The claims involved crop-dusting, which allegedly damaged abutting fields because of herbicide drift. Instead, a party may recover fees only where controlling substantive law permits recovery. App.Houston 1998, pet. Dec. 1, 2007. What Is a Declaratory Judgment Action? hearing as an action for a declaratory judgment and may advance it on the calendar." Federal courts have typically held that declaratory relief is discretionary, and a federal court has broad authority to stay or dismiss an action seeking a declaratory judgment. As with the state act, one of the exceptions allows a federal court to enjoin re-litigation in state court to protect or effectuate its judgments. See Royal Ins. 169 (S.D.Tex., 1935); Borchard, Declaratory Judgments (1934), passim. The industry leader for online information for tax, accounting and finance professionals. App. 2201-2202 2201. 688, 699 (1936). denied). Insurers should also be sure to expressly reserve their right to recoup the costs in their coverage position letters. at 68. The insurer refused to pay the judgment, on the basis that the insureds conduct constituted a willful violation of a penal statute, and was thus excluded by the policy. Rule 57, FED. Co. v. Gjonaj Realty & Mgt. 214-871-8200, One Riverway (b) The declaration may be either affirmative or negative in form and effect, and the declaration has the force and effect of a final judgment or decree. any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Civ. Wade, 827 S.W.2d at 451. Explanation of the Constitution - from the Congressional Research Service Code37.009 provides that in any proceeding under this Chapter, the court may award costs and reasonable and necessary attorneys fees as they are equitable and just.. Co. v. Vandewater, 907 S.W.2d 491 (Tex. See United Services Life Ins. 1271 (N.D. Tex. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Co. v. David Agency Ins., Inc., 327 F.Supp.2d 922 (N.D. . dismd by agrmt.) Seq. There are exceptions, however, (1) when conduct estops a party from asserting prior active jurisdiction; (2) where parties are lacking; or (3) where there is lack of intent to prosecute. Explainer: How did the battle between Ron DeSantis and Disney escalate? defenses always be pled by motion. Co., 316 U.S. 491 (1942); Wilton, 515 U.S. 277. Co. v. Deering Mgmt. App.Dallas 1998, pet. Co. v. Tex. Co., 61 F.3d 389 (5th Cir. Co. v. Taylor, 832 S.W.2d 645 (Tex. ANSWER to COMPLAINT for declaratory judgment, affirmative defenses and COUNTERCLAIM filed by Clemens Franek against Jay Franco & Sons, Inc. (jmp, ). The landowner-appellant appealed a declaratory judgment excluding guests of his commercial lodge from freely using reserved lot areas on some property (essentially gutting the commercial. Nevertheless, some courts have concluded that declaratory relief is inappropriate where another cause of action is fully mature and provides an appropriate remedy at law. 8 0 obj CIV. 1997) (whether vehicle was owned by insured); Harken Exploration Co. v. Sphere Drake Ins., PLC, 261 F.3d 466 (5th Cir. Co. v. Port Auth. CODE 37.001-.011. For In American, the insurer agreed to defend the insured in an underlying personal injury action but reserved its right to deny coverage to the extent that the insurer was prejudiced due to the insured's late notice of the action. Jul 20th, 2015 Collections and Foreign Judgments. 1992), cert. App.Corpus Christi 2000, no writ). See here for a complete list of exchanges and delays. 1997); Trinity Universal Ins. See Utica Lloyds of Tex. denied) (disallowing evidence of workers compensation payments to establish employment). The Supreme Court of Texas has ruled that a company did not waive its right to arbitration by bringing a "friendly" declaratory judgment action. Id. Co. v. Kelliher, 343 S.W.2d 278 (Tex. & REM. 1974, no writ). On Dec. 30, 2020, New York's Appellate Division, Second Department, issued a ruling which may have created a split in authority on the question of recoupment of defense costs among New York's appellate level courts. App.Corpus Christi 1998), revd on other grounds, 995 S.W.2d 675 (Tex. Sec. Co., 975 S.W.2d 329 (Tex. The Court also held that its decision is in line with what has "historically been the majority