Chapter 5-5 Declaratory Judgment on Policy—Coverage Claim

• Jurisdiction: United States

5-5 Declaratory Judgment on Policy—Coverage Claim

5-5:1 Overview

"The Declaratory Judgments Act does not confer new substantive rights upon the parties nor additional jurisdiction on the courts but merely provides a procedural device for determination of controversies which are already within the jurisdiction of the courts."¹¹⁸

Texas courts construe insurance policies using ordinary rules of contract inter-pretation.¹¹⁹ Therefore, Declaratory Judgment actions can be a useful tool to settle disputes on insurance coverage.

5-5:1.1 Related Causes of Action

Bad Faith, Breach of Contract, Breach of Stowers Duty, DTPA, Insurance Code Violations

MUST READ CASES & STATUTES

Texas Civil Practice and Remedies Code Section 37.004 (Uniform Declaratory Judgments Act)
Texas Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993)

5-5:2 Requirements to Bring a Declaratory Judgment Action¹²⁰

(1) A justiciable controversy (to constitute a justiciable controversy, there must exist a real and substantial controversy involving a genuine conflict of tangible interests and not merely a theoretical dispute).¹²¹ exists as to the rights and status of the parties; and
(2) A declaration will resolve the controversy.

5-5:2.1 Elements

To prove coverage under the policy, the insured must establish that:

(1) the injury or damage is the type covered by the policy,
(2) the injury or damage was incurred at a time covered by the policy, and
(3) the injury or damage was incurred by a person whose injuries are covered by the policy.¹²²

If the insured establishes coverage, the insurer then has the burden to plead and prove that the loss falls within an exclusion to the policy's coverage.¹²³

5-5:3 Damages and Remedies

5-5:3.1 Declaratory Judgment

Texas Civil Practice and Remedies Code Section 37.004 (Uniform Declaratory Judgments Act).

5-5:3.2 Court Costs

Court can award court costs to either party in declaratory judgment action.¹²⁴

5-5:3.3 Attorney's Fees

Court can award reasonable and necessary attorney's fees in declaratory judgment action.¹²⁵

5-5:4 Defenses

5-5:4.1 Statute of Limitations

Because declaratory judgment action is a procedural device used to vindicate substantive rights, it is generally governed by the statute of limitations for the legal remedy underlying the claim.¹²⁶

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Notes:

^[118] Hous. Auth. of City of Harlingen v. Valdez, 841 S.W.2d 860, 864 (Tex. App.—Corpus Christi 1992, writ denied).

^[119] Nassar v. Liberty Mut. Fire Ins. Co., 508 S.W.3d 254, 257...