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. P. 26; Tex. Co., 975 S.W.2d 329, 332 (Tex. The Fifth Circuit overruled prior case law to conform with the Supreme Courts ruling. 2001). In Nautilus, the insureds were sued in California state court by a former business partner asserting numerous claims, including interference with prospective economic advantage. DECLARATIONS RELATING TO LIABILITY FOR SALES AND USE TAXES OF ANOTHER STATE. denied) (any judgment on indemnity was advisory and beyond power and jurisdiction of the court); Campbell v. Commercial Standard Ins. % 2000). 1996) (insurer not estopped from litigating employment issue). We agree and affirm as well. Civ. 1974, no writ). Despite the complaint allegation rule, Texas courts have always recognized that there are circumstances in which the court must look to extrinsic evidence to determine whether a duty to defend exists. Co. v. Taylor, 832 S.W.2d 645 (Tex. Still, there are often strategic benefits to filing early. PDF Texas Supreme Court to Decide Whether a Declaratory Judgment Action is Westport v. Atchley, Russell, Waldrop & Hlavinka, 267 F. Supp. The insurer refused to pay the judgment, on the basis that the insureds conduct constituted a willful violation of a penal statute, and was thus excluded by the policy. PDF In the United States District Court for The Northern District of Texas App.Fort Worth 1992, writ denied) (insurer not estopped by failing to have declaratory judgment determined before judgment in underlying case). Sept. 1, 1999. Co. v. Delaney, 386 S.W.2d 648 (Tex. 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.Dallas 1998, pet. Co. of Texas v. Erskine, 169 S.W.2d 731 (Tex. 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. (on petition for mandamus, found claimant was not third party beneficiary and had no right to intervene in declaratory action). 1998, no pet.). defense | Wex | US Law | LII / Legal Information Institute When to file is often determined by what is at issue. Co. v. Bailey, 133 F.3d 363, 368 (5th Cir. Group, 946 F.Supp. All quotes delayed a minimum of 15 minutes. 1996). See London Mut. LEXIS 7550 (Tex. 30, 2007, eff. The declaratory judgment action allows relief, even where another remedy exists. 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. ), Notes of Advisory Committee on Rules1937. Ins. (no right to new trial because of amended petition where suit brought and determined based on prior petition). They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. (b) A district court has original jurisdiction of a proceeding seeking a declaratory judgment that involves: (1) a party seeking declaratory relief that is a business that is: (A) organized under the laws of this state or is otherwise owned by a resident of this state; or, (B) a retailer registered with the comptroller under Section 151.106, Tax Code; and, (A) is an official of another state; and. 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. 651-389-5000, 10001 Reunion Place The firm's new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112. Co. of N. PDF Preserving Coverage Defenses 169 (S.D.Tex., 1935); Borchard, Declaratory Judgments (1934), passim. Co. v. Tandy Corp., 986 F.2d 94, 95 (5th Cir. See, e.g., Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995). 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. Tex. R. CIV. Where extrinsic evidence is offered, however, the scope of discovery should be broader. 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. 713-403-8210, 601 Poydras (4) to determine rights or legal relations of an independent executor or independent administrator regarding fiduciary fees and the settling of accounts. 1023, 1026 (N.D. Tex. )1^Hl]TgxY8Ubs,! 9@Dyp*l8sA!N\X Co. v. Port Auth. Federated Mut. ERISA/fiduciary-related claims, commercial general liability (CGL), admiralty and maritime, toxic/mass 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. ANSWER to COMPLAINT for declaratory judgment, affirmative defenses and 3 0 obj 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. (not justiciable controversy); Foust v. Ranger Ins. PRACTICAL CONSIDERATIONS Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Further necessary or proper relief based on a declaratory judgment or decree may be granted, after reasonable notice and hearing, against any adverse party whose rights have been determined by such judgment. Ins. (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. Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper. In this instance, both state and federal courts have readily allowed the use of extrinsic evidence to determine the duty to defend. The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. Understanding Declaratory Judgment Actions | Larkin Farrell App.Austin, Oct. 2, 2003, no pet. R. Civ. E.g., Wilton v. Seven Falls Co., 515 U.S. 277 (1995); American States Ins. 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. Declaratoryjudgments are an important tool in litigation. SUPPLEMENTAL RELIEF. 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. 