Alea London Ltd. v. Bickford

• Decision Date: 12 June 2009
• Docket Number: Civil Action No. H-08-648.
• Parties: ALEA LONDON LIMITED, Plaintiff, v. David BICKFORD, et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

627 F.Supp.2d 763

ALEA LONDON LIMITED, Plaintiff, v. David BICKFORD, et al., Defendants.

Civil Action No. H-08-648.

United States District Court, S.D. Texas, Houston Division.

June 12, 2009.

COPYRIGHT MATERIAL OMITTED

Richard Hunt Gateley, Michael Lewis Schneiderman, Brackett & Ellis, Fort Worth, TX, for Plaintiff.

C. Thomas Valentine, Daw & Ray PC, Mary Cazes Greene, Phelps Dunbar LLP, Houston, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

GRAY H. MILLER, District Judge.

Pending before the court are plaintiff Alea London Limited's ("Alea") motion for summary judgment (Dkt. 12) and Defendant Scottsdale Insurance Company's ("Scottsdale") motion for partial summary judgment (Dkt. 38). After carefully considering the parties' pleadings, the record evidence, and the applicable law, Alea's motion is GRANTED, and Scottsdale's motion is DENIED.

I. BACKGROUND

This is an insurance coverage dispute among Alea, Scottsdale, and several Bickford entities including David Bickford, the individual, D.R. Bickford & Sons, Inc., and Bickford & Sons, L.P. David Bickford, a framing and carpentry contractor, is associated with both Bickford entities, but has never been the general partner of Bickford L.P. As part of his carpentry business, Bickford secured several liability policies from Alea and Scottsdale. The relevant policies are:

1. Alea Policy ALE 12566, effective from April 15, 2002 to April 15, 2003;

2. Alea Policy ALE 15662, effective from April 15, 2003 to April 15, 2004;

3. Alea Policy ALE 18696, effective from April 15, 2004 to April 15, 2005;

4. Scottsdale Policy CLS0655162, effective from March 16, 2000 to March 16, 2001; and

5. Scottsdale Policy CLS0738150, effective from March 15, 2001 to March 15, 2002.

Dkts. 12, 18. David Bickford is the named insured in all of the Alea policies. Bickford & Sons is the named insured in the Scottsdale policies. Id.

In August, 2006, Royal Oaks Homes, LP sued D.R. Bickford & Sons, Inc. as successor in interest to Bickford & Sons, Inc. in the 157th Judicial District Court of Harris County, Texas, Cause No. 2006-53778 ("Royal Oaks Lawsuit"). D.R. Bickford & Sons, Inc. was also a named defendant in Royal Oaks Homes, L.P. v. Builders Firstsource-South Texas L.P., which was pending in the 61st Judicial District Court of Harris County, Texas, Cause No. 2006-53779 before it was dismissed with prejudice as to defendant D.R. Bickford & Sons, Inc. ("Builders Firstsource Lawsuit"). The plaintiff in the Royal Oaks Lawsuit alleges that Bickford & Sons, Inc. provided substandard construction services which resulted in water penetration of wall cavities in several homes in the Royal Oaks subdivision. As a result of the damages, Royal Oaks Homes, LP paid several claims to homeowners. It now seeks to recover for those damages. Dkt. 12.

In April, 2007, 5177 Builders Ltd. and Lovett Interests filed a third-party petition against D.R. Bickford & Sons, Inc. and Bickford & Sons, L.P. in the 61st Judicial District Court of Harris County, Texas, Cause No. 2007-24030 for indemnity arising out of claims made by Kandice Fergus, individually and as next friend to Keegan Fergus, her minor child ("Fergus Lawsuit"). The Ferguses allege that they purchased a home from 5177 Builders in July, 2003, which also suffered water intrusion, and that the intrusion lead to asthma in Keegan Fergus which required medical attention. The water intrusion was allegedly caused by the work of D.R. Bickford & Sons, Inc. and Bickford & Sons, L.P. On August 4, 2008, the Fergus lawsuit was dismissed without prejudice. However, since Keegan Fergus is still a minor, he can bring suit after he reaches 18 years of age. Id.¹

Scottsdale initially provided a defense to the Bickford defendants in the Royal Oaks and Builders Firstsource Lawsuits. However, by letter dated August 4, 2008, Scottsdale tendered the defense and indemnity of Bickford & Sons in both lawsuits to Alea because some of the claims alleged in the underlying lawsuits fell outside of the coverage period of the Scottsdale policies.

