defenses to declaratory judgment action texas

In Foust v. Ranger Ins. ^9@VXB-'C(SOZ#jGT"1kfWj7i,9^'EJ He concentrates his practice on all 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. Citing the Travelers case, the court recited the relevant factors the court must consider in determining whether to dismiss a declaratory judgment action: 1) whether there is a pending state action in which all of the matters in controversy may be fully litigated; 2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant; 3) whether the plaintiff engaged in forum shopping in bringing the suit; 4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist; 5) whether the federal court is a convenient forum for the parties and witnesses; 6) whether retaining the lawsuit in federal court would serve the purposes of judicial economy; and. Group, 946 F.Supp. It argues that the other claims and defenses in the case subsume the issues on which Holmes asks for a declaratory judgment. Prac. Exclusive news, data and analytics for financial market professionals. 606 S.W.3d 774 (Tex. On the other hand, the existence of another remedy, or unresolved issues, does not preclude declaratory relief. App.Houston 1965, writ refd n.r.e.) 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. Specifically, when does filing a declaratory judgment action on coverage defenses make good business sense and what are the advantages, and disadvantages, of being the plaintiff. o FRCP Rule 57. at 452-53; but see Tri-Coastal Contrs Inc., 981 S.W.2d at 863 (questioning scope of exception). Ins. PDF RESERVATION OF RIGHTS LETTERS FOR CASUALTY CLAIMS - PLRB Claims Conference 1994). In Natl Union Fire Ins. The amendment substitutes the present statutory reference. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Co. v. Vic Mfg. Burch involved a declaration that the insurer owed defense, and also owed indemnity for the insureds liability for his wifes torts. See Feria v. CU Lloyds of Texas, 2001 Tex. App. App.Waco 1943, no writ); Superior Ins. tort and environmental coverage. 37.010. REVIEW. By Karl Bayer. ydXOEp Pzz2 -Ia5D(eUE02Xd#zG5 ;}srmVY9c~Vqz6#tUy/`ck$cVpxKCoo,}o{T#@TQ]%5|@Rtx~K9jptm> oL See Bailey, 133 F.3d at 369 n.4; Travelers Ins. Id. at 1280 (insurer not precluded from relitigating course and scope of employment). In this chapter, "person" means an individual, partnership, joint-stock company, unincorporated association or society, or municipal or other corporation of any character. The courts appear to be split, with federal courts being somewhat more lenient in allowing the use of extrinsic evidence in this circumstance. Recent cases discussing the enforceability of policy buy-backs suggest there may be other exceptions in which a statutory insurance requirement renders a claimant an intended beneficiary. Sept. 1, 1987; Acts 1999, 76th Leg., ch. Co. v. Tex. App.Dallas 2000, pet. App.Amarillo 2019). Added by Acts 2007, 80th Leg., R.S., Ch. Under Texas substantive law, attorneys fees may be available to the insured if the insurer has breached its duty to defend or indemnify. Sec. denied). App.Fort Worth 1961, writ refd n.r.e.) 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). 1996). Co., 418 S.W.2d 712, 715-16 (Tex. App.Houston [1st Dist.] LEXIS 7550 (Tex. The Burches were the plaintiffs, and were also the petitioners for declaratory relief. Costs and fees are not dependent upon the outcome, and can be awarded to either the prevailing or the non-prevailing party. (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. These changes are intended to be stylistic only. He can be reached at mzigelman@kdvlaw.com. 2283. The Law Dictionary is not a . Ins. DECLARATORY JUDGMENT ACTIONS - ryderlaw.com CSAT Versus Denton - Original Answer and Counterclaim - TML App.Houston [14th Dist.] at 313. 1997); Trinity Universal Ins. . App.Dallas 2001, pet. Declaratory Judgment Action Insurer Does Nothing Facts Don't Trigger Duty to Defend Insurer Does Nothing 34 . 6#7a |mp}v"VY2I C.M.W., 53 S.W.3d 877 (Tex. While the law is less clear, Federal courts, applying Texas law, have reached a similar conclusion. Co. v. Sassin, 894 F.Supp. 504-526-4350, 408 St. Peter Street, Suite 510 A future interest in a potential judgment has been held insufficient to allow intervention. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. Answer, Affirmative Defenses, and Counterclaim to the First Amended Complaint for Declaratory Judgment ("Complaint") filed by Hartford Fire Insurance Company ("Hartford"), . A justiciable controversy may nonetheless exist where no other cause of action is available or has ripened. denied); ANR Prod. The collision was also in Hidalgo County, as was the liability suit. 1999) (insureds motion to transfer erroneously granted); Southern County Mut. App.Texarkana 2003, pet. This article contains general legal information but does not constitute professional legal advice for your particular situation. 