Interstate Fire Ins. Co. v. First Tape, Inc.
| Decision Date | 26 September 1991 |
| Docket Number | No. 01-90-00747-CV,01-90-00747-CV |
| Citation | 817 S.W.2d 142 |
| Parties | INTERSTATE FIRE INSURANCE COMPANY, Appellant, v. FIRST TAPE, INC., f/k/a U.S. Tape, Inc., and First Bag, Inc., f/k/a Plasti-Bag, Inc., Appellees. (1st Dist.) |
| Court | Texas Court of Appeals |
Douglas A. Shackelford, Jr., Houston, for appellant.
Elena DiIorio, Lance C. Winchester, Eileen O'Neill & Penelope E. Nicholson, Houston, for appellees.
Before MIRABAL, DUGGAN and O'CONNOR, JJ.
This is an appeal from a summary judgment in favor of the defendants in a negligence action. The issue presented is whether the former warehouse tenants, who assigned their lease to a new tenant, are insulated from liability for their alleged negligence in causing a fire, by a waiver of subrogation clause in the assigned lease.
The uncontroverted summary judgment evidence establishes the following: Gary Pentecost (Pentecost) owned a commercial building worth over $1,600,000, which he partially insured for $600,000 with appellant, Interstate Fire Insurance Company ("the Insurance Company"). On July 28, 1983, Pentecost leased the building to appellees, First Tape, Inc., f/k/a/ U.S. Tape, Inc., and First Bag, Inc., f/k/a Plasti-Bag, Inc. ("First Tape/First Bag"), for eight years with a three-year renewal option. First Tape/First Bag used the building for adhesive tape and plastic bag manufacturing, distribution, and storage. The lease between Pentecost and First Tape/First Bag contained the following clause on insurance and liability:
Lessor and Lessee mutually agree that with respect to any loss or damage that may occur to the leased premises, or any improvements thereto, or said building of which the leased premises are a part, or any improvements thereto, by reason of fire, the elements, or any other cause which could be insured against under the terms of standard fire and extended coverage insurance policies, regardless of the cause or origin, including negligence of the parties hereto, their agents, officers, and employees, the party hereto carrying such insurance and suffering said loss, hereby releases the other from any and all claims with respect to such loss; and Lessor and Lessee further mutually agree that their respective insurance companies shall have no right of subrogation against the other party hereto on account of any such loss and each party agrees that it will request its insurance carrier to include in its policies such a clause or endorsement. If extra cost shall be charged therefor, Lessor shall advise Lessee of the amount of the extra cost and the same shall be paid by Lessee as additional rent within ten (10) days; provided, however, that nothing contained in this Paragraph shall be deemed to modify or otherwise affect releases of either party from liability for claims elsewhere herein contained.
(Emphasis added.) Another provision in the lease, on assignment or subletting, read It is expressly understood and agreed that Lessee shall not assign this lease contract or any interest herein or sublet all or any portion of the premises without the prior written consent of Lessor which shall not be unreasonably withheld; provided, however, if said premises or any part be assigned or sublet, Lessee agrees to remain, and shall be held liable for the prompt payment of all rent due or to become due hereunder for the full term of this lease and for the carrying out of the terms and conditions contained herein. Lessee may assign to its subsidiary or affiliate or its successor by merger or by sale of assets (provided such successor entity has at least the net worth of Lessee) with written notice to lessor.
(Emphasis added.) The lease expressly provided that "[t]he terms and provisions of this Lease Contract shall be binding upon and shall extend to the successors, assigns, and legal representatives of the Lessor and Lessee herein."
First Tape/First Bag subsequently sold all the assets of the tape and plastic bag businesses and assigned the Pentecost lease to Gundle Lining Systems, Inc. ("Gundle"). First Tape/First Bag expressly contracted to manage the business for Gundle as independent contractors. A short time later, one of the machines used in the manufacturing process started a fire which consumed the entire building and its contents.
The Insurance Company paid $600,000 to Pentecost on the insurance claim, was subrogated to the rights of Pentecost, and intervened in a suit against First Tape/First Bag, Gundle, and others, brought by another of Pentecost's insurance carriers, Alliance Insurance Company. Interstate alleged that the negligence of First Tape/First Bag proximately caused the fire. First Tape/First Bag sought, and obtained, summary judgment based on the limitation of liability clause in the lease.
In its sole point of error, the Insurance Company contends the trial court erred in granting the summary judgment because, as a matter of law, First Tape/First Bag lost all right to assert the waiver of subrogation clause when they assigned the lease to Gundle. First Tape/First Bag say they are entitled to assert the clause as a defense as a matter of law, despite the assignment, because they remain in privity of contract with Pentecost. 1
The standard of appellate review for a summary judgment in favor of a defendant is whether the summary judgment proof establishes, as a matter of law, that there is no genuine issue of fact as to one or more of the essential elements of the plaintiff's cause of action. Gibbs v. General Motors Corp. 450 S.W.2d 827, 828 (Tex.1970). The movant has the burden to show that there is no genuine issue of material fact, and that it is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). Evidence favorable to the non-movant will be taken as true in deciding whether there is a disputed material fact issue that precludes summary judgment. Id. Every reasonable inference must be indulged...
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