Trammell Crow Residential Co. v. American Protection Insurance Co., 070714 FED5, 13-10451

Docket Nº:13-10451
Opinion Judge:PER CURIAM
Party Name:TRAMMELL CROW RESIDENTIAL COMPANY, Plaintiff-Appellant v. AMERICAN PROTECTION INSURANCE COMPANY Defendant-Appellee
Judge Panel:Before DENNIS and PRADO, Circuit Judges, and BROWN, District Judge.
Case Date:July 07, 2014
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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TRAMMELL CROW RESIDENTIAL COMPANY, Plaintiff-Appellant

v.

AMERICAN PROTECTION INSURANCE COMPANY Defendant-Appellee

No. 13-10451

United States Court of Appeals, Fifth Circuit

July 7, 2014

Appeal from the United States District Court for the Northern District of Texas USDC No. 3:10-CV-2163

Before DENNIS and PRADO, Circuit Judges, and BROWN, District Judge. [*]

PER CURIAM [**]

Plaintiff Trammell Crow Residential Company ("Trammell Crow") operated a number of apartment complexes in Colorado. Between 2001 and 2004, Trammell Crow was covered by four insurance policies from three different insurance companies—one policy issued by Defendant American Protection Insurance Company ("APIC"), one policy issued by Virginia Surety, and two policies issued by Old Republic. When Trammell Crow was sued by residents due to a mold problem, it tendered its defense to Virginia Surety. Virginia Surety later sued APIC seeking contribution, but the court granted summary judgment to APIC finding no contribution was owed. Following the litigation against Virginia Surety, APIC was paid funds from a Trammell Crow expense account to reimburse its costs in defending against Virginia Surety's claims. Trammell Crow then brought this suit against APIC, alleging that Trammell Crow was not required to reimburse APIC's defense costs and that the payment to APIC was improper. APIC counterclaimed, urging that Trammell Crow owed it reimbursement.

The district court granted summary judgment in favor of APIC, and Trammell Crow now appeals. Concluding that Trammell Crow is required to reimburse APIC's defense costs up to the amount of the deductible under the APIC policy, but that the district court improperly determined that Trammell Crow was collaterally estopped from arguing that the deductible had been met, we affirm in part and reverse in part and remand.

BACKGROUND

This litigation is the third matter in a series of cases involving an insurance policy issued to Trammell Crow by APIC. Trammell Crow operated a number of apartment complexes in Colorado. Between 2001 and 2004, Trammell Crow was covered by four insurance policies from three different insurance companies—one policy issued by APIC (the "APIC Policy"), one policy issued by Virginia Surety, and two policies issued by Old Republic. The APIC policy, which is at issue in the pending case, had a $1, 000, 000 per occurrence limit with a $250, 000 deductible and a $5, 000, 000 general aggregate limit.

In the first case, known as the "Colorado Litigation, " Trammell Crow was sued by several residents regarding a mold problem. Trammell Crow tendered its defense to Virginia Surety, and the claims ultimately settled.

In the second matter, known as the "Insurance Litigation, " Trammell Crow sued Virginia Surety, alleging that Virginia Surety had refused to pay all of the defense and settlement payments incurred in the Colorado Litigation. Virginia Surety filed a third-party complaint against APIC, seeking contribution toward the defense and settlement costs from the Colorado Litigation. The court granted APIC's motion for summary judgment, finding that APIC did not have a duty to defend or indemnify Trammell Crow in the Colorado Litigation, and thus Virginia Surety was not entitled to contribution.

APIC then billed an expense account owned by Trammell Crow for the costs it incurred in the Insurance Litigation. Trammell Crow, contending that it is not responsible for APIC's defense costs, filed this lawsuit (the "Current Litigation") seeking return of the money that was paid to APIC out of the expense account. APIC counterclaimed requesting compensation for the costs incurred in the Insurance Litigation. The parties filed cross-motions for summary judgment. The district court granted APIC's motion for summary judgment and denied Trammell Crow's motion for summary judgment. The district court found that APIC's defense costs qualified as a "claim expense" under the APIC policy, thus obligating Trammell Crow to pay these costs up to the amount of its deductible. Further, the district court found that Trammell Crow was barred pursuant to the doctrine of collateral estoppel from arguing that the deductible had been met, based on a previous order in the Insurance Litigation. Trammell Crow now appeals these determinations.

STANDARD OF REVIEW

Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). We review a district court's grant of summary judgment de novo, construing all facts and evidence in the light most favorable to the non-moving party. See EEOC v. Chevron Phillips Chem. Co., 570 F.3d 606, 615 (5th Cir. 2009).

With respect to the district court's application of collateral estoppel, "[g]enerally, the issue of whether to apply collateral estoppel is a question of law, making our review de novo." Bradberry v. Jefferson Cnty., 732 F.3d 540, 549 (5th Cir. 2013).

DISCUSSION

I.

The dispute between Trammell Crow and APIC focuses on whether APIC's costs and expenses in the Insurance Litigation qualify as a "claim expense" under the APIC Policy. In relevant part, the APIC Policy defines "claim expense, " stating:

As used in this endorsement, the words claim expense mean:

D. all reasonable expenses incurred by the insured and by us in

1. investigating an occurrence, offense, claim or "suit",

2. defending a "suit",

3. pursuing rights of recovery against others, and

4. investigating, defending and settling any coverage dispute under this policy

but not including wages or salary of any employee of the insured, normal operating or overhead expenses or payments made by the insured under contract with the claim service provider stated in the schedule of this endorsement.

Under the terms of the APIC Policy, costs qualifying as a claim expense are to be allocated between Trammell Crow and APIC as follows:

A. When the total amount of all damages and claim expense paid for all claims or "suits" as a result of any one "occurrence" or offense does not exceed the Deductible Amount, we [APIC] will not be obligated to pay any part of the claim expense.

B. When the total amount of damages and claim expense paid for all claims or "suits" as a result of any one "occurrence" or offense is in excess of the Deductible Amount, we [APIC] will be obligated to pay that part of the claim expense that exceeds the Deductible Amount.

As mentioned above, the APIC Policy had a $1, 000, 000 per occurrence limit with a $250, 000 deductible and a $5, 000, 000 general aggregate limit.

Trammell Crow argues that the term "claim expense" does not include the attorneys' fees and litigation costs that APIC incurred in defending against Virginia Surety's third-party complaint in the Insurance Litigation. Trammell Crow points to the policy's definition of "claim expense, " noting that subsection D provides that reasonable expenses must be incurred by Trammell Crow and APIC, as opposed to stating that the expenses may be incurred by either Trammell Crow or APIC. Drawing on the distinction between "and" and "or, " Trammell Crow reasons that there are no joint expenses at issue; rather APIC's defense costs were only incurred by APIC. Accordingly, Trammell Crow maintains that these costs do not qualify as a "claim expense."

Alternatively, Trammell Crow argues that if APIC's costs in the Insurance Litigation qualify as a "claim expense, " then Trammell Crow would be deemed to have met its deductible and therefore should not be obligated to reimburse APIC for APIC's...

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