United States Court of Appeals

for the Fifth Circuit

No. 18-10721

State Farm Lloyds,

 Plaintiff—Appellee,

versus

Janet Richards; Melvin Richards; Amanda Culver Meals,

 Defendants—Appellants.

Appeal from the United States District Court

for the Northern District of Texas

USDC No. 4:17-CV-753

Before Elrod and Willett, Circuit Judges.*

Per Curiam:

In summer 2017, a ten-year-old died in an ATV accident at his 

paternal grandparents’ house. The boy’s mom sued the grandparents, the 

Richards, in state court. The Richards asked their insurer, State Farm, to 

defend (and if necessary, indemnify) them. But State Farm refused and 

sought a declaration in federal court that it had no duty to do either. The 

parties filed cross summary-judgment motions, and the district court granted 

State Farm’s motion. We reverse and remand.

* This matter is being decided by a quorum. 28 U.S.C. § 46(d).

United States Court of Appeals

Fifth Circuit

FILED

July 20, 2020

Lyle W. Cayce

Clerk

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I

Jayden Meals was killed in an all-terrain vehicle accident while under 

the temporary care of his grandparents, the Richards. Jayden’s mother, 

Amanda Meals, sued the Richards in Texas state court, alleging they were 

negligent in allowing Jayden to operate the ATV at his young age, without 

instruction, supervision, or a helmet or other protective gear. The Richards 

sought a defense from State Farm Lloyds under their homeowner’s insurance 

policy. That policy requires State Farm to provide a defense against a suit for 

bodily injury.

Specifically, the insurance policy requires State Farm to provide a 

defense “[i]f a claim is made or a suit is brought against an insured for 

damages because of bodily injury . . . to which this coverage applies, caused 

by an occurrence.” And under this policy, an “occurrence” includes “an 

accident” that “results in . . . bodily injury.”

State Farm initially defended this suit under a reservation of rights, 

but later sought a declaration in federal court that it had no duty to defend or 

indemnify the Richards. In a summary-judgment motion, State Farm argued 

that two exclusions barred coverage.

The first, the “motor-vehicle exclusion,” exempts from coverage 

bodily injury “arising out of the . . . use . . . of . . . a motor vehicle owned or 

operated by or loaned to any insured.” The policy defines “motor vehicle” 

to include an “all-terrain vehicle . . . owned by an insured and designed or 

used for recreational or utility purposes off public roads, while off an insured 

location.” The policy defines “insured location” to mean “the residence 

premises.” Thus, the policy excludes coverage for bodily injury arising from 

the use of an ATV while off the Richards’ premises. In support of its 

summary-judgment motion, State Farm attached a vehicle crash report and 

the Richards’ admissions indicating the crash occurred off their premises.

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The other exclusion—the “insured exclusion”—excludes coverage 

for bodily injury to any insured “within the meaning of part a. or b. of the 

definition of insured.” The policy defines “insured” to mean “you and, if 

residents of your household: a. your relatives; and b. any other person under 

the age of 21 who is in the care of a person described above.” State Farm thus 

attached to its motion the Richards’ admission that they were Jayden’s 

grandparents, as well as a court order appointing them as joint-managing 

conservators to show that Jayden was a “resident of [the Richards’] 

household.”

Appellants filed cross summary-judgment motions. They argued that, 

under Texas’s eight-corners rule, State Farm could not rely on extrinsic 

evidence to prove up a policy exclusion. The district court disagreed and, 

finding that the extrinsic evidence satisfied both exclusions, granted 

summary judgment for State Farm. State Farm Lloyds v. Richards, No. 4:17-

CV-753-A, 2018 WL 2225084, at *3–4 (N.D. Tex. May 15, 2018). The 

district court also held that State Farm had no duty to indemnify. Id. at *4–

5.

According to the district court, the eight-corners rule does not apply 

if a policy does not include language requiring the insurer to defend “all 

actions against its insured no matter if the allegations of the suit are 

groundless, false or fraudulent.” Id. at *3 (citing B. Hall Contracting, Inc. v. 

