Admiral Ins. Co. v. Little Big Inch Pipeline Co., Civil Action No. EP-06-CV-0446-KC.

CourtUnited States District Courts. 5th Circuit. Western District of Texas
Writing for the CourtKathleen Cardone
Citation523 F.Supp.2d 524
PartiesADMIRAL INSURANCE COMPANY, Plaintiff, v. LITTLE BIG INCH PIPELINE COMPANY, INC.; Avenida de Palms, Ltd.; Ept Bella Homes, L.P.; and Oneok, Inc. d/b/a Texas Gas Service Company, Defendants.
Decision Date14 December 2007
Docket NumberCivil Action No. EP-06-CV-0446-KC.
523 F.Supp.2d 524
ADMIRAL INSURANCE COMPANY, Plaintiff,
v.
LITTLE BIG INCH PIPELINE COMPANY, INC.; Avenida de Palms, Ltd.; Ept Bella Homes, L.P.; and Oneok, Inc. d/b/a Texas Gas Service Company, Defendants.
Civil Action No. EP-06-CV-0446-KC.
United States District Court, W.D. Texas, El Paso Division.
December 14, 2007.

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Nathan M. Rymer, David Clay Wilkerson, Rymer, Moore, Jackson & Echols, P.C., Houston, TX, for Plaintiff.

Andres Eduardo Almanzan, Carl H. Green, Mounce, Green, Myers, Safi & Galatzan, P.C., Harrel L. Davis, III, Gordon & Mott, P.C., El Paso, TX, for Defendants.

ORDER

KATHLEEN CARDONE, District Judge.


On this day, the Court considered Plaintiff's Motion for Summary Judgment and Defendants' Responses. For the reasons set forth below, it is hereby ORDERED that Plaintiffs Motion be GRANTED in part and DENIED in part.

I. BACKGROUND

This case involves the rights and duties of an insurance company to defend a contractor and sub-contractor in an underlying suit in a Texas state court. Plaintiff Admiral Insurance Company ("Admiral") seeks a declaratory judgment concerning an insurance policy it issued to Defendant Little Big Inch Pipeline Company, Inc. ("LBI"). LBI claims Texas Gas Services Company, a Division of Oneok, Inc. ("Texas Gas") is also insured. Defendants Avenida De Palmas, Ltd. ("Avenida") and Bella Homes, L.P. ("Bella Homes") (collectively "the Underlying Plaintiffs") brought a negligence and trespass claim against LBI and Texas Gas (collectively the "Underlying Defendants") in El Paso County Court. See Avenida de Palmas, Ltd. & Bella Homes, L.P. v. Oneok, Inc. d/b/a Texas Gas Service Co. & Little Big Inch Pipeline Co., Inc., Cause No. 2006-4344., LBI demanded Admiral defend and indemnify it, and Admiral has denied coverage.

A. Jurisdiction and Venue

Plaintiff Admiral is a Delaware corporation with its principal place of business in New Jersey. Pl.'s Third Am. Compl. ¶ 1.1 Defendant LBI is a Texas corporation with its principal place of business in El Paso, Texas. Id. ¶ 2; Def. LBI's Answer to Pl.'s Third Am. Compl. ¶ 2. Defendant Texas Gas is an Oklahoma corporation authorized to do business in Texas. Pl.'s Third Am. Compl. ¶ 5; Texas Gas's Answer to Pl.'s Third Am. Compl. ¶ 2. Both Defendants Avenida and Bella Homes are Texas corporations with their principal place of business in El Paso, Texas. Pl.'s Third Am. Compl. ¶ 3; Defendants Avenida and Bella Homes' Answer to Pl.'s Third Am. Compl. ¶ 1.

There appears, therefore, to be complete diversity of citizenship between Plaintiff and all Defendants. Moreover, the amount in controversy in this case exceeds $75,000.2 The Court therefore has subject

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matter jurisdiction over the instant case pursuant to 28 U.S.C. § 1332(a)(1). Venue is also proper in this case because a substantial part of the events or omissions upon which this claim is based occurred in the Western District of Texas, and because Defendants Avenida and Bella Homes have their principal place of business in this District. See 28 U.S.C. § 1391(a)(1)(2).

