Lyons v State Farms Lloyds

• Decision Date: 22 February 2001
• Citation: 41 S.W.3d 201
• Parties: <!--41 S.W.3d 201 (Tex.App.-Houston 2001) GERLENE LYONS, Appellant v. STATE FARM LLOYDS AND NATIONAL CASUALTY COMPANY, Appellee NO. 14-98-01253-CV Court of Appeals of Texas, Houston (14th Dist.)
• Court: Texas Court of Appeals

Page 201

41 S.W.3d 201 (Tex.App.-Houston [14th Dist.] 2001)

GERLENE LYONS, Appellant v STATE FARM LLOYDS AND NATIONAL CASUALTY COMPANY, Appellee

NO. 14-98-01253-CV

Court of Appeals of Texas, Houston (14th Dist.).

February 22, 2001.

On Appeal from the 125th District Harris County, Texas Trial Court Cause No. 96-60380

Panel consists of Justices Sears, Cannon, and Draughn.^*

OPINION

Ross A. Sears, Justice(Assigned)

This is an appeal from summary judgments granted to the appellees, State Farm Lloyds (State Farm) and National Casualty Company (National Casualty), and denied to the appellant, Gerlene Lyons. Lyons sued State Farm and National Casualty after obtaining a judgment against, and an assignment of claims from, Goswick & Associates, an alleged insured of the two insurance companies and a defendant in a personal injury lawsuit filed by Lyons. Lyons brings three issues on appeal: (1) that State Farm Lloyds had a duty to defend Goswick as a matter of law; (2) her claims against Goswick were covered under the State Farm and National Casualty policies; and (3) Goswick's assignment of claims against State Farm and National Casualty was valid. Because we find that neither State Farm nor National Casualty's policies afforded coverage to Goswick, we affirm the judgments of the trial court.

BACKGROUND

Lyons, a real estate agent, and her husband were invited to attend a promotional event at a newly-developed subdivision near Houston called Cinco Ranch. Part of the activities of the evening included riding from model home to model home on a "hayride." The hayride consisted of bails of hay piled on a trailer and pulled by a truck from home to home. After viewing one home, Lyons climbed back onto the hayride to find a place to sit. However, she lost her balance, fell from the trailer, struck her head against the pavement, and suffered a closed head injury from the impact.

She brought suit against a number of parties, including Goswick & Associates, the event planner who was responsible for the evening's itinerary and arrangements. The morning of trial, the last remaining defendant (aside from Goswick) settled and left Goswick the sole defendant at trial. After a short bench trial, in which Goswick "went through the motions" of defending itself, the court awarded Lyons $786,000. The trial court's judgment reflects an assignment of claims and an agreement not to execute between Goswick and Lyons.

Lyons, as assignee, then sued for Goswick's claims against State Farm and National Casualty. All three parties brought motions for summary judgment. The trial court granted State Farm summary judgment because (1) an "auto" exclusion in the policy excluded coverage to Goswick and (2) Lyons's verdict was based upon a non-adversarial trial. Additionally, the trial court also granted a general summary judgment to National Casualty, whose motion for summary judgment contained the following grounds: (1) no coverage under the policy for the trailer; (2) an invalid assignment of claims to Lyons because the underlying trial was inadversarial; (3) Goswick was not an insured under the policy; (4) no cause of action exists for bad faith in third party liability claims; (5) late notice by Goswick in the underlying suit. The reason for granting National Casualty summary judgment was not stated. Additionally, Lyons moved for summary judgment on the grounds that State Farm had a duty to defend the underlying lawsuit as a matter of law. This motion was denied.

STANDARD OF REVIEW

In a summary judgment case, the issue on appeal is whether the movant met its summary judgment burden by establishing that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Calvillo v. Gonzalez, 922 S.W.2d 928, 929 (Tex.1996); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.1979). The burden of proof is on the movant, and all doubts about the existence of a genuine issue of material fact are resolved against the movant. Friendswood Dev. Co. v. McDade & Co., 926 S.W.2d 280, 282 (Tex.1996); Cate v. Dover Corp., 790 S.W.2d 559, 562 (Tex.1990); Great Am. Reserve Ins. Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex.1965). Therefore, we must view the evidence and its reasonable inferences in the light most favorable to the nonmovant. Great Am., 391 S.W.2d at 47.

A defendant is entitled to summary judgment if the summary judgment evidence establishes, as a matter of law, that at least one element of a plaintiff's cause of action cannot be established. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). To accomplish this, the defendant must present summary judgment evidence that negates an element of the plaintiff's claims. Once this evidence is presented, the burden shifts to the plaintiff to put on competent controverting evidence that proves the existence of a genuine issue of material fact with regard to the element challenged by the defendant. Id.

