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Click here for the full text of this decision FACTS:William Broussard is an officer and director of King Chapman & Broussard Consulting Group Inc. (KCB), a management consultant corporation. Broussard and his wife, Evelyn Turner, divorced in 1996. National Union Fire Insurance Co. of Pittsburgh issued a directors and officers (D&O) insurance policy to KCB to insure against losses for “wrongful acts” committed “in their capacities” as directors, officers or employees. In 2001, Turner sued Broussard for alimony and other contractual rights alleged due under the divorce decree. Among other things, Turner alleged that Broussard would be receiving benefits for her benefit and that he was breaching her fiduciary duty to her. Broussard and Turner settled in December 2001. The settlement specifically released KCB, as well as its subsidiaries and affiliates. In February 2001, Broussard and KCB demanded that National Union provide coverage for Turner’s lawsuit under the D&O policy. National Union denied coverage. Broussard and KCB sued National Union for reimbursement for the defense and settlement costs incurred in Turner’s lawsuit. They sought damages representing attorneys’ fees Broussard and KCB each incurred, as well as the present value of the agreed judgment, reproduction and copying costs, and losses the company suffered while dealing with the Turner suit. The trial court granted National Union’s motion for summary judgment, but it did not specify which of the insurer’s two grounds its was ruling on. Nor did it address National Union’s objections to affidavits Broussard and KCB submitted in response to the motion. HOLDING:Affirmed. The court announces it will apply the eight-corners rule, construing both the language used in Turner’s lawsuit as well as the language used in the D&O policy. The court notes that under one exclusion in the D&O policy, which precludes coverage for acts under an express contract, National Union is not liable for claims “alleging, arising out of, based upon or attributable to any actual or alleged contractual liability of the Company or any other Insured under any express contract or agreement.” Turner’s suit against Broussard alleges that Broussard breached his obligations under the divorce settlement agreement by failing to pay alimony and other amounts due under the agreement. A review of Turner’s amended petition demonstrates that each of her allegations arises out of, is based upon, and can be attributed to specific sections of the divorce decree. For example, Turner did not alleged that Broussard breached his fiduciary duty in his capacity as a corporate director; instead, she said he breached his fiduciary duty under specific provisions of the divorce decree. The court finds that other allegations might be said to fall within the scope of coverage under the D&O policy but that those allegations also fall within the policy’s contract exclusion, because they plainly arise out of Broussard’s contractual obligation to Turner. The court adds that the venue and jurisdiction statements in Turner’s petition refer to the divorce decree,. The court then reviews another exclusion, this one for prior litigation. Each of Turner’s allegations arises out of specific sections of the 1996 divorce decree, so the prior-litigation exclusion precludes coverage. The court refuses to consider extrinsic evidence, as Broussard urges, noting that the Texas Supreme Court has never recognized an exception to the strict eight-corners rule to ascertain an insurer’s duty to defend nor has this court ever recognized an exception. OPINION:Bland, J.; Taft, Jennings and Bland, JJ.

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