• Atlanta
• Boston
• Dallas
• Ft. Lauderdale
• London
• Minneapolis
• New York
• Oakland
• Philadelphia
• Washington, DC

by Alexander Masotto

On March 19, 2025, Judge Reed O’Connor in Liberty Mutual Fire Insurance Co. v. N. Tarrant Infrastructure LLC, No. 4:23-cv-01043-O, 2025 WL 863470 (N.D. Tex. Mar. 19, 2025) held that under the Eight-Corners Rule, Liberty Mutual owed no duty to defend pursuant to the policy’s Designated Work Exclusion and Professional Liability Exclusion.

Liberty Mutual issued a policy in 2013 that only covered work related to a specific highway project: the rebuilding and expansion of Segment 3A of the North Tarrant Express. After the toll road opened in 2018, a deadly multi-vehicle pile-up occurred during a 2021 winter storm, prompting over 30 lawsuits. The lawsuits alleged that, among other things, North Tarrant Infrastructure LLC (“NTI”), Ferrovial Construction US Corp, and Webber LLC (collectively, the “Defendants”) failed to maintain the roadway.

The key issue was whether Liberty Mutual owed a duty to defend or indemnify the Defendants in the underlying lawsuits. Liberty Mutual however declined coverage, asserting the claims fell outside the policy’s scope, which excluded: (1) bodily injury arising out of work conducted for any project other than the North Tarrant Express; and (2) bodily injury arising out of the rendering of or failure to render any professional services. Liberty Mutual then sought declaratory relief.

Applying the Texas Eight-Corners Rule, the Court held Liberty Mutual had no duty to defend. Liberty Mutual asserted that all of the allegations related to Defendants’ “failure to maintain the roadway.” While Defendants agreed, Defendants also argued that each underlying lawsuit made broad “defect” allegations without specifying whether the defects were construction or design defects. Thus, Defendants urged the court to infer that the defects concerned “construction defect” claims because NTI (as a defendant in the underlying lawsuits) constructed the roadway and the Court should “draw all reasonable inferences in favor of [Defendants].”

But the Court quickly dismissed this argument, and stated that “the facts giving rise to the alleged actionable conduct” did not support such an inference. Instead, the Court noted that the underlying factual allegations included Defendants’ “acts and omissions” relating to the weather event and the accident. After carefully analyzing the underlying lawsuits, the Court found that the allegations “unequivocally concern Defendants’ maintenance and operation of the roadway.” Accordingly, any “work” relating to the operation and maintenance of the roadway, which occurred after the project’s construction was completed and therefore fell outside the policy’s scope. Furthermore, any failure to implement “state-of-the-art technology” suggesting a potential design defect would be excluded under the policy’s Professional Liability Exclusion.

Lastly, the Court appropriately ruled that the duty to indemnify was not yet ripe for decision, as the underlying litigation was ongoing, and factual findings could later affect that determination.

In sum, while “allegations are read liberally in favor of the insured,” this decision illustrates that Texas courts will reject attempts to recharacterize allegations to trigger the duty to defend under the Eight-Corners Rule.

_________________________________

The opinions expressed are those of the authors and do not necessarily reflect the views of the firm or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal advice.