2d 719, 725 (D. Minn. 2005) (applying Texas law); Forum Ins. Co. v. County of Nye0, Nev., 26 . Under most liability policies, the claimants are not third-party beneficiaries and have no direct rights, and no cause of action, against the insurer until there has been a settlement, to which the insurer agrees, or a judgment against the insured. denied); Ranger Ins. denied). In St. Paul Ins. <>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 612 792] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> 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. Control of defense and directing actions of defense counsel in conflict situation (Utica Mut. PDF Texas Supreme Court to Decide Whether a Declaratory Judgment Action is 2003) (finding Texas allows only narrow exception); but see Gonzales v. American States Ins. Co. v. David Agency Ins., Inc., 327 F.Supp.2d 922 (N.D. . Civ. 6 0 obj 1993) (whether accident arose from liquor liability); Acceptance Ins. See, e.g., Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995). As a preliminary consideration, counsel for the insurer should be careful and selective in what is requested. Insurer's right to assert other policy defenses . Co. v. Tandy Corp., 986 F.2d 94, 96 (5th Cir. In American, the insurer agreed to defend the insured in an underlying personal injury action but reserved its right to deny coverage to the extent that the insurer was prejudiced due to the insured's late notice of the action. App.Corpus Christi 1992, writ denied) (whether boat was being used for business pursuit); International Serv. Co. v. Tilley, 484 S.W.2d 802, 806 (Tex. Suite 1850 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. In Nautilus, the insureds were sued in California state court by a former business partner asserting numerous claims, including interference with prospective economic advantage. Co. v. River Entertainment, 998 F.2d 311, 315 (5th Cir. App.Fort Worth 2000, no pet.). at 468. App. Under federal law, the Declaratory Judgment Act, itself, does not authorize attorneys fees. 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. See, e.g., Ruth v. Imperial Ins. <>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 612 792] /Contents 12 0 R/Group<>/Tabs/S/StructParents 1>> CIVIL PRACTICE AND REMEDIES CODE CHAPTER 37. DECLARATORY JUDGMENTS - Texas 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. Download PDF Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. Although efforts are occasionally made, it is inappropriate for the insurer to be joined as a defendant in a liability suit. COURT REFUSAL TO RENDER. The issue becomes more murky when allegations triggering coverage are alleged, but are in conflict with the actual facts. (b) A contract may be construed either before or after there has been a breach. Co. v. Block, 744 S.W.2d 940, 943 (Tex. Shoot First, Litigate Later: Declaratory Judgment Actions, Procedural 1965). Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. 1997); Heyden Newport Chemical Corp. v. So. The claims involved crop-dusting, which allegedly damaged abutting fields because of herbicide drift. The petition in the underlying suit was amended, however, and all references to alcohol were deleted. 37.002 provides that the chapter is remedial: Its purpose is to settle and to afford relief from uncertainty and in security with respect to rights, status, and other legal relations; and it is to be legally construed and administered. The Act does not create or enlarge jurisdiction. C.M.W., 53 S.W.3d 877 (Tex. Co. v. River Entertainment, 998 F.2d 311, 315 (5th Cir. 869, 93 A.L.R. Admiral Ins. aspects of insurance coverage including directors and officers liability, professional liability, 1979, no writ) (not justiciable controversy); Boorhem-Fields, Inc. v. Burlington Northern Railroad Co., 884 S.W.2d 530 (Tex. A court may not, however, refuse to exercise jurisdiction on the basis of a whim or personal disinclination. See, e.g., St. Paul Ins. 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. 11 0 obj 1170 (1933). There is a contract, and a dispute over the parties rights and obligations under the contract. CODE provides, in subpart (a), that: When declaratory relief is sought, all persons who have or claim any interest that would be affected by the declaration must be made parties. denied). Aug. 2, 2012). Supreme Court of Texas Denies Motion to Compel Arbitration on Alternate BORON. Id. hearing as an action for a declaratory judgment and may advance it on the calendar." 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. Civ. Declaratoryjudgments are an important tool in litigation. The policy provided limits of $100,000 per occurrence and $200,000 in the aggregate. 