Evanston Ins.Co., 447 F. Supp. 2d 634, 645 (N.D. Tex. 2006), rev’d on other 

grounds, 273 F. App’x 310 (5th Cir. 2008)). This is the purported “policylanguage exception” to the eight-corners rule. Because the district court 

concluded that State Farm’s duty to defend arose only if a suit was brought 

to which the coverage applies, it reasoned that extrinsic evidence was 

admissible to make that determination. Id. at *3. Appellants timely appealed.

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This case involves important and determinative questions of Texas 

law, as to which there is no controlling Texas Supreme Court precedent. So 

we declined to make an Erie guess and instead certified the following question 

to the Supreme Court of Texas: “Is the policy-language exception to the 

eight-corners rule articulated in B. Hall Contracting Inc. v. Evanston Ins. Co., 

447 F. Supp. 2d 634 (N.D. Tex. 2006), a permissible exception under Texas 

law?” State Farm Lloyds v. Richards, 784 F. App’x 247, 253 (5th Cir.), 

certified question accepted (Sept. 13, 2019). The Supreme Court of Texas 

answered in the negative: “The ‘policy-language exception’ to the eightcorners rule . . . is not a permissible exception under Texas law.” Richards v. 

State Farm, 597 S.W.3d 492, 500 (Tex. 2020). The Court discussed but 

declined to weigh in on any other exception to the eight-corners rule. Id.

II

Whether an insurer has a duty to defend its insured in an underlying 

suit is a question of law that we review de novo. See Ooida Risk Retention 

Grp., Inc. v. Williams, 579 F.3d 469, 472 (5th Cir. 2009) (citing Liberty Mut. 

Ins. Co. v. Graham, 473 F.3d 596, 599 (5th Cir. 2006)); Guar. Nat’l Ins. Co. 

v. Vic Mfg. Co., 143 F.3d 192, 193 (5th Cir. 1998). Summary judgment is 

proper when, viewing the evidence in the light most favorable to the nonmoving party, the record reflects that no genuine dispute of material fact 

exists, and the moving party is entitled to judgment as a matter of law. Ooida, 

579 F.3d at 472 (citing FED. R. CIV. P. 56(c)). 

III

The underlying dispute in this case concerns whether State Farm 

must defend its insureds—the Richards—against personal-injury claims 

brought by Meals. In this diversity suit, we apply Texas law. See, e.g., 

Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523, 527 (5th Cir. 

2004). And under Texas’s well-established eight-corners rule, an insurer’s 

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“duty to defend is determined by the claims alleged in the petition and the 

coverage provided in the policy.” Pine Oak Builders, Inc. v. Great Am. 

Lloyds Ins. Co., 279 S.W.3d 650, 654 (Tex. 2009). The petition’s (or 

complaint’s) “four corners” + the policy’s “four corners” = the “eight 

corners” that give the rule its name. “Only these two documents are 

ordinarily relevant to the duty-to-defend inquiry.” Ooida, 579 F.3d at 472 

(citation omitted). “If the underlying pleading alleges facts that may fall 

within the scope of coverage, the insurer has a duty to defend; if, on the other 

hand, the pleading only alleges facts excluded by the policy, there is no duty 

to defend.” Id. (citing Northfield, 363 F.3d at 528).

“The duty to defend is determined by consulting the latest amended 

pleading.” Northfield, 363 F.3d at 528 (emphasis omitted). Here, that’s 

Meals’s third-amended complaint. The insureds have the initial burden to 

establish that a claim is potentially within the scope of coverage. Id. If the 

Richards carry this burden, it then shifts to State Farm to show “that the 

plain language of a policy exclusion or limitation allows [it] to avoid coverage 

of all claims, also within the confines of the eight corners rule.” Id. (emphasis 

removed). When determining whether each side has satisfied its burden, the 

Texas Supreme Court has instructed us—when applying Texas law—to 

“resolve all doubts regarding the duty to defend in favor of the duty . . . and 

[] construe the pleadings liberally.” Zurich Am. Ins. Co. v. Nokia, Inc., 268 

S.W.3d 487, 491 (Tex. 2008).

