FIFTH CIRCUIT AFFIRMS SUMMARY JUDGMENT OF NO DUTY TO INDEMNIFY BASED ON DIFFERENCES BETWEEN TEXAS AND NEW MEXICO LAW
In Liberty Insurance Corp. v. Dixie Electric, LLC, No. 15-10279, 2015 WL 9145494 (5th Cir. December 16, 2015), the Fifth Circuit of Appeals affirmed the summary judgment granted Liberty in a declaratory judgment suit filed in District Court in the Northern District of Texas, Dallas Division. The Fifth Circuit adopted the District Court’s analysis holding there was no duty to indemnify Liberty’s insured, Dixie Electric, for a judgment rendered in a New Mexico wrongful death action for $1,000,000.
The underlying plaintiff was electrocuted to death while working underneath an energized power line at the direction of his supervisor, in clear violation of company policy and federal regulations. The Court recognized the workers compensation and employer’s liability policy only provided coverage for “bodily injury by accident” that has not been caused by the intentional conduct of the employer. The court held because both Texas and New Mexico law define “accident” as “an unexpected event,” then “any liability-producing event that would satisfy the New Mexico standard for Dixie’s liability in the Underlying Lawsuit would necessarily preclude coverage for Dixie under the Policy.” In this case, there was no coverage for Dixie’s “willful” conduct.
The Court recognized under New Mexico law “willful conduct” would be covered because it is less than intentional conduct but more than mere negligence. However, under Texas law coverage would be afforded for conduct that equated to gross negligence. The Court refused to equate the New Mexico standard of “willful conduct” with the Texas standard for “gross negligence” and, therefore, there was no coverage for the intentional conduct.