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Click here for the full text of this decision FACTS:In 1997, Catherine and William Barrows hired a nanny from Loving Home Care Inc., owned by Sheila and Ronnie Daniels. The nanny, Celia Giral, was officially employed by LHC as she worked for the Barrows. Several weeks after she began work, the Barrows 3-month-old daughter died while in Giral’s care. The coroner found the girl’s death to be a homicide, and Giral was convicted by a state court of first-degree felony injury to a child. She was sentenced to seven years in prison. The Barrows filed a lawsuit against LHC and the Daniels. In their initial pleadings, the Barrows referred to Giral’s intentional and criminal conduct. Their third amended petition, which was their live petition, referred only to Giral’s negligent conduct in dropping and/or shaking the baby girl, causing her death. The pleading stated that the child’s death was proximately caused by LHC and the Daniels. The Daniels requested defense and indemnification from Northfield Insurance Co., under the commercial general liability (CGL) policy issued by the insurer. Northfield refused both requests, citing the “designated professional services” exclusion of the CGL. Northfield also refused under the commercial professional liability (CPL) policy issued to the Daniels and LHC because of two exclusions, one for “criminal acts” and one for “physical/sexual abuse.” The district court granted Northfield’s summary judgment on the CGL policy, but denied its motion on the CPL policy. Ultimately, the district court entered a declaratory judgment that Northfield had a duty to defend LHC and the Daniels under the CPL. HOLDING:Affirmed. The court first establishes that the Texas Supreme Court has recently stated in King v. Dallas Fire Ins. Co., 85 S.W.3d 185 (Tex. 2002), that “[a]n insurer’s duty to defend is determined solely by the allegations in the pleadings and the language of the insurance policy,” that is, the “eight corners” doctrine. The duty to defend is determined by consulting the latest amended pleading, the court adds. After the insured meets his burden to show that the petition states a potential claim against him, the insurer has a duty to defend unless it can show that the plain language of a policy exclusion or limitation allows the insurer to avoid coverage. In both cases, the parties are limited to the eight corners of the pleading and the policy. The court notes, however, that the duty to indemnify is based on the actual facts underlying the cause of action, not on facts alleged in a petition. Generally, though, Texas law considers questions on the duty to indemnify after the underlying suit is concluded unless the same reasons that would negate a duty to defend would likewise negate a duty to indemnify. The court adds that the Texas Supreme Court has never recognized an exception to the eight-corners rule that would allow courts to examine extrinsic evidence when determining an insurer’s duty to defend. State Farm Fire & Casualty Co. v. Wade, 827 S.W.2d 448 (Tex.App. � Corpus Christi 1992, writ denied), is the last Texas appellate case to apply an exception. In light of the courts’ “unwavering unwillingness” to apply any attempts to broaden the narrow exemption of Wade, the court surmises that the Texas Supreme Court would not recognize any exception to the strict eight-corners rule. “However, in the unlikely situation that the Texas Supreme Court were to recognize an exception to the strict eight corners rule, we conclude any exception would only apply in very limited circumstances: when it is initially impossible to discern whether coverage is potentially implicated and when the extrinsic evidence goes solely to a fundamental issue of coverage which does not overlap with the merits of or engage the truth or falsity of any facts alleged in the underlying case.” The extrinsic evidence Northfield wanted the district court to look at is evidence of Giral’s criminal conviction and the autopsy report stating that the baby’s death was murder. This evidence, Northfield says, establishes as a matter of law that the Barrows’ injury arose from a criminal act and/or physical abuse. The court finds the district court properly refused Northfield’s request because the petition alleged facts sufficient to trigger coverage. No need for an exception to the eight-corners rule existed. The court acknowledges Northfield’s complaint that the Barrows’ third petition was “artful pleading” designed to keep the criminal and intentional allegations out, but the court again stresses that previous versions of petitions are not to be considered. The court adds that even if the extrinsic evidence could be let in, this particular evidence overlaps with the allegations in the negligence suit; it doesn’t disprove them. The court agrees that when the district court found a duty to defend, then the question about the duty to indemnify became non-jusiticiable. “That is, the district court was only going to find lack of a duty to indemnify if it found lack of a duty to defend because Texas law generally prohibits the determination of the duty to indemnify before the conclusion of the underlying suit against the insured.” OPINION:DeMoss, J.; Reavley, Davis, and DeMoss, JJ.

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