approach." Sept. 1, 1985. Twenty-Fifth Floor - Plaza of the Americas Created is remedy App.Fort Worth 1986, writ refd n.r.e.). Cf. Co. v. Trejo, 39 F.3d 585, 590 (5th Cir. Co. v. Burch, 442 S.W.2d 331 (Tex. He can be reached at alipkowitz@kdvlaw.com. See, e.g., City of Galveston v. Giles, 902 S.W.2d 167 (Tex. The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. See Bocquet v. Herring, 972 S.W.2d 19 (Tex. & Rem. defense n. 1 : the act or action of defending see also self-defense. Nor can an insurer join the claimants and address the issues through interpleader. Insrs v. American Home Assur. Hasselbring v. Koepke, 263 Mich. 466, 248 N.W. The underlying liability suit arose from an accident in which one defendant, while intoxicated, hit the plaintiffs vehicle, killing their daughter. For years, Texas courts concluded that a declaration of indemnity was premature, until the underlying suit was resolved. 1968). App.San Antonio 1998, pet. Inasmuch as it often involves only an issue of law on undisputed or relatively undisputed facts, it operates frequently as a summary proceeding, justifying docketing the case for early hearing as on a motion, as provided for in California (Code Civ.Proc. endobj See Hartford Ins. See Brillhart v. Excess Ins. at 332. Under state or federal law, declaratory relief is only appropriate when there is an actual case or controversy. A declaratory judgment must be based on an actual controversy, and cannot be merely advisory. 1271 (N.D. Tex. Civ. POWER OF COURTS TO RENDER JUDGMENT; FORM AND EFFECT. Further necessary or proper relief based on a declaratory judgment or decree may be granted, after reasonable notice and hearing, against any adverse party whose rights have been determined by such judgment. District courts have articulated several reasons for why mirror-image counterclaims should be dismissed. LEXIS 7088 (Tex. Co. v. Truckin USA, 122 F.3d 270, 272-73 (5th Cir. In RSL Funding, LLC v. Pippins, No. Jurisdictional authority is split on the question of whether an insurance company can recoup defense costs paid on behalf of an insured when it is subsequently determined that there was no duty to defend. COSTS. Federal courts are especially reluctant to exercise jurisdiction if there is a parallel state court proceeding even if subsequently filed that includes all necessary parties and will resolve the issues. endstream Co. v. Griffin, 955 S.W.2d 81 (Tex. See TEX. These changes are intended to be stylistic only. Sept. 1, 1987; Acts 1999, 76th Leg., ch. Sec. Therefore, either diversity or federal question jurisdiction must still exist. (b) A district court has original jurisdiction of a proceeding seeking a declaratory judgment that involves: (1) a party seeking declaratory relief that is a business that is: (A) organized under the laws of this state or is otherwise owned by a resident of this state; or, (B) a retailer registered with the comptroller under Section 151.106, Tax Code; and, (A) is an official of another state; and. 1979, no writ) (not justiciable controversy); Boorhem-Fields, Inc. v. Burlington Northern Railroad Co., 884 S.W.2d 530 (Tex. The Second Department's decision creates a distinction amongst the First and Second Departments, possibly making the issue ripe for review by New York's Court of Appeals. The declaratory judgment action allows relief, even where another remedy exists. : the evidence and arguments presented supporting the defendant's opposition see also accord, alibi . Rule 57, FED. Courts recognize that when there are conflicting positions on coverage, as when the insurer reserves rights, there is no privity between the insured and the insurer on issues relating to coverage, which are also at issue in the underlying case. Plaintiff's Complaint fails to state a cause of action. (a) When declaratory relief is sought, all persons who have or claim any interest that would be affected by the declaration must be made parties. A common way of eliminating this uncertainty is with a declaratory judgment action, also called a declaration. Youell & Cos v. Getty Oil Co., 510 U.S. 820 (1993); Service Mutual Ins. at 368-69. See McCarthy Bros. Co. v. Continental Lloyds, 7 S.W.3d 725 (Tex. 1978). endobj Co. v. River