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. Co. v. Murray, 437 S.W.2d 264, 265-66 (Tex. Co. v. Block, 744 S.W.2d 940, 943 (Tex. 86.011 Et. Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper. App.Fort Worth 1961, writ refd n.r.e.) denied). Co. v. Trejo, 39 F.3d 585, 590 (5th Cir. endobj App.Amarillo 1997, no pet.). 37.004. Sept. 1, 1987; Acts 1999, 76th Leg., ch. any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. 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. 2021 :: Supreme Court of Texas Decisions - Justia Law App.Amarillo 1976, writ refd n.r.e. The collision was also in Hidalgo County, as was the liability suit. 1969); see also Allstate Ins. 1996) (nevertheless refraining from determining coverage for indemnity, on the basis of judicial economy). Corp. v. Vacuum Tanks, Inc., 975 F.2d 1130, 1133 (5th Cir. 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. 1993); American States Ins. 2201, and further provides for a jury trial. 4 0 obj There was also a declaration that the insurer owed neither defense nor indemnity to the wife. For more information, please contact the law firm at 817-335-8800. 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. By Karl Bayer. First Cause of Action: Declaratory Judgment under . App.Amarillo 2019). Co. v. Taylor, 706 S.W.2d 352 (Tex. 1993) (whether accident arose from liquor liability); Acceptance Ins. 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. 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. For years, Texas courts concluded that a declaration of indemnity was premature, until the underlying suit was resolved. 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 held the county where the agent was located, the policy was sold, and the claim was reported, was not a proper venue. Co. v. Louisiana Farm Bureau Fedn, Inc., 996 F.2d 774, 778 (5th Cir. Ins. Moreover, Insurers should note that policies that are not duty to defend, or otherwise expressly provide a right of recoupment, may not be subject to the same limitations on the right of recoupment. PDF In the Circuit Court of The Second Judicial Circuit in And for Leon While for years there was a question in the Federal courts as to whether 38.001, Tex. Coverage disputes under liability policies are well-suited for declaratory actions. 1997)2; see also State Farm Lloyds v. 1997) (whether vehicle was owned by insured); Harken Exploration Co. v. Sphere Drake Ins., PLC, 261 F.3d 466 (5th Cir. The court may order a speedy hearing of a declaratory judgment action. PDF NO. 2009-52869 THE STATE OF TEXAS IN THE DISTRICT COURT v. OF App.Dallas 2001, no pet.) The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. See Brillhart v. Excess Ins. Auto Ins. If no facts within the scope of coverage are alleged, an insurer is not required to defend. Group, Inc., 946 F.Supp. Declaratory relief is an especially appropriate method for resolving coverage disputes, because of the limited options available for resolution of such disputes. Sec. (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. Improper use of declaratory judgments under the Texas UDJA - LinkedIn Ins. aspects of insurance coverage including directors and officers liability, professional liability, 45 (N.D. Tex. 1993); Trinity Univ. 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. If the application is deemed sufficient, the court shall, on reasonable notice, require any adverse party whose rights have been adjudicated by the declaratory judgment or decree to show cause why further relief should not be granted forthwith. The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. Insrs v. American Home Assur. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such. ), Notes of Advisory Committee on Rules1937. Co., 2000 Tex. Co., 981 S.W.2d 861 (Tex. Texas Supreme Court to Decide Whether a Declaratory Judgment Action is the Proper Way to Assert an Underinsured Motorist Claim January 7, 2021 Bob Allen The Allen Law Group bob.allen@theallenlaw.com Ever since the landmark Texas Supreme Court decision in Brainard v. See, e.g., City of Galveston v. Giles, 902 S.W.2d 167 (Tex. endobj PDF IN THE SUPREME COURT OF TEXAS - txcourts.gov 1998), overruled on other grounds, State Farm Fire & Cas. . A court may not . The issue becomes more murky when allegations triggering coverage are alleged, but are in conflict with the actual facts. Costs and fees are not dependent upon the outcome, and can be awarded to either the prevailing or the non-prevailing party. 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. Ins. . Co. of Texas, 1998 Tex. (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.Dallas 1998, no pet.). denied); State Farm Lloyds v. State Farm argued the policy changes were made in Milam County, where the agent was located, and the policy was sold. Since the duty to defend is based solely on the live pleadings, a declaratory judgment is arguably based only on the pleading in effect, and is not determinative as to any subsequent amended or supplemental pleading. dismd, 507 U.S. 1026 (1993). Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Co. v. Gandy, 925 S.W.2d 696 (Tex. App.Houston [1st Dist.] P. 76A; 192.6(b)(5). %PDF-1.5 Instead, the purpose of a declaratory judgment action is to determine the parties' responsibilities in relation to a particular dispute. Sec. 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. 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. Cigna Lloyds Ins. at 1280 (insurer not precluded from relitigating course and scope of employment). Id. Ins. Pursuant to 37.003, a declaration may be either affirmative or negative in form and effect. Under Texas substantive law, attorneys fees may be available to the insured if the insurer has breached its duty to defend or indemnify. Admiral Ins. 1997); Trinity Universal Ins. Acts 1985, 69th Leg., ch. Co. v. Patriot Sec., Inc., 926 F.Supp. Nor can an insurer join the claimants and address the issues through interpleader. The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. Michael L. Zigelman is co-managing partner of the New York City office of Kaufman Dolowich & App.Corpus Christi 1982, no writ) (could not consider facts of ownership that conflicted with petition); Calderon v. Mid-Century Indem. (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. 1995). 37.002. Under state or federal law, declaratory relief is only appropriate when there is an actual case or controversy. 45 (N.D. Tex. U.S. Constitution Annotated Toolbox. App. 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. . Co. v. Burch, 442 S.W.2d 331 (Tex. When Can You File a Declaratory Judgment Action' - Insurance Journal See Firemans Ins. The Federal Declaratory Judgment Act creates a remedy, not a basis for jurisdiction. 2010), Sec. The controversy is ripe, because the insurer is called upon to defend, and because the existence of coverage may impact the outcome of the suit. The claims involved crop-dusting, which allegedly damaged abutting fields because of herbicide drift. It is axiomatic that the duty to defend is broader than the duty to indemnify. denied sub nom. PDF IN THE SUPREME COURT OF TEXAS - txcourts.gov In this instance, there may be legitimate concerns that the insurers discovery will inure to the benefit of the liability plaintiff, which is likely not in the interest of either the insured or the insurer. 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. declaratory-judgments | U.S. Constitution Annotated | US Law | LII 855, Sec. See here for a complete list of exchanges and delays. 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. insured that the insurer's defense of the action against the insured . . 925 S.W.2d at 714. Indemnity, on the other hand, is based on actual facts and should always be subject to extrinsic evidence. A court can dismiss a declaratory action even if it fails to meet the stringent standards for abstention. 14-0457 (Tex., July 1, 2016), RSL agreed to purchase certain annuity contracts issued by MetLife from three individuals. Ins. at 451-53. 28 U.S.C. R. CIV. 1996). 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. App.Austin 1998, no pet. endstream Id. The existence or nonexistence of any right, duty, power, liability, privilege, disability, or immunity or of any fact upon which such legal relations depend, or of a status, may be declared. 1993). Suite 1400 Sec. 1995, no writ); Employers Cas. When an issue has been litigated in the underlying case, when can it be re-litigated in the coverage dispute? 97 (E.D. Sec. Co. v. Hood, 895 F.Supp. As such, there should be no collateral estoppel of the insurer, based upon the outcome of the issue in the underlying case. R. CIV. PDF Affirmative and Defensive Pleadings in Insurance Coverage and Bad Faith