Loya Insurance Company v. Osbaldo Hurtado Avalos and Antonio Hurtado as Assignees of Karla Flores Guevara, 610 S.W.3d 878

Loya insured Karla Flores Guevara under an auto policy that expressly excluded coverage for her husband, Rodolfo Flores.
Rodolfo (the excluded driver) drove Guevara’s car, collided with the Hurtados, and Guevara, Rodolfo, and the Hurtados agreed to falsely report Guevara was driving to police and the insurer.
The Hurtados sued Guevara alleging she drove; Loya initially provided a defense but later learned of the false statements and denied further defense and coverage.
At summary judgment in the insurer’s suit, Guevara admitted under oath that Rodolfo, not she, was driving; the trial court granted judgment for Loya on that basis.
The court of appeals reversed under Texas’s eight‑corners rule; the Supreme Court granted review to decide whether collusive fraud allows consideration of extrinsic evidence and whether an insurer must seek a declaratory judgment before withdrawing defense.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether courts may consider extrinsic evidence of collusive fraud to determine duty to defend	Hurtados: Eight‑corners bars extrinsic evidence; pleadings alleging Guevara drove trigger duty to defend	Loya: Where insured colludes with plaintiff to create false pleadings, extrinsic evidence may show no duty to defend	Court: Adopted narrow exception — courts may consider extrinsic evidence of collusive fraud; if collusion is conclusively proved, insurer owes no duty to defend
Whether insurer must obtain declaratory judgment before withdrawing defense	Hurtados: Insurer must seek declaratory judgment before terminating defense	Loya: Not required when undisputed collusion exists; insurer may withdraw but risks liability	Court: Not required; insurer may withdraw when collusive fraud is undisputed, though withdrawing without a declaratory judgment carries litigation and statutory exposure

Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co., 279 S.W.3d 650 (Tex. 2009) (applied eight‑corners and reserved question whether collusion exception exists)
GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305 (Tex. 2006) (declined to recognize a true‑facts exception absent evidence of collusion)
Heyden Newport Chem. Corp. v. Southern Gen. Ins. Co., 387 S.W.2d 22 (Tex. 1965) (established eight‑corners rule foundation)
Lamar Homes, Inc. v. Mid‑Continent Cas. Co., 242 S.W.3d 1 (Tex. 2007) (discussed insurers’ use of declaratory relief for coverage disputes)
Excess Underwriters at Lloyd’s v. Frank’s Casing Crew & Rental Tools, Inc., 246 S.W.3d 42 (Tex. 2008) (encouraged insurers to seek prompt declaratory judgments)
Nat’l Union Fire Ins. Co. of Pittsburgh v. Merch.’s Fast Motor Lines, Inc., 939 S.W.2d 139 (Tex. 1997) (applied eight‑corners doctrine)
Fid. & Guar. Ins. Underwriters, Inc. v. McManus, 633 S.W.2d 787 (Tex. 1982) (earlier application of coverage/duty principles)