Entertainment, 998 F.2d 311, 315 (5th Cir. Subscribe to Justia's Free Newsletters featuring summaries of federal and state court opinions. In Nautilus, the insureds were sued in California state court by a former business partner asserting numerous claims, including interference with prospective economic advantage. Typically, an anti-suit injunction is appropriate in limited instances: 1) to address a threat to the courts jurisdiction; 2) to prevent the evasion of important public policy; 3) to prevent a multiplicity of suits; or 4) to protect a party from vexatious or harassing litigation. See, e.g., Texas Assn of Bus. 28 U.S.C. Bonham State Bank v. Beadle, 907 S.W.2d 465 (Tex. Instead, plaintiffs alleged River Entertainment was negligent for allowing the defendant to leave, in his own vehicle, when they should have known his driving ability was impaired. Sec. 1998, pet. Acts 1985, 69th Leg., ch. Absent any indemnity obligation and the clear prejudice from late notice, the insurer commenced a declaratory judgment action seeking to recover the defense costs it incurred in defending the underlying action. Co. v. Hood, 895 F.Supp. Code, applied to breaches of an insurance agreement, this question was resolved by the Texas Supreme Court, on a certified question from the Fifth Circuit, in Grapevine Excavation, Inc. v. Maryland Lloyds, 35 S.W.3d 1 (Tex. Ohio Cas. (c) Notwithstanding Section 22.001, Property Code, a person described by Subsection (a) may obtain a determination under this chapter when the sole issue concerning title to real property is the determination of the proper boundary line between adjoining properties. Answer, Affirmative Defenses, and Counterclaim to the First Amended Complaint for Declaratory Judgment ("Complaint") filed by Hartford Fire Insurance Company ("Hartford"), . Co. v. Cooper Machinery Corp., 817 F.Supp. Co., 418 S.W.2d 712, 715-16 (Tex. Sec. When to file is often determined by what is at issue. Texas, Inc., 64 S.W.3d 497 (Tex. Houston, TX 77056 713-403-8210, 601 Poydras 37.011. (a) A court of record within its jurisdiction has power to declare rights, status, and other legal relations whether or not further relief is or could be claimed. The insured was located in Hidalgo County, the car was purchased in Hidalgo County, and the salesman contacted the agent by phone, from Hidalgo County, to add the car to the policy. P., specifically provides, with regard to joinder of third parties, that This rule shall not be applied, in tort cases, so as to permit the joinder of a liability or indemnity insurance company, unless such company is by statute or contract liable to the person injured or damaged. Most policies include a no action provision that provides that a third partys right of action against the insured does not arise until there is a settlement, to which the insurer has agreed, or a judgment against the insured. Acts 2007, 80th Leg., R.S., Ch. Civ. Co. v. Boll, 392 S.W.2d 158, 161 (Tex. Cluett v. Medical Protective Co., 829 S.W.2d 822, 826 (Tex. The insurer denied defense based on the liquor liability exclusion and filed a declaratory judgment action. (driver excluded); see also Tri-Coastal Contrs, Inc. v. Hartford Undwrs Ins. Compare Aetna Life Insurance Co. v. Haworth, 300 U.S. 227, 57 S.Ct. Defense counsel may, nonetheless, have protected certain information from disclosure, for fear that it was effect coverage, and violate counsels own ethical obligations. ydXOEp Pzz2 -Ia5D(eUE02Xd#zG5 ;}srmVY9c~Vqz6#tUy/`ck$cVpxKCoo,}o{T#@TQ]%5|@Rtx~K9jptm> oL Opinions expressed are those of the author. App.Dallas 1998, pet. Prac. 9. Id. JURY TRIAL. 2283. 