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. Wade, 827 S.W.2d 448 (Tex. 1994), the court reviewed abstention doctrine in relation to declaratory judgment actions. Ins. Co. v. Taylor, 706 S.W.2d 352 (Tex. But, because courts have recognized that, where a coverage issue exists, there is no privity between the insured and the insurer, there is an argument that an insurer should be allowed to litigate facts in a declaratory judgment, regardless of whether the facts are also being litigated in the underlying suit. See, e.g., Stroop v. N. County Mut. PDF UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS - Manatt 1993). 1998, pet. PDF NO. 2009-52869 THE STATE OF TEXAS IN THE DISTRICT COURT v. OF 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. Civ. 5 0 obj 1271 (N.D. Tex. 37.002 provides that the chapter is remedial: Its purpose is to settle and to afford relief from uncertainty and in security with respect to rights, status, and other legal relations; and it is to be legally construed and administered. The Act does not create or enlarge jurisdiction. R. CIV. 37.011. App.Fort Worth 1961, writ refd n.r.e.) The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. 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. Co. v. Cooper Machinery Corp., 817 F.Supp. The abundance of case law allowing extrinsic evidence, however, suggests that the exception will continue. (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. See, e.g., State Farm Fire & Cas. Co., 981 S.W.2d 861 (Tex. P. 76A; 192.6(b)(5). 1 Justice Smith was perhaps prescient in his dissent, concluding that a justiciable controversy existed. Co., 61 F.3d 389 (5th Cir. 466, 473, 80 L.Ed. relation to an action brought by a party with no apparent justiciable interest. The court may order a speedy hearing of a declaratory judgment action. Id. App.Houston [14th Dist.] 45 (N.D. Tex. The landowner-appellant appealed a declaratory judgment excluding guests of his commercial lodge from freely using reserved lot areas on some property (essentially gutting the commercial. 37.001. Ins. 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. 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. Co. v. Gaskins, 572 S.W.2d 573, 575 (Tex. endstream 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. There are several defenses that should be considered in a suit for declaratory relief in both state and federal court. Protective orders are still relatively simple, and can usually be subject to an agreed motion in federal court. A declaration does not prejudice the rights of a person not a party to the proceeding. See Firemens Ins. ); Taylor v. State Farm Lloyds, 2003 Tex. 1993) (whether accident arose from liquor liability); Acceptance Ins. See Great American Ins. 461 (1937); Nashville, Chattanooga & St. Louis Ry. Co. v. App.Corpus Christi 2002, pet. 1787), Sec. The court may order a speedy hearing of a declaratory-judgment action. 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. A federal anti-injunction also exists. Rule 57, FED. Civ. at 332. It is still likely a court will not allow dual-track litigation of issues that affect liability and coverage. App.Austin 1998, pet. Co. v. Vandewater, 907 S.W.2d 491 (Tex. 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. Co. v. Deering Mgmt. The claims involved crop-dusting, which allegedly damaged abutting fields because of herbicide drift. 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.". R. CIV. 6 0 obj The Court also held that its decision is in line with what has "historically been the majority approach." See McCarthy Bros. Co. v. Continental Lloyds, 7 S.W.3d 725 (Tex. 1998). endobj Insrs v. American Home Assur. Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. Co. v. Cowan, 945 S.W.2d 819 (Tex. 59.02(c). Ins. App.Corpus Christi 2003, no writ). It is axiomatic that the duty to defend is broader than the duty to indemnify. Explainer: How did the battle between Ron DeSantis and Disney escalate? 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. Co. v. County of Nye0, Nev., 26 . A declaratory judgment is a binding judgment from a court defining the legal relationship between parties and their rights in a matter before the court. Ins. See Utica Lloyds of Tex. Dallas, TX 75201 Co., 981 S.W.2d 861 (Tex. 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. Co. v. Childress, 650 S.W.2d 770, 775-76 (Tex. It may be appropriate for courts to abstain, in certain circumstances. 37.007. 1, eff. Attorney Analysis from Westlaw Today, a part of Thomson Reuters. 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. 1 0 obj Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. 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. App.Dallas 1998, no pet.). See, e.g., State Farm Fire & Cas. 2d 601, 621-22 (E.D. Notes of Advisory Committee on Rules1948 Amendment. denied). 