Opinion ID: 854258
Heading Depth: 5
Heading Rank: 1

Heading: Standards for Duty to Defend

Text: Texas follows the eight-corners rule. Colony Ins. Co v. Peachtree Constr., Ltd., 647 F.3d 248, 253 (5th Cir. 2011) (citing Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co., 279 S.W.3d 650, 654 (Tex. 2009)). The insurance company’s duty to defend the insured party is determined solely on the facts alleged in the underlying lawsuit and the terms of the policy. Id. “Thus, the duty to defend arises only when the facts alleged in the [underlying lawsuit], if taken as true, would potentially state a cause of action falling within the terms of the policy.” Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523, 528 (5th Cir. 2004) (first emphasis added). If there is a “doubt as to whether or not the allegations of a complaint against the insured state a cause of action within the coverage of a liability policy sufficient to compel the insurer to defend the action, such doubt will be resolved in the insured’s favor.” Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Merchs. Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997) (citation omitted). The insured bears the initial burden of showing that the claim against it is potentially within the policy’s coverage. Sentry Ins. v. R.J. Weber Co., 2 F.3d 554, 556 (5th Cir. 1993). The eight-corners rule requires courts to focus on the factual allegations contained in the underlying suits. “If a petition does not allege facts within the 2 We do not reach the issue of whether the underlying lawsuits allege “personal and advertising injury” under Coverage B of the Policy, as PPI asserted originally. The district court held that the allegations did not allege “personal and advertising injury,” and PPI states in its briefs that it “does not challenge th[is] holding at this time.” 6 Case: 12-40189 Document: 00512161191 Page: 7 Date Filed: 03/01/2013 No. 12-40189 scope of coverage, an insurer is not legally required to defend a suit against its insured.” Merchs. Fast, 939 S.W.2d at 141. More specifically, “the court must focus on the factual allegations that show the origin of the damages rather than on the legal theories alleged.” Id. “It is not the cause of action alleged that determines coverage but the facts giving rise to the alleged actionable conduct.” Merchs. Fast, 939 S.W.2d at 141 (quoting Adamo v. State Farm Lloyd’s Co., 853 S.W.2d 673, 676 (Tex. App.—Houston [14th Dist.] 1993, writ denied)); see also Farmers Tex. Cnty. Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 82 (Tex. 1997) (“A court must focus on the factual allegations rather than the legal theories asserted in reviewing the underlying petition.”).