Allstate County Mutual Insurance Co. v. Wootton

494 S.W.3d 825, 2016 Tex. App. LEXIS 3155, 2016 WL 1237872
CourtCourt of Appeals of Texas
DecidedMarch 29, 2016
DocketNO. 14-14-00657-CV
StatusPublished
Cited by11 cases

This text of 494 S.W.3d 825 (Allstate County Mutual Insurance Co. v. Wootton) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allstate County Mutual Insurance Co. v. Wootton, 494 S.W.3d 825, 2016 Tex. App. LEXIS 3155, 2016 WL 1237872 (Tex. Ct. App. 2016).

Opinion

OPINION

Kem Thompson Frost, Chief Justice

This appeal arises out of a dispute between an insurer and its insureds as to the insurer’s duty to defend. We must determine whether the trial court erred in granting summary judgment and declaring as a matter of law that (1) the insurer must defend its insureds in the underlying suit and (2) the insureds have the right to select their defense counsel and require the insurer to. pay that counsel’s reasonable and necessary attorney’s fees. We conclude that the trial court did not err in granting summary judgment as- to the duty to defend but that the trial court erred in granting summary judgment regarding the. insureds’ right to select defense counsel and compel the insurer to pay that counsel’s fees. Accordingly, we affirm in part and reverse and remand in part.

I. Factual and Procedural Background

In June 2010, Juan Gonzalez, Sr. filed suit against his son, Juan Gonzalez, Jr., and appellees/plaintiffs Bobby Wootton and Mary Wootton, d/b/a M. Wootton Construction (hereinafter the “Woottons”), seeking to recover damages resulting from Gonzalez, Jr.’s alleged negligence in operating a truck, which allegedly caused a collision in which Gonzaiez, Sr. sustained personal injury (hereinafter the “Underlying Suit”). Gonzalez, Sr. alleged that the Woottons owned the truck at the time of the collision and that they were responsible for Gonzalez, Jr.’s negligence in operate ing the truck. Gonzalez, Sr., also alleged the elements of a negligent-entrustment claim.

[828]*828 Personah-Injury Plaintiffs Claim under the Policy

Before filing suit, Gonzalez, Sr. made a claim under a Business Auto Policy issued to the Woottons by appellant/defendant Allstate’County Mutual Insurance Company (hereinafter the “Policy”). Allstate responded by , denying liability coverage for Gonzalez, Sr.’s claim under the Policy.

Defense of the Underlying Suit

After Gonzalez, Sr. sued the Woottons, they tendered defense of the Underlying Suit to Allstate under the Policy. In response, Allstate retained an attorney to defend the Woottons in the Underlying Suit and sent a reservation-of-rights letter to the Woottons. In addition to reserving its rights to withdraw a defense in the future and to deny coverage, Allstate informed the Woottons that they had the right to retain a different attorney, to represent them in the Underlying Suit but that the Woottons would have to do so at their own cost.

Declaratory-Judgment Claims

The Woottons wanted to retain an attorney of their choosing and have Allstate pay that attorney’s reasonable and necessary attorney’s fees. Therefore, the Woottons filed this declaratory-judgment suit against Allstate, asking the trial court to declare that Allstate is obligated to defend the Woottons in the Underlying Suit through counsel of their choice. In addition to seeking declaratory relief, the Woottons requested reasonable and necessary attorney’s fees under section 37.009 of the Civil Practice and Remedies Code, which governs awards of such fees and other costs under the Declaratory Judgments Act.

Allstate ' ■' filed declaratory-judgment counterclaims against the Woottons, .seeking a declaration that Allstate had no duty to defend the Woottons for the claims against them in the Underlying Suit. Allstate asserted that Gonzalez, Sr. and Gonzalez, • Jr. 'were acting in the course and scope of their employment with the Woot-tons at the time of the collision made the basis of the Underlying Suit and that therefore three exclusions in the Policy eliminated-any duty to defend the Woot-tons.1

Cross-Motions for Summary Judgment

The Woottons filed a motion for traditional' summary judgment, asserting the following grounds: (1) the summary-judgment evidence proves as a matter of law that Allstate has a duty to' defend the Woottons in the Underlying Suit;'- (2) as a matter of law, the eight-corners rule, as applied to the Policy and Gonzalez, Sr.’s pleading in the Underlying Suit, imposes on Allstate a duty to defend the Woottons in the Underlying Suit;' and (3) because of issues regarding the respondeat-superior theory in the Underlying Suit, the attorney Allstate chose to defend the Woottons labors under a potential conflict of interest, and therefore the Woottons have the right to select an attorney to represent them and to require that Allstate pay the attorney’s reasonable and necessary attorney’s fees in the Underlying Suit. The Woottons sought a summary judgment awarding them declaratory relief as well as reasonable and necessary attorney’s fees for pursuing their declaratory-judgment claims.

Allstate filed a cross-motion for traditional summary judgment, seeking a declaration that Allstate owes no duty to defend [829]*829the Woottons in the Underlying Suit. Allstate asserted that an exception to the eight-corners rule applies. According to Allstate, after considering extrinsic- evidence showing that Gonzalez, Sr. and Gonzalez, Jr. were acting within the course and scope of their employment with the Woottons at the time of the collision that gave rise to the Underlying Suit, three exclusions in the Policy demonstrate that Allstate has no duty to defend the Woot-tons. In its summary-judgment motion, Allstate did not seek summary judgment as to the Woottons’ request for a declaration that the Woottons - have the right to select an attorney to represent them in the Underlying Suit and to have Allstate pay that attorney’s reasonable and necessary attorney’s fees.

Trial Court’s Rulings ■

The trial court signed an interlocutory summary judgment in which the court (1) granted the Woottons’ summary-judgment motion,' (2) denied Allstate’s summary-judgment motion, (3) ordered that Allstate must provide the Woottons a defense in the Underlying Suit, (4) ordered that the Woottons have the right to select the attorney to defend them in the Underlying Suit and that Allstate shall pay that attorney’s reasonable and necessary attorney’s fees and expenses incurred in this defense; and (5) awarded the Woottons reasonable and necessary attorney’s fees and costs on their declaratory-judgment claims as well as conditional appellate attorney’s fees.

Allstate filed a motion for reconsideration of the court’s summary-judgment order and attached to the motion excerpts from the depositions of Gonzalez, Sr. and Gonzalez, Jr., both of which were taken after the trial court signed the summary-judgment order. ° Allstate filed a supplement-to this motion that included the transcript of Bobby Wootton’s deposition. The trial court denied Allstate’s reconsideration motion.

Settlement of the Underlying Suit and Appeal of Summary-Judgment Order

Allstate settled the Underlying Suit on behalf of the Woottons and Gonzalez, Jr., and Allstate nonsuited certain claims.in the case under review.2 After the summary-judgment order became final, Allstate perfected this appeal. 1

II. Issues and Analysis

In its first appellate issue,-Allstate asserts that an exception to the eight-corners rule allows courts to consider extrinsic evidence in determining whether Allstate has a duty to defend. Allstate urges that upon considering extrinsic evidence, this court should reverse the trial court’s finding that Allstate has a duty to defend the Woottons' in the Underlying Suit.

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Bluebook (online)
494 S.W.3d 825, 2016 Tex. App. LEXIS 3155, 2016 WL 1237872, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allstate-county-mutual-insurance-co-v-wootton-texapp-2016.