1. denied); see also State Farm Fire & Cas. See Bernard v. Gulf Ins. Where a judgment has been entered in the underlying case, and the insurer has refused indemnity, it may also be that declaratory relief is inappropriate, because a cause of action for breach of contract has ripened. See, e.g., Standard Fire Ins. LEXIS 7550 (Tex. There are several defenses that should be considered in a suit for declaratory relief in both state and federal court. An action or proceeding is not open to objection on the ground that a declaratory judgment or decree is prayed for. Under Texas substantive law, attorneys fees may be available to the insured if the insurer has breached its duty to defend or indemnify. ), the court held the county where the agent was located, the policy was sold, and the claim was reported, was not a proper venue. aspects of insurance coverage including directors and officers liability, professional liability, 1991). App.Houston [1st Dist.] Thus, an insured can seek an affirmative finding of coverage, or an insurer can seek a negative determination that coverage does not exist. PRAC. These rules govern the procedure for obtaining a declaratory judgment under 28 U.S.C. Co., 143 F.3d 192 (5th Cir. See State Farm Fire & Cas. denied) (any judgment on indemnity was advisory and beyond power and jurisdiction of the court); Campbell v. Commercial Standard Ins. 2 0 obj denied) (judgment of negligence in underlying case did not establish that negligent acts caused bodily injury, and did not preclude insurer from establishing intentional conduct); Deering Mgmt. In duty to defend cases, the issue of whether extrinsic evidence is even relevant would likely arise. The complaint allegation rule can pose a problem with declaratory relief. App.Austin 1998, no pet. Tex. 97 (E.D. Sec. 504-526-4350, 408 St. Peter Street, Suite 510 St. Paul had also appealed the original award to state district court, and that suit had also been settled, with a provision for payment of future expenses. Suite 300 14-0457 (Tex., July 1, 2016), RSL agreed to purchase certain annuity contracts issued by MetLife from three individuals. v. Texas Air Control Bd., 852 S.W.2d 440, 446 (Tex. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139 (Tex. Ins. 37.006, TEX. oEN>-BZ=/c]-ZP4U3o>0!f$F = FQfB@DlClYthnA mML.;Emu =uT Const. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. LEXIS 8082 (Tex. the enforceability of a non-compete, considerations before initiating legal action, cease and desist letters, declaratory judgments, seeking damages, requesting injunctive relief, and potential remedies available under the Defend Trade Secrets Act (DTSA). (although judgment reversed on coverage, no indication courts refusal to award fees to either party was abuse of discretion). 59.02(c). Co. v. Burch, 442 S.W.2d 331, 337 (Tex. Frontier Pac. 1996) (insurer not estopped from litigating employment issue). App.Fort Worth 1992, writ denied) (insurer not estopped by failing to have declaratory judgment determined before judgment in underlying case). See Farmers Tex. Tex. Cigna Lloyds Ins. Co. v. Rio Grande Heart Specialists of So. (4) to determine rights or legal relations of an independent executor or independent administrator regarding fiduciary fees and the settling of accounts. Obviously, the nature of the coverage issue to be determined will also determine the scope of discovery. Rules 38 and 39 govern a demand for a jury trial. 1995). Co. v. Carmichael, 1998 Tex. If the discovery is limited, or poorly conducted, or does not address the coverage issues, however, the insurer may seek additional testimony and evidence. Texas is not a direct action state, and a claimant typically has no claim against an insurer until a judgment is obtained. Tex. Co. v. Tandy Corp., 986 F.2d 94, 95 (5th Cir. Ins. 2004). Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. 466, 473, 80 L.Ed. A declaration may not be rendered if a special statutory proceeding has been provided for the adjudication of some special type of case, but general ordinary or extraordinary legal remedies, whether regulated by statute or not, are not deemed special statutory proceedings. App.Corpus Christi 1982, no writ) (could not consider facts of ownership that conflicted with petition); Calderon v. Mid-Century Indem. 1973) (court had no authority to order declaration against insurer in response to insureds motion for summary judgment on insurers claims); Indigo Oil, Inc. v. Wiser Oil Co., 1998 TEX. 2 The courts decision has been described as carving out an exception, rather than overruling prior law. 45 (N.D. Tex. 37.003. Co. v. Ward, 107 S.W.3d 820 (Tex. 37.006. (a) In this section, "state" includes any political subdivision of that state. Absent any indemnity obligation and the clear prejudice from late notice, the insurer commenced a declaratory judgment action seeking to recover the defense costs it incurred in defending the . 