Gibson & Associates, Inc. v. Home Ins. Co.

Decision Date11 March 1997
Docket NumberCivil Action No. 3:96-CV-1725-P.
Citation966 F.Supp. 468
PartiesGIBSON & ASSOCIATES, INC., Plaintiff, v. HOME INSURANCE COMPANY, Defendant.
CourtU.S. District Court — Northern District of Texas

W. Kyle Gooch, Canterbury Stuber Pratt Elder & Gooch, Dallas, TX, for Gibson & Associates.

Judith A. Schening, Fulbright & Jaworski, Dallas, TX, for Home Indem. Co., Home Ins. Co.

MEMORANDUM OPINION AND ORDER

SOLIS, District Judge.

Now before this Court are the following:

1. Plaintiff's Motion for Partial Summary Judgment and supporting Memorandum of Law, filed August 8, 1996;

2. Defendant's Response to Plaintiff's Motion for Partial Summary Judgment and Defendant's Counter-Motion for Summary Judgment, filed August 28, 1996, and Brief in Support, filed on the same date;

3. Response of Gibson & Associates, Inc. to Defendant's Motion for Summary Judgment, filed September 4, 1996;

4. Plaintiff's Reply Brief, filed September 4, 1996; and

5. Defendant's Reply to Plaintiff's Response to Defendant's Counter-Motion for Partial Summary Judgment, filed September 18, 1996.

Upon thorough review of the summary judgment evidence, the parties' arguments, and relevant law, this Court finds that for the reasons set forth below, Plaintiff's Motion for Partial Summary Judgment should be granted and that Defendant's counter-motion should be denied.

BACKGROUND

This is a coverage dispute involving a commercial general liability policy (the "Policy") provided by Defendant, Home Insurance Company ("Home"), to Plaintiff, Gibson & Associates, Inc. ("Gibson"). Gibson contends that, pursuant to the Policy, Home was under a contractual duty to defend it in a lawsuit brought against Gibson by the City of Dallas (the "City"). Home, by contrast, denies that the claims asserted by the City fell within the scope of coverage of the Policy and asserts that it consequently never became subject to any obligation to afford Gibson a defense against the City's action.

The underlying lawsuit arose out of a construction contract awarded to Gibson by the City of Dallas in October 1992, according to which Gibson was to perform street, sidewalk, and public underground utility upgrades along Main Street between Griffin and Ervay Streets in downtown Dallas. Several store owners and tenants along Main Street (the "Shop Owners") brought two separate actions against the City of Dallas, claiming that, "[d]ue to poor or inadequate planning," the City had failed adequately to assess the scope of necessary construction, in particular the total closing of Main Street in late 1992 or early 1993.1 Both the closing of Main Street and the ongoing construction activities, the plaintiffs claimed, created significant interference with access to their leasehold or property interests and caused the plaintiffs serious financial damage, including in some instances the loss of their leases. The plaintiffs asserted, inter alia, that the City's actions constituted a taking without compensation in violation of the constitutions of the United States and the State of Texas and that the City's restriction of access to the plaintiffs' properties "was illegal, unnecessary, negligently performed and/or unduly delayed."

The City responded to these lawsuits in part by filing third-party complaints against Gibson in which it alleged that Gibson had agreed to indemnify the City "from and against any and all claims, lawsuits or any other harm for which recovery or damages is sought, that arise out of a breach of any term of the contract" between Gibson and the City. Gibson had breached its contractual duties, the City contended, because the construction contract required Gibson to insure that continued access to businesses along Main Street would be maintained during business hours. Attached as an exhibit to the City's third-party complaint in each case was a copy of the shopkeepers' underlying pleading.

Gibson forwarded both third-party actions to its liability carrier. By correspondence of April 6 and May 16, 1995, Home declined to assume Gibson's defense in these matters on the ground that the claims were not covered under the applicable liability insurance policy. Gibson thereupon retained personal counsel, and on April 15, 1996, the City's claims against Gibson were dismissed with prejudice pursuant to the parties' stipulation of dismissal. On May 23, 1996 Gibson filed the present action against Home in state court, seeking to recover the costs of its defense in the underlying lawsuit.2 Gibson contends that under the commercial general liability policy effective at the time of the relevant events in this matter, Home had a duty to defend Plaintiff against the City's claims and that in refusing to provide Plaintiff with a defense, Home failed to deal with Plaintiff fairly and in good faith. The parties now have filed cross-motions for partial summary judgment on the issue whether Home was under a duty to defend Gibson against the City's allegations.

