English v. Bgp Intern., Inc., 14-04-00491-CV.

• Decision Date: 15 September 2005
• Docket Number: No. 14-04-00491-CV.,14-04-00491-CV.
• Citation: 174 S.W.3d 366
• Parties: Cynthia ENGLISH d/b/a English Land Service and American States Insurance Company, Appellants, v. BGP INTERNATIONAL, INC., Appellee.
• Court: Texas Supreme Court

174 S.W.3d 366

Cynthia ENGLISH d/b/a English Land Service and American States Insurance Company, Appellants, v. BGP INTERNATIONAL, INC., Appellee.

No. 14-04-00491-CV.

Court of Appeals of Texas, Houston (14th Dist.).

September 15, 2005.

COPYRIGHT MATERIAL OMITTED

Christopher Lee Burke, San Antonio, for appellants.

Joseph L. Segrato, Vaughan E. Waters, Corpus Christi, for appellee.

Panel consists of Justices YATES, ANDERSON, and HUDSON.

OPINION

J. HARVEY HUDSON, Justice.

This appeal arises from a dispute over responsibility for providing a defense in a series of underlying lawsuits. Cynthia English d/b/a English Land Service and American States Insurance Company¹ (collectively, "English"), appeal from the trial court's order denying their motion for summary judgment and granting the motion for summary judgment of BGP International Inc. ("BGP"). We reverse and remand.

Factual and Procedural Background

BGP contracted with English to provide seismic exploration services on land located in Hidalgo County. The land was owned by approximately 15,000 different parties. Before BGP could commence their exploration activities, each of the affected landowners had to consent. BGP, however, began operations before all of the Hidalgo County landowners gave permission.² Subsequently, 43 of the owners filed suit in Hidalgo County against BGP, English, and their affiliated entities for trespass and various negligence actions.

Pursuant to an indemnity provision in the contract, English asked BGP to defend it in the 43 underlying lawsuits. The provision specifically required BGP to:

[P]rotect, defend, indemnify and hold harmless [English] ... against loss or damage arising out of any claim or suit, including trespass (whether geophysical or surface), property loss or damage, or any civil fines or penalties imposed ... resulting from operations when BGP ... commence[s] field operations without the permit acquisition of 100% of the mineral owners and 100% of the surface owners, or any claim or suit arising out of the negligent actions or omissions of BGP....

When BGP refused to provide a defense, English filed suit in Harris County seeking a declaratory judgment that BGP was required to defend and indemnify English against the Hidalgo County actions.

Subsequently, both parties moved for summary judgment. The trial court denied English's motion and granted BGP's motion. Accordingly, the court dismissed English's suit without prejudice and explained that English's request for indemnification was premature and not ripe for adjudication until after the conclusion of the underlying Hidalgo County lawsuits.

On appeal, English contends the trial court erred in denying its request for declaratory judgment. English argues that BGP is required to pay for defense of the 43 Hidalgo County suits despite the unresolved nature of those actions because that is what the parties intended when they contracted. BGP, on the other hand, argues that the issue of who bears responsibility to pay for English's defense is non-justiciable until such time that the Hidalgo County suits are resolved, either by settlement or judgment. BGP also claims the express negligence doctrine precludes English from shielding itself from its own negligence. Thus, the ultimate issue presented to this court is whether BGP owes a duty to step in and defend English in the landowner lawsuits.³

Standard of Review

To prevail on a motion for summary judgment, the movant must establish that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. TEX.R. CIV. P. 166a(c); Rhone-Poulenc Inc. v. Steel, 997 S.W.2d 217, 222 (Tex.1999). In reviewing a trial court's decision on a request for summary judgment, we take as true all evidence favorable to the non-movant, and we make all reasonable inferences in the non-movant's favor. KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex.1999). When, as in this case, the parties file competing motions for summary judgment, and the trial court grants one motion and denies the other, this court should review both parties' summary judgment evidence and determine all questions presented. Comm'rs Court v. Agan, 940 S.W.2d 77, 81 (Tex.1997).

We review declaratory judgments under the same standards as other judgments and decrees. See TEX. CIV. PRAC. & REM.CODE ANN. § 37.010 (Vernon 1997); City of Galveston v. Giles, 902 S.W.2d 167, 170 (Tex.App.-Houston [1st Dist.] 1995, no writ.). We look to the procedure used to resolve the issue at trial to determine the standard of review on appeal. Giles, 902 S.W.2d at 170. Here, because the trial court resolved the case on competing motions for summary judgment, we review the propriety of the trial court's denial of the declaratory judgment under the same standards as we apply to review the summary judgment. See Unauthorized Practice of Law Comm. v. Jansen, 816 S.W.2d 813, 814 (Tex.App.-Houston [14th Dist.] 1991, writ denied). Therefore, we must determine whether the trial court properly denied English's declaratory judgment request and, if not, enter the judgment which should have been entered by the trial court.

