07-0639 Don's Building Supply Inc. v. OneBeacon Insurance Co. certified question from the Fifth Circuit, U.S. Court of Appeals For appellant: Thomas B. Alleman, Dallas For appellee: Gene F. Creely II, Austin The Supreme Court will hear arguments on the principal issue of when property damage "occurs" for purpose of an occurrence-based policy. The threshold question is when property damage "occurs" to trigger an insurer's duty to defend in an occurrence-based general liability policy. In this case homeowners alleged a synthetic exterior stucco allowed water to seep behind it, causing wood rotting and mold. The homeowners asserted the discovery rule, arguing that the damage was hidden until discovered just before they filed suit. OneBeacon initially defended Don's Building Supply, then withdrew the defense, claiming it had no duty to defend because the homeowners discovered the property damage after its policy expired. The U.S. district court granted summary judgment for the insurance company, holding that the duty to defend becomes manifest or identifiable.

07-1059 Financial Industries Corp. v. XL Specialty Insurance Co. certified question from the Fifth Circuit U.S. Court of Appeals For appellant: Bart Wulff, Dallas For appellee: Gabriela Richeimer, Washington, D.C., and Elizabeth Bloch, Austin The Supreme Court will hear arguments of whether, in certified question, prejudice was required in 'claims-made' policy when policy stipulated notice as condition precedent to policy payment. Certified question: Must an insurer show prejudice to deny payment on a claims-made policy when the denial is based upon the insurer's breach of the policy's prompt-notice provision, but the notice is nevertheless given within the policy's coverage period? XL Specialty's policy required Financial Industries to notify it of any claim "as soon as practicable" and labeled the provision as a condition precedent to payment under the policy. Financial Industries gave notice of a lawsuit against it seven months after the suit was filed, but within the coverage period.

10-0245 Patrick O. Ojo, et al. v. Farmers Group Inc., et al. certified question from the U.S. Court of Appeals, Ninth Circuit For appellants: Sanford Svetcov, San Francisco For appellees: Harriet S. Posner, Los Angeles The ultimate issue in this class action, alleging credit scoring for pricing insurance discriminates against minority policyholders, is whether anti-discrimination provisions in Texas insurance and fair housing laws are broad enough to include unintended discriminatory effects. In its opinion certifying the question to this Court, the Ninth Circuit holds that the federal Fair Housing Act prohibits "impact" discrimination in denial and pricing of homeowners insurance. The federal court also holds that the McCarran-Ferguson Act, which essentially prohibits federal law from interfering with state insurance law, applies to claims brought under later-enacted civil rights statutes such as the Fair Housing Act. The court then certifies the "dispositive question" whether Texas law permits an insurance company to price insurance by using credit-score factors that have a racially disparate impact that, were it not for the McCarran-Ferguson Act, would violate the Fair Housing Act. Texas Supreme Court advisory Contact: Osler McCarthy, Staff Attorney for Public Information (512) 463.1441 or email: osler.mccarthy@courts.state.tx.us

10-0581 O. Lee Tawes III v. Doris Barnes certified questions from the U.S. Court of Appeals, Fifth Circuit In this suit over royalty payments, the ultimate issue is whether Tawes, one of several interest-holders in oil and gas production under Barnes' land, owes Barnes any or all unpaid royalties she claims. Tawes was an investor in two wells on property adjacent to Barnes' that tapped oil and gas under Barnes' land under a pooling arrangement. Barnes' lessee opted out of developing the wells, but a provision in the joint-operating agreement specified that interest-holders consenting to drilling the wells would be "responsible for ... all royalty." The first certified question asks whether Barnes can recover unpaid royalties under the joint-operating agreement - defining the operator and allocating expenses and revenues - or another, the working interest-unit agreement - defining allocations in a pooled operation. Her theory is that she is a third-party beneficiary of those agreements or has privity of estate because the company in which Tawes invested took over as operator from her lessee. The second certified question asks whether the working interest-unit agreement prevents Barnes from recovering from Tawes because, under that agreement, the company in which Tawes invested was liable for Tawes' obligations. The third certified question asks whether Tawes is responsible for all royalties owed Barnes or just royalties to the extent of his interest in the two wells. This advisory serves only as an abbreviated guide to oral argument. Summaries are prepared by the Court's staff attorney for public information and reflect his judgment alone on facts and legal issues and in no way represent the Court's opinion about case merits. Texas Supreme Court advisory Contact: Osler McCarthy, Staff Attorney for Public Information (512) 463.1441 or email: osler.mccarthy@courts.state.tx.us

