General Agents Ins. Co. v. Arrendondo

Decision Date04 April 2001
Docket NumberNo. 04-00-00052-CV,04-00-00052-CV
Parties(Tex.App.-San Antonio 2001) GENERAL AGENTS INSURANCE COMPANY, Appellant v. Robert C. ARREDONDO, Individually and d/b/a United Erectors, Appellee
CourtTexas Court of Appeals

Sitting: Tom Rickhoff, Justice, Catherine Stone, Justice, Sarah B. Duncan, Justice

OPINION

Sarah B. Duncan, Justice

General Agents Insurance Company of America appeals the summary judgment declaring it owes a duty to defend and indemnify Robert C. Arredondo in a lawsuit filed by Rafael Saenz. We reverse this aspect of the trial court's judgment, because Saenz' claim is not covered by the GAINSCO policy. In light of this holding, we also reverse the trial court's award of attorney's fees to Arredondo and remand this claim to the trial court for further consideration in light of this opinion.

Factual and Procedural Background

This is a declaratory judgment action to determine coverage for a personal injury lawsuit under a commercial general liability policy issued by General Agents Insurance Company of America (GAINSCO) to Robert C. Arredondo d/b/a United Erectors. The material facts are undisputed.

On August 26, 1994, Rafael Saenz was seriously injured when he was knocked off a building by a crane operated by Robert V. Arredondo. At the time of the accident, both Saenz and Arredondo were employees of Agency Services, which subcontracted with United Erectors, a sole proprietorship operated by Arredondo's son, Robert C. Arredondo (also an employee of Agency Services). All of United Erectors' construction was done through employees of its subcontractor, Agency Services. Because United Erectors had no employees, it was not required to and did not obtain workers' compensation insurance.

Although Robert C. Arredondo was aware of the subcontract with Agency Services, his insurance application to GAINSCO stated United Erectors did not use any contractors or subcontractors. In reliance upon this representation, GAINSCO issued to Robert C. Arredondo d/b/a United Erectors a general commercial liability policy containing the following exclusion:

EXCLUSION--CONTRACTORS AND SUBCONTRACTORS

This insurance does not apply to and no duty to defend is provided by us for "bodily injury", "property damage", "personal injury" or "advertising injury" arising out of:

a.operations performed directly or indirectly for any insured by contractors or subcontractors; or

b.acts or omissions in connection with the general supervision of a. above.

In May 1996, Saenz filed a negligence suit against the general contractor on the project, David & David Construction; Robert C. Arredondo, individually and d/b/a United Erectors; and Robert V. Arredondo, individually and d/b/a Metro Erectors. GAINSCO defended the Arredondos in the Saenz suit pursuant to a reservation of rights letter. However, in August of 1998, GAINSCO filed a declaratory judgment action seeking to establish it did not owe the Arredondos a duty to defend or indemnify them in Saenz' suit.

Shortly before the Saenz trial, Saenz nonsuited his claims against Robert V. Arredondo, thus mooting GAINSCO's claims against Robert V. Arredondo and Metro Erectors in the declaratory judgment action. Shortly thereafter, Robert C. Arredondo counterclaimed for a declaratory judgment to establish GAINSCO owed him a duty to defend and indemnify him in Saenz' suit. Arredondo also sought his attorney's fees in the declaratory judgment action.

Immediately before trial in Saenz' suit, Saenz filed his Second Amended Petition. In this petition, Saenz' sole allegation against Robert C. Arredondo was that he was negligent in failing to provide safety equipment. The jury found Robert C. Arredondo 75% negligent and Saenz 25% negligent. The trial court rendered judgment against Robert C. Arredondo for an amount in excess of $300,000.

