Covington Spclt Ins v. USAI
21-10010
5th Cir.Oct 20, 2021Background
- Calvin McCullers, a private security guard, drowned after his vehicle was inundated and swept into Turtle Creek during a storm; his survivors sued property owners USAI LP and Lara Briggs-Tafel.
- USAI was insured by Covington Specialty Insurance under a policy excluding coverage for bodily injury that "aris[es] out of or result[s] from . . . use [of an] 'auto'." The policy’s definition of "auto" encompasses McCullers’ vehicle.
- The underlying suit (state court) alleged McCullers was sitting in the vehicle when floodwaters engulfed it and swept him away; his body was recovered nearly two months later.
- Covington sought a declaratory judgment that it had no duty to defend under the policy’s auto exclusion; the district court denied Covington’s summary judgment and later granted summary judgment for USAI (finding Covington must defend).
- On appeal, the Fifth Circuit reviewed de novo whether the auto exclusion applied under Texas law and the eight-corners rule (policy vs. underlying pleadings).
- The court held Covington failed to prove the exclusion applied: the allegations implicated the policy but showed the flood—not the vehicle—caused the death, so Covington must defend; indemnity remains unripe.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Covington has a duty to defend USAI in the underlying suit | Auto exclusion bars coverage because injuries "resulted from" use of the vehicle | The pleadings show the flood, not the vehicle, caused the injury; duty to defend exists | Covington must defend—the exclusion was not shown to apply |
| Whether injuries "aris[e] out of the use" of the vehicle (auto exclusion) | "Sitting post" in vehicle rendered McCullers unable to seek refuge; vehicle use produced injury | Pleadings say he was swept away while escaping; flood was the causative event, not the vehicle | Exclusion not established—vehicle was not shown to be the producing cause |
| Proper causation standard: producing cause vs. but-for causation | But-for test: but for sitting in the vehicle, McCullers would not have died | Producing-cause standard governs; even under but-for, plaintiff did not show vehicle caused death | Court applied producing-cause standard and found Covington failed under either standard |
Key Cases Cited
- JAW The Pointe, L.L.C. v. Lexington Ins., 460 S.W.3d 597 (Tex. 2015) (insured bears burden to establish coverage; insurer must prove exclusions)
- Zurich Am. Ins. v. Nokia, Inc., 268 S.W.3d 487 (Tex. 2008) (apply "eight corners" rule for duty to defend)
- Mid‑Century Ins. Co. v. Lindsey, 997 S.W.2d 153 (Tex. 1999) (tests for when injury "arises out of the use" of an automobile)
- Nat'l Union Fire Ins. Co. v. Merch's Fast Motor Lines, Inc., 939 S.W.2d 139 (Tex. 1997) (allegations construed liberally and doubts resolved for the insured)