37.006, TEX. Where a judgment has been entered in the underlying case, and the insurer has refused indemnity, it may also be that declaratory relief is inappropriate, because a cause of action for breach of contract has ripened. A common way of eliminating this uncertainty is with a declaratory judgment action, also called a declaration. Oct. 20, 1949; Apr. Twenty-Fifth Floor - Plaza of the Americas PDF Preserving Coverage Defenses A justiciable controversy requires a real and substantial controversy over tangibles interests, and not merely a theoretical dispute. PARTIES. 37.005. An insurer should not be held to have waived its right to litigate coverage by defending under reservation of rights, or by delay in filing a declaratory judgment action. App.San Antonio 1998, pet. 2201. Co. v. Ward, 107 S.W.3d 820 (Tex. The district court denied Nautilus' motion, and on appeal, the 9th U.S. 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. Jul 20th, 2015 Collections and Foreign Judgments. (b) In any proceeding that involves the validity of a municipal ordinance or franchise, the municipality must be made a party and is entitled to be heard, and if the statute, ordinance, or franchise is alleged to be unconstitutional, the attorney general of the state must also be served with a copy of the proceeding and is entitled to be heard. Nautilus also simultaneously commenced a declaratory judgment action in federal court seeking a declaration that it did not owe a duty to defend because the underlying action did not allege "personal and advertising injury.". 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. 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. We agree and affirm as well. Civ. 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. 305 (H.B. POWER OF COURTS TO RENDER JUDGMENT; FORM AND EFFECT. Fla. Stat. Insurers should be sure to work with competent counsel to be aware of all of their rights under applicable policies and the relevant controlling law and proceed accordingly. Co. v. Trejo, 39 F.3d 585 (5th Cir. 1998), overruled on other grounds, State Farm Fire & Cas. Prac. 37.006. SECOND AFFIRMATIVE DEFENSE. See here for a complete list of exchanges and delays. See McCarthy Bros. Co. v. Continental Lloyds, 7 S.W.3d 725 (Tex. Eric B. Stern is a partner and co-deputy chair of the Data Privacy & Cybersecurity Practice at Kaufman Dolowich & Voluck LLP and concentrates his practice in insurance coverage litigation. It is not an abuse of discretion, however, to retain a suit, and to decide issues of indemnity, even before the underlying liability suit has reached judgment. App.Fort Worth 1998, no pet.) 131 (E.D. Cf. Acts 1985, 69th Leg., ch. 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. US Senate panel seeks ethics details from Supreme Court. 39 F.3d at 591. App.Austin 1999, no pet.) Westport v. Atchley, Russell, Waldrop & Hlavinka, 267 F. Supp. relation to an action brought by a party with no apparent justiciable interest. Declaratory judgment actions in the United States are defined by a statutory framework first developed by the National Conference of Commissioners on Uniform State Laws in 1922 and designed to expand the role and authority of courts in settling disputes. App.Corpus Christi 2003, no writ). 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. See Hartford Ins. 59.02(c). Co., 2000 Tex. See, e.g., State Farm Fire & Cas. 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. Where extrinsic evidence is offered, however, the scope of discovery should be broader. Code, applied to breaches of an insurance agreement, this question was resolved by the Texas Supreme Court, on a certified question from the Fifth Circuit, in Grapevine Excavation, Inc. v. Maryland Lloyds, 35 S.W.3d 1 (Tex. 5 0 obj Moreover, the Second Department noted that the policy at issue did not expressly provide the insurer with a right to recoup defense costs. Texas Air Control Bd., 852 S.W.2d at 444. (Deering, 1937) 1062a), Michigan (3 Comp.Laws (1929) 13904), and Kentucky (Codes (Carroll, 1932) Civ.Pract. 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 Insurer's right to file declaratory judgment action 9. <> PDF IN THE SUPREME COURT OF TEXAS - txcourts.gov 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. Boll, 392 S.W.2d 158, 161 (Tex. Ins. Houston, TX 77056 37.008. App.Dallas 1992, writ denied); U.S. Fire Ins. (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. If the discovery is limited, or poorly conducted, or does not address the coverage issues, however, the insurer may seek additional testimony and evidence. Notes of Advisory Committee on Rules1948 Amendment. Id. Co. v. Blevins, 741 S.W.2d 604, 606 (Tex. 12 0 obj Attorney Analysis from Westlaw Today, a part of Thomson Reuters. Ins. 2004). 1974, no writ). In older cases, courts allowed broad introduction of extrinsic evidence in a declaratory judgment context. stream Ins. An action or proceeding is not open to objection on the ground that a declaratory judgment or decree is prayed for. Insrs v. American Home Assur. 2000). A declaratory judgment is appropriate when it will terminate the controversy giving rise to the proceeding. 