A

Turning to Meals’s third amended complaint, she alleges facts that 

possibly implicate coverage under the policy, meaning—according to the 

eight-corners rule—State Farm would have a duty to defend. In particular, 

Meals makes the following factual allegations: 

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On or about June 11, 2017 . . . Jayden Meals, age 10, was 

operating, on Defendant, Janet Richards’ property, a 2004 

Polaris off-road all terrain vehicle . . . , owned by the Defendant, 

Janet Richards. Defendants allowed Jayden to operate the ATV 

on their property while Jayden was not wearing a helmet or 

safety gear. Jayden was killed because of Janet Richards 

allowing him to operate the ATV on their property, without 

instruction, without supervision, and without a helmet or other 

potentially livesaving protective gear. The decision to allow 

Jayden to operate the motor vehicle or ATV was made at the 

Richards’ house, where the ATV was kept. Jayden had no 

experience in safely operating an ATV and was too young to be 

properly trusted with its operation. Jayden resided with his 

Mother and Grandmother, Sharen Culver, at 727 Jones Road, 

Weatherford, Parker County, Texas, where he had resided for 

many years.

In relevant part, the policy provides the following coverage (Coverage L):

If a claim is made or a suit is brought against an insured for 

damages because of bodily injury . . . to which this coverage 

applies, caused by an occurrence, we will: 

1. pay up to our limit of liability for the damages for 

which the insured is legally liable; and 

2. provide a defense at our expense by counsel of our 

choice.

Coverage L, however, explicitly does not apply to bodily injury arising 

out of the use of an insured’s motor vehicle. And the policy’s definition of 

“motor vehicle” includes an insured’s ATV “used for recreational or utility 

purposes off public roads, while off an insured location.”

Appellants argue that Meals’s complaint repeatedly alleged “the 

Richards’ actionable conduct that gave rise to Jayden’s death all occurred on

the Richards’ property,” and that those allegations “clearly implicate the 

Policy coverage for an ‘occurrence’ occasioned by a motor vehicle operated 

on the Richards’ property; as contemplated by . . . the scope of the Motor 

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Vehicle Exclusion.” Comparing Meals’s allegations within the four corners 

of her third-amended complaint to the terms within the four corners of the 

policy, indeed, Meals alleged facts that possibly implicate coverage under the 

policy. And even if there were doubt, “such doubt will be resolved in [the] 

insured’s favor.” Northfield, 363 F.3d at 528 (quotation and citation 

omitted). So Appellants have met their initial burden under the eight-corners 

rule. 

Yet the district court concluded that the eight-corners rule does not 

apply because “the policy does not require plaintiff to defend all actions 

against its insured no matter if the allegations of the suit are groundless, false 

or fraudulent.” Richards, at *3. 

But as the Supreme Court of Texas explained in response to our 

certified question, “[t]he ‘policy-language exception’ to the eight-corners 

rule . . . is not a permissible exception under Texas law.” Richards, 597 

S.W.3d at 500.1 That Court has “never held or suggested that the eightcorners rule is contingent on a groundless-claims clause.” Richards, 597 

S.W.3d at 498. Consistent with this approach, “Texas courts of appeal have 

routinely applied the eight-corners rule for many decades, without regard to 

whether the policy contained a groundless-claims clause.” Id. at 499.

In fact, the Texas Supreme Court only recently—and for the first 

time—applied any exception to the eight-corners rule. Loya Ins. Co. v. 

Avalos, No. 18-0837, 2020 WL 2089752, at *3 (Tex. May 1, 2020). 

Specifically, in Avalos, it held that “an insurer owes no duty to defend when 

there is conclusive evidence that groundless, false, or fraudulent claims 

1 Like federal courts, Texas courts have no jurisdiction to render advisory opinions.

But answering a certified question is a constitutionally permissible advisory opinion 

because the Texas Constitution grants the Supreme Court of Texas jurisdiction to “answer 

questions of state law certified from a federal appellate court.” TEX.CONST. art. V, § 3-c.

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against the insured have been manipulated by the insured’s own hands in 

order to secure a defense and coverage where they would not otherwise 

exist.” Id. In this case, there have been no allegations of collusive fraud by 

the insured, so the exception does not apply. And neither does the purported 

“policy-language exception.” The district court erred in applying it.

B

State Farm argues we should affirm the district court on other grounds 

supported by the record. Like the district court, State Farm concludes that 

the eight-corners rule does not apply but argues instead that the district court 

should consider extrinsic evidence under a different exception.

