Admiral Ins. Co. v. Rio Grande Heart, Etc.
| Decision Date | 15 November 2001 |
| Docket Number | No. 13-00-552-CV.,13-00-552-CV. |
| Citation | 64 S.W.3d 497 |
| Parties | ADMIRAL INSURANCE COMPANY, Appellant, v. RIO GRANDE HEART SPECIALISTS OF SOUTH TEXAS, INC., Appellee. |
| Court | Texas Court of Appeals |
Marvin C. Moos, Nathan M. Rymer, David Clay Wilkerson, Debra E. Ibarra, Smith, Rymer, Moore & Moos, Houston, for appellant.
Jeffrey S. Osgood, P. Michael Jung, Toni Scott Reed, Strasburger & Price, for appellee.
Before Justices DORSEY, YANEZ, and RODRIGUEZ.
This appeal is brought by Admiral Insurance Company ("Admiral") to challenge the decision by the trial court to deny a summary judgment filed by Admiral and grant summary judgment in favor of appellee, Rio Grande Heart Specialists of South Texas ("RGH"). We affirm.
The litigation which produced this appeal arose from a lawsuit filed by two cardiologists against RGH.1 The cardiologists alleged that they had been enticed to work for RGH, abandoning their successful practices at The Heart Clinic, a consortium of cardiologists. After coming to RGH, the cardiologists became convinced that RGH was not operating its facility as promised, and filed suit against RGH. RGH had an insurance contract with Admiral, and made a demand that Admiral provide a defense against the cardiologists' suit.
Admiral filed suit under the Uniform Declaratory Judgment Act2 alleging that it had no duty to defend RGH against the cardiologists' lawsuit. Admiral filed a motion for summary judgment in the declaratory judgment case, based on the cardiologists' first amended original petition in the underlying suit. RGH also filed a motion for summary judgment, also based on the first amended original petition in the underlying suit. The trial court denied Admiral's motion and granted RGH's. Admiral now appeals, arguing that the trial court erred by denying its summary judgment motion and granting RGH's summary judgment motion.
Admiral raises four issues on appeal, arguing: 1) that the allegations raised in the underlying suit fall outside the scope of the insurance policy with RGH; 2) exclusions in the policy unambiguously exclude the claims in the underlying suit from coverage; 3) the underlying suit requests equitable remedies not encompassed within the insurance policy's definition of damages; and 4) petitions filed in the underlying suit, subsequent to the granting of summary judgment in the instant case, did not include any negligence-based claims, and, therefore, the trial court should have granted a new trial for Admiral on the issue of coverage.
A summary judgment movant has the burden of showing there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex.1985); Cigna Lloyds Ins. Co. v. Bradleys' Elec., Inc., 33 S.W.3d 102, 104 (Tex.App.Corpus Christi 2000, pet. denied). Where the only question presented to the trial court was a question of law and both sides moved for summary judgment, the appellate court should render the judgment that the trial court should have rendered. Jones v. Strauss, 745 S.W.2d 898, 900 (Tex.1988); Bradleys' Elec., Inc., 33 S.W.3d at 104; The Cadle Co. v. Butler, 951 S.W.2d 901, 905 (Tex. App.-Corpus Christi 1997, no writ).
An insurer's duty to defend is determined by comparing the factual allegations in the pleadings to the language of the insurance policy. National Union Fire Ins. Co. of Pittsburgh v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex.1997); Bradleys' Elec., Inc., 33 S.W.3d at 104. This is often referred to as the "eight corners" rule because the inquiry is limited to the four corners of the insurance policy and the four corners of the plaintiff's petition. National Union Fire Ins. Co. of Pittsburgh, 939 S.W.2d at 141; Bradleys' Elec., Inc., 33 S.W.3d at 104. If a petition does not allege facts within the scope of coverage, an insurer is not legally required to defend a suit against its insured. National Union Fire Ins. Co. of Pittsburgh, 939 S.W.2d at 141; American Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 848 (Tex.1994); Bradleys' Elec., Inc., 33 S.W.3d at 104. When applying the eight corners rule, if the appellate court finds the policy is vague, it construes the policy against the insurer in favor of finding a duty to defend. Houston Petroleum Co. v. Highlands Ins. Co., 830 S.W.2d 153, 155 (Tex.App.-Houston [1st Dist.] 1990, writ denied).
