B. Hall Contracting Inc. v. Evanston Ins. Co.

• Decision Date: 01 September 2006
• Docket Number: No. 4:06-CV-050-A.,4:06-CV-050-A.
• Citation: 447 F.Supp.2d 634
• Parties: B. HALL CONTRACTING INC. d/b/a Hall Contracting Services, Plaintiff, v. EVANSTON INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Texas

447 F.Supp.2d 634

B. HALL CONTRACTING INC. d/b/a Hall Contracting Services, Plaintiff, v. EVANSTON INSURANCE COMPANY, Defendant.

No. 4:06-CV-050-A.

United States District Court, N.D. Texas, Fort Worth Division.

September 1, 2006.

COPYRIGHT MATERIAL OMITTED

Kelly J. Curnutt; Curnutt & Hafer, Arlington, TX, for Plaintiff/Petitioner.

Joseph A. Ziemianski and April Zubizarreta; Cozen O'Connor-Houston, Houston, TX, for Defendant/Respondent.

MEMORANDUM OPINION and ORDER

McBRYDE, District Judge.

Before the court for decision are the motion of plaintiff, B. Hall Contracting Inc. d/b/a Hall Contracting Services, ("Hall") for partial summary judgment and the motion of defendant, Evanston Insurance Company, ("Evanston") for summary judgment.

I. Overview

This is an insurance coverage dispute. The parties seek declaratory adjudications as to the rights of Hall and the obligations of Evanston in regard to two state court lawsuits under a liability insurance policy issued by Evanston to Hall. Hall maintains that Evanston has, and has had, an obligation to defend Hall in the lawsuits and to satisfy on behalf of Hall any liability that might be imposed on Hall to the plaintiffs in those lawsuits. Evanston contends that it has no obligation to defend Hall and will have no payment obligation. Each party has moved for summary adjudication in its favor as to its basic contentions. The court has concluded that Evanston's motion should be granted and Hall's denied.

II. The State Court Litigation

The state court lawsuits arise from an incident that occurred in October 2003 at the campus of the University of Texas at Arlington ("UTA") when a structure on the campus was destroyed by a fire, causing property damage to UTA, which is the plaintiff in one of the lawsuits, and personal injuries to the two individuals who are the plaintiffs in the other. A more complete description follows¹

A. The UTA Lawsuit.

The UTA lawsuit is pending in the District Court of Tarrant County, Texas, 236th Judicial District, as Cause No. 236-214456-05, styled "The University of Texas at Arlington and The University of Texas System, Plaintiffs, v. Williams & Thomas, Inc., D/B/A Jamail Construction, Defendant." Though not reflected in the style, additional defendants are Hall, Devin Hall and Floydell Hall, individually and d/b/a F. Hall Mowing Company, and F. Hall, L.L.C.²

UTA alleges that it entered into a contract with Williams & Thomas, Inc., d/b/a Jamail Construction, ("Jamail") for the demolition of a structure where UTA's main electrical switchgear room was located and for the construction of a temporary structure to protect the switchgear and utility tunnels so that they would remain operational during the demolition. In October 2003 a fire destroyed the demolition site and the switchgear, causing UTA to suffer damages in excess of $2,000,000. According to UTA:

An investigation revealed that an employee of Defendant F. Hall Mowing subcontractor ("F.Hall") was cutting metal pipe and released a spark, which ignited the fumes from a roof adhesive and/or the roofing materials from a EPDM membrane roof application being done by another subcontractor, B. Hall Contracting, Inc., ("B.Hall").

Pl.'s Br. in Resp. to Def.'s Mot. for Summ. J., App. at 69, ¶ 11 (emphasis added).

Under the heading "Negligence Cause of Action," the following allegations are made:

Defendants negligently constructed the temporary housing for the switchgear, which resulted in a fire, and the resulting destruction of the existing building as well as the switchgear. In addition, Jamail, the general contractor, failed in its duty to adequately supervise the work of the Hall subcontractors. Further, both of the Hall subcontractors failed to properly supervise their workers, allowing them to continue their work in extremely close proximity to one another.

Id. at 70, ¶ 17.

Jamail filed a third-party petition against Hall, Devin Hall individually and d/b/a F. Hall Mowing Company, F. Hall, L.L.C., and Floydell Hall, d/b/a F. Hall Mowing Company, alleging that the fire occurred as a result of work being performed by the third-party defendants. Jamail seeks contribution or indemnity from the third-party defendants, alleging that:

[T]he occurrence and events made the subject of this lawsuit, as well as all damages sustained thereby, were proximately caused, contributorily caused, producingly caused, in whole or in part, by the acts, omissions, negligence, breach of contract, breach of warranty, fault or other conduct on the part of the Third Party Defendants ....

