• Upon Further Reflection: The Fifth Circuit Court of Appeals’ Re-Examination of Mid-Continent is Favorable to Policyholders
  • April 25, 2011 | Author: W. Bryan Tate
  • Law Firm: Haynes and Boone, LLP - Dallas Office
  • In recent years, few Texas Supreme Court decisions have generated as much commentary, questions, and concern as Mid-Continent Insurance Co. v. Liberty Mutual Insurance Co., 236 S.W.3d 765 (Tex. 2007). In Mid-Continent, the Court appeared to have severely curtailed, if not eliminated entirely, any contribution and/or subrogation rights an insurer may have against a jointly settling insurer which does not pay its fair share of a settlement against a common insured. In deciding Mid-Continent, the Court overlooked some of its prior decisions, as well as the practical considerations insurers face when settling claims against their insureds and the sometimes difficult task of bringing recalcitrant insurers to the table when negotiating settlement agreements. It was feared that the Court gave the most difficult and obstinate insurers free license via Mid-Continent to undervalue cases against their insureds without repercussion (that is, so long as the insurer has included a pro rata clause in its policy, as is so often the case). Fortunately for insurers and policyholders alike, the Fifth Circuit Court of Appeals and several other courts have distanced themselves from the Mid-Continent decision by limiting it to the very narrow set of factual circumstances from which it arose.