Two Liberty Mutual Insurance subsidiaries asked a Texas federal court Friday to throw out a lawsuit brought by Copart of Connecticut Inc., arguing that claims of breach and bad faith are premature until a related case decides whether the insurers had any obligation to indemnify.
In their motion to dismiss, Liberty Mutual Fire Insurance Co. (LMFIC) and Liberty Insurance Corp. (LIC) called Copart’s allegations “pure speculation,” insisting that no breach can be established without first interpreting the insurers’ policies in the separate case pending before the Northern District of Texas.
Bad Faith Claim Under Fire
The Liberty units also moved to kill Copart’s bad faith claim, asserting Texas law shields insurers from such liability when handling third-party claims against a policyholder.
“Since there is no bad faith cause of action in the third-party context, Copart cannot pursue damages for any failure of indemnification here,” the insurers told the court.
Dispute Rooted in Stormwater Runoff Case
The coverage battle stems from a 2016 South Carolina state court suit filed by neighboring property owners who accused Copart’s Lexington County salvage facility expansion of unleashing stormwater runoff into creeks, wetlands, and ponds.
