Edinburg Consol. I.S.D. v. INA
| Citation | 806 S.W.2d 910 |
| Decision Date | 21 March 1991 |
| Docket Number | No. 13-90-017-CV,13-90-017-CV |
| Parties | 67 Ed. Law Rep. 327 EDINBURG CONSOLIDATED I.S.D., et al., Appellants, v. INA, a/k/a Pacific Employers Insurance Company, C.I.G.N.A., Appellee. |
| Court | Court of Appeals of Texas |
William J. Quackenbush, Pena, McDonald, Prestia & Ibanez, Edinburg, Larry Watts, Watts & Company, Lawyers, P.C., Houston, Robert E. De La Garza, Garcia & De La Garza, McAllen, for appellants.
Nancy Manderson, Coats, Yale, Holm & Lee, P.C., Houston, for appellee.
Before NYE, C.J., and HINOJOSA and SEERDEN, JJ.
Appellants, Edinburg Consolidated Independent School District (ECISD) and Maruca Lopez, appeal by one point of error from a summary judgment in favor of Pacific Employers Insurance Company (Pacific Employers). We affirm.
The undisputed facts as established by the summary judgment evidence indicate that James Lopez 1, a school teacher, was terminated by ECISD on October 12, 1980. At his request, on January 27, 1981, the ECISD Board of Trustees held a hearing to review the termination. Lopez appeared with counsel. He argued that his termination was wrongful and requested reinstatement. On February 3, 1981, the Board confirmed the termination.
Lopez then filed a Petition of Review to the Texas Education Agency (TEA) on March 30, 1981. Again, he argued that his termination was wrongful. He requested reinstatement, back pay, other damages, and costs. A hearing was held in Austin on May 19, 1981 2. On October 6, 1982 the TEA, through its Commissioner, refused to find the termination wrongful.
On November 2, 1982, Lopez filed suit against the school district in federal court. The case was settled and an agreed judgment entered. The judgment assessed damages against ECISD for its termination and failure to rehire Lopez for the school years of 1981-84.
ECISD and Lopez then made a claim against appellee, Pacific Employers. When the claim was refused, Lopez and ECISD filed suit against Pacific Employers claiming coverage for the damages paid pursuant to the agreed judgment entered in federal court. Subsequently, Pacific Employers filed a motion for summary judgment against ECISD and Lopez asserting that the policy issued to ECISD did not cover the claims asserted by ECISD and Lopez. The trial court granted the motion for summary judgment.
During the times described above, ECISD was covered by two separate insurance policies issued by different companies. Before June 9, 1981, ECISD was covered by an insurance policy issued by St. Paul Insurance Company. This policy was effective only until June 8, 1981. Immediately before the coverage with St. Paul Insurance Company ended, ECISD filed an application for insurance coverage with Pacific Employers for a "claims made" policy with a starting date of June 9, 1981. The relevant portion of the new policy provided:
(A) by reason of any act, error, or omission in services rendered in the discharge of School District duties;
. . . . .
PROVIDED ALWAYS THAT such act, error, omission, or such bodily injury due to corporal punishment happens:
(A) during the policy period and CLAIM IS FIRST MADE DURING THE POLICY PERIOD, or
(B) prior to the policy period provided that prior to the effective date of the policy:
(1) the insured did not give notice to any prior insurer of such act, error, omission, or bodily injury due to corporal punishment; and
(2) the insured had no knowledge of such act, error, omission, or bodily injury due to corporal punishment likely to give rise to a claim hereunder; and
(3) CLAIM IS FIRST MADE AGAINST THE INSURED DURING THE POLICY PERIOD.
The application for insurance included the question: "Does any person proposed for this insurance have any knowledge of any pending Federal, State, or Local legal actions or investigations against the School, its board members or other employees?" ECISD answered: "Yes, No definite knowledge; but rumors are that a teacher whose contract was not renewed, (public hearing was held), may file suit." In an addendum ECISD further stated:
Immediately after June 9, 1981, the effective date of the policy with appellee, ECISD notified a prior insurer, St. Paul Insurance Company, that Lopez had "registered a claim for wrongful dismissal" against ECISD. St. Paul Insurance Company defended ECISD in the federal suit and negotiated the settlement pursuant to its obligations under that insurance policy.
Subsequently, in a letter written to appellee, Pacific Employers, ECISD claimed appellee's policy covered damages arising from the termination of James Lopez. By a letter dated March 18, 1983, Pacific Employers denied coverage under the quoted section of the policy because ECISD's response to the question in the application for insurance indicated that it knew of the act, error or omission that caused the claim before the effective date of the policy.
The trial court agreed with Pacific Employers that ECISD had knowledge of the act, error, or omission likely to give rise to a claim prior to the effective date of the policy and granted Pacific Employer's summary judgment pursuant to § (B)(2) of the "provided always" clause of the insurance contract.
When reviewing a motion for summary judgment, the trial court and this court apply an identical standard: to determine whether the movant established as a matter of law that there is no question of material fact. All evidence and inferences in favor of the non-movant will be taken as true. Reilly v. Rangers Management Inc., 727 S.W.2d 527, 529 (Tex.1987).
Appellants attack the summary judgment on two grounds. First, they argue that the act or error likely to give rise to a claim was the failure to...
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