Canal Ins. Co. v. XMEX Transp., LLC
| Decision Date | 04 September 2014 |
| Docket Number | No. EP–13–CV–156–KC.,EP–13–CV–156–KC. |
| Citation | 48 F.Supp.3d 958 |
| Parties | CANAL INSURANCE COMPANY, Plaintiff, v. XMEX TRANSPORT, LLC, et al., Defendants. |
| Court | U.S. District Court — Western District of Texas |
George T. Jackson, Bush & Ramirez LLC, Houston, TX, for Plaintiff.
Stewart W. Forbes, Forbes & Forbes, James F. Scherr, Christopher Robert Johnston, Firth Johnston Bunn Kerr, El Paso, TX, Langdon Milton Smith, III, Jim S. Adler & Associates, Houston, TX, for Defendants.
On this day, the Court considered the above-captioned case (the “Case”). The Case is a declaratory judgment action concerning an insurer's duties under a liability insurance policy. Five parties to the Case have filed cross-motions for summary judgment (collectively the “Motions”). Two of the Motions are substantive: Defendant Jessica Lopez's Motion for Summary Judgment Regarding Plaintiff Canal's Duty to Defend (the “Lopez Motion”), ECF No. 57, and the Motion for Summary Judgment of Canal Insurance Company on the Duty to Defend (the “Canal Motion”), ECF No. 59. The other three moving parties have adopted the Lopez Motion by reference, and one of those parties seeks relief beyond that requested by Lopez. At issue in the Motions is whether Canal had a duty to provide a defense to certain alleged insureds in liability litigation in Texas state court concerning a fatal truck accident. All five moving parties have filed a number of responses, replies, and supplemental briefs regarding the Motions.1 The Court need rule upon three of the Motions to dispose of the instant controversy:
For the reasons set forth herein, the Lopez Motion is GRANTED, the Trailer Defendants' Motion is DENIED, and the Canal Motion is DENIED.
Unless otherwise noted, the following facts are undisputed:
On August 17, 2010, Lorenzo Munoz (“Munoz”) and Roger Franceware (“Franceware”) were traveling eastbound on Interstate 20 in Mitchell County, Texas, in a 2007 International truck bearing Vehicle Identification Number 2HSCNSCR57C432781 (the “Truck”). Canal Proposed Facts ¶ 2; Lopez Resp. to Proposed Facts ¶ 2; Crash Report, ECF No. 59–2 at 71–73.2 The Truck was towing a trailer (the “Trailer”). Crash Report 73. The parties dispute whether Munoz or Franceware was driving.3 See Munoz Pls.' Am. Pet. of Mar. 10, 2014 (“Munoz Live Petition”), ECF No. 57–1 at 4; Pls.' Fifth Am. Pet. (“Lopez Live Petition”), ECF No. 51–1 at 5; First Am. Plea in Intervention (“Franceware Live Petition”), ECF No. 50 at 9. The Truck left the highway, crashed, and caught fire, killing both Munoz and Franceware. Canal Proposed Facts ¶ 2; Lopez Resp. to Proposed Facts ¶ 2; Crash Report 73.
Munoz's and Franceware's survivors filed lawsuits in state court in El Paso, Texas (collectively the “State Court Litigation”), in which they alleged that numerous parties associated with the Truck or the Trailer were liable for Munoz's and Franceware's personal injuries and wrongful deaths. See Munoz Live Pet. 1–12; Lopez Live Pet. 1–14; Franceware Live Pet. 4–26. Each decedent's survivors also alleged that the other decedent was among the responsible parties. See Munoz Live Pet. 6; Lopez Live Pet. 6–7; Franceware Live Pet. 10–11. In brief, the Munoz Defendants filed one lawsuit, Lopez filed a second lawsuit as administratrix of Franceware's estate and next friend of two of Franceware's minor children, Franceware's widow Rosa Franceware intervened in both lawsuits, and the state court consolidated the two lawsuits for trial. See ECF No. 62–1; Canal Ins. Co. v. XMEX Transp. LLC, No. 3:12–cv–178, 2013 WL 663742, at *1 (E.D.Tenn. Feb. 25, 2013).
Among the defendants in the State Court Litigation were the Trailer Defendants, Defendant XMEX Transport, LLC (“XMEX”), Defendant Charles Strader, and non-party Moore Freight Services, Inc. (“Moore Freight”). The underlying petitions alleged that the Trailer Defendants have some interest in the Trailer, and that XMEX, Strader, and Moore Freight all have some interest in the Truck. More specifically, Moore Freight and XMEX are trucking companies. Moore Freight allegedly owned the Truck. See Munoz Live Pet. 3; Franceware Live Pet. 9. However, Strader allegedly founded XMEX while he was an employee of Moore Freight, and allegedly misappropriated Moore Freight's equipment, including the Truck, to operate XMEX. See Munoz Live Pet. at 5–6.
Most of the specific allegations and theories of liability set forth in the State Court Litigation are not pertinent to the Motions. However, for reasons explained below, the parties' allegations concerning the identity of the Truck and the employment status of Munoz and Franceware are crucial to resolving the Motions.