1, eff. 1997)2; see also State Farm Lloyds v. Shoot First, Litigate Later: Declaratory Judgment Actions, Procedural . App.Texarkana 1994, no writ) (possibility that liability triggering indemnity would be incurred was a feature hypothetical event, and court had no power to pass upon hypothetical or contingent situation); Fort Worth Lloyds v. Garza, 527 S.W.2d 195 (Tex. Instead, the purpose of a declaratory judgment action is to determine the parties' responsibilities in relation to a particular dispute. Suite 400 v. Mitchell, 138 F.3d 208, 210 (5th Cir. 1983). App.Dallas 2001, pet. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139 (Tex. Declaratory judgment actions are oftentimes filed in federal court. Tex. Voluck LLP and chair of its general liability coverage practice group. E.g., Cluett v. Medical Protective Co., 829 S.W.2d 822, 826 (Tex. denied); Ranger Ins. & Rem. See, e.g., City of Galveston v. Giles, 902 S.W.2d 167 (Tex. 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. 6#7a |mp}v"VY2I denied). Foust v. Ranger Ins. at 1280 (insurer not precluded from relitigating course and scope of employment). 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. Co. v. Grapevine Excavation, 241 F.3d 396 (5th Cir. App.Houston 1965, writ refd n.r.e.) 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. Co. v. Burch, 442 S.W.2d 331 (Tex. Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. Obviously, the nature of the coverage issue to be determined will also determine the scope of discovery. A declaratory judgment must be based on an actual controversy, and cannot be merely advisory. Auto. 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. Tex. First Cause of Action: Declaratory Judgment under . (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 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 there under. In Natl Union Fire Ins. Rules 38 and 39 govern a demand for a jury trial. 688, 699 (1936). SUBJECT MATTER OF RELIEF. 2201, and further provides for a jury trial. summary judgment on all of the Murphys' claims and its own claim for declaratory relief, requesting attorney's fees for both prosecuting and defending a declaratory judgment action. 8. App. Civ. 1994). See Farmers Tex. The issue becomes more murky when allegations triggering coverage are alleged, but are in conflict with the actual facts. Defense - FindLaw Dictionary of Legal Terms Co. v. Quinn-L Capital Corp., 3 F.3d 877 (5th Cir. In addition to the county of the defendants residence or principal office, venue is generally deemed proper in the county where the liability suit is pending, or judgment is entered. 2d 719, 725 (D. Minn. 2005) (applying Texas law); Forum Ins. !`g)a00-k@@eU 639a3). (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. JURY TRIAL. Tex. defenses always be pled by motion. Disclaimer. Suite 1850 See Fed. 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. PDF IN THE SUPREME COURT OF TEXAS - txcourts.gov Co. v. Am. 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. Ins. The insurer denied defense based on the liquor liability exclusion and filed a declaratory judgment action. 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. Texas Dept of Public Safety v. Moore, 985 S.W.2d 149, 153-54 (Tex. 699 (H.B. App.Houston 1998, pet. Indemnity, on the other hand, is based on actual facts and should always be subject to extrinsic evidence. If no facts within the scope of coverage are alleged, an insurer is not required to defend. In re Houston Specialty Insurance Co., 569 S.W.3d 138 (Tex. 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. Co. v. Hood, 895 F.Supp. 1996). oEN>-BZ=/c]-ZP4U3o>0!f$F = FQfB@DlClYthnA mML.;Emu =uT V 8). Co. v. Carmichael, 1998 Tex. 1996). App.Beaumont 1972), affd other grounds, 496 S.W.2d 552 (Tex. Co. v. Block, 744 S.W.2d 940, 943 (Tex. 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. 1992), cert. App.Houston [1st Dist.] If any facts within the scope of coverage are determined, however, an insurer is required to defend. PARTIES. Oct. 20, 1949; Apr. 1, eff. at 468. Co., 767 F.Supp. The most significant is that there must be a justiciable controversy between the parties. Proc. Co., 975 S.W.2d 329 (Tex. 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. 97, 99 (E.D. <> App.Texarkana 1967, no writ) (auto excluded); International Serv. Tex. 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 Filing 34 ANSWER to COMPLAINT for declaratory judgment, affirmative defenses and COUNTERCLAIM filed by Clemens Franek against Jay Franco & Sons, Inc. (jmp, ). 1993); American States Ins. See here for a complete list of exchanges and delays. The amendment substitutes the present statutory reference. 37.009. The Murphys opposed Wells Fargo's motion, arguing, among other things, that Wells Fargo's claims should not be characterized as requesting declaratory relief. & Ind. What Is a Declaratory Judgment Action? In this. Genl Ins. Suite 300 In American Genl Fire & Cas. Sec. 1994). App.El Paso 2000, no pet. Download PDF Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. 1979, no writ) (not justiciable controversy); Boorhem-Fields, Inc. v. Burlington Northern Railroad Co., 884 S.W.2d 530 (Tex. Co. v. Boll, 392 S.W.2d 158, 161 (Tex. App.San Antonio 1998, pet. (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.
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