The Houston [14th] Court of Appeals has reversed a $1.5 million punitive damages judgment against a trucking company that procured a nonsubscriber policy for an independent contractor truck driver who knew that he wasn’t covered by the policy in the first place.
Pilot Travel Centers LLC v. M Felder Trucking, LLC and Mark Felder (No. 14-24-00224-CV; August 28, 2025) arose from an employer’s alleged failure to provide nonsubscriber insurance to a truck driver. Mark Felder entered into an agreement with Pilot to deliver crude oil as an independent contractor. He opted to waive worker’s compensation insurance and agreed instead to occupational-injury/employer’s liability (i.e. nonsubscriber) insurance coverage for the contractor’s employees. However, this coverage was contingent on the “Covered Person” being employed and paid on a regular basis. Felder had no employees and did not receive a salary. Felder executed the Contractor Agreement acting individually, and in doing so, recognized the coverage would be subject to the policy. Felder’s weekly pay statements included subtractions for occupational-accident insurance premiums, which he later testified he did not read. After becoming an independent contractor, Felder assigned his Contractor Agreement to Felder Trucking so that his company became a contractor for Pilot.
Felder had occasion to invoke the nonsubscriber policy when, while cleaning his windshield, he slipped on the wet tire of the truck he had been standing on and injured himself. Pilot initiated a claim under the occupational-accident insurance policy for $60,000 in disability benefits. Felder also filed suit in Caldwell County against his own company for not providing him a long-handled squeegee to clean the windshield. The parties reached an agreed judgment on damages. Felder’s wife, who co-owned the company, admitted that suit was filed to establish damages for the lawsuit.
Subsequently, Felder and Felder Trucking filed suit against Pilot and Pilot’s insurance broker, Willis Towers Watson SE, Inc., alleging fraud, breach of fiduciary duty, and breach of contract for failure to provide the nonsubscriber insurance pursuant to the Contractor Agreement form. The litigation hinged on determining whether Felder was a “Covered Person.” He admitted that he was not, which should have been conclusive. However the jury’s verdict awarded $0 in actual damages but $300,000 in exemplary damages for fraud. It also awarded Felder Trucking awarded $1,252,303.56 in exemplary damages for fraud. The trial court entered judgment on December 31, 2023. Pilot’s insurer, Willis, prevailed at trial and obtained a take-nothing-judgement on Felder’s claims. The trial court overruled Pilot’s motion for a new trial. Pilot appealed, and Felder and Felder Trucking cross appealed.
In an opinion by Justice Bridges, the court of appeals reversed and rendered a take-nothing judgment in favor of Pilot. Pilot raised four issues: (1) the trial court erred as a matter of law by entering judgement on fraud and breach of contract when appellees failed to make a consistent election of remedies, (2) whether the court of appeals should reverse and render judgment on Felder Trucking’s fraud claim against Pilot, with several sub issues addressing derivatives of the fraud claim, (3) whether the Court should reverse and render judgment on Felder Trucking’s breach of contract claim against Pilot, and (4) did Felder Trucking’s claims fail for lack of causation or damages. (We omit Felder’s cross-appeal issues.) The court determined that Pilot’s argument that Felder’s injuries would not be covered under the policy even if coverage under the policy would have extended to Felder Trucking was dispositive and considered it first. The court found conclusive evidence that Felder, an independent contractor, could not have been a covered person under the nonsubscriber policy. Plaintiffs, consequently, could not prove the causation element of their fraud and contract claims because even if the alleged fraud occurred, it could not have caused Felder’s damages.
This is a strange case, not least for the fact of the sham Caldwell County lawsuit in which Plaintiff basically sued himself. But we are even more baffled that a Harris County jury could award more than $1.5 million in punitive damages on this claim and that the trial court entered judgment on that verdict. It goes without saying that something went way off the rails here.
TCJL Research Intern Satchel Williams researched and drafted this article.
