IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 

HILLTOP HOLDINGS INC., § 

 § 

 Plaintiff, § 

 § CIV. A. NO. 3:22-cv-0907-S 

 § 

v. § 

 § 

AIG SPECIALTY INSURANCE § 

COMPANY, § 

 § 

 Defendant. § 

 

DEFENDANT AIG SPECIALTY INSURANCE COMPANY’S 

ANSWER TO PLAINTIFF’S SECOND AMENDED COMPLAINT 

Defendant AIG Specialty Insurance Company (“ASIC”) files this Answer to 

Plaintiff Hilltop Holdings Inc.’s (“Hilltop” or “Plaintiff”) Second Amended 

Complaint (“Complaint”). ASIC files this Answer subject to, and without prejudice 

to, its motion to dismiss filed on May 10, 2024. The paragraphs in this Answer 

correspond to those in the Complaint. Unless expressly admitted, all allegations in 

the Complaint are denied. 

I. INTRODUCTION

1. ASIC lacks knowledge or information sufficient to form a belief as to 

the truth of the allegations contained in this paragraph, and therefore denies such 

allegations on that basis. 

2. ASIC denies the allegations contained in this paragraph. 

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3. ASIC states that the allegations in this paragraph are not factual 

allegations susceptible to a response. To the extent a response is necessary, ASIC 

denies the allegations. 

II. PARTIES

4. ASIC lacks knowledge or information sufficient to form a belief as to 

the truth of the allegations contained in this paragraph, and therefore denies such 

allegations on that basis. 

5. ASIC admits that it is a surplus lines carrier eligible to engage in 

business in Texas. ASIC also admits that it is an Illinois corporation with its 

principal place of business in New York. ASIC also admits that it made an 

appearance in this case. ASIC states that this paragraph asserts legal conclusions 

regarding jurisdiction and therefore no response is required. 

6. ASIC admits the allegation contained in this paragraph. 

III. JURISDICTION

7. ASIC states that this paragraph asserts legal conclusions regarding 

jurisdiction and therefore no response is required. 

IV. VENUE

8. ASIC admits the allegation contained in this paragraph. 

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V. CONDITIONS PRECEDENT

9. ASIC denies the allegations contained in this paragraph because Hilltop 

did not submit itemized bills to ASIC, did not segregate its fees between covered 

allegations and non-covered allegations, and has failed to adhere to the cooperation 

and consent provisions of the Policy. In addition, the fees for which Hilltop seeks 

reimbursement were not reasonable and necessary. 

VI. POLICY AT ISSUE

10. This paragraph contains allegations regarding the Policy, which speaks 

for itself and is the best evidence of its contents. ASIC denies any allegations 

inconsistent with the plain language of the Policy and denies any remaining 

allegations in this paragraph. 

11. This paragraph contains allegations regarding the Policy, which speaks 

for itself and is the best evidence of its contents. ASIC denies any allegations 

inconsistent with the plain language of the Policy and denies any remaining 

allegations in this paragraph. 

12. This paragraph contains allegations regarding the Policy, which speaks 

for itself and is the best evidence of its contents. ASIC denies any allegations 

inconsistent with the plain language of the Policy and denies any remaining 

allegations in this paragraph. 

13. ASIC admits the allegation contained in this paragraph. 

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14. This paragraph contains allegations regarding the Policy, which speaks 

for itself and is the best evidence of its contents. ASIC denies any allegations 

inconsistent with the plain language of the Policy and denies any remaining 

allegations in this paragraph. 

15. This paragraph contains allegations regarding the Policy, which speaks 

for itself and is the best evidence of its contents. ASIC denies any allegations 

inconsistent with the plain language of the Policy and denies any remaining 

allegations in this paragraph. 

16. This paragraph contains allegations regarding the Policy, which speaks 

for itself and is the best evidence of its contents. ASIC denies any allegations 

inconsistent with the plain language of the Policy and denies any remaining 

allegations in this paragraph. 

