Arm Properties Management Group v. Rsui Indem. Co., Case No. A-07-CA-718-SS.
| Decision Date | 04 March 2009 |
| Docket Number | Case No. A-07-CA-718-SS. |
| Citation | 642 F.Supp.2d 592 |
| Parties | ARM PROPERTIES MANAGEMENT GROUP, Plaintiff, v. RSUI INDEMNITY COMPANY, Defendant. |
| Court | U.S. District Court — Western District of Texas |
BE IT REMEMBERED on the 23rd day of February, 2009 the Court entered an order [# 149]. That order is hereby withdrawn, and the present order is entered in substitution for it.
On this the 4th day of March 2009, the Court reviewed the file in the above-styled cause, specifically Defendant RSUI Indemnity Company ("RSUI")'s Motion for Partial Summary Judgment on Flood Exclusion [# 52] and its appendix [# 53], Plaintiff ARM Properties Management Group ("ARM")'s unopposed motion for extension of time to file [# 71] and response thereto [# 77], RSUI's reply thereto [# 87], ARM's motion to strike the appendix [# 80]; RSUI's Motion for Partial Summary Judgment on NFIP Coverage [# 54] and its appendix [# 55], ARM's response thereto [# 75], and RSUI's reply thereto [# 86]; and RSUI's motion to strike evidence in support of ARM's response to the motion for summary judgment [# 89], ARM's response thereto [# 95], and RSUI's reply thereto [# 102]; ARM's unopposed motion to file sur-reply to RSUI's motions for summary judgment [# 90] and ARM's sur-reply [# 97]; RSUI's unopposed motion for leave to file a rebuttal to ARM's surreply [# 94] and RSUI's rebuttal [# 99]; RSUI's unopposed motion for leave to file a supplement to its rebuttal of ARM's sur-reply [# 101]; ARM's unopposed motion for leave to file a supplemental response to RSUF s motion on flood exclusion [# 126]; RSUI's Motion for Leave to File Defendant's Motion for Summary Judgement [# 113], and ARM's response thereto [# 124]; and ARM's Post-Submission Brief [# 129] and RSUI's response thereto [# 135].
In the interest of developing the record as fully as possible, the Court GRANTS ARM's unopposed motion for extension of time to file [# 71], ARM's unopposed motion to file sur-reply to RSUI's motions for summary judgment [# 90], RSUI's unopposed motion for leave to file a rebuttal to ARM's sur-reply [# 94], RSUI's unopposed motion for leave to file a supplement to its rebuttal of ARM's sur-reply [# 101], ARM's unopposed motion for leave to file a supplemental response to RSUI's motion on flood exclusion [# 126], and RSUI's Motion for Leave to File a Motion for Summary Judgment [# 113]. In the same vein, the Court DENIES RSUI's motion to strike ARM's response in opposition to RSUI's motion for summary judgment [# 146]. Having considered the motions, responses, the replies, the relevant law, and the case file as a whole, the Court enters the following opinion and order, considering RSUI's motions for partial summary judgment in turn.
Summary judgment may be granted if the moving party—in this case, RSUI— shows there is no genuine issue of material fact, and it is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). In deciding summary judgment, the Court construes all facts and inferences in the light most favorable to the nonmoving party. Richter v. Merchs. Fast Motor Lines Inc., 83 F.3d 96, 98 (5th Cir.1996). The standard for determining whether to grant summary judgment "is not merely whether there is a sufficient factual dispute to permit the case to go forward, but whether a rational trier of fact could find for the nonmoving party based upon the record evidence before the court." James v. Sadler, 909 F.2d 834, 837 (5th Cir.1990).
Both parties bear burdens of production in the summary judgment process. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party has the initial burden of showing there is no genuine issue of any material fact and judgment should be entered as a matter of law. FED. R. CIV. P. 56(c); Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The nonmoving party must then come forward with competent evidentiary materials establishing a genuine fact issue for trial, and may not rest upon mere allegations or denials of its pleadings. Anderson, 477 U.S. at 256-57, 106 S.Ct. 2505; Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Neither "conclusory allegations" nor "unsubstantiated assertions" will satisfy the non-movant's burden. Wallace v. Tex. Tech Univ., 80 F.3d 1042, 1047 (5th Cir. 1996).
