(Sept. 16) – A Houston appeals court ruled Tuesday that a lower trial court must consider whether an insurance company breached its duty to a former Superior Offshore International executive when it refused to provide certain coverage the executive claimed was included in the director-and-insurer policy.

The alleged coverage involved expenses former Superior Chief Financial Officer Roger D. Burks incurred while defending the disgorgement of his compensation that trustees and investors sought from him after Superior filed for bankruptcy in 2008.

The bankruptcy proceedings and derivative investor lawsuits both claimed that Burks, among other former Superior executives, illegally profited off of the Houston-based energy offshore services company while it was in a dire financial situation.

Legal experts involved in the case contend the opinion could significantly affect C-level executives of troubled Texas energy companies, as low oil prices drive their corporations into bankruptcy, bringing creditors and investors at their doorsteps – and, inevitably, demanding executive compensation as a recovery of assets.

“This case will matter to C-suite executives of beleaguered companies and the lawyers who defend them,” Austin lawyer Chris Johns, who represents Burks, said in a statement. “The court’s opinion makes it much harder for insurance companies in Texas to just deny coverage for defense costs when a bankruptcy trustee tries to force directors to forfeit compensation, severance packages and stock.”

Johns’ law partner, Joseph Marrs, also worked on the case for Mr. Burks. Both attorneys practice at Johns Marrs Ellis & Hodge.

For more information, please see The Texas Lawbook’s article on the matter here, or contact Johns Marrs Ellis & Hodge by phone at (512) 215-4078 or email at [email protected].