Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca5-14-50878/USCOURTS-ca5-14-50878-0/pdf.json

Parties Involved:
Axis Insurance Company
Appellee
Axis Surplus Insurance Company
Appellee
NetSpend Corporation
Appellant

Document Text:

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 14-50878

NETSPEND CORP.,

 Plaintiff - Appellant

v.

AXIS INSURANCE COMPANY and AXIS SURPLUS INSURANCE 

COMPANY,

 Defendants - Appellees

Appeal from the United States District Court 

for the Western District of Texas

USDC No. 1:13-CV-456

Before JONES, SMITH, and COSTA, Circuit Judges.

PER CURIAM:*

In 2012, NetSpend Corporation (NetSpend) was sued in Texas state 

court. NetSpend did not initially request a defense of that suit pursuant to a 

professional liability insurance policy with AXIS Insurance Company and 

AXIS Surplus Insurance Company (collectively, AXIS). Only after a second 

amended petition was filed in the lawsuit did NetSpend request that Axis fund 

the defense. AXIS denied the request on the ground that the claim was 

 

* Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5th Cir. 

R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

July 16, 2015

Lyle W. Cayce

Clerk

 Case: 14-50878 Document: 00513117769 Page: 1 Date Filed: 07/16/2015
No. 14-50878

2

untimely because it was not reported during the policy period (or extended 

reporting period) when the state court suit was first filed. 

NetSpend subsequently sued AXIS in state court, while proceeding to 

defend the underlying litigation at its own expense. NetSpend alleged breach 

of contract, breach of the duty of good faith and fair dealing, and violations of 

the Texas Insurance Code. AXIS removed to federal court, and the parties filed 

cross-motions for summary judgment. The district court granted summary 

judgment in favor of AXIS, holding that the original petition in the underlying 

litigation constituted a covered “claim” within the meaning of the policy and

that NetSpend thus was required to report that claim during the first policy 

period in order to secure coverage. 

The sole question on appeal is whether the original petition filed in the 

state court case constituted a “Claim arising out of a Wrongful Act” that 

triggered NetSpend’s obligation to seek defense costs from its insurer. 

We have carefully reviewed that operative petition and incorporated 

attachments. We have also considered the parties’ briefs and the applicable 

legal authorities and heard oral argument from both sides. The judgment is 

AFFIRMED essentially for the reasons given by the district court. 

 Case: 14-50878 Document: 00513117769 Page: 2 Date Filed: 07/16/2015