Associated Industries Insurance Company has taken legal action against Colony Insurance Company over a significant construction defect settlement in Texas. The lawsuit, filed on August 6, 2025, in the United States District Court for the Western District of Texas, centers on Colony’s refusal to pay its share of a $3.35 million settlement related to construction issues at an apartment and retail complex in San Antonio, known as The Tribute at the Rim.
The dispute involves Framing Construction Logistics, LLC (FCL), which was a subcontractor on the project. Associated Industries alleges that Colony failed to fulfill its obligations to defend and indemnify FCL during legal proceedings concerning the construction defects. These defects reportedly led to water penetration and leaks, prompting Passco Companies, LLC, the current owner of the property, to file a lawsuit against the original owner, Rim WP Apts, LLC, and other parties in May 2022.
Continental Real Estate Companies acted as the general contractor for the project and entered a contract with Rim for construction. FCL’s responsibilities included framing, siding, and exterior work, and the project was completed in phases between June and November 2017. After Passco acquired the property in May 2019, they discovered significant design and construction defects in early 2021, leading to the litigation.
Both Colony and Associated issued commercial general liability policies to FCL, with Colony’s coverage running from October 2018 to October 2020 and Associated’s from October 2020 to October 2022. Although both insurers initially agreed to defend FCL, Colony later withdrew its defense, citing policy exclusions that it claimed applied to the situation.
The arbitration regarding the defects took place from December 2 to December 20, 2024, and in June 2025, the underlying case settled. Associated Industries contributed $3.35 million to this settlement, while Colony did not participate, which led to the current lawsuit. Associated is seeking a declaration of rights under the insurance policies, recovery of costs, and attorney fees, claiming that Colony is responsible for its share of the settlement and defense costs.
As of now, the court has not made any decisions, and Colony has yet to respond to the allegations. The case remains ongoing, with significant implications for both insurance companies and the construction industry in Texas.