We have at times applied a “very narrow” exception to the eightcorners rule, GuideOne Specialty Mut. Ins. Co. v. Missionary Church of 

Disciples of Jesus Christ, 687 F.3d 676, 686 (5th Cir. 2012), “where it is 

initially impossible to discern whether coverage is potentially implicated and 

when the extrinsic evidence goes solely to a fundamental issue of coverage 

which does not overlap with the merits of or engage the truth or falsity of any 

facts alleged in the underlying case.”2 Ooida, 579 F.3d at 475 (citing 

Northfield, 363 F.3d at 531); see also Star-Tex Res., L.L.C. v. Granite State 

Ins. Co., 553 F. App’x 366, 371 (5th Cir. 2014) (per curiam). But this is not 

one of those cases.

As discussed, the Richards met their initial burden to establish that a 

claim is potentially within the scope of coverage. See infra Part III(A). So, the 

burden now shifts to State Farm to show “that the plain language of a policy 

2 As the Texas Supreme Court made clear when responding to our certified 

question, it has acknowledged that “some courts” use this exception, but it has not yet 

weighed in on whether it’s a valid exception under Texas law. Richards, 597 S.W.3d at 496–

97, 500; see also Zurich, 268 S.W.3d at 497 (acknowledging but not addressing the Fifth 

Circuit’s use of the exception).

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exclusion or limitation allows the insurer to avoid coverage of all claims, also 

within the confines of the eight corners rule.” Northfield, 363 F.3d at 528.

To support its no-duty-to-defend argument, State Farm invokes two policy 

exclusions: the “motor vehicle exclusion” and the “insured exclusion.” The 

issue is whether extrinsic evidence is permissible under our “very narrow” 

exception to show that these policy exclusions apply to this claim.

First, the “motor vehicle exclusion.” Under this exclusion, there is 

no coverage for bodily injury arising out of the use of a “motor vehicle” 

owned by an insured. State Farm argues that the ATV Jayden was driving 

constitutes a “motor vehicle” under the policy, meaning that any bodily 

injury arising out of Jayden’s use of the ATV would not be covered. But to 

meet the definition of a “motor vehicle,” Jayden must have been using the 

ATV “off public roads, while off an insured location.” Meals’s thirdamended complaint does not include the location of the accident. So to show 

the exclusion applies, State Farm seeks to use extrinsic evidence—namely, a 

crash report that shows the location of the crash and the Richards’ 

admissions regarding the location of the crash.

Under the very narrow exception we have recognized, the extrinsic 

evidence must “go[] solely to a fundamental issue of coverage which does 

not overlap with the merits of or engage the truth or falsity of any facts alleged 

in the underlying case.” Ooida, 579 F.3d at 476. 

In Meals’s third-amended complaint, she alleges “Jayden was killed 

because” “[the Richards] allowed Jayden to operate the ATV on their 

property.” Meals’s allegations of negligence focus on acts or omissions on

the Richards’ property. For example, Meals alleges the Richards were 

negligent for “[f]ailing to directly supervise a person younger than 14 years 

of age operating an ATV on the Richards’ property in violation of Texas 

Transportation Code § 663.032”; “[f]ailing to monitor Jayden on the 

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Richards’ property as a person using ordinary care would have done in the 

same or similar circumstances”; allowing Jayden to operate the ATV on the 

Richards’ property without a helmet, other protective gear, seatbelt, proper

instruction, or a certified training course; “[f]ailing to inspect the ATV 

before allowing Jayden to operate the vehicle on the Richards’ property to 

ensure that it was safe”; and “[a]llowing Jayden to operate the ATV on the 

Richards’ property without the skills, abilities, or judgment needed to 

operate the ATV safely.”

Considering these allegations, the extrinsic evidence State Farm seeks 

to admit problematically “overlap[s] with the merits of or engage[s] the truth 

or falsity of [] facts alleged in the underlying case.” Ooida, 579 F.3d at 476. 

