Farmers Ins. Exch. v. Greene

• Citation: 376 S.W.3d 278
• Decision Date: 12 September 2012
• Docket Number: No. 05–11–00487–CV.,05–11–00487–CV.
• Parties: FARMERS INSURANCE EXCHANGE, Appellant, v. Bob GREENE, as Next Friend of Lawayne Greene, Appellee.
• Court: Court of Appeals of Texas

376 S.W.3d 278

FARMERS INSURANCE EXCHANGE, Appellant,

v.Bob GREENE, as Next Friend of Lawayne Greene, Appellee.

No. 05–11–00487–CV.

Court of Appeals of Texas,

Dallas.

Aug. 2, 2012.

Rehearing Overruled Sept. 12, 2012.

Steven A. Springer, Stephen G. Good, Fee, Smith, Sharp & Vitullo, L.L.P., Dallas, TX, for Appellant.

Matthew Kasey Ratliff, Strasburger & Price LLP, Dallas, TX, William Michael Ucherek, II, D. Bradley Kizzia, Juneau, Boll, Stacy & Ucherek, PLLC, Addison, TX, for Appellee.

Before Justices O'NEILL, MARTIN RICHTER, and LANG–MIERS.

OPINION

Opinion by Justice MARTIN RICHTER.

This breach of contract case against Farmers Insurance Exchange (“FIE”) arises out of the denial of Lawyane Greene's claim for fire damage to her real property. The trial court granted partial summary judgment for Greene on her breach of contract claim, severed all remaining claims and defenses, and assigned the severed claims a separate cause number. On appeal, FIE asserts the trial court erred in denying its motion for summary judgment and granting partial summary judgment for Green on her contract claim because the trial court misinterpreted the vacancy provision in the policy and section 862.054 of the insurance code does not apply to Greene's claim. Because we conclude section 862.054 of the insurance code is inapplicable to Greene's claim for damages to her residential real property, FIE is not required to establish that the vacancy caused or contributed to any loss before asserting the vacancy clause as a defense to the denial of coverage for damage to the dwelling. Therefore, we reverse the trial court's judgment on the breach of contract claim and render judgment on this narrow issue.

I. Background

FIE issued a homeowner's insurance policy (the “Policy”) to Greene. Section IA of the Policy provides coverage for damages to the “dwelling,” defined as the residence premises reflected on the declarations page. Section IB provides coverage for damage to personal property. Section II provides liability coverage that includes coverage for personal liability and medical payments to others. The Policy also contains a vacancy provision which suspends coverage for damage to the dwelling under section 1A sixty days after the dwelling becomes vacant.

In July 2007, four months prior to the loss at issue, Greene notified FIE that she was moving to a retirement community and placing her house on the market for sale. In November 2007, a fire spread from neighboring property to Greene's property, causing her to suffer a loss. Greene made a claim under the Policy for damages to her dwelling. Relying on the vacancy provision, FIE denied the claim.

Following the denial of her claim, Greene sued FIE to recover benefits under the Policy, attorney's fees, and penalties under the prompt payment statute. Greene also sued for extra-contractual damages, asserting claims for negligence, fraud, breach of the duty of good faith and fair dealing, and violations of the deceptive trade practices act and insurance code. FIE answered, and asserted that coverage for property damage was suspended under the Policy's vacancy clause and it “did not breach the policy by denying a claim for coverage that was suspended.” FIE did not contend that Greene breached or violated the Policy by leaving the house vacant.

FIE moved for summary judgment “on all of [Greene's] claims.” Specifically, FIE asserted that property damage coverage is suspended during a lengthy vacancy of the house, FIE is not required to show prejudice, there is no breach of contract, the insurance policy is not forfeited and Greene is not entitled to reformation. FIE further challenged Greene's extra-contractual claims for negligence, fraudulent nondisclosure, and violations of the deceptive trade practices act and insurance code. The trial court denied the motion.

Greene moved for partial summary judgment three times. In her first motion, Greene asserted that FIE owes her benefits under the Policy because she did not commit a substantial breach of the Policy and FIE suffered no prejudice as a result of her vacating the property. The trial court denied the motion.

In her second motion, Greene asserted that FIE is precluded from relying on the vacancy provision in the Policy because there is no evidence that FIE provided her with a copy of the Policy. Greene also urged the court to reconsider her previous argument—that FIE should not be allowed to rely on the vacancy condition without first establishing that it suffered prejudice. Greene subsequently filed a supplemental motion for summary judgment, re-urging the same arguments set forth in her second motion and adding the argument that section 862.054 of the insurance code prohibits denial of her claim absent a showing of prejudice.

