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See, e.g., Western Heritage Ins. Suite 1400 denied) (failure to satisfy burden is not finding of proof of opposite). Oftentimes, the insurer has no duty to indemnify. The Supreme Court of Texas has ruled that a company did not waive its right to arbitration by bringing a "friendly" declaratory judgment action. The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. On the other hand, where the insured seeks a declaration that the insurer owes indemnity, before resolution of the underlying case, the opinion may be considered advisory, and declaratory relief may, indeed, be premature. 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. See Farmers Tex. Because the pleadings did not address a fact essential to determining coverage, the court allowed extrinsic evidence. The focus is on the factual allegations that show the origin of damages, rather than the legal theories alleged. Still, there are often strategic benefits to filing early. 5 0 obj Co. v. Plummer, 13 F.Supp. Texas law provides innocent owners and holders of a security interest in property with a statutory defense to civil forfeiture of their property or interest in the property. 1993). Co. v. Tandy Corp., 986 F.2d 94, 96 (5th Cir. Ins. App. Tex. aspects of insurance coverage including directors and officers liability, professional liability, Co. v. River Entertainment, 998 F.2d 311, 315 (5th Cir. 2 a : the theory or ground that forms the basis for a defendant's opposition to an allegation in a complaint or to a charge in a charging instrument (as an indictment) ;also. 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. Nevertheless, some courts have concluded that declaratory relief is inappropriate where another cause of action is fully mature and provides an appropriate remedy at law. Foust v. Ranger Ins. (c) This chapter shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states that enact it and to harmonize, as far as possible, with federal laws and regulations on the subject of declaratory judgments and decrees. (c) The enumerations in Sections 37.004 and 37.005 do not limit or restrict the exercise of the general powers conferred in this section in any proceeding in which declaratory relief is sought and a judgment or decree will terminate the controversy or remove an uncertainty. <> endobj The insurer denied defense based on the liquor liability exclusion and filed a declaratory judgment action. stream <> . at 452. denied) (any judgment on indemnity was advisory and beyond power and jurisdiction of the court); Campbell v. Commercial Standard Ins. Civ. (a) In this section, "state" includes any political subdivision of that state. Created is remedy Id. As with the state act, one of the exceptions allows a federal court to enjoin re-litigation in state court to protect or effectuate its judgments. See Royal Ins. The Western Heritage case epitomizes the argument for use of extrinsic evidence. 1992), cert. at 468. endobj 37.008 provides that the court may refuse to render a declaratory judgment if the judgment would not terminate the uncertainty or controversy giving rise to the proceeding. A federal court cannot, however, stay a pending suit for declaratory relief to allow the parties to re-file suit in state court, as the state court will have no jurisdiction. 1996) (nevertheless refraining from determining coverage for indemnity, on the basis of judicial economy). v. Mitchell, 138 F.3d 208, 210 (5th Cir. relation to an action brought by a party with no apparent justiciable interest. He can be reached at estern@kdvlaw.com. Group v. Lou-Con, Inc., 293 F.3d 908 (5th Cir. In addition to the county of the defendants residence or principal office, venue is generally deemed proper in the county where the liability suit is pending, or judgment is entered. See Scottsdale Ins. The Uniform Declaratory Judgments Act (the "UDJA") does not extend a trial court's jurisdiction, and a litigant's request for declaratory relief does not confer jurisdiction on a court or change a suit's underlying nature. 37.003. Genl Ins. The declaratory judgment action allows relief, even where another remedy exists. See, American Home Assur. 37.009. Co., 981 S.W.2d 861 (Tex. Pursuant to 37.003, a declaration may be either affirmative or negative in form and effect. Cluett v. Medical Protective Co., 829 S.W.2d 822, 826 (Tex. Sec. In this chapter, "person" means an individual, partnership, joint-stock company, unincorporated association or society, or municipal or other corporation of any character. 