American Int'l Specialty Lines Ins. v. Triton Energy Ltd.

• Decision Date: 29 June 2001
• Docket Number: No. 05-00-01584-CV,05-00-01584-CV
• Citation: 52 S.W.3d 337
• Parties: (Tex.App.-Dallas 2001) AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY, Appellant v. TRITON ENERGY LIMITED, TRITON ENERGY CORPORATION, AND TRITON INDONESIA, INC., Appellees
• Court: Texas Court of Appeals

Page 337

52 S.W.3d 337 (Tex.App.-Dallas 2001)

AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY, Appellant v. TRITON ENERGY LIMITED, TRITON ENERGY CORPORATION, AND TRITON INDONESIA, INC., Appellees

No. 05-00-01584-CV

Court of Appeals of Texas, Dallas

June 29, 2001

On Appeal from the 191st Judicial District Court Dallas County, Texas Trial Court Cause No. DV99-07043-J

Before Justices Kinkeade, Wright, and FitzGerald

OPINION

Wright, Justice.

American International Specialty Lines Insurance Company ("AISLIC") brings this interlocutory appeal pursuant to section 51.014 of the Texas Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. 51.014(a)(4) (Vernon Supp. 2001). In a single issue, AISLIC contends that the trial court abused its discretion by granting an anti-suit injunction against it. After reviewing the record, we disagree.

Factual and Procedural Background

In the underlying litigation, AISLIC issued a commercial umbrella insurance policy to Triton Energy Corporation for the policy period from May 31, 1993 to May 31, 1994, with policy limits of $25 million. Plaintiffs/appellees Triton Energy Limited, Triton Energy Corporation, and Triton Indonesia, Inc. (collectively, "Triton") contend that this policy provides coverage for an $11,014,110 punitive damage award against them on a malicious prosecution claim in David A. Hite et al. v. Triton Energy Corp. et al., No. CV 97-7146 R (XCT) in the United States District Court for the Central District of California (the "Hite Litigation").

Prior to the verdict in the Hite Litigation, Triton filed this action against several of its insurance carriers to assert claims for coverage in connection with the Hite Litigation. After the Hite verdict, on November 9, 1999, Triton joined AISLIC in this litigation. On November 12, 1999, AISLIC filed a new proceeding in California against Triton (the "California Lawsuit"), seeking a declaratory judgment that its policy did not cover the punitive damages awarded in the Hite Litigation. Both cases proceeded.

In the California Lawsuit, AISLIC refused Triton's request for an extension of time to file its answer and proceeded with the first of several attempts to obtain an accelerated summary judgment hearing on the coverage issue. Although California law prohibits the hearing of summary judgment motions until 60 days after the defendant has answered,¹ AISLIC asked the court for an accelerated summary judgment hearing before Triton made a general appearance in the California suit. The California court denied AISLIC's request because not all of the defendants had appeared or otherwise responded to AISLIC's complaint. After Triton filed its answer in May 2000, AISLIC again sought an accelerated summary judgment hearing. The California court denied that request as well, setting a hearing for September 6, 2000, to allow Triton time to conduct discovery in defense of AISLIC's motion.

In the meantime, Triton filed an application for anti-suit injunction in Texas, seeking to enjoin AISLIC from pursuing the California Lawsuit. A hearing was set for September 1, 2000. In the California Lawsuit, AISLIC sought to reset its summary judgment motion to a date prior to September 1, 2000, arguing that the summary judgment motion should be heard prior to the Texas hearing on the anti-suit injunction "in order to avoid the risk of inconsistent judgments." This application was also denied by the California court.

After an evidentiary hearing, the trial court in Texas entered an anti-suit injunction prohibiting AISLIC from (1) "[f]iling or seeking the resolution of any dispositive motions or final disposition" in the California Lawsuit; and (2) conducting any discovery in the California Lawsuit. This appeal followed.

Discussion

We review the trial court's decision for abuse of discretion. Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993); Gannon v. Payne, 706 S.W.2d 304, 305 (Tex. 1986).² A trial court abuses its discretion if its decision is "arbitrary, unreasonable, and without reference to guiding principles." Goode v. Shoukfeh, 943 S.W.2d 441, 446 (Tex. 1997). In reviewing the trial court's order, we draw inferences from the evidence in the manner most favorable to the trial court's ruling. Bridas Corp. v. Unocal Corp., 16 S.W.3d 887, 890-91 (Tex. App.-Houston [14th Dist.] 2000, pet. dism'd w.o.j.).

