P. 26; Tex. App.Amarillo 1976, writ refd n.r.e. (b) A district court has original jurisdiction of a proceeding seeking a declaratory judgment that involves: (1) a party seeking declaratory relief that is a business that is: (A) organized under the laws of this state or is otherwise owned by a resident of this state; or, (B) a retailer registered with the comptroller under Section 151.106, Tax Code; and, (A) is an official of another state; and. Co. of Texas, 1998 Tex. A defense is an act of protecting one's own interests. 45 (N.D. Tex. 1968). Because the insurer would be allowed to re-litigate, after the underlying case is resolved, there is no reason to delay the inevitable. denied); cf. dYU1oprU.:1FlU;{~_%uIMT6cHE 7o1E-j=E.s nR&%*%")QmLd~s`MF_]jd%DhjP1h 4 z#G?o 0Xj[f e /R&K(KX K$ TBu /5v+nA%. There are a number of instances in which extrinsic evidence may be at issue: Extrinsic evidence may be used to show that the person sued does not qualify as an insured, or that the vehicle or equipment in issue is not insured. June 29, 2021 - A standard feature of CGL policies is the duty to defend, which obligates insurance companies to defend an insured even if there is ultimately no duty to indemnify. See Feria v. CU Lloyds of Texas, 2001 Tex. See Farmers Tex. 1997); Trinity Universal Ins. 1787), Sec. The insurer, Nautilus, agreed to defend the suit while also reserving its rights to disclaim coverage and obtain reimbursement of defense costs if it was determined that Nautilus did not owe a duty to defend. 10, eff. 37.003. The court of appeals determined that the Uniform Declaratory Judgments Act can be used for this purpose and affirmed the trial court's judgment to the same effect. In RSL Funding, LLC v. Pippins, No. dismd, 507 U.S. 1026 (1993); cf. Under Texas substantive law, attorneys fees may be available to the insured if the insurer has breached its duty to defend or indemnify. !`g)a00-k@@eU Suite 1400 See Travelers Ins. New Orleans, LA 70130 Thompson Coe on Best Lawyers Best Law Firms List for 12th Consecutive Year, Four Years Later: The Impact of Texas Insurance Code Section 542A.006 on Insurance Litigation, Texas Supreme Court Reverses Appeals Court Judgment, Affirms Trial Win for Thompson Coe Client, Developing Texas Insurance Law in the Appellate Courts, Update & Recap: Winter Storm Uri and Impact on Gulf Coast Coverage Cases, The Good, The Bad, The Ugly: Texas Appraisals, NEW June PC Webinar: Insurance Retrospective, Texas Supreme Court Issues Significant Decision on Exception to Eight Corners Rule, 2801 Via Fortuna Civ. Co. v. Gandy, 925 S.W.2d 696 (Tex. See, e.g., Standard Fire Ins. Defense - FindLaw Dictionary of Legal Terms )1^Hl]TgxY8Ubs,! 9@Dyp*l8sA!N\X 2d 601, 621-22 (E.D. Where suits are filed in two states, one court may abstain in favor of the first-filed suit. Co. v. Burch, 442 S.W.2d 331, 337 (Tex. Civ. stream Saint Paul, MN 55102 In state court, an order to seal discovery requires that the parties jump through a number of additional hoops, but protective orders are still available. (b) This chapter is remedial; its purpose is to settle and to afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations; and it is to be liberally construed and administered. 639a3). Co. v. Trejo, 39 F.3d 585, 590 (5th Cir. Co. v. Travis, 68 S.W.3d 72, 77 (Tex. (on petition for mandamus, found claimant was not third party beneficiary and had no right to intervene in declaratory action). As Texas law remains uncertain regarding reimbursement of defense costs, and as many insureds are not financially capable of repayment, the defense issue may be rendered moot either practically or legally by delay. 955 S.W.2d at 84 (construing Tex. Supreme Court of Texas Denies Motion to Compel Arbitration on Alternate See Farmers Tex. 97 (E.D. App.Austin 1998, pet. Insurer's right to file declaratory judgment action 9. Judges have always been suspect of declaratory judgment actions and, more particularly, the "mirror image" case where the alleged wrongdoer takes on the role of the plaintiff. 1992); LaFarge Corp. v. Hartford Cas. <> (driver excluded); see also Tri-Coastal Contrs, Inc. v. Hartford Undwrs Ins. . Co. v. Burch, 442 S.W.2d 331 (Tex. & REM. App.Fort Worth 2000, no pet.). See, e.g., Cook v. Ohio Cas. See Scottsdale Ins. PRAC. Dec. 1, 2007. The petition in the underlying suit was amended, however, and all references to alcohol were deleted. 1993). App.Houston 1965, writ refd n.r.e.) On March 11, 2021, the Nevada Supreme Court, in a 4-3 decision, held in Nautilus Insurance Company v. Access Medical, LLC, 2021 WL 936076 (Nev. 2021) that an insurance company is entitled to reimbursement of defense costs where a determination is ultimately made that the insurer did not owe a duty to defend, and the insurer expressly reserved its right to seek recoupment. The controversy must necessarily be of a justiciable nature, thus excluding an advisory decree upon a hypothetical state of facts. Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 325, 56 S.Ct. (no right to new trial because of amended petition where suit brought and determined based on prior petition). On the other hand, in some instances, principally those in which only indemnity is at issue, or where stay or abstention is likely, there may be no benefit to early filing. the enforceability of a non-compete, considerations before initiating legal action, cease and desist letters, declaratory judgments, seeking damages, requesting injunctive relief, and potential remedies available under the Defend Trade Secrets Act (DTSA). Declaratory Judgment Action Insurer Does Nothing Facts Don't Trigger Duty to Defend Insurer Does Nothing 34 . Download PDF Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. SHORT TITLE, CONSTRUCTION, INTERPRETATION. 