(Chief Justice Jefferson not sitting) 09-0387 Carol Severance v. Jerry Patterson, et al. certified questions from the U.S. Court of Appeals, Fifth Circuit For appellant: J. David Breemer, Sacramento, Calif. For appellees: Daniel L. Geyser, Austin In this rehearing involving Hurricane Rita's beach destruction in Galveston, and consequent change in public access under the Texas Open Beaches Act, the federal circuit court asks: (1) whether Texas recognizes a "rolling" public beachfront-access easement; if so, (2) whether the rolling easement derives from common law or the Open Beaches Act; and (3) what extent the landowner would be entitled to compensation for loss of property use apart from the state's offer to remove houses on the easement. In a 6-2 opinion by Justice Wainwright issued November 5, the Court held that public easements do not "roll" onto previously unencumbered private beachfront property when avulsive events cause dramatic coastline changes. The Court reasoned that the Open Beaches Act, enacted in 1959, did not purport to create new substantive rights for public easements along Texas' ocean beaches and recognized that mere pronouncements of encumbrances on private property rights are improper. Because no public-use right exists in historic grants to private owners on West Beach exists, the Court said, the state must comply with legal principles to encumber privately owned realty along Galveston Island's West Beach. Land patents from the Texas Republic in 1840, affirmed by legislation after statehood, conveyed the state's title in West Galveston Island to private parties and reserved no ownership interests or public-use rights in Galveston's West Beach. In a dissent Justice Medina, joined by Justice Lehrmann, concluded the Open Beaches Act enforces a reasoned balance between private property rights and the public's right to free and unrestricted use of the beach. This advisory serves only as an abbreviated guide to oral argument. Summaries are prepared by the Court's staff attorney for public information and reflect his judgment alone on facts and legal issues and in no way represent the Court's opinion about case merits. Texas Supreme Court advisory Contact: Osler McCarthy, Staff Attorney for Public Information (512) 463.1441 or email: osler.mccarthy@courts.state.tx.us

11-0519 Evanston Insurance Co. v. Legacy of Life Inc. certified questions from the Fifth Circuit U.S. Court of Appeals For appellant: Marc J. Wojciechowski, Spring For appellee: John C. Cave and Miguel Villarreal Jr., San Antonio In this insurance-coverage dispute involving a non-profit organ-collection company that allegedly sold human organs through a for-profit affiliate, the Fifth Circuit asks: (1) whether personal injury under the policy - defined as bodily injury, sickness or disease including death to any person resulting from that injury, sickness or disease - covers mental anguish for someone who did not suffer physical injury or disease and (2) whether property damage under the policy, defined as "physical injury to or destruction of tangible property, including consequential loss of use, or loss of use of tangible property that has not been physically injured or destroyed," includes coverage for the underlying plaintiff's loss of her dead mother's tissues, organs, bones and body parts. In this case Evanston refused to defend its insured, Legacy of Life, when it was sued by the daughter who donated her mother's organs and who contends the donation was contingent on the their distribution without profit. The U.S. District Court granted summary judgment for the insured, Legacy of Life, on the duty-to-defend question. This advisory serves only as an abbreviated guide to oral argument. Summaries are prepared by the Court's staff attorney for public information and reflect his judgment alone on facts and legal issues and in no way represent the Court's opinion about case merits. Texas Supreme Court advisory Contact: Osler McCarthy, Staff Attorney for Public Information (512) 463.1441 or email: osler.mccarthy@courts.state.tx.us

The federal appeals court asks the Texas Supreme Court to answer (1) whether, under Texas law, at-will employees may bring fraud claims against employers for losing their jobs and, if not, (2) whether employees covered by a collective-bargaining agreement, subject to a 60-day cancellation notice and limiting discharge to "just cause," may sue on allegations that their employer fraudulently induced them to quit their jobs. The roots of this case are in DuPont's decision to spin off its Terathane Products Unit at DuPont's manufacturing complex in La Porte. Sawyer and 62 other former DuPont employees claim DuPont, through a company manager, assured them that DuPont's planned spinoff would result in a wholly owned subsidiary that DuPont was not planning to sell. Terathane employees were given a choice to stay with DuPont. But the company urged them to transfer to the new company and told them they would be covered by a new collective-bargaining agreement identical to the one covering them at DuPont, with the same pay and benefits. (At the time DuPont was beginning negotiations with Koch Industries to buy the Terathane unit, which it did.) All but four of the employees who sued DuPont were union members covered by a collective-bargaining agreement that specified either the union or the company could cancel it with 60 days' notice. The employees contend the Koch acquisition led to decreased pay and benefits. The U.S. District Court granted DuPont summary judgment on the fraud and fraudulent-inducement claims, finding all the employees, as at-will workers, could be terminated at any time. On appeal, the Fifth Circuit initially affirmed the trial court in a split decision, then withdrew its decision and asked the Texas Supreme Court to answer unsettled state-law questions.

