defenses to declaratory judgment action texas

1170 (1933). App.Austin 1998, no pet. App.Corpus Christi 2000, no writ). Co. v. David Agency Ins., Inc., 327 F.Supp.2d 922 (N.D. . 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. Of N.Y. & N.J., 166 A.D.3d 464 (1st Dep't 2018); Max Specialty Ins. App.Dallas 2001, pet. See Firemens Ins. Co., 96 S.W.3d 673 (Tex. App.Waco 1943, no writ); Superior Ins. denied); cf. 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. The Fifth Circuit reviewed abstention under the Burford and Colorado River doctrines, and concluded that neither was applicable. 3.08(a), eff. 37.010. REVIEW. 1983). Declaratory relief is an especially appropriate method for resolving coverage disputes, because of the limited options available for resolution of such disputes. 1994). Sec. App.Dallas 1998, pet. Written instruments, including ordinances and statutes, may be construed before or after breach at the petition of a properly interested party, process being served on the private parties or public officials interested. 97 (E.D. Admiral Ins. Answer, Affirmative Defenses, and Counterclaim to the First Amended Complaint for Declaratory Judgment ("Complaint") filed by Hartford Fire Insurance Company ("Hartford"), . denied) (disallowing evidence of workers compensation payments to establish employment). 1974, no writ). See, e.g., Cook v. Ohio Cas. 2001) (when lease obtained); Guaranty Natl Ins. 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As such, there should be no collateral estoppel of the insurer, based upon the outcome of the issue in the underlying case. Aug. 2, 2012). ); Taylor v. State Farm Lloyds, 2003 Tex. Co., 143 F.3d 192 (5th Cir. 37.007. (driver excluded); see also Tri-Coastal Contrs, Inc. v. Hartford Undwrs Ins. 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. Seq. Declaratory Judgment These rules govern the procedure for obtaining a declaratory judgment under 28 U.S.C. 1998) (holding that Texas Declaratory Judgment Act was not controlling, substantive law, and did not justify fee award to defendants). Sept. 1, 1985. R. Civ. Ins. A justiciable controversy requires a real and substantial controversy over tangibles interests, and not merely a theoretical dispute. 1, eff. In Foust v. Ranger Ins. See Owens v. Allstate Ins. <>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 612 792] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> 8. A defense is an act of protecting one's own interests. LEXIS 8082 (Tex. Co. v. Wade, 827 S.W.2d 448 (Tex. 1, eff. 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. The court may order a speedy hearing of a declaratory-judgment action. 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. 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. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139 (Tex. If any facts within the scope of coverage are determined, however, an insurer is required to defend. at 468. The abundance of case law allowing extrinsic evidence, however, suggests that the exception will continue. Am., 845 S.W.2d 794, 801 (Tex. (B) A contract may be construed either before or after there has been a breach. See TEX. I Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper. Co., 542 S.W.2d 429 (Tex. In holding that Nautilus was entitled to recoupment of defense costs, the Court reasoned that the right to recoupment was not governed by the insurance policy at issue, but rather the right is afforded to the insurer under the theory of common law unjust enrichment. Co. v. Louisiana Farm Bureau Fedn, Inc., 996 F.2d 774, 778 (5th Cir. App.Houston 1998, pet. Westlaw Today is owned by Thomson Reuters and operates independently of Reuters News. 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. 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. When there is uncertainty as to the legal obligations or rights between two parties, a declaratory judgment offers an immediate means to resolve this uncertainty. Co. v. Hood, 895 F.Supp. 37.0055. 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In addition, in many instances, a protective order will allow broad discovery, without fear of disclosure to the plaintiff. The Murphys opposed Wells Fargo's motion, arguing, among other things, that Wells Fargo's claims should not be characterized as requesting declaratory relief. 1, eff. Cty. Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 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. LEXIS 7982 (Tex. Civ. Co. v. Kelliher, 343 S.W.2d 278 (Tex. 1993) (Colorado River factors inapplicable in declaratory judgment action); Granite State Ins. Tex. (b) A contract may be construed either before or after there has been a breach. The insurer denied defense based on the liquor liability exclusion and filed a declaratory judgment action. 