Court Opinion

ID: 9784132
Source: CourtListenerOpinion
Date Created: 2023-08-30 20:38:22.225758+00
Date Added: 2024-06-11T07:35:49.386335
License: Public Domain

KEM THOMPSON FROST, Justice,
dissenting.
Under Texas law, the eight-corners rule is used to determine whether an insurer has a duty to defend. The Supreme Court of Texas has never recognized an exception to this rule, and in several cases, our high court has pronounced that if it were ever to recognize an exception to this rule it would do so only within a very narrow set of circumstances. Under these cases, this court may not recognize an exception to the eight-corners rule outside the context specified by the Supreme Court of Texas. Because the case under review does not fit within this context, the majority errs in recognizing an exception to this important rule of Texas jurisprudence.
General Principles of the Eight-Corners Rule
In determining a duty to defend, Texas courts follow the eight-corners rule, also known as the complaint-allegation rule: “‘an insurer’s duty to defend is determined by the third-party plaintiffs pleadings, considered in light of the policy provisions, without regard to the truth or falsity of those allegations.’ ” Zurich American Ins. Co. v. Nokia, Inc., 268 S.W.3d 487, 491 (Tex.2008) (quoting Guideline Elite Ins. Co. v. Fielder Road Baptist Church, 197 S.W.3d 305, 308 (Tex.2006)). Thus, “‘[e]ven if the allegations are groundless, false, or fraudulent the insurer is obligated to defend.’ ” Id. (quoting 14 Couch on Insurance § 200:19). We resolve all doubts regarding the duty to defend in favor of the existence of a duty, and we construe the pleadings liberally. Id. If the petition does not contain factual allegations sufficient to clearly bring the underlying case within or without the coverage, the general rule is that the insurer is obligated to defend if, potentially, there is a case under the petition within the coverage of the policy. Id. The duty to defend is not affected by facts ascertained before suit or developed in the course of litigation, or by the ultimate outcome of the suit. Id. If a petition potentially includes a covered claim, the insurer must defend the entire suit. Id.
Despite various requests over the years to recognize exceptions to the eight-corners rule, the Supreme Court of Texas has never done so.1 See Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co., 279 S.W.3d 650, 654-56 (Tex.2009). Though, as explained below, our high court discussed in GuideOne the possibility of recognizing an exception to this rule, it did *872not do so, and our high court has continued to emphasize the importance of adherence to the eight-corners rule. See Burlington Northern and Santa Fe Ry. Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 334 S.W.3d 217, 219 (Tex.2011) (stating that “the determination as to duty to defend is according to the eight-corners rule wherein only the pleadings and the policy language are considered”); D.R. Horton-Texas Ltd. v. Market Int’l Ins. Co., 300 S.W.3d 740, 744 (Tex.2009) (stating that the “analysis of the duty to defend has been strictly circumscribed by the eight-corners doctrine”); Nokia, Inc., 268 S.W.3d at 497 (stating that “while Maryland has recognized exceptions, in some limited circumstances, to the eight-corners rule, Texas has not”) (quotations omitted); GuideOne Elite Ins. Co., 197 S.W.3d at 308-11 (discussing possibility of adopting exception to eight-corners rule); King v. Dallas Fire Ins. Co., 85 S.W.3d 185, 187 (Tex.2002) (stating that “[a]n insurer’s duty to defend is determined solely by the allegations in the pleadings and the language of the insurance policy”).

