Continental Cas. Co. v. Hall, s. A14-86-00873-C

• Citation: 761 S.W.2d 54
• Decision Date: 20 October 1988
• Docket Number: Nos. A14-86-00873-C,A14-86-00688-CV,s. A14-86-00873-C
• Parties: 50 Ed. Law Rep. 906 CONTINENTAL CASUALTY CO., Appellant, v. G. Wayne HALL, Individually and as Next Friend of April Lynn Hall, Minor; Ronald Wyatt, Individually and as Next Friend of Nichole Wyatt, Minor; and Martin Urand, Appellees, and CONTINENTAL CASUALTY CO., Appellant, v. KATY INDEPENDENT SCHOOL DISTRICT, Appellee. (14th Dist.)
• Court: Court of Appeals of Texas

Page 54

761 S.W.2d 54

50 Ed. Law Rep. 906

CONTINENTAL CASUALTY CO., Appellant, v. G. Wayne HALL, Individually and as Next Friend of April Lynn

Hall, Minor; Ronald Wyatt, Individually and as

Next Friend of Nichole Wyatt, Minor; and Martin Urand, Appellees, and CONTINENTAL CASUALTY CO., Appellant, v. KATY INDEPENDENT SCHOOL DISTRICT, Appellee.

Nos. A14-86-00873-CV, A14-86-00688-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

Oct. 20, 1988.

Rehearing Denied Nov. 23, 1988.

Alice M. Giessel, Henry P. Giessel, Houston, Royal H. Brin, Jr., Dallas, Richard A. Simpson, Washington D.C., for appellant.

Jeffrey D. Horner, Larry Watts, Larry J. Doherty, W. Michael Leebron, II, George P. Hardy, III, Kelly Frels, Houston, Bob Roberts, Austin, for appellees.

Before J. CURTISS BROWN, C.J., and MURPHY and ROBERTSON, JJ.

OPINION

MURPHY, Justice.

This case arises from injuries sustained by children during a school sponsored tug-of-war, and appellant Continental Casualty Company's [hereinafter Continental] assertion that the Board of Education Liability [hereinafter BEL] policy it carried for the Katy Independent School District [hereinafter KISD] specifically excluded coverage for such injuries. We reverse the judgments of the trial court, and render judgment in favor of Continental.

In February of 1981, KISD students April Hall and Nichole Wyatt were participating in tug-of-war while at school. During the exercise, a knot tightened around the children's hands. Before the girls could extricate themselves, Hall had lost three fingers and Wyatt had had the skin and fingernails pulled from her fingers. In July of 1984, Hall and Wyatt filed suit in federal court against KISD, and ten employees, among whom was Martin Urand, the teacher supervising the tug-of-war. The federal action alleged the children had suffered damages as a result of the infringement of their constitutionally protected interests and rights to a safe educational environment, free from risk to their bodily integrity.

Following notice of the suit, Continental informed KISD that its BEL policy, provision IV(b)(3), specifically excluded coverage:

"(b) The Insurer shall not be liable to make any payment for loss in connection with any claim against the Assureds.

* * *

(3) for damages, direct or consequential, arising from bodily injury, sickness, or death of any person, or for damage to or destruction of any tangible property including loss or use thereof." [Emphasis added.]

Continental suggested KISD contact its general liability carrier. After a protracted exchange of letters with KISD, Continental itself contacted KISD's general liability carrier, Fidelity & Casualty. Fidelity answered the federal action, and filed a motion for summary judgment demonstrating that a single instance of negligence did not, as a matter of law, rise to the level of infringement of constitutional rights. Hall and Wyatt did not respond to the motion for summary judgment.

While the federal action was still pending, Hall and Wyatt filed suit in the district court of Fort Bend County against only Martin Urand. Urand shortly thereafter signed stipulations of liability. The trial court entered a consent judgment, awarding Hall and Wyatt $10.9 million damages; approved a covenant not to execute judgment in which Urand assigned all his rights against Continental to Hall and Wyatt; and issued a protective order sealing the file. Neither KISD, Fidelity & Casualty, the general liability carrier, nor Continental received notice of these state court proceedings.

After the consent judgment in the state court had become final, Hall and Wyatt agreed to dismissal of the federal court action--with prejudice as to some defendants, but without prejudice as to Urand and KISD. They then demanded payment from Continental on the consent judgment and, subsequently, filed the instant suit in...