1991), affd in part, 961 F.2d 213 (5th Cir. <> 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. (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. See, e.g., Standard Fire Ins. 1993), cert. endobj E.g., Cluett v. Medical Protective Co., 829 S.W.2d 822, 826 (Tex. 1999) (insureds motion to transfer erroneously granted); Southern County Mut. V 8). 1997) (whether vehicle was owned by insured); Harken Exploration Co. v. Sphere Drake Ins., PLC, 261 F.3d 466 (5th Cir. App.Dallas 1992, writ denied) (insurer not collaterally estopped from challenging findings); United States Fire Ins. The focus is on the factual allegations that show the origin of damages, rather than the legal theories alleged. Tex. 1998, pet. 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. 8 0 obj 10 0 obj denied); ANR Prod. 37.011. 1995); but cf. 2201. Defense counsel may, nonetheless, have protected certain information from disclosure, for fear that it was effect coverage, and violate counsels own ethical obligations. Suite 1850 It may be appropriate for courts to abstain, in certain circumstances. Because the insurer would be allowed to re-litigate, after the underlying case is resolved, there is no reason to delay the inevitable. Co. v. Fraiman, 514 S.W.2d 343, 346 (Tex. POWER OF COURTS TO RENDER JUDGMENT; FORM AND EFFECT. See Bocquet v. Herring, 972 S.W.2d 19 (Tex. 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. Fla. Stat. There are exceptions, of course. In this chapter, "person" means an individual, partnership, joint-stock company, unincorporated association or society, or municipal or other corporation of any character. Cluett v. Medical Protective Co., 829 S.W.2d 822, 826 (Tex. A declaration does not prejudice the rights of a person not a party to the proceeding. R. CIV. 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. 10, eff. In Gandy, the court broadened the scope of re-litigation, noting that in no event, however, is a judgment for plaintiff against defendant rendered without a fully adversarial trial, binding on defendants insurer . Under Texas substantive law, attorneys fees may be available to the insured if the insurer has breached its duty to defend or indemnify. The Burches were the plaintiffs, and were also the petitioners for declaratory relief. App.Corpus Christi 1997, no pet.) 1993). Although efforts are occasionally made, it is inappropriate for the insurer to be joined as a defendant in a liability suit. Acts 1985, 69th Leg., ch. 86.011 Et. 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. Co., 579 S.W.2d 523 (Tex. Co. v. Tandy Corp., 986 F.2d 94, 96 (5th Cir. Where the insurer is providing a defense, it is a party to the attorney-client privilege, and can share in communications between the insured and defense counsel, without waiver. Advisory opinions are prohibited by both the state and federal constitutions. He can be reached at mzigelman@kdvlaw.com. Indemnity is based on the actual facts establishing liability in the underlying suit. <> Civ. In this instance, both state and federal courts have readily allowed the use of extrinsic evidence to determine the duty to defend. Sept. 1, 1999. 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. Ins. 1995, no writ); Employers Cas. ); but cf. 2023 Thompson, Coe, Cousins & Irons, LLP. Co. v. Cooper Mach. 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. Suite 300 App.Dallas 1998, no pet.). See Farmers Tex. App.Beaumont 1972), affd other grounds, 496 S.W.2d 552 (Tex. 639a3). App.San Antonio 1998, pet. See Firemans Ins. 1992); cf. Notes of Advisory Committee on Rules1948 Amendment. See Great American Ins. declaratory judgment action. Co., 418 S.W.2d 712, 715-16 (Tex. He can be reached at estern@kdvlaw.com. at 1280 (insurer not precluded from relitigating course and scope of employment). See, e.g., Commercial Metals Co. v. Balfour, Guthrie & Co., Ltd., 577 F.2d 264 (5th Cir. App.Fort Worth 1986, writ refd n.r.e.). 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. RESERVATION OF RIGHTS CHECKLIST - PAGE 2 . Acts 1985, 69th Leg., ch. 37.006. denied). See Feria v. CU Lloyds of Texas, 2001 Tex. art. The crop-dusting involved only one flight, but several passes during which herbicide was released, and during which wind direction and velocity varied. App.Dallas 2000, pet. In the event of a legal controversy, both parties generally want to avoid any legal uncertainty and insecurity that could arise out of a dispute. . Co., 316 U.S. 491 (1942); Wilton, 515 U.S. 277. 855, Sec. The following state regulations pages link to this page. Mut. Co. v. Bailey, 133 F.3d 363, 368 (5th Cir. Tex. 1023, 1026 (N.D. Tex. Co., 981 S.W.2d 861 (Tex. Rules 12(b) and 12(h) . 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. 14-0457 (Tex., July 1, 2016), RSL agreed to purchase certain annuity contracts issued by MetLife from three individuals. The most significant is that there must be a justiciable controversy between the parties. App.Fort Worth 1961, writ refd n.r.e.) Page 2 / 14Defendant-Counterclaimant's First Amended Answer and Counterclaims 5. 