UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF TEXAS

SHERMAN DIVISION

ACE AMERICAN INSURANCE
COMPANY,

Plaintiff,

vs. C.A. No.

TRAVELERS INDEMNITY COMPANY
OF CONNECTICUT
JURY TRIAL DEMANDED
Defendant.

ACE AMERICAN INSURANCE COMPANYS COMPLAINT
AND REQUEST FOR DECLARATORY JUDGMENT
Plaintiff ACE American Insurance Company (Plaintiff or ACE), as subrogee of
Savannah Properties Associates, L.P. (Savannah), files this Complaint and Request for
Declaratory J udgment against Defendant Travelers Indemnity Company of Connecticut
(Travelers) and in support of its Complaint, alleges as follows:
I.
NATURE OF THE ACTION
1. ACE brings this action for contribution and breach of contract for Travelers
failure to defend Savannah and declaratory relief pursuant to 28 U.S.C. 2201 et seq. seeking a
judicial declaration that Travelers breached its duty to defend Savannah against the claims
asserted against it in the underlying lawsuit styled: D.R. Horton Texas, Ltd., et al. v. Savannah
Properties Associates L.P., et al., in the 362
nd
District Court of Denton County, Texas, Cause
No. 2009-40118-362 (D.R. Horton lawsuit). (A copy of Plaintiffs Original Petition is attached
hereto as Exhibit A).
II.
PARTIES
2. ACE is incorporated and has its principal place of business in Pennsylvania.
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3. Travelers is incorporated and has its principal place of business in Connecticut. It
is licensed to do business in Texas.
III.
JURISDICTION AND VENUE
4. The jurisdiction of this Court is based upon complete diversity of citizenship
pursuant to 28 U.S.C. 1332(a). The amount in controversy, exclusive of interest and costs,
exceeds the sum of $75,000.
5. Venue is proper in the Northern District of Texas pursuant to 28 U.S.C. 1391(a)
and (c) because the underlying lawsuit was in Denton County, involving property in Denton
County, and Travelers failure to defend Savannah took place in Denton County.
6. An actual case or controversy of a justiciable nature exists between ACE and
Travelers concerning its breach of the duty to defend Savannah under Travelers liability
policies.
IV.
FACTS
A. THE POLICIES
7. ACE issued a general liability policy that named Savannah as an insured, which
was in effect from March 28, 2005 to April 1, 2006 (policy number G21626715) (the ACE
Policy). (A copy of the ACE Policy is attached hereto as Exhibit B).
8. Travelers issued three general liability policies that named Savannah as an insured
from December 31, 2003 through March 14, 2005 as follows:
December 31, 2003 to December 31, 2004 (policy No. Y-660-709K4903-
TCT-03);
December 31, 2004 to February 28, 2005 (policy No. Y-660-709K4903-TCT-
04); and
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February 28, 2005 to March 14, 2005 (policy No. Y-660-709K4903-TCT-05)
(collectively, the Travelers Policies). (A copy of the Travelers Policies is
attached hereto as Exhibit C).
B. THE UNDERLYING LAWSUIT
9. In the D.R. Horton lawsuit, Plaintiffs alleged that the Defendants represented that
the soil on the lots sold to Plaintiffs was properly prepared for residential construction
purposes, but failed to properly prepare the soil. Plaintiffs claimed that Savannah breached its
contracts with Plaintiffs and breached express and common law implied warranties. Plaintiffs
also alleged that the Defendants were negligent.
10. Shortly after the D.R. Horton lawsuit was filed, ACE was notified of this lawsuit
and it provided a defense to Savannah under a reservation of rights pursuant to the ACE Policy.
11. On May 24, 2010, Savannah tendered the D.R. Horton lawsuit to Travelers,
seeking a defense pursuant to the Travelers Policies. Travelers did not respond until J anuary
2013, at which time Travelers agreed that the Travelers Policies provided coverage to Savannah
for the claims asserted against it in the D.R. Horton lawsuit and agreed to join ACE in providing
a defense to Savannah in that lawsuit.
12. ACE spent approximately $902,211.09 to defend Savannah in the D.R. Horton
lawsuit, which was resolved in favor of Savannah and was recently affirmed on appeal.
13. Although Travelers agreed over a year ago to join ACE in providing a defense to
Savannah in the D.R. Horton lawsuit, Travelers failed to pay for any of Savannahs defense fees
and costs.
C. THE COVERAGE DISPUTE
14. Both ACE and Travelers had an obligation under their respective policies to
provide a defense to Savannah for the claims made against it the D.R. Horton lawsuit. Travelers
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has readily admitted it had such an obligation, and on April 15, 2013, Travelers confirmed in
writing that it would defend Savannah and share in Savannahs defense along with ACE.
15. To date, however, Travelers has not paid for any of the defense fees or costs
associated with defending Savannah in the D.R. Horton lawsuit, nor has it reimbursed ACE for
any such defense fees or costs ACE incurred in defending Savannah, despite numerous requests
from ACE and Savannahs defense counsel.
16. ACE now seeks reimbursement from Travelers for its share of defense fees and
costs Travelers was obligated to pay on behalf of Savannah under the Travelers Policies, yet
failed to do.
V.
CONTRIBUTION
17. ACE realleges and incorporates by reference paragraphs 1-16.
18. ACE was required to retain the legal services of defense counsel and incurred
attorneys fees on behalf of Savannah that were and are the obligation of Travelers under the
Travelers Policies.
19. Pursuant to its contractual and equitable subrogation rights, ACE seeks recovery
from Travelers for the amounts paid in the defense of Savannah in the D.R. Horton lawsuit.
VI.
COUNT I DECLARATORY RELIEF
20. ACE realleges and incorporates by reference paragraphs 1 19.
21. There is a real and immediate controversy between Plaintiff, as subrogees of
Savannah, and Travelers with respect to the obligations of Travelers under the Travelers Policies
to defend Savannah and reimburse ACE for defense fees and costs it expended in defending
Savannah in the D.R. Horton lawsuit.
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22. Pursuant to 28 U.S.C. 2201, ACE requests the Court declare that Travelers was
obligated to defend Savannah in the D.R. Horton lawsuit and that it breached that duty by failing
to pay its share of defense costs in defending Savannah in that lawsuit.
VII.
COUNT II BREACH OF CONTRACT
23. ACE realleges and incorporates by reference paragraphs 1-22.
24. The allegations against Savannah in the D.R. Horton lawsuit triggered a duty to
defend under the Travelers Policies and, therefore, obligated Travelers to defend Savannah in the
D.R. Horton lawsuit under the terms of the Travelers Policies.
25. Additionally, Travelers agreed in writing to provide a defense to Savannah in the
D.R. Horton lawsuit.
26. Travelers breached the Travelers Policies and its written agreement by failing to
pay for any of the defense fees or costs incurred in defending Savannah in the D.R. Horton
lawsuit.
VIII.
COUNT III - PROMPT PAYMENT VIOLATION

