Monroe Guar. Ins. Co. v. BITCO Gen. Ins. Corp.

Monroe Guar. Ins. Co. v. BITCO Gen. Ins. Corp.

Opinion

This insurance coverage dispute presents two certified questions from the United States Court of Appeals for the Fifth Circuit. The ultimate issue in the case is whether Monroe Guaranty Insurance Company owed its insured a duty to defend a suit in which the plaintiff alleged that the insured negligently drilled an irrigation well, damaging the plaintiff's land. The certified questions relate to a subsidiary [*2]  issue: whether Texas law permits consideration of stipulated extrinsic evidence to determine whether the duty to defend exists when the plaintiff's pleading is silent about a potentially dispositive coverage fact.

The Fifth Circuit asks, first, whether the Northfield exception to the "eight-corners rule" is permissible under Texas law. See Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523 (5th Cir. 2004). ] Some Texas appellate courts and some federal courts applying Texas law, relying on Northfield or a similar test, consider extrinsic evidence bearing solely on coverage facts when the eight-corners analysis, due to gaps in the plaintiff's pleading, is not determinative of whether coverage exists. We hold this practice is permissible under Texas law provided the extrinsic evidence (1) goes solely to the issue of coverage and does not overlap with the merits of liability, (2) does not contradict facts alleged in the pleading, and (3) conclusively establishes the coverage fact to be proved.

] The second certified question asks whether the date of an occurrence is a type of extrinsic evidence that may be considered when these requirements are satisfied. Because we do not adhere to Northfield's requirement that extrinsic evidence may be considered only to determine "fundamental" coverage [*3]  issues, we answer "yes" but conclude that the stipulation offered in this case may not be considered because it overlaps with the merits of liability.

I. Background

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