17. This paragraph contains allegations regarding the Policy, which speaks 

for itself and is the best evidence of its contents. ASIC denies any allegations 

inconsistent with the plain language of the Policy and denies any remaining 

allegations in this paragraph. 

18. This paragraph contains allegations regarding the Policy, which speaks 

for itself and is the best evidence of its contents. ASIC denies any allegations 

inconsistent with the plain language of the Policy and denies any remaining 

allegations in this paragraph. 

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VII. FACTUAL ALLEGATIONS

Underlying Lawsuits 

19. ASIC admits the allegation contained in this paragraph. 

20. ASIC admits the allegation contained in this paragraph. 

21. ASIC lacks knowledge or information sufficient to form a belief as to 

the truth of the allegation contained in this paragraph regarding PCB’s current 

position in the Guarantors Lawsuit. ASIC admits the remaining allegations 

contained in this paragraph. 

22. ASIC lacks knowledge or information sufficient to form a belief as to 

the truth of the allegation contained in this paragraph regarding PCB’s current 

position in the Teekell Lawsuit. ASIC admits the remaining allegations contained 

in this paragraph. 

23. This paragraph contains allegations regarding the Policy, which speaks 

for itself and is the best evidence of its contents. ASIC denies any allegations 

inconsistent with the plain language of the Policy, and denies any remaining 

allegations in this paragraph. 

Claims Handling 

24. ASIC admits that on August 1, 2016, Hilltop’s broker provided ASIC 

with notice of the Guarantors Lawsuit. ASIC also admits that it hired coverage 

counsel. ASIC denies any remaining allegations in this paragraph. 

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25. ASIC admits that it acknowledged receipt of the notice of the 

Guarantors Lawsuit on August 2, 2016. ASIC also admits that on November 15, 

2016, it sent a letter to Hilltop accepting Hilltop’s “notice of claim” as notice of 

circumstances that may give rise to a Claim being made against an Insured. ASIC’s 

November 15, 2016 letter is the best evidence of its contents, and ASIC denies any 

allegations inconsistent with the plain language of the letter. ASIC denies any 

remaining allegations in this paragraph. 

26. ASIC admits the allegation contained in this paragraph. 

27. ASIC admits that on June 16, 2017, it sent a letter to Hilltop 

acknowledging receipt of the counterclaims. ASIC’s June 16, 2017 letter is the best 

evidence of its contents, and ASIC denies any allegations inconsistent with the plain 

language of the letter. ASIC denies any remaining allegations in this paragraph. 

28. ASIC admits the allegation contained in this paragraph. 

29. ASIC admits that on January 23, 2018, Hilltop’s defense counsel 

corresponded with ASIC’s coverage counsel regarding the counterclaims and the 

Guarantors Lawsuit. ASIC denies any remaining allegations in this paragraph. 

30. ASIC admits the allegation contained in this paragraph. 

31. ASIC admits that on July 12, 2018, Hilltop’s defense counsel 

corresponded with ASIC’s coverage counsel regarding the counterclaims and the 

Guarantors Lawsuit. ASIC denies any remaining allegations in this paragraph. 

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32. ASIC admits that on October 10, 2018, Hilltop’s defense counsel 

corresponded with ASIC’s coverage counsel regarding the counterclaims and the 

Guarantors Lawsuit. ASIC denies any remaining allegations in this paragraph. 

33. ASIC admits that in January 2019, Hilltop’s insurance broker informed 

ASIC’s coverage counsel that Hilltop’s attorney’s fees incurred in the Guarantors 

Lawsuit were approximately $5-$6 million. ASIC denies any remaining allegations 

in this paragraph. 

34. ASIC denies the allegations contained in this paragraph. 

35. ASIC admits that in March and April 2019, Hilltop’s counsel and/or its 

broker corresponded with ASIC. ASIC denies any remaining allegations in this 

paragraph. 

36. ASIC admits that on November 7, 2019, ASIC’s coverage counsel sent 

a letter to Hilltop acknowledging receipt of a pleading naming PCB and Sam Wooten 

in the Teekell Lawsuit. ASIC’s November 7, 2019 letter is the best evidence of its 

contents, and ASIC denies any allegations inconsistent with the plain language of 

the letter. ASIC denies any remaining allegations in this paragraph. 

