Alexander Ct-CS071016Mr. Robert E. Hagar
Nichols Jackson Dillard Hager & Smith
500 North Akard, Suite 1800
Dallas, TX 75201
Re: Style: Mira Air Development Corp. v City of Copl-7ell
Cause #: 07-11511
TML Claim #: 0800140451
Dear Mr. Hagar:
The above - referenced lawsuit was forwarded to the Risk Pool for handling in accordance with
the terms of the Interlocal Agreement. We have determined that some of the allegations
potentially seek damages covered under the Errors and Omissions Liability Coverage effective
October 1, 2006, and have retained the law firm of Taylor Olson Adkins Sralla & Elarn to
provide the City with a defense.
As we discussed, the allegations are vague and it is not clear whether the Risk Pool has a duty to
defend this suit. The Risk Pool's obligation to provide a defense is created by the following
provision of the Liability Coverage Document:
PA I GENERAL CONDITIONS
I. DEFENSE
The Fund shall have the right and the duty to defend any suit against the
Member or Covered Party seeking damages on account . of such liability
, as
-covered in this Plan, even if any of the allegations of the suit are
groundless, false or fraudulent, and may make such investigation and
settlement of any claim or suit it deems expedient. (emphasis added)
The Plaintiff is a developer that alleges that the City is responsible for the extra costs it has
incurred in connection with delays due to outdated flood plain maps and the City's insistence that
it provide unnecessary engineering reports. The Plaintiff also alleges that additional
requirements the City imposed as a condition of approving the development plan violate the
- rough proportionality" requirement imposed by the Texas Constitution and refers to Art. 1. § 17
of the Texas Constitution. That provision is the basis for compensation for acts of eminent
domain. It also alleges that the hearing before the City Council to review the chaiiges imposed
by the City's staff' did not provide Sufficient "due process." The Petition does not identi the
EX�S MU. UCIIAi- IN RISK
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Only
RESERVATION OF RIGHTS LETTER
Mr. Robert E. Hagar
October 16, 2007
Page 2
legal causes of action under which the Plaintiff is seeking damages. The allegations raise the
possible applicability of the following definition and exclusion contained in the Liability
Coverage document:
PART 11 DEFINITIONS
Whenever the following words or phrases appear throughout the Plan, they are
defined as follows:
P. DAMAGES means monetary Ljqd
lmcnt, award, pl interest
thereon or settlement, but does not include lines, civil penalties, of
whatever kind or nature, damages for which insurance is prohibited by
law, or attorneys' fees unless those attorneys fees are awarded in
connection with a. covered damage.
PART VIII EXCLUSIONS APPLICABLE TO ALL COVERAGES
Unless otherwise provided in the Agreement Declarations, Linder specific
coverages or by endorsement, the self-insurance provided in this Agreement does
not apply to or provide coverage for the following:
T. Claims or suits based upon the operation of the principles of emillent
domain including condemnation proceedings or inverse condemnation by
whatever name called, whether such liability accrues directly against the
Member or by virtue of any agreement entered into by or on behalf of the
Member;
X. Claims or suits against the Member or Covered Party which do not seek
civil damages or monetary relief other - t - - --co_sls of court or altorpqy5L[ces
for prosecuting the Suit, Such as, but not limited to: criminal prosecutions
and proceedings; election contests; actions for injunctive or declaratory
i.gd �mei2ts- actions to enforce or invalidate ordinances, City charter
provisions or code provisions; actions specifically to enforce or invalidate
contracts with the Member or go between the Member and others; actions
by government agencies against the Member or Covered Party to require
compliance with applicable law or regulation; and actions by any person
seeking exemption from applicable ordinances or regulations of tile
INIember, except claims or suits filed with the Equal Employment
Opportunity Commission or the Texas Commission on Human Rights
shall not be excluded. (emphasis added)
The Risk Pool does not cover stilts seeking damages under Art. 1. § 17 because of Exclusion T.
The Risk Pool Would not cover a declaratory judgment action, or any attorriev's fees awarded to
T, NIN I L
RFSERVAnON 0FRI(;I ITS LVITER
Mr. Roberi E. Hagar
October 16. 2007
Page 3
the Plaintiff because of the definition of "damages" and Exclusion X. As discussed, the
allegations are vague as it is not clear whether the Plaintiff is seeking damages other than
compensation for an act of eminent domain. Although the Risk Pool is providing a defense. it
reserves the right to deny coverage for any monetary award which is not within the definition of
- damages." or which is otherwise excluded by Exclusions T and X above.
The Risk Pool's duty to provide a defense is determined by the live pleadings. The Risk Pool
will continue to provide a defense so long as the allegations seek damages covered by the Risk
Pool. There is the possibility that the allegations seeking covered damages will be disposed of
through amended pleadings or pre-trial motions, leaving only a claim for declaratory relief and
attorneys' fees and/or compensation for an act of eminent domain, The Risk Pool, therefore,
must reserve the right to withdraw its defense at any time it determines that the Plaintiff is 110
longer seeking covered damages.
In view of the coverage questions involved in this case and the fact that the Risk Pool is
defending the City Linder a reservation of rights, the City may wish to seek the advice of an
attorney, at its erpense, regarding the Risk Pool's obligations to the City as a Covered Party and
its handling of this suit. If the City retains an attorney for that purpose, please have him or her
contact Taylor Olson Adkins Srala & Elam for whatever information he or she might desire. If
we do not hear from you to the contrary, we will assume that the defense we are providing and
the conditions we have outlined are acceptable to the City and will continue to defend under
those terms.
We look forward to working with the City toward the defense of this Suit. Please feel free to call
if you have any questions concerning coverage.
Sincerely,
Richard Evans
Staff Attorney
RE/ma
cc: /Mr. Vivyon Bowman, Director of HR-Admin/Fund Contact, City of Coppell. P.O. Box
9478, Coppell, TX 75019-9478
Mr. Wayne Olson, Defense Counsel, Taylor Olson Adkins Sralla & Elam, 6000 Western
Place, Suite 200, Fort Worth, TX 76107-4654
CERTIFIED MAIL, RETURN RECEIPT REQUESTED NO. 7004 1350 0002 7264 2872
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