Butler & Binion v. Hartford Lloyd's Ins. Co.

• Decision Date: 22 November 1995
• Docket Number: No. 14-94-00694-CV,14-94-00694-CV
• Parties: BUTLER & BINION, et al., Appellants, v. HARTFORD LLOYD'S INSURANCE COMPANY, et al., Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 566

957 S.W.2d 566

BUTLER & BINION, et al., Appellants, v. HARTFORD LLOYD'S INSURANCE COMPANY, et al., Appellees.

No. 14-94-00694-CV.

Court of Appeals of Texas Houston (14th Dist.).

Nov. 22, 1995.

Rehearing Overruled Dec. 14, 1995 and Nov. 25, 1997.

Joe C. Holzer, Houston, for appellants.

Arno W. Krebs, Jr., Houston, Ben Taylor, Dallas, for appellees.

MURPHY, C.J., and AMIDEI and ANDERSON, JJ.

OPINION

MURPHY, Chief Justice.

Appellants, Butler & Binion, a law firm, and several of its partners, appeal from a summary judgment granted in favor of appellees, Hartford Lloyd's Insurance Company and Hartford Casualty Insurance Company. Appellants brought suit, alleging the appellees breached their insurance contracts and their duty of good faith and fair dealing by failing to defend and indemnify them in a prior lawsuit brought by Colette Bohatch. Appellees filed a motion for summary judgment, arguing that no duty to defend or duty to indemnify existed because appellants' insurance policies did not cover the allegations asserted by Bohatch. The trial court granted summary judgment, disposing of all claims asserted by appellants. Appellants bring one point of error contending: (1) a fact issue existed as to whether appellants intentionally caused injury to Bohatch which would have precluded coverage under the commercial general liability policy; (2) Bohatch's claims fell within the "bodily injury," "advertising injury" and "personal injury" provisions of the commercial general liability policy; (3) appellants' commercial general liability policy covered exemplary damages; (4) appellants' workers compensation and employer's liability insurance policy covered Bohatch's claims; and (5) appellees acted in bad faith by failing to defend and fully indemnify appellants in the suit brought by Bohatch. We affirm.

In 1991, Colette Bohatch, a former partner of Butler & Binion, sued appellants, alleging she was constructively expelled as a partner after she reported alleged unethical conduct by another Butler & Binion partner. At the time of Bohatch's alleged injuries, appellants were insured by both a commercial general liability policy and a workers' compensation/employer's liability policy issued by the appellees. In her petition, Bohatch alleged appellants unfairly restricted her access to clients, reassigned her work, and reduced her employment compensation. Bohatch asserted causes of action for breach of fiduciary duty, breach of the duty of good faith and fair dealing and breach of contract. A jury awarded Bohatch actual, exemplary and mental anguish damages and attorneys' fees. Appellees defended appellants in the Bohatch lawsuit under a reservation of rights agreement; but, appellees agreed to pay only one-half of the continuing defense costs during appellants' appeal of the jury's verdict. Moreover, appellees refused to indemnify appellants, asserting that no insurance coverage existed for damages awarded to Bohatch.

When reviewing an appeal from a summary judgment, we must determine whether the proof establishes as a matter of law that there is no genuine issue of material fact. Rodriguez v. Naylor, 763 S.W.2d 411, 413 (Tex.1989). To decide whether a disputed material fact issue exists, the proof is viewed in favor of the non-movant, resolving all doubts and indulging all reasonable inferences in its favor, and the evidence is taken as true. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex.1985). A defendant as a movant must either: (1) disprove at least one element of each of plaintiff's theories of recovery; or (2) plead and conclusively establish each essential element of an affirmative defense. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 679 (Tex.1979).