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. Plaintiff lacks standing for some or all of . 9. dismd, 507 U.S. 1026 (1993). The Fifth Circuit overruled prior case law to conform with the Supreme Courts ruling. Cigna Lloyds Ins. LEXIS 7550 (Tex. App.Corpus Christi 1998), revd on other grounds, 995 S.W.2d 675 (Tex. Foust v. Ranger Ins. App.El Paso 1976, writ refd n.r.e.) App.San Antonio 2019). 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). Instead, the purpose of a declaratory judgment action is to determine the parties' responsibilities in relation to a particular dispute. He concentrates his practice on all 7 Id. Co. v. Louisiana Farm Bureau Federation, 996 F.2d 774, 778 (5th Cir. App.Houston [1st Dist.] endobj However, each party must still plead for relief and carry its own burden of proof. Ins. R. CIV. App.Corpus Christi 1975, writ refd n.r.e.) Genl Ins. 4 suit would prejudice both Essex and SDT in their defenses against Zuniga's claims because it would (1) create a conflict of interest for Essex,3 and (2) necessarily require the admission of evidence of liability insurance in violation of Texas Rule of Evidence 411.4 Because those policy reasons for the "no direct action" rule apply regardless of whether the plaintiff is seeking These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia. 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. & Rem. (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. 959, Sec. 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. Ins. 3 0 obj 1996) (nevertheless refraining from determining coverage for indemnity, on the basis of judicial economy). 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. 1364 (N.D. Tex. 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. 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. 713-403-8210, 601 Poydras SECOND AFFIRMATIVE DEFENSE. Co. v. App.Corpus Christi 2000, no writ). See, e.g., State Farm Lloyds v. 1. 1 0 obj 2000) (staying declaratory action because of motion to join insurer in state court liability suit). 1998); see also Abraxas Petroleum Corp. v. Hornburg, 20 S.W.3d 741 (Tex. denied) (failure to satisfy burden is not finding of proof of opposite). 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. 305 (H.B. Tex. (prior judgment not res judicata as to amended pleading that alleged new facts, not involving completed operations); St. Paul Ins. 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. Added by Acts 2007, 80th Leg., R.S., Ch. 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. 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. For All quotes delayed a minimum of 15 minutes. Circuit Court of Appeals certified the question of whether an insurer is entitled to recoupment of defense costs based on a reservation of its rights to seek recoupment to the Nevada Supreme Court. The Federal Declaratory Judgment Act creates a remedy, not a basis for jurisdiction. If no facts within the scope of coverage are alleged, an insurer is not required to defend. As Texas law remains uncertain regarding reimbursement of defense costs, and as many insureds are not financially capable of repayment, the defense issue may be rendered moot either practically or legally by delay. The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. endobj The district court dismissed the indemnification issue, but granted judgment on defense, based on the extrinsic evidence. Co. v. Burch, 442 S.W.2d 331, 337 (Tex. denied sub nom. (whether driver qualified as an insured); John Deere Ins. See, e.g., City of Galveston v. Giles, 902 S.W.2d 167 (Tex. 1965, writ refd n.r.e.) 651-389-5000, 10001 Reunion Place that AHCA Comply with Fla. Stat. (c) A business described by Subsection (b)(1) is entitled to declaratory relief on the issue of whether the requirement of another state that the business collect and remit sales or use taxes to that state constitutes an undue burden on interstate commerce under Section 8, Article I, United States Constitution. The courts appear to be split, with federal courts being somewhat more lenient in allowing the use of extrinsic evidence in this circumstance. The industry leader for online information for tax, accounting and finance professionals. In common law, a defendant may use defenses to prevent or limit liability.A defense can either allege a failure to state a claim, or affirm the existence of a claim and present additional reasons that prevent the plaintiff or prosecutor from prevailing on a cause of action, a demand for relief, or otherwise obtaining the result requested. A declaration does not prejudice the rights of a person not a party to the proceeding. defenses always be pled by motion. Co. v. Vandewater, 907 S.W.2d 491 (Tex. 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. 167, Sec. While the law is less clear, Federal courts, applying Texas law, have reached a similar conclusion. 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. 