Judicial Dicta as to Any Potential Exception to the Eight-Corners Rule

In GuideOne, the Supreme Court of Texas held that it would not recognize an exception to the eight-corners rule under the circumstances of that case, which are not the same circumstance as those in the case under review. See GuideOne Elite Ins. Co., 197 S.W.3d at 308-11. Nonetheless, beyond this holding, the GuideOne court made deliberate statements for future guidance in the conduct of litigation. See Edwards v. Kaye, 9 S.W.3d 310, 314 (Tex.App.-Houston [14th Dist.] 1999, pet. denied). These statements are judicial dicta binding on this court. See id.
According to the United States Court of Appeals for the Fifth Circuit, the teaching of GuideOne is that, though the Supreme Court of Texas may never recognize an exception to the eight-corners rule, if it were to recognize an exception, it would do so only in the narrow circumstance in which “ ‘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.’ ” Liberty Mut. Ins. Co. v. Graham, 473 F.3d 596, 600-601 (5th Cir.2006) (quoting GuideOne Elite Ins. Co., 197 S.W.3d at 309, and applying Texas law). After the Fifth Circuit decided Graham, the Supreme Court of Texas, in the Nokia case, embraced this characterization of GuideOne. See Nokia, Inc., 268 S.W.3d at 497-98. The Nokia court described the foregoing narrow situation in which an exception to the eight-corners rule might be recognized. See id. at 497. The court then concluded that, even if the extrinsic evidence in Nokia pertained solely to coverage, the circumstances in Nokia did not fit within the narrow situation in which an exception might be granted because it was not “ ‘initially impossible to discern whether coverage is potentially implicated.’ ” Id. at 498 (quoting GuideOne Elite Ins., 197 S.W.3d at 309).
The Supreme Court of Texas’s opinion in Pine Oak Builders, Inc. also supports this reading of GuideOne. See Pine Oak Builders, Inc., 279 S.W.3d at 654-55. In Pine Oak Builders, the high court concluded that the potential exception to the eight-corners rule mentioned in GuideOne did not apply because the proffered extrinsic evidence contradicted allegations of the underlying petition. See id.
*873In the case under review, the majority concludes that, under GuideOne, the following circumstances must be present before the Supreme Court of Texas might consider an exception to the eight-corners rule: “the extrinsic evidence must go strictly to an issue of coverage without contradicting any allegation in the third-party claimant’s pleadings material to the merits of that underlying claim.” Ante at p. 865. Though parts of the GuideOne opinion examined in isolation might lead to the conclusion the majority reaches today, subsequent supreme court decisions have clarified that the situation in which the supreme court might recognize an exception are more constricted than the majority recognizes. See Pine Oak Builders, Inc., 279 S.W.3d at 654-55; Nokia, Inc., 268 S.W.3d at 497-98; GuideOne Elite Ins. Co., 197 S.W.3d at 308-10. Under current law, the Supreme Court of Texas will not consider an exception to the eight-corners rule unless “ ‘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.’ ” Nokia, Inc., 268 S.W.3d at 497 (quoting GuideOne Elite Ins. Co., 197 S.W.3d at 309). The majority misses the mark in its description of the circumstances under which the Supreme Court of Texas might consider an exception to the eight-corners rule.

This Case Does Not Fall With the Potential Narrow Exception Described by the Supreme Court of Texas

