deserves to be exempt from the payment of attorneys' fees, penalties, interest and other expenses beyond actual damages from lawsuits is now in the hands of a state district judge.

Galveston County 212th District Court Judge Susan Criss will issue a ruling that approves or denies the association's request for sovereign immunity, a move that prohibits it from litigation without its consent.

Hundreds of coastal residents who sustained damage from Hurricane Ike last September have sued TWIA, claiming the insurer deceived policyholders.

Among them is Bakht Khattak of League City. His suit, which was filed at the beginning of the year, contains the association's motion for sovereign immunity.

According to court papers, TWIA is claiming it is a governmental entity and thus eligible for sovereign immunity.

TWIA wants the motion applied in all cases in which it is accused of acting in bad faith, but the defendant is not seeking complete dismissal.

"Immunity from suit prohibits suits against a government unit even if the government unit acknowledges liability on a claim; immunity from suit bars a remedy until the Legislature consents to suit," court papers state.

"Immunity from liability protects the governmental unit from judgments even after the government has consented to suit. Summary judgment is proper when there is immunity from liability."

The defendant also relies on its nearly 40-year history of working with the state.

"TWIA has been a governmental unit since 1999 through legislative enactments," the motion states. "When Texas Catastrophe Property Insurance Association (now known as TWIA) was first created in 1971, it was a primarily private association of insurers with a public mandate and some governmental attributes but retaining the right to distribute earnings to members."

"Over the decades TWIA morphed from a public-private partnership into an arm of the State under administrative control of the Commissioner of Insurance."

The plaintiff's counsel responded to the association's recent moves by arguing that TWIA is a private business entity that uses private funds instead of state money and that policyholders are not limited to policy benefits.

The plaintiff also argues that TWIA was not a state entity before the passage of House Bill 4409 this year.

"TWIA's motion argues that characteristics TWIA acquired as a result of HB 4409 render it a state agency with sovereign immunity," documents say. "However, to determine whether TWIA is entitled to sovereign immunity in this case, the court must examine TWIA's characteristics at the time the acts or omissions giving rise to the cause of action occurred."

They ultimately state that "the Legislature clearly intended TWIA to be subject to the same good-faith requirements and prohibitions against deceptive and unfair practices as other insurers, and nothing in the TWIA Act says otherwise."

If Judge Criss grants the association's request in Khattak's case, other Ike-related suits against the insurer could be affected.

Case No. 09CV0147

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