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Fanning Harper Martinson Brandt & Kutchin, P.C. congratulates Thomas P. Brandt and Rebecca Raper on their recent, major appellate victory before the Fort Worth Court of Appeals in Doe v TASB et al, No. 2-08-266-CV. Tom and Rebecca successfully protected their clients from a $5 million judgment arising out of sexual abuse.
In a unanimous opinion issued on Friday, March 6, the Fort Worth Court of Appeals affirmed the judgment that Fanning Harper Martinson Brandt & Kutchin secured in favor of it client, Texas Association of School Boards Risk Management Fund (“TASB RMF”) in the trial court.
The litigation had a long history. Initially, claims were lodged against a school bus driver who was accused of molesting a child. TASB RMF has always disputed that coverage existed for the bus driver, but did provide a defense when the school district and another of its employees were sued. Though liability was disputed, the claims against the district and other employee were settled. As part of the settlement, the Plaintiff agreed to indemnify and hold TASB RMF harmless against future claims arising out of the molestation claims. Nevertheless, after the settlement, Plaintiff sued TASB RMF directly, seeking a declaration that TASB RMF was required to defend and indemnify the claims asserted against the bus driver. TASB RMF counterclaimed, asserting that (1) no coverage existed under its coverage document for claims against child molesters and (2) Plaintiff could never recover from TASB RMF because of the indemnity/hold harmless provisions contained in the earlier settlement agreement. TASB RMF was granted summary judgment on both issues.
Plaintiff appealed the summary judgment after taking a $5 million verdict against the bus driver. The Court of Appeals determined that the indemnity language in the settlement agreement effectively bound the Plaintiff and, accordingly, that TASB RMF could never be liable again to Plaintiff with regards to the molestation claims. Having so held, the court determined that the coverage issues were essentially moot and did not address same.
This case is important in that it illustrates that when a risk pool or insurer settles claims against a covered person/insured, the settlement agreement can be used to protect the risk pool/insurer from further liability involving non-settling purportedly covered persons/insureds.