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The Latest

Insurance Company Wants Liability Coverage Denied
Arkansas Business - gary - 10/20/2009

Colony Insurance Co. recently has asked a federal judge to rule that it doesn't have to provide money for a legal defense to its client, Mid-America Manufacturing Corp. of Jonesboro.

Mid-America is being sued in U.S. District Court in Texas by Lubbock J&G Management LLC, as general partner and on behalf of South Plains Concrete Products L.P.

Lubbock J&G said in its lawsuit that South Plains bought a dry cast machine and mold system from Mid-America for $1.3 million. The system was installed in 2008.

Lubbock J&G said that Mid-America agreed to make changes to the equipment in a timely manner, according to Colony's lawsuit. And Lubbock J&G said that the work wouldn't be finished until the equipment met set production goals.

Lubbock J&G charges "that the equipment was never capable of meeting these goals and that Mid-America misrepresented the kind, quality, and capability of the equipment," Colony said in the lawsuit.

Lubbock J&G is suing for breach of contract, breach of warranties and fraud. It is seeking damages of at least $2.3 million.

Mid-America has denied the allegations of wrongdoing in its court filings. It has filed a counterclaim against Lubbock J&G and South Plains for $427,000 to cover the outstanding bill on equipment sold to Lubbock's related companies plus court costs and attorney fees.

Mid-America's attorney, Tom Womack of Jonesboro, sent Colony a letter in April requesting money to cover the cost of the defense.

Colony said in its lawsuit that under Mid-America's liability insurance policy it doesn't have to provide a legal defense or to indemnify Mid-America based on the facts alleged in Lubbock J&G's lawsuit.

Womack said last week that he hasn't seen Colony's lawsuit so he couldn't comment on it.


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