When deciding if a duty to defend exists, appellate courts assume the facts in the plaintiff's petition are true, and determine if the claims fall within the limits of the policy. Id. The factual allegations within a petition are liberally interpreted when determining if a petition alleges facts that potentially state a claim within the coverage of a policy. National Union Fire Ins. Co. of Pittsburgh, 939 S.W.2d at 141; Bradleys' Elec., Inc., 33 S.W.3d at 104. Any doubt as to whether the allegations state a cause of action within the coverage of the policy is resolved in the insured's favor. National Union Fire Ins. Co. of Pittsburgh, 939 S.W.2d at 141; Bradleys' Elec., Inc., 33 S.W.3d at 104. The focus of the inquiry is on the facts alleged, not the legal theories alleged. National Union Fire Ins. Co. of Pittsburgh, 939 S.W.2d at 141; Bradleys' Elec., Inc., 33 S.W.3d at 104.
The cardiologists raised several allegations. According to their petition, RGH made a number of representations to the cardiologists, designed to induce the cardiologists to leave their existing practice at The Heart Clinic, and practice at RGH instead. According to their petition, the cardiologists relied upon RGH's representations, left their own practice, and "began a new practice in partnership with [RGH]." The cardiologists accused RGH of having created a "sham" corporation, which was used to negotiate employment contracts, and then employ, the cardiologists. The cardiologists accuse RGH of misleading them, either intentionally or negligently, into working in RGH's cardiology program and then engaging in wrongful conduct to deprive the cardiologists of money. In the alternative, the cardiologists allege that RGH was negligent in making promises to the cardiologists then failed to exercise reasonable care in obtaining information for, or communicating information to, the cardiologists, resulting in harm to the cardiologists.
In its first issue, Admiral argues that the trial court erred in granting RGH's summary judgment and in denying Admiral's motion for summary judgment because the allegations in the cardiologists' lawsuit fell outside the scope of the policy's coverage provisions. RGH argues that the cardiologists' petition triggered Admiral's duty to defend under the provisions of the policy covering managed health care.
The policy provides that Admiral
will pay those sums that the insured becomes legally obligated to pay as "damages" because of a "wrongful act" in the "policy territory", arising out of your "managed health care" services to which this insurance applies. [Admiral] will have the right and duty to defend any "suit" seeking those "damages."
Under the definitions section of the policy, "wrongful act" is defined as any actual or alleged error or omission, negligent act, misstatement or misleading statement, or breach of duty. The definition of "managed health care" includes "sales and marketing of health care services;" "evaluating for payment and processing of health care claims;" and "providing records and data processing relating to services offered."
The cardiologists' petition alleges facts within the scope of the policy. According to the petition, RGH made misstatements or misleading statements which caused the cardiologists harm. These representations included statements concerning the sales and marketing of health care services and the accurate and timely provision of detailed accountings to the cardiologists. Assuming the factual allegations in the petition to be true, the cardiologists' suit constitutes a claim for damages caused by wrongful acts on the part of RGH, arising out of RGH's managed health care services. Issue number one is overruled.
With its second issue, Admiral argues that the trial court erred by granting RGH's motion for summary judgment, and denying Admiral's motion because the claims raised by the cardiologists are excluded by the policy and, therefore, Admiral has no duty to defend RGH in the suit. Admiral argued that the exclusions pertaining to employment, breach of contract, and fraudulent acts preclude coverage.
The supreme court has held that:
[g]enerally, a contract of insurance is subject to the same rules of construction as other contracts. If the written instrument is worded so that it can be given only one reasonable construction, it will be enforced as written. However, if a contract of insurance is susceptible of more than one reasonable interpretation, we must resolve the uncertainty by adopting the construction that most favors the insured. The court must adopt the construction of an exclusionary clause urged by the insured as long as that construction is not unreasonable, even if the construction urged by the insurer appears to be more reasonable or a more accurate reflection of the parties' intent. In particular, exceptions or limitations on liability are strictly construed against the insurer and in favor of the insured.
National Union Fire Ins. Co. of Pittsburgh, Pa. v. Hudson Energy Co., 811 S.W.2d 552, 555 (Tex.1991) (citations omitted). Our inquiry is whether the construction advanced by RGH is a reasonable interpretation. Id.
The policy states that it does not apply to...
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