By arguing that only the location of the “accident”—as State Farm interprets 

that term—matters, State Farm is challenging Meals’s claim that “Jayden 

was killed because of Janet Richards allowing him to operate the ATV on 

their property.” In other words, the extrinsic evidence State Farm urges the 

court to consider is simply too entwined in the merits for the “very narrow 

exception” to apply. GuideOne, 687 F.3d at 686 (finding that the “very 

narrow exception” to the eight-corners rule does not apply because “the 

evidence considered by the district court to determine coverage overlaps with 

the merits of [plaintiff’s] action”). This type of “overlapping evidence” 

“poses a significant risk of undermining the insured’s ability to defend itself 

in the underlying litigation.” GuideOne Elite Ins. Co. v. Fielder Rd. Baptist 

Church, 197 S.W.3d 305, 309 (Tex. 2006) (refusing to consider “mixed” or 

“overlapping” extrinsic evidence); cf. Star-Tex, 553 F. App’x at 372−73 

(considering undisputed extrinsic evidence that shows employee was 

“operating a motor vehicle” when she allegedly caused bodily harm to a 

customer—thus triggering the policy’s auto exclusion—as “[i]t does not 

overlap with the merits of the underlying dispute because the mere fact that 

[the employee] was operating a motor vehicle does not establish her 

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negligence or relate to [plaintiff’s] negligent-hiring or respondeat superior 

claims.”). Thus, State Farm’s argument is unavailing.

Second, the “insured exclusion.” State Farm also points to this 

exclusion and seeks to introduce extrinsic evidence showing Jayden was an 

“insured” under the policy, meaning his bodily injury would not be covered.

Specifically, State Farm seeks to introduce the Richards’ admission that they 

were Jayden’s grandparents, as well as a court order appointing them as jointmanaging conservators to show that Jayden was a “resident of [the 

Richards’] household.” Appellants argue this extrinsic evidence should not 

be considered because it “contradict[s] allegations in [Meals’s] underlying 

pleading.” We agree.

Here, the policy lists the Richards as the named insureds. And, under

the policy, all other subcategories of “insureds” must be “residents of” the 

Richards’ household. Meals’s third-amended complaint does not contain any 

allegations suggesting Jayden was a “resident” of the Richards’ household. 

Rather, the complaint states that “Jayden resided with his Mother and 

[maternal] Grandmother, Sharon Culver, at 727 Jones Road, Weatherford, 

Parker County, Texas, where he had resided for years.” So considering the 

extrinsic evidence to determine whether Jayden was a “resident of [the 

Richards’] household,” would impermissibly “engage the truth or falsity of 

[] facts alleged in the underlying case.” Ooida, 579 F.3d at 476.

In sum, the eight-corners rule applies here; the “very narrow 

exception” does not. And Meals’s third-amended complaint contains 

allegations within its four corners that potentially constitute a claim within 

the four corners of the policy. Thus, we reverse the district court’s holding 

that State Farm does not have a duty to defend the Richards.

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IV

Finally, Appellants challenge the district court’s holding that State 

Farm has no duty to indemnify, arguing that duty is not yet justiciable. Under 

Texas law, “[t]he duty to defend and the duty to indemnify are distinct and 

separate duties.” King v. Dall. Fire Ins. Co., 85 S.W.3d 185, 187 (Tex. 2002) 

(citation omitted); see also Northfield Ins. Co., 363 F.3d at 528 (applying 

Texas law). And “the duty to defend is broader than the duty to indemnify.”

Am. States Ins. Co. v. Bailey, 133 F.3d 363, 368 (5th Cir. 1998) (applying 

Texas law) (citation omitted). “While the duty to defend depends on the 

allegations in the pleadings, the duty to indemnify is triggered by the actual 

facts that establish liability in the underlying suit.” Ooida, 579 F.3d at 472 

(quotation marks and citation omitted). So, “[g]enerally, Texas law only 

considers the duty-to-indemnify question justiciable after the underlying suit 

is concluded, unless ‘the same reasons that negate the duty to defend likewise 

negate any possibility the insurer will ever have a duty to indemnify.’” 

Northfield, 363 F.3d at 529 (emphasis omitted) (quoting Farmers Tex. Cty. 

Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 84 (Tex. 1997)). Here, State Farm 

has a duty to defend, so the exception to non-justiciability does not apply. 

And because the underlying suit remains pending, we reverse the district 

court on this issue.

CONCLUSION

After carefully reviewing the record and the parties’ briefing and 

arguments, and for the reasons discussed above, we REVERSE and

REMAND. We DENY all pending motions.

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