Civ. 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. Co. v. Trejo, 39 F.3d 585, 590 (5th Cir. Austin, TX 78746 See Fed. Co. v. Tex. See Bernard v. Gulf Ins. App.Waco 1943, no writ); Superior Ins. But the fact that another remedy would be equally effective affords no ground for declining declaratory relief. 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. 959, Sec. <> COSTS. 169 (S.D.Tex., 1935); Borchard, Declaratory Judgments (1934), passim. V 8). Foust v. Ranger Ins. Suite 300 This Note is jurisdiction neutral. The Burches were the plaintiffs, and were also the petitioners for declaratory relief. 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., 96 S.W.3d 673 (Tex. Sec. Westlaw Today is owned by Thomson Reuters and operates independently of Reuters News. CIV. In cases involving duty to indemnify, there may be issues as to whether the indemnity facts were fully litigated in an actual trial, or whether the facts can be re-litigated, construing Gandy and Maldonado. 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. Co., 316 U.S. 491 (1942); Wilton, 515 U.S. 277. 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. 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. Ins. 1993); McLaren v. Imperial Cas. 1993); American States Ins. denied), the court held it was permissible, and not purely advisory, to determine the number of occurrences involved in the underlying litigation. at 452. A future interest in a potential judgment has been held insufficient to allow intervention. P. 26; Tex. 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 (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. 1994), the court reviewed abstention doctrine in relation to declaratory judgment actions. 1992); cf. See, e.g., Texas Assn of Bus. Sec. declaratory-judgments | U.S. Constitution Annotated | US Law | LII 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. 1992), cert. App.Fort Worth 1973, writ refd n.r.e.). Dept. declaratory judgment action. First Cause of Action: Declaratory Judgment under . 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 Fifth Circuit overruled prior case law to conform with the Supreme Courts ruling. App.Houston [14th Dist.] Insurer's right to file declaratory judgment action 9. The Statutory Basis for Declaratory Judgment Actions in Texas Lawsuits 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. 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. 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. Grapevine Excavation, 241 F.3d 396 (5th Cir. Strategy and Ethics in Declaratory Judgment Actions 1996). 1996). The court may order a speedy hearing of a declaratory-judgment action. While for years there was a question in the Federal courts as to whether 38.001, Tex. tort and environmental coverage. APP. Co. v. River Entertainment, 998 F.2d 311, 315 (5th Cir. Co. v. Plummer, 13 F.Supp. June 15, 2007. 1998). The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. Co. v. Deering Mgmt. There are a number of instances in which extrinsic evidence may be at issue: Extrinsic evidence may be used to show that the person sued does not qualify as an insured, or that the vehicle or equipment in issue is not insured. 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. The policy provided limits of $100,000 per occurrence and $200,000 in the aggregate. JURY TRIAL. Co., 579 S.W.2d 523 (Tex. 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 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. The dispute was over an unscheduled vehicle. 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. (As amended Dec. 29, 1948, eff. PDF United States Court of Appeals for The Ninth Circuit For The collision was also in Hidalgo County, as was the liability suit. See, e.g., Sylvester v. Watkins, 538 S.W.2d 827 (Tex. App.Texarkana 1967, no writ) (auto excluded); International Serv. 2 a : the theory or ground that forms the basis for a defendant's opposition to an allegation in a complaint or to a charge in a charging instrument (as an indictment) ;also. Co., 2000 Tex. 869, 93 A.L.R. Saint Paul, MN 55102 See United Services Life Ins. 2201. 