Homes v. Lexington Ins. Co.
| Decision Date | 16 June 2014 |
| Docket Number | No. 3:13-cv-719-BN,3:13-cv-719-BN |
| Parties | CENTEX HOMES, a Nevada General Partnership, Plaintiff, v. LEXINGTON INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Northern District of Texas |
This is a civil action related to an insurer's duty to defend and accompanying obligations. See Dkt. No. 66. Plaintiff Centex Homes ("Plaintiff" or "Centex") filed a Motion for Partial Summary Judgment on its Breach of Contract and Chapter 542 Claims ("Motion"). See Dkt. No. 74. Defendant Lexington Insurance Company ("Defendant" or "Lexington") filed its response and a cross-motion for summary judgment ("Cross-Motion") on certain of Plaintiff's claims [Dkt. No. 86]. Plaintiff filed a reply in support of its Motion and a response to Defendant's Cross-Motion [Dkt. No. 97], and Defendant filed a reply in support of its Cross-Motion [Dkt. No. 101]. Also pending is Defendant's Motion for Leave to File Supplemental Brief in Support [Dkt. No. 100] of its Cross-Motion. Plaintiff filed a response [Dkt. No. 112], and Defendant filed a reply [Dkt. No. 114]. Defendant also filed a Motion for Reconsideration [Dkt. No.137].
For the reasons explained below, Plaintiff's Motion for Partial Summary Judgment on its Breach of Contract and Chapter 542 Claims [Dkt. No. 74] is DENIED, Defendant's Cross-Motion [Dkt. No. 86] is DENIED in part and GRANTED in part, and Defendant's Motion for Reconsideration [Dkt. No. 137] is DENIED. As to Defendant's Motion for Leave [Dkt. No. 100], because the Court did not consider the evidence at issue in reaching its decision, the motion is DENIED as moot.
Plaintiff asserts causes of action for breach of contract and violations of Chapters 541 and 542 of the Texas Insurance Code. See Dkt. No. 66 at 11-13. In its Motion, Plaintiff moves for summary judgment on its breach of contract and Chapter 542 claims and also seeks attorneys' fees and pre-judgment interest. See Dkt. No. 75.
This case involves a coverage dispute between an insured and insurer. Plaintiff is primarily in the business of designing, developing, and constructing condominiums and other housing complexes throughout the country. See Dkt. No. 66 at 2. In constructing these condominium projects, Plaintiff purchases "wrap" insurance policies that cover Plaintiff as a general contractor and all subcontractors performing work in connection with the insured project. See id. at 3. Plaintiff purchased five such wrap policies from Defendant.
The summary judgment evidence - when all facts are viewed and all reasonable inferences are drawn in the light most favorable to the non-moving party and when all disputed factual controversies are resolved in the non-moving party's favor - shows thefollowing regarding each of the policies for purposes of resolving the pending motions for summary judgment.
Defendant issued Commercial General Liability Residential Wrap-up Policy No. 4142193 to Plaintiff as a general contractor and all subcontractors performing work in connection with the Astoria Property located in Sacramento, California (the "Astoria Policy"). See Dkt. No. 78-1 at 2 (¶¶ 5, 8). Under the Astoria Policy, there is an "each occurrence" limit of $5,000,000 and a "Retained Amount" of $150,000 for "each occurrence." See Dkt. No. 78-1 at 25. In other words, Defendant is not obligated to make any payments under the Astoria Policy until Plaintiff has reached its Retained Amount of $150,000. The Astoria Policy also mandated a "Joint Defense Approach," which reflects that the named insured would cooperate with Defendant in connection with the investigation, defense, and resolution of any occurrence, offense, claim, or suit under the Policy. See Dkt. No. 78-1 at 27. Some of the relevant Astoria Policy provisions are as follows:
In February 2011, members of the Astoria Owners' Association filed suit inCalifornia against Plaintiff ("Astoria Litigation") for several causes of action, including construction defects. See Dkt. No. 43-1 at 85. Plaintiff and Defendant offer different accounts as to what transpired after the Astoria Litigation was filed, as detailed below.
