Co. v. Grapevine Excavation, 241 F.3d 396 (5th Cir. In Wade, the insurer argued that it was not challenging the veracity of the facts alleged, but had a defense independent of the pleadings. See State Farm Mut. 37.005. 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. Co., 996 S.W.2d 207 (Tex. 1998). The petition in the underlying suit was amended, however, and all references to alcohol were deleted. denied) (refusing to allow use of extrinsic evidence to disprove alleged facts). 855, Sec. The court, in the coverage action, concluded that there was a conflict of interest and a lack of privity, and therefore the insurer was not collaterally estopped from re-litigating the existence of false imprisonment. R. CIV. endobj See, e.g., Commercial Metals Co. v. Balfour, Guthrie & Co., Ltd., 577 F.2d 264 (5th Cir. Co., 95 S.W.3d 702 (Tex. After St. Paul filed its declaratory action in federal court, the claimant filed suit in state court in the same court in which the two prior suits had been filed. Saint Paul, MN 55102 Sec. Co. v. Bailey, 133 F.3d 363, 368 (5th Cir. Declaratory Judgment Action Insurer Does Nothing Facts Don't Trigger Duty to Defend Insurer Does Nothing 34 . Co., 981 S.W.2d 861 (Tex. 1995, no writ); Employers Cas. 955 S.W.2d at 84 (construing Tex. Notes of Advisory Committee on Rules1948 Amendment. One reason proffered is the possibility of inconsistent outcomes. Control of defense and directing actions of defense counsel in conflict situation (Utica Mut. art. PRAC. Seq. dismd by agrmt.) o FRCP Rule 57. 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. insured that the insurer's defense of the action against the insured . Co. v. River Entertainment, 998 F.2d 311, 315 (5th Cir. 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. 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). 830-252-5100. See, e.g., Boring & Tunneling Co. v. Salazar, 782 S.W.2d 284, 289-90 (Tex. 37.006. Co. v. Truckin USA, 122 F.3d 270, 272-73 (5th Cir. It may be appropriate for courts to abstain, in certain circumstances. However, each party must still plead for relief and carry its own burden of proof. 1996) (nevertheless refraining from determining coverage for indemnity, on the basis of judicial economy). App.Dallas 1998, no pet.). Co., 628 S.W.2d 184 (Tex. v. Mitchell, 138 F.3d 208, 210 (5th Cir. . )1^Hl]TgxY8Ubs,! 9@Dyp*l8sA!N\X While abstention doctrine is more frequently an issue in federal court, state courts can also abstain. Code Crim. In a declaratory judgment action, neither party is seeking a judgment for money damages. App.Dallas 2000, pet. endobj DECLARATIONS RELATING TO LIABILITY FOR SALES AND USE TAXES OF ANOTHER STATE. Dallas, TX 75201 Declaratory Judgment. The most significant is that there must be a justiciable controversy between the parties. Co. v. WSG Investors, LLC, 09-cv-05237, 2012 WL 3150577 (E.D.N.Y. 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. Tex. There are several defenses that should be considered in a suit for declaratory relief in both state and federal court. See United Services Life Ins. App.Austin 1987, no writ); Safeway Mng. xko9.ou _:=;0b+w)m3]WTy:>yYWOv]vs|?V~>zw"{}v~eM/XVY&R~Eou6Wv/ *]nT:^\-G:[A? Under the Declaratory Judgment Act, "any court of the United States, upon the filing of an appropriate pleading, may: . Ins. Cluett v. Medical Protective Co., 829 S.W.2d 822, 826 (Tex. 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. See State Farm Fire & Cas. Co., 387 S.W.2d 22, 25 (Tex. June 15, 2007. The insurer denied defense based on the liquor liability exclusion and filed a declaratory judgment action. See, e.g., State Farm Fire & Cas. Co. v. Louisiana Farm Bureau Federation, 996 F.2d 774, 778 (5th Cir. Similarly, courts have held that an insurance company has no right to intervene in the liability action against the insured to seek a coverage determination. 1978). <> (4) to determine rights or legal relations of an independent executor or independent administrator regarding fiduciary fees and the settling of accounts. 2023 Thompson, Coe, Cousins & Irons, LLP. App.Fort Worth 1998, no pet.) Co. v. Trejo, 39 F.3d 585 (5th Cir. The court noted that the Griffin exception did not apply, but that a justiciable controversy existed, as the judgment clarified the rights of the parties under the contract; especially because the policy includes a provision under which Ranger could be relieved of its duty to defend by tendering its limits. Because the pleadings did not address a fact essential to determining coverage, the court allowed extrinsic evidence. ); State Farm Lloyds Ins. DEFINITION. %PDF-1.5 denied); State Farm Lloyds v. denied); ANR Prod. See Utica Lloyds of Tex. CIV. The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. 