37. ASIC admits that on or around November 22, 2019, Hilltop provided a 

partial production of select attorney’s fee invoices for the Guarantors Lawsuit and 

the Teekell Lawsuit. ASIC denies any remaining allegations in this paragraph. 

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38. ASIC admits that on or around July 23, 2021, ASIC’s coverage counsel 

provided Hilltop with an analysis of the attorney’s fees received. ASIC denies any 

remaining allegations in this paragraph. 

39. ASIC admits that on or around July 23, 2021, ASIC’s coverage counsel 

provided Hilltop with an analysis of the attorney’s fees received. ASIC admits that 

it indicated it would recognize $535,423.61 in covered Defense Costs related to the 

Guarantors Lawsuit and $203,440.59 in covered Defense Costs related to the Teekell 

Lawsuit for a total of $738,864.20. ASIC denies any remaining allegations in this 

paragraph. 

40. ASIC denies the allegations contained in this paragraph. 

41. ASIC admits that it contends its coverage interpretation is correct. 

ASIC denies the remaining allegations contained in this paragraph. 

42. ASIC denies that its review of Hilltop’s attorney’s fees invoices was 

insufficient or that Hilltop was forced to conduct its own review of the invoices. 

ASIC lacks knowledge or information sufficient to form a belief as to the truth of 

the remaining allegations contained in this paragraph and therefore denies such 

allegations on that basis. 

43. ASIC admits that on or about October 27, 2021, Hilltop informed ASIC 

that it disagreed with the analysis performed by ASIC’s coverage counsel of the 

attorney’s fees invoices. ASIC lacks knowledge or information sufficient to form a 

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belief as to the truth of the remaining allegations contained in this paragraph and 

therefore denies such allegations on that basis. 

44. ASIC lacks knowledge or information sufficient to form a belief as to 

the truth of the allegations contained in this paragraph and therefore denies such 

allegations on that basis. 

45. ASIC admits that it has credited Hilltop $1,064,336.15 in covered 

Defense Costs under the Policy, and has paid Hilltop $314,336.15 in excess of the 

$750,000 Retention. ASIC also admits that in February 2023, ASIC made a payment 

of $109,077.22 to Hilltop. In April 2023, ASIC made a payment of $179,428.99 to 

Hilltop. In August 2023, ASIC made a payment of $25,829.94 to Hilltop. ASIC 

denies any remaining allegations contained in this paragraph. 

46. ASIC lacks knowledge or information sufficient to form a belief as to 

the truth of Hilltop’s allegations that it has paid the total amount of attorney’s fees 

and costs incurred in the Guarantors Lawsuit and in the Teekell Lawsuit, and 

therefore denies such allegations on that basis. ASIC denies any remaining 

allegations contained in this paragraph. 

VIII. CAUSES OF ACTION

COUNT I 

BREACH OF CONTRACT 

47. ASIC incorporates its answers to the preceding paragraphs by reference 

as if fully restated herein. 

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48. This paragraph contains conclusions of law to which no response is 

required. 

49. ASIC admits that Hilltop has paid the required premiums under the 

Policy. ASIC denies any remaining allegations in this paragraph. 

50. ASIC denies the allegations contained in this paragraph. 

51. ASIC denies the allegations contained in this paragraph. 

52. ASIC denies the allegations contained in this paragraph. 

COUNT II 

VIOLATIONS OF TEXAS PROMPT PAY OF CLAIMS ACT 

53. ASIC incorporates its answers to the preceding paragraphs by reference 

as if fully restated herein. 

54. This paragraph contains conclusions of law to which no response is 

required. 

55. ASIC denies the allegations contained in this paragraph. 

56. This paragraph contains conclusions of law to which no response is 

required. 

57. ASIC denies the allegations contained in this paragraph. 

COUNT III 

UNFAIR OR DECEPTIVE INSURANCE PRACTICES 

- VIOLATIONS OF TEX. INS. CODE 541.001 

58. ASIC incorporates its answers to the preceding paragraphs by reference 

as if fully restated herein. 

