An appeals court in Waco has ruled that a district judge in Gatesville abused his discretion in rulings he made in a lawsuit related to the June 2018 explosion at the Coryell County Memorial Hospital.
In a five-page opinion written by 10th Court of Appeals Justice Rex Davis and released Wednesday evening, the three-judge court granted a writ of mandamus requested by AP Gulf States, the general contractor overseeing the hospital renovation and expansion project.
The court ruled that 52nd State District Judge Trent Farrell’s pretrial order in February requiring AP Gulf States’ insurance carrier to deposit $6.8 million into the court’s registry was “a clear and prejudicial error of law and an abuse of discretion” and ordered him to remedy the error within 21 days.
Tenth Court Chief Justice Tom Gray concurred in part and dissented in part. Gray noted that he agrees with the court’s judgment ordering Farrell to withdraw his February registry order but he disagreed with the order compelling him to rule on other pretrial motions with a prescribed time frame.
AP Gulf States took out a builder’s risk insurance policy with Zurich American Insurance Co. when the project began. In December, five months after the explosion that killed three workers and injured more than a dozen, AP Gulf States initiated an arbitration proceeding against the hospital seeking to recover funds it alleged it was owed from the project.
A month later, the hospital sued AP Gulf States and Zurich in a lawsuit that seeks possession and use of the insurance proceeds from the policy with Zurich. The hospital also is seeking damages based on claims of breach of fiduciary duty and breach of insurance codes. The suit also asks for injunctive relief based on payments Zurich made to AP Gulf States out of the insurance proceeds.
Farrell set a Feb. 21 hearing on the hospital’s request for an injunction. In response, AP Gulf States filed motions to compel arbitration, to challenge the jurisdiction, to dismiss the suit and others.
The day before the hearing, AP Gulf States obtained an order from an emergency arbitrator that directed the hospital “not to proceed with consideration of its motion for a temporary injunction ... until after Coryell and AP arbitrate the issue of distribution of those funds in this arbitration,” according to the opinion.
The hospital appeared at the hearing the following day and asked Farrell to order the insurance proceeds be deposited into the registry of the court instead of being paid directly to the hospital.
In its appeal of Farrell’s rulings, AP Gulf States argued that Farrell abused his discretion by failing to address its various motions before ruling on the hospital’s request to deposit the insurance funds into the registry of the court. It also argued that Farrell abused his discretion by ordering the funds to be deposited without evidence that the funds were in danger of being lost or depleted.
The appellate court agreed and ordered Farrell to vacate his order placing the funds from Zurich into the registry of the court and to rule on the pending motions within 21 days.