A $9,878 payout on what could be a $2 million-plus claim - that is the gap at the heart of a new federal lawsuit targeting three surplus lines carriers.
Tidwell Shopping Plaza, Inc., West Little York Industrial Warehouse, LLC, and Long Point Shopping Plaza, LP filed suit on April 16 in the US District Court for the Southern District of Texas against Certain Underwriters at Lloyd's, London, Convex Insurance UK Limited, and AXA XL Insurance Company UK Limited. The case, which has not yet been decided, centers on the alleged mishandling of commercial property claims stemming from two back-to-back windstorm events in Houston.
According to the lawsuit, the two properties - multi-tenant commercial buildings on Veterans Memorial Drive and Bissonnet Street in Harris County - were covered under a policy providing nearly $9 million in combined building and business income limits for windstorm damage. That coverage was put to the test twice in quick succession during the summer of 2024.
First came the May derecho, a rare and powerful windstorm that tore through Southeast Texas on May 16, 2024, with gusts reaching 75 miles per hour. Less than two months later, Hurricane Beryl made landfall on July 8, bringing gusts in excess of 96 miles per hour to Harris County. The lawsuit alleges both events caused significant damage to the properties' roofs, exteriors, and interiors.
What followed, the plaintiffs say, was a drawn-out and inadequate claims process. The carriers allegedly brought in Vanguard Claims Administration as a third-party administrator, which assigned Gulf Coast Claims Service to inspect the Veterans Memorial property. That inspection, conducted in September 2024, reportedly identified just $62,648.72 in covered damages - and after depreciation and deductible, the plaintiffs were told they were owed $9,878.82. They would not learn of that figure until three months later, the filing states.
The carriers then retained an engineer from Haag Engineering Co. to inspect both properties. The lawsuit characterizes those inspections as cursory and outcome-driven, alleging the reports downplayed Hurricane Beryl's impact without even acknowledging whether the earlier derecho could have contributed to the damage. The plaintiffs say their own consultants later assessed more than $2 million in covered losses.
Adding to the dispute, the lawsuit alleges the third-party administrator misrepresented policy exclusions and mixed up which property a prior payment applied to.
Before filing suit, the plaintiffs say they sent a pre-suit notice under the Texas Insurance Code, offering to waive attorneys' fees if the carriers paid up promptly. According to the filing, they received no response.
The case raises claims including breach of contract, violations of Texas Insurance Code Sections 541 and 542, breach of the duty of good faith and fair dealing, and violations of the Texas Deceptive Trade Practices Act. The plaintiffs are also seeking punitive damages, statutory interest, and attorneys' fees. A jury trial has been requested.
No determination has been made on the merits. The carriers have not yet responded in court.
