Coastal Mart v. Southwestern Bell Telephone

• Decision Date: 20 January 2005
• Docket Number: No. 13-02-094-CV.,13-02-094-CV.
• Citation: 154 S.W.3d 839
• Parties: COASTAL MART, INC. and Coastal Markets, Ltd., d/b/a Maverick Markets, Appellants, v. SOUTHWESTERN BELL TELEPHONE COMPANY, Appellee.
• Court: Texas Court of Appeals

154 S.W.3d 839

COASTAL MART, INC. and Coastal Markets, Ltd., d/b/a Maverick Markets, Appellants, v. SOUTHWESTERN BELL TELEPHONE COMPANY, Appellee.

No. 13-02-094-CV.

Court of Appeals of Texas, Corpus Christi-Edinburg.

January 20, 2005.

Audrey Mullert Vicknair, Roberta J. Hegland, Joseph A. Stallone, Bracewell & Patterson, L.L.P., Corpus Christi, David Lopez, Davis, Cedillo & Mendoza, San Antonio, for appellants.

Javier Aguilar, Ron Mendoza, Les J. Strieber, III, Ricardo G. Cedillo, Davis, Cedillo & Mendoza, Inc., Geoffrey Amsel, San Antonio, Ronald B. Walker, Ronald B. Walker & Associates, Victoria, Judith Lopez, Houston, for appellees.

Before Justices YANEZ, CASTILLO and GARZA.

OPINION

Opinion by Justice GARZA.

This is a contract dispute between Coastal Mart, Inc., Coastal Market, Ltd. d/b/a Maverick Markets (collectively "Coastal") and Southwestern Bell Telephone Company ("SWBT"). Underlying this dispute are wrongful death and survival actions filed against Coastal and SWBT by Guadalupe Ordonez and Maria Esparza for damages arising from the death of their daughter, Blanche Esparza. Ordonez and Esparza alleged that their child was killed due to the negligence of Coastal and SWBT in the design, placement, operation, and maintenance of SWBT pay phones in front of a convenience store operated by Coastal.¹ Ordonez eventually settled his claim with Coastal and SWBT, and the trial court ultimately issued a take-nothing judgment against Esparza. Before these actions were resolved, Coastal filed a cross-action against SWBT based on a license agreement executed by Coastal and SWBT that dealt with the pay phones involved in Blanche's death. The trial court entered a final summary judgment in favor of SWBT on Coastal's cross-action, and this appeal ensued. We affirm in part, see Tex.R.App. P. 43.2(a), and reverse and remand in part. See Tex.R.App. P. 44.1(b).

Issues on Appeal/Standard of Review

According to Coastal's cross-action, SWBT was obligated to indemnify Coastal for the claims alleged by the plaintiffs in the underlying actions, and in addition, SWBT was obligated to provide insurance for and defend Coastal against the plaintiffs' claims. Coastal's cross-action is thus primarily a claim for breach of contract; however, it also asserts that SWBT acted in bad faith as an insurance company, which is an extra-contractual claim. See Aranda v. Ins. Co. of N. Am., 748 S.W.2d 210, 212 (Tex.1988) ("[The] duty of good faith and fair dealing arises out of the special trust relationship between the insured and the insurer."). Coastal moved for summary judgment on both claims, as did SWBT.

Coastal raises four issues on appeal. It argues that the trial court erred by awarding summary judgment to SWBT and not awarding summary judgment to Coastal because, as a matter of law, the evidence showed that (1) SWBT owed Coastal a duty to indemnify and hold Coastal harmless, (2) SWBT owed Coastal a duty to maintain insurance and to defend Coastal, (3) SWBT breached the license agreement, and (4) SWBT acted in bad faith. Coastal also asserts that it is entitled to reasonable attorney's fees under the civil practice and remedies code. See Tex. Civ. Prac. & Rem.Code Ann. § 38.001 (Vernon 1997).

Appellate courts review summary judgments de novo. Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex.1994); Tex. Commerce Bank-Rio Grande Valley, N.A. v. Correa, 28 S.W.3d 723, 726 (Tex.App.-Corpus Christi 2000, pet. denied). When both sides move for summary judgment and the trial court grants one side's motion without specifying its reasons, as in this case, the appellate court must review the motions and evidence and render the judgment that the trial court should have rendered. Comm'rs Court v. Agan, 940 S.W.2d 77, 81 (Tex.1997).

