March 11th, 2021

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Early Sullivan’s Coverage Determination On Behalf Of Old Republic Affirmed On Appeal

The United States Court of Appeals for the Fifth Circuit upheld Early Sullivan’s coverage determination, involving a complex mechanic’s lien dispute, on behalf of client Old Republic National Title Insurance Company (“Old Republic”). At the center of the dispute was the famed Cal-Neva Lodge & Casino that sits on the border of California and Nevada — a property Frank Sinatra once co-owned in the 1960s.

Hall filed suit against Old Republic for breach of contract, breach of the duty to defend, breach of the duty of good faith and fair dealing, and violations of Chapter 541 of the Texas Insurance Code, claiming that coverage was improperly denied, for which Hall sought over $5,000,000 in damages.

The coverage opinions, prepared by Scott Gizer, concerned whether Hall had coverage under the insuring provisions of the title policy that insured the lien priority of Hall’s deed of trust, and under certain mechanic’s lien endorsements, as well as whether Hall’s claims were excluded from coverage under Exclusions 3(a), excluding matters created by the Insured, and 3(d), post-policy events. Scott Gizer opined that, because all of the work covered by the mechanic’s liens was post-policy work, and arose due to Hall’s internal decision to discontinue funding its construction loan months prior to notifying any of the contractors, there was no coverage for the claim and was excluded from coverage.

Early last year, the U.S. District Court for the Northern District of Texas found that Scott Gizer’s and Old Republic’s coverage opinions were correct, Ordering that Hall take nothing by its claims against Old Republic, and that those claims be dismissed with prejudice. The United States Court of Appeals for the Fifth Circuit recently affirmed summary judgment.

Click “Download PDF” to read the 5th Circuit Opinion.