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Texas, like most states, follows a complaint allegation rule, determining a duty to defend by comparing the allegations of the petition to the terms of the policy. The facts, not the causes of action, determine coverage: if a claim is potentially within coverage, a duty to defend is triggered. The complaint allegation rule is harder to apply, however, in the context of personal and advertising injury coverage provided under Coverage B.

Because Coverage B is limited to enumerated offenses, rather than any damage resulting from an occurrence, there has been ongoing debate about whether a petition must specifically plead the offense (libel, slander, invasion of privacy, etc.), or whether it is sufficient to allege facts which could give rise to liability for an enumerated offense, even if not pleaded. Courts across the country have split on this issue. In a recent opinion, the Fifth Circuit, applying Texas law, staked out new territory, concluding that a petition alleging the elements of an offense listed under Coverage B gave rise to a duty to defend even if the covered cause of action was not alleged in the pleading. In St. Paul Fire & Marine Ins. Co. v. Green Tree Financial Corp.,No. 00-10237, (5th Cir., April 23, 2001) the court concluded that a suit for unfair debt collection practices, which included allegations of harassing conduct toward the debtor, sufficiently alleged the elements of an invasion of privacy claim, and therefore invoked a duty to defend under Coverage B.

The impact and precedential value of this case has not yet been determined. It should be noted that the umbrella policy language at issue was not standard and did not include exclusions that might have precluded coverage under Coverage B. Nevertheless, it raises the specter of expanded and unanticipated coverage for a number of commercial torts and statutory violations that may incidentally include the elements of enumerated offenses within Coverage B.

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