Ace American Insurance v. Freeport Welding & Fabricating, Inc.
2012 U.S. App. LEXIS 21891
| 5th Cir. | 2012Background
- Freeport sought defense/indemnity from ACE as an additional insured under Brand Energy’s ACE policy.
- Policy period ran Sept 30, 2008–Sept 30, 2009; three endorsements define additional insured status.
- 2008 purchase order (Freeport to Brand Industrial) predates the 2009 purchase agreement; 2009 agreement purported to evergreen.
- 2009 purchase agreement, effective Jan 1, 2009, states insured obligations and that Brand Energy will name buyer as additional insured.
- Underlying state court suit arising from May 20, 2009 accident; Texas state court case settled after district court proceedings.
- District court granted ACE summary judgment on defense duty; indemnity issue reserved pending settlement, then remanded for indemnity determination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Freeport is an additional insured for the underlying claims | Freeport qualified under the 2009 purchase agreement | Only coverage under 2009 agreement for post-2009 purchases applies | Freeport not covered for 2008-order claims (no retroactive application) |
| Eight-corners rule applicability to duty to defend | Eight-corners analysis independently shows coverage | Extrinsic evidence not allowed under eight-corners | Eight-corners applies; no duty to defend as to underlying claims |
| Duty to indemnify given settlement in state court | Indemnity should follow defense duty and be decided now | Indemnity cannot be determined until underlying liability is settled | Remanded to determine whether ACE has a duty to indemnify Freeport for settlement cost |
Key Cases Cited
- Gilbane Bldg. Co. v. Admiral Ins. Co., 664 F.3d 589 (5th Cir. 2011) (two duties (defense/indemnity) distinct; eight-corners rule for defense; indemnity later)
- Ooida Risk Retention Group, Inc. v. Williams, 579 F.3d 469 (5th Cir. 2009) (eight-corners limits; extrinsic evidence limited to certain circumstances)
- GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305 (Tex. 2006) (only policy and petition may determine defense duty; no extrinsic evidence ordinarily)
- Columbia Cas. Co. v. Ga. & Fla. RailNet, Inc., 542 F.3d 106 (5th Cir. 2008) (duty to indemnify depends on underlying liability; evidence may be used)
- D.R. Horton-Tex., Ltd. v. Markel Int’l Ins. Co., 300 S.W.3d 740 (Tex. 2009) (twin duties of defense/indemnity; coverage analysis defined)
- Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523 (5th Cir. 2004) (strict eight-corners rule; no extrinsic evidence to interpret contract)
- Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co., 279 S.W.3d 650 (Tex. 2009) (indemnity is separate and fact-intensive; post-trial determination often needed)