Yolanda E. Quihuis and Robert Quihuis, a Married Couple, Plaintiffs v. State Farm Mutual Automobile Insurance…

Summary

The court held that a stipulated default judgment entered under a Damron agreement binds an insurer as to the insured's existence and extent of liability but does not preclude the insurer from litigating whether coverage exists. Because ownership was not actually litigated in the underlying action, State Farm could contest whether the Coxes owned the Jeep and therefore whether the policy covered the accident, despite the overlap between ownership and negligent-entrustment liability. The court also held that an insurer's alleged breach of the duty to defend does not independently eliminate its coverage defenses.