Opinion ID: 821185
Heading Depth: 3
Heading Rank: 4

Heading: Justiciability of Duty to Indemnify

Text: Rapid Logistics contends that the district court erred in ruling that the issue of whether Canal has a duty to indemnify is justiciable. Rapid Logistics argues that because Canal has a duty to defend it in the underlying state court action, the issue is non-justiciable. As set forth above, we find no error in the district court’s holding that Canal had no duty to defend Rapid Logistics. Thus, this argument is without merit. In the alternative, Rapid Logistics argues that because the duty to indemnify is dependent upon facts proven in the underlying suit, the issue of Canal’s duty to indemnify Rapid Logistics is non-justiciable and should be deferred until after the underlying state court suit is resolved. Under Texas law, the duty to defend and the duty to indemnify are distinct and separate duties. Gilbane Bldg. Co. v. Admiral Ins. Co., 664 F.3d 589, 601 (5th Cir. 2011). In contrast to a duty to defend, “[i]t may sometimes be necessary to defer resolution of indemnity issues until the liability litigation is resolved. In some cases, coverage may turn on facts actually proven in the underlying lawsuit.” Farmers Tex. Cnty. Mut. Ins. v. Griffin, 955 S.W.2d 81, 84 (Tex. 1997). The Texas Supreme Court has concluded that the “duty to indemnify is justiciable before the insured’s liability is determined in the liability lawsuit when the insurer has no duty to defend and the same reasons that negate the duty to defend likewise negate any possibility the insurer will ever have a duty to indemnify.” Id. (emphasis in original). In a subsequent case, the Court explained that its “conclusion [in Griffin] was grounded on the impossibility that the [intentional] drive-by shooting in that case could be transformed by proof of any conceivable 7 Case: 12-40209 Document: 00512152751 Page: 8 Date Filed: 02/22/2013 No. 12-40209 set of facts into an auto accident covered by the insurance policy.” D.R. Horton–Texas, Ltd v. Markel Intern. Ins. Co., 300 S.W.3d 740, 745 (Tex. 2009). Likewise, in the instant case, Canal has no duty to defend and the same reasons that negate the duty to defend also negate the possibility that Canal will have a duty to indemnify. More specifically, as previously explained, Rapid Logistics has conceded that Olivas was Sanchez’s employee driver, and that fact excludes coverage of the accident. Thus, in light of this concession, there is no conceivable proof that could be developed in the state court action that would transform the accident into one that is covered by the policy. Because the material facts (Olivas was Sanchez’s driver employee) are not in dispute, the district court did not err in holding the issue of duty to indemnify was justiciable. Accordingly, Rapid Logistics has not shown that the district court erred in granting summary judgment in favor of Canal.