Galveston condo owners sue insurer over $5M in fire proceeds

GALVESTON - Alleging it was paid only half of its stated limits on its insurance policy in following a huge fire last year, a local condominium owners' association has filed suit against its insurer, recent court documents say.

The Maravilla Homeowners Association accuses Westchester Surplus Lines Insurance Co. of "failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement" after the plaintiff filed a claim for the four-alarm fire within the Maravilla Resort Condominiums on Galveston's West End on June 3, 2009.

The suit was filed March 10 in Galveston County District Court.

The homeowners association asserts the stated limits were $10 million, but Westchester tendered only $5 million. The defendant refused to pay any additional coverage, the suit states.

"Westchester has refused to tender the policy limits..., despite the claim being properly filed, and despite the loss being greatly in excess of the policy limits," the original petition alleges.

"Westchester has failed to articulate any viable reason why it has not tendered policy limits."

The Southeast Texas Record reported in October that the homeowners association filed suit against two businesses over alleged misconduct and overall negligence in relation to the blaze, which left more than 30 homeless.

Ted W. Allen & Associates Inc. is named a co-defendant in the case. It reportedly failed to make sure the property was adequately insured.

The Sheena Law Firm in Houston is representing the homeowners association, and Galveston County 212th District Court Judge Susan Criss is presiding over the case.

Case No. 10-cv-0700