Fifth Circuit Affirms No Duty to Defend Anti-Terrorism Act Suits: Intentional Payments to Terrorist Organizations Are Not “Occurrences” Under CGL Policies

On September 11, 2026, the Fifth Circuit Court of Appeals entered a per curiam, unpublished opinion in Travelers Property Casualty Co. of America v. Ericsson Inc., affirming summary judgment for the insurers and holding that the insurers had no duty to defend two lawsuits filed against Ericsson Inc. and its subsidiaries alleging that Ericsson intentionally paid protection money to terrorist organizations.

Background

The coverage dispute arose out of two underlying lawsuits pending in the District of Columbia, which the court described as accusing Ericsson of “intentionally paying protection money” to foreign terrorist organizations (FTOs) through third-party contractors that “ultimately funded terrorist attacks that killed or injured the third-party plaintiffs and their family members, in violation of the Anti-Terrorism Act.” The underlying complaints asserted seven claims under the Anti-Terrorism Act, for which “liability may be asserted as to any person who aids and abets, by knowingly providing substantial assistance ... [to] the person who committed such an act of international terrorism.”

The Policies

Travelers Property Casualty Co. and ACE American Insurance Co. issued commercial general liability policies to the Ericsson entities from May 1, 2003, to May 1, 2014. The policies covered sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage,” but only if the injury was caused by an “occurrence,” defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”

Declaratory Judgment Action

Travelers filed a declaratory judgment action against the Ericsson entities, after which ACE was brought in and filed counterclaims against the Ericsson entities. Both insurers sought a declaration of no duty to defend or to indemnify the Ericsson entities in the underlying suits because the alleged injuries did not constitute accidental “occurrences.” The district court agreed that the underlying injuries were not “accidents” and granted the insurer summary judgment as to the duty to defend.

Fifth Circuit’s Ruling

The panel applied Texas’ “eight corners” approach, under which courts “compare[] the third-party pleadings to the operative insurance policy without considering extrinsic evidence.” The court reaffirmed that Texas’ duty to defend standard is “very favorable to insureds” and that the factual allegations in the underlying complaint controls, not the legal theories of relief. As for what counts as an “accident,” the Fifth Circuit restated the governing rule: “Under Texas law, a person’s act is not an accident ‘when he (1) commits an intentional act that (2) results in injuries that ordinarily follow from or could be reasonably anticipated from the intentional act.’”

Applying that standard, the Fifth Circuit held that “the district court did not err in construing the conduct described by the Underlying Suits as non-accidents,” explaining that “[t]heir payments to third-party contractors were volitional [and] it is not alleged by Ericsson that the payments were made under duress or by accident.” The court further explained that the underlying complaints “allege intentional acts on behalf of the Ericsson Entities, not only in paying the FTOs, but in covering up their payments to those organizations” and that despite the length of the underlying pleadings — collectively spanning over a thousand pages — the gravamen of the allegations was clear that the Ericsson entities willfully made payments to the FTOs. The Fifth Circuit therefore affirmed the district court ruling that the insurers owed no duty to defend the underlying suits.

Blue Bell Creameries

The Fifth Circuit decision drew heavily on a prior decision in Discovery Property & Casualty Insurance Co. v. Blue Bell Creameries USA Inc., a case that turned on the same issue — whether the insurer owed a duty to defend under an identically defined “occurrence” provision. The court held in Blue Bell that the directors’ and officers’ conduct was “easily” considered intentional because “there were no allegations that the directors or officers were acting involuntarily,” emphasizing that “an intentional act and the intent to cause injury are two distinct concepts.” The Fifth Circuit applied the same reasoning in rejecting the argument by the Ericsson entities that a duty to defend was implicated because they did not know or intend for the payments to end up with the FTOs. The Fifth Circuit reiterated that their intention for the payments to reach the FTOs was “irrelevant.”