When interpreting an insurance policy, a court applies the same rules for interpreting other types of contracts, reading all parts of the policy together and exercising caution not to isolate particular sections or provisions from the contract as a whole. Provident Life & Accident Co. v. Knott, 128 S.W.3d 211, 216 (Tex.2003) (citations omitted). In other words, the court must give effect to all contractual provisions of the policy so that none are rendered meaningless. See id.; Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex.1995); Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex. 1994). However, "[n]o one phrase, sentence, or section [of a contract] should be isolated from its setting and considered apart from the other provisions." Lynch Props., Inc. v. Potomac Ins. Co., 140 F.3d 622, 626 (5th Cir.1998) (quoting Forbau, 876 S.W.2d at 134). The parties' intent "is governed by what they said, not by what they intended to say but did not." Fiess v. State Farm Lloyds, 202 S.W.3d 744, 746 (Tex.2006).
Whether an insurance contract is ambiguous is a question of law. American Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex.2003). If policy language can be given a definite or certain legal meaning, the policy contract is not ambiguous and the court may construe it as a matter of law. Id. That the parties disagree with the policy's interpretation, or the result, is irrelevant, as "[d]isagreement over the meaning or interpretation of a term is not sufficient to make a provision ambiguous or create a question of fact." Lynch Props., Inc., 140 F.3d at 626. Neither will a party's "reasonable expectations" create ambiguity under Texas law. See Constitution State Ins. Co. v. Iso-Tex Inc., 61 F.3d 405, 410 (5th Cir.1995); Forbau, 876 S.W.2d at 134 (). Instead, "[a]n ambiguity exists only if the contract language is susceptible to two or more reasonable interpretations." American Mfrs. Mut. Ins. Co., 124 S.W.3d at 157.
Plaintiff ARM, a Texas partnership, purchased multiple "layers" of insurance for nine properties in Mississippi that were subsequently damaged by Hurricane Katrina. The primary insurance policy was issued by Westchester Surplus Lines Insurance Company ("Westchester"). The Westchester policy limit was $20,000,000. The first-layer excess policy was issued by Essex Insurance Company ("Essex") and was limited to $10,000,000. The second-layer excess policy (the "RSUI policy") was issued by RSUI, the Defendant, with a limit of $470,000,000 per occurrence.
The nine properties insured under these interlocking policies were each heavily damaged by Hurricane Katrina on August 29, 2005. It is undisputed that Westchester and Essex have paid ARM the full limits of the primary and first-layer insurance policies as a result of this occurrence. ARM now seeks to recover its excess losses from the RSUI policy. RSUI however, seeks in the present motion for partial summary judgment to establish "that any property damage, business interruption losses, or extra expenditures resulting from flood waters, concurrently or in any sequence, are excluded from coverage." RSUI Mot. Summ. J. on Flood Exclusion ("RSUI Mot.") [# 52/53] at ¶ 4 (emphasis added). In other words, RSUI claims the RSUI policy not only excludes coverage for flood damages, but for all losses caused by a combination of another force, such as wind, and flood waters.
It is undisputed the RSUI policy expressly excludes coverage for "flood" damage. See ARM's Resp. [# 77] at 5. Furthermore, except as it provides otherwise, the RSUI policy in large part adopts the provisions of the Westchester Policy. Specifically, the RSUI policy provides in its Insuring Clause (found in the "Excess Physical Damage Coverage Form"):
1. INSURING CLAUSE:
Subject to any limitations, terms, and conditions contained in this Policy or added hereto, the Company agrees to indemnify the Insured named in the schedule herein in respect of direct physical loss or damage to the property described in the schedule while located or contained as described in the schedule, occurring during the period stated in the schedule and caused by any such perils as set forth in Item 3 of the Schedule,1 and which are also covered by and defined in the policy(ies) specified in the schedule and issued by the "Primary Insurer(s)" stated therein.2
RSUI Mot. at Ex. 3, RWUI UWR 8 (emphasis added). Thus, the Insuring Clause specifically allows coverage for all perils set forth in the Schedule—i.e., "all risk excluding flood or earthquake"—which are also covered by and defined in the Westchester policy.
The RSUI policy also provides in its Maintenance of Primary Insurance Clause (found in the "Excess Physical...
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