The Fifth Circuit asks in this dispute over general commercial liability coverage: (1) Does a general contractor that enters into a contract in which it agrees to perform its construction work in a good and workmanlike manner, without more specific provisions enlarging this obligation, "assume liability" for damages arising out of the contractor's defective work so as to trigger the Contractual Liability Exclusion? (2) If the answer to question one is "Yes" and the contractual-liability exclusion is triggered, do the allegations in the underlying lawsuit alleging that the contractor violated its common law duty to perform the contract in a careful, workmanlike, and non-negligent manner fall within the exception to the contractual-liability exclusion for "liability that would exist in the absence of contract"?

In this class action alleging changes to home-equity loans violated the state constitution, the Fifth Circuit certifies these questions: (1) After an initial credit extension, is a home-equity lender's new agreement with the borrower capitalizing past-due interest, fees, property taxes or insurance premiums into the loan principal - but not satisfying or replacing the original note - a modification or a refinance for purposes of home-equity exceptions to the protection against forced homestead sale for debt repayment? If the agreements are modifications: (2) Does capitalization of past-due interest, fees, property taxes or insurance premiums constitute an impermissible "advance of additional funds" under Texas Administrative Code section 153.14(2)(B)? (3) Must such a modification comply with requirements of Texas Constitution section 50(a)(6), including subsection B, which mandates a home-equity loan be for no more than 80 percent of a home's appraised value? and (4) Do repeated modifications like those in this case convert a home-equity loan into an impermissible open-end account?

In this case the Fifth Circuit asks the Texas Supreme Court to decide how state law allocates wrongful death-settlement proceeds among multiple beneficiaries when a workers-compensation carrier seeks reimbursement for what it paid in benefits and for future payments. Two companies settled after a trainee's death at the Texas Department of Public Safety Training Academy. In addition an allocation from the settlements for what it had paid, the State Office of Risk Management, the DPS's workers-comp carrier, sought reimbursement for future payments it would pay to the trainee's children. Specifically, the Fifth Circuit asks (1) how excess net settlement proceeds more than the amount required to reimburse the workers-compensation carrier for paid benefits should be apportioned among multiple beneficiaries under Texas Labor Code section 417.002; (2) how a workers-compensation carrier's right to treat a recovery as an advance of future benefits should be calculated involving multiple beneficiaries - that is, whether on a beneficiary-by-beneficiary basis or considering the collective recovery; and, if calculated beneficiary by beneficiary, (3) whether the surviving spouse's nonbinding statement that she will use her recovery to benefit her children makes the settlement allocation invalid.

In this insurance dispute over pollution damages from the Deepwater Horizon drilling-rig explosion, the Fifth Circuit asks in essence (1) whether under Evanston Insurance Co. v. ATOFINA Petrochemicals Inc. oil producer BP P.L.C. and its affiliates are covered by the driller's insurance policies as "additional insureds" and (2) whether the doctrine that an ambiguous insurance contract will be interpreted in the insured's favor applies to decide the drilling contract's insurance-coverage provision under ATOFINA. Insurance carriers sued for a declaratory judgment that BP's liability for the explosion and sinking of the Deepwater Horizon rig was not covered by driller Transocean's policies. Answering the first question, as the federal circuit court framed it, depends on whether the BP-Transocean contract's provision for additional insureds like BP is separate and independent from the drilling contract's indemnity provisions. Insurers in this case argue that the scope of additional insurance coverage contemplated by that contract was limited to pollution risks on or above the Gulf's surface, not below the water. BP contends that ATOFINA holds that insurance-policy language defines coverage regardless of the drilling contract's indemnity limits. The federal district court declared BP was not covered for below-surface pollution, but the Fifth Circuit initially reversed, then certified the questions for the Texas Supreme Court to answer.

In this worker-injury case, the Fifth Circuit asks whether under Texas law an employee may recover from a non-subscribing employer for injury caused by a premises defect he was aware of but that his job required him to remedy. As the circuit stated the question in the alternative: "Put differently, does the employee's awareness of the defect eliminate the employer's duty to maintain a safe workplace?" Austin fell, breaking a leg and dislocating a hip, while he mopped water that flooded a floor from power washing work.

