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Employers Casualty Co. v. Block

Supreme Court of Texas

February 24, 1988, Decided

No. C-6224



Our opinion of January 6, 1988 is withdrawn and the following is substituted.

This case involves a claim for insurance proceeds resulting from an alleged breach of an insurance contract. The trial court granted the homeowners' motion for directed verdict in regard to the insurer's wrongful failure to defend, but granted the insurer's motion for judgment notwithstanding the verdict and rendered a take-nothing judgment against the homeowners. A divided court of appeals reversed and rendered, holding that once the issue of wrongful failure to defend was determined against the insurer, the agreed judgment between the insured and the homeowners could not be collaterally attacked. Further, the court of appeals held that the insurer was precluded from contesting liability based upon a coverage question because it failed to affirmatively plead that the damaging event did not occur during the policy period. 723 S.W.2d 173. For reasons different from those expressed [**2]  by the court of appeals, we affirm.

In 1977, Coating Specialists Inc. (CSI) installed a monoflex roof on a house in San  [*942]  Antonio, Texas. George and Margie Block purchased the home in February 1978. In August of 1979, the Blocks discovered that the roof was leaking. CSI repaired the roof and resprayed it with plastic coating between September and November of 1979. No further leaking problems occurred until August 1980 when hurricane Allen caused heavy rainfall in the San Antonio area. Although the Blocks subsequently had their roof inspected and tried to have the leaking stopped, they were unsuccessful. In August of 1981, an inspector informed them that the roof needed to be repaired due to leaks which had allowed water to collect in the insulation and exterior walls of their house.

In June of 1982, the Blocks brought an action against CSI under the Deceptive Trade Practices Act and for breach of express and implied warranties. CSI had a Texas multi-peril policy of insurance issued by Employers Casualty Company (Employers Casualty). The policy insured CSI for property damage occurring between August 1, 1980 and August 1, 1981. CSI notified Employers Casualty of the suit,  [**3]  but Employers Casualty refused to defend on the ground that the damaging event had not occurred during the policy period.

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744 S.W.2d 940 *; 1988 Tex. LEXIS 22 **; 31 Tex. Sup. J. 245

Employers Casualty Company, Petitioner v. George Block, et ux., Respondents

Prior History:  [**1]   FROM BEXAR COUNTY FOURTH DISTRICT. Opinion of January 6, 1988 Withdrawn and Substituted.


damages, coverage, collateral, court of appeals, insurer, policy period, trial court, recited, leaking, roof, judgments, employees, hurricane, estoppel

Civil Procedure, Preclusion of Judgments, Estoppel, Collateral Estoppel, Judgments, General Overview, Appeals, Appellate Jurisdiction, Collateral Order Doctrine, Pleadings, Heightened Pleading Requirements, Insurance Law, Business Insurance, Commercial General Liability Insurance, Property Claims, Labor & Employment Law, Employer Liability, Third Party Insurers, Exclusions, Pleading & Practice, Rule Application & Interpretation, Damages, Trials, Jury Trials, Province of Court & Jury