59.02(c). & REM. Ins. C.M.W., 53 S.W.3d 877 (Tex. at 1280 (insurer not precluded from relitigating course and scope of employment). App.Texarkana 1967, no writ) (auto excluded); International Serv. See, e.g., Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995). 2000). Civ. (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. Dept. R. Civ. Exclusive news, data and analytics for financial market professionals. 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. He concentrates his practice on all A court can dismiss a declaratory action even if it fails to meet the stringent standards for abstention. 9 0 obj Insurer's right to assert other policy defenses . 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. Sec. App.San Antonio 2019). The right to award costs and fees is discretionary, not mandatory. 2201, and further provides for a jury trial. The Western Heritage case epitomizes the argument for use of extrinsic evidence. Voluck LLP and chair of its general liability coverage practice group. Under Texas substantive law, attorneys fees may be available to the insured if the insurer has breached its duty to defend or indemnify. Co. v. A justiciable controversy may nonetheless exist where no other cause of action is available or has ripened. The petitioner must have a practical interest in the declaration sought and all parties having an interest therein or adversely affected must be made parties or be cited. 167, Sec. 2002, no pet. Id. 1998, no pet.). St. Paul had also appealed the original award to state district court, and that suit had also been settled, with a provision for payment of future expenses. The Federal act is broader in scope. Costs and fees are not dependent upon the outcome, and can be awarded to either the prevailing or the non-prevailing party. Hasselbring v. Koepke, 263 Mich. 466, 248 N.W. Frontier Pac. App.Austin 2003, no pet. App.Austin 1999, no pet.) . 925 S.W.2d at 714. Therefore, the claimants should not be necessary or indispensable parties, prior to the settlement or judgment. 169 (S.D.Tex., 1935); Borchard, Declaratory Judgments (1934), passim. District courts have articulated several reasons for why mirror-image counterclaims should be dismissed. He can be reached at estern@kdvlaw.com. Corp., 377 F. Supp. Co. v. Bradleys Elec., Inc., 993 S.W.2d 673 (Tex. Ohio Cas. endobj & Rem. endobj App.Corpus Christi 2000, no writ). Co. v. Deering Mgmt. 2 The courts decision has been described as carving out an exception, rather than overruling prior law. PARTIES. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such. Civ. A court may not, however, refuse to exercise jurisdiction on the basis of a whim or personal disinclination. See, e.g., St. Paul Ins. Explanation of the Constitution - from the Congressional Research Service App.Dallas 2001, pet. In duty to defend cases, the issue of whether extrinsic evidence is even relevant would likely arise. Aug. 2, 2012). 305 (H.B. Co. v. Cowan, 945 S.W.2d 819 (Tex. While federal abstention doctrine is equally applicable to declaratory judgments action, courts are particularly vigilant in exercising their discretion to protect comity and prevent forum shopping. A number of issues arise in regard to discovery in a declaratory judgment action. Sec. 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. An action or proceeding is not open to objection on the ground that a declaratory judgment or decree is prayed for. See, e.g., Cook v. Ohio Cas. Ins. 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. Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. These rules govern the procedure for obtaining a declaratory judgment under 18 U.S.C. Co., 628 S.W.2d 184 (Tex. % (As amended Dec. 29, 1948, eff. 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. 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. Instead, the purpose of a declaratory judgment action is to determine the parties' responsibilities in relation to a particular dispute. Group, 946 F.Supp. 4 0 obj (b) A contract may be construed either before or after there has been a breach. 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. The court may refuse to render or enter a declaratory judgment or decree if the judgment or decree would not terminate the uncertainty or controversy giving rise to the proceeding. App.Austin 1998, no pet. Ins. 1997), the Supreme Court reaffirmed the complaint allegation rule, with dicta suggesting that the exception for extrinsic evidence would be narrowed. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. Co., 418 S.W.2d 712, 715-16 (Tex. 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. See, e.g., Sylvester v. Watkins, 538 S.W.2d 827 (Tex. It argues that the other claims and defenses in the case subsume the issues on which Holmes asks for a declaratory judgment. Co. v. Tex. 713-403-8210, 601 Poydras App.Waco 1943, no writ); Superior Ins. In a number of instances, courts have concluded that an insurer is entitled to re-litigate issues. 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. denied). Rule 38(c), TEX. 1 0 obj Declaratory Judgment These rules govern the procedure for obtaining a declaratory judgment under 28 U.S.C. "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 application must be by petition to a court having jurisdiction to grant the relief. Michael L. Zigelman is co-managing partner of the New York City office of Kaufman Dolowich & App.El Paso 2000, no pet. 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. 1996); Williamson v. State Farm Lloyds, 76 S.W.3d 64 (Tex. <> costs and declaratory judgment). Tex. 1968); National Sav. COURT REFUSAL TO RENDER. 1997) (whether vehicle was owned by insured); Harken Exploration Co. v. Sphere Drake Ins., PLC, 261 F.3d 466 (5th Cir. A future interest in a potential judgment has been held insufficient to allow intervention. The court may order a speedy hearing of a declaratory-judgment action. The Court also noted that where an insurer denies coverage and then loses a subsequent coverage dispute, it can be subject to "significant liability," creating a disincentive for the insurer to deny defense outright, and that equitable concerns support allowing recoupment. Co., 61 F.3d 389 (5th Cir. 1993); American States Ins. 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. The crop-dusting involved only one flight, but several passes during which herbicide was released, and during which wind direction and velocity varied. Civ. While some older cases find an insurer cannot re-litigate facts, if it has wrongfully refused to defend, recent cases have held that an insurer is not bound, in any circumstance, where the facts allegedly establishing coverage are not fully litigated. 2 0 obj 1998), overruled on other grounds, State Farm Fire & Cas. 1995); but cf. Co., 975 S.W.2d 329, 332 n.1 (Tex. Id. Twenty-Fifth Floor - Plaza of the Americas The court, however, concluded this was not a county in which a substantial part of the facts giving rise to the coverage dispute arose. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. 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. Group, Inc., 946 F.Supp. A declaratory judgment must be based on an actual controversy, and cannot be merely advisory. ); Taylor v. State Farm Lloyds, 2003 Tex. U.S. Constitution Annotated Toolbox. that AHCA Comply with Fla. Stat. One of the factors the courts will review is whether the declaratory action is filed in anticipation of a state court suit. County Mut. Ins. 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. (because claimant could not bring suit, she had no right to intervene); see, e.g., Graciela v. Tagle, 946 S.W.2d 504 (Tex. App.Dallas 1992, writ denied) (insurer not collaterally estopped from challenging findings); United States Fire Ins. In American Genl Fire & Cas. Answer, Affirmative Defenses, and Counterclaim to the First Amended Complaint for Declaratory Judgment ("Complaint") filed by Hartford Fire Insurance Company ("Hartford"), . 8. Auto Ins. 37.010. REVIEW. 37.008. Co., 542 S.W.2d 429 (Tex. For more information, please contact the law firm at 817-335-8800. Thus, an insured can seek an affirmative finding of coverage, or an insurer can seek a negative determination that coverage does not exist. The Fifth Circuit reviewed abstention under the Burford and Colorado River doctrines, and concluded that neither was applicable. PRAC. App.Houston [1st Dist.] Co. v. Port Auth. Co. v. Quinn-L Capital Corp., 3 F.3d 877 (5th Cir. 1, eff. When declaratory relief will not be effective in settling the controversy, the court may decline to grant it. POWER OF COURTS TO RENDER JUDGMENT; FORM AND EFFECT. SUPPLEMENTAL RELIEF. 86.011 Et. In this instance, both state and federal courts have readily allowed the use of extrinsic evidence to determine the duty to defend. Facts and Procedural History. denied), the court held it was permissible, and not purely advisory, to determine the number of occurrences involved in the underlying litigation. 