Federated Mut. Ins. v. Grapevine Excavation, Inc.

• Decision Date: 22 May 1998
• Docket Number: No. 4:96-CV-598-E.,4:96-CV-598-E.
• Citation: 18 F.Supp.2d 636
• Parties: FEDERATED MUTUAL INSURANCE COMPANY, v. GRAPEVINE EXCAVATION, INC., et al. GRAPEVINE EXCAVATION, INC. v. MARYLAND LLOYDS, A Lloyds Insurance Co.
• Court: U.S. District Court — Northern District of Texas

Page 636

18 F.Supp.2d 636

FEDERATED MUTUAL INSURANCE COMPANY, v. GRAPEVINE EXCAVATION, INC., et al.

GRAPEVINE EXCAVATION, INC. v. MARYLAND LLOYDS, A Lloyds Insurance Co.

No. 4:96-CV-598-E.

United States District Court, N.D. Texas, Fort Worth Division.

May 22, 1998.

John Charles Tollefson, Knox & Tollefson, Dallas, TX, for Federated Mutual Insurance Company, plaintiff.

Patrick Jerome Wielinski, Michelle Illene B. Rieger, Ford, Yungblut, White & Salazar, Dallas, TX, for Grapevine Excavation Inc, defendant.

Michael Patrick Duray, Paul F. Vernon, Vernon & Duray, Dallas, TX, for Employers Mutual Casualty Company, defendant.

John S. Torigian, Krell & Torigian, Houston, TX, for Tribble & Stephens Co., defendant.

R. Brent Cooper, Cooper & Scully, Dallas, TX, for Maryland Lloyds, a Lloyds Insurance Company, third-party defendant.

MEMORANDUM OPINION AND ORDER

MAHON, District Judge.

Now before the Court are several motions and cross-motions for summary judgment filed by the parties in the above-styled and numbered cause. On May 6, 1998, the Court conducted a hearing on said motions. After a review of the record before the Court, the extensive motions and authorities submitted by the parties, the capable oral presentations at the hearing, and the applicable law, the Court makes the following determination.

I. OVERVIEW

This is a coverage dispute involving general liability policies provided to Grapevine Excavation, Inc. ("GEI") by Federated Mutual Insurance Company ("FM") and Maryland Lloyds, a Lloyds Insurance Company ("Maryland"). Generally, the parties seek a declaration of the relative rights, duties, and obligations owed pursuant to the subject policies.

II. BACKGROUND

On August 23, 1996, FM filed this action for declaratory judgment pursuant to 28 U.S.C. § 2201 and Fed.R.Civ.P. 57. The basis for jurisdiction is diversity of citizenship pursuant to 28 U.S.C. § 1332. GEI has counterclaimed for a declaration in favor of Defendants.¹

All Defendants herein have filed Original Answers and,in addition, Defendant GEI filed a Third-party Complaint against Maryland on January 13, 1997. Simply put, the issue before the Court involves the determination of coverage under general liability insurance policies, — specifically: whether FM and/or Maryland has a duty to defend and/or indemnify GEI and Employers Mutual Casualty Company ("EMCASCO"), GEI's performance bond surety, in a state court lawsuit brought by Tribble and Stephens ("T & S") arising out of a parking lot construction project.

The subject parking lot was constructed in part by GEI for Wal-Mart Stores, Inc. ("Wal-Mart") under a general contract between Wal-Mart and T & S. GEI was a subcontractor under the general contract and EMCASCO was GEI's performance bond surety.

T & S's state court petition in the underlying lawsuit (the "T & S lawsuit") generally alleges that FM's named insured, GEI, a foundation subcontractor, and Moore Paving Company ("Moore"), another subcontractor, breached their subcontracts in failing to construct the Wal-Mart parking lot in accordance with contract specifications. It is alleged that GEI failed to lay an appropriate base and/or Moore failed to properly lay asphalt over the base.

In the action before the Court, FM filed its Motion for Summary Judgment on January 28, 1997, seeking a declaration that FM has no duty to defend GEI in the T & S lawsuit nor to pay any judgment or settlement arising out of the claims asserted by T & S in that lawsuit. By motion dated February 28, 1997, GEI responded in opposition to FM's motion and counter-motioned for summary judgment on the issues of FM's duty to defend and coverage under the FM policy for the allegations against GEI in the T & S lawsuit.²

Next, on June 16, 1997, GEI filed a Motion for Summary Judgment against Third-party Defendant Maryland claiming that GEI is entitled to coverage under the Maryland policy and that Maryland is obligated to defend GEI against the T & S lawsuit. Maryland filed a responsive motion in opposition to GEI's summary judgment motion.³ Finally, on March 4, 1998, Maryland filed an amended response which included a cross-motion for summary judgment.

