Unclean hands don’t muddy excess carrier’s subrogation action.
In a recent decision, a U.S. District Court held a primary insurer could not assert an equitable unclean hands defense against the excess insurer in response to an equitable subrogation claim in a Stowers case. Westport Ins. Corp. v. Pennsylvania Nat’l Mut. Cas. Ins. Co., No. 4:16-CV-01947, 2023 WL 2574982, at *1 (S.D. Tex. Mar. 17, 2023). A marina in north Texas was damaged in a storm after it contracted with Insurance Alliance (IA) to procure full insurance coverage .
Read the full article…
The Texas Construction Anti-Indemnity Act – Some Guidance from the Texas Supreme Court
The Texas Construction Anti-Indemnity Act (“AIA”) generally voids provisions in construction contracts, entered into after January 1, 2012, that impose indemnity obligations and obligations to secure additional insured coverage for the additional insured/indemnitee’s own negligence or fault. Tex. Ins. Code §§ 151.102, 151.104. (Texts of these provisions is quoted below). We provided a brief primer on the AIA in this post from Eric Peabody on July 26, 2020. A recent decision by the Texas Supreme Court begins to define the scope
Read the full article…
Eight (Corners) May Not Be Enough After All
The Texas Supreme Court recently ruled that the “eight corners” rule, under which the duty to defend is assessed, permits consideration of evidence extrinsic to the allegations of the pleadings. Monroe Guar. Ins. Co. v. BITCO Gen. Ins. Corp., 2022 WL 413940 (Tex. Feb. 11, 2022). The Court held that extrinsic evidence may be considered under some circumstances where there is a “gap in pleadings” – where a petition is silent – on a coverage question that does not overlap
Read the full article…
Fifth Circuit Certifies Eight Corners Exception to Texas Supreme Court
Making the call on the duty to defend a case in which the pleadings are silent on a key coverage question – such as the date damage occurred – is problematic for courts, carriers, coverage attorneys, and policyholders alike. The eight corners requirement, limiting the defense assessment to the live petition, generally precludes the use of extrinsic evidence to fill in such gaps in the pleadings. This leaves parties and courts guessing, leading to inconsistent results. Compare Great American Lloyds
Read the full article…
Federal court holds pollution exclusion does not apply to injuries caused by direct, personal exposures
In Canal Indemnity Company v. CalJet II, 4:2019cv02945 (opinion available on PACER), a Texas federal judge recently held pollution exclusions did not bar coverage for a suit involving a truck driver who allegedly died from cancer caused by exposure to the carcinogen benzene in gasoline, a cargo the driver loaded and unloaded. Although Texas courts have previously held that pollution exclusions are not limited to typical cases of environmental pollution, U.S. District Judge Alfred H. Bennett of the Southern District
Read the full article…
Is Eight Enough, Part 3: Texas Supreme Court Rejects District Judge’s Exception to the “Eight Corners Rule”
We recently wrote about a question, certified to the Texas Supreme Court by the Fifth Circuit Court of Appeals, regarding the continuing validity of the “eight corners” rule. The U.S. District Court decision under review was one of a series of decisions authored by Judge John McBryde finding that because the eight corners rule originally derived from policy language requiring the carrier to defend claims even “if the allegations of the suit are groundless, false or fraudulent,” policies without such
Read the full article…
Time is on Whose Side? Time-on-the-risk allocation applied over insurer objections.
In Great Am. Lloyds Ins. Co. v. Vines-Herrin Custom Homes, L.L.C., 05-18-00337-CV, 2020 WL 104622 (Tex. App.—Dallas Jan. 9, 2020, no pet. h.), the Dallas Court held indemnity coverage can be allocated among multiple liability insurers based on each carrier’s time on the risk. The decision does not cite and appears to depart from prior decisions that favor targeted tender and allocation according to subrogation and “other insurance” clauses. See, e.g., CNA Lloyds of Texas v. St. Paul Ins. Co.,
Read the full article…
Is Eight Enough? The Texas Supreme Court may answer that question when it tackles the eight-corners rule.
The Fifth Circuit Court of Appeals recently certified to the Texas Supreme Court, and the latter accepted, a question that could end up undermining the “eight corners” rule. State Farm Lloyds v. Richards, 18-10721, 2019 WL 4267354, at *3 (5th Cir. Sept. 9, 2019), certified question accepted (Sept. 13, 2019) Jayden Meals was killed in an all-terrain vehicle accident while under the temporary care of his grandparents, the Richards. Jayden’s mother sued the Richards in state court alleging they were
Read the full article…
You Can’t Always Get What You Want (if what you want is a declaratory judgment on non-liability)
In re Houston Specialty Insurance Co., 569 S.W.3d 138 (Tex. Jan. 25, 2019) is a mandamus case involving an insurer’s motion to dismiss a declaratory judgment action by a law firm seeking a declaration of non-liability for malpractice in representing the insurer and advising it did not owe a defense in an underlying suit. The Texas Supreme Court ultimately held the Rule 91a motion was proper because the declaratory judgment action seeking non-liability was without merit. [Ed. Note – Rule
Read the full article…
Allocation 2: Electric Boogaloo
The Fifth Circuit affirms an insured cannot arbitrarily allocate settlement proceeds to non-covered damages in order to preserve coverage claims against a non-contributing excess insurer.