27. ACE realleges and incorporates by reference paragraphs 1-26.
28. A claim for defense costs is a first-party claim for purposes of the prompt
payment statute. Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 20 (Tex. 2007)
(the prompt payment statute, formerly article 21.55, and now codified as sections 542.051-.061
of the Texas Insurance Code, may be applied when an insurer wrongfully refuses to promptly
pay a defense benefit owed to the insured). A prompt payment claim combines an insurers
contractual and statutory liability into one cause of action. Harris v. Am. Prot. Ins. Co., 158
S.W.3d 614, 621 (Tex. App.-Fort Worth 2005, no pet.). Because Travelers breached its contract
by refusing to accept the tender of Savannahs defense, Travelers is liable to ACE for the 18%
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penalty on the defense costs ACE has incurred in protecting the interests of Savannah in the D.R.
Horton lawsuit.
IX.
REQUEST FOR ATTORNEYS' FEES AND COSTS
29. ACE requests this Court award Plaintiff its reasonable and necessary attorneys fees
and costs incurred as allowed by Sections 38.001 and 37.009 of the Texas Civil Practice &
Remedies Code. ACE further requests that the Court award any other relief to which it may be
justly entitled.
X.
JURY DEMAND
30. ACE demands a trial by jury on all issues of fact.
PRAYER
For the foregoing reasons, ACE prays that this Court grant the relief requested above, its
reasonable and necessary attorneys fees, costs of court and any other relief to which ACE may be
entitled.
Respectfully submitted,

By: /s/ Edwin G. Preis, Jr.
Edwin G. Preis, J r.
State Bar No. 24029069
PREIS & ROY, PLC
102 Versailles Blvd., Suite 400
Post Office Drawer 94-C
Lafayette, Louisiana 70509
Tel: (337) 237-6062
Fax: (337) 237-9129
egp@preisroy.com

ATTORNEY FOR ACE AMERICAN
INSURANCE COMPANY




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OF COUNSEL:

Marjorie C. Nicol
State Bar No.: 00784684
PREIS & ROY, PLC
24 Greenway Plaza, Suite 2050
Houston, Texas 77046
Tel: (713) 355-6062
Fax: (713) 572-9129
mnicol@preisroy.com



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