1993). ); but cf. The policy provided limits of $100,000 per occurrence and $200,000 in the aggregate. In Foust v. Ranger Ins. Co., 95 S.W.3d 702 (Tex. 461 (1937); Nashville, Chattanooga & St. Louis Ry. The court noted that the Griffin exception did not apply, but that a justiciable controversy existed, as the judgment clarified the rights of the parties under the contract; especially because the policy includes a provision under which Ranger could be relieved of its duty to defend by tendering its limits. (Deering, 1937) 1062a), Michigan (3 Comp.Laws (1929) 13904), and Kentucky (Codes (Carroll, 1932) Civ.Pract. Still, there are often strategic benefits to filing early. 639a3). Attorney Analysis from Westlaw Today, a part of Thomson Reuters. title to the propertyan essential element of an action to quiet titleand, in the court of appeals' view, the pleadings alleged "the wrong cause of action," the court concluded that the Brumleys' pleadings did not support the judgment.9 6 603 S.W.3d 449, 451 (Tex. App.Houston [1st Dist.] I App.Corpus Christi 1997, no pet.) Co. v. Boll, 392 S.W.2d 158, 161 (Tex. <>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/MediaBox[ 0 0 612 792] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> A number of issues arise in regard to discovery in a declaratory judgment action. Costs and fees are not dependent upon the outcome, and can be awarded to either the prevailing or the non-prevailing party. ); State Farm Lloyds Ins. But, because courts have recognized that, where a coverage issue exists, there is no privity between the insured and the insurer, there is an argument that an insurer should be allowed to litigate facts in a declaratory judgment, regardless of whether the facts are also being litigated in the underlying suit. Under most liability policies, the claimants are not third-party beneficiaries and have no direct rights, and no cause of action, against the insurer until there has been a settlement, to which the insurer agrees, or a judgment against the insured. (B) A contract may be construed either before or after there has been a breach. See, e.g., Dairyland County Mut. Sec. Tex. App.Houston [14th Dist.] App.Corpus Christi 1982, no writ), the court declared that the rule was that use of extrinsic evidence was allowed to determine coverage, but not to determine facts that would establish the insurers liability. "gj6P'pn.g_9z# ?V#yof.j,^4{%y^LJ_z|0 eivLnBE.orQevfwe^_d \2P4^Gy-ts}] ;|^QRg-d^yX^OeGE?kP0+]kw/k}m+TssVg4Pv. 30, 2007, eff. In this. P. 76A; 192.6(b)(5). 955 S.W.2d at 84 (construing Tex. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Code Crim. Co. of Texas, 1998 Tex. <> 869, 93 A.L.R. 2002); Monticello Ins. In a straight complaint allegation case, for instance, there should be extremely limited discovery, beyond verification of the pleadings and the policy. COURT REFUSAL TO RENDER. Am., 845 S.W.2d 794, 801 (Tex. K-yXHMKS mmgOT}|aMz0. 1 Justice Smith was perhaps prescient in his dissent, concluding that a justiciable controversy existed. PRAC. at 451-53. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. In the event of a legal controversy, both parties generally want to avoid any legal uncertainty and insecurity that could arise out of a dispute. Exclusive news, data and analytics for financial market professionals. Co. v. Ochoa, 19 S.W.3d 452 (Tex. App.Austin, Oct. 2, 2003, no pet. On March 11, 2021, the Nevada Supreme Court, in a 4-3 decision, held in Nautilus Insurance Company v. Access Medical, LLC, 2021 WL 936076 (Nev. 2021) that an insurance company is entitled to reimbursement of defense costs where a determination is ultimately made that the insurer did not owe a duty to defend, and the insurer expressly reserved its right to seek recoupment. In this chapter, "person" means an individual, partnership, joint-stock company, unincorporated association or society, or municipal or other corporation of any character. In American Genl Fire & Cas. 1997)2; see also State Farm Lloyds v. (c) This chapter shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states that enact it and to harmonize, as far as possible, with federal laws and regulations on the subject of declaratory judgments and decrees. See Great American Ins. 37.010. REVIEW. App.Austin 1999, pet. The district court dismissed the declaratory action on the defendants motion based on 28 U.S.C. As a matter of law, the duty to defend is broader than the duty to indemnify, and an insurer's duty to defend is triggered as long as there is a "reasonable possibility" that the insurer may have to indemnify the insured under the policy. 