MID-CONTINENT Cas. Co. v. GLOBAL ENERCOM Mgmt. INC.

• Decision Date: 01 October 2010
• Docket Number: No. 09-0744.,09-0744.
• Parties: MID-CONTINENT CASUALTY COMPANY, Petitioner, v. GLOBAL ENERCOM MANAGEMENT, INC., Respondent.
• Court: Texas Supreme Court

323 S.W.3d 151

MID-CONTINENT CASUALTY COMPANY, Petitioner,

v.GLOBAL ENERCOM MANAGEMENT, INC., Respondent.

No. 09-0744.

Supreme Court of Texas.

Oct. 1, 2010.

Timothy Poteet, Chamberlain & McHaney, Austin, TX, Matthew E. Coveler, Jennifer Bruch Hogan, Hogan & Hogan, L.L.P., Houston, TX, J. Mike Johanson, Kelley Jewell Friedman, Johanson & Fairless, L.L.P., Sugar Land, TX, for Petitioner.

John Kenneth Woodard, Bush & Ramirez LLC, Houston, TX, for Respondent.

PER CURIAM.

In this case, we must determine whether two exclusions in insurance policies-“auto use” and “subsequent-to-execution”-preclude coverage for a subcontractor's workers who fell and died after being hoisted up on a rope through a pulley system by a pickup truck. The subcontracts for which the insurance policies allegedly provided coverage were signed after the work had begun. The trial court and court of appeals held that neither exclusion applied and granted summary judgment to the policyholder, declaring coverage under both policies. 293 S.W.3d 322, 325, 328 (Tex.App.-Houston [14th Dist.] 2009, pet. granted). We affirm in part, reverse in part, and render judgment.

The relevant facts are not in dispute. Global Enercom Management, Inc. is a Delaware corporation with its principal place of business in Houston. It constructs and maintains cellular phone towers. Global subcontracted with All States Construction Company to perform repair work on a cell tower located in Arkansas. A provision of Global's subcontract with All States required All States to indemnify Global for “all acts and omissions of its employees, on the site where the Work is being performed and for all acts and omissions of its subcontractors, agents and vendors....” All States signed and delivered the subcontractor agreement to Global and began work on the project, but Global did not immediately sign the contract.

Mid-Continent Casualty Company is All States's insurer, and it issued both a commercial general liability policy (CGL) and a commercial auto policy (CAP) to All States. The CGL policy has a limit of $1,000,000 per occurrence, and the CAP has a limit of $100,000 per occurrence. Each policy also provides coverage extending to additional “insured contracts” when All States enters into contracts “pertaining to [its] business” in which All States “assume[s] the tort liability of another to pay for ‘bodily injury’ or ‘property damage’ to a third party or organization,” so long as the liability occurred “subsequent to the execution of the contract or agreement.”

All States employees began repairing the cell tower in December 2001, continuing into January 2002. As part of the repairs, the employees set up a rope-and-pulley system on the tower. One end of the rope was anchored on a spool and was run through a pulley attached to the “towing point,” or eye hooks, on the front bumper of a 2000 Ford F-250 Super Duty truck. The truck was parked some distance away from the tower on the opposite side of an outbuilding. The rope also ran through pulleys installed on the top and bottom of the 280-foot cell tower and was finally anchored to a headache ball on the other end of the rope. Three workers were instructed by the foreman to climb the tower to take measurements. They tried to reach the top of the tower by attaching themselves to the headache ball at the end of the rope and signaling the foreman to back the truck away from the tower to pull the rope through the pulleys and raise the headache ball. The foreman driving the truck did not see the workers until they had been raised approximately fifteen to twenty feet in the air, over the building obstructing his view. The foreman gave a hand signal, communicating “What's going on?” The workers, attached to the headache ball, gave another “up” signal, indicating to the foreman to continue driving the truck. Although the foreman knew this was not common practice and potentially unsafe, he nevertheless continued to drive the truck in reverse, away from the tower, lifting the three workers to a height of eighty feet. The rope broke, and the workers fell to their deaths. The day after the incident, Global signed the subcontract.

The heirs of the deceased workers brought suit against Global in federal court in Mississippi. Global sought indemnification from Mid-Continent as an additional insured under All States's CGL and CAP policies. Mid-Continent defended but ultimately refused to indemnify Global, and Global then filed this case in Texas, seeking, among other things, ¹ a declaration of a right to defense and indemnification from Mid-Continent. Mid-Continent filed a counterclaim seeking declarations that it owed no duty to indemnify or defend Global, that Global was not an additional insured under any policies issued by Mid-Continent to All States, and that it did not commit any statutory violations.