1993); American States Ins. See, e.g., Western Heritage Ins. App. Co., 628 S.W.2d 184 (Tex. at 452. Co. v. Deering Mgmt. See, e.g., Texas Assn of Bus. POWER OF COURTS TO RENDER JUDGMENT; FORM AND EFFECT. Sec. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. (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. The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. 1995). h.). 1998); Monticello Ins. Co., 628 S.W.2d 184 (Tex. Co. v. Trejo, 39 F.3d 585 (5th Cir. 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. The firm's new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112. Still, there are often strategic benefits to filing early. When to file is often determined by what is at issue. US Senate panel seeks ethics details from Supreme Court. 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. Texas, Inc., 64 S.W.3d 497 (Tex. Co. v. Travis, 68 S.W.3d 72, 77 (Tex. See McCarthy Bros. Co. v. Continental Lloyds, 7 S.W.3d 725 (Tex. While for years there was a question in the Federal courts as to whether 38.001, Tex. Prac. App.Austin 1987, no writ); Safeway Mng. Co. v. Cooper Machinery Corp., 817 F.Supp. . App.Houston [1st Dist.] The claims involved crop-dusting, which allegedly damaged abutting fields because of herbicide drift. 1989, no writ); In re Fontenot, 13 S.W.3d 111 (Tex. Proc. 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. App.Houston [1st Dist.] Filing 34 ANSWER to COMPLAINT for declaratory judgment, affirmative defenses and COUNTERCLAIM filed by Clemens Franek against Jay Franco & Sons, Inc. (jmp, ). See Brillhart v. Excess Ins. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. 2002); Monticello Ins. Const. Declaratory Judgment. App.Austin, Oct. 2, 2003, no pet. Co. v. Murray, 437 S.W.2d 264, 265-66 (Tex. (2) the decisions of other courts interpreting Section 8, Article I, United States Constitution. K-yXHMKS mmgOT}|aMz0. San Antonio, TX 78216 Explanation of the Constitution - from the Congressional Research Service Auto. Id. Ins. Hasselbring v. Koepke, 263 Mich. 466, 248 N.W. Oftentimes, the insurer has no duty to indemnify. App.Houston [14th Dist.] <> o FRCP Rule 57. denied, 511 U.S. 1032 (1994). (on petition for mandamus, found claimant was not third party beneficiary and had no right to intervene in declaratory action). The district court dismissed the declaratory action on the defendants motion based on 28 U.S.C. See, e.g., Standard Fire Ins. Co. v. Sassin, 894 F.Supp. <> Co. v. Marathon Ashland Petrol., L.L.C., 87 F. Supp. In older cases, courts allowed broad introduction of extrinsic evidence in a declaratory judgment context. A federal anti-injunction also exists. 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). See, American Home Assur. Co. v. Gaskins, 572 S.W.2d 573, 575 (Tex. endobj 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. Federated Mut. Control of defense and directing actions of defense counsel in conflict situation (Utica Mut. 1969); see also Allstate Ins. For instance, when it is clear that a ruling on the merits of plaintiff's claims would . Civ. Download PDF Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. Ins. 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. <> 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. App.Corpus Christi 1982, no writ), the court declared that the rule was that use of extrinsic evidence was allowed to determine coverage, but not to determine facts that would establish the insurers liability. What Is a Declaratory Judgment Action? Where suits are filed in two states, one court may abstain in favor of the first-filed suit. E.g., Wilton v. Seven Falls Co., 515 U.S. 277 (1995); American States Ins. Co. v. Ward, 107 S.W.3d 820 (Tex. Rule 57, FED. It argues that the other claims and defenses in the case subsume the issues on which Holmes asks for a declaratory judgment. (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. Co. v. Griffin, 955 S.W.2d 81 (Tex. (B) asserts a claim that the party seeking declaratory relief is required to collect sales or use taxes for that state based on conduct of the business that occurs in whole or in part within this state. Explainer: How did the battle between Ron DeSantis and Disney escalate? Co. v. County of Nye0, Nev., 26 . Insurer's right to file declaratory judgment action 9. A declaratory judgment is appropriate when it will terminate the controversy giving rise to the proceeding. . This article contains general legal information but does not constitute professional legal advice for your particular situation. Therefore, the claimants should not be necessary or indispensable parties, prior to the settlement or judgment. Ins. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. In duty to defend cases, the issue of whether extrinsic evidence is even relevant would likely arise. PRACTICAL CONSIDERATIONS COURT REFUSAL TO RENDER. 1996) (insurer not estopped from litigating employment issue). Sec.
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defenses to declaratory judgment action texas 2023