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Click here for the full text of this decision FACTS:The automobile liability policy in this case obligated the insurer, Northern County Mutual Insurance Co., to provide a defense for covered claims and granted the insurer the right to conduct that defense. The insured, Timoteo Davalos, however, refused the insurer’s tendered defense because of a disagreement about where the case should be defended. The court of appeals concluded that this is a sufficient reason for the insurer to lose its right to conduct the defense, while still remaining obligated to pay for it. HOLDING:Reversed and rendered. Every disagreement about how the defense should be conducted cannot amount to a conflict of interest within the meaning of State Farm Mut. Auto. Ins. Co. v. Traver, 980 S.W.2d 625 (Tex. 1998). If it did, the insured, not the insurer, could control the defense by merely disagreeing with the insurer’s proposed actions. “This is not what the court contemplated in Traver.” Northern’s actions did not actually deprive Davalos of the defense attorney’s independent counsel on any issue. Davalos did not ask Northern to provide a defense until after his own personal attorneys had filed an answer and moved to transfer venue. Northern nevertheless agreed to defend, asking that its named attorney be substituted as record counsel and that Davalos’ personal attorneys withdraw and not pursue the motion to transfer venue. Northern also asked that Davalos act expeditiously to transfer the defense to the new attorney. Davalos did not respond for several weeks and ultimately refused to accept the defense. If he had accepted the defense, he could have submitted the issue of venue or any other issue to defense counsel for an independent determination. Under Traver, that lawyer owes unqualified loyalty to the insured, and must at all times protect the interests of the insured if those interests would be compromised by the insurer’s instructions. Of course, it is difficult to imagine a set of circumstances in which a choice of venue might amount to a disqualifying conflict of interest. The county where a covered claim should be defended is a strategic litigation decision that must be made in conducting the insured’s defense. The choice of venue should ordinarily have no impact on the insured’s legitimate interests under the policy. In this case, Davalos chose to reject Northern’s tender and conduct his own defense because he really did not want the case defended in Dallas County. That was his right. But having rejected the insurer’s defense without a sufficient conflict, Davalos lost his right to recover the costs of that defense. Because Northern’s offer to defend Davalos in Dallas County satisfied its obligation under the policy, Northern did not breach its duty to defend. Northern’s conduct in this case did not violate the terms of Texas Insurance Code Article 21.55, whether or not that statute properly applies to a liability insurer who fails to promptly accept or reject its insured’s defense. Shortly after notice of the claim and within the time constraints of the statute, Northern tendered a defense to its insured when it asked Davalos on January 9 to substitute its chosen attorney as his attorney of record. The parties’ disagreement about venue did not make that tender equivocal because Davalos had no right to complain about venue remaining in Dallas County. OPINION:Phillips, C.J., delivered the court’s opinion.

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