Cigna Lloyds v. Bradleys' Electric

• Citation: 993 S.W.2d 673
• Decision Date: 14 May 1998
• Docket Number: No. 13-95-524-CV,13-95-524-CV
• Parties: (Tex.App.-Corpus Christi 1998) CIGNA LLOYDS INSURANCE COMPANY, Texas Pacific Indemnity Company, and United National Insurance Company, Appellants, v. BRADLEYS' ELECTRICT, INC., Appellee.
• Court: Court of Appeals of Texas

Page 673

993 S.W.2d 673 (Tex.App.-Corpus Christi 1998)

CIGNA LLOYDS INSURANCE COMPANY, Texas Pacific Indemnity Company, and United National Insurance Company, Appellants, v. BRADLEYS' ELECTRICT, INC., Appellee.

No. 13-95-524-CV.

Court of Appeals of Texas, Corpus Christi.

May 14, 1998.

Before Chief Justice SEERDEN and Justices YANEZ and RODRIGUEZ

OPINION ON MOTION FOR REHEARING

YANEZ, J.

Cigna Lloyds Insurance Company (hereinafter "Cigna"), United National Insurance Company (hereinafter "United National"), and Texas Pacific Indemnity Company (hereinafter "Texas Pacific") appeal a summary judgment in favor of Bradleys' Electric, Incorporated (hereinafter "Bradleys'"), by which appellants were adjudged to have a duty to defend a third-party contributory patent infringement claim against Bradleys'. Cigna and United National further challenge the transfer of this case from Harris County, where Cigna originally filed an action for declaratory relief against Bradleys'. We issued an opinion in this case on January 22, 1998, by which we reversed the judgment in favor of appellants. Both Cigna and Bradleys' have filed motions for rehearing. We hereby grant Bradleys' motion for rehearing and withdraw our original opinion. This is now the opinion of the Court. We reverse and remand.

FACTUAL AND PROCEDURAL HISTORY

Bradleys' sells "DISCUS" repair part kits for the repair of the valve plate assemblies of compressors patented and sold by the Copeland Corporation. In a letter received by Bradleys' on March 3, 1992, an attorney for the Copeland Corporation charged that Bradleys's repair kits may be used by purchasing customers to remanufacture Copeland compressors; hence Copeland alleged that Bradleys' was a contributory patent infringer. ON or about April 22, 1992, Bradleys' filed suit against Copeland in a Houston federal court, seeking a declaratory judgment that its actions did not constitute patent infringement. Copeland counterclaimed, alleging patent infringement by Bradleys'. After some delay in responding to Bradleys's notice of this counterclaim, Cigna, which is Bradleys's primary insurance carrier, agreed to defend Bradleys' against the counterclaim and paid $250,000 in attorneys' fees thus far expended by Bradleys', but reserved its rights under its policy for Bradleys'. By letter dated October 2, 1, 1993, Cigna informed Bradleys' that Cigna would not provide a defense or indemnity for the Copeland counterclaim.

On October 26, 1993, Cigna filed suit in a Harris County district court seeking a declaratory judgment that it has no duty to defend or indemnify Bradleys' in the patent infringement suit pending in federal court. On December 13, 1993, Bradleys' filed its original answer, by which it specially expected to venue of the action in Harris County, made a general denial, claimed that Cigna waived its right to assert the claims in its action, and counterclaimed, seeking a declaratory judgment that Cigna had a duty to defend Bradleys' against the Copeland lawsuit under the "advertising liability" provisions of its policy with Cigna. Also on December 13, 1993, Bradleys' filed a motion to transfer venue of Cigna's cause of action to Nueces County, on the ground that (1) Bradleys' was not a resident of Harris County, (2) no part of the cause of action arose in Harris County, (3) no mandatory or permissive exception authorized maintenance of this action in Harris County, and (4) the insurance contracts at issue were negotiated and entered into in Nueces County. On that same day, Bradleys' further filed a third-party petition for declaratory judgment and other relief against United National and Texas Pacific, umbrella insurance carriers were for Bradleys', alleging that both carriers were contractually obligated to defend Bradley's against any advertising injury, in light of Cigna's denial of coverage against the Copeland cause of action. On February 28, 1994, the Harris County trial court granted Bradleys' motion to transfer venue. Apparently, this order was subsequently vacated, as the court, on August 5, 1994, again granted Bradleys's motion to transfer venue.

On May 25, 1994, Bradleys' filed a motion for summary judgment against Texas Pacific and United National, arguing that the advertising injury provisions of their policies cover Copeland's patent infringement counterclaim and that their policies' "drop down" provisions require the companies to defend Bradleys' against the counterclaim. On August 19, 1994, both Texas Pacific and United National filed responses to Bradleys's motion for summary judgment. Texas Pacific argued that the phrase "advertising injury" in its policy for Bradleys' did not cover the Copeland patent infringement claim. Specifically, Texas Pacific maintained that Copeland had not "alleged any personal injury, property damage or advertising liability caused by an occurrence, but rather . . . alleged only that Bradleys' infringed and caused others to infringe upon its patent rights" (footnote omitted). On August 24, 1994, United National filed a motion for summary judgment, arguing: "Nowhere is it alleged by Copeland in its claim against Bradleys' Electric that an injury occurred in the course of its advertising." On October 3, 1994, United National joined the consolidation.

On January 4, 1995, the court signed an order granting Cigna's motion for summary judgment, stating the Cigna had no duty to defend Bradleys' against Copeland's counterclaim. On January 16, 1995, the court signed orders granting United National's and Texas Pacific's motions for summary judgment, stating the United National and Texas Pacific, respectively, had no duty to defend Bradleys' against the counterclaim. Bradleys' subsequently filed motions for reconsideration of the summary judgment orders for Texas Pacific and United National. On February 20, 1995, the court, without explanation, vacated the summary judgment favoring Cigna. On March 24, 1995, Bradleys' filed a motion for summary judgment against Cigna and its opposition to Cigna's summary judgment motion. On July 25, 1995, the court, without specifying any reasons, signed an order granting Bradleys's motion for summary judgment against Cigna, and granted Bradleys's motion for reconsideration of the summary judgment granted in favor of United National and Texas Pacific. On August 1, 1995, the court vacated the summary judgment favoring Texas Pacific and United National and, without specifying its reasons, granted summary judgment in favor of Bradleys'. Subsequent motions for reconsideration, rehearing, and/or new trial filed by Cigna, Texas Pacific, and United National were overruled.

On appeal, the court's summary judgment and the...