In July 1997, the Court ordered the parties to mediate this case before a mediator designated by the parties. However, the parties' attempt to resolve this dispute through mediation proved unsuccessful. In their Joint Status Report Regarding Mediation filed November 14, 1997 informing the Court of the mediation results, the parties express to the Court their opinion that this Court's rulings on the current motions and cross-motions for summary judgment "may resolve many, if not all, of the issues in this insurance dispute."⁴ The Court will now endeavor to resolve the pending summary judgment motions.

III. SUMMARY JUDGMENT STANDARDS

Summary judgment is proper when the record establishes that no genuine issue as to any material fact exists, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Hill v. London, Stetelman, & Kirkwood, Inc., 906 F.2d 204, 207 (5th Cir.1990). The evidence in the record is to be viewed in the light most favorable to the nonmoving party. Newell v. Oxford Management Inc., 912 F.2d 793, 795 (5th Cir.), reh'g denied, 918 F.2d 484 (1990); Medlin v. Palmer, 874 F.2d 1085, 1089 (5th Cir.1989).

In order to prevail on a motion for summary judgment, the moving party has the initial burden of demonstrating that there is no genuine issue as to any material fact and that he is entitled to a judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Williams v. Adams, 836 F.2d 958, 960 (5th Cir.1988); Thibodeaux v. Torch, Inc., 858 F.2d 1048, 1050 (5th Cir.1988); Fed.R.Civ.P. Rule 56(c). The party moving for summary judgment need not produce evidence showing the absence of a genuine issue of material fact with respect to an issue on which the nonmoving party bears the burden of proof. Celotex, 477 U.S. at 325, 106 S.Ct. 2548. Rather, the party moving for summary judgment need only show that the party who bears the burden of proof has adduced no evidence to support an element essential to his case. Celotex, supra; Teply v. Mobil Oil Corp., 859 F.2d 375, 379 (5th Cir.1988). If the movant bears the burden of proof on a claim or defense, he must establish all elements of the claim or defense to prevail on summary judgment. Western Fire Insurance Co. v. Copeland, 651 F.Supp. 1051, 1053 (S.D.Miss.1987), aff'd, 824 F.2d 970 (5th Cir. 1987).

Once the moving party has made an initial showing, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 585, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Anderson, 477 U.S. at 257, 106 S.Ct. 2505. In order to avoid summary judgment, the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586, 106 S.Ct. 1348. Rule 56(e) requires that the nonmoving party "set forth specific facts showing that there is a genuine issue for trial." See Anderson, 477 U.S. at 256, 106 S.Ct. 2505.

In making its determination on the motion, the Court must look at the full record including the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits. Williams, 836 F.2d at 961; Fed. R.Civ.P. Rule 56(c). All reasonable inferences to be drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion and any doubt must be resolved in his favor. Matsushita, 475 U.S. at 587, 106 S.Ct. 1348; Meyers v. M/V Eugenio, 842 F.2d 815, 816 (5th Cir. 1988). However, the Court's function is not to "weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, supra.

In the present case, FM's first point in its summary judgment motion is that "GEI Has the Burden of Proof to Demonstrate Insurance Coverage and That Covered Damages Occurred Within the Term of the Policy." FM's Brief in Support of Motion for Summary Judgment at 4. In sum, FM asserts the following:

The person seeking coverage under an insurance policy has the duty of proving that he or she is an insured under the policy, that the loss is covered by the policy, that the damages asserted occurred within the policy effective dates and that all policy conditions were met. Only the burden of proving exclusions to coverage rests with the insurer. Once exclusions are shown to be applicable, the burden is then again on the insured to rebut their application or to prove exceptions to the exclusions apply. Before any exclusions to coverage are even considered, the persons seeking insurance must first prove that the insurance applies at all under the coverage.

Id. (footnote and citations omitted)(emphasis original). FM asserts that GEI cannot meet its burden of showing coverage under the FM policy.

GEI responds that what FM is attempting to do in the above-cited passage is to "convince the Court that Grapevine must sustain some sort of high burden in order to obtain the defense which Federated owes to it in the Underlying Lawsuit." GEI Response and Cross-Motion for Summary Judgment at 7. Instead, GEI asserts, an insured need only meet a relatively low burden in order to obtain a defense from a general liability carrier. Id. In its brief, GEI states the following correct principles of law:

The insurer's duty to indemnify, the duty addressed in most of the cases cited by Federated, is not as broad as its duty to defend. Colony Ins. Co. v. H.R.K., Inc., 728 S.W.2d 848, 850 (Tex.App. — Dallas 1987, no writ). The obligation to defend the Underlying Lawsuit is determined solely from the allegations in the third party cla...