In Geico General Insurance Company v. Austin Power, Inc., 357 S.W.3d 821 (Ct. App. Tex 2012), the court held Geico had the duty to defend Austin Power in an action alleging it caused bodily injury arising from asbestos, even though the underlying complaint failed to identify the date of exposure to asbestos. The court found that even though there was no specific date of injury alleged, there were other indications of the time of injury.
Because the complaint alleged exposure to asbestos “in the past,” “on numerous occasions,” and “for many decades,” the court rejected Geico’s argument that the claim failed to allege a potentially covered injury. To the contrary, because“ nothing in the pleadings negates the possibility that the injury occurred “ during the policy period, Geico failed to sustain its burden of proof to deny that a duty to defend was triggered. The allegations of the underlying suit, when construed liberally in favor of the insured, supported the inference that the plaintiff’s injury potentially occurred during the policy period.
One of the more interesting battles fought in insurance coverage disputes is establishing the line between “inference” and “speculation,” when it comes to whether the underlying complaint sufficiently alleges facts to potentially trigger coverage. Because it is a very gray line, the issue is hotly contested. Usually such ties are supposed to be decided in the insured’s favor, but the outcome will hinge on the whether the court keeps their “blinders” on. The dictionary definition of “infer” is: To conclude from evidence or premises. 2. To reason from circumstance; surmise.” That definition gives a court a great deal of leeway, but it is very difficult to predict what can be inferred by one court versus another.
In the GEICO case, the court was willing to “infer” that the injuries were caused by exposure in the past because the complaint used the past tense in alleging that the plaintiff “has suffered injuries” from asbestos exposure. The court also recognized the common knowledge that it can take years of exposure to produce asbestos related diseases. This “leap” seems sensible since injuries have to occur at some point in time and just because the plaintiff’s allegations are inexact, the court can infer that such injuries occurred.
Contrast the Geico court’s willingness to infer when the injuries occurred based on the inclusion of the past tense used in the underlying complaint with the Supreme Court of Texas’s decision in Pine Oak Builders v. Great Am. Lloyds Ins. Co., 279 S.W.3d 650 (Tex. 2009), in which the court refused to infer additional facts not in the pleadings. In Pine Oak Builders, the court held there was no duty to defend because the pleading alleged that Pine Oak alone was liable and did not refer to the fact that the complained of work was performed by a subcontractor. Similarly, in Zurich Am. Ins. v. Nokia, Inc., 268 SW3d 487 (Tex 2008), the court was unwilling to make the leap from the allegations that plaintiffs had suffered “biological injury” to potentially include a claim for “bodily injury.” It would not make any factual assumptions or inferences that were not pled It will not “imagine factual scenarios” like whether the plaintiff was contributorily negligent, even though a plaintiff would never allege his own negligence. See Gilbane Building Co. v. Admiral Insurance, __ F.3d __ (5th Cir. 2011).