Alea's motion for summary judgment (Dkt. 12) seeks declarations that:

1. Alea has no duty to defend or indemnify D.R. Bickford & Sons, Inc. in the Royal Oaks Lawsuit or the Builders Firstsource Lawsuit because it is not a named insured under the Alea policies;

2. Alea has no duty to defend or indemnify D.R. Bickford & Sons, Inc. or Bickford & Sons, L.P. in the Fergus Lawsuit because neither is a named insured under the Alea policies;

3. Alea has no duty to defend or indemnify D.R. Bickford & Sons, Inc. or Bickford & Sons, L.P. in the Fergus Lasuit because the allegedly faulty work was done before the inception of the Alea policies;

4. Alea has no duty to contribute to Scottsdale's defense costs for D.R. Bickford & Sons, Inc. in the Royal Oaks Lawsuit or the Builders Firstsource Lawsuit because it is not a named insured under the Alea policies; and

5. Even if Alea has a duty to defend, it does not have a duty to indemnify D.R. Bickford & Sons, Inc. or Bickford & Sons, L.P. in the Royal Oaks Lawsuit or the Builders Firstsource Lawsuit because the Independent Contractor Exclusion bars coverage under the Alea policies.

Scottsdale's motion for partial summary judgment (Dkt. 38) seeks a finding that Alea must reimburse it for its pro rata share of defense costs already expended in the underlying lawsuits.

II. DECLARATORY JUDGMENT ACT AND JURISDICTION

The Declaratory Judgment Act provides that "[i]n a case of actual controversy within its jurisdiction, ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The United States Supreme Court has repeatedly characterized the Declaratory Judgment Act as an "enabling" statute only, "confer[ing] a discretion on the courts rather than an absolute right upon the litigant." Wilton v. Seven Falls Co., 515 U.S. 277, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995) (quoting PSC v. Wycoff Co., 344 U.S. 237, 241, 73 S.Ct. 236, 97 L.Ed. 291 (1952)) (internal quotation marks omitted). Therefore, "the propriety of declaratory relief in a particular case will depend upon a circumspect sense of its fitness informed by the teachings and experience concerning the functions and extent of federal judicial power." Id. (quoting Wycoff, 344 U.S. at 241, 73 S.Ct. 236).

Insurance coverage disputes are often resolved in an action for declaratory judgment. Harris v. United States Fidelity & Guaranty Co., 569 F.2d 850, 852 (5th Cir.1978). However, § 2201 is a procedural provision only extending to controversies within the jurisdiction of the federal courts. Gaar v. Quirk, 86 F.3d 451, 453-54 (5th Cir.1996). As such, federal courts may not entertain declaratory judgment actions unless there is an independent basis for subject matter jurisdiction. Lowe v. Ingalls Shipbuilding, A Div. of Litton Systems, Inc., 723 F.2d 1173, 1177 (5th Cir.1984). As the present case is based on diversity of citizenship, under 28 U.S.C. § 1332, the jurisdictional requirements are satisfied, and the requests for declaratory relief are properly before this court.

III. LEGAL STANDARDS AND ANALYSIS

A. SUMMARY JUDGMENT STANDARD

A timely motion for summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c); see also Carrizales v. State Farm Lloyds, 518 F.3d 343, 345 (5th Cir.2008). "[W]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). An issue is "material" if its resolution could affect the outcome of the action. Burrell v. Dr. Pepper/Seven Up Bottling Group, Inc., 482 F.3d 408, 411 (5th Cir.2007).

The moving party bears the initial burden of informing the court of all evidence demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Only when the moving party has discharged this initial burden does the burden shift to the nonmoving party to demonstrate that there is a genuine issue of material fact. Id. at 322, 106 S.Ct. 2548. If the moving party fails to meet this burden, then it is not entitled to a summary judgment, and no defense to the motion is required. Id.

"For any matter on which the non-movant would bear the burden of proof at trial ..., the movant may merely point to the absence of evidence and thereby shift to the non-movant the burden of demonstrating by competent summary judgment proof that there is an issue of material fact warranting trial." Transamerica Ins. Co. v. Avenell, 66 F.3d 715, 718-19 (5th Cir. 1995); see also Celotex, 477 U.S. at 323-25, 106 S.Ct. 2548. When the moving party bears the burden of proof on the relevant issues at trial, it "must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir.1986). To prevent summary judgment, "the nonmoving party must come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co., 475 U.S. at 587, 106 S.Ct. 1348 (quoting FED. R. CIV. P. 56(e)). When considering a motion for summary judgment, the court must view the evidence in the light most favorable to the non-movant and draw all justifiable inferences in favor of the nonmovant. Envtl. Conservation Org. v. City of Dallas, 529 F.3d 519, 524 (5th Cir.2008). The court must review all of the evidence in the record, but make no credibility determinations or weigh any...