Justiciability

The trial court granted BGP's request for summary judgment on the basis that the issue is not justiciable until liability has been determined in the 43 Hidalgo County lawsuits. On appeal, English notes that there is little case law regarding the timing of an indemnitor's duty to defend its indemnitee. However, English argues that the trial court's decision was incorrect because, unlike the duty to indemnify, the duty to defend can arise before liability is determined. Specifically, English differentiates between the duty to defend and the duty to indemnify, and argues that BGP's duty to provide a defense to the 43 Hidalgo County lawsuits arose separate and apart from its duty to indemnify. Furthermore, English analogizes BGP's contractual obligation to defend with that of an insurer's duty to defend its insured in an insurance policy. Drawing that parallel, English argues that the contract imposed upon BGP the duty to pay for or provide a defense to the Hidalgo County lawsuits independent from BGP's duty to indemnify. Otherwise, English contends, BGP's interpretation of the contract would render the word "defend" meaningless.

BGP counters by arguing that a declaratory judgment in favor of English would be an improper advisory opinion. Specifically, BGP contends that the issue of who bears the responsibility of providing a defense to the Hidalgo County lawsuits is an unripe, non-justiciable question until liability is established in those underlying suits. In support of this contention, BGP relies on several cases which strictly limit the justiciability of the right to indemnity.

Generally, when parties include an indemnity provision in a contract, the duty to indemnify includes the duty to pay for all costs and expenses associated with defending suits against the indemnitee. See, e.g., Fisk Elec. Co. v. Constructor's & Assoc., Inc., 888 S.W.2d 813, 815 (Tex.1994) ("[An] obligation to pay attorney's fees arises out of [a] duty to indemnify."); Keystone Equity Mgmt. v. Thoen, 730 S.W.2d 339, 340 (Tex.App.-Dallas 1987, no writ) ("The ordinary and commonly accepted meaning of the phrase `indemnify, defend, and save harmless' ... encompasses attorney's fees.... We hold that [the] contractual promise to `defend ... all suits in connection with the premises' includes the obligation to pay for the defense of such suits.") (emphasis added). However, "absent a duty to indemnify, there is no obligation to pay attorney's fees." Fisk Elec. Co., 888 S.W.2d at 815. BGP relies on this latter principle to assert that because there has been no determination that it must indemnify English, BGP has no responsibility to bear the costs of providing a defense for English. Instead, BGP claims its duty to defend, or pay costs of defense, only arises if and when BGP is determined to owe a duty of indemnification. Therefore, BGP concludes the duty to defend is not a justiciable question until a determination has been made on the issue of liability. However, numerous courts have held that the duty to defend, unlike the duty to indemnify, is, in most situations, a justiciable issue.⁴

For example, in Griffin, the Texas Supreme Court explained that "[a]n insurer's duty to defend and duty indemnify are distinct and separate duties. Thus, an insurer may have a duty to defend but, eventually, no duty to indemnify." 955 S.W.2d at 82 (emphasis added). Providing an example of how these two duties might diverge, the court said "a plaintiff pleading both negligent and intentional conduct may trigger an insurer's duty to defend, but a finding that the insured acted intentionally and not negligently [i.e., not within the policy's coverage] may negate the insurer's duty to indemnify." Id. Therefore, Griffin makes it clear that a party's duty to defend may arise even when it is later determined that the party has no duty to indemnify. See also Reser, 981 S.W.2d at 263 (noting that the duty to defend is unaffected by the ultimate outcome of the case). Because the duty to defend may be decided in an action for declaratory judgment, the trial court incorrectly determined that English's claim was premature. See Johnson, 829 S.W.2d at 324.⁵ We must next determine whether BGP had a duty to defend and, therefore, whether English's request for declaratory judgment should have been granted.

Duty to Defend

The duty to defend is determined solely by the precise language in the contract and the factual allegations in the pleadings. Griffin, 955 S.W.2d at 82; see also Tesoro Petroleum Corp. v. Nabors Drilling USA, Inc., 106 S.W.3d 118, 125 (Tex.App.-Houston [1st Dist.] 2003, pet. denied) ("The duty to defend may be triggered by the pleadings, but the duty to indemnify is based on the jury's findings."). In interpreting the contractual language, our...