Coverage


Texas Supreme Court Recognizes Eight-Corners Exception for “Collusive Fraud”

May 3rd, 2020 By David L. Plaut

For the first time, the Texas Supreme Court has recognized an exception to the eight-corners rule and allowed the consideration of “extrinsic evidence” when assessing a carrier’s duty to defend its insured under a liability policy.  In Cause No. 18-0837, Loya Insurance Company v. Osbaldo Hurtado Avalos et al. (Tex. May 1, 2020), the Texas Supreme Court adopted “an exception to the eight-corners rule” finding a trial court “may consider extrinsic evidence regarding whether the insured and a third party
Read the full article…


Is Eight Enough, Part 3: Texas Supreme Court Rejects District Judge’s Exception to the “Eight Corners Rule”

April 19th, 2020 By Jeffrey C. Glass

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.

April 12th, 2020 By Jeffrey C. Glass

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, Part 2 – Texas Supreme Court Justices Signal Skepticism of Extrinsic Evidence Exception

February 9th, 2020 By Eric S. Peabody

On January 8, 2020, the Texas Supreme Court heard argument on a certified question from the U.S. Court of Appeals for the Fifth Circuit in State Farm Lloyds v. Richards, 784 Fed. App’x 247 (5th Cir. 2019), certified question accepted (Sept. 13, 2019), which asks: Is extrinsic evidence permissible—and the strict eight-corners rule inapplicable—in determining the duty to defend if the policy does not require defense of groundless, false or fraudulent allegations? Jeff Glass previously blogged about this certified question here.
Read the full article…


Stormy Weather — Insured Sings the Burden of Proof Blues

December 3rd, 2018 By Eric S. Peabody

Insured’s Failure to Support Causation and Segregation with Evidence Results in Win for Carrier Insureds Richard and Linda Seim filed suit against their homeowners’ insurance carrier Allstate for damage to their home following a storm in August 2013. Seim v. Allstate Texas Lloyds, No. 02-16-00050-CV, 2018 WL 5832106, at *1 (Tex. App.—Fort Worth  Nov. 8, 2018, n.p.h.). Allstate had investigated and, despite finding some interior water damage to the home, had denied the claim because there was no evidence of
Read the full article…


The Burden of Allocation

June 17th, 2018 By Jeffrey C. Glass

Insured cannot arbitrarily allocate settlement proceeds to non-covered damages in order to preserve coverage claims against a non-contributing insurer. Judge Lee Rosenthal, of Texas’ U.S. Southern District, recently prohibited an insured from unilaterally allocating general settlement amounts from its subcontractors to uncovered damages, in order to preserve claims against insurers “that would cover the damages if the loss was properly allocated to that policy.”  In  Am. Guarantee & Liab. Ins. Co. v. United States Fire Ins. Co., 255 F. Supp.
Read the full article…


Insurance Coverage for Punitive Damages – The Discussion Continues

May 15th, 2018 By Tara Mireur

The Court of Appeals of Texas, Fourth District, sitting en banc, has denied a motion for en banc reconsideration.  The case, Farmers Texas County Mutual Insurance Company v. Zuniga, 2018 WL 1310157, involved the question of whether or not a form automobile insurance policy covered exemplary damages.  In November 2017, the San Antonio Court of Appeals held that the policy, under which the insurer agreed to “pay damages for bodily injury,” did not provide coverage for a claim for punitive
Read the full article…


Defining Damages in a CGL Policy – Do Attorney’s Fees Make the Cut?

March 13th, 2018 By Sarah Scott

Given the broad nature of most commercial general liability (CGL) policies, it’s not surprising that creative attorneys continue to press new arguments about costs and fees that should (or should not) be covered. In most CGL policies, the insuring agreement says the carrier will pay “those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies…” Problematically, many policies don’t define the term “damages,” which leaves wiggle
Read the full article…


Judge Pushes the Button for Coverage for Elevator Subcontractor

February 27th, 2018 By Jeffrey C. Glass

Literal interpretation of unambiguous policy language rejected  because it would defeat the purpose of the liability coverage. In a recent decision construing a commercial general liability policy, Judge Sam Sparks of the Western District of Texas used contextual clues in the policy as well as an “illusory coverage argument” to narrow an exclusion whose literal words applied more broadly. In Northfield Ins. Co. v. Herrera, A-16-CA-00553-SS, 2017 WL 5147618, at *3 (W.D. Tex. Nov. 6, 2017), an employee of Austin Energy
Read the full article…