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Phelps Dunbar Defends Denying $1.7M in Additional Insurance Coverage

February 24, 2016

HOUSTON – Phelps Dunbar has successfully defended a client in Texas federal court in denying an additional $1.7 million in insurance coverage for damage resulting from a failed pipe at an Arabian Shrine Center.

U.S. District Judge Keith P. Ellison said Praetorian Insurance Co., represented by Phelps Dunbar Houston insurance and reinsurance attorneys Peri Alkas and Laura Englert, doesn't have to pay the additional coverage for damage resulting from a failed pipe at one of Arabian’s facilities in Houston, holding that coverage is barred under a water exclusion.

All of the damage for which Arabia Shrine is seeking further coverage falls within the Praetorian policy's water exclusion endorsement, Ellison found. Praetorian issued a CGL policy to Arabia Shrine for a period spanning from January 2014 through January 2015. In March 2014, a metal fire supply line  beneath the concrete  slab in the ballroom lobby of the Arabia Shrine Center failed, causing more than 1 million gallons of water to be released into the facility, according to the decision.

Law360.com reported (subscription required) that Ellison granted Praetorian’s motion for summary judgment in his decision, holding that all of the damage for which Arabia Shrine is seeking coverage resulted from an excluded cause of loss, as per the policy's water exclusion endorsement. The exclusion provides that Praetorian won't pay for loss or damage resulting directly or indirectly from "water under the ground surface pressing on, or flowing or seeping through" the building's foundation, walls, floors or other paved surfaces.