Federal Court In Texas Finds No Coverage For Post-Judgment Tender

A federal court in Texas held that there was no coverage for an additional insured under the named insured’s policy where the insurer received a tender after the trial court rendered judgment. Liberty Ins. Corp. v. Arch Ins. Co., No. 4:20-cv-098-A, 2021 U.S. Dist. LEXIS 92121 (N.D. Tex. 2021)

The named insured had entered into an agreement in which it agreed to name the other party as an additional insured on its liability policies. An injured driver sued the additional insured (but not the named insured) for an accident while the insured and the additional insured were performing construction activities on a road. An amended petition alleged as a proximate cause the manner in which the road was widened, constructed, maintained and/or modified. The additional insured placed its commercial auto and CGL insurers on notice. The lawsuit was tried and the jury returned a verdict against the insureds, and final judgment was entered. The named insured’s insurer was not placed on notice of the claim until after entry of the final judgment.

The court held that the named insured’s insurer was not obligated to act unless and until the additional insured made demand on it, following Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Crocker, 246 S.W.3d 603 (Tex. 2008). The additional insured argued that it was unaware of the named insured’s policy but had tendered the case to the named insured. The court held that tender to the named insured was insufficient as it was not a demand on the named insured’s insurer. As to whether tender after judgment has been entered triggers a duty, the court stated: “Once the case is over – that is, the jury has returned its verdict – notice is clearly too late. The cows have long since left the barn.”