For several reasons, the circumstances of the case under review do not fall within the narrow situation described by the Supreme Court of Texas as a potential exception to the eight-corners rule. In her pleadings in the underlying case, Connie Johnson alleged that Weingarten Realty Management Company owned the real property on which she was assaulted and that Weingarten had leased the store location to Johnson’s employer at the time of the robbery and assault. Johnson also alleged that Weingarten (1) was in control of the premises on which Johnson’s injuries occurred when she sustained these injuries, (2) knew that the area was filled with crime, was extremely dangerous, and required security measures, (3) knew of numerous incidents shortly before the incident forming the basis of the Johnson’s lawsuit, but took no action to provide for the safety of those who were working at the store or in the shopping center in which the store was located, (4) failed to provide lighting in the parking lot and common areas outside of the store where Johnson worked, (5) failed to provide adequate security for the commercial center in the evenings, and (6) allowed two large concrete pillars to obstruct the view from inside the store of persons who could be laying in wait. Johnson alleged that Wein-garten’s tortious conduct proximately caused Johnson’s damages. Johnson asserted various claims including a negligence claim based on premises liability. Under the allegations in the underlying lawsuit, it is not initially impossible to discern whether coverage is potentially implicated. On this basis, alone, the situation in the case under review does not fit within the circumstances under which the Supreme Court of Texas might consider an exception to the eight-corners rule. See Nokia, Inc., 268 S.W.3d at 497-98; Graham, 473 F.3d at 603.
Furthermore, the extrinsic evidence in the case under review shows that Weingar-ten was not the lessor of the premises in question at any time material to Johnson’s claims. But this extrinsic evidence contradicts the allegation in Johnson’s petition *874that Weingarten was the lessor of the premises at the time of the occurrence made the basis of Johnson’s suit. Therefore, the potential exception does not apply because the extrinsic evidence engages the truth or falsity of a fact alleged in the underlying case. See Pine Oak Builders, Inc., 279 S.W.3d at 654-55.
Finally, the extrinsic evidence showing that Weingarten was not the lessor of the premises in question overlaps with the merits. Johnson alleged that Weingarten owned, leased, and yet still controlled the premises in question when she was robbed and assaulted. A landlord who retains the right to control the security and safety of the premises owes a duty to a tenant’s employees to use ordinary care to protect the employees against an unreasonable and foreseeable risk of harm from the criminal acts of third parties. See Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex.1995); Exxon Corp. v. Tidwell, 867 S.W.2d 19, 22-23 (Tex.1993). The terms of the lease and Weingarten’s status as a lessor are relevant to the issue of whether Weingarten retained the right to control the security and safety of the premises. See Tidwell, 867 S.W.2d at 22-23. In addition, if, as alleged by Johnson, Weingarten was the lessor of the premises when she was robbed and assaulted, then Weingar-ten would be an insured under Liberty Mutual’s insurance policy. Therefore, the extrinsic evidence does not go solely to coverage; instead, the extrinsic evidence touches upon both coverage and the merits of the underlying case.2 See GuideOne Elite Ins., 197 S.W.3d at 310.
The majority relies upon the opinion in Blue Ridge Insurance Company v. Hanover Insurance Company, in which a federal district court concluded that “[t]he status of ‘insured’ is to be determined by true facts, not false, fraudulent, or otherwise incorrect facts that might be alleged by a personal injury claimant.” 748 F.Supp. 470, 473 (N.D.Tex.1990). But, in Graham, the trial court expressly relied upon this legal standard from Blue Ridge and held that there was an exception to the eight-corners rule because the extrinsic evidence showed that the party alleging a duty to defend was not an insured under the policy. See Liberty Mut. Ins. Co. v. Graham, 407 F.Supp.2d 808, 813-14 (N.D.Tex.2005), rev’d, 473 F.3d 596 (5th Cir.2006). On appeal, the Fifth Circuit held that there was a duty to defend based upon the legal standard from GuideOne, which is significantly different than the legal standard followed in Blue Ridge. Compare Graham, 473 F.3d at 600-601, with Blue Ridge Ins. Co., 748 F.Supp. at 473. Therefore, though the Fifth Circuit in Graham did not expressly disapprove of the Blue Ridge legal standard, it impliedly disapproved of the Blue Ridge legal standard in favor of the legal standard from GuideOne. See Graham, 473 F.3d at 600-603.3
It is possible to discern whether coverage is potentially implicated by Johnson’s petition. The extrinsic evidence overlaps with the merits of Johnson’s claims and engages the truth or falsity of a fact alleged by Johnson. Therefore, this case does not fall within the situation under *875which the Supreme Court of Texas might recognize an exception to the eight-corners rule. See Pine Oak Builders, Inc., 279 S.W.3d at 654-55; Nokia, Inc., 268 S.W.3d at 497-98; GuideOne Elite Ins., 197 S.W.3d at 309. For this reason, the trial court erred in granting Liberty Mutual’s motion for summary judgment and in ruling that Liberty Mutual had no duty to defend as a matter of law. Because this court affirms the trial court’s summary judgment, I respectfully dissent.

. Before today, the Fourteenth Court of Appeals had not recognized any such exceptions either.

. The terms of the lease and Weingarten's status as a lessor are material to the merits of Johnson’s negligence claim. See Centeq Realty, Inc., 899 S.W.2d at 197; Tidwell, 867 S.W.2d at 22-23. Thus, the circumstances of this case also do not satisfy the legal standard followed by the majority.

. In addition, following the Supreme Court's GuideOne opinion, the First Court of Appeals determined whether a party fell within the definition of "insured” under an insurance policy based upon the allegations in the underlying petition. See AccuFleet, Inc. v. Hartford Fire Ins. Co., 322 S.W.3d 264, 271-72 (Tex.App.-Houston [1st Dist.] 2009, no pet.).