A federal judge has paused a lawsuit brought by two Texas entertainment businesses against their insurers, ruling that the companies must comply with policy provisions requiring sworn testimony before proceeding with their claims.
TnT Gaming Center LLC and TnT Family Entertainment Inc. filed suit last year against Arch Specialty Insurance Company and several other insurers, alleging failure to cover damages stemming from a kitchen fire that occurred in May 2023. The fire caused extensive smoke and water damage to the family-oriented venue, which includes an event space, restaurant and gaming area.
At issue in the case is a clause in TnT Family Entertainment’s policy with Arch Specialty that mandates the company’s representatives submit to examinations under oath, or EUOs, as part of any insurance investigation. The policy also includes a cooperation clause and a condition prohibiting legal action until all policy terms have been met.
Arch argued that it repeatedly requested EUOs from TnT Family’s owners, Teresa and Kendall Walles, starting in November 2023, months before the plaintiffs filed suit. When the plaintiffs refused to comply, the insurer moved to abate the case — a procedural halt — until the examinations could be completed.
In his ruling, Judge Ed Kinkeade of the U.S. District Court for the Northern District of Texas sided with the insurer, holding that the policy terms were unambiguous and enforceable under Texas law. “These provisions are valid conditions precedent,” Judge Kinkeade wrote, adding that Arch had made its requests in a timely manner and that TnT Family had failed to meet its obligations.
TnT Family argued that Arch’s own delays and conduct in handling the claim — including its alleged failure to make timely payments to a mortgage-holder — relieved the plaintiffs of their duty to comply. The company further asserted that depositions taken during litigation should suffice in place of pre-suit examinations under oath.
But Judge Kinkeade rejected those arguments, citing well-established precedent that EUOs are a distinct procedural safeguard for insurers and cannot be substituted by depositions. He emphasized that compliance with the policy’s cooperation and EUO requirements was a necessary step before filing suit.
The case reflects a common feature of insurance litigation, where courts routinely enforce such procedural clauses to ensure insurers can complete claim investigations. The judge’s decision underscores the importance of policyholders strictly adhering to pre-suit obligations outlined in their contracts.
The case will remain on hold until the examinations are completed. Both parties have been directed to file a status report by May 19, 2025.