STATE FARM

One of the grounds on which State Farm won summary judgment was that Lyons's injuries were excluded from coverage in Goswick's policy with State Farm. Goswick's policy with State Farm was a general commercial liability policy that excluded coverage for injury arising from the use of an auto. Lyons also filed a motion for partial summary judgment, which the court denied, claiming that State Farm owed Goswick a defense as a matter of law. When two parties move for summary judgment, and the trial court grants one but denies the other, the non-prevailing party may appeal both the summary judgment granted against it and the summary judgment denied it. See Tobin v. Garcia, 316 S.W.2d 396, 400 (Tex. 1958). Lyons appeals both the granting of State Farm's summary judgment and denial of her motion.

A. Coverage

An insurer is not legally required to defend a lawsuit against its insured if the plaintiff's petition fails to allege facts that are within the scope of coverage. National Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997). In Texas, courts apply the "eight corners" rule to determine coverage: the "insurer's duty to defend is determined by the allegations in the pleadings and the language of the insurance policy." Id. The allegations in the pleading are to be given a liberal interpretation, and the truth of the allegations cannot be considered. Id.; see also Nationwide Property & Cas. Ins. Co. v. McFarland, 887 S.W.2d 487, 492 (Tex. App. Dallas 1994, writ denied). Further, in case of doubt about whether the allegations state a cause of action within the coverage sufficient to compel the insurer to defend, such doubt will be resolved in the insured's favor. Heyden Newport Chem. Corp. v. Southern Gen. Ins. Co., 387 S.W.2d 22, 26 (Tex. 1965).

Lyon's petition in the underlying suit alleged the following against Goswick:

Gerlene Lyons was a guest at a party being held for realtors at and by Cinco Ranch. . . . Cinco Ranch. . . hired Goswick & Associates, Inc. to make all arrangements for the party. . . . While as an invited guest at this party, Gerlene Lyons participated in the hayride in order to view the model homes. She climbed up onto the trailer, with no one's assistance and very little light, and while trying to climb over bales of hay in order to find a place to sit, she fell from the hayride hitting her head on the road surface. The trailer used for the hayride. . . was unsafely loaded with hay, giving guests no choice but to climb over bales of hay in order to sit down. Additionally, Goswick & Associates did not provide or arrange for any assistance in helping guests safely board the hayride in the dark.

We must determine whether these allegations fall within the following auto exclusion in Goswick's policy with State Farm: "This insurance does not apply to: 'Bodily injury' . . . arising out of the ownership, maintenance, use or entrustment to others of any aircraft, 'auto' or watercraft . . . ."

B. "Use"

The critical question in determining whether Lyons's claim is excluded under Goswick's State Farm policy is whether Lyons's injuries arise from "use of an auto." Lyons argues that we need look no further that the State Farm policy for a definition of "use." The policy states, "[u]se includes operation and 'loading or unloading [of property].'" Lyons reads this clause restrictively so that use only entails operation, loading, and unloading of property. We disagree with this argument. See Great Nat'l Corp. v. Campbell, 687 S.W.2d 450, 451-52 (Tex. App. Dallas 1985, writ ref'd n.r.e.) (the word "including" is most often meant as a term of enlargement).

The phrase "arising from use" has been addressed in various cases, both where use of an auto is required for coverage and where use of an auto excludes coverage. The term "use" in the policy is a "general catchall. . ., designed and construed to include all proper uses of the vehicle not falling within other terms of definition such as ownership and maintenance." State Farm Mut. Auto. Ins. Co. v. Pan Am. Ins. Co., 437 S.W.2d 542, 545 (Tex. 1969) (holding that refueling of truck was maintenance, not use). Use means "to put into action or service; to employ for or apply to a given purpose." LeLeaux v. Hamshire-Fannett I.S.D., 835 S.W.2d 49, 51 (Tex. 1992) (holding that injury did not arise from use of school bus and that bus was a mere situs for the injury).

The Texas Supreme Court has recently discussed the term "use" in the context of an automobile insurance policy: "[t]he use required is of the vehicle qua vehicle, rather than simply as an article of property. . . . [I]f a vehicle is only the locational setting for an injury, the injury does not arise out of any use of the vehicle." Mid-Century Ins. Co. of Tex. v. Lindsey, 997 S.W.2d 153, 156 (Tex. 1999); see Collier v. Employers Nat. Ins. Co., 861 S.W.2d 286, 288-90 (Tex. App. Houston [14th Dist.] 1993, writ denied) (agreeing that...