Geico General Insurance Co. v. Austin Power Inc.
357 S.W.3d 821
Tex. App.2012Background
- Austin Power held a liability policy with GEICO covering Dec 31, 1969 to Dec 31, 1970; GEICO’s duty to defend arises for claims arising from bodily injury during the period.
- Bradley v. AEP Texas Central Company (Bradley case) alleged Weldon Bradley was injured by exposure to asbestos-containing products and machinery; injury timing not specified in pleadings.
- Bradley plaintiffs alleged exposure to asbestos on numerous occasions and over many decades, with allegations of a conspiracy among defendants and asbestos-related lung disease damages.
- Austin Power incurred $54,706.67 in defense fees in the Bradley suit; GEICO sought defense costs from the coverage suit and related appeals, which trial court awarded.
- GEICO sought summary judgment arguing the Bradley petition did not allege a potentially covered occurrence within the policy period; trial court denied GEICO's motion and granted Austin Power’s motion.
- Texas courts apply the eight-corners (complaint-allegation) rule to determine the duty to defend, construing pleadings liberally in favor of the insured.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Bradley petition allege a potentially covered occurrence within the policy period? | Bradley contends injury occurred during or before the policy period is plausible from pleadings. | GEICO argues no specific date of injury is alleged within the policy period, so no potential coverage. | Yes; pleadings allege potential occurrence within the policy period, triggering the duty to defend. |
| Is liberal construction of pleadings necessary to determine potential coverage under the eight-corners rule? | Bradley asserts the pleadings should be liberally construed to reveal potential coverage. | GEICO argues extrinsic facts cannot augment the pleadings to create coverage. | Pleadings construed liberally may reveal potential coverage; extrinsic evidence not permitted to define duty to defend, but inferences from pleadings are allowed. |
Key Cases Cited
- Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487 (Tex. 2008) (duty to defend exists even if allegations are groundless or false)
- GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305 (Tex. 2006) (eight-corners rule governs duty to defend)
- Merchants Fast Motor Lines, Inc. v. Nat'l Union Fire Ins. Co., 939 S.W.2d 139 (Tex. 1997) (duty to defend if any potential claim within policy terms)
- Gehan Homes Ltd. v. Employers Mut. Casualty Co., 146 S.W.3d 833 (Tex.App.-Dallas 2004) (liberal construction; insurer bears burden to show no potential covered claim)
- Pine Oak Builders, Inc. v. Great American Lloyds Insurance Co., 279 S.W.3d 650 (Tex. 2009) (extrinsic evidence cannot be used to expand coverage beyond pleadings)
- Heyden Newport Chem. Corp. v. S. Gen. Ins. Co., 387 S.W.2d 22 (Tex. 1965) (illustrates inference of coverage from pleadings)
- Lohrmann v. Pittsburgh Corning Corp., 782 F.2d 1156 (4th Cir. 1986) (exposure duration can lead to negligence in asbestos cases)