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. endobj Co., 418 S.W.2d 712, 715-16 (Tex. Youell & Cos v. Getty Oil Co., 510 U.S. 820 (1993); Service Mutual Ins. 37.006. Co. v. Ochoa, 19 S.W.3d 452 (Tex. 1993), cert. Co. v. Quinn-L Capital Corp., 3 F.3d 877 (5th Cir. In addition, in many instances, a protective order will allow broad discovery, without fear of disclosure to the plaintiff. By Karl Bayer. A declaration may not be rendered if a special statutory proceeding has been provided for the adjudication of some special type of case, but general ordinary or extraordinary legal remedies, whether regulated by statute or not, are not deemed special statutory proceedings. See McCarthy Bros. Co. v. Continental Lloyds, 7 S.W.3d 725 (Tex. <> Co., 61 F.3d 389 (5th Cir. App.Houston [1st Dist.] Sec. Notes of Advisory Committee on Rules1948 Amendment. Co. v. Patriot Sec., Inc., 926 F.Supp. 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. denied) (disallowing evidence of workers compensation payments to establish employment). A defense is an act of protecting one's own interests. Co. of Texas v. Erskine, 169 S.W.2d 731 (Tex. Co. v. Louisiana Farm Bureau Fedn, Inc., 996 F.2d 774, 778 (5th Cir. Pursuant to 37.003, a declaration may be either affirmative or negative in form and effect. PDF In the Circuit Court of The Second Judicial Circuit in And for Leon These rules govern the procedure for obtaining a declaratory judgment under 28 U.S.C. See Southern County Mut. defenses always be pled by motion. The Uniform Declaratory Judgments Act (the "UDJA") does not extend a trial court's jurisdiction, and a litigant's request for declaratory relief does not confer jurisdiction on a court or change a suit's underlying nature. PDF NO. 2009-52869 THE STATE OF TEXAS IN THE DISTRICT COURT v. OF (whether driver qualified as an insured); John Deere Ins. An action or proceeding is not open to objection on the ground that a declaratory judgment or decree is prayed for. Specifically, when does filing a declaratory judgment action on coverage defenses make good business sense and what are the advantages, and disadvantages, of being the plaintiff. He can be reached at estern@kdvlaw.com. The Historic Hamm Building Ins. Declaratory relief is an especially appropriate method for resolving coverage disputes, because of the limited options available for resolution of such disputes. App.Beaumont 1972), affd other grounds, 496 S.W.2d 552 (Tex. As with the state act, one of the exceptions allows a federal court to enjoin re-litigation in state court to protect or effectuate its judgments. See Royal Ins. Co. v. Taylor, 832 S.W.2d 645 (Tex. App.Fort Worth 1986, writ refd n.r.e.). Co. v. Gaskins, 572 S.W.2d 573, 575 (Tex. 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. The most significant is that there must be a justiciable controversy between the parties. ERISA/fiduciary-related claims, commercial general liability (CGL), admiralty and maritime, toxic/mass A Texas court may also enjoin the litigants from moving forward on the same issues in any other jurisdiction. However, in American W. Home Ins. Still, there are often strategic benefits to filing early. BORON. dismd, 507 U.S. 1026 (1993); cf. )1^Hl]TgxY8Ubs,! 9@Dyp*l8sA!N\X endobj Id. See Feria v. CU Lloyds of Texas, 2001 Tex. Declaratory judgment actions are oftentimes filed in federal court. oEN>-BZ=/c]-ZP4U3o>0!f$F = FQfB@DlClYthnA mML.;Emu =uT at 68. If no facts within the scope of coverage are alleged, an insurer is not required to defend. 9. Shoot First, Litigate Later: Declaratory Judgment Actions, Procedural *I`Sl,'dpC2\,AMia*K/[ -M @ICPgIw5 Y k]x?4 :D R*NuNK^CXdmS0I,-B App.Austin 1998, no pet. The underlying liability suit arose from an accident in which one defendant, while intoxicated, hit the plaintiffs vehicle, killing their daughter. 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). Co. v. Griffin, 955 S.W.2d 81, 82-84 (Tex. 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. PDF In the United States District Court for The Northern District of Texas The declaratory judgment action allows relief, even where another remedy exists. Ins. LEXIS 7088 (Tex. 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. 59.02(c). Improper use of declaratory judgments under the Texas UDJA - LinkedIn In this holding, Nevada fell in line with other jurisdictions that also recognize an insurer's right to recoup defense costs where the insurer has specifically reserved such rights, including: California, Connecticut, Massachusetts and Minnesota. Co. v. WSG Investors, LLC, 09-cv-05237, 2012 WL 3150577 (E.D.N.Y. 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 . Ins. denied). 