1996). that AHCA Comply with Fla. Stat. We agree and affirm as well. The Federal Declaratory Judgment Act creates a remedy, not a basis for jurisdiction. 2201. See, e.g., State Farm Fire & Cas. Sec. Co. v. Trejo, 39 F.3d 585 (5th Cir. denied). Michael L. Zigelman is co-managing partner of the New York City office of Kaufman Dolowich & 7) whether the federal court is being called on to construe a state judicial decree involving the same parties and entered by the court before whom the parallel state suit between the same parties is pending. Ins. <> Nor can an insurer join the claimants and address the issues through interpleader. endobj 1997), the Supreme Court reaffirmed the complaint allegation rule, with dicta suggesting that the exception for extrinsic evidence would be narrowed. Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1978). (2) the decisions of other courts interpreting Section 8, Article I, United States Constitution. Federal courts have typically held that declaratory relief is discretionary, and a federal court has broad authority to stay or dismiss an action seeking a declaratory judgment. Because there was no judgment in the liability suit, the court concluded that any declaration regarding indemnity would be purely hypothetical.1 In 1997, the Supreme Court concluded that the law had changed, however, and determined that a declaration of indemnity was available, when the same facts that defeated a duty to defend also defeated a duty to indemnify. Even before the Texas Supreme Courts opinion in Griffin, federal courts recognized that indemnity presented an actual controversy and was justiciable, prior to judgment in the underlying liability suit. 9. In considering whether to afford a defense under a policy, insurers must also carefully review the relevant policy language and be aware of the potential limitations on the right to recoupment. (As amended Dec. 29, 1948, eff. App.Dallas 1992, writ denied) (insurer not collaterally estopped from challenging findings); United States Fire Ins. 2d 719 (S.D. 3 0 obj C.M.W., 53 S.W.3d 877 (Tex. 1992), cert. Explainer: How did the battle between Ron DeSantis and Disney escalate? 2201-2202 2201. Ins. "gj6P'pn.g_9z# ?V#yof.j,^4{%y^LJ_z|0 eivLnBE.orQevfwe^_d \2P4^Gy-ts}] ;|^QRg-d^yX^OeGE?kP0+]kw/k}m+TssVg4Pv. The industry leader for online information for tax, accounting and finance professionals. 2d 719, 725 (D. Minn. 2005) (applying Texas law); Forum Ins. Finally, the Court stated that it strongly disagreed with the view that permitting recoupment would erode the duty to defend. 2002, no pet. dismd, 507 U.S. 1026 (1993); cf. v. Wallace, 288 U.S. 249 (1933); Gully, Tax Collector v. Interstate Natural Gas Co., 82 F.(2d) 145 (C.C.A.5th, 1936); Ohio Casualty Ins. Ins. 830-252-5100. 1992), cert. Co. v. Cooper Mach. denied). Subscribe to Justia's Free Newsletters featuring summaries of federal and state court opinions. See Murray, 437 S.W.2d 264 (Tex. Under Texas substantive law, attorneys fees may be available to the insured if the insurer has breached its duty to defend or indemnify. Redwood also moves to dismiss Holmes's affirmative defense of failure of conditions precedent, arguing that the defense does not refer to any specific or particular unmet condition. Sec. When declaratory relief will not be effective in settling the controversy, the court may decline to grant it. (c) Notwithstanding Section 22.001, Property Code, a person described by Subsection (a) may obtain a determination under this chapter when the sole issue concerning title to real property is the determination of the proper boundary line between adjoining properties. 1993) (whether accident arose from liquor liability); Acceptance Ins. 1995), the court held a minor, whose interests were affected, was properly made a party to a declaratory judgment action, and was bound by the judgment where the minors mother answered, as next friend, and a guardian ad litem was appointed. If no facts within the scope of coverage are alleged, an insurer is not required to defend. In Wade, the insurer argued that it was not challenging the veracity of the facts alleged, but had a defense independent of the pleadings. Prior to the Grapevine Excavation case, the Fifth Circuit had construed 38.006 to exempt insurers from paying attorneys fees in breach of contract actions. (a) A