I. Duty to Indemnify

We begin with whether SWBT had a duty to indemnify Coastal under the license agreement. Indemnity agreements are construed under the normal rules of contract construction. Assoc. Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 284 (Tex.1998). The interpretation of an unambiguous contract is a question of law for the court to decide. N.M. Uranium, Inc. v. Moser, 587 S.W.2d 809, 814 (Tex.Civ.App.-Corpus Christi 1979, writ ref'd n.r.e.); see also Perry v. Houston Indep. Sch. Dist., 902 S.W.2d 544, 547 (Tex.App.-Houston [1st Dist.] 1995, writ dism'd w.o.j.). Unambiguous contracts are enforced as written. See, e.g., Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex.1996). When a contract contains an ambiguity, the granting of a motion for summary judgment is improper because the interpretation of the instrument is a question of fact for the jury. Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 529 (Tex.1987). Whether a contract is ambiguous is a question of law. See Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex.1995) (per curiam); see also Vermillion Constr. Co. v. Fid. & Deposit Co., 526 S.W.2d 744, 748 (Tex.Civ.App.-Corpus Christi 1975, no writ). If a written contract is worded so that it can be given a definite or certain legal meaning, then it is unambiguous. Nat'l Union, 907 S.W.2d at 520; see also Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983); Universal CIT Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154, 157 (Tex.1951). An ambiguity does not arise simply because the parties offer conflicting interpretations. Lopez v. Munoz, Hockema & Reed, 22 S.W.3d 857, 861 (Tex.2000); Kelley-Coppedge, Inc. v. Highlands, 980 S.W.2d 462, 465 (Tex.1998). Rather, a contract is ambiguous only if two or more meanings are genuinely possible after application of the pertinent rules of interpretation to the face of the instrument. Daniel, 243 S.W.2d at 157. Parol evidence is not admissible for the purpose of creating an ambiguity. Highlands, 980 S.W.2d at 464. Only when a contract is first determined to be ambiguous may the court admit extraneous evidence to determine the true meaning of the instrument. Id.

The starting point of our inquiry is the operative language of the license agreement that creates and specifies the scope of SWBT's duty to indemnify:

SWBT shall indemnify and hold COASTAL ... free and harmless from and against any and all claims, liabilities, losses, liens, demands, damages, and causes of action of every particular character and kind ... which COASTAL may at any time suffer, incur, or sustain arising from or connected with SWBT's obligations hereunder....

This language limits SWBT's duty to indemnify to events "arising from or connected with SWBT's obligations" under the license agreement. We must therefore examine SWBT's obligations under the license agreement to determine if SWBT's duty to indemnify has been triggered. The relevant language is as follows:

SWBT [has] the right, obligation and license to install, operate, maintain and service public telephone(s) and associated equipment.... The location of the Public Telephone Equipment at each premises shall be mutually agreed upon between COASTAL and SWBT in order to satisfy considerations of safety and discouragement of undesirable utilization.

According to this language, SWBT had an obligation to place its telephone equipment in a location that satisfied "considerations of safety."

The next question is whether the claims against Coastal and SWBT "arise from" or are "connected with" SWBT's obligation to "satisfy considerations of safety." The claims alleged that Coastal and SWBT were negligent for having "public telephones placed in the unobstructed path of vehicular traffic." On their face, these claims "arise from" and are "connected with" SWBT's obligation to place its telephone equipment in a location that satisfied "considerations of safety."

SWBT argues that the claims do not "arise from" and are not "connected with" SWBT's obligations because (1) its "on-site obligations were strictly limited to installing, operating, maintaining and servicing the three pay phones"; and (2) "the injury sustained by Blanche was caused, both factually and legally, solely by the criminal actions of Mr. Godinez, not by SWBT." SWBT contends that "phrases such as `arise from' in an indemnity agreement are to be narrowly construed." In particular, SWBT argues that "where an indemnitor's work or service under a contract is limited in nature and performed in a safe manner and injury results due to the negligence of the indemnitee or a third party, the injury does not `arise from' and is not `connected with' the indemnitor's performance under the contract." See Brown & Root, Inc. v. Serv. Painting Co., 437 S.W.2d 630 (Tex.Civ.App.-Beaumont 1969, writ ref'd).

In a separate point, SWBT emphasizes that "it is not the allegations in a case but the actual facts of the case that matter" in deciding whether a duty to indemnify exists. See Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 210 (Tex.1999) ("The facts that entitle an indemnitee to seek indemnification through suit come into existence when the indemnitee's liabilities become fixed and certain by judgment."); Am. Alliance Ins. Co. v. Frito-Lay, Inc., 788 S.W.2d 152, 153-54 (Tex.App.-Dallas 1990, writ dism'd). SWBT points out that Coastal voluntarily settled its claim with Guadalupe Ordonez and argues that Coastal thereby "destroyed any forum for determining who was at fault." See Man GHH Logistics GMBH v. Emscor, Inc., 858 S.W.2d 41, 43-44 (Tex.App.-Houston [14th Dist.] 1993, no writ).

SWBT further argues that "[t]he duty to indemnify attaches only upon a finding of liability, not by virtue of mere allegations." See Ingersoll-Rand, 997 S.W.2d at 205 ("We adhere to the longstanding rule that a claim based on a contract that provides indemnification from liability does not accrue until the indemnitee's liability becomes fixed and certain, as by rendition of a judgment."). SWBT argues that the take-nothing judgment against Maria Esparza precluded a contractual duty to indemnify from arising.

We take this last point first....