The parties each filed motions for summary judgment. Mid-Continent argued two separate bases for denial of coverage. First, Mid-Continent claims that the “auto-use” exclusion in the CGL policy precludes coverage. The exclusion states that the policy does not apply to:

“[b]odily injury” or “property damage” arising out of the ownership, maintenance, use or entrustment to others of any aircraft, “auto” or watercraft owned or operated by or rented or loaned to any insured.

The policy defines the term “auto” as “a land motor vehicle, trailer or semitrailer designed for travel on public roads, including any attached machinery or equipment.”

Second, Mid-Continent denied coverage under the CGL and CAP policies pursuant to the “subsequent-to-execution” clauses in each. Those clauses provide that a claim under an “insured contract” is only covered under the policies if “the ‘bodily injury’ or ‘property damage’ occurs subsequent to the execution of the [insured] contract or agreement.”

The trial court granted Global's motion for summary judgment and denied Mid-Continent's. Mid-Continent appealed. ² The court of appeals affirmed, holding that neither exclusion applied. 293 S.W.3d at 328. One justice dissented in part, arguing that the “auto-use” exclusion should bar coverage under the CGL policy, but he agreed with the majority that the “subsequent-to-execution” exceptions did not bar recovery under the policies. Id. at 329-32 (Seymore, J., dissenting in part and concurring in part). Mid-Continent petitioned this Court for review.

When both parties move for summary judgment and the trial court grants one motion and denies the other, the reviewing court should review the summary judgment evidence presented by both sides, determine all questions presented, and render the judgment the trial court should have rendered. Tex. Workers' Comp. Comm'n v. Patient Advocates of Tex., 136 S.W.3d 643, 648 (Tex.2004) (citation omitted). We analyze disputes over the interpretation of insurance contracts under the well-established principles of contract construction, attempting to determine the parties' intent through the written language of the policy. E.g., State Farm Lloyds v. Page, 315 S.W.3d 525 (Tex.2010) (citing State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 433 (Tex.1995)). If a contract for insurance has a clear and definite meaning, then it is not ambiguous as a matter of law, even if the parties interpret a policy differently. Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd's London, --- S.W.3d ---- (Tex.2010) (citations omitted).

We first address whether the “auto-use” exclusion bars coverage for the injury under the CGL policy. In the case before us, Mid-Continent alleges that using the truck with an attached pulley to lift the workers “arises out of” the use of an “auto” and excludes coverage. The parties do not dispute that the truck was hoisting the headache ball with the workers attached when the rope broke. But the parties dispute what caused the rope to break, and, more relevant here, whether the “use” of the truck was sufficient to trigger the “auto-use” exclusion and preclude coverage under the CGL policy.

The leading case from this Court regarding “auto-use” exceptions or inclusions to coverage is Mid-Century Insurance Co. of Texas v. Lindsey, 997 S.W.2d 153 (Tex.1999). In Lindsey, a boy attempted to access a locked pickup truck through its back window, but in the process accidentally touched a shotgun mounted over the window, causing it to discharge and injure a person sitting in an adjacent vehicle. Id. at 154. The injured party settled with the owners of the first vehicle for an amount less than his total injuries and then sought underinsured motorist coverage from the insurer of the vehicle in which he was sitting. Id. That insurance company denied coverage, arguing, among other things, that the vehicle owner's policy did not provide coverage because the accident did not “arise out of” the “use” of a motor vehicle. Id. at 155.

The Court used the factors announced in two insurance treatises ³ to focus the analysis in determining whether an automobile's “use” clause applied to a particular claim.

For an injury to fall within the “use” coverage of an automobile policy (1) the accident must have arisen out of the inherent nature of the automobile, as such, (2) the accident must have arisen within the natural territorial limits of an automobile, and the actual use must not have terminated, (3) the automobile must not merely contribute to cause the condition which produces the injury, but must itself produce the injury.

Lindsey, 997 S.W.2d at 157. ⁴ The Court held that the factors were satisfied because the child was attempting to gain entry into the truck through the back window and the child did not stray from that purpose by playing with the gun or trying to shoot it. Id. at 158. The “injury producing act and its purposes are an integral part of the use of the vehicle as such,” and therefore the injury caused by the discharging gun arose out of the use of the vehicle. Id. at 161.

The court of appeals in this case...