494 S.W.3d 825
Tex. App.2016Background
- Gonzalez Sr. sued Gonzalez Jr. and the Woottons (owners of the truck) for personal injuries from a collision, alleging negligence and negligent entrustment; the petition did not plead employment status or that injuries arose from employment.
- The Woottons tendered defense to their insurer Allstate under a Business Auto Policy; Allstate accepted defense under a reservation of rights and retained counsel, telling the Woottons they could hire their own counsel at their own cost.
- Allstate initially denied coverage and later asserted extrinsic evidence showing Gonzalez Sr. and Jr. were acting within the Woottons’ employment, which would trigger policy exclusions.
- The Woottons sued for declaratory relief seeking (1) a ruling that Allstate must defend them and (2) the right to select defense counsel at Allstate’s expense; Allstate cross-claimed that it owed no duty to defend.
- Trial court granted summary judgment for the Woottons: Allstate must defend, and the Woottons may choose independent counsel at Allstate’s expense; Allstate appealed. Court of appeals affirmed duty-to-defend but reversed the independent-counsel ruling and remanded.
Issues
| Issue | Plaintiff's Argument (Woottons) | Defendant's Argument (Allstate) | Held |
|---|---|---|---|
| Whether, under eight-corners rule, Allstate has a duty to defend | Pleading potentially alleges covered claims (negligence/entrustment); insurer must defend entire suit | Eight-corners rule controls; pleadings potentially implicate coverage so duty to defend exists | Duty to defend affirmed; eight-corners rule applies, insurer must defend |
| Whether an exception permits consideration of extrinsic evidence to defeat duty | N/A (Woottons opposed extrinsic evidence) | Extrinsic evidence shows employees acting in scope of employment, triggering exclusions; court may consider it under an exception | No exception applies here; court may not consider extrinsic evidence; exception framework narrowly construed and inapplicable |
| Whether facts show as a matter of law employees acted in scope of employment (defeating coverage) | N/A at summary-judgment stage under eight-corners | Extrinsic evidence (depositions) proves employee status and scope, so no duty | Rejected: extrinsic evidence could not be considered under applicable precedent; duty to defend remains |
| Whether Woottons are entitled to select independent counsel at insurer’s expense due to conflict | Reservation of rights plus potential conflict (respondeat-superior overlap) creates right to independent counsel | Potential conflict from reservation of rights is insufficient; right to independent counsel requires actual conflict where liability facts equal coverage facts | Reversed as to independent counsel: Woottons failed to prove an actual conflict on grounds argued; trial court erred in awarding independent-counsel fees |
Key Cases Cited
- GuideOne Elite Ins. Co. v. Fielder Road Baptist Church, 197 S.W.3d 305 (Tex. 2006) (discusses potential narrow exception to eight‑corners rule)
- Nokia, Inc. v. Zurich Am. Ins. Co., 268 S.W.3d 487 (Tex. 2008) (explains eight‑corners rule and limits on extrinsic evidence)
- Davalos v. N. Cnty. Mut. Ins. Co., 140 S.W.3d 685 (Tex. 2004) (reservation of rights creates potential conflict; actual conflict required to deprive insurer of control)
- Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co., 279 S.W.3d 650 (Tex. 2009) (refuses to expand exceptions to eight‑corners rule)
- Ewing Const. Co. v. Amerisure Ins. Co., 420 S.W.3d 30 (Tex. 2014) (reaffirms adherence to eight‑corners doctrine)
- G & H Towing Co. v. Magee, 347 S.W.3d 293 (Tex. 2011) (limits grounds on which appellate courts may affirm summary judgment)