The controlling issues in this case are whether the appellees had a duty to defend or indemnify appellants in the prior lawsuit filed by Bohatch. In Texas, the duty to defend and duty to indemnify are distinct and separate duties. American Alliance Ins. v. Frito-Lay, 788 S.W.2d 152, 153 (Tex.App.--Dallas 1990, writ dism'd). An insurer owes a duty to defend if the plaintiff's petition alleges facts within the scope of coverage. American Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 848 (Tex.1994); Argonaut Southwest Ins. Co. v. Maupin, 500 S.W.2d 633, 635 (Tex.1973); Heyden Newport Chem. Corp. v. Southern Gen. Ins. Co., 387 S.W.2d 22, 25 (Tex.1965). The duty to defend is unaffected by facts ascertained before suit, developed in the process of litigation, or by the ultimate outcome of the suit. Argonaut, 500 S.W.2d at 636; American Alliance Ins., 788 S.W.2d at 154; Feed Store, Inc. v. Reliance Ins. Co., 774 S.W.2d 73, 74-75 (Tex.App.--Houston [14th Dist.] 1989, writ denied). An insurer has the burden to prove that the allegations contained in the underlying plaintiff's petition are excluded from coverage. Adamo v. State Farm Lloyds Co., 853 S.W.2d 673, 676 (Tex.App.--Houston [14th Dist.] 1993, writ denied). Any doubt is resolved in the insured's favor. See Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 666 (Tex.1987); Feed Store, 774 S.W.2d at 75. If a case is potentially within the policy coverage, the insurer has a duty to defend. Adamo, 853 S.W.2d at 676; Mary Kay Cosmetics, Inc. v. North River Ins. Co., 739 S.W.2d 608, 612 (Tex.App.--Dallas 1987, no writ).

Appellants essentially contend that appellees owed a duty to defend because Bohatch's allegations, contained in her petitions, fell within various provisions of the commercial general liability policy and the workers compensation/employer's liability insurance. We disagree.

First, appellants contend Bohatch's claims constituted a "bodily injury" under "Coverage A" of the commercial general liability policy. The policy states that a "bodily injury" must be caused by an "occurrence" which is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." The policy further excludes coverage for "bodily injury" that is "expected or intended from the standpoint of the insured." Upon reviewing Bohatch's petitions, we find no allegations that would trigger coverage under the "bodily injury" provision. Bohatch alleged only intentional conduct by appellants which was not only expressly excluded under this provision, but also, did not constitute an "occurrence" as that term is defined in the policy. See Argonaut, 500 S.W.2d at 635; Baldwin v. Aetna Casualty & Sur. Co., 750 S.W.2d 919, 921 (Tex.App.--Amarillo 1988, writ denied). In addition, whether appellants, in fact, intentionally injured Bohatch is immaterial. Baldwin, 750 S.W.2d at 921. Rather, the duty to defend is determined by the kind of claim advanced against the insured as it relates to the scope of the policy. Id. Each of Bohatch's claims alleged intentional or willful actions, which were not covered under the policy. Therefore, appellants' contention is overruled.

Alternatively, appellants contend the "bodily injury" provision is ambiguous, and thus, this Court should construe the policy in their favor. The construction of appellants' insurance policies are governed by ordinary contract principles. Barnett, 723 S.W.2d at 665; Clemons v. State Farm Fire & Cas. Co., 879 S.W.2d 385, 391 (Tex.App.--Houston [14th Dist.] 1994, no writ). The construction of the policies is a question of law for the court to determine. Coker v. Coker, 650 S.W.2d 391, 393-94 (Tex.1983); R & P Enterprises v. La Guarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518 (Tex.1980); Clemons, 879 S.W.2d at 391. Insurance policies are to be strictly construed in favor of the insured in order to avoid exclusion of coverage. Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (Tex.1984). If, however, the written instrument is worded so that it can be given only one reasonable construction, it will be enforced as written. National Union v. Hudson Energy Co., 811 S.W.2d 552, 555 (Tex.1991). Language in insurance provisions is only ambiguous if the court is uncertain as to which of two or more meanings was intended. Houston Petroleum v. Highlands Ins., 830 S.W.2d 153, 155 (Tex.App.--Houston [1st Dist.] 1990, writ denied); Clemons, 879 S.W.2d at 391.

After considering the "bodily injury" provision, we find that no...