The Texas Supreme Court issued the much-anticipated opinion in Monroe Guar. Ins. Co. v. BITCO Gen. Ins. Corp. (attached), recognizing an exception to the eight corners rule. Specifically, the Court held that if the underlying petition states a claim that could trigger the duty to defend, and the application of the eight-corners rule is not determinative of whether coverage exists, due to gaps in the pleading, Texas law permits consideration of extrinsic evidence so long as it: (1) goes solely to an issue of coverage and does not overlap with the merits of liability, (2) does not contradict facts alleged in the pleading, and (3) conclusively establishes the coverage fact to be proved. This is similar to the Northfield exception long recognized by the Fifth Circuit. While many questions remain to be answered, such as what constitutes a conclusively established coverage fact, this opinion should be considered a victory for insurers.

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