Id. at 76, ¶ 9.

In addition, Jamail seeks recovery (a) from Hall and F. Hall Mowing Company based on their alleged failures to perform under contracts between Jamail and those parties by which those parties agreed to defend and indemnify Jamail with respect to claims or losses arising out of or related to their performance of the work that led to the fire, and (b) from all third-party defendants based on their alleged failures to comply with agreements to provide liability insurance coverage for Jamail so that Jamail would be provided a full defense and indemnity with respect to the claims asserted in the lawsuit.

B. The Personal Injury Lawsuit.

The personal injury lawsuit is pending in the District Court of Tarrant County, Texas, 153rd Judicial District, as Cause No 153-212299-05, styled "Tim Calhoun and Gustine Gaston, Plaintiffs, v. B. Hall Contracting, Inc., and F. Hall Mowing Company/F. Hall L.L.C., Defendants." Plaintiffs Calhoun and Gaston allege that they were working with the defendants named in the suit when the fire in question was negligently started by defendants on a roof at UTA, causing the plaintiffs to be injured when they had to jump to the ground to avoid the fire.

III. The Activities of Hall at the Site of the Fire When the Fire Started

The sworn statement of Brett Hall, who is the president and owner of Hall, provides an explanation of the operation in which Hall was engaged, through a sub-subcontractor, when the fire started.

Hall is a construction company that does, among other things, building construction, office remodeling, fire restoration, carpentry, roofing, and painting. It was working at UTA under subcontract with Jamail. At the time of the fire, a sub-subcontractor, Ramirez Roofing Service ("Ramirez"), was finishing on behalf of Hall the installation of a roof on a temporary structure that was being erected to protect switchgear equipment located inside a larger building that was being demolished by Jamail, acting through F. Hall, another Jamail subcontractor.

The roof that was being installed by Hall, through Ramirez, was a type of membrane roofing known as ethylene pro-pylene diene monomer, sometimes referred to as EPDM. Use of that type of roofing product, which is flammable and is applied with a flammable adhesive, was inappropriate considering the demolition work being conducted over and around the surface where the roof was being installed. Because of the demolition work, there was a risk that embers or sparks from cutting torches would fall on the roofing material, causing it to catch fire.

IV. Pertinent Parts of the Insurance Policy

The insurance policy in question, which bears policy number CL 420300372, was issued by Evanston to Hall, as the named insured, covering the January 8, 2003, to January 8, 2004, time period. It provided commercial general liability insurance coverage to Hall.³

The insuring agreement of the policy obligates Evanston to pay "those sums that the insured becomes legally obligated to pay as damages because of `bodily injury' or `property damage' to which this insurance applies." Evanston's Mot. for Summ. J., App. at 22. In addition, the policy imposes on Evanston the "duty to defend the insured against any `suit' seeking those damages," id.; but, the policy goes on to say that "[h]owever, we will have no duty to defend the insured against any `suit' seeking damages for `bodily injury' or `property damage' to which this insurance does not apply," id.⁴ According to the insuring agreement, the "insurance applies to `bodily injury' and `property damage' only if: (1) The `bodily injury' or `property damage' is caused by an `occurrence' that takes place in the `coverage territory'; and (2) The `bodily injury' or `property damage' occurs during the policy period." Id.⁵

The exclusions on which Evanston relies as precluding coverage under the policy for the state court lawsuits are (1) the Roofing Endorsement exclusion; (2) the Breach of Contract Exclusion; (3) exclusions j.(5) and (6); and (4) the exclusion contained in the Combination General Endorsement applicable to bodily injury to any employee of an independent contractor or subcontractor. Pertinent wording of these exclusions is set forth below:

(1) The Roofing Endorsement provides, in relevant part, as follows:

The coverage under this policy does not apply to "bodily injury," "property damage," . . . or any injury, loss or damage arising out of:

* * * * * *

3. Any operations involving any hot tar, wand, open flame, torch or heat applications, or membrane roofing;

Id. at 47 (emphasis added).

(2) The Breach of Contract Exclusion endorsement provides:

This insurance does not apply to claims for breach of contract, whether express or oral, nor claims for breach of an implied in law or implied in fact contract, whether "bodily injury," "property damage," "advertising injury," "personal injury" or an "occurrence" or damages of any type is alleged; this exclusion also applies to any additional insureds under this policy.

Id. at 12.

(3) Exclusions j.(5) and (6) read as follows:

2. Exclusions

This insurance does not apply to:

* * * * * *

j. Damage to Property

"Property damage" to:

* * * * * *

(5) That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the "property damage" arises out...