Lay v. Aetna Ins. Co.

• Decision Date: 21 May 1980
• Docket Number: No. 13142,13142
• Citation: 599 S.W.2d 684
• Parties: J. D. LAY, Appellant, v. AETNA INSURANCE COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 684

599 S.W.2d 684

J. D. LAY, Appellant, v. AETNA INSURANCE COMPANY, Appellee.

No. 13142.

Court of Civil Appeals of Texas, Austin.

May 21, 1980.

Rehearing Denied June 11, 1980.

William W. McNeal, Austin, for appellant.

George H. Spencer, George H. Spencer, Jr., Clemons, Spencer, Welmaker & Finck, San Antonio, for appellee.

SMITH, Justice.

Appellant, J. D. Lay, was employed by J. & J. Oil Venture to ascertain the proper location for, and supervise the drilling of, an oil well on a lease belonging to J. & J. in Caldwell County. At appellant's direction, a site was located, a well drilled, and production actually brought in. Subsequently, after J. & J. had expended some $40,000 in expenses on the well, it was discovered that, due to appellant's error in reading the surveyor's stakes, the well had been located and drilled on an adjoining tract not under lease to J. & J. A settlement was reached with the adjoining landowner, Jerry Sauer, whereby J. & J. purchased an assignment of the drilling rights on the property where the well was located. In turn, J. & J. brought suit against appellant to recoup its losses incurred as a result of the negligent location of the well on the wrong lease.

Appellant called upon his liability insurer, appellee Aetna Insurance Company, under its coverage of him in a valid general liability insurance policy, to defend the suit against him. Appellee refused and denied coverage on the grounds that the incident in question was not an "occurrence," nor was the suit one for the recovery of "property damage," as those terms are defined by the policy.

Appellant then acquired his own counsel and the cause proceeded to trial. After trial to the court, judgment was entered against appellant in the amount of $34,034.56, plus interest and court costs.

Subsequently, appellant brought this suit praying for a determination that he was covered by the provisions of the insurance policy and that he was entitled to indemnification for the amount of the judgment entered against him in the previous suit. From an adverse judgment, appellant now appeals to this Court.

Appellant was issued Aetna's Policy Number CG-30-48-94, a "Comprehensive General Liability Insurance" policy, which provided:

"The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

A. bodily injury or

B. property damage

to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage. . . . " (Emphasis supplied)

Assuming, arguendo, that the drilling of the well in the wrong location was an "occurrence" within the meaning of the insurance policy, appellant must also show that this "occurrence" resulted in "property damage."

"Property damage" is defined by the policy as:

". . . (1) physical injury to or destruction of tangible property which occurs during the policy period, including loss of use thereof at any time resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period." (Emphasis supplied)

Appellant sought indemnification for the following damages awarded to J. & J. Oil Venture in the previous judgment:

(1) $15,750 for purchase of an assignment of the portion of the lease upon which the well was drilled (2) $1,640.56 for attorney and surveyor fees; and

(3) $16,644 for the loss of approximately 1500 barrels of oil to adjacent wells caused by delay in getting the well into production.

Language used in insurance policies is given its usual and popular meaning unless it is ambiguous or it is shown that the parties intended it to have a special meaning. Northwestern National Life Insurance Company v. Black, 383 S.W.2d 806 (Tex.Civ.App. Texarkana 1964, writ ref'd n. r. e.).

"Tangible property" is commonly understood to be property that is capable of being handled or touched. Erwin v. Steele, 228 S.W.2d 882 (Tex.Civ.App. Dallas 1950, writ ref'd n. r. e.); Bismarck Tribune Co. v. Omdahl, 147 N.W.2d 903 (N.D.1966). It has also been defined as ". . . such property as may be seen, weighed, measured, and estimated by the physical senses." 73 C.J.S. Property § 5 (1951).

The purchase of the assignment and the payment of attorney and surveyor fees were not injury to, destruction of, or loss of use of "tangible property." The purchase of the assignment was an economic transaction involving the exchange of money for the privilege of drilling and producing oil. Likewise, the attorney and surveyor fees were merely expenses necessarily incurred in the process of negotiating and acquiring the lease from Sauer.

There was also no injury...