See Tri-Coastal Contractors, Inc. v. Hartford Undwrs Ins. Answer, Affirmative Defenses, and Counterclaim to the First Amended Complaint for Declaratory Judgment ("Complaint") filed by Hartford Fire Insurance Company ("Hartford"), . A number of issues arise in regard to discovery in a declaratory judgment action. Suite 1400 Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. LEXIS 7088 (Tex. 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. The federal act allows the court to declare the rights of any interested party.. 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. Hasselbring v. Koepke, 263 Mich. 466, 248 N.W. App.Houston [1st Dist.] 955 S.W.2d at 84 (construing Tex. App.Houston [1st Dist.] Because the pleadings did not address a fact essential to determining coverage, the court allowed extrinsic evidence. Guar. In a straight complaint allegation case, for instance, there should be extremely limited discovery, beyond verification of the pleadings and the policy. 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 651-389-5000, 10001 Reunion Place Insurers should also be sure to expressly reserve their right to recoup the costs in their coverage position letters. See Farmers Tex. at 452-53; but see Tri-Coastal Contrs Inc., 981 S.W.2d at 863 (questioning scope of exception). App.Corpus Christi 1992, writ denied) (whether boat was being used for business pursuit); International Serv. Co. v. Sweatt, 978 S.W.2d 267 (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%. In this. at 451-53. The award is subject to reversal only if it is arbitrary and unreasonable. 1, eff. Const. dismd by agrmt.) In fact, the Court held that the policy "did not apply" in the context of Nautilus' claim for reimbursement of defense costs, as it had already been determined that there was no duty to defend. 11 0 obj 1995); but cf. ); Rice v. Alamo Rent-A-Car, Inc., 987 S.W.2d 231 (Tex. 167, Sec. The insured had initially defaulted in the underlying action, and the insurer reserved its right to seek reimbursement if the default judgment was not vacated. of Trans., 999 S.W.2d 881, 883 (Tex. App.Austin 2003, no pet. Subscribe to Justia's Free Newsletters featuring summaries of federal and state court opinions. 1997), the Supreme Court reaffirmed the complaint allegation rule, with dicta suggesting that the exception for extrinsic evidence would be narrowed. 5 0 obj Insights in Action: Corporate law departments find their outside firms innovation lagging, but there may be little incentive to change, Messaging platform & personal device use is a firm-wide compliance problem, What a law firm Client Development Manager says about client listening programs, Law firm leaders express the benefit of strategy, culture & adaptability to weather these uncertain times, U.S. officials lead urgent rescue talks for First Republic, DeSantis' showdown with Disney carries political risk. (because claimant could not bring suit, she had no right to intervene); see, e.g., Graciela v. Tagle, 946 S.W.2d 504 (Tex. Cf. Ins. 2201. Co. of Texas v. Erskine, 169 S.W.2d 731 (Tex. 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). The district court dismissed the declaratory action on the defendants motion based on 28 U.S.C. App.San Antonio 1998, pet. Ins. Sec. App.Corpus Christi 1998), revd on other grounds, 995 S.W.2d 675 (Tex. The fact that a declaratory judgment may be granted whether or not further relief is or could be prayed indicates that declaratory relief is alternative or cumulative and not exclusive or extraordinary. Download PDF Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. Co. v. Trejo, 39 F.3d 585, 590 (5th Cir. Co. v. Bailey, 133 F.3d 363, 368 (5th Cir. Sept. 1, 1987; Acts 1999, 76th Leg., ch. 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. Co. v. River Entertainment, 998 F.2d 311, 315 (5th Cir. Co. v. Murray, 437 S.W.2d 264, 265-66 (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. 8 0 obj 1271 (N.D. Tex. All orders, judgments, and decrees under this chapter may be reviewed as other orders, judgments, and decrees. Co., 975 S.W.2d 329 (Tex. 1, eff. 305 (H.B. App.Dallas 2001, pet. ); but cf. COSTS. The declaratory judgment action allows relief, even where another remedy exists. See, e.g., Sylvester v. Watkins, 538 S.W.2d 827 (Tex. <> See, e.g., Dairyland County Mut. Absent any indemnity obligation and the clear prejudice from late notice, the insurer commenced a declaratory judgment action seeking to recover the defense costs it incurred in defending the . In St. Paul Ins. Texas, Inc., 64 S.W.3d 497 (Tex. 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. . 925 S.W.2d at 714. 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. 1998). A separate issue exists, however, as to the facts and testimony relating to the liability event, and the evidence that has been accumulated or produced in the underlying case. 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. 1993); American States Ins. Co. v. Hood, 895 F.Supp. Co. v. Grapevine Excavation, 241 F.3d 396 (5th Cir. Compare Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 57 S.Ct. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. (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. Cty. denied). Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 37.009. Co. v. Burch, 442 S.W.2d 331 (Tex. Co., 192 A.D. 3d 28 (2d Dep't 2020) the Second Department expressly "declined to follow" the prevailing New York authority. For years, Texas courts concluded that a declaration of indemnity was premature, until the underlying suit was resolved. Co. v. V 8). If the discovery is limited, or poorly conducted, or does not address the coverage issues, however, the insurer may seek additional testimony and evidence. <> 6 0 obj Group v. Lou-Con, Inc., 293 F.3d 908 (5th Cir. Co. v. Rio Grande Heart Specialists of So. 2010), Sec. Co. v. Delaney, 386 S.W.2d 648 (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. stream 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. action seeking a declaratory judgment." , See Wilton 515 U.S. at 288; Dizol, 133 F.3d at 1223, 1225 & n.5. 1998) (holding that Texas Declaratory Judgment Act was not controlling, substantive law, and did not justify fee award to defendants). Bonham State Bank v. Beadle, 907 S.W.2d 465 (Tex. Sec. 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. R. CIV. What Is a Declaratory Judgment Action? App.Dallas 2001, pet. For instance, when it is clear that a ruling on the merits of plaintiff's claims would . The courts have recognized an exception when the liability insurance is statutorily required, and arguably for the benefit of the claimant, such as compulsory auto insurance or workers compensation. A declaratory judgment is one which simply declares the rights of the parties, or expresser, the opinion of the court on a question of law, without ordering anything to be done. 2201, and further provides for a jury trial. I Facts and Procedural History. Suite 1850 Youell & Cos v. Getty Oil Co., 510 U.S. 820 (1993); Service Mutual Ins. 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. As such, there should be no collateral estoppel of the insurer, based upon the outcome of the issue in the underlying case. By Karl Bayer. at 313. Id. Issues also arise, when the underlying case is still proceeding, as to the extent to which the insurer can discover information which could also be relevant, and potentially damaging, in the underlying liability suit. Federal courts are especially reluctant to exercise jurisdiction if there is a parallel state court proceeding even if subsequently filed that includes all necessary parties and will resolve the issues. The Fifth Circuit reviewed abstention under the Burford and Colorado River doctrines, and concluded that neither was applicable. & Ind. APP. Sec. This is an action for declaratory judgment pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. 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. App.Dallas 1998, pet. There are exceptions, however, (1) when conduct estops a party from asserting prior active jurisdiction; (2) where parties are lacking; or (3) where there is lack of intent to prosecute. In a declaratory judgment action, neither party is seeking a judgment for money damages. COURT REFUSAL TO RENDER. On Dec. 30, 2020, New York's Appellate Division, Second Department, issued a ruling which may have created a split in authority on the question of recoupment of defense costs among New York's appellate level courts. Acts 2007, 80th Leg., R.S., Ch. (As amended Dec. 29, 1948, eff. App.Fort Worth 1978, no writ); Providence Lloyds Ins. Auto. Co. of Texas, 1998 Tex. Under Texas substantive law, attorneys fees may be available to the insured if the insurer has breached its duty to defend or indemnify. As a preliminary consideration, counsel for the insurer should be careful and selective in what is requested. 1998, pet. This article will discuss some of the recent decisions illustrating the different views that Courts have taken with respect to this issue, as well as the implications for insurance companies that issue duty to defend policies. Co. v. Gandy, 925 S.W.2d 696 (Tex. 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. 1995). Rule 38(c), TEX. at 332. 1996). Co. v. Patriot Sec., Inc., 926 F.Supp. (b) A contract may be construed either before or after there has been a breach. He can be reached at mzigelman@kdvlaw.com. denied). denied). 39 F.3d at 591. These changes are intended to be stylistic only. Courts recognize that when there are conflicting positions on coverage, as when the insurer reserves rights, there is no privity between the insured and the insurer on issues relating to coverage, which are also at issue in the underlying case. 28 U.S.C. (prior judgment not res judicata as to amended pleading that alleged new facts, not involving completed operations); St. Paul Ins. 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. v. Vic Mfg. September 1, 2007. 2 0 obj Typically, the first-filed suit has dominant jurisdiction. Co. v. Gandy, 925 S.W.2d 696 (Tex. Declaratory Judgment These rules govern the procedure for obtaining a declaratory judgment under 28 U.S.C. 37.003. If any facts within the scope of coverage are determined, however, an insurer is required to defend. 2d 601, 621-22 (E.D. (B) A contract may be construed either before or after there has been a breach. P. 26; Tex. Although the trial court vacated the default judgment, on appeal, the Second Department reversed the lower court's order and reinstated the judgment against the insureds. SUPPLEMENTAL RELIEF. 