NORTHERN DISTRICT DENIES INSURER'S SUMMARY JUDGMENT ON DUTY TO DEFEND BECAUSE NO EXTRINSIC EVIDENCE EXCEPTION APPLIED

Recently, Federal District Court Judge Hendrix from San Angelo denied an insurer’s summary judgment motion on the duty to defend on the basis that there was no exception to the eight-corners rule that would allow the Court to consider extrinsic evidence.   In National Liability & Fire Ins. Co. v. John Young, 6:19-CV-031-H, (N.D. Tex. May 12, 2020) (slip op.), National Liability filed a motion for summary judgment seeking a declaration on their duty to defend  a lawsuit stemming from a fatal auto accident.  The vehicle involved in the accident was being rented by Enterprise Rent-A-Car to John Young d/b/a Rio Restaurant Group.  National Liability filed a declaratory judgment action and argued it had no duty to defend because there was coverage for rental autos unless it was being rented because a covered auto was out of service.

National Liability moved for summary judgment arguing that the rented vehicle was not covered under the terms of the policy because Young rented the vehicle continuously between August 2018 and February 2079 and because "none of Defendant Rio Restaurant's Specifically Described 'Autos' under the Policy were being repaired.”   Young argued that the Plaintiff’s First Amended Petition specifically alleged that the that the vehicle being driven at the time of the accident was a temporary substitute auto within the meaning of the insurance policy.  The district court found that the insurer failed to establish that the Northfield exception to the "eight corners" rule applied where the underlying pleading sufficiently established that a duty to defend was owed.  

Editor’s Note: This decision is one of the first to address the recent Supreme Court of Texas decisions regarding the "policy language" exception that was rejected and the "collusive fraud" exception that was adopted.  The Court found that no recognized exception applied in this case, and it may not consider extrinsic evidence.  Accordingly, the summary judgment motion was denied.