SUMMARY JUDGMENT STANDARD

Summary judgment is proper when the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25, 106 S.Ct. 2548, 2552-54, 91 L.Ed.2d 265 (1986). A dispute about a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The moving party must identify the evidence on file in the case which establishes the absence of any genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. at 2552.

Once the moving party has made an initial showing, the party opposing the motion must offer evidence sufficient to establish the existence of essential elements of the party's case. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986). Mere assertions of a factual dispute unsupported by probative evidence will not prevent summary judgment; the party defending against a motion for summary judgment cannot defeat the motion unless it provides specific facts that show the case presents a genuine issue of material fact, such that a jury might return a verdict in its favor. Anderson, 477 U.S. at 256-57, 106 S.Ct. at 2514-15. Conclusory assertions, unsupported by specific facts, presented in affidavits opposing the motion for summary judgement are likewise insufficient to defeat a proper motion for summary judgment. See Lujan v. National Wildlife Fed'n, 497 U.S. 871, 888, 110 S.Ct. 3177, 3188, 111 L.Ed.2d 695 (1990).

All evidence and the inferences to be drawn therefrom "must be viewed in the light most favorable to the party opposing the motion." United States v. Diebold, 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962); Marshall v. Victoria Transp. Co., 603 F.2d 1122, 1123 (5th Cir.1979). However, if the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to its case on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23, 106 S.Ct. at 2552-53.

ANALYSIS
A. GENERAL CONSIDERATIONS

Home's argument that it was never under a duty to defend Gibson against the City's third-party action is predicated on the presumption that the City's claims are essentially contractual in nature and hence do not fall within the scope of coverage provided by Home's commercial general liability insurance policy. Because the Court is of the opinion that, notwithstanding its inapplicability to causes of action for breach of contract, the Policy does provide coverage for indemnification claims of the type asserted by the City, Home's motion for summary judgment must be denied, and partial summary judgment must instead be granted in favor of Gibson.

1. The Duty to Defend

Under Texas law, the duty to defend is significantly broader in scope than the duty to indemnify, and a breach of the former gives rise to a distinct and separate cause of action than does a breach of the latter. Gulf Chem. & Metallurgical Corp. v. Associated Metals & Minerals Corp., 1 F.3d 365, 369 (5th Cir.1993); Colony Ins. Co. v. H.R.K., Inc., 728 S.W.2d 848, 850 (Tex.App. — Dallas 1987, no writ). In determining whether the facts of any given case obligate the carrier to provide a defense to its insured, Texas courts follow the "eight corners" rule, which requires the court to look strictly to the allegations in the pleadings and the language of the policy. State Farm Lloyds v. Kessler, 932 S.W.2d 732, 736 (Tex.App. — Fort Worth 1996, writ requested); American Alliance Ins. Co. v. Frito-Lay, Inc., 788 S.W.2d 152, 153 (Tex.App. — Dallas 1990, writ dism'd w.o.j.). If the underlying lawsuit alleges facts that are within the scope of coverage, the insurer ordinarily is held to owe the insured a duty to defend. National Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 140 (1997); American Physicians Ins. Exchange v. Garcia, 876 S.W.2d 842, 848 (Tex.1994).

Neither the truth or falsity of the allegations nor any other factors outside the pleadings may be taken into consideration: "The duty to defend is not affected by facts ascertained before suit, developed in the process of litigation, or by the ultimate outcome of the suit." Pro-Tech Coatings, Inc. v. Union Standard Ins. Co., 897 S.W.2d 885, 887 (Tex.App. — Dallas 1995) (quoting American Alliance, 788 S.W.2d at 153-54); Argonaut Southwest Ins. Co. v. Maupin, 500 S.W.2d 633, 635 (Tex.1973). As long as the plaintiff has potentially asserted a claim that lies within the coverage of the policy, the insurance carrier is under an obligation to defend the insured. Gulf States Ins. Co. v. Alamo...

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