In GAINSCO's declaratory judgment action, both parties moved for summary judgment. In its motion, GAINSCO argued, among other things, that the contractors and subcontractors exclusion unambiguously excluded coverage for Saenz' injuries because they arose out of the operations of a subcontractor, Agency Services. In response, Arredondo argued the exclusion was ambiguous on its face and as applied because Saenz' injuries were not caused by the operations of a subcontractor but by the insured Robert C. Arredondo's negligence in failing to provide safety equipment. Alternatively, Arredondo argued coverage was mandated because Saenz' injuries were caused by the concurrent negligence of a subcontractor and a named insured. The trial court denied GAINSCO's motion and granted Arredondo's, awarding him indemnity in the Saenz suit and his attorney's fees in the declaratory judgment action.

Standard of Review

We review a summary judgment de novo. See Sasser v. Dantex Oil & Gas, Inc., 906 S.W.2d 599, 602 (Tex. App. San Antonio 1995, writ denied). Under Rule 166a(c), summary judgment is proper when the summary judgment record establishes there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law on a ground set forth in the motion. See Tex. R. Civ. P. 166a(c); Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex. 1985). The evidence must be viewed in the light most favorable to the nonmoving party and all contrary evidence and inferences must be disregarded. Nixon, 690 S.W.2d at 548-49.

"When both sides move for summary judgment and the trial court grants one motion and denies the other, the reviewing court should review both sides' summary judgment evidence and determine all questions presented ... render[ing] the judgment that the trial court should have rendered." FM Properties Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). "When a trial court's order granting summary judgment does not specify the grounds relied upon, the reviewing court must affirm summary judgment if any of the summary judgment grounds are meritorious." Id.

Applicable Law

The general rules of contract construction govern insurance policy interpretation. State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 433 (Tex. 1995). "Whether a contract is ambiguous is a question of law that must be decided by examining the contract as a whole in light of the circumstances present when the contract was entered." Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d. 587, 589 (Tex. 1996). A contract is unambiguous as a matter of law "if it can be given a definite or certain meaning." Id. Conversely, if an insurance contract is subject to more than one reasonable interpretation, the contract is ambiguous and the interpretation that most favors coverage for the insured will be adopted. Kelly Assocs., Ltd. v. Aetna Cas. & Sur. Co., 681 S.W.2d 593, 596 (Tex. 1984). However, an ambiguity does not arise simply because the parties advance conflicting interpretations of the contract. Columbia Gas, 940 S.W.2d at 589. Further, the presence of conflicting judicial decisions is insufficient, as a matter of law, to create an ambiguity. Gulf Metals Indus., Inc. v. Chicago Ins. Co., 993 S.W.2d 800, 807 (Tex. App. Austin 1999, pet. denied); see Grain Dealers Mut. Ins. Co. v. McKee, 943 S.W.2d 455, 459 (Tex. 1997).

Discussion

It is undisputed that, at the time of Saenz' accident, both he and the Arredondos were employees of and performing work for Agency Services, a subcontractor of United Erectors. The summary judgment record also conclusively establishes Saenz' and Robert V. Arredondo's conduct bears a causal relationship to the accident. The jury concluded Saenz was twenty-five percent responsible for the accident; and it undisputed that Robert V. Arredondo was operating the crane that precipitated Saenz' fall. Thus, the parties' only dispute is whether the contractors and subcontractors exclusion unambiguously excludes coverage for personal injuries bearing a causal relationship to a subcontractor's work.

As GAINSCO points out, courts in other jurisdictions have held the contractors and subcontractors exclusion unambiguously excludes coverage for independent contractors' and subcontractors' employees' injuries. See Mount Vernon Fire Ins. Co. v. Roma Constr. Corp., 952 F. Supp. 129, 131 (E.D.N.Y. 1996); U.S. Underwriters Ins. Co. v. Congregation B'Nai Israel, 900 F. Supp. 641, 645-46 (E.D.N.Y. 1995), aff'd , 101 F.3d 685 (2d Cir. 1996); Federal Kemper Ins. Co. v. Jones, 777 F. Supp. 405, 410 (M.D. Pa. 1991). In Congregation B'Nai Israel, for instance, the court held injuries sustained by a subcontractor's employee when he fell off a ladder were excluded from coverage by a contractors and...

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