court of record within its jurisdiction has power to declare rights, status, and other legal relations whether or not further relief is or could be claimed. See Firemans Ins. Thus, an insured can seek an affirmative finding of coverage, or an insurer can seek a negative determination that coverage does not exist. ydXOEp Pzz2 -Ia5D(eUE02Xd#zG5 ;}srmVY9c~Vqz6#tUy/`ck$cVpxKCoo,}o{T#@TQ]%5|@Rtx~K9jptm> oL P. 26; Tex. 512-708-8200, 700 North Pearl Street Co. v. Burch, 442 S.W.2d 331 (Tex. U.S. Constitution Annotated Toolbox. The following state regulations pages link to this page. 1996); Williamson v. State Farm Lloyds, 76 S.W.3d 64 (Tex. tort and environmental coverage. Under state or federal law, declaratory relief is only appropriate when there is an actual case or controversy. The answer may depend upon whether the insurer has defended or simply denied coverage, and the extent to which the issue is actually material to, and fully litigated in, the underlying dispute. 1998) (whether release was sudden and accidental); Western Heritage Ins. App.Austin 1998, pet. Declaratory relief is an especially appropriate method for resolving coverage disputes, because of the limited options available for resolution of such disputes. When there is uncertainty as to the legal obligations or rights associated with a potential future course of action, declaratoryrelief offers an immediate means to resolve this uncertainty. art. P. 76A; 192.6(b)(5). Download PDF Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. 1997) (whether vehicle was owned by insured); Harken Exploration Co. v. Sphere Drake Ins., PLC, 261 F.3d 466 (5th Cir. 2002); Monticello Ins. Sept. 1, 1985. V 8). In this instance, there may be legitimate concerns that the insurers discovery will inure to the benefit of the liability plaintiff, which is likely not in the interest of either the insured or the insurer. Co. v. Am. The firm's new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112. 1271 (N.D. Tex. 37.008 provides that aforementioned court may refuse to render a declaratory judgements if the judgment become nay terminate and uncertainty or controversy giving rise to the proceeding. See, e.g., Cook v. Ohio Cas. App.San Antonio 1998, pet. App.Dallas 1998, pet. Texas, Inc., 64 S.W.3d 497 (Tex. LEXIS 7550 (Tex. Civ. : the evidence and arguments presented supporting the defendant's opposition see also accord, alibi . Co. v. Boll, 392 S.W.2d 158, 161 (Tex. A trial court has discretion to enter declaratory judgment if it will serve a useful purpose or will terminate the controversy between the parties. Id. 6#7a |mp}v"VY2I 65. 1991), affd in part, 961 F.2d 213 (5th Cir. Facts and Procedural History. As a matter of law, the duty to defend is broader than the duty to indemnify, and an insurer's duty to defend is triggered as long as there is a "reasonable possibility" that the insurer may have to indemnify the insured under the policy. App.Amarillo 1997, no pet.). 9 0 obj Therefore, either diversity or federal question jurisdiction must still exist. The application must be by petition to a court having jurisdiction to grant the relief. . 925 S.W.2d at 714. 7 0 obj While the law is less clear, Federal courts, applying Texas law, have reached a similar conclusion. See Farmers Tex. SECOND AFFIRMATIVE DEFENSE. 2 The courts decision has been described as carving out an exception, rather than overruling prior law. 713-403-8210, 601 Poydras It argues that the other claims and defenses in the case subsume the issues on which Holmes asks for a declaratory judgment. Tex. endobj The Burches were the plaintiffs, and were also the petitioners for declaratory relief. R. Civ. 1995) (whether trademark violation occurred during policy period). 12 0 obj Insurers that issue policies containing a duty to defend, such as CGL policies, should familiarize themselves with the rules governing recoupment in the applicable jurisdiction. Co. v. Port Auth. 2001) (when lease obtained); Guaranty Natl Ins. (a) A person interested under a deed, will, written contract, or other writings constituting a contract or whose rights, status, or other legal relations are affected by a statute, municipal ordinance, contract, or franchise may have determined any question of construction or validity arising under the instrument, statute, ordinance, contract, or franchise and obtain a declaration of rights, status, or other legal relations thereunder. In Nautilus, the insureds were sued in California state court by a former business partner asserting numerous claims, including interference with prospective economic advantage. 