B. Facts and Procedure

Because this is a diversity action, the Court will apply the law of the state in which it sits and in which the events at issue took place, namely Texas law. See Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Texas follows the "eight corners" rule of insurance contract interpretation. United Nat'l Ins. Co. v. Hydro Tank, Inc., 497 F.3d 445, 448 (5th Cir.2007) (citing GuideOne Elite Ins. v. Fielder Rd. Baptist Church, 197 S.W.3d 305, 308 (Tex.2006)). This rule states that "an insurer's duty to defend is determined by the third-party plaintiffs pleadings, considered in light of the policy provisions, without regard to the truth or falsity of those allegations." GuideOne Elite Ins., 197 S.W.3d at 308; see also King v. Dallas Fire Ins. Co., 85 S.W.3d 185, 188 (Tex.2002). The duty to defend, therefore, is determined by the allegations in the underlying pleadings and the language of the insurance policy. Gehan Homes Ltd. v. Employers Mut. Cas. Co., 146 S.W.3d 833, 838 (Tex.App.2004) (citing Nat'l Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex.1997)). If the pleadings allege facts stating a cause of action potentially falling within the insurance policy's scope of coverage, the insurer has a duty to defend. Hydro Tank, Inc., 497 F.3d at 448 (citing Liberty Mut. Ins. Co. v. Graham, 473 F.3d 596, 599 (5th Cir.2006)). When applying the "eight corners" rule, the Court gives the allegations in the petition a liberal interpretation. Gehan Homes Ltd., 146 S.W.3d at 838 (citing Nat'l Union Fire Ins. Co., 939 S.W.2d at 141). Doubtful cases will be resolved in favor of the insured. Hydro Tank, Inc., 497 F.3d at 448 (citing Nat'l Union Fire Ins. Co., 939 S.W.2d at 141). Therefore, the facts alleged in the underlying petition against the insured are presumed to be true when gauging the insurer's duty to defend. Gehan Homes, Ltd., 146 S.W.3d at 838 (citing Heyden Newport Chem. Corp. v. S. Gen. Ins. Co., 387 S.W.2d 22, 24 (Tex.1965)).3

Taking the facts in the Underlying Petition as true, in June 2006, Bella Homes contacted Texas Gas and requested that natural gas service be turned off to the Las Palmas Mobile Home Park, a section of real property located at 11600 Montana Avenue in El Paso ("the Property"). See Pl.'s Mot. for Summ. J. App. 62-67 ¶¶ 8-9 ("Underlying Pls.' Second Am. Pet."). Bella Homes was in the process of closing down the Property as a mobile home park and converting it into a residential subdivision. Id. ¶ 9. Bella Homes at all times was acting on behalf of Avenida, who owned the Property. Id. ¶ 8.

Texas Gas subsequently engaged the services of LBI to excavate and remove the gas lines from the Property. Id. ¶ 10.

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On June 27, 2006, LBI-acting at all times as agent for Texas Gas-began excavating and digging up the gas lines.4 Id. ¶ 11. In addition to digging up the gas lines, LBI also dug up concrete driveways, concrete slabs and foundations on the Property, and left a considerable amount of debris behind. Id. Some of the driveways, slabs and foundations had been constructed by Bella Homes for the new residential subdivision. Id.

The Underlying Plaintiffs state that Texas Gas either misunderstood Bella Homes' instructions, miscommunicated those instructions to LBI, or LBI misunderstood Texas Gas's instructions, because at no time did Bella Homes request Texas Gas to excavate and remove the gas lines. Id. ¶ 10. Alternatively, the Underlying Plaintiffs claim either Texas Gas or LBI failed to adequately or accurately ascertain the scope of the job. Id. Regardless, the Underlying Plaintiffs claim both Underlying Defendants acted negligently in performing the work requested by the Underlying Plaintiffs. Id.

The Underlying Defendants' actions ultimately resulted in damages to the Underlying Plaintiffs' overall project in constructing new homes. Id. ¶ 12. Defendants also left debris that was not the subject of their work. Id. Additionally, Defendants' actions caused the value of Plaintiffs' property to decrease. Id. Overall, the damages in question total $250,336. Id. ¶ 14.

On October 5, 2006, Bella Homes sued Texas Gas and LBI in El Paso County Court. See generally Avenida de Palmas, Ltd. & Bella Homes, L.P. v. Oneok, Inc. d/b/a Texas Gas Service Co. & Little Big Inch Pipeline Co., Inc., Cause No. 2006-4344. `Subsequent amendments to the Underlying Plaintiffs' pleadings added Avenida as a party. The claims ultimately included negligence, trespass, and a demand for attorneys' fees. See Underlying Pls.' Second Am. Pet. ¶¶ 13-19.

Admiral provides commercial liability insurance coverage to LBI under Admiral Insurance Policy No. CA000000365-05 ("The Policy"). Pl.'s Mot. for Summ. J. 21 ¶ 1 ("Pl.'s Proposed Undisputed Facts").5 The Policy has an effective period from August 31, 2005, to August 31, 2006. Id.; see also App. 1-49. LBI asserts that Texas Gas is an additional insured under the Policy. Defs. LBI and Texas Gas's Resp. to Pl.'s Mot. for Summ. J. App. 1 ¶ 3 (Defs.' Resp. to Pl.'s Proposed Undisputed Facts). LBI demanded that Admiral defend and indemnify LBI pursuant to the Policy. Pl.'s Proposed Undisputed Facts ¶ 3. Admiral denied coverage. Id.