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59. ASIC denies the allegations contained in this paragraph. 

60. ASIC denies the allegations contained in this paragraph. 

61. Subject to, and without prejudice to, its motion to dismiss filed on May 

10, 2024, ASIC denies the allegations contained in this paragraph. 

62. Subject to, and without prejudice to, its motion to dismiss filed on May 

10, 2024, ASIC denies the allegations contained in this paragraph. 

63. ASIC denies the allegations contained in this paragraph. 

64. Subject to, and without prejudice to, its motion to dismiss filed on May 

10, 2024, ASIC denies the allegations contained in this paragraph. 

COUNT IV 

ATTORNEYS’ FEES AND STATUTORY INTEREST 

65. ASIC incorporates its answers to the preceding paragraphs by reference 

as if fully restated herein. 

66. ASIC denies the allegations contained in this paragraph. 

67. ASIC denies the allegations contained in this paragraph. 

68. ASIC states that this paragraph asserts legal conclusions regarding 

Hilltop’s request for its attorney’s fees in bringing this lawsuit and therefore no 

response is required. 

IX. JURY DEMAND 

69. ASIC states that the allegation in this paragraph is not a factual 

allegation susceptible to a response. 

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X. RELIEF REQUESTED 

70. ASIC denies that Hilltop is entitled to any relief that it seeks. 

DEFENSES

Without conceding that any of the following are affirmative defenses or that 

ASIC has the burden of proving the allegations or denials of the following, ASIC 

pleads the following defenses. 

1. Coverage is barred, in whole or in part, because the fees that Hilltop 

seeks to recover do not constitute Loss as defined by the Policy. 

2. Coverage is barred, in whole or in part, because the fees that Hilltop 

seeks to recover do not constitute Defense Costs as defined by the Policy. 

3. Coverage is barred, in whole or in part, by BPL Coverage Section 2(a) 

to the Policy, known as the “conduct exclusion.” 

4. Coverage is barred, in whole or in part, because Hilltop has not 

segregated its fees between covered allegations and non-covered allegations. 

5. Recovery is barred, in whole or in part, because Hilltop failed to adhere 

to the cooperation and consent provisions in Section 4(c) in the BPL Coverage 

Section of the Policy. 

6. Recovery is barred, in whole or in part, to the extent Hilltop did not 

incur the fees and expenses for which it sues. 

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7. Recovery is barred, in whole or in part, because the fees that Hilltop 

seeks to recover are not reasonable and necessary. 

PRAYER FOR RELIEF

ASIC requests that Hilltop take nothing by this action and that ASIC be 

awarded its costs of court and other expenses to which it is justly entitled. ASIC 

further requests such other relief, general and specific, legal and equitable, to which 

it is justly entitled. 

Dated: May 10, 2024 Respectfully submitted, 

/s/ Robert S. Harrell

Robert S. Harrell 

Texas Bar No. 09041350 

Gary W. Johnson 

Texas Bar No. 24083257 

James B. Danford, Jr. 

Texas Bar No. 24105775 

MAYER BROWN LLP 

700 Louisiana Street, Suite 3400 

Houston, TX 77002 

Tel: 713-238-2700 

Email: rharrell@mayerbrown.com 

Email: gjohnson@mayerbrown.com 

Email: jdanford@mayerbrown.com 

Jo Allison Stasney 

Texas Bar No. 19080280 

Thompson, Coe, Cousins & Irons, LLP 

700 North Pearl Street, 25th Floor 

Dallas, Texas 75201 

Tel: 214-871-8200 

jstasney@thompsoncoe.com

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Counsel for Defendant AIG Specialty 

Insurance Company

CERTIFICATE OF SERVICE 

The undersigned hereby certifies that on May 10, 2024, all counsel of record 

who are deemed to have consented to electronic service are being served with a 

copy of this document via the Court’s CM/ECF system. 

/s/ James B. Danford, Jr. 

James B. Danford, Jr. 

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