283 F. Supp. 3d 559
W.D. Tex.2017Background
- July 19, 2012: Border Patrol Agent James Dominguez was struck and killed by a truck driven by Jorge Luis Flores; Dominguez's family sued Flores and several employers/subcontractors in Val Verde County, Texas.
- Tekrock (Bar None entities) and Precision (MasTec subsidiaries) were sued as vicariously and jointly liable employers; Flores allegedly was using his Ford F-350 under a lease/rental agreement with Precision while working on the project.
- Hallmark insured Tekrock (policy Mar 30, 2012–Mar 30, 2013) and has been defending Tekrock under reservation of rights; Ace insured Precision (policy Sept 15, 2011–Sept 15, 2012) and declined to defend Tekrock or Flores.
- Hallmark (and intervenor Colony) sued Ace for a declaratory judgment that Ace has a duty to defend Tekrock and Flores, arguing Flores is an insured under Ace Policy endorsements (Endorsement 34 and 35).
- Endorsement 34 would make an employee an insured when using a covered auto the named insured does not own; Endorsement 35 treats autos hired/leased 180+ days as owned and makes the owner/lessor an insured for certain acts.
- The dispositive factual issue: whether the Flores–Precision rental/lease met Endorsement 35’s requirement of being "hired for a period of 180 days or longer." A signed rental agreement showed a day-by-day arrangement executed 35 days before the accident.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Flores (and thus Tekrock) is an insured under Endorsement 34 | Flores was an employee using a covered auto for business, so 34 makes him an insured | The vehicle was a covered auto hired by Precision, so 34 does not apply | Endorsement 34 does not apply; vehicle was a hired covered auto, excluding 34 coverage |
| Whether Flores is an insured under Endorsement 35 (180+ day hire) | Allegations of a lease in the petition allow a reasonable inference the lease could be 180+ days; thus 35 triggers coverage | Petition is vague; the actual rental agreement is a daily, renewable contract signed 35 days before accident—does not satisfy 180-day requirement; Court may consider extrinsic evidence on discrete coverage issue | Petition ambiguous; Court considered the rental agreement and found it does not show intent to hire for 180+ days—35 does not apply |
| Whether the court may consider extrinsic evidence to decide initial insured-status coverage question | Hallmark: stick to eight-corners; extrinsic evidence inadmissible and rental agreement unauthenticated/hearsay | Ace: narrow exception to eight-corners applies for independent coverage questions; the rental agreement is admissible and authenticated as business record | Court applied Fifth Circuit-recognized exception and considered the properly authenticated rental agreement for the discrete coverage issue |
| Final duty-to-defend disposition | Ace must defend as primary insurer if endorsements make Flores/Tekrock insureds | No duty to defend because neither Flores nor Tekrock is an insured under the policy or endorsements | Ace entitled to summary judgment; no duty to defend; Hallmark and Colony’s declaratory claims dismissed with prejudice |
Key Cases Cited
- ACE Am. Ins. Co. v. Freeport Welding & Fabricating, Inc., 699 F.3d 832 (5th Cir. 2012) (insurer must first determine whether claimant qualifies as additional insured; courts may consider extrinsic documents to resolve that threshold question)
- GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305 (Tex. 2006) (articulates Texas eight‑corners rule and when pleadings and policy control duty to defend)
- Nat'l Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139 (Tex. 1997) (duty to defend determined by pleadings and policy language)
- In re Deepwater Horizon, 470 S.W.3d 452 (Tex. 2015) (courts may refer to incorporated or referenced documents outside policy when policy directs)
- Ooida Risk Retention Grp., Inc. v. Williams, 579 F.3d 469 (5th Cir. 2009) (permits narrow exception to eight‑corners where extrinsic evidence addresses discrete coverage issues)
- Star‑Tex Resources, L.L.C. v. Granite State Ins. Co., 553 Fed.Appx. 366 (5th Cir.) (underlying complaint ambiguity can require consideration of extrinsic evidence to resolve coverage)