Prior to the hearing, the parties stipulated that Greene's residence was vacant beginning July 20, 2007. FIE also entered into a limited stipulation that the vacancy did not contribute to cause the destruction of the property. The stipulation makes clear, however, that FIE's “continued position is that ... Greene did not breach or violate the policy provision.”

On March 17, 2011, the trial court heard argument on whether FIE, in “asserting a policy defense based upon a vacancy clause ... could prevail on such a defense without establishing that such ... vacancy contributed to the loss....” The trial court concluded that it could not, and memorializedits conclusion in an order that states, in pertinent part:

Greene's ... violation of the purported vacancy clause does not render the policy void and does not constitute a defense to ... Greene's suit for loss without ... [FIE] establishing that any purported vacancy clause violation ... contributed to the loss at issue....

On March 21, 2011, the trial judge signed a final judgment which recited that it was “based on the Order dated March 17, 2011.” The judgment awards Greene damages and attorney's fees on her breach of contract claim, and states that the parties agree to severance of all remaining claims and defenses so that a final appealable judgment can be entered. In an order of severance signed on the same date, the trial court again referenced the award to Greene on her breach of contract claim, and severed “all remaining claims, causes of action and defenses of the parties not specifically ruled upon by the court in its Final Judgment.” This appeal followed.

II.AnalysisSummary Judgment on the Breach of Contract Claim

FIE contends the trial court erred in granting partial summary judgment for Green on her breach of contract claim because the trial court misinterpreted the vacancy provision in the policy and section 862.054 of the insurance code does not apply to Greene's claim. We review the trial court's grant of summary judgment de novo. See Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005). Where, as here, both sides move for summary judgment and the trial court grants one motion and denies the other, in the event of trial court error, we are to render the judgment the trial court should have rendered. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex.2000).

Our determination here involves two matters of construction—the Policy and the statute under which Greene contends the prejudice requirement arises. When interpreting an insurance policy, we utilize well-established principles which include construing the policy according to general rules of contract construction to ascertain the parties' intent. Gilbert Texas Const., L.P. v. Underwriters at Lloyd's London, 327 S.W.3d 118, 126 (Tex.2010) (citations omitted). In conducting our review, we presume the parties intend what the words of their contract say, examine the entire agreement, “seek to harmonize and give effect to all provisions so that none will be meaningless,” attribute the ordinary and generally-accepted meaning to terms unless the policy shows the words are meant in a technical or different sense, and attempt to honor the agreement “by not remaking the contract by reading additional provisions into it.” Id.;Nat'l Union Fire Ins. Co. v. Crocker, 246 S.W.3d 603, 606 (Tex.2008) (“Most importantly, we must give the policy's words their plain meaning, without inserting additional provisions into the contract.”). If the policy language is worded so that it can be given definite legal meaning, it is not ambiguous and is construed as a matter of law. Kelley–Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex.1998). Even if parties interpret a policy differently, an insurance contract having a clear and definite meaning is not ambiguous as a matter of law. Mid–Continent Cas. Co. v. Global Enercom Mgmt., Inc., 323 S.W.3d 151, 154 (Tex.2010) (citations omitted).

We review issues of statutory construction de novo. Tex. Lottery Comm'n v. First State Bank of DeQueen, 325 S.W.3d 628, 635 (Tex.2010). In construing statutes, our primary objective is to give effect to the Legislature's intent. Id. (citing Galbraith Eng'g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 867 (Tex.2009)). We rely on the plain meaning of the text as expressing legislative intent unless a different meaning is supplied by legislative definition or is apparent from the context, or the plain meaning leads to absurd results. Id. We presume that the legislature selected language in a statute with care and that every word or phrase was used with a purpose in mind. Id. (citing In re Caballero, 272 S.W.3d 595, 599 (Tex.2008)). Courts should give effect to “every sentence, clause, and word of a statute so that no part thereof [will] be rendered superfluous.” City of San Antonio v. City of Boerne, 111 S.W.3d 22, 29 (Tex.2003).

We begin our analysis with an examination of the Policy. The vacancy clause at issue provides:

If the insured moves from the dwelling and a substantial part of the personal property is removed from that dwelling, the dwelling will be considered vacant. Coverage that applies...