606 S.W.3d 774 (Tex. The Texas Supreme Court concluded that 38.006 allowed recovery of attorneys fees for breach of contract unless attorneys fees are otherwise available. Co. of Texas, 1998 Tex. Id. Insrs v. American Home Assur. Notes of Advisory Committee on Rules1948 Amendment. See Tri-Coastal Contractors, Inc. v. Hartford Undwrs Ins. Under Texas law, a duty to defend is determined by the complaint allegation rule. In addition, in many instances, a protective order will allow broad discovery, without fear of disclosure to the plaintiff. A declaration does not prejudice the rights of a person not a party to the proceeding. (not justiciable controversy); Foust v. Ranger Ins. Federal courts have broad discretion as to whether to retain jurisdiction or dismiss declaratory judgment actions. Co., 975 S.W.2d 329, 332 (Tex. COURT REFUSAL TO RENDER. The district court denied Nautilus' motion, and on appeal, the 9th U.S. Co. v. Gandy, 925 S.W.2d 696 (Tex. The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. Plaintiff lacks standing for some or all of . <> at 451-53. The district court dismissed the indemnification issue, but granted judgment on defense, based on the extrinsic evidence. 1992); LaFarge Corp. v. Hartford Cas. Therefore, the claimants should not be necessary or indispensable parties, prior to the settlement or judgment. An action or proceeding is not open to objection on the ground that a declaratory judgment or decree is prayed for. In older cases, courts allowed broad introduction of extrinsic evidence in a declaratory judgment context. 86.011 Et. App.Houston [14th Dist.] Youell & Cos v. Getty Oil Co., 510 U.S. 820 (1993); Service Mutual Ins. See, e.g., Dairyland County Mut. 1994). endobj If a proceeding under this chapter involves the determination of an issue of fact, the issue may be tried and determined in the same manner as issues of fact are tried and determined in other civil actions in the court in which the proceeding is pending. However, each party must still plead for relief and carry its own burden of proof. App.Corpus Christi 1975, writ refd n.r.e.) Texas Dept of Public Safety v. Moore, 985 S.W.2d 149, 153-54 (Tex. 1271 (N.D. Tex. ); but cf. CODE 37.001-.011. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. CIV. Declaratory Judgment. 461 (1937); Nashville, Chattanooga & St. Louis Ry. They allow businesses or individuals to seek a court's direction at the early stages of a controversy. The Second Department's decision creates a distinction amongst the First and Second Departments, possibly making the issue ripe for review by New York's Court of Appeals. . 1. Co., 981 S.W.2d 861 (Tex. App.Austin 1999, pet. App.Austin 2003, no pet. See Firemens Ins. Co., 981 S.W.2d 889 (Tex. 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%. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such. Rule 57. App.Fort Worth 2000, no pet.). % Unfortunately, while 38.001, et seq., may allow recovery of attorneys fees by the insured, in a proper case, it provides no basis for recovery of fees by an insurer. 10, eff. Admiral Ins. Sept. 1, 1999. The court recognized that the insurer was defending, but the coverage issue would not be litigated in the underlying case, so declaratory relief was appropriate. App.Houston 1965, writ refd n.r.e.) (d) In determining whether to grant declaratory relief to a business under this section, a court shall consider: (1) the factual circumstances of the business's operations that give rise to the demand by the other state; and. C.M.W., 53 S.W.3d 877 (Tex. . Co. v. Vic Mfg. declaratory judgment action. The most significant is that there must be a justiciable controversy between the parties. ); Taylor v. State Farm Lloyds, 2003 Tex. LEXIS 1736 (Tex. App.Corpus Christi 2000, no writ). Amended by Acts 1987, 70th Leg., ch. <> At issue was a declaratory judgment action over whether medical expenses were owed to an insured worker, under The Workers Compensation Act, where the expenses were incurred after settlement of the employees negligence suit against a third party. The policy provided limits of $100,000 per occurrence and $200,000 in the aggregate. 