Claims Denial Law Firm – Intentional Act Or Accidental?

The primary purpose of liability insurance is to cover harms caused by negligence. Thus, an intentional act is not covered.  This is discussed in a 2020, opinion from the Eleventh Court of Appeals.  The opinion is styled, Joe Torres v State Farm County Mutual Insurance Company of Texas.

This is an appeal from a Stowers action against State Farm.  In trial, the jury found that State Farm’s insured, Edward Aguilar, intentionally cause injury to claimant, Joe Torres.  The trial court entered a take nothing judgment in favor of State Farm and this appeal followed.

This case arises out of Aguilar getting drunk, getting into an altercation with Torres, Aguilar getting in his car and leaving the scene, then turning around and running his insured vehicle into Torres.

Torres eventually made a claim with State Farm for injuries he received.  Aguilar’s policy, in relevant part provides up to $30,000 for “bodily injury or property damage for which any covered person becomes legally responsible because of an auto accident.”  However, an exclusion in the policy says, State Farm does “not Provide Liability Coverage for any person … who intentionally causes bodily injury or property damage.”

Torres eventually made a Stowers demand to State Farm.  Other legal actions occurred and they entered into an agreed judgment that provided as follows:


ON THIS, the 21 day of October, 2014, came on to be heard the above entitled and numbered cause, and Plaintiff, State Farm Mutual Automobile Insurance Company of Texas, by and through its attorney of record, and Defendant, Edward Aguilar, appeared by and through his attorney of record; and the parties announced to the Court that all matters and things in controversy between such parties have been compromised and settled in so far as the case styled Cause No. 49216; Joe Prado Torres and Patricia M. Aguilar v. Edward Aguilar; In the 118th District Court in and for Howard County, Texas.

IT IS ORDERED, ADJUDGED AND DECREED by the Court that there is no coverage for the claims of Patricia Aguilar against Edward Aguilar in Cause No. 492163;

IT IS FURTHER ORDERED, ADJUDGED AND DECREED by the Court that State Farm Mutual Automobile Insurance Company will provide coverage for the claims made by Joe Torres in Cause No. 49216 in accordance with the coverages and monetary limits provided;

IT IS FURTHER ORDERED, ADJUDGED AND DECREED by the Court that State Farm Mutual Automobile Insurance Company owes no duty to defend or indemnify Edward Aguilar in Cause No. 49216 from injuries claimed or sustained on July 7 and 8, 2012, by Patricia Aguilar, and that there is no coverage for Edward Aguilar under the then existing State Farm policy for Patricia Aguilar’s claims.

Later, a jury returned a verdict in favor of Torres.  State Farm tendered the $30,000 payment based on the policy limits but Torres rejected the payment.

Torres’s claims against Aguilar proceeded to trial and a verdict was returned in favor of Torres for over a million dollars.  State Farm tendered the $30,000 payment to Torres and it was rejected.  This claim against State Farm under Stowers resulted.

A Stowers cause of action arises when an insurer negligently fails to settle a claim covered by an applicable policy within policy limits.

To prove a Stowers claim, the insured must establish that (1) the claim is within the scope of coverage; (2) a demand was made that was within policy limits; and (3) the demand was such that an ordinary, prudent insurer would have accepted it, considering the likelihood and degree of the insured’s potential exposure to an excess judgment.

This appeal concerns the first element—was Torres’s claim within the scope of coverage of State Farm’s policy?  An insurer has no duty to settle a claim that is not covered under its policy.

The relevant portion of the agreed judgment between State Farm and Aguilar states that “State Farm Mutual Automobile Insurance Company will provide coverage for the claims made by Joe Torres [in the negligence lawsuit]in accordance with the coverages and monetary limits provided.”  Torres asserts that this language bars the trial court from relitigating the issue of coverage because the phrase “will provide coverage” conclusively establishes that State Farm agreed to cover Torres under Aguilar’s Auto Policy.

A Texas liability insurance policy imposes two distinct duties: the duty to defend and the duty to indemnify.  An insurer’s duty to defend its insured is distinct and separate from its duty to indemnify.  Generally, the duty to defend is determined by comparing the facts alleged in the underlying lawsuit with the policy terms without regard to the truth or falsity of the allegations.  Conversely, the duty to indemnify is controlled by the facts actually established in the underlying suit.  Thus, an insurer may have a duty to defend but no duty to indemnify.

Torres relies on the agreed judgment’s use of the word “coverage” to support his claim of collateral estoppel.  “Coverage” can mean one of three things: the duty to defend, the duty to indemnify, or both. Here, the agreed judgment states that State Farm will provide coverage for Torres, but that statement is limited by the words “in accordance with the coverages and monetary limits provided.”  By its reference to the monetary limits, the provision does not bind State Farm to pay any sums in excess of the policy limit of $30,000, which would be the case if Torres’s claim of collateral estoppel were correct.  Furthermore, the provision limits State Farm’s obligations by the “coverages. . . provided,” which indicates that the question of State Farm’s duty to indemnify Aguilar remained to be decided.

The provisions of the agreed judgment pertaining to Patricia’s claims support the Court’s interpretation of the agreed judgment.  The agreed judgment provides that State Farm has no duty to defend or indemnify Aguilar for Patricia’s claims, thereby conclusively addressing State Farm’s liability for her claims.  Conversely, the provision addressing Torres’s claims indicates that State Farm’s liability for his claims will be in accordance with the State Farm policy.

There is no dispute that State Farm’s policy contained an exclusion from coverage if Aguilar acted intentionally.  The question of whether Aguilar acted intentionally was not decided by the agreed judgment in the declaratory judgment action.  Thus, the agreed judgment did not serve as an estoppel to a later determination of coverage based upon the intentional injury exclusion.  Accordingly, the trial court did not err by overruling Torres’s motion to disregard the jury’s finding that Aguilar intentionally injured Torres.

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