Allstate Ins. Co. v. Hallman
In Allstate Ins. Co. v. Hallman, 159 S.W.3d 640 (Tex. 2005), the Texas Supreme Court reaffirmed that a dispute over attorneys' fees in a declaratory-judgment action remains a "live controversy," even if the substance of the case becomes moot during its pendency. 159 S.W.3d at 642.
There, Hallman had been sued for property damage, and her liability insurer, Allstate, provided her with a defense under a reservation of rights. Id. at 641.
However, Allstate commenced a declaratory-judgment action against Hallman, contesting coverage of the property-damage claim. Id. The trial court granted summary judgment for Allstate and denied both parties their attorneys' fees. Id. at 642.
The Dallas Court of Appeals reversed, holding that the claim was covered, and it remanded the attorney's fees issue to the trial court. Id.
During oral argument in the Texas Supreme Court, the parties announced that the underlying property-damage case had concluded with a jury verdict in Hallman's favor and Allstate had disclaimed any intention of seeking to recoup from Hallman its costs of defending the underlying case. Id.
Regardless, both parties argued that a justiciable controversy remained because Hallman had continued to seek attorney's fees. Id.
The supreme court held that Hallman's continuing claim for attorney's fees kept the case from becoming moot. Id. at 643 ("Hallman's remaining interest in obtaining attorney's fees 'breathes life' into this appeal and prevents it from being moot.").
Accordingly, the court proceeded to decide the merits of the coverage question because of the "live" issue of attorney's fees. Id. at 643-45.