The Fifth Circuit asks whether under Texas law the Environmental Protection Agency's "potential responsible party" letters or unilateral administrative order, or both, threatening McGinnes with cleanup costs under the federal Superfund law, constitute a "suit" that would trigger the insurers' duty to defend under McGinnes' liability policies. McGinnes sued Phoenix and Travelers in federal court when Travelers refused to defend McGinnes against the EPA's threated action to recover waste-site cleanup costs and threatened penalties if McGinnes did not comply. In its refusal to defend, Travelers told McGinnes that EPA's actions under the Superfund law - the Comprehensive Environmental Response, Compensation and Liability Act - were not a suit under McGinnes' commercial general-liability policy. The trial court agreed.

In four specific questions the Fifth Circuit asks essentially (1) whether the terms "physical injury" and "replacement" are ambiguous in the "your product" and "impaired property" exclusions common in commercial general-liability policies and, if either is not, (2) how Texas law defines the two terms. The underlying case involved a contract under which U.S. Metals supplied defective flanges manufactured by a subcontractor to two oil refineries. U.S. Metals sued Liberty Mutual when the insurer refused to defend and indemnify, citing the exclusions. If either term is ambiguous, the court specifically asks, first, whether U.S. Metals, as the insured, offers reasonable interpretations that must be applied under Texas law. But if "physical injury" is not ambiguous, does such physical injury under the policy occur when the U.S. Metals' defective product was permanently attached to refinery equipment or when the refinery equipment was damaged when the defective product was removed? And if "replacement" is not ambiguous, does replacing the defective flanges under the policy include the refinery equipment's removal or destruction?

The Fifth Circuit asks (1) whether an action for a civil penalty under the Texas Optometry Act is one in which a claimant "seeks damages relating to a cause of action" within the meaning of Texas Civil Practice and Remedies Code chapter 41 and, if so, (2) whether the penalties amount to exemplary damages such that Civil Practice and Remedies Code section 41.004(a) precludes their recovery when a plaintiff gets no more than nominal damages. Forte and other optometrists who leased space from Wal-Mart sued Wal-Mart for violating the Optometry Act's ban on prescribed office hours for optometrists. A jury found Wal-Mart liability and awarded $3.9 million in civil penalties under the act (at $1,000 a day) in lieu of actual damages. The federal trial court recommended a reduction to just under $1.4 million. The Fifth Circuit affirmed the liability ruling and initially reversed the civil-penalty award because it constituted exemplary damages disallowed by chapter 41 in the absence of compensatory damages.

In this dispute over terms of a home equity-loan repayment, the Firth Circuit asks essentially (1) whether, under the state constitutional home equity-loan provision, a lender is liable for forfeiting principal and interest by failing to return the canceled note and lien release upon full repayment and after notice within 60 days of the lender's failure to comply and, if not, (2) whether forfeiture of principal and interest may be had instead of actual damages under a breach-of-contract theory even if the lien release has been filed in deed records.

In this dispute to recover close to $6 million in promotional expenses by Allen Stanford to further his long-running Ponzi scheme, the Fifth Circuit asks whether "market value" is sufficient to show reasonably equivalent value for purposes of the Texas Uniform Fraudulent Transfer Act's affirmative defense in section 24.009(a). In this case Janvey, as receiver, sued to recover money Stanford paid for advertising as part of his golf-tournament sponsorships. The U.S. District Court granted the Golf Channel summary judgment, determining that Stanford's payments were fraudulent transfers, but the Golf Channel took them in good faith and for advertising, for reasonably equivalent value. The Fifth Circuit initially reversed, holding that the Golf Channel filed to show Stanford's payments were reasonably equivalent value from the Stanford creditors' perspective. The court then vacated that opinion and certified the question.

The questions certified to the Court are (1) whether, under Texas Human Resources Code section 121.002(5), a plasma-collection center is a "public facility" and, if so, (2) whether Texas law allows it to reject as a donor a "person with a disability" based on concerns for the person's health that stem from that disability and by what standard to determine the plasma center properly rejected the person instead of discriminating against her in violation of section 121.003(a).

In the underlying dispute, in which JSB (doing business as Conveying & Power Transmission Solutions) claims the Texas Sales Representative Act entitles it to treble damages for late commission payments, the Fifth Circuit asks (1) how courts should determine treble damages permitted under the act and by what timing standard and (2) whether and under what conditions attorney fees and costs may be recovered if treble damages are not awarded under the act.