On December 29, 2006, Admiral brought the instant suit, seeking declaratory judgment as to its rights and duties to defend and indemnify LBI pursuant to the Policy. See generally Pl.'s Compl. and subsequent amendments. Admiral filed its motion for Summary Judgment November 9, 2007.

II. DISCUSSION

A. Standard

Summary judgment is required "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any

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material fact and that the movant is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c) (2007); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Warfield v. Byron, 436 F.3d 551, 557 (5th Cir.2006). The substantive `law identifies which facts are material. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202,(1986); Ellison v. Software Spectrum, Inc., 85 F.3d 187, 189 (5th Cir.1996). A dispute about a material fact is genuine only "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Ellison, 85 F.3d at 189.

"[The] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323, 106 S.Ct. 2548; Wallace v. Texas Tech. Univ., 80 F.3d 1042, 1046-1047 (5th Cir.1996). If the moving party meets its initial burden, the nonmoving...

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6 practice notes
  • Bldg. Specialties Inc v. Liberty Mut. Fire Ins. Co., Civil Action No. H-09-0823.
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • 17 May 2010
    ...“property damage.”712 F.Supp.2d 642 242 S.W.3d at 10 (emphasis added); see also Admiral Ins. Co. v. Little Big Inch Pipeline Co., 523 F.Supp.2d 524, 538 (W.D.Tex.2007) (citing Lamar Homes and noting that Texas law does not recognize purely economic damages as “property damage”); Charlton v.......
  • Energy Res. LLC v. Petroleum Solutions Int'l, LLC, CIVIL ACTION H:08-656
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • 17 August 2011
    ...act that is legally deemed to constitute an intentional tort—is a Maupin tortfeasor. Admiral Ins. Co. v. Little Big Inch Pipeline Co., 523 F.Supp.2d 524, 534 (W.D. Tex. 2007). On the other hand, an obligor who intends his performance to be correct, but who negligently falls short of the app......
  • Mid-Continent Cas. Co. v. Jhp Development, Inc., No. 05-50796.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 28 January 2009
    ...to damage caused during a prolonged suspension of active construction work. See Admiral Ins. Co. v. Little Big Inch Pipeline Co., Inc., 523 F.Supp.2d 524, 541 (W.D.Tex. 2007) (finding that exclusion applied to debris from excavation work); Jim Johnson Homes, Inc. v. Mid-Continent Casualty C......
  • PPI Tech. Servs., L.P. v. Liberty Mut. Ins. Co., No. 12–40189.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 29 November 2012
    ...plaintiffs suffered. The “property damage” clause in the policy at issue in Admiral Insurance Co. v. Little Big Inch Pipeline Co., 523 F.Supp.2d 524 (W.D.Tex.2007) is the same as the clause in the Policy at issue here. The Little Big Inch plaintiffs alleged that damage to land from dug-up d......
  • Request a trial to view additional results
6 cases
  • Bldg. Specialties Inc v. Liberty Mut. Fire Ins. Co., Civil Action No. H-09-0823.
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • 17 May 2010
    ...“property damage.”712 F.Supp.2d 642 242 S.W.3d at 10 (emphasis added); see also Admiral Ins. Co. v. Little Big Inch Pipeline Co., 523 F.Supp.2d 524, 538 (W.D.Tex.2007) (citing Lamar Homes and noting that Texas law does not recognize purely economic damages as “property damage”); Charlton v.......
  • Energy Res. LLC v. Petroleum Solutions Int'l, LLC, CIVIL ACTION H:08-656
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • 17 August 2011
    ...act that is legally deemed to constitute an intentional tort—is a Maupin tortfeasor. Admiral Ins. Co. v. Little Big Inch Pipeline Co., 523 F.Supp.2d 524, 534 (W.D. Tex. 2007). On the other hand, an obligor who intends his performance to be correct, but who negligently falls short of the app......
  • Mid-Continent Cas. Co. v. Jhp Development, Inc., No. 05-50796.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 28 January 2009
    ...to damage caused during a prolonged suspension of active construction work. See Admiral Ins. Co. v. Little Big Inch Pipeline Co., Inc., 523 F.Supp.2d 524, 541 (W.D.Tex. 2007) (finding that exclusion applied to debris from excavation work); Jim Johnson Homes, Inc. v. Mid-Continent Casualty C......
  • PPI Tech. Servs., L.P. v. Liberty Mut. Ins. Co., No. 12–40189.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • 29 November 2012
    ...plaintiffs suffered. The “property damage” clause in the policy at issue in Admiral Insurance Co. v. Little Big Inch Pipeline Co., 523 F.Supp.2d 524 (W.D.Tex.2007) is the same as the clause in the Policy at issue here. The Little Big Inch plaintiffs alleged that damage to land from dug-up d......
  • Request a trial to view additional results

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