Evanston Ins. Co. v. Lapolla Indus., Inc.

• Decision Date: 23 February 2015
• Docket Number: Civil Action No. H–13–3157.
• Citation: 93 F.Supp.3d 606
• Parties: EVANSTON INSURANCE COMPANY, Plaintiff, v. LAPOLLA INDUSTRIES, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

93 F.Supp.3d 606

EVANSTON INSURANCE COMPANY, Plaintiff

v.LAPOLLA INDUSTRIES, INC., Defendant.

Civil Action No. H–13–3157.

United States District Court, S.D. Texas, Houston Division.

Signed Feb. 23, 2015.

Marc James Wojciechowski, Wojciechowski & Associates, Spring, TX, for Plaintiff.

Dylan B. Russell, Hoover Slovacek LLP, Houston, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

LEE H. ROSENTHAL, District Judge.

I. Introduction

Lapolla Industries, a citizen of Texas and Delaware, manufactures spray polyurethane foam (“SPF”) insulation. Evanston Insurance Company, a citizen of Illinois, issued Lapolla three insurance policies, two commercial general liability (“CGL”) policies and one excess liability policy. The policies required Evanston to defend Lapolla against underlying suits seeking damages for bodily injury or property damage caused by Lapolla's products. The policies also obligated Evanston to indemnify Lapolla for these damages. The policies excluded coverage for damages for bodily injury or property damage that “would not have occurred in whole or in part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants at any time.” (Docket Entry No. 23, Ex. B). The policies defined “pollutants” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, electromagnetic fields and waste.” (Id. ).

This lawsuit stems from underlying litigation arising from Lapolla insulation installed during a home renovation. In April 2010, during a covered period, the plaintiffs' renovation contractors installed Lapolla-manufactured SPF insulation in the part of a home owned by Michael and Kimberly Commaroto that was being renovated. The Commarotos and their house guest, Gretchen Schlegel, were not living in the part of the home undergoing renovations. They complained that shortly after the insulation was installed in a renovated room, they smelled odors and suffered respiratory distress, causing them to leave the home. Attempts to return triggered the same respiratory distress symptoms. The plaintiffs moved out permanently, leaving their personal property.

In April 2012, the plaintiffs sued the general contractor and various subcontractors for negligence and breach of contract. Michael A. Commaroto, Kimberly S. Commaroto and Gretchen Schlegel v. Pasquale Guzzo, AKA Pasqualino Guzzo d/b/a PDB Home Improvement, Perfect Wall, LLC and Jozsef Finta, No. FST–CV12–6013645S, Judicial Dist. Stamford, Ct.; see also (Docket Entry No. 27). In July 2012, the contractors filed an apportionment complaint and a third-party complaint against Lapolla. In the plaintiffs' second amended complaint, filed in April 2013, they also asserted a products-liability claim against Lapolla, alleging that it manufactured, sold, and marketed its SPF insulation in a defective and unreasonably dangerous manner. (Docket Entry No. 27, at 36, ¶¶ 151–62).¹

In 2013, Evanston filed this diversity-jurisdiction suit in Texas federal court. Evanston sought a declaratory judgment that it has no duty to defend or indemnify Lapolla because of the policies' pollution exclusions. (Docket Entry No. 1). After Evanston amended its complaint, Lapolla answered and counterclaimed for a declaratory judgment that Evanston was obligated to defend and indemnify. (Docket Entry No. 22). In April and May 2014, Evanston and Lapolla cross-moved for summary judgment. (Docket Entry Nos. 23, 30). Both parties responded. (Docket Entry Nos. 30, 31, 33). Evanston also moved to strike certain of Lapolla's summary judgment exhibits, (Docket Entry No. 32), and Lapolla moved for leave to supplement the summary judgment record with versions of those exhibits addressing some of the deficiencies identified in Evanston's motions. (Docket Entry No. 33). Evanston opposed the motion to supplement. (Docket Entry No. 34).

Based on the motions, the briefs, the pleadings, the record, and the applicable law, the court grants Evanston's motion for summary judgment that it has no duty to defend, (Docket Entry No. 23), and denies Lapolla's motion, (Docket Entry No. 30). Evanston's motion to strike Lapolla's exhibits and Lapolla's cross-motion to supplement, (Docket Entry Nos. 32, 33), are denied as moot, although, as explained below, allowing the supplementation sought would not change the outcome. The parties are directed to file a statement by March 5, 2015, advising what issues remain to be decided and proposing a scheduling and docket control order for doing so.

The reasons for these rulings are explained below.