The Texas Supreme Court has held that an anti-suit injunction is appropriate in four instances: (1) to address a threat to the court's jurisdiction; (2) to prevent the evasion of important public policy; (3) to prevent a multiplicity of suits; or (4) to protect a party from vexatious or harassing litigation. Golden Rule Ins. Co. v. Harper, 925 S.W.2d 649, 651 (Tex. 1996) (citing Gannon, 706 S.W.2d at 307). There is "no question" that Texas courts "are empowered to issue injunctions to prevent parties from going forward with litigation in a sister state." Christensen v. Integrity Ins. Co., 719 S.W.2d 161, 163 (Tex. 1986). The principle of comity, however, requires that courts exercise the power to enjoin foreign suits "'sparingly, and only in very special circumstances'." Golden Rule, 925 S.W.2d at 651 (citing Christensen, 719 S.W.2d at 163, and Gannon, 706 S.W.2d at 306). The party seeking an anti-suit injunction must show that "a clear equity demands" the injunction. Golden Rule, 925 S.W.2d at 651.

Triton does not contend that the "multiplicity of suits" factor is implicated in this case.³ The trial court found, however, that all three of the remaining factors existed through AISLIC's pursuit of the California Lawsuit. The court specifically found that there was a threat to the court's jurisdiction, an important public policy was evaded, and the California Lawsuit was vexatious and harassing. In finding that three of the four Golden Rule factors were met, the trial court relied on the language of the AISLIC insurance policy. The court found that AISLIC was prevented from pursuing the California Lawsuit by the "Service of Suit" endorsement to the policy. This endorsement provides as follows:

In consideration of the premium charged, it is hereby understood and agreed that in the event of failure of [AISLIC] (herein called "the company"), to pay any amount claimed to be due hereunder, the Company, at the request of the Insured, will submit to the jurisdiction of a court of competent jurisdiction within the United States. Nothing in this condition constitutes or should be understood to constitute a waiver of the Company's rights to commence an action in any court of competent jurisdiction in the United States to remove an action to a United States District Court or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. It is further agreed that . . . in any suit instituted against the Company upon this contract, the Company will abide by the final decision of such court or of any appellate court in the event of any appeal.

AISLIC interprets this provision to mean only that AISLIC will not contest jurisdiction in a suit brought against it by Triton. Under AISLIC's interpretation, AISLIC is free to assert its own claims in other courts as well, whether or not suit has already been instituted by the insured. In contrast, Triton argues that AISLIC's additional promise to "abide by the final decision of such court" precludes AISLIC from asserting its claims in a separate proceeding when Triton has already initiated an action to recover amounts claimed to be due under the insurance policy. The trial court agreed with Triton's interpretation, reasoning that the promise to "abide by the final decision of such court" would be "meaningless" if it did not require AISLIC to litigate its claims in the suit first brought by Triton. In its written order, the trial court found: "The Court is of the opinion that this endorsement required AISLIC to submit to the jurisdiction of the Court selected by Triton, which filed suit first, and to agree to be bound by that Court's final decision."

AISLIC relies on International Insurance Co. v. McDermott, Inc., 956 F.2d 93 (5th Cir. 1992), for the proposition that the service of suit clause does not "prevent the insurer from bringing its own action in another court." It is undisputed that, in the service of suit clause, AISLIC specifically reserved the right to commence its own action or remove an action filed by the insured. The McDermott court held that the insurer could bring its own action, even in the absence of the specific language AISLIC relies on here. 956 F.2d at 95-96. Two critical distinctions, however, prevent McDermott from persuading us here. First, the service of suit provision in McDermott lacked a clause in which the insurer agreed "to abide by the final decision of such court." The trial court found that this clause would be rendered meaningless if the service of suit provision was interpreted as AISLIC contends it should be. Second, the carrier in McDermott filed suit first. The actual holding of McDermott was that the insured could not "block" the insurer's suit "by a subsequent filing." Id. at 95 (emphasis added).

The parties have not cited any Texas cases interpreting a "service of suit" clause that includes the "abide by the final decision" language at issue here, and we have found none. AISLIC has cited Columbia Casualty Co. v. Bristol-Myers Squibb Co., 215 A.D.2d 91, 635 N.Y.S.2d 173 (N.Y. App. Div. 1995), in which the clause at issue does contain the "abide by the final decision" language. The New York court held that a "service of suit" clause is not a mandatory forum selection clause, but is merely a permissive consent to the jurisdiction of the court. The court, however, did not mention the "abide by the final decision" language or attempt to give it meaning. Without binding authority on point, we cannot conclude that the trial court's decision to give effect to the "abide by...