United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit

____________ FILED September 18, 2024 No. 23-20282 Lyle W. Cayce ____________ Clerk Westport Insurance Corporation, On Its Own Behalf and Assignee of Houstoun, Woodward, Eason, Gentle, Tomforde and Anderson, Incorporated, doing business as Insurance Alliance,

Plaintiff—Appellant/Cross-Appellee,

versus Pennsylvania National Mutual Casualty Insurance Company, doing business as Penn National Insurance,

Defendant—Appellee/Cross-Appellant. ______________________________

Appeal from the United States District Court for the Southern District of Texas USDC No. 4:16-CV-1947 ______________________________ Before Higginbotham, Stewart, and Higginson, Circuit Judges. Carl E. Stewart, Circuit Judge: This is a dispute between a primary insurer, Appellant Westport Insurance Corporation (“Westport”), and an excess insurer, Appellee Pennsylvania National Mutual Casualty Insurance Company (“Penn National”). This case concerns liability for a judgment against their mutual insured: Insurance Alliance (“IA”), an insurance agency. In 2008, Lake Texoma Highport LLC (“Highport”) sued IA for failing to procure the Case: 23-20282 Document: 125-1 Page: 2 Date Filed: 09/18/2024

No. 23-20282

requested insurance coverage to protect its marina, which was damaged during heavy rainfall destroying much of Highport’s property. IA had a primary insurance policy with Westport and a policy that provided excess coverage with Penn National. As the primary insurer, Westport controlled the defense in the Highport suit. Throughout the underlying litigation, Highport and Westport engaged in multiple settlement discussions, spanning from 2009 through 2010, in which Westport rejected five settlement demands offered. In 2012, a jury found IA liable for breach of contract in failing to procure the requested insurance coverage for Highport’s marina. Nearly four years later, Westport and Penn National each sued the other in IA’s name as its subrogee, seeking to recover the portion of the excess judgment it paid on the insured’s behalf. Westport sued Penn National for breach of the excess insurance policy. Penn National countersued Westport for violating its Stowers1 duty to accept one of the five settlement offers within the primary insurance policy limits. At summary judgment, the district court determined that Penn National breached its duties to defend and to indemnify. After a five-day jury trial, a jury found that Westport failed to act as an ordinarily prudent insurance company when it did not accept any of Highport’s settlement demands. We agree that Penn National breached its duties under the excess insurance policy. We also agree that Westport’s Stowers duty was triggered by Highport’s offers and that Westport violated this duty. The district court’s judgment is AFFIRMED.

_____________________ 1 G.A. Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544 (Tex. Comm’n App. 1929) [hereinafter Stowers].

2 Case: 23-20282 Document: 125-1 Page: 3 Date Filed: 09/18/2024

No. 23-20282

I. A. Factual Background: