A San Antonio federal magistrate judge recently examined the duty to defend and the limits of the eight-corners rule when it comes to pleading an occurrence potentially within the policy period.  Bitco Gen. Ins. Corp. v. Monroe Guar. Ins. Co., SA18CV00325FBESC, 2019 WL 3459248 (W.D. Tex. July 31, 2019) (slip op.) involved allegations that an irrigation well drilled into the Edwards Aquifer was improperly drilled and became useless.  The pleading against the insured mentioned the date the parties initially contracted to drill the well and the date the insured invoiced the claimant for its services, but no other dates of any of the events complained of. In this coverage suit, the insurer argued it had no duty to defend, and sought to introduce extrinsic evidence proving the property damage complained of occurred before its policy period.

The insurer sought to pierce the eight-corners rule and introduce additional evidence showing the parties had stipulated the drill bit became stuck on a date before the insurer’s policy inception date. The magistrate judge recognized the limited exception to the eight-corners rule that has been hinted at by the Supreme Court of Texas and openly acknowledged by some other courts, but concluded that in this case, the extrinsic evidence could not be considered because it only established the date the drill bit became stuck and was not dispositive of the coverage issue.  There were other allegations of wrongdoing by the insured that resulted in property damage, and the extrinsic evidence offered did not resolve when those occurred.  Therefore, the court rejected the extrinsic evidence and worked solely from the dates mentioned in the petition and the date suit was filed against the insured.  The magistrate judge concluded the property damage could have occurred at any time in that interval, and the interval included the insurer’s policy period, triggering a duty to defend.

The magistrate judge then went on to reject the insurer’s contention that the improperly drilled well was excluded by Exclusion J.  Because there were allegations the insured’s actions had damaged not only the well, but also the Edwards Aquifer itself, the allegations went beyond any exclusion pertaining to the insured’s work or damage to property the insured had worked on.

Editor’s Note: This result is consistent with existing Texas law suggesting that as a general rule, “less is more” when drafting a pleading that will trigger an insurer’s duty to defend, at least when it comes to pleading dates. Savvy attorneys looking for coverage to fund their clients’ claims generally include few or no dates in their pleadings, in the hope of triggering multiple insurers to join the defense. However, pleading gamesmanship cannot create a duty to indemnify, and the parties in this case recognized that point of law. But sometimes, the gamesmanship can bite you…

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