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. (whether policy was void or loss was covered presented justiciable controversy); American States Ins. 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. 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. denied) (disallowing evidence of workers compensation payments to establish employment). See Firemans Ins. The Federal Declaratory Judgment Act creates a remedy, not a basis for jurisdiction. 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. 9. Typically, an anti-suit injunction is appropriate in limited instances: 1) to address a threat to the courts jurisdiction; 2) to prevent the evasion of important public policy; 3) to prevent a multiplicity of suits; or 4) to protect a party from vexatious or harassing litigation. 1995). P., specifically provides, with regard to joinder of third parties, that This rule shall not be applied, in tort cases, so as to permit the joinder of a liability or indemnity insurance company, unless such company is by statute or contract liable to the person injured or damaged. Most policies include a no action provision that provides that a third partys right of action against the insured does not arise until there is a settlement, to which the insurer has agreed, or a judgment against the insured. dismd, 507 U.S. 1026 (1993); cf. In a straight complaint allegation case, for instance, there should be extremely limited discovery, beyond verification of the pleadings and the policy. The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. Sec. denied) (any judgment on indemnity was advisory and beyond power and jurisdiction of the court); Campbell v. Commercial Standard Ins. 14-0457 (Tex., July 1, 2016), RSL agreed to purchase certain annuity contracts issued by MetLife from three individuals. declaratory judgment action. 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. *I`Sl,'dpC2\,AMia*K/[ -M @ICPgIw5 Y k]x?4 :D R*NuNK^CXdmS0I,-B Advisory opinions are prohibited by both the state and federal constitutions. 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. App.Houston [1st Dist.] It is still likely a court will not allow dual-track litigation of issues that affect liability and coverage. 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. This article contains general legal information but does not constitute professional legal advice for your particular situation. App.Corpus Christi 1997, no pet.) App.Fort Worth 2000, no pet.). 1974, no writ). Co. v. Hood, 895 F.Supp. 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. Sec. 1995) (whether trademark violation occurred during policy period). 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. <> 6 0 obj Co., 981 S.W.2d 889 (Tex. The court remanded for consideration of these factors. Civ. LEXIS 7088 (Tex. 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. 1998); Monticello Ins. Co. v. Burch, 442 S.W.2d 331 (Tex. Co., 975 S.W.2d 329 (Tex. 3.08(a), eff. 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. ), Notes of Advisory Committee on Rules1937. The dispute was over an unscheduled vehicle. 214-871-8200, One Riverway 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. 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). 1994). Co. v. Rio Grande Heart Specialists of So. App.Amarillo 2019). An action or proceeding is not open to objection on the ground that a declaratory judgment or decree is prayed for. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Co. v. Tandy Corp., 986 F.2d 94, 95 (5th Cir. Co. v. Carmichael, 1998 Tex. 1993), cert. <> Civ. See Murray, 437 S.W.2d 264 (Tex. Rule 57. Co. v. Taylor, 832 S.W.2d 645 (Tex. Sec. App.Houston 1965, writ refd n.r.e.) A defense is an act of protecting one's own interests. 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. However, in American W. Home Ins. R. CIV. Civ. Civ. DECLARATIONS RELATING TO TRUST OR ESTATE. JURY TRIAL. App.Corpus Christi 2002, pet. endobj Corp., 817 F.Supp. C.M.W., 53 S.W.3d 877 (Tex. stream 1998). App.Dallas 1998, pet. While the law is less clear, Federal courts, applying Texas law, have reached a similar conclusion. Co. v. River Entertainment, 998 F.2d 311, 315 (5th Cir. This is an action for declaratory judgment pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. 1969); see also Allstate Ins. 2283. Co. v. County of Nye0, Nev., 26 . 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.Houston [14th Dist.]

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