Texas appeals court rules it lacks jurisdiction in attorneys' fee case involving Liberty construction companies

By Karen Kidd | Jun 21, 2018

HOUSTON – The case of an insurance company and a former Delaware insurance official against two Liberty construction companies and their owners is on its way back to Chambers County after a Texas appeals court ruled it had no jurisdiction to hear an appeal in the case.

"Before we address the merits of any case, we first must have jurisdiction," the 1st District Court of Appeals three-judge panel said in a short, four-page memorandum opinion issued June 14.

The appeals court vacated an earlier judgment by the 334th Judicial District Court in Chambers County and remanded the case for further proceedings. 

"The trial court must decide its subject matter jurisdiction before it or we can address the merits of the case," the appeals court said in its opinion, which was issued June 14.

Former Delaware Insurance Commissioner Karen Weldin Stewart  

Justice Jennifer Caughey wrote the opinion in which Justice Jane Bland and Justice Russell Lloyd concurred.

Appellants Ullico Casualty Co. and former Delaware Insurance Commissioner Karen Weldin Stewart filed suit against appellees Pelco Construction Co. and Pelco Commercial Construction and the company's owners Matthew G. and Kimberly A. Harris over an alleged breach in an indemnity agreement, according to the background portion of the appeals court's opinion. Ullico and Stewart sought indemnification for attorneys' fees in an earlier lawsuit.

Parties in the case filed cross-motions for summary judgment, which the Chambers County court granted in favor of Pelco and the Harrises. Ullico and Stewart maintained the trial court was wrong when it denied their own motion for summary judgment and their appeal soon followed.

"Appellees raise a colorable argument that Ullico Casualty Co. lacks standing to seek indemnity for a loss (attorneys' fees) incurred by Ullico Casualty Group - a distinct entity," the appeals court's opinion said. "This question implicates the trial court's and our jurisdiction."

Pelco and the Harrises didn't raise the jurisdictional challenge until their appeal, according to the opinion. 

"We cannot resolve the issue as a matter of law because there is at least one outstanding factual question: who paid the attorneys' fees underlying this dispute," the opinion said.

"Appellants argue that Ullico Casualty Co. paid the fees, and they rely on an affidavit that refers to Ullico Casualty Co. as the 'surety' and later states that the surety paid these fees. Conversely, Pelco emphasizes that Ullico Casualty Group was the defendant in the Chambers County lawsuit in which the fees at issue were incurred, and the invoices in the record are addressed to Ullico Casualty Group - and not Ullico Casualty Co.," the opinion states.

Stewart's name remains on the case as an appellant but she hasn't been Delaware Insurance Commissioner since she lost re-election to that seat in the Democratic primary in 2016 to Trinidad Navarro. Stewart was first elected to four-year term as Delaware Insurance Commissioner in 2008 when she defeated Republican candidate John F. Brady and Independent candidate Tom Savage. She won another four-year term in 2012.

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