1978). See Bernard v. Gulf Ins. See Travelers Ins. Mirror-image counterclaims in declaratory judgment actions Where suits are filed in two states, one court may abstain in favor of the first-filed suit. A court can dismiss a declaratory action even if it fails to meet the stringent standards for abstention. . R. CIV. ), Notes of Advisory Committee on Rules1937. (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. A declaration does not prejudice the rights of a person not a party to the proceeding. Sec. 1996) (insurer not estopped from litigating employment issue). Civ. Federated Mut. Acts 1985, 69th Leg., ch. Instead, plaintiffs alleged River Entertainment was negligent for allowing the defendant to leave, in his own vehicle, when they should have known his driving ability was impaired. 1993) (Colorado River factors inapplicable in declaratory judgment action); Granite State Ins. 8 0 obj The industry leader for online information for tax, accounting and finance professionals. Cigna Lloyds Ins. Understanding Declaratory Judgment Actions | Larkin Farrell Co. v. Burch, 442 S.W.2d 331 (Tex. stream Co. v. Marathon Ashland Petrol., L.L.C., 87 F. Supp. Genl Agency v. Cooper, 952 S.W.2d 861 (Tex. DEFINITION. See, e.g., Dairyland County Mut. Despite the insurers right to review any such documents without waiver of the privilege, and the likelihood that defense counsels concerns would be abrogated by the right to conduct discovery, there is still a question as to what extent defense counsels opinions or observations would be relevant to coverage. 1993), cert. 1995). Previously, multiple New York courts at both the trial and Appellate Division levels aligned with Nevada and the other listed states holding that an insurance company may recoup defense costs paid on behalf of an insured when it is ultimately determined that there was no coverage in connection with the underlying action, provided that the insurer reserved its rights to seek such reimbursement. Co., 502 S.W.2d 232 (Tex. Twenty-Fifth Floor - Plaza of the Americas. denied); see also State Farm Fire & Cas. COSTS. When to file is often determined by what is at issue. 466, 473, 80 L.Ed. 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. App.Texarkana 1967, no writ) (auto excluded); International Serv. 4 0 obj In addition, in many instances, a protective order will allow broad discovery, without fear of disclosure to the plaintiff. See State Farm Fire & Cas. (no right to new trial because of amended petition where suit brought and determined based on prior petition). Created is remedy Co. v. Am. Ins. See, e.g., City of Galveston v. Giles, 902 S.W.2d 167 (Tex. 1968); National Sav. In Chiriboga v. State Farm Mut. App.San Antonio 1998, pet. Texas, Inc., 64 S.W.3d 497 (Tex. endobj Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. Plaintiff's Complaint fails to state a cause of action. 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. Co. v. Travis, 68 S.W.3d 72, 77 (Tex. 2023 Thompson, Coe, Cousins & Irons, LLP. Co. v. Patriot Sec., Inc., 926 F.Supp. The Fifth Circuit reviewed abstention under the Burford and Colorado River doctrines, and concluded that neither was applicable. 2201. at 452. 2d 719 (S.D. 1992); LaFarge Corp. v. Hartford Cas. 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. 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. Co., 981 S.W.2d 889 (Tex. Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper. Co. v. Truckin USA, 122 F.3d 270, 272-73 (5th Cir. P. 76A; 192.6(b)(5). 1787), Sec. PDF Preparing for Non-Compete Litigation - Epstein Becker & Green 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. It is axiomatic that the duty to defend is broader than the duty to indemnify. Tex. Because the pleadings did not address a fact essential to determining coverage, the court allowed extrinsic evidence. See Firemans Ins. App.Austin 1998, pet. K-yXHMKS mmgOT}|aMz0. Ins. (auto liability insurer seeking declaratory relief was not subject to cross-action by injured party, or consolidation of liability and coverage suit); see also Firemans Ins. Co., 975 S.W.2d 329, 332 n.1 (Tex. Clearly, the insurer should be entitled to discovery of anything that has been discovered in the underlying suit. Am., 845 S.W.2d 794, 801 (Tex. Id. PDF IN THE SUPREME COURT OF TEXAS - txcourts.gov 1271 (N.D. Tex. Sec. (prior judgment not res judicata as to amended pleading that alleged new facts, not involving completed operations); St. Paul Ins. 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. Inasmuch as it often involves only an issue of law on undisputed or relatively undisputed facts, it operates frequently as a summary proceeding, justifying docketing the case for early hearing as on a motion, as provided for in California (Code Civ.Proc. 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.

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