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Texas 12th Court of Appeals (Tyler)
ISD Wins a Legal Battle Against Insurer
Ruling: An insurance company can’t force an ISD’s lawsuit against the company into arbitration. Travelers Indemnity Company v. Alto ISD, No. 12-21-00143-CV. Issued May 25.

Background
This dispute involves a property casualty insurance policy that AISD purchased from the Texas Rural Education Association Risk Management Cooperative. The cooperative subsequently — without the involvement or approval by AISD — entered into a contract with Travelers to reinsure part of the cooperative’s liability to the district.

The policy that AISD bought from the cooperative did not contain a provision requiring disputes to go to arbitration instead of being pursued in the courts.

The Traveler’s policy required arbitration to settle disputes.

A Hailstorm and a Tornado
While the policy was in effect, AISD sustained damages to its buildings and contents that collectively resulted from an April 6, 2019, hailstorm and by a tornado a week later.

The district received an insurance payout totaling about $6.5 million.

The district sued the cooperative and Travelers after a law firm (which had expertise in making property damage claims) the ISD had hired said the damages totaled $14.8 million.

Travelers appealed after the trial judge refused to issue a ruling that would have sent the dispute to arbitration for a resolution before the possibility of litigating the matter in the courts could be entertained.

Cannot Force Arbitration
A three-member Twelfth Court panel, in this unanimous decision, dismissed the appeal by concluding that the arbitration provisions contained in the reinsurance contract between the cooperative and Travelers were not “valid and enforceable” against AISD.

The justices sent the dispute back to the trial judge for further proceedings.