1996). Co. v. Childress, 650 S.W.2d 770, 775-76 (Tex. 37.009. Civ. After St. Paul filed its declaratory action in federal court, the claimant filed suit in state court in the same court in which the two prior suits had been filed. The firm's new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112. The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate. This article will discuss some of the recent decisions illustrating the different views that Courts have taken with respect to this issue, as well as the implications for insurance companies that issue duty to defend policies. See Southern County Mut. denied); ANR Prod. Clearly, the insurer should be entitled to discovery of anything that has been discovered in the underlying suit. App.Austin 2003, no pet. 2000). After the federal court ruled in favor of Nautilus, holding that it did not owe a duty to defend, Nautilus filed a motion for recoupment of its defense costs. A court may not . Co., 628 S.W.2d 184 (Tex. A federal court cannot, however, stay a pending suit for declaratory relief to allow the parties to re-file suit in state court, as the state court will have no jurisdiction. Federal: Declare Assess Act, 28 U.S.C. 97, 99 (E.D. Rule 57 also notes that the existence of another adequate remedy does not preclude a judgment for declaratory relief in cases where it is appropriate. In addition, Rule 57 provides that the court may order a speedy hearing as an action for a declaratory judgment and may advance it on the calendar.. Genl Ins. Id. Citing the Travelers case, the court recited the relevant factors the court must consider in determining whether to dismiss a declaratory judgment action: 1) whether there is a pending state action in which all of the matters in controversy may be fully litigated; 2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant; 3) whether the plaintiff engaged in forum shopping in bringing the suit; 4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist; 5) whether the federal court is a convenient forum for the parties and witnesses; 6) whether retaining the lawsuit in federal court would serve the purposes of judicial economy; and. He concentrates his practice on all Co. v. Cooper Mach. App.Austin 1999, no pet.) (a) This chapter may be cited as the Uniform Declaratory Judgments Act. Rule 38(c), TEX. E.g., Wilton v. Seven Falls Co., 515 U.S. 277 (1995); American States Ins. Twenty-Fifth Floor - Plaza of the Americas. (a) A person interested under a deed, will, written contract, or other writings constituting a contract or whose rights, status, or other legal relations are affected by a statute, municipal ordinance, contract, or franchise may have determined any question of construction or validity arising under the instrument, statute, ordinance, contract, or franchise and obtain a declaration of rights, status, or other legal relations thereunder. 2000) (staying declaratory action because of motion to join insurer in state court liability suit). Because the pleadings did not address a fact essential to determining coverage, the court allowed extrinsic evidence. Sept. 1, 1985. Jan. 25, 2019) is a mandamus case involving an insurer's motion to dismiss a declaratory judgment action by a law firm seeking a declaration of non-liability for malpractice in representing the insurer and advising it did not owe a defense in an underlying suit. 1969); Getty Oil v. Ins. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. costs and declaratory judgment). )1^Hl]TgxY8Ubs,! 9@Dyp*l8sA!N\X CODE provides, in subpart (a), that: When declaratory relief is sought, all persons who have or claim any interest that would be affected by the declaration must be made parties.

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