606 S.W.3d 774 (Tex. 45 (N.D. Tex. App.Houston [1st Dist.] endstream The demand for relief shall state with precision the declaratory judgment desired, to which may be joined a demand for coercive relief, cumulatively or in the alternative; but when coercive relief only is sought but is deemed ungrantable or inappropriate, the court may sua sponte, if it serves a useful purpose, grant instead a declaration of rights. Co. v. Boll, 392 S.W.2d 158, 161 (Tex. App.Fort Worth 1992, writ denied) (insurer not estopped by failing to have declaratory judgment determined before judgment in underlying case). (driver excluded); see also Tri-Coastal Contrs, Inc. v. Hartford Undwrs Ins. <>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 612 792] /Contents 12 0 R/Group<>/Tabs/S/StructParents 1>> A future interest in a potential judgment has been held insufficient to allow intervention. 1 0 obj All Rights Reserved. R. CIV. Co. v. Carmichael, 1998 Tex. 37.0055. CODE 37.001-.011. App. District courts have articulated several reasons for why mirror-image counterclaims should be dismissed. 1998, no pet.). 1993); Trinity Univ. 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. In other respects the Uniform Declaratory Judgment Act affords a guide to the scope and function of the Federal act. 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. insured that the insurer's defense of the action against the insured . 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. All quotes delayed a minimum of 15 minutes. 2023 Thompson, Coe, Cousins & Irons, LLP. Ins. The dispute was over an unscheduled vehicle. & Rem. Costs and fees are not dependent upon the outcome, and can be awarded to either the prevailing or the non-prevailing party. Explanation of the Constitution - from the Congressional Research Service See, e.g., Stroop v. N. County Mut. The Texas Supreme Court concluded that 38.006 allowed recovery of attorneys fees for breach of contract unless attorneys fees are otherwise available. (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. App.Houston [14th Dist.] denied) (failure to satisfy burden is not finding of proof of opposite). <> Michael L. Zigelman is co-managing partner of the New York City office of Kaufman Dolowich & ), the court held the county where the agent was located, the policy was sold, and the claim was reported, was not a proper venue. Co. v. Fraiman, 514 S.W.2d 343, 346 (Tex. (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. aspects of insurance coverage including directors and officers liability, professional liability, 7 0 obj 1998); see also Abraxas Petroleum Corp. v. Hornburg, 20 S.W.3d 741 (Tex. 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. LEXIS 8494 (Tex. 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. App.Houston 1965, writ refd n.r.e.) 1968) (J. Smith, dissenting). It is still likely a court will not allow dual-track litigation of issues that affect liability and coverage. In Chiriboga v. State Farm Mut. Finally, the Court stated that it strongly disagreed with the view that permitting recoupment would erode the duty to defend. In re Houston Specialty Insurance Co., 569 S.W.3d 138 (Tex. Opinions expressed are those of the author. 959, Sec. C.M.W., 53 S.W.3d 877 (Tex. denied); ANR Prod. Instead, a party may recover fees only where controlling substantive law permits recovery. dismd, 507 U.S. 1026 (1993); cf. App.Fort Worth 1986, writ refd n.r.e.). 37.008. Civ. Courts have struggled with the issue of what can be resolved in the declaratory judgment action, when the issue determining coverage may also be material in the underlying case. 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. Filing 34 ANSWER to COMPLAINT for declaratory judgment, affirmative defenses and COUNTERCLAIM filed by Clemens Franek against Jay Franco & Sons, Inc. (jmp, ). 2201. See Scottsdale Ins. Civ. App.Amarillo 1997, no pet.). This Note is jurisdiction neutral. The Law Dictionary is not a . Co., 316 U.S. 491 (1942); Wilton, 515 U.S. 277. (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. ), Notes of Advisory Committee on Rules1937. US Senate panel seeks ethics details from Supreme Court. There are exceptions, of course. The county where the contract was formed may also be a proper venue. A court may not, however, refuse to exercise jurisdiction on the basis of a whim or personal disinclination. See, e.g., St. Paul Ins. 1, eff. 131 (E.D. In Gonzales v. American States Ins. Tex. 1969); see also Allstate Ins. 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. In addition, Rule 57 provides that the court may order a speedy hearing as an action for a declaratory judgment and may advance it on the calendar.. App.Amarillo 2019). Notes of Advisory Committee on Rules1948 Amendment. Because the insurer would be allowed to re-litigate, after the underlying case is resolved, there is no reason to delay the inevitable. See Natl Union Fire Ins. E.g., Cluett v. Medical Protective Co., 829 S.W.2d 822, 826 (Tex. (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. Group, Inc., 946 F.Supp. See Firemens Ins. Co. v. Marathon Ashland Petrol., L.L.C., 87 F. Supp. Insurer's right to file declaratory judgment action 9. See, e.g., Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995). C.M.W., 53 S.W.3d 877 (Tex. Acts 1985, 69th Leg., ch. art. See here for a complete list of exchanges and delays. (a) This chapter may be cited as the Uniform Declaratory Judgments Act.
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