The Texas Eight Corners Rule Won’t Help Suit Against Insurer

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After obtaining a default judgment in state court against defunct entities, six plaintiffs filed this coverage action to collect on that judgment from the entities’ insurer. The district court granted summary judgment to the insurer on two grounds. It determined that the Plaintiffs’ claims against the entities fell outside the scope of the entities’ liability insurance coverage. In Blakely Turner; Damon Brooks; Deandra Simpson; Shamiyan Walton; Michael Harris; Anita Simpson, Charles Levy v. Cincinnati Insurance Company, No. 20-50548, United States Court of Appeals, Fifth Circuit (August 13, 2021) students of a trade school sought to recover their default judgments against the defendant’s insurer.

ZALMA OPINION

Claims Made policies are different than “occurrence” based policies because they limit their coverage to acts that happen and claims that are made during a policy period. Because ATI was the subject of multiple lawsuits when they sought coverage from Cincinnati the claims made policy was issued to limit coverage to new problems not the old ones that eventually drove ATI to bankruptcy.