A federal judge has put a stop to a lawsuit filed by two entertainment businesses in Texas against their insurance providers. The judge ruled that the businesses must first provide sworn testimony before they can move forward with their claims.
TnT Gaming Center LLC and TnT Family Entertainment Inc. took legal action last year against Arch Specialty Insurance Company and other insurers. They claimed that these companies failed to cover damages caused by a kitchen fire in May 2023. The fire resulted in significant smoke and water damage to their family-friendly venue, which features an event space, restaurant, and gaming area.
The dispute centers around a requirement in TnT Family Entertainment’s insurance policy with Arch Specialty. This policy includes a clause that mandates the company’s representatives to undergo examinations under oath (EUOs) during any insurance investigation. It also has a cooperation clause and a stipulation that no legal action can be taken until all policy conditions are satisfied.
Arch Specialty argued that it had repeatedly requested these EUOs from the owners, Teresa and Kendall Walles, starting in November 2023, well before the lawsuit was filed. When the owners did not comply, the insurance company sought to pause the lawsuit until the required examinations could take place.
Judge Ed Kinkeade of the U.S. District Court for the Northern District of Texas sided with the insurer. He stated that the policy terms were clear and enforceable under Texas law. The judge pointed out that Arch Specialty had made timely requests and that TnT Family had not fulfilled its obligations.
In defense, TnT Family claimed that Arch’s delays in handling the claim, including not making timely payments to a mortgage holder, should excuse them from complying with the EUO requirement. They also argued that depositions taken during the lawsuit should count in place of the required examinations.
However, Judge Kinkeade dismissed these arguments. He emphasized that EUOs are a specific safeguard for insurers and cannot be replaced by depositions. He reaffirmed that complying with the cooperation and EUO requirements was necessary before proceeding with the lawsuit.
This case highlights a common aspect of insurance disputes. Courts often enforce such procedural clauses to allow insurers to properly investigate claims. The judge’s ruling serves as a reminder to policyholders about the importance of adhering to the obligations set out in their contracts.
The lawsuit will remain on hold until the necessary examinations are completed. Both parties must submit a status report by May 19, 2025.