Opinion ID: 3218595
Heading Depth: 2
Heading Rank: 3

Heading: DP Engineering’s Counterclaims

Text: DP Engineering argues the district court erred in adjudicating its counterclaims sua sponte without giving the required notice. Hartford responds that once the district court decided there was no duty to defend, DP Engineering’s counterclaims necessarily failed. DP Engineering’s counterclaims relied on Hartford having a duty to defend under the policies. DP Engineering presented all its legal arguments about Hartford’s duty to defend in response to Hartford’s motion for summary judgment, as well as in its own cross-motion for summary judgment. Accordingly, DP Engineering had ample opportunities to present arguments in support of its counterclaims as to why a duty to defend existed. See British Caledonian Airways Ltd. v. First State Bank of Bedford, 819 F.2d 593, 595–96 (5th Cir. 1987) (citing 10A WRIGHT, MILLER & KANE, FEDERAL PRACTICE & PROCEDURE § 2720 (3d ed.)). There was no error in entering judgment against DP Engineering on its counterclaims because those claims were necessarily resolved after the court considered all the arguments and determined that as a matter of law, Hartford had no duty to defend. See Jensen v. Snellings, 841 F.2d 600, 618 (5th Cir. 1988) (entering summary judgment sua sponte when an insurer’s duty to defend was argued at length to the district court). We agree with the district court’s resolution of the duty to defend, and therefore DP Engineering’s counterclaims. DP Engineering’s counterclaims do not address Hartford’s duty to indemnify, which we hold the district court erred in resolving at summary judgment. We AFFIRM the district court’s grant of summary judgment on Hartford’s duty to defend and the district court’s resolution of DP Engineering’s counterclaims related to the duty to defend. We REVERSE the district court’s grant of summary judgment to Hartford on its duty to indemnify and REMAND for further proceedings consistent with this opinion. 13