July 21st, 2020

US Court of Appeals for the Fifth Circuit Opinions
State Farm Lloyds v. Richards

Docket: 18-10721
Opinion Date: July 20, 2020
Judge: Per Curiam
Areas of Law: Insurance Law, Personal Injury

State Farm filed suit seeking a declaratory judgment that it had no duty to defend or indemnify the insureds in the underlying action. In the underlying action, Jayden Meals' mom filed a personal injury suit against his paternal grandparents, the insureds, after Jayden, who was 10 years old, died in an ATV accident. The district court found that the extrinsic evidence satisfied both the motor-vehicle exclusion and the insured exclusion. The Fifth Circuit certified a question of Texas law to the Texas Supreme Court, which answered that the policy-language exception to the eight-corners rule is not a permissible exception under Texas law. Therefore, the district court erred by applying the policy-language exception in this case. The court held that the eight-corners rule applies here; the underlying third-amended complaint contains allegations within its four corners that potentially constitute a claim within the four corners of the policy; and thus the court reversed the district court's holding that State Farm does not have a duty to defend the insureds. The court stated that State Farm has a duty to defend, so the exception to non-justiciability does not apply. Because the underlying suit remains pending, the court reversed the district court's holding that State Farm has no duty to indemnify.

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