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. Dec. 1, 2007. Genl Agency v. Cooper, 952 S.W.2d 861 (Tex. 1968) (J. Smith, dissenting). Burch involved a declaration that the insurer owed defense, and also owed indemnity for the insureds liability for his wifes torts. Civ. Oftentimes, the insurer has no duty to indemnify. The court, however, concluded this was not a county in which a substantial part of the facts giving rise to the coverage dispute arose. at 451-53. Ins. 45 (N.D. Tex. A common way of eliminating this uncertainty is with a declaratory judgment action, also called a declaration. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia. 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. The language of Rule 57 has been amended as part of the general restyling of the Civil Rules to make them more easily understood and to make style and terminology consistent throughout the rules. 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. Code37.009 provides that in any proceeding under this Chapter, the court may award costs and reasonable and necessary attorneys fees as they are equitable and just.. . A declaratory judgment must be based on an actual controversy, and cannot be merely advisory. 5 0 obj
1996). stream
See Scottsdale Ins. denied) (refusing to allow use of extrinsic evidence to disprove alleged facts). Group, 946 F.Supp. 2283. 2001) (when lease obtained); Guaranty Natl Ins. In a straight complaint allegation case, for instance, there should be extremely limited discovery, beyond verification of the pleadings and the policy. An action or proceeding is not open to objection on the ground that a declaratory judgment or decree is prayed for. 37.011. R. Civ. 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. In American Genl Fire & Cas. In other respects the Uniform Declaratory Judgment Act affords a guide to the scope and function of the Federal act. Under state or federal law, declaratory relief is only appropriate when there is an actual case or controversy. 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. 1993); Trinity Univ. Co. v. Gandy, 925 S.W.2d 696 (Tex. What Is a Declaratory Judgment Action? See Murray, 437 S.W.2d 264 (Tex. Am., 845 S.W.2d 794, 801 (Tex. 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. 2201, to determine an actual controversy between the . Suite 1400 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. endobj
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. 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. It may be appropriate for courts to abstain, in certain circumstances. Therefore, either diversity or federal question jurisdiction must still exist. (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. 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.Fort Worth 1998, no pet.) The Fifth Circuit reviewed abstention under the Burford and Colorado River doctrines, and concluded that neither was applicable. Mut. 959, Sec. 7 Id. The court may order a speedy hearing of a declaratory judgment action. Added by Acts 2007, 80th Leg., R.S., Ch. Suite 300 Co. v. Carmichael, 1998 Tex. For Texas Air Control Bd., 852 S.W.2d at 444. 11 0 obj
App.Dallas 1998, pet. The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. endobj
Co., 975 S.W.2d 329, 332 (Tex. 120.53. (driver excluded); see also Tri-Coastal Contrs, Inc. v. Hartford Undwrs Ins. 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. 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. 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. Plummer, 13 F.Supp. CIVIL PRACTICE AND REMEDIES CODE CHAPTER 37. DECLARATORY JUDGMENTS - Texas dismd, 507 U.S. 1026 (1993); cf. (As amended Dec. 29, 1948, eff. !`g)a00-k@@eU Co. v. Vandewater, 907 S.W.2d 491 (Tex. SECOND AFFIRMATIVE DEFENSE. 1998). The courts appear to be split, with federal courts being somewhat more lenient in allowing the use of extrinsic evidence in this circumstance. Declaratory judgment actions are oftentimes filed in federal court. Co. v. Trejo, 39 F.3d 585, 590 (5th Cir. Federated Mut. 1 Justice Smith was perhaps prescient in his dissent, concluding that a justiciable controversy existed. 2000). Civ. Co., 95 S.W.3d 702 (Tex. App.Houston [1st Dist.] )1^Hl]TgxY8Ubs,!
