Duty to Defend Could Be Triggered by Extrinsic Evidence
By Harrison H. Yoss â€˘ Sep 1, 2006
The Texas Supreme Court recently addressed whether there is an extrinsic evidence exception to the eight corners rule. In other words, the court determined whether the duty to defend could be triggered by evidence outside the pleadings themselves. Although the Fifth Circuit has held that there are very narrow exceptions to the eight corners rule, the Texas Supreme Court has never addressed this issue.
In GuideOne Elite Ins. Co. v. Fielder Road Baptist Church, the carrier issued a policy effective 3/31/93 to 3/31/94. The allegations against the insured church were that a youth minister under its direct supervision and control, employed from 1992-1994, sexually molested a minor church member during the time of employment. The trial court, over the church’s objection, permitted discovery regarding the youth minister’s dates of employment as being relevant. The discovery ultimately resulted in a stipulation between the carrier and the church that the youth minister commenced work as a part-time intern on 11/14/91, became a part-time associate on 1/1/92, left the church’s employment on 12/15/92, and never served as, nor was he ever authorized to act as an officer or director of the church. Relying on this stipulation between the parties, the trial court entered a judgment that the carrier owed no duty to defend, and the church appealed. The court of appeals held that the eight corners rule must be strictly applied and reversed the judgment in favor of the carrier.
What is extrinsic evidence? At the supreme court, the carrier argued: (1) the extrinsic evidence primarily related to coverage rather than the merits of the underlying claim; (2) the extrinsic evidence was necessary because the allegations alone were insufficient to determine the duty to defend; and (3) if the evidence related to both coverage and liability, the court should make an exception to the eight corners rules for such mixed/overlapping evidence.
Notably, the Supreme Court specifically recognized that exceptions have been made to the eight corners rule and did not imply or hold that it disagreed that particular situations may require consideration of extrinsic evidence. In fact, the court recognized the Fifth Circuit’s recent pronouncement that if the Texas Supreme Court recognized an exception to the eight corners rule, it would be when it is initially impossible to discern whether coverage is potentially implicated and when extrinsic evidence goes solely to a fundamental issue of coverage which does not overlap with the merits of the underlying case or engage in the truth or falsity of any facts alleged in the underlying lawsuit. Because the youth minister’s dates of employment potentially affected both liability issues and coverage issues, and specifically contradicted pleaded facts, the Supreme Court held that the factual scenario did not present a situation requiring an exception to the eight corners rule.