Dallas Fort Worth Insurance Lawyer Blog
Duncanville insurance attorneys need to know how the Texas Insurance Code and the Texas Deceptive Trade Practices Act (DTPA) interact. A United States 5th Circuit Court of Appeals case from 2008 discusses this a little bit. The style of the case is, National Union Fire Insurance Company v. Puget Plastics Corp. Here is some of the relevant information to try and understand.
In the underlying lawsuit, a jury found that Puget Plastics Corp. and Puget Plastics Corp. SA DE CV (Puget) knowingly violated the Texas DTPA in their business dealings with Intervenor, Microtherm, Inc. After the trial, both parties and the primary insurance carrier mediated the case and reached a settlement. The insured assigned its rights against National Union as part of the settlement.
National Union filed a declaratory judgement action in federal court. On cross motions for summary judgment, the trial court found against National Union. National Union appealed.
The finding of the violations of the DTPA does not mean that the claim is excluded. “This argument is unavailing because all we can definitively conclude from the jury’s findings is that Puget’s actions were deliberate. The jury made no determination as to: (1) whether Puget intended or expected the harm Microderm ultimately suffered or (2) whether this harm was highly probable. Moreover, we cannot presume that Puget intended Microderm’s injuries because knowing violations of the DTPA are not intentional torts.”
The Court stated: “In sum, National Union would have us find that any knowing misconduct cannot constitute an accident-however improbable the damages turn out to be. Because case law precludes this result, we reject it here. Accordingly, the jury’s findings do not bar Puget from establishing an occurrence as a matter of law.”
In addition, the Court found that the carrier bears the burden of proof to establish that an exclusion is applicable.
Finally, the insured may present evidence at the coverage trial that was not adjudicated in the underlying case. The underlying case often does not resolve all the factual issues necessary to determine coverage because issues relevant to the question of coverage can be irrelevant to the question of the insured’s liability.
This case is getting in the weeds to a certain extent about the different matters to be proved up in the DTPA claim and the matters to be proved up in the Insurance Code claim.