Traub Lieberman Straus & Shrewsberry LLP congratulates Mark F. Wolfe, James M. Eastham and Lana J. Zaretsky on their recent victory on motion to dismiss in the civil action captioned Nations Construction Management, Inc. v. Max Specialty Insurance Co., in the United States District Court for the Southern District of Texas, case number 10 CV 1796.
July 28, 2010

Max Specialty Insurance Co. (“Max Specialty”) issued a policy to its named insured, Mansions at Lake Moses. Mansions at Lake Moses is a housing complex for senior citizens in Texas City, Texas. Nations Construction Management, Inc. (“Nations”), was the construction manager hired by Mansions at Lake Moses. On September 12, 2008, Hurricane Ike struck the Galveston Bay area. Before the hurricane, Nations had begun construction on the project, including pouring a large slab of concrete. The storm damage required Nations to remove and re-pour the slab, resulting in an alleged $269,800.51 in damages.

Nations submitted a claim for those damages to Max Specialty under the Mansions at Lake Moses insurance policy. Max Specialty denied the claim. Nations filed a declaratory judgment action seeking coverage under the policy. Texas law applied to the coverage action. TLS&S filed a motion to dismiss arguing that Nations is not an insured party on the policy or a third-party beneficiary. Nations responded that the policy is ambiguous and susceptible to multiple reasonable constructions. In response, TLS&S argued that when read as a whole, as Texas law requires, the Max Specialty Policy is unmistakably unambiguous.

The Honorable Lee H. Rosenthal entered an Order granting Max Specialty’s Motion to Dismiss, with prejudice, finding that Nations did not qualify as an insured under the Max Specialty Policy. Judge Rosenthal also found that Nations did not qualify as a third party beneficiary. Correspondingly, the Judge found that amendment would be futile and dismissed the complaint filed by Nations, with prejudice.