Robert Allen Successfully Defends St. Paul Fire & Marine Insurance Co.

IADC member, Robert D. ("Bob") Allen, the Partner-in-Charge of the Dallas office of Meckler Bulger Tilson Marick & Pearson, LLP, won a verdict on March 3, 2011 on behalf of St. Paul Fire & Marine Insurance Co. upon completion of a 2 1/2 week jury trial in a Dallas State District Court. The case involved a dispute between St Paul, as a reinsurer, and a Managing General Agency over excessive commission withdrawals from a Premium Trust Account by the MGA. The MGA denied making excessive withdrawals from the Premium Trust Account and filed a $6.5 million counterclaim against St Paul, contending that St Paul's wrongful termination of the reinsurance agreement had the effect of putting the MGA out of business and that the value of the business was $6 million. The MGA also claimed that it was entitled to an additional $500,000 in commissions from St Paul. The jury ruled against the MGA on all of its theories of recovery and ruled in favor of St. Paul on its claims for breach of contract, promissory estoppel and fraud.

Lawyers from the Dallas office of Meckler Bulger Tilson Marick & Pearson, LLP won a jury trial in a reinsurance dispute for client St Paul Fire & Marine Insurance Company ('St. Paul"). Dallas litigator and IADC member Bob Allen and Abel Leal tried the case for 2 1/2 weeks in the 44th Judicial District Court of Dallas County, Texas, presided by the Honorable Carlos Cortez.

In this case, St Paul filed suit against Clark & Company, Inc. ("Clark & Co."), an Arlington, Texas based Managing General Agency, to recover its 50% share of approximately $700,000 in excessive commissions that Clark & Co. withdrew from a Premium Trust Account. Clark & Co. denied taking excessive withdrawals from the Premium Trust Account and filed a $6.5 million Counterclaim contending that it was entitled to an additional $500,000 commissions and that St Paul wrongfully terminated the reinsurance agreement, which put Clark & Co. out of business. Clark & Co. put on evidence that its value was $6 million.

One aspect of the case was that when the parties negotiated terms for a renewal of the Reinsurance Agreement to become effective on January 1, 2001, a new term provided for St Paul and Clark & Co. to begin sharing policy fees, amounting to approximately $1.2 million over the remainder of the Reinsurance Program, which St Paul terminated as of March 1, 2002. However, a contract addendum to that effect was never executed. The Reinsurance Agreement and Managing General Agency Agreement both contained provisions that required all modifications to be in writing and signed by all parties. Accordingly, Clark & Co. contended it did not take excessive withdrawals and that it was entitled to all of the policy fees (amounting to an additional $500,000). St. Paul terminated the Reinsurance Agreement as of March 1, 2002, when it decided to stop writing reinsurance in December of 2001 and Clark & Co. contended that St Paul's manner in cancelling the reinsurance breached the Reinsurance Agreement and had the effect of putting Clark & Co. out of business.

St.Paul obtained jury findings that Clark & Co. breached the Reinsurance Agreement because the Agreement was modified, albeit not in writing and signed by all parties, but by the parties' performance and by Clark & Co being estopped from requiring that the modification had to be in writing and signed by all parties. On this count, the jury awarded St Paul $353,131.00 in damages. Also, the jury also found for St Paul on its promissory estoppel count and awarded St. Paul $504,455.00 in damages. Additionally, the jury found for St Paul on its fraud theory and awarded St. Paul $857,586.00.

The jury found for St Paul and against Clark & Co. on its contention that St Paul wrongfully terminated the Reinsurance Agreement (for which it was claiming $6 million in damages) and its Moneys Had and Received theory (for which it was claiming entitlement to an additional $500,000 in policy fees).
St. Paul's attorneys fees were stipulated at approximately $450,000. The Pre-Judgment interest award should be approximately $200,000.