37.001. P., specifically provides, with regard to joinder of third parties, that This rule shall not be applied, in tort cases, so as to permit the joinder of a liability or indemnity insurance company, unless such company is by statute or contract liable to the person injured or damaged. Most policies include a no action provision that provides that a third partys right of action against the insured does not arise until there is a settlement, to which the insurer has agreed, or a judgment against the insured. In Williamson, a jury awarded the claimant damages against the insured for false imprisonment. Where suits are filed in two states, one court may abstain in favor of the first-filed suit. LEXIS 8082 (Tex. Rule 57. Declaratory Judgment - LII / Legal Information Institute When Can You File a Declaratory Judgment Action' - Insurance Journal Co. v. Rio Grande Heart Specialists of So. . For years, Texas courts concluded that a declaration of indemnity was premature, until the underlying suit was resolved. endobj P. 76A; 192.6(b)(5). <> The industry leader for online information for tax, accounting and finance professionals. ANSWER to COMPLAINT for declaratory judgment, affirmative defenses and There are exceptions, of course. 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. 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. SUBJECT MATTER OF RELIEF. PDF WHEN IS A DECLARATORY JUDGMENT PROPER? - Harris County, Texas 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. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. App.Corpus Christi 1998), revd on other grounds, 995 S.W.2d 675 (Tex. Plaintiff's Complaint fails to state a cause of action. A declaration does not prejudice the rights of a person not a party to the proceeding. In any proceeding under this chapter, the court may award costs and reasonable and necessary attorney's fees as are equitable and just. Ins. Burch involved a declaration that the insurer owed defense, and also owed indemnity for the insureds liability for his wifes torts. LEXIS 1736 (Tex. PDF I. CAN YOU FILE BASIS FOR DECLARATORY RELIEF - Thompson, Coe, Cousins The district court dismissed the declaratory action on the defendants motion based on 28 U.S.C. 2 The courts decision has been described as carving out an exception, rather than overruling prior law. 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. Typically, the first-filed suit has dominant jurisdiction. Exclusive news, data and analytics for financial market professionals. 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. The district court denied Nautilus' motion, and on appeal, the 9th U.S. Defendant restates its responses to allegations 1-64 as if fully set forth herein. 651-389-5000, 10001 Reunion Place at 468. 7 Id. Facts and Procedural History. 1, eff. Co., 975 S.W.2d 329 (Tex. Co. of N. aspects of insurance coverage including directors and officers liability, professional liability, App. 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. Tex. In this instance, both state and federal courts have readily allowed the use of extrinsic evidence to determine the duty to defend. On the other hand, where the insured seeks a declaration that the insurer owes indemnity, before resolution of the underlying case, the opinion may be considered advisory, and declaratory relief may, indeed, be premature. The court, however, concluded this was not a county in which a substantial part of the facts giving rise to the coverage dispute arose. Thus, an insured can seek an affirmative finding of coverage, or an insurer can seek a negative determination that coverage does not exist. See Bituminous Cas. 1997); Trinity Universal Ins. Co. v. Bailey, 133 F.3d 363, 368 (5th Cir. Opinions expressed are those of the author. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. . o FRCP Rule 57. You Can't Always Get What You Want (if what you want is a declaratory 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. Supreme Court of Texas Denies Motion to Compel Arbitration on Alternate In part, of course, the scope of discovery will be determined by the nature of the issue. 1995, no writ); Employers Cas. 97, 99 (E.D. 1998), overruled on other grounds, State Farm Fire & Cas. <> Cigna Lloyds Ins. App.Houston 1998, pet. The Law Dictionary is not a . 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. Corp. v. Vacuum Tanks, Inc., 975 F.2d 1130, 1133 (5th Cir. 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. Id. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia. 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.
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