687 F.3d 676
5th Cir.2012Background
- Gilmore was injured in a March 9, 2006 car collision involving a van owned by Salgado and driven by Meyer, a Church member.
- The Church is overseen by Salgado; Meyer and Restrepo were Church members on a Church-related trip when the accident occurred.
- Gilmore sued the Church, Salgado, and Meyer in Texas state court; GuideOne issued a commercial general liability policy to the Church.
- The Amendatory Endorsement defines nonowned autos as those not owned by the Church but used in connection with its business, including autos used by employees.
- GuideOne filed a federal declaratory judgment action seeking to determine its duty to defend and indemnify in the underlying state case; the district court granted summary judgment finding no duty to defend or indemnify and enjoined Gilmore from pursuing state-law claims.
- The Fifth Circuit vacated the district court’s judgment, held GuideOne has a duty to defend, and remanded to determine indemnity scope after state court resolution.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Eight-corners rule applicability | Gilmore argues the eight-corners rule applies; pleadings and policy determine defense duty. | GuideOne contends extrinsic evidence may be used to resolve coverage. | Eight-corners rule applies; analysis limited to petition and policy. |
| Scope of duty to defend | Allegations show a covered auto and business use, triggering defense. | Extrinsic facts may narrow the duty to defend. | GuideOne has a duty to defend the Church and Salgado. |
| Extrinsic evidence exception | Very narrow exception may apply to solely coverage issues. | Extrinsic evidence should be considered to determine coverage. | No exception applies; cannot use extrinsic evidence to redefine defense duty here. |
| Indemnity scope | Once duty to defend exists, indemnity scope cannot be adjudicated until underlying claims are resolved. | Indemnity scope can be decided within the declaratory action. | Indemnity scope is non-justiciable until Gilmore’s state claims are decided. |
Key Cases Cited
- National Casualty Co. v. West World Ins. Co., 669 F.3d 608 (5th Cir. 2012) (duty-to-defend de novo under eight-corners rule)
- National Union Fire Ins. Co. v. Merchants Fast Motor Lines, 939 S.W.2d 139 (Tex. 1997) (duty to defend defined by pleadings and policy coverage)
- Utica Nat. Ins. Co. of Tex. v. Am. Indem. Co., 141 S.W.3d 198 (Tex. 2004) (duty-to-defend vs. indemnify distinction; pleadings vs. evidence)
- Northfield Ins. Co. v. Loving Home Care, 363 F.3d 523 (5th Cir. 2004) (distinction between defense and indemnity inquiries)
- Fielder Rd. Baptist Church, 197 S.W.3d 305 (Tex. 2006) (very narrow extrinsic-evidence exception to eight-corners rule)
- Liberty Mut. Ins. Co. v. Graham, 473 F.3d 596 (5th Cir. 2006) (eight-corners rule applied to similar policy language)
- Pendergest-Holt v. Certain Underwriters at Lloyd’s of London, 600 F.3d 562 (5th Cir. 2010) (contracting around the eight-corners rule)
- Griffin v. Lee, 621 F.3d 380 (5th Cir. 2010) (collision-of-interest analysis for realignment in jurisdiction)
- Md. Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270 (1941) (jurisdiction and injunctive enforcement principles in declaratory actions)
- Atlantic Mut. Fire Ins. Co. of Savannah v. Cook, 619 F.2d 553 (5th Cir. 1980) (declaratory actions not to control underlying tort actions)