September 19, 2025

Mid-Continent Casualty Company Pursues Federal Insurance in Legal Dispute

News Summary

Mid-Continent Casualty Company has filed a lawsuit against Federal Insurance Company to recover $400,000 in defense costs linked to a dismissed defamation suit involving oil executive William Francis. The legal battle revolves around the complexities of insurance coverage, as federal insurance has claimed secondary liability responsibility. Mid-Continent argues they should not bear the financial burden alone after defending Francis against accusations made by a former associate. This ongoing case underscores the nuances of overlapping insurance policies amidst legal controversies.

Texas – Mid-Continent Casualty Company is in a legal dispute with Federal Insurance Company over more than $400,000 in defense costs tied to a defamation lawsuit that has since been dismissed. The disagreement centers on whether Federal Insurance should cover part of the expenses related to the defense of Texas oil executive William Francis in a lawsuit brought by Adam Ferrari.

The case began when Ferrari accused Francis, the CEO of Incline Energy Partners, L.P., of attempting to tarnish his reputation following Ferrari’s decision to start his own energy company. According to the allegations, Francis sent out false and defamatory communications about Ferrari to various parties from 2021 to 2022. This list of parties includes organizations such as First International Bank and Trust, Dalmore Capital, 4 GRLZ Investments, and the Financial Industry Regulatory Authority.

Ferrari made serious claims against Francis, saying that he portrayed Ferrari as a criminal by stating he was a felon and that he was misrepresenting himself as the CEO of another company while defrauding mineral owners and investors. As a result, Ferrari pursued multiple forms of damages, which included actual, exemplary, consequential, and compensatory damages, along with court costs and the request for permanent injunctive relief.

Ultimately, the underlying defamation lawsuit involving Ferrari and Francis was dismissed, and it is not currently active. However, Mid-Continent, which had been defending Francis, incurred over $400,000 in legal defense costs after Federal Insurance opted not to participate in the defense. Mid-Continent asserts that they acted under a reservation of rights, meaning they defended Francis while also reserving the right to later dispute their obligations.

Mid-Continent has now filed a complaint in the U.S. District Court for the Northern District of Texas, seeking a declaratory judgment that Federal Insurance was obligated to provide a defense for Francis and should reimburse Mid-Continent for the incurred defense costs. The complaint references specific insurance policy clauses that detail the responsibilities of both insurance companies in this situation.

Mid-Continent previously provided a commercial general liability policy to Incline Niobrara Partners LP, which included coverage limits of $1 million per occurrence and $2 million in the aggregate. This policy outlines that Mid-Continent is responsible for defending the insured against lawsuits related to bodily injury or property damage, provided that such cases are covered. Furthermore, it clarifies that Mid-Continent does not assume a duty to defend against lawsuits that are not covered.

It is essential to note that Incline Energy Partners, L.P. is not named as an insured under the Mid-Continent policy. On the other hand, the Federal Insurance Company had issued a Directors and Officers and Entity Liability Policy to Incline Energy Partners, L.P. with a limit of $10 million. The Federal Insurance policy contains an “other insurance” clause, which indicates that it will contribute as excess insurance above any other valid coverage.

Federal Insurance contends that its policy is secondary to the Mid-Continent policy. However, Mid-Continent disputes this assertion and is now seeking judicial clarification on their respective rights and obligations under their insurance arrangements, along with reimbursement for legal costs and attorney’s fees.

This ongoing dispute illustrates the complexities often encountered with overlapping insurance coverage and the financial implications that arise when multiple insurers are involved in the defense of legal actions. While the initial defamation lawsuit has been resolved, the conflict concerning the insurance coverage between Mid-Continent and Federal Insurance remains active and unresolved.

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