Houston Petroleum Co. v. Highlands Ins. Co., 01-89-01064-CV

• Decision Date: 31 August 1990
• Docket Number: No. 01-89-01064-CV,01-89-01064-CV
• Citation: 830 S.W.2d 153
• Parties: HOUSTON PETROLEUM COMPANY and Richard O'Donnell, Appellants, v. HIGHLANDS INSURANCE COMPANY, Appellee. (1st Dist.)
• Court: Texas Court of Appeals

Page 153

830 S.W.2d 153

HOUSTON PETROLEUM COMPANY and Richard O'Donnell, Appellants, v. HIGHLANDS INSURANCE COMPANY, Appellee.

No. 01-89-01064-CV.

Court of Appeals of Texas Houston (1st Dist.).

Aug. 31, 1990.

Publication Ordered Jan. 17, 1991.

Laurence T. Gillaspia, Houston, for appellants.

Richard P. Colquitt, Houston, for appellee.

Before EVANS, C.J., and DUGGAN and MIRABAL, JJ.

OPINION

EVANS, Chief Justice.

This is an appeal from a summary judgment in favor of appellee, Highland Insurance Company. The judgment declares that Highlands has no duty to defend appellants, Houston Petroleum Company and its president, Richard O'Donnell, in a suit (the "Topalian suit"), brought against them in federal district court, where they are the defendants.

In their first point of error, appellants contend generally that the trial court erred in entering the summary judgment. Under this point, appellants argue various procedural objections to Highlands' motion for summary judgment, all of which relate to the authenticity of the insurance policies in question. Based on counsels' statements at oral submission, we have determined there is no dispute as to the authenticity of the insurance policies that were properly before the trial court, and the only question raised by the record is the legal interpretation to be accorded such policies. Accordingly, we conclude that the trial court did not err in considering the policy provisions contained in the record. The first point of error is overruled.

In their second point of error, appellants' principal contention is that the trial court erred in granting the summary judgment because the allegations in the plaintiffs' Topalian suit complaint are covered by the Highlands' insurance policies.

In Texas, an insurer's contractual duty to defend must be determined solely from the face of the pleadings, without reference to any facts outside the pleadings. Continental Sav. Ass'n v. U.S. Fidelity and Guar. Co., 762 F.2d 1239, 1243 (5th Cir.), amended in part, rehearing denied, 768 F.2d 89 (1985). The duty to defend arises when a third party sues the insured on allegations that, if taken as true, potentially state a cause of action within the terms of the policy. Id. Whether the policy covers the cause of action alleged must be determined from the contractual terms of the insurance policy. Whatley v. City of Dallas, 758 S.W.2d 301, 304 (Tex.App.--Dallas 1988, writ denied). If under the facts alleged, there is a prima facie showing that the claim is not covered under the policy, the insurer has no duty to defend. Holmes v. Employers Casualty Co., 699 S.W.2d 339, 340-41 (Tex.App.--Houston [1st Dist.] 1985, writ ref'd n.r.e.).

It is well established that insurance policies are to be strictly construed in favor of the insured in order to avoid exclusion of coverage. Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (Tex.1984). This is not true however, when a term in question is susceptible of only one reasonable construction. Id. When there is no ambiguity, it is the court's duty to give the words used their plain meaning. Id. Language in insurance provisions is only ambiguous if the court is uncertain as to which of two or more meanings was intended. Entzminger v. Provident Life & Accident Ins. Co., 652 S.W.2d 533, 535 (Tex.App.--Houston [1st Dist.] 1983, no writ).

The Topalian suit plaintiffs essentially allege that they incurred obligations and suffered economic loss, including loss of capital contributions in a limited partnership venture conducted by appellants, due to appellants' wrongful conduct.

We first address appellants' assertions that the complaint in the Topalian suit alleges "bodily injury" within the meaning of their insurance coverage.

The Highland Insurance policy covers:

a) bodily injury; b) personal injury; c) property damage; d) advertising injury; ... caused by an occurrence which takes place anywhere in the world.

(Emphasis added)

The insurance policy defines "bodily injury" as:

bodily injury, sickness or disease sustained by a person, which occurs during the policy period, including mental injury, mental anguish, shock, fright, disability or death at any time resulting therefrom.

(Emphasis added)

The policy defines "occurrence" with respect to bodily injury as:

an accident, including continuous or repeated exposure to conditions, which result in bodily injury or property damage neither expected nor intended from the standpoint of the insured.

We find a few paragraphs in the Topalian suit complaint that arguably might fall within the "bodily injury" provision of the insurance policies. In those paragraphs, the plaintiffs allege appellants made fraudulent promises, false representations, and untrue statements of material fact, which resulted in damages in excess of $12 million. The $12 million figure includes the alleged fair value of the plaintiffs' limited partnership units, as well as damages for "emotional distress." Appellants must show that the alleged fraudulent promises, false representations, and untrue statements constituted a "condition," and "continuous or repeated exposure" to the condition resulted in some bodily injury to the insured.

We hold that exposure to "fraudulent promises, false representations, and untrue statements" does not, as a matter of law, fall within the plain meaning of the definition of "occurrence." To hold otherwise would require us to unnaturally extend the definition of the term "conditions," and consequently, the definition of "bodily...