A Texas appellate court affirmed the insurer’s right to collect unpaid premiums from Imperial Charters, LLC, despite claims of impossibility due to COVID-19. The legal disagreement involved Redwood Fire and Casualty Insurance Company and charter bus operator Imperial Charters. The charter company defaulted on premium payments for February, March, and April 2020, leading Redwood to issue a cancellation notice effective June 2, 2020.
After cancellation, Redwood calculated unpaid premiums and issued credits, determining Imperial Charters still owed $11,554.76. Redwood filed a breach of contract lawsuit seeking these unpaid premiums and attorney’s fees. Imperial Charters argued the impossibility of performance due to the pandemic and claimed breach of duty of good faith and fraud, asserting that Redwood should have refunded credits rather than applied them to the balance.
The trial court ruled in favor of Redwood, awarding it damages and attorney’s fees, and rejecting Imperial Charters’ counterclaims. Imperial Charters appealed, challenging the ruling based on its impossibility defense and rejected counterclaims.
On April 3, the Court of Appeals for the Second Appellate District of Texas upheld the trial court’s decision, emphasizing the limited applicability of the impossibility defense under Texas law, and rejecting claims of breach of duty and fraud. The decision reinforces the enforcement of premium payment obligations, even in the face of pandemic-related business disruptions, absent specific legal prohibitions or explicit policy terms.