9@Dyp*l8sA!N\X The court remanded for consideration of these factors. See Hartford Ins. Explainer: How did the battle between Ron DeSantis and Disney escalate? Jurisdictions continue to be split over insurer's right to recoup 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. Sec. 37.008. 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. 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.". Rules 12(b) and 12(h) . Co., 981 S.W.2d 861 (Tex. Under Texas substantive law, attorneys fees may be available to the insured if the insurer has breached its duty to defend or indemnify. 8 0 obj
Co., 316 U.S. 491 (1942); Wilton, 515 U.S. 277. 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. One reason proffered is the possibility of inconsistent outcomes. denied). 2002); Monticello Ins. Civ. For more information, please contact the law firm at 817-335-8800. 1997), the Supreme Court reaffirmed the complaint allegation rule, with dicta suggesting that the exception for extrinsic evidence would be narrowed. Elements of Declaratory Judgment in Texas: Strategies & Ethics in DEC All orders, judgments, and decrees under this chapter may be reviewed as other orders, judgments, and decrees. Fla. Stat. 1, eff. See Firemans Ins. Sec. Seq. We agree and affirm as well. 1968). The crop-dusting involved only one flight, but several passes during which herbicide was released, and during which wind direction and velocity varied. Costs and fees are not dependent upon the outcome, and can be awarded to either the prevailing or the non-prevailing party. Cluett v. Medical Protective Co., 829 S.W.2d 822, 826 (Tex. New Orleans, LA 70130 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. See here for a complete list of exchanges and delays. action seeking a declaratory judgment." , See Wilton 515 U.S. at 288; Dizol, 133 F.3d at 1223, 1225 & n.5. 1983). & Rem. Co. v. Childress, 650 S.W.2d 770, 775-76 (Tex. 1997) (whether vehicle was owned by insured); Harken Exploration Co. v. Sphere Drake Ins., PLC, 261 F.3d 466 (5th Cir. Moreover, the Second Department noted that the policy at issue did not expressly provide the insurer with a right to recoup defense costs. Corp., 817 F.Supp. While for years there was a question in the Federal courts as to whether 38.001, Tex. App. See Tri-Coastal Contractors, Inc. v. Hartford Undwrs Ins. (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. DECLARATORY JUDGMENT ACTIONS - ryderlaw.com Ins. Cigna Lloyds Ins. Sec. P., also addresses declaratory judgments, by reference to 28 U.S.C. See Bailey, 133 F.3d at 369 n.4; Travelers Ins. PDF Declaratory Judgment Actions: When are they Appropriate? 2d 719, 725 (D. Minn. 2005) (applying Texas law); Forum Ins. denied) (failure to satisfy burden is not finding of proof of opposite). Cf. SHORT TITLE, CONSTRUCTION, INTERPRETATION. defense | Wex | US Law | LII / Legal Information Institute 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. 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. See Utica Lloyds of Tex. (B) A contract may be construed either before or after there has been a breach. 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). denied). 1996). For instance, when it is clear that a ruling on the merits of plaintiff's claims would . In St. Paul Ins. Ohio Cas. Texas is not a direct action state, and a claimant typically has no claim against an insurer until a judgment is obtained. Co. v. Taylor, 706 S.W.2d 352 (Tex. 1995); but cf. Rule 57, FED. All Rights Reserved. 10, eff. App.El Paso 2000, no pet. 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. 1996) (insurer not estopped from litigating employment issue). 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. (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. dismd, 507 U.S. 1026 (1993). Acts 1985, 69th Leg., ch. Civ. 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. 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. The insurer denied defense based on the liquor liability exclusion and filed a declaratory judgment action. 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 . 2d 601, 621-22 (E.D. 37.006. C.M.W., 53 S.W.3d 877 (Tex. The Burches were the plaintiffs, and were also the petitioners for declaratory relief. While the law is less clear, Federal courts, applying Texas law, have reached a similar conclusion. h.). Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper. 1, eff. Ins. Wade, 827 S.W.2d at 451. 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.
Cole Hauser In Good Will Hunting,
Articles D