First, the Munoz Defendants alleged that the Truck was a “2007 International” owned by Moore Freight, and that Franceware was driving the Truck in the course and scope of his employment with Moore Freight, XMEX, Strader, or certain of the Trailer Defendants. Munoz Live Pet. 3–4. They additionally alleged alternative theories of liability against various defendants in the case that the jury found that Munoz was driving the Truck. Id. at 6. The Munoz Defendants finally alleged that Munoz was not employed by any of the defendants. Id. at 4.
Second, Lopez alleged that Munoz was driving the Truck in the course and scope of his employment with Strader, XMEX, or Moore Freight, and that some combination of those parties owned the Truck. Lopez Live Pet. 5–8. Lopez denied that Franceware was acting in the course and scope of his employment with Strader, XMEX, or Moore Freight, but pleaded in the alternative that Franceware was a truck driver employed by Strader, XMEX, or Moore Freight. Id. at 6.
Third, Rosa Franceware pleaded that Franceware was “either the driver or passenger of a[ ] Moore Freight tractor.” Franceware Live Pet. 9. She further pleaded in the alternative that Franceware either was or was not acting in the course and scope of his employment with Strader, XMEX, or Moore Freight. Id. at 10. She finally pleaded that Munoz was acting in the course and scope of his employment with one or more of Moore Freight, its principal Dan Moore, Strader, XMEX, or other unspecified defendants. Id. at 11.
Thus, to summarize the allegations that are pertinent to the Motions, at least one party to the State Court Litigation alleged that Franceware was acting in the course and scope of his employment with XMEX, and at least one other party alleged that he was not. Similarly, at least one party alleged that Munoz was acting in the course and scope of his employment with XMEX, and at least one other party alleged that he was not. None of the pleadings in the State Court Litigation specifically identified the Truck, for instance, by its VIN or license plate number. The most specific description of the Truck in any of those pleadings was the allegation in the Munoz Live Petition that the Truck was a “2007 International.”
On August 6, 2010, Canal issued a liability insurance policy numbered PIA06033700 to XMEX (the “Policy”), ECF No. 1–10. The Policy was in effect at the time of the accident. Policy 1. Several defendants in the State Court Litigation asserted that the Policy obligated Canal to provide them a defense and indemnify them in that litigation. Canal ultimately provided a defense to XMEX and Strader under reservations of rights.4 Canal Br. on Mootness, ECF No. 75 ¶ 2. Canal refused to provide a defense to the Trailer Defendants and Lopez, in her capacity as the executor of Franceware's estate.5 Trailer Defs. Br. on Mootness, ECF No. 74 ¶¶ 2, 5; Lopez Br. on Mootness, ECF No. 76 ¶ 6.
The State Court Litigation began on October 25, 2010. See ECF No. 1 at 5. Eighteen months later, on April 17, 2012, Canal filed a declaratory action against all of the defendants in the State Court Litigation, except Moore Freight, in the United States District Court for the Eastern District of Tennessee. See Compl., Canal Ins. Co. v. XMEX Transp., LLC, No. 3:12–cv–178–TWP–HBG, 2012 WL 1600668 (E.D.Tenn. Apr. 17, 2012). Canal sought, among other things, declarations that the Policy did not require it to defend or indemnify any parties in the State Court Litigation. Id. at 11. That court ultimately dismissed the case pursuant to its discretionary authority under the Declaratory Judgment Act, refused to grant a change of venue to this court, and found that it lacked personal jurisdiction over some of the defendants. See Canal Ins. Co. v. XMEX Transp., LLC, No. 3:12–cv–178, 2013 WL 663742, at *5, *8 (E.D.Tenn. Feb. 25, 2013).
Canal then filed the Case on May 7, 2013. See Compl. for Declaratory J., ECF No. 1. As in the Tennessee action, Canal seeks declarations that the Policy does not require it to defend or indemnify any of the defendants in the State Court Litigation. See id. at 12. Canal again named as defendants all of the parties to the State Court Litigation except Moore Freight. See id. at 2–4. However, Canal has not served several of the defendants, and several served defendants have not appeared. See Joint Report of Parties Planning Meeting, ECF No. 46 at 1–2. Notably, XMEX and Strader are among those who have not appeared.6 See id. at 1.
The Trailer Defendants moved to join Moore Freight under Federal Rule of Civil Procedure 19(a), or in the alternative to dismiss for failure to join a party under Federal Rule of Civil Procedure 12(b)(7). See, ECF No. 26. The Court denied that motion on October 22, 2013 2013 WL 5740223. See Order, ECF No. 39.
Lopez then filed a motion requesting that the Court dismiss the Case pursuant to its discretionary authority under the Declaratory Judgment Act, or in the alternative, abate the Case in deference to the State Court Litigation. See Mot. to Dismiss, ECF No. 43. While that motion was pending, the Court entered a scheduling order on January 29, 2014. See Scheduling Order, ECF No. 49. The Court noted that under Texas law, it would be appropriate to immediately...
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