553 F. App'x 366
5th Cir.2014Background
- Siegmund sued Star-Tex and Esquivel in Texas state court (later removed to federal court) alleging Esquivel negligently caused an automobile collision while under the influence, with theories including negligence, negligent-hiring, and respondeat superior.
- Star-Tex is a staffing company; Esquivel was staffed to Auto Auction through Star-Tex and allegedly driving a vehicle at the time of the accident.
- Granite State insured Star-Tex for commercial-property and commercial-general-liability through June 4, 2011 and declined defense under an auto-exclusion for damages arising from ownership, use, or entrustment of autos.
- Star-Tex and Esquivel sought a declaratory judgment that Granite State erred in denying defense and that full coverage (including defense and indemnity) should apply, with focus on the eight-corners rule.
- The district court granted Granite State summary judgment, concluding the eight-corners rule plus the auto exclusion barred coverage and defense; Star-Tex/Esquivel challenged on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether eight-corners alone resolves coverage | Star-Tex/Esquivel argue eight-corners should resolve in favor of coverage. | Granite State argues eight-corners and inference from the pleadings support exclusion. | Eight-corners alone insufficient to determine coverage. |
| Whether extrinsic evidence may be used to determine coverage | Star-Tex/Esquivel contend extrinsic evidence is unnecessary or should be limited. | Granite State contends a narrow extrinsic-evidence exception applies when coverage is ambiguous. | A limited extrinsic-evidence exception applies to determine coverage when needed. |
| Whether the auto exclusion applies under the circumstances | Star-Tex/Esquivel argue no clear showing Esquivel was driving, so exclusion may not apply. | Granite State asserts extrinsic evidence shows Esquivel was operating a vehicle, triggering the auto exclusion. | Extrinsic evidence shows Esquivel operated a vehicle; auto exclusion applies. |
| Whether the auto exclusion bars Granite State's duty to defend and indemnify | If coverage exists, Granite State would owe defense/indemnity. | With auto exclusion controlling, there is no duty to defend or indemnify. | Auto exclusion bars both duty to defend and indemnify. |
Key Cases Cited
- GuideOne Elite Ins. Co. v. Fielder Road Baptist Church, 197 S.W.3d 305 (Tex. 2006) (eight-corners rule and liberal construction of pleadings)
- Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487 (Tex. 2008) (duty to defend governed by pleadings and potential coverage)
- Ooida Risk Retention Grp., Inc. v. Williams, 579 F.3d 469 (5th Cir. 2009) (limited extrinsic-evidence exception to eight-corners rule)
- Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523 (5th Cir. 2004) (extrinsic-evidence exception requires discrete coverage issue)
- Lib. Mut. Ins. Co. v. Graham, 473 F.3d 596 (5th Cir. 2006) (extrinsic evidence may be considered when exclusion at issue)
- General Star Indem. Co. v. Gulf Coast Marine Assocs., 252 S.W.3d 450 (Tex. App. 2008) (extrinsic evidence and coverage considerations in complex scenarios)
- Heyden Newport Chem. Corp. v. S. Gen. Ins. Co., 387 S.W.2d 22 (Tex. 1965) (duty to defend and scope of coverage principles)