St. Paul Fire & Marine Insurance v. Convalescent Services, Inc.

BENAVIDES, Circuit Judge:

This appeal involves the scope of an insurer’s duty to its insured in the context of settlement negotiations under- Texas law. Concluding that the Texas Supreme Court would not impose a duty upon an insurer to take into consideration a claim specifically excluded from coverage, we affirm.

I. BACKGROUND

St. Paul Fire and Marine Insurance Company (St.Paul) filed a complaint for declaratory relief pursuant to 28 U.S.C. § 2201 in federal district court, seeking a determination that it was not liable- for payment of a punitive damages award entered against its insured,…