defenses to declaratory judgment action texas

On the other hand, in some instances, principally those in which only indemnity is at issue, or where stay or abstention is likely, there may be no benefit to early filing. Rule 57, FED. Co. v. Gjonaj Realty & Mgt. App.Austin, Oct. 2, 2003, no pet. 1997); Trinity Universal Ins. App.Corpus Christi 1998), revd on other grounds, 995 S.W.2d 675 (Tex. The petition in the underlying suit was amended, however, and all references to alcohol were deleted. Co. v. Ochoa, 19 S.W.3d 452 (Tex. App.Dallas 1998, pet. 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. 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. Co., 767 F.Supp. RESERVATION OF RIGHTS CHECKLIST - PAGE 2 . Co. v. Delaney, 386 S.W.2d 648 (Tex. As a preliminary consideration, counsel for the insurer should be careful and selective in what is requested. relation to an action brought by a party with no apparent justiciable interest. September 1, 2007. Corp., 377 F. Supp. 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. Co. v. WSG Investors, LLC, 09-cv-05237, 2012 WL 3150577 (E.D.N.Y. The most significant is that there must be a justiciable controversy between the parties. The claims involved crop-dusting, which allegedly damaged abutting fields because of herbicide drift. Co., 981 S.W.2d 861 (Tex. Sec. When there is uncertainty as to the legal obligations or rights associated with a potential future course of action, declaratoryrelief offers an immediate means to resolve this uncertainty. 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. Sec. Co. v. Plummer, 13 F.Supp. 2201. Co. v. Patriot Sec., Inc., 926 F.Supp. Co., 628 S.W.2d 184 (Tex. 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. 28 U.S.C. Co. v. Gaskins, 572 S.W.2d 573, 575 (Tex. 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. Co. v. Vic Mfg. App.Houston [1st Dist.] San Antonio, TX 78216 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. PRAC. Following the Court's decision in Martin, the Texas Legislature amended the Declaratory Judgment Act to expressly provide that, notwithstanding section 22.001 of the Texas Property Code (the trespass-to-try-title statute), a claimant may sue for declaratory relief "when the sole issue concerning title to real property is the determination . 2d 601, 621-22 (E.D. 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. App.Dallas 1998, pet. 1999) (insureds motion to transfer erroneously granted); Southern County Mut. Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. 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. endobj App.Houston 1998, pet. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. There are exceptions, of course. 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. The crop-dusting involved only one flight, but several passes during which herbicide was released, and during which wind direction and velocity varied. If no facts within the scope of coverage are alleged, an insurer is not required to defend. Oct. 20, 1949; Apr. (d) In determining whether to grant declaratory relief to a business under this section, a court shall consider: (1) the factual circumstances of the business's operations that give rise to the demand by the other state; and. Texas Air Control Bd., 852 S.W.2d at 444. The insurer denied defense based on the liquor liability exclusion and filed a declaratory judgment action. Subscribe to Justia's Free Newsletters featuring summaries of federal and state court opinions. The Federal Declaratory Judgment Act creates a remedy, not a basis for jurisdiction. The district court dismissed the indemnification issue, but granted judgment on defense, based on the extrinsic evidence. 1996). ); but cf. Previously, multiple New York courts at both the trial and Appellate Division levels aligned with Nevada and the other listed states holding that an insurance company may recoup defense costs paid on behalf of an insured when it is ultimately determined that there was no coverage in connection with the underlying action, provided that the insurer reserved its rights to seek such reimbursement. Cigna Lloyds Ins. Co. v. Wade, 827 S.W.2d 448 (Tex. 2004). See, e.g., State Farm Fire & Cas. denied); ANR Prod. 2201, and further provides for a jury trial. 688, 699 (1936). 97 (E.D. Wade, 827 S.W.2d at 451. 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. 1271 (N.D. Tex. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. U.S. Constitution Annotated Toolbox. Costs and fees are not dependent upon the outcome, and can be awarded to either the prevailing or the non-prevailing party. The collision was also in Hidalgo County, as was the liability suit. 1998) (holding that Texas Declaratory Judgment Act was not controlling, substantive law, and did not justify fee award to defendants). art. These rules govern the procedure for obtaining a declaratory judgment under 18 U.S.C. Prac. Co., 628 S.W.2d 184 (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. Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper. Co. v. Rio Grande Heart Specialists of So. See, e.g., Standard Fire Ins. App.Fort Worth 1973, writ refd n.r.e.). See, e.g., Western Heritage Ins. Rule 57. LEXIS 8494 (Tex. 2003) (finding Texas allows only narrow exception); but see Gonzales v. American States Ins. Co. v. Burch, 442 S.W.2d 331 (Tex. 1998, pet. 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. 1994). App.Austin 1987, no writ); Safeway Mng. PRACTICAL CONSIDERATIONS DECLARATIONS RELATING TO LIABILITY FOR SALES AND USE TAXES OF ANOTHER STATE. Co. v. Vandewater, 907 S.W.2d 491 (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. Explainer: How did the battle between Ron DeSantis and Disney escalate? 37.0055. Co. v. Deering Mgmt. Co. v. Bailey, 133 F.3d 363, 368 (5th Cir. App.Houston [1st Dist.] See Employers Cas. Twenty-Fifth Floor - Plaza of the Americas. 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. denied). 8. Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. New Orleans, LA 70130 See, e.g., Boring & Tunneling Co. v. Salazar, 782 S.W.2d 284, 289-90 (Tex. 45 (N.D. Tex. App.Dallas 2000, pet. <> Dept. Co. of Texas v. Erskine, 169 S.W.2d 731 (Tex. (c) This chapter shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states that enact it and to harmonize, as far as possible, with federal laws and regulations on the subject of declaratory judgments and decrees. <> (a) In this section, "state" includes any political subdivision of that state. In this. See Bocquet v. Herring, 972 S.W.2d 19 (Tex. at 368-69. Co. v. Cowan, 945 S.W.2d 819 (Tex. 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. Co. of Texas, 1998 Tex. Co. v. Gandy, 925 S.W.2d 696 (Tex. App.Austin 1998, pet. Although efforts are occasionally made, it is inappropriate for the insurer to be joined as a defendant in a liability suit. Civ. The declaratory action may also bring the coverage issues into focus for the plaintiff, and assist the insured in negotiating settlement. Sec. See McCarthy Bros. Co. v. Continental Lloyds, 7 S.W.3d 725 (Tex. xko9.ou _:=;0b+w)m3]WTy:>yYWOv]vs|?V~>zw"{}v~eM/XVY&R~Eou6Wv/ *]nT:^\-G:[A? Guar. 651-389-5000, 10001 Reunion Place 2201, to determine an actual controversy between the . The Burches were the plaintiffs, and were also the petitioners for declaratory relief. 7 0 obj Typically, the first-filed suit has dominant jurisdiction. A justiciable controversy requires a real and substantial controversy over tangibles interests, and not merely a theoretical dispute. It is still likely a court will not allow dual-track litigation of issues that affect liability and coverage. 131 (E.D. Co. v. What Is a Declaratory Judgment Action? App.Fort Worth 1992, writ denied) (insurer not estopped by failing to have declaratory judgment determined before judgment in underlying case). 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. 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. A declaratory judgment must be based on an actual controversy, and cannot be merely advisory. 1023, 1026 (N.D. Tex. 1 0 obj The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. & Rem. Civ. % A federal anti-injunction also exists. App.Austin 2003, no pet. denied sub nom. In RSL Funding, LLC v. Pippins, No. 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 R. CIV. LEXIS 1736 (Tex. 1993) (Colorado River factors inapplicable in declaratory judgment action); Granite State Ins. Cluett v. Medical Protective Co., 829 S.W.2d 822, 826 (Tex. (B) A contract may be construed either before or after there has been a breach. One of the factors the courts will review is whether the declaratory action is filed in anticipation of a state court suit. 1. Co., 192 A.D. 3d 28 (2d Dep't 2020) the Second Department expressly "declined to follow" the prevailing New York authority. 37.004. (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. 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. On March 11, 2021, the Nevada Supreme Court, in a 4-3 decision, held in Nautilus Insurance Company v. Access Medical, LLC, 2021 WL 936076 (Nev. 2021) that an insurance company is entitled to reimbursement of defense costs where a determination is ultimately made that the insurer did not owe a duty to defend, and the insurer expressly reserved its right to seek recoupment. Id. (not justiciable controversy); Foust v. Ranger Ins. The abundance of case law allowing extrinsic evidence, however, suggests that the exception will continue. Co. v. Taylor, 832 S.W.2d 645 (Tex. 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. A justiciable controversy may nonetheless exist where no other cause of action is available or has ripened. 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. ); Taylor v. State Farm Lloyds, 2003 Tex. He can be reached at estern@kdvlaw.com. Co., 981 S.W.2d 861 (Tex. 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. ANSWER to COMPLAINT for declaratory judgment, affirmative defenses and COUNTERCLAIM filed by Clemens Franek against Jay Franco & Sons, Inc. (jmp, ). 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.

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