The dispute centers on a $25 million reinsurance fraud involving fake letters of credit from China Construction Bank. Porch's subsidiary Homeowners of America Insurance hired Gallagher to broker a reinsurance deal with Whiterock and Vesttoo, a reinsurance-finance company. When Vesttoo collapsed in 2023 amid reports of invalid collateral letters, HOA discovered CCB had never issued the promised letters of credit, leaving the company exposed and forcing Porch to inject tens of millions to keep its subsidiary afloat.
Circuit Judge Stuart Kyle Duncan wrote that Porch "plausibly alleged lapses by Gallagher that occurred after it had placed the reinsurance contract," including failing to recognize that a Yu Po collateral letter was not the promised CCB letter of credit and incorrectly assuring HOA that the collateral was valid. Duncan found the contract's requirement that Gallagher perform "all servicing duties customarily performed by a reinsurance intermediary-broker" was at minimum ambiguous regarding such duties.
The three-judge panel affirmed dismissals of Porch's other contract claims, ruling that Gallagher's duty to "retain" documents didn't encompass procuring new ones and that a sanctions compliance clause didn't cover Texas insurance laws. The Northern District of Texas had originally dismissed all of Porch's breach of contract claims with prejudice in 2025.
The partial reversal sends the case back to district court on the administrative services claim, where factual questions about customary broker duties will likely need resolution. The ruling could have broader implications for defining reinsurance intermediaries' post-placement obligations, particularly regarding verification of collateral and third-party financial instruments.