DALLAS -- An arbitrator has determined that Kevin M. Curley was fired from his post as president of Texans Insurance Group without reasonable or justifiable cause and ruled that the former executive is entitled to his job back.

The final ruling came on July 8 from arbitrator Susan Soussan, who ruled that Curley can resume his job with Texans Insurance, recover roughly $350,000 in back pay, benefits and pre-and post-judgment interest. Texans Insurance Group is a CUSO of the $2 billion Texans Credit Union.

Texans Insurance Group said it is currently reviewing its options following the arbitrator's decision However, "due to the nature of the arbitration process and the fact that there are still pending matters awaiting resolution, Texans Insurance Group cannot comment on the facts or issues in the employment dispute."

"Texans Insurance Group participated in arbitration with Kevin Curley as required in his employment agreement [and] has received Arbitrator Susan Soussan's decision regarding the claims made by Kevin Curley," the CUSO said in a July 18 e-mailed statement. "Texans Insurance Group is currently reviewing its options in regard to the decision and will respond in a manner that is in the best interests of its clients and employees."

John Bickel, an attorney with Bickel and Brewer, who represented Curley, said he "is confident that Texans Insurance will drag this out." Curley showed up for work on the morning of July 15 but was not allow into the building, Bickel said. He was told that the CUSO is "reviewing its options" and did not feel Curley should be on the premises during this process. According to Matt Davis, Texans CU executive vice president and chief marketing officer, on July 10 Texans' attorneys informed Curley's attorneys that Curley should not report to work on July 15.

"Attorneys for Texans and Mr. Curley have recognized the ruling and identified outstanding issues needing resolution before any specific action can be taken regarding Mr. Curley's reinstatement. Both parties continue to have outstanding issues on this matter. Additionally, as employment matters can be sensitive for all parties involved, and because Texans considers the arbitration process to be confidential, Texans prefers to keep the details of this matter private and between the parties involved. As a result, Texans is not able to comment further," Davis wrote in a July 22 e-mail.

Meanwhile, Bickel said he is unsure of Texans Insurance's next move.

"We may have to enforce the award," Bickel said. "If they continue not to honor the arbitration hearing, we will have to go to court to enforce the findings."

Curley's case goes back to January 2007 when Texans Credit Union bought the Curley Insurance Group LLC and six other companies from Curley for $19 million, according to the July 8 final award arbitration hearing letter. Curley was also entitled to a $21 million contingent right to an earn-out to be paid by Texans Insurance.

Per an employment agreement, Curley was to continue working with the new CUSO from Jan. 1, 2007 to Dec. 31, 2009. A clause limiting Texans Insurance from terminating him before the employment agreement ended included willful or negligent conduct harmful to the company, participation in felony acts and breach of contract.

At the arbitration hearing that lasted from March 9 through March 12, Gary Kirkindoll, president of Texans Services Group, listed several reasons why Curley was fired. Kirkindoll said Curley did not honor an April 27, 2007 request to have Kirkindoll's office set up by April 30, 2007. According to the arbitration hearing letter, Kirkindoll felt Curley was being insubordinate. Curley did not refuse to move Kirkindoll's office to the CUSO's headquarters but felt his presence "would be to the detriment, financially or otherwise, to the company," the arbitration letter read.

Kirkindoll said Curley also failed to follow his April 26, 2007 request to set up an enhanced benefits package with Kevin Heitzman, head of human resources. Heitzman had submitted a letter of resignation on April 24, effective May 7. Curley told Heitzman he could leave the company on April 27, 2007 since he had submitted his resignation on April 24, the arbitration letter read. Curley told Kirkindoll that another employee named in the letter was more capable of implementing the benefits package. Kirkindoll felt that Curley was again being insubordinate for failing to launch the package with Heitzman.

Texans Insurance also claimed that it fired Curley because he engaged in discussions with a CUSO accounting clerk about a potential job opportunity with one of his companies. Kirkindoll said Curley had the conversations despite his instructions to first seek permission before talking with employees about such matters. Curley said he e-mailed Kirkindoll about the discussions with the employee asking for feedback on how the job transfer would work since two of Curley's old companies were involved, according to the arbitration letter. In his response, Kirkindoll told Curley not to have any further discussions with the employee, instructions that Curley followed.

The final reason for firing Curley involved the alleged unauthorized issuance of tail policies. On Feb. 28, 2007, Curley purchased tail insurance policies on behalf of KMC Insurance Services Inc., Heartland Marketing Group, NCIS Ltd., CEIS Ltd., and IMI from SIA Insurance Co., a company owned by Curley that was not acquired by Texans. The CUSO argued that the tail policies were unauthorized by the state of Texas when Curley purchased them.

According to Bickel, tail insurance is coverage during that period of time that is not covered during an insurance policy's time frame. For instance, if a policyholder has coverage from June 2008 to June 2009, he or she could ask for coverage for the remaining six months of 2009. That would be a tail insurance policy.

Soussan noted that the tail policies were the subject of much discussion at the hearing with Curley's briefing focused on the issue that the policies fell within the "independently procured" insurance exemption and, therefore, were not illegal. Texans stood by its position that the policies were unauthorized. The arbitrator said the status of the policies were not clear and at the time of the March 2008 hearing, they remained in effect and no action had been taken by the Texas Department of Insurance even though they were reported to the regulator after April 2007.

"Whether these policies were or were not authorized by TDI is not an issue to be decided here," Soussan wrote. "The issue...is whether when Kirkindoll learned of the existence of these policies on April 24 or 25, 2007, he had a sufficient reason to terminate Curley on April 27, 2007 for cause as a result of the same. The simple answer is no."

Texans Insurance also argued that Curley had a conflict of interest in having NCIS, a Texans company, issue tail insurance policies by SIAI, an entity in which Curley has "a substantial ownership interest." The arbitrator said there was no proof that SIAI did not pay a fair price for the policies or that they did not adequately cover risks to NCIS. Proof presented at the hearing did show that fair quotes were provided only after Curley consulted with others in the industry "to ensure fairness of the provisions," Soussan wrote.

Ultimately, Curley's conduct during his time with Texans Insurance as a basis to terminate him for any reasonable or justifiable cause did not rise to the level required by law, Soussan wrote, adding, "A three-year employment contract was in place" and "it does not make sense that after only four months, Curley's actions...were as egregious as to warrant termination."

"From the testimony and the demeanor of the witnesses at the arbitration hearing, it became obvious that a personal animus was building up between Texans and Curley," Soussan said. "Curley had just sold the business he had built over an 18-year period. Texans took over a business with which it was not familiar. More of an effort should have been made by Texans to work with Curley and vice-versa."

Soussan said other remedies could have been explored that could have eliminated the need for arbitration.

"This could have been done through counseling and successive corrective actions not by an abrupt and unwarranted termination," she wrote. "People work together to correct behavior patterns in the work place especially when a company is only four months into a three-year employment agreement with its president."

Bickel said the next steps include the arbitrator calculating the attorney fees, which could "dwarf" the $350,000 Curley should recover. The final amount could come within the next 30 days, depending on Soussan's schedule.

"It was mismanagement 101," Bickel said of Texans Insurance. "It's really regrettable from Mr. Curley's point of view. He was the one that built [the insurance company] literally from mom and pop to one of the most honored and respected agencies in the country. And, these guys come in, don't have the same expertise and they try to intervene and undermine him."

--msamaad@cutimes.com

Instant Insights /

Arbitrator Rules Texans Insurance President Was Fired Without Cause

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