DATE OF INJURY NEED NOT BE PLED IN UNDERLYING PETITION TO TRIGGER DUTY TO DEFEND ACCORDING TO HOUSTON COURT OF APPEALS

January 16, 2012

Two weeks ago, Houston’s Fourteenth Court of Appeals determined that GEICO owed a duty to defend to Austin Power, Inc. for an underlying asbestos-exposure tort suit.  Geico General Ins. Co. v. Austin Power Inc., 2012 WL 27697 (Tex.App.—Houston [14th Dist.], Jan. 5, 2012),  Austin Power had successfully defended the underlying suit, winning a summary judgment.  GEICO, however, had refused to defend it. In the coverage suit, the parties stipulated that Austin Power incurred $54,706.67 in attorney's fees and costs in defending the underlying case.  The only issue for the court was whether the underlying petition triggered GEICO’s duty to defend under a CGL policy issued from December 1, 1969 to December 1, 1970.  The underlying petition was silent as to the date of any injury.

The court rejected GEICO’s argument that the underlying petition’s silence did not trigger the duty to defend.  Instead, the court applied a strict version of the eight-corners rule, comparing only the pleadings to the policy.  In doing so, the court found that it was possible the underlying claim arose during the policy period.  The court thus rejected GEICO’s arguments that construing the petition in such a way was “inferring” a claim in the petition that had not been made.  The court determined that GEICO owed Austin Power a defense.