Opinion ID: 25144
Heading Depth: 2
Heading Rank: 2

Heading: Farmers’s Duty to Defend

Text: On appeal, Farmers contends that (1) the specific allegations made by the claimants against the insured by name trump the general allegations made against all defendants, thereby precluding any duty of Farmers to defend, and (2) the allegations in the underlying lawsuits fall under the policies’ pollution exclusion clauses, likewise alleviating Farmers’s duty to defend. Farmers’s position does not comport neatly with applicable case law or with a common-sense reading of the claimants’ allegations. First, Farmers’s position requires reading “general allegation” to mean an allegation lodged against all defendants generically and “specific allegation” to mean one that targets only 6 Celotex Corp., 477 U.S. at 323. 7 Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 150 (2000). 8 Id. at 151. 4 one particular defendant. As these terms are employed in the case law, however, “general” and “specific” refer to the degree of detail in the substance of the allegation, not to the identity of the party or parties targeted by the allegation.9 Buying into Farmers’s reading would contravene the accepted convention of collectively referring to multiple defendants as “defendants” for the purpose of common allegations. The claimants’ allegations categorized by Farmers as “general” are located in the sections of the complaints entitled “Facts Common to all Causes of Action” and “Negligence.” Most reasonably construed, this suggests that the claimants are alleging facts against all defendants as a convenient shorthand in lieu of redundantly re-alleging the same facts against each defendant by name. Even if the proposition relied on by Farmers might make sense in a case comprising a single plaintiff, a single defendant, and a single subject matter, it does not comport with the situation in the underlying lawsuits, which comprise multiple plaintiffs, multiple defendants, and a large variety of claims. Moreover, the allegations against all defendants and the 9 Cf. Monsanto v. Milam, 494 S.W.2d 534 (Tex. 1973) (specific pleading of facts giving rise to negligence controlled over general allegation of negligence); Chuck Wagon Feeding Co., Inc. v. Davis, 768 S.W.2d 360 (Tex. App. – El Paso 1989) (holding that specific allegations control where plaintiff generally alleged breach of contract, but then proceeded to specifically allege the exact terms of the breached contracts). 5 allegations against the insured by name are not limiting or mutually exclusive of each other. Read most reasonably, the allegations against all defendants include the insured and are complementary to the allegations against the insured individually, by name. As such, Farmers’s duty to defend is not precluded by the form of the claimants’ allegations.
Farmers’s second argument on appeal is equally unpersuasive. Texas law commands courts to apply the so-called “Eight corners rule” when testing suits by insureds seeking to enforce insurers’ duties to defend or indemnify.10 Under this rule of construction, only allegations within the four corners of the complaint and terms within the four corners of the insurance policy itself can be considered by a court. In interpreting insurance policies under Texas law, our well-established canon specifies that “[w]hen courts apply the eight-corners rule, they must liberally interpret the allegations in the pleadings, resolving doubts in favor of the insured.”11 In juxtaposition to liberal interpretation of pleadings 10 Guaranty Nat. Ins. Co. v. Azrock Industries, Inc., 211 F.3d 239, 243 (5th Cir. 2000); Nat. Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997). 11 Guaranty Nat. Ins. Co.v. Azrock Indus., Inc., 211 F.3d 239, 243 (5th Cir. 2000); see also Clarendon America Ins. Co. v. Bay, Inc., 10 F. Supp. 2d 736, 740 (S.D. Tex. 1998) (“Courts must liberally construe the allegations of the pleadings, and any doubt concerning coverage is resolved in favor of the insured.”) (citing Nautilus Ins. Co. v. Zamora, 114 F.3d 536, 538 (5th Cir. 1997)). 6 is another maxim which dictates that “[p]olicy exclusions are strictly construed against the insurer.”12 These complementary rules of interpretation must here be applied in the context of Farmers’s inability to escape its duty to defend simply by showing that a few allegations are defeated by the pollution exclusion or that some of the insured’s vehicles may not have been covered by it.13 The pollution exclusion clauses, in relevant part, exclude from coverage: “Bodily injury or property damage arising out of the actual, alleged or threatened discharge, dispersal, release or escape of pollutants:
that is: A. Being transported or towed by, or handled for movement into, onto or from, the covered auto; B. Otherwise in the course of transit; or