Burlington Northern & Santa Fe Railway Co. v. National Union Fire Insurance Co.
334 S.W.3d 217
| Tex. | 2011Background
- BNSF contracted with Mobley to control vegetation along its right-of-way, with Mobley required to obtain a CGL policy naming BNSF as an additional insured from National Union.
- In 1995, a collision at a railroad crossing killed two and injured others; pleadings alleged excessive vegetation near the crossing proximately caused the collision.
- BNSF tendered defense to National Union, which denied coverage for defense and indemnity, prompting a declaratory-judgment suit by BNSF.
- During litigation, BNSF settled the claims from the driver’s death and reached a high-low settlement with other claimants; a verdict exceeding $27 million was later returned against BNSF, which paid $8 million under the agreement.
- The trial court granted National Union summary judgment; the court of appeals affirmed, applying the eight-corners rule to deny a duty to defend and indemnify, and did not consider extrinsic evidence on indemnity.
- The Texas Supreme Court reversed, noting the need to consider extrinsic evidence for indemnity and remanding for proceedings consistent with its opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend under eight-corners rule | BNSF contends eight-corners governs whether a defense is owed. | National Union argues the pleadings and policy foreclose a defense under the eight-corners rule. | Court-reviewed but did not definitively decide defense issue; vacated and remanded for indemnity analysis with extrinsic evidence. |
| Indemnity versus extrinsic evidence | Extrinsic evidence may establish coverage for indemnity despite pleadings. | Indemnity should be decided within the pleadings and policy framework unless extrinsic evidence shows otherwise. | Court held the court of appeals erred by not considering all extrinsic evidence and remanded for further proceedings. |
| Impact of completed operations exclusion | Exclusion may be overridden if operations were not yet completed per policy terms. | Exclusion forecloses coverage for completed operations absent the exception. | Discussed but did not resolve in favor of a broad defense or indemnity; focus remained on indemnity submission to extrinsic evidence. |
Key Cases Cited
- Griffin v. Farmers Tex. County Mut. Ins. Co., 955 S.W.2d 81 (Tex.1997) (drives-by shooting case used to discuss eight-corners scope and indemnity possibility)
- D.R. Horton-Tex., Ltd. v. Markel Int'l Ins. Co., 300 S.W.3d 740 (Tex.2009) (duty to defend precedes litigation completion; defense and indemnity are independently determined)
- Utica Nat'l Ins. Co. v. Am. Indem. Co., 141 S.W.3d 198 (Tex.2004) (separate considerations for defense and indemnity duties)
- Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487 (Tex.2008) (indemnity determined on facts of underlying suit)
- GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305 (Tex.2006) (eight-corners rule applied to defense; policy language examined)
- King v. Dallas Fire Ins. Co., 85 S.W.3d 185 (Tex.2002) (eight-corners rule explained in evaluating insurer duties)
- Farmers Tex. County Mut. Ins. Co. v. Griffin, 955 S.W.2d 81 (Tex.1997) (establishes framework for whether pleadings negate indemnity possibility)
- Hernandez v. Ford Motor Co., N/A (N/A) (not cited in opinion)