law-insurance-duty-to-defend-indemnify
RECENT TEXAS SUPREME COURT OPINIONS: INSURER'S DUTY TO
DEFEND, INDEMNIFY
Pine Oak Builders, Inc. v. Great American Lloyds Ins. Co., No. 06-0867 (Tex. 2009)(Willett)
In deciding the duty to defend, the court should not consider extrinsic evidence from either the
insurer or the insured that contradicts the allegations of the underlying petition. The duty to defend
depends on the language of the policy setting out the contractual agreement between insurer and
insured. Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex. 1994) (“Interpretation of
insurance contracts in Texas is governed by the same rules as interpretation of other contracts.
When construing a contract, the court’s primary concern is to give effect to the written expression
of the parties’ intent.” (citations omitted)).
A defense of third-party claims provided by the insurer is a valuable benefit granted to the insured
by the policy, separate from the duty to indemnify.[28] Trinity Universal Ins. Co. v. Cowan, 945 S.
W.2d 819, 821-11 (Tex. 1997) (noting that “the duty to defend and the duty to indemnify by an
insurer are distinct and separate duties.”); Heyden Newport Chem. Corp. v. S. Gen. Ins. Co., 387
S.W.2d 22, 25 (Tex. 1965) (noting that duty to indemnify protects insureds “from payment of
damages they may be found legally obligated to pay,” while duty to defend “protects the same
parties against the expense of any suit seeking damages” covered by the policy).But the insurer’s
duty to defend is limited to those claims actually asserted in an underlying suit.
“If the petition only alleges facts excluded by the policy, the insurer is not required to defend.”
Fid. & Guar. Ins. Underwriters, Inc. v. McManus, 633 S.W.2d 787, 788 (Tex. 1982). “We will not read
facts into the pleadings. . . . Nor will we look outside the pleadings, or imagine factual scenarios
which might trigger coverage.” Nat’l Union Fire Ins. Co. of Pittsburgh, PA, v. Merchs. Fast Motor Lines,
Inc., 939 S.W.2d 139, 142 (Tex. 1997). Instead, “an insurer is entitled to rely solely on the factual
allegations contained in the petition in conjunction with the terms of the policy to determine whether it has
a duty to defend.”Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 829 (Tex. 1997).
Ulico Casualty Co. v. Allied Pilots Association, No. 06-0247 (Tex. Aug. 29, 2008)(Johnson)
(insurance coverage, non-coverage claim, waiver, estoppel)
ULICO CASUALTY COMPANY v. ALLIED PILOTS ASSOCIATION; from Tarrant County; 2nd district
(02-04-00120-CV, 187 SW3d 91, 12-15-05)
The Court reverses the court of appeals' judgment and renders judgment.
Justice Johnson delivered the opinion of the Court.
Chief Justice Jefferson delivered a concurring opinion, in which Justice O'Neill joined.
Zurich American Ins. Co. v. Nokia Inc., No. 06-1030 (Tex. Aug. 29, 2008)(Jefferson)
(insurance coverage, duty to defend)
A wireless telephone manufacturer, sued in a number of putative class actions alleging that radiation
emitted by the phones caused biological injury, turned to its insurers, who had agreed to defend claims
seeking damages because of bodily injury. After initially providing a defense, the insurers later sought a
declaration that they had no duty to do so. Because we conclude that most of the underlying suits seek
damages because of bodily injury, we modify the court of appeals’ judgment and, as modified, affirm.
Justice Hecht delivered a dissenting opinion, in which Justice Brister joined.
Federal Ins. Co. v. Samsung Electronics America, No. 06-1040 (Tex. Aug. 29, 2008)(Jefferson)
(duty to defend cell phone company against consumer class action found)
Justice Hecht delivered a dissenting opinion, in which Justice Brister joined.
Trinity Universal Ins. Co. v. Cellular One Group, No. 07-0140 (Tex. Aug. 29, 2008)(Jefferson)
(insurance law, duty to defend, companion case to Zurich v. Nokia)
Don's Building Supply, Inc. v. Onebeacon Ins. Co., No. 07-0639 (Tex. Aug. 29, 2008)(Willett)
(cert. questions)(insurance coverage dispute, duty to defend, eight corners rule, belated discovery of
residential construction defect)(construction law)
As to the duty to defend, we answer this question “yes.”[41] Under the “eight corners” rule of Texas
insurance law, the insurer’s defense duty turns on the policy’s terms and the plaintiff’s allegations. The
duty is triggered if the plaintiff alleges facts that would give rise to any claim against the insured that is
covered by the policy.[42] The OneBeacon policy itself imposes a duty to defend without regard to the
merits of the underlying claim against the insured; it imposes on the insurer “a duty to defend any” suit[43]
seeking damages for “bodily injury” or “property damages” covered by the policy, regardless of whether
the plaintiff in the underlying action has a legally meritorious claim. By purchasing the policy, DBS
acquired a contractual right to a defense against both meritorious and nonnmeritorious claims for property
damage.[44]
Based on our answer to the first certified question, the insurer’s duty to defend DBS depends on whether
the homeowners’ pleadings allege property damage that occurred during the policy term. Under the actual-
injury rule applicable to this policy, a plaintiff’s claim against DBS that any amount of physical injury to
tangible property occurred during the policy period and was caused by DBS’s allegedly defective product
triggers OneBeacon’s duty to defend.[45] This duty is not diminished because the property damage was
undiscoverable, or not readily apparent or “manifest,” until after the policy period ended. Nor does it
depend on whether DBS has a valid limitations defense. The parties could have conditioned coverage on
identifiability, but the contract imposes no such limitation.[46]
APPEALS INVOLVING DUTY TO DEFEND ISSUES IN WHICH
THE TEXAS SUPREME COURT DENIED REVIEW
08-0139
MARYLAND CASUALTY COMPANY, NATIONAL STANDARD INSURANCE COMPANY, AND MARYLAND
LLOYDS v. SOUTH TEXAS MEDICAL CLINICS, P.A.; from Wharton County; 13th district
(13-06-00089-CV, ___ SW3d ___, 01-10-08, pet denied June 2008)(duty to defend employment suit,
summary judgment, defense costs)
08-0241
GENERAL STAR INDEMNITY COMPANY v. GULF COAST MARINE ASSOCIATES, INC.; from Harris
County; 14th district (14-06-00662-CV, ___ SW3d ___, 02-14-08, pet. denied June 2008)
[Dissent in 14-06-00662-CV] (insurer's duty to indemnify, duty to defend)
07-0445
STATE FARM LLOYDS INSURANCE v. EUNICE RICHARDSON AND BOBBY RICHARDSON,
INDIVIDUALLY, AND ON BEHALF OF THE ESTATE OF KENT RICHARDSON, DECEASED; from Tarrant
County; 2nd district (02-04-00072-CV, ___ S.W.3d ___, 04-05-07, pet. denied May 2008) (insurance
coverage, duty to defend, indemnify)
07-0016
WARRANTECH CORPORATION AND WARRANTECH CONSUMER PRODUCT SERVICES, INC. v.
STEADFAST INSURANCE COMPANY; from Tarrant County; 2nd district (02-05-00351-CV, 210 SW3d
760, 11-30-06, pet. denied March 2008) (insurance law, duty to defend, duty to indemnify)
This is an insurance dispute involving a claims-made professional liability policy issued by Appellee
Steadfast Insurance Company to Appellants Warrantech Corporation and Warrantech Consumer Product
Services, Inc. Warrantech sued Steadfast for breach of contract and insurance code violations when
Steadfast refused to defend Warrantech in another lawsuit