II. The Applicable Legal Standards

A. Summary Judgment

Summary judgment is appropriate if the moving party “shows that there is no genuine dispute as to any material fact” and that it “is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “The movant bears the burden of identifying those portions of the record it believes demonstrate the absence of a genuine [dispute] of material fact.” Lincoln Gen. Ins. Co. v. Reyna, 401 F.3d 347, 349 (5th Cir.2005) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322–25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). If the burden of proof at trial lies with the nonmoving party, the movant may satisfy its initial burden by “ ‘showing’—that is, pointing out to the district court— that there is an absence of evidence to support the nonmoving party's case.” Celotex, 477 U.S. at 325, 106 S.Ct. 2548. Although the party moving for summary judgment must demonstrate the absence of a genuine dispute as to any material fact, it does not need to negate the elements of the nonmovant's case. Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir.2005) (citation omitted). A dispute “is material if its resolution could affect the outcome of the action.' ” DIRECTV, Inc. v. Robson, 420 F.3d 532, 536 (5th Cir.2005) (quoting Weeks Marine, Inc. v. Fireman's Fund Ins. Co., 340 F.3d 233, 235 (5th Cir.2003) ). “If the moving party fails to meet its initial burden, the motion for summary judgment must be denied, regardless of the nonmovant's response.” Quorum Health Res., L.L.C. v. Maverick Cnty. Hosp. Dist., 308 F.3d 451, 471 (5th Cir.2002) (citing Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc)).

When the moving party has met its Rule 56(a) burden, the nonmoving party cannot survive a summary judgment motion by resting on the mere allegations of its pleadings. “[T]he nonmovant must identify specific evidence in the record and articulate the manner in which that evidence supports that party's claim.” Johnson v. Deep E. Tex. Reg'l Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th Cir.2004) (citation omitted). “This burden is not satisfied with ‘some metaphysical doubt as to the material facts,’ by ‘conclusory allegations,’ by ‘unsubstantiated assertions,’ or by ‘only a “scintilla” of evidence.’ ” Little, 37 F.3d at 1075 (citations omitted). In deciding a summary judgment motion, the court draws all reasonable inferences in the light most favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The moving party bears a heavier burden when seeking summary judgment on a claim or defense on which it would bear the burden of proof at trial. Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir.1986). In that case, it “must establish beyond peradventure all of the essential elements of the claim or defense to warrant [summary] judgment in [its] favor.” Id. (emphasis in original); see also Meecorp Capital Mkts. LLC v. Tex–Wave Indus. LP, 265 Fed.Appx. 155, 157 (5th Cir.2008) (per curiam) (quoting Fontenot ). “If the moving party fails to meet this initial burden, the motion must be denied, regardless of the nonmovant's response.” Meecorp Capital Mkts., 265 Fed.Appx. at 158 (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) ). When the parties cross-move for summary judgment, the court must review “each motion independently, viewing the evidence and inferences in the light most favorable to the nonmoving party.” Mid–Continent Cas. Co. v. Bay Rock Operating Co., 614 F.3d 105, 110 (5th Cir.2010) (internal quotation marks and alteration omitted).

B. Insurance Policy Interpretation and the Duty to Defend

The parties agree that Texas law governs. Under Texas law, insurance policies are interpreted under the rules of construction that apply to contracts generally. Sharp v. State Farm Fire & Cas. Ins. Co., 115 F.3d 1258, 1260 (5th Cir.1997) (citing Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex.1995) ). In interpreting a policy, a court must read all parts together, giving meaning to each sentence, clause, and word, to avoid making any portion inoperative. Fiess v. State Farm Lloyds, 202 S.W.3d 744, 748 (Tex.2006). The parties' intent “is governed by what they said, not by what they intended to say but did not.” Id. at 746. The terms used in an insurance contract are given their commonly understood or generally accepted meaning unless otherwise defined in the policy. Lamar Homes, Inc. v. Mid–Continent Cas. Co., 242 S.W.3d 1, 8 (Tex.2007).

Ambiguities in insurance contracts are to be strictly construed against the insurer, Sharp, 115 F.3d at 1260–61 ; Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (Tex.1984), but only if the court first finds that the contract is ambiguous. Sharp, 115 F.3d at 1261. A policy provision is ambiguous if it is susceptible to more than one reasonable interpretation. Id.; Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex.1996). A court determines ambiguity by looking at the contract as a whole, in light of the circumstances present when the parties entered the contract. Universal Health Servs., Inc. v. Renaissance Women's Group, P.A., 121 S.W.3d 742, 746 (Tex.2003). Whether the contract is ambiguous is a question of law for the court to decide. Nat'l Union Fire Ins. Co., 907...