Plaintiff notified Defendant on April 16, 2012 that the Retained Amount would be exceeded, and, on that date, Plaintiff sent a summary of invoices and amounts but did not include evidence of payment. See Dkt. No. 78-8 at 28-34. Defendant does not contest that it received notice of exhaustion on that date but instead says that it did not receive the necessary supporting documentation until December 6, 2012, despite having requested it on several different occasions. See Dkt. No. 78-8 at 81; Dkt. No. 78-8 at 43. On that date and upon receiving the documents, Defendant informed Plaintiff that it accepted that the Retained Amount had been met and said that its reservation of rights would be forthcoming. See Dkt. No. 78-4 at 1. On April 11, 2013, Defendant issued a check related to the Astoria fees for $95,757.11. Dkt. No. 78-4 at 12. Defendant did not provide its detailed reservation of rights, however, until October 4, 2013. See Dkt. No. 78-4 at 13.
In sum, Plaintiff claims that Defendant did not provide payment until a year after being notified that the Retained Amount was exhausted and did not provide a reservation of rights for almost 18 months. Defendant claims that Plaintiff exaggerates any delay in providing these things and that any alleged delay was caused by Plaintiff's conduct.
The parties also dispute the timing of when Defendant provided Plaintiff with notice that Defendant did not agree to the use of the law firm Newmeyer & Dillon("N&D") as Plaintiff's counsel. Plaintiff contends that it was not informed that Defendant would not accept N&D as counsel until the December 6, 2012 email informing Plaintiff that Defendant accepted satisfaction of the Retained Amount and requesting that the file be sent to the newly-selected law firm. See Dkt. No. 88-4 at 13. Defendant contends, however, that it informed Plaintiff that N&D would not be acceptable counsel several years before that. See Dkt. No. 88-4 at 9-14 & 22. That said, it appears that Defendant and N&D communicated regarding the status of the case and that Defendant was involved in the pre-litigation process, see Dkt. No. 88-5 at 1-3; Dkt. No. 88-3 at 1-7, and Defendant has not presented any evidence that it indicated N&D would not be acceptable counsel between initially stating so in its "Claim Account Instructions" and the December 6, 2012 communication.
With respect to payment, Defendant made a payment of $95,757.11 on April 11, 2013. See Dkt. No. 78-4 at 12. Plaintiff states that no further payments have been made to Plaintiff's defense costs. See Dkt. No. 75 at 13. Defendant states that, as of the filing of its Response, it had paid approximately $127,982 in defense costs and that payments are ongoing, but Defendant cites only to its affidavit and not to any proof of payment to support its position. See Dkt. No. 87 at 8.
Defendant issued Commercial General Liability Residential Wrap-up Policy No. 1323344 to Plaintiff as a general contractor and all subcontractors performing work in connection with the Element Property located in San Diego, California (the "Element Policy"). See Dkt. No. 78-1 at 2 (¶¶ 5, 9). Under the Element Policy, there is an "eachoccurrence" limit of $5,000,000 and a "Retained Amount" of $500,000 for "each occurrence." See Dkt. No. 78-2 at 2. In other words, Defendant is not obligated to make any payments under the Element Policy until Plaintiff has reached its Retained Amount of $500,000. The Element Policy mandated a "Joint Defense Approach," which reflects that the named insured would cooperate with Defendant in connection with the investigation, defense, and resolution of any occurrence, offense, claim, or suit under the Policy. See 78-2 at 18. Some of the relevant Element Policy provisions are as follows:
In April 2009, members of the Element Homeowners' Association filed suit in California against Plaintiff (the "Element Litigation") for several causes of action, including construction defects. See id. at 4; Dkt. No. 63-5 at 1 (Second Amended Complaint in the Element Litigation). Plaintiff and Defendant offer different accounts as to what transpired after the Element Litigation was filed, as detailed below.
Plaintiff notified Defendant on November 15, 2011 that the Retained Amount had been, or would soon be, satisfied. See Dkt. No. 78-6 at 8. Interestingly, Plaintiff claims in both its Motion and Appendix that the following day - November 16, 2011 -it sent the N&D invoices that had been issued through November 15, 2011, but Defendant claims that the invoices were not attached. See id. at 14. The letter in the Appendix also does not contain the invoices. See ...
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