10 0 obj The insurer refused to pay the judgment, on the basis that the insureds conduct constituted a willful violation of a penal statute, and was thus excluded by the policy. In cases involving duty to indemnify, there may be issues as to whether the indemnity facts were fully litigated in an actual trial, or whether the facts can be re-litigated, construing Gandy and Maldonado. PARTIES. App.El Paso 1976, writ refd n.r.e.) 2d 719, 725 (D. Minn. 2005) (applying Texas law); Forum Ins. Jurisdictions continue to be split over insurer's right to recoup The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. App.Corpus Christi 2000, no writ). 2000) (staying declaratory action because of motion to join insurer in state court liability suit). R. CIV. App.Beaumont 1972), affd other grounds, 496 S.W.2d 552 (Tex. A developing issue has been the extent to which declaratory relief is available to determine an insurers indemnity obligations, while the underlying suit is pending. Rule 57 also notes that "the existence of another adequate remedy does not preclude a judgment for declaratory relief in cases where it is appropriate." Co. v. Taylor, 706 S.W.2d 352 (Tex. Co., 418 S.W.2d 712, 715-16 (Tex. App.Houston 1998, pet. When to file is often determined by what is at issue. Further, while it is unlikely that an insurer wishes to proceed, without protective order, to establish evidence that demonstrates the insureds liability as the insurer has not yet prevailed on its coverage defenses it is also unclear under what standard the insured should be able to protect otherwise discoverable information, simply because it is damaging. Ins. 2001). declaratory judgment action. Co. v. Wade, 827 S.W.2d 448 (Tex. 1993); American States Ins. Indemnity, on the other hand, is based on actual facts and should always be subject to extrinsic evidence. Ohio Cas. 1973) (court had no authority to order declaration against insurer in response to insureds motion for summary judgment on insurers claims); Indigo Oil, Inc. v. Wiser Oil Co., 1998 TEX. A federal anti-injunction also exists. Co., 628 S.W.2d 184 (Tex. Ins. 699 (H.B. Co. v. Gandy, 925 S.W.2d 696 (Tex. See State Farm Mut. Exclusive news, data and analytics for financial market professionals. 1998) (holding that Texas Declaratory Judgment Act was not controlling, substantive law, and did not justify fee award to defendants). denied); ANR Prod. For more information, please contact the law firm at 817-335-8800. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia. at 368-69. See Great American Ins. denied sub nom. endobj We agree and affirm as well. Moreover, Insurers should note that policies that are not duty to defend, or otherwise expressly provide a right of recoupment, may not be subject to the same limitations on the right of recoupment. Voluck LLP and chair of its general liability coverage practice group. Ins. App.Austin 1998, no pet. Rules 38 and 39 govern a demand for a jury trial. App.Dallas 2001, pet. Tex. Co. v. Sweatt, 978 S.W.2d 267 (Tex. App.Houston [14th Dist.] 1996). In Williamson, a jury awarded the claimant damages against the insured for false imprisonment. 2002); Monticello Ins. 1978). Civ. 2 0 obj endobj A common way of eliminating this uncertainty is with a declaratory judgment action, also called a declaration. In determining amount in controversy, the court may consider policy limits and defense costs, and is not necessarily limited by the damages pleaded in the underlying suit. (a) When declaratory relief is sought, all persons who have or claim any interest that would be affected by the declaration must be made parties. Sec. App.Fort Worth 1992, writ denied) (insurer not estopped by failing to have declaratory judgment determined before judgment in underlying case). DECLARATORY JUDGMENT Definition & Legal Meaning - The Law Dictionary Further necessary or proper relief based on a declaratory judgment or decree may be granted, after reasonable notice and hearing, against any adverse party whose rights have been determined by such judgment. App.San Antonio 1998, pet. A declaratory judgment must be based on an actual controversy, and cannot be merely advisory. 59.02(c). 1998, pet. In this holding, Nevada fell in line with other jurisdictions that also recognize an insurer's right to recoup defense costs where the insurer has specifically reserved such rights, including: California, Connecticut, Massachusetts and Minnesota. See, American Home Assur. 1 0 obj Federated Mut. Co., 542 S.W.2d 429 (Tex. 1991), affd in part, 961 F.2d 213 (5th Cir. P., also addresses declaratory judgments, by reference to 28 U.S.C. Mirror-image counterclaims in declaratory judgment actions 1997), the Supreme Court reaffirmed the complaint allegation rule, with dicta suggesting that the exception for extrinsic evidence would be narrowed. Still, there are often strategic benefits to filing early. Jurisdictional authority is split on the question of whether an insurance company can recoup defense costs paid on behalf of an insured when it is subsequently determined that there was no duty to defend. In Bradleys Electric, the court rejected an argument from the insured that the county where the insurance contract was negotiated and executed was the only proper venue, but recognized it was also proper.
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