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. <>>> Where suits are filed in two states, one court may abstain in favor of the first-filed suit. Sec. Under this rule, the insurers defense obligations are determined by the allegations of the pleadings and the language of the insurance policy, without regard to the actual facts. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. 4 0 obj Ins. See McCarthy Bros. Co. v. Continental Lloyds, 7 S.W.3d 725 (Tex. The Court held that insurers are entitled to recoupment even where the policy at issue does not expressly provide such a right. denied) (judgment of negligence in underlying case did not establish that negligent acts caused bodily injury, and did not preclude insurer from establishing intentional conduct); Deering Mgmt. Co. v. Wade, 827 S.W.2d 448 (Tex. Advisory opinions are prohibited by both the state and federal constitutions. Control of defense and directing actions of defense counsel in conflict situation (Utica Mut. 1445(c) and federal abstention principles. Co. v. Delaney, 386 S.W.2d 648 (Tex. title to the propertyan essential element of an action to quiet titleand, in the court of appeals' view, the pleadings alleged "the wrong cause of action," the court concluded that the Brumleys' pleadings did not support the judgment.9 6 603 S.W.3d 449, 451 (Tex. Despite the complaint allegation rule, Texas courts have always recognized that there are circumstances in which the court must look to extrinsic evidence to determine whether a duty to defend exists. App.Houston [1st Dist.] In this instance, both state and federal courts have readily allowed the use of extrinsic evidence to determine the duty to defend. 2201. The Federal act is broader in scope. App.San Antonio 1998, pet. LEXIS 8082 (Tex. Co., 418 S.W.2d 712, 715-16 (Tex. denied); cf. Ins. Answer, Affirmative Defenses, and Counterclaim to the First Amended Complaint for Declaratory Judgment ("Complaint") filed by Hartford Fire Insurance Company ("Hartford"), . Rule 57, FED. Co. v. Travis, 68 S.W.3d 72, 77 (Tex. Co., 542 S.W.2d 429 (Tex. 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. Co. v. Tex. <>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 612 792] /Contents 12 0 R/Group<>/Tabs/S/StructParents 1>> 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. 1, eff. 37.008. It is axiomatic that the duty to defend is broader than the duty to indemnify. 1998); see also Abraxas Petroleum Corp. v. Hornburg, 20 S.W.3d 741 (Tex. App.Dallas 2001, pet. 1996). endstream Co. v. Deering Mgmt. 45 (N.D. Tex. The court in Griffin relied upon a change in the Texas Constitution, expanding the scope of district court jurisdiction and eliminating the minimum amount in controversy. 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. 955 S.W.2d at 84 (construing Tex. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139 (Tex. summary judgment on all of the Murphys' claims and its own claim for declaratory relief, requesting attorney's fees for both prosecuting and defending a declaratory judgment action. Insurers should also be sure to expressly reserve their right to recoup the costs in their coverage position letters. PRAC. See Bailey, 133 F.3d at 369 n.4; Travelers Ins. These rules govern the procedure for obtaining a declaratory judgment under 28 U.S.C. ), the court held the county where the agent was located, the policy was sold, and the claim was reported, was not a proper venue. 37.007. <>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 612 792] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> R. Civ. 8. The court then noted the special concerns applicable in declaratory actions. Civ. insured that the insurer's defense of the action against the insured . Id. A Texas court may also enjoin the litigants from moving forward on the same issues in any other jurisdiction. See, e.g., Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995). After the federal court ruled in favor of Nautilus, holding that it did not owe a duty to defend, Nautilus filed a motion for recoupment of its defense costs. 37.011. & REM. 1993); McLaren v. Imperial Cas. defenses always be pled by motion. Indemnity is based on the actual facts establishing liability in the underlying suit. See, e.g., Ohio Cas. In Natl Union Fire Ins. Texas Air Control Bd., 852 S.W.2d at 444. Acts 2007, 80th Leg., R.S., Ch. Co., 192 A.D. 3d 28 (2d Dep't 2020) the Second Department expressly "declined to follow" the prevailing New York authority. 959, Sec. Jul 20th, 2015 Collections and Foreign Judgments.

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