Devoe v. Great American Ins.
| Decision Date | 03 May 2001 |
| Citation | 50 S.W.3d 567 |
| Parties | (Tex.App.-Austin 2001) Dave and Kim Devoe, Appellants v. Great American Insurance, Appellee NO. 03-00-00695-CV |
| Court | Texas Court of Appeals |
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 200TH JUDICIAL DISTRICT NO. 99-05965, HONORABLE F. SCOTT MCCOWN, JUDGE PRESIDING
Anatole R. Barnstone, George B. Slade, Law Office of George B. Slade, Austin, for Apellant.
Chris C. Pappas, Dunn, Kacal, Adams, Pappas & Law, P.C., Houston, for Appellee.
Before Chief Justice Aboussie, Justices Yeakel and Patterson
Dave and Kim Devoe (the "Devoes") appeal the trial court's summary judgment in favor of Great American Insurance ("Great American") and the denial of the Devoes' motion for summary judgment. We will affirm the judgment of the trial court.
The Devoes contracted with Tri-Mark Development Corporation ("Tri-Mark") to construct a custom home. Tri-Mark was insured by Great American under a Business Pro Commercial Liability Policy (the "Policy"). The Devoes contend that as work progressed, a number of flaws developed in Tri-Mark's performance, including improper and deficient workmanship and the failure to complete the home in the agreed upon time. The Devoes filed suit against Tri-Mark and its principal, Gerald Zigrossi, to recover damages and attorney's fees. The Devoes alleged that Tri-Mark breached the contract by failing to construct the residence in a good and workmanlike manner and by violating certain provisions of the Deceptive Trade Practices Act ("DTPA"). Tri-Mark requested that Great American defend and indemnify Tri-Mark based on the Policy, which Tri-Mark argues covered the complaints. Great American declined to defend on the basis that the claims alleged were not covered by the Policy. Tri-Mark failed to appear for trial, and the Devoes provided the trial court with evidence of liability and damages. The Devoes were granted a default judgment against Tri-Mark for actual damages of $216,035.13, attorney's fees in the amount of $27,173.23, and post-judgment interest.
The judgment rendered by the trial court remained unsatisfied, however, and the Devoes consequently brought the present suit against Great American, seeking recovery as third-party beneficiaries under the terms of the Policy. Great American moved for summary judgment on the following grounds: (1) the underlying injury did not arise from an "occurrence" and therefore is not covered by the policy; (2) the injury falls under a policy exclusion for "unexpected or intentional injury"; (3) the injury falls under a policy exclusion for property damage that "arises out of these operations"; (4) the injury falls under a policy exclusion for "property that must be restored, repaired or replaced because Tri-Mark's work was incorrectly performed on it"; (5) the injury falls under a policy exclusion for damage to "impaired property or property that has not been physically injured"; (6) allowing the Devoes to recover would allow the insured to be paid twice for its work; and (7) no actual trial was held in the suit between the Devoes and Tri-Mark.
The Devoes in turn filed a motion for partial summary judgment, alleging that the amended petition included allegations of facts sufficient to bring the Devoes' claims within the scope of the policy. The Devoes alleged that they were entitled to partial summary judgment because there were no genuine issues of material fact regarding the following facts: (1) at least some of the damages claimed by the Devoes potentially came within the scope of coverage; (2) the insurance company was notified of the lawsuit against Tri-Mark and was given the opportunity to defend; (3) the insurance company failed to tender a defense of the insured; and (4) the judgment obtained against the insured included an award for damages coming within the scope of coverage.
The trial court granted Great American summary judgment on all the grounds asserted in its motion except for the contention that there was no actual trial held in the suit between the Devoes and Tri-Mark; the trial court denied the Devoes' motion for partial summary judgment. The Devoes appeal the trial court's grant of judgment in favor of Great American, and in addition complain of the trial court's denial of their motion for partial summary judgment.
When both sides move for summary judgment and the trial court grants one motion and denies the other, the appealing party may appeal both the prevailing party's motion as well as the denial of its own. Holmes v. Morales, 924 S.W.2d 920, 922 (Tex. 1996). In such a situation, we review the summary judgment evidence presented by both sides and determine the questions presented. Commissioners Court v. Agan, 940 S.W.2d 77, 81 (Tex. 1997). If the pertinent facts are undisputed, the court can determine the issues presented as a matter of law. McCreight v. City of Cleburne, 940 S.W.2d 285, 288 (Tex. App. Waco 1997, writ denied). In this situation, the court will either affirm or reverse and render. Jones v. Strauss, 745 S.W.2d 898, 900 (Tex. 1988); Tobin v. Garcia, 316 S.W.2d 396, 400-01 (Tex. 1958). However, if resolution of the issues rests on disputed facts, summary judgment is inappropriate, and the court will reverse and remand. Coker v. Coker, 650 S.W.2d 391, 394-95 (Tex. 1983); McCreight, 940 S.W.2d at 288. The parties do not dispute the pertinent facts; the issue in this case is whether those facts trigger Great American's duty to defend. By their first and second issues, the Devoes argue that Great American is liable to the Devoes under the policy for wrongfully refusing to defend the insured and therefore the trial court erred in granting summary judgment for Great American.
Texas follows the "eight corners" or "complaint allegation" test: the insurer has a duty to defend when the facts alleged in the petition, if assumed to be true, establish a liability that is covered under the policy. See National Union Fire Ins. Co. v. Merchants Fast Motor Lines, 939 S.W.2d 139, 141 (Tex. 1997). The insurer is to examine the pleadings, in light of the policy, without reference to the merits of the allegations in the petition and without reference to what the parties know or believe the true facts to be. Heydon Newport Chem. Corp. v. Southern Gen. Ins. Co., 387 S.W.2d 22, 24 (Tex. 1965). If the allegations state a claim that is potentially within the coverage of the policy, then the insurer has a duty to defend. Id. at 25. The courts will liberally interpret the meaning of the factual allegations in the insured's favor. Id.
However, the Supreme Court has stated that in order to determine whether factual allegations are covered by a policy, the allegations must be at least specific enough to "create that degree of doubt which compels resolution of the issue for the insured." Merchants Fast Motor Lines, 939 S.W.2d at 142. The court will not imagine factual scenarios that might trigger coverage or read facts into the pleadings. Id. If a petition does not allege facts within the scope of coverage, an insurer is not legally required to defend the suit against its insured. Id. at 141.
The insurance policy issued by Great American is a general liability policy. Section one of the policy coverage agreement states:
(1)(a)We will 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. We will have the right and duty to defend any "suit" arising out of those damages . . . .
(b)This insurance applies to "bodily injury" or "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.
The policy defines "occurrence" as an "accident," including continuous or repeated exposure to substantially the same general harmful conditions.
Even if a petition does not include the word "accident," it does not preclude the possibility that an accident caused the damage. Stumph v. Dallas Fire Ins. Co., 34 S.W.3d 722, 729 (Tex. App. Austin 2000, no pet.). In Mid-Century Insurance Co. v. Lindsey, the supreme court clarified the definition of "accident" by stating that:
an injury is...
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