In this action challenging withdrawal changes by the pension system, the Fifth Circuit asks: (1) whether the withdrawal method from the pension system's deferred retirement-option plan constitutes a state constitutionally protected retirement benefit and, if so, (2) whether the pension board's decision, pursuant to statute, altering previous withdrawal elections and to annuitize the deferred-option money over the plaintiffs' respective life expectancies violates the state constitution.

The issue is whether the Texas Uniform Fraudulent Transfer Act’s "good faith" defense against fraudulent-transfer clawbacks is available to someone who had "inquiry notice" of fraud but did not diligently inquire and would not reasonably have been able to discover it by diligent investigation.

The question is whether a lender that failed to correct a curable constitutional defect in loan documents should be entitled to equitable subrogation. In this case the refinancing lender did not sign an acknowledgment of the home's fair-market value, required by Texas Constitution Article 16, section 50.

Whether the policy-language exception to the "eight-corners rule" as articulated in B. Hall Contracting Inc. v. Evanston Insurance Co. is a permissible exception under Texas law.

In this case the issues are (1) whether the comptroller erred by rejecting Brown's claim for compensation under the Tim Cole Act when the comptroller questioned the trial court's dismissal order that declared Brown actually innocent and (2) whether the trial court had authority to amend the original dismissal order to declare Brown's actual innocence.

The issue is whether, under Texas products-liability law, Amazon is a "seller" of third-party products sold on its website when Amazon does not hold title to the product but controls the transaction and delivery through its Fulfillment by Amazon program.

1. Is the exception to the eight-corners rule articulated in Northfield Ins. Co. v. Loving Home Care, Inc. permissible under Texas law? 2. When applying such an exception, may a court consider extrinsic evidence of the date of an occurrence when (a) it is initially impossible to discern whether a duty to defend potentially exists from the eight-corners of the policy and pleadings alone; (b) the date goes solely to the issue of coverage and does not overlap with the merits of liability; and (c) the date does not engage the truth or falsity of any facts alleged in the third party pleadings? Fifth Circuit opinion (docket number 19-51012)

In this interlocutory appeal, from denial of a dismissal motion in a guardianship dispute in which the petitioner alleges lack of subject matter jurisdiction because the proposed ward was not properly served under the Texas Estates Code, the issues are (1) whether the petition is moot and (2) whether James Fairley, the ward, was served in compliance with Texas Estates Code chapter 1051 and, if not, (3) whether the probate court lacks subject-matter jurisdiction.

The question certified by the Fifth Circuit in this case is whether the employee exception to the Texas Anti-Indemnity Act allows additional insured coverage when an injured worker brings a personal injury claim against the additional insured and the worker and the additional insured are deemed "co-employees" of the indemnitor for purposes of the Act.

At issue in this case is whether certain government entities are authorized to enforce the Texas Heartbeat Act.

Certified Question from the U.S. Court of Appeals for the Fifth Circuit

This case concerns an exception to the Texas Alcoholic Beverage Code's prohibition against publicly owned corporations selling alcohol.

The case underlying these certified questions is a pre-enforcement challenge to two recently enacted provisions of the Texas Election Code: section 276.016(a) (the anti-solicitation provision) and section 31.129 (the civil-liability provision) as applied to the anti-solicitation provision.

The principal issue in these two cases is whether section 541.060 or section 1271.155 of the Insurance Code create an implied private right of action for claims that a health maintenance organization has reimbursed an emergency-care provider at improperly reduced rates.

This certified question from the U.S. Court of Appeals for the Fifth Circuit concerns the Tim Cole Act's immunity statute.

At issue in this certified-question case is the interpretation of Section 16.064 of the Texas Civil Practice and Remedies Code, which tolls limitations where a prior action is dismissed "because of lack of jurisdiction" and refiled in a court of "proper jurisdiction" within sixty days after the date the dismissal "becomes final."

This certified question asks whether an insurer's payment of the full appraisal award plus any possible statutory interest precludes recovery of attorney's fees.

These certified questions concern notice requirements for acceleration of loans under Section 16.038 of the Civil Practices and Remedies Code.

This certified question concerns the Texas Constitution's retroactivity clause.

These certified questions ask the Supreme Court to construe language used in oil-and-gas leases.

The principal issue in this certified-question case is whether a person can be held liable for supplying defamatory material to a publisher.

At issue in this certified question is the meaning of the phrase "has proven to be operational" in the Texas Commission on Environmental Quality's definition of "best available control technology."

Case details to come.