645 F.3d 739
5th Cir.2011Background
- This is a Texas-law diversity case where Evanston insured Legacy under a combined professional/general liability policy for 2006-2007.
- Alvarez, on behalf of Alicia Garza, sued Legacy alleging improper handling of deceased tissue/organs and seeking numerous damages and fees.
- Evanston refused to defend and filed a declaratory-judgment action; the district court granted Legacy partial summary judgment on duty to defend.
- The district court later amended judgments, ordering Evanston to pay costs but dismissing remaining counterclaims; Legacy sought fees.
- The Fifth Circuit certified to the Texas Supreme Court two questions on coverage to resolve whether the duty to defend should extend to the underlying suit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does personal injury include mental anguish unconnected to physical injury? | Alvarez's mental anguish falls within personal injury. | Trinity confines personal injury to bodily injury; purely emotional injury may be excluded. | Unclear under Texas law; certified questions address the issue. |
| Does property damage cover loss of use of deceased tissues/organs? | Tissues are tangible property; loss of use may be within property damage. | Texas limits on property rights in decedents raise doubt about coverage. | Unsettled; certified questions address the matter. |
| If either personal injury or property damage could be covered, is Evanston required to defend the entire underlying suit? | Eight corners rule requires defense if any potentially covered claim exists. | Characterizations in the complaint are legal conclusions; coverage must be determined. | Duty to defend hinges on Texas Supreme Court’s forthcoming ruling on the certified questions. |
| If a duty to defend is found, what additional relief may Legacy obtain in the related and present actions? | Legacy seeks breach, prompt-payment penalties, and fees tied to defense costs. | Duty to defend triggers related relief but depends on coverage resolution. | Remains contingent on Texas Supreme Court decision on duty-to-defend issues. |
Key Cases Cited
- Trinity Universal Insurance Co. v. Cowan, 945 S.W.2d 819 (Tex. 1997) (construction of bodily injury vs. personal injury; emotional injuries discussed)
- GuideOne Elite Insurance v. Fielder Road Baptist Church, 197 S.W.3d 305 (Tex. 2006) (eight corners rule favors insured; liberal construction for coverage)
- Primrose Operating Co. v. National American Insurance Co., 382 F.3d 546 (5th Cir. 2004) (eight corners rule—focus on complaint facts, not theories)
- Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487 (Tex. 2008) (if any claim potentially covered, insurer must defend the whole suit)
- National Union Fire Ins. Co. of Pittsburgh v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139 (Tex. 1997) (eight corners rule; focus on factual allegations)