Osbaldo Hurtado Avalos and Antonio Hurtado as Assignees of Karla Flores Guevara v. Loya Insurance Company
04-17-00070-CV
| Tex. App. | Jul 20, 2017Background
- March 18, 2013 auto collision: Hurtados sued Karla Flores Guevara (petition alleged Guevara was the driver and negligent). Police report and initial discovery identified Guevara as driver.
- Guevara was insured by Loya Insurance. Loya initially provided counsel; shortly before Guevara’s deposition she (allegedly) told counsel her husband — an excluded driver — had actually been driving. Counsel (Loya employee) withdrew and Loya denied coverage and ceased defending Guevara.
- The underlying suit proceeded; a final judgment was entered against Guevara for damages. The Hurtados then accepted an assignment of Guevara’s claims against Loya (claiming wrongful denial of defense/coverage) and sued Loya.
- Loya filed counterclaims and then moved for traditional and no-evidence summary judgment seeking a declaration it owed no duty to defend. Loya relied on extrinsic evidence (Guevara’s statements that her husband was driver) to deny coverage.
- Trial court granted Loya’s traditional and no-evidence motions for summary judgment. Appellants (the Hurtados as assignees) appealed, arguing (inter alia) the duty-to-defend is governed by the eight-corners rule, the declaratory claim was unripe/moot after Loya had already breached, the no-evidence motion was conclusory, and discovery was incomplete.
Issues
| Issue | Plaintiff's Argument (Hurtado/assignees) | Defendant's Argument (Loya) | Held (trial court) |
|---|---|---|---|
| Whether Loya owed a duty to defend under the eight‑corners rule | Pleadings alleged Guevara (an insured) was negligent; under eight‑corners Loya must defend where complaint potentially alleges a covered claim | Loya contends extrinsic evidence (insured’s admission that excluded husband drove) removes coverage and negates duty to defend | Trial court granted Loya’s summary judgment (no duty to defend) |
| Whether Loya’s declaratory‑judgment claim was ripe / moot | Once Loya withdrew defense and judgment entered, declaratory relief was moot; Loya should have sought declaration before breaching | Loya sought judicial declaration it owed no duty to defend (i.e., entitlement to a pre‑breach ruling) | Trial court granted Loya’s declaratory relief via summary judgment |
| Validity/specificity of Loya’s no‑evidence summary judgment | Loya’s no‑evidence motion was conclusory, failed to identify specific elements lacking evidence; non‑movant lacked adequate discovery time | Loya argued plaintiffs produced no evidence of duty and no evidence to support claims once coverage denied | Trial court granted Loya’s no‑evidence motion |
| Preclusion/res judicata effect of underlying judgment on coverage/disputed facts | Underlying judgment finding Guevara negligent precludes re‑litigation of who was driving; evidence that Guevara was the driver supports plaintiffs’ coverage arguments | Loya argues evidence (Guevara’s admissions) shows husband was driver and excluded; coverage lacking | Trial court accepted Loya’s position and granted summary judgment (case disposed on MSJs) |
Key Cases Cited
- National Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139 (Tex. 1997) (establishes eight‑corners/complaint‑allegation rule for duty to defend)
- Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487 (Tex. 2008) (insurer must defend even if allegations are groundless, false, or fraudulent)
- GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305 (Tex. 2006) (plaintiff’s allegations that potentially support coverage invoke duty to defend)
- Heyden Newport Chem. Corp. v. S. Gen. Ins. Co., 387 S.W.2d 22 (Tex. 1965) (extrinsic facts generally not considered in duty‑to‑defend analysis)
- King v. Dallas Fire Ins. Co., 85 S.W.3d 185 (Tex. 2002) (doubts about duty to defend are resolved in favor of the insured)
- Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819 (Tex. 1997) (distinguishing duty to defend from duty to indemnify)