Millis Dev. & Constr., Inc. v. America First Lloyd's Ins. Co.

• Decision Date: 12 August 2011
• Docket Number: Civil Action No. H–10–3260.
• Citation: 809 F.Supp.2d 616
• Parties: MILLIS DEVELOPMENT & CONSTRUCTION, INC. and Mt. Hawley Insurance Company, Plaintiffs, v. AMERICA FIRST LLOYD'S INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Texas

809 F.Supp.2d 616

MILLIS DEVELOPMENT & CONSTRUCTION, INC. and Mt. Hawley Insurance Company, Plaintiffs,

v.AMERICA FIRST LLOYD'S INSURANCE COMPANY, Defendant.

Civil Action No. H–10–3260.

United States District Court,S.D. Texas,Houston Division.

Aug. 12, 2011.

Tammy Lynn Clary, Gregory Keith Winslett, Quilling Selander Lownds Winslett & Moser P.C., Dallas, TX, for Plaintiffs.

Christopher W. Martin, Todd Mellies Lonergan, Martin Disiere et al., Houston, TX, for Defendant.

MEMORANDUM OPINION

NANCY K. JOHNSON, United States Magistrate Judge.

Pending before the court ¹ are Defendant's Motion for Partial Summary Judgment (Doc. 11) and Plaintiff's Motion for Partial Summary Judgment (Doc. 21). The court has considered the motions, all relevant filings, and the applicable law. For the reasons set forth below, the court GRANTS IN PART AND DENIES IN PART Plaintiff's Motion for Partial Summary Judgment, and GRANTS IN PART AND DENIES IN PART Defendant's Motion for Partial Summary Judgment.

I. Background

Mt. Hawley Insurance Company (“Mt. Hawley” or “Plaintiff”) brought this action against America First Lloyd's Insurance Company (“America First” or “Defendant”) seeking a declaratory judgment on the coverage obligations allegedly owed by America First to Millis Development and Construction, Inc. (“Millis”) and Trendmaker Homes, Inc. (“Trendmaker”) as defendants in a personal injury lawsuit pending in Harris County (the “Underlying Action”). ² Defendant filed its motion for summary partial judgment seeking the following declarations: (1) that it owed no duty to defend Trendmaker in the Underlying Action; (2) that its duty to defend Millis began with the filing of the sixth amended petition in the Underlying Action; and (3) that it had pro rata liability with Mt. Hawley for the costs incurred in defending Millis in the Underlying Action.³

In response, Plaintiff moved to amend its complaint and filed its second amended complaint on June 13, 2011.⁴ Plaintiff then filed its motion for partial summary judgment seeking the following declarations from the court: (1) that both Millis and Trendmaker are additional insureds on the America First policy; (2) that America First's duty to defend Millis and Trendmaker was triggered by the filing of the original petition in the Underlying Action; (3) that America First owes primary and non-contributory coverage to Millis and that Mt. Hawley provides excess coverage for Millis; (4) that America First has a duty to pay its pro rata share of defense and indemnity costs incurred on behalf of Trendmaker.⁵ Plaintiff also seeks summary judgment on its breach of contract claims against America First and alleges that America First breached its insurance contract to defend and indemnify both Millis and Trendmaker in the Underlying Action.⁶ Plaintiff claims that because of America First's alleged breaches of contract, Plaintiff is entitled through contractual and equitable subrogation to recover defense and indemnity costs expended on behalf of Millis and Trendmaker in the Underlying Action as well as other costs and attorney's fees in bringing this action.⁷

A. The Underlying Action

In September 2009, Wayne Gordon (“Gordon”), the plaintiff in the Underlying Action, filed his original petition.⁸ Gordon alleged that he was injured on February 2, 2009, in the course and scope of his employment for Dynamic Air Balancing, Inc., while performing his job duties at a project owned by Trendmaker and controlled by Trendmaker and general contractor Millis. ⁹ The following is the relevant portion of Gordon's original petition:

On February 2, 2009, Plaintiff Wayne Gordon, was in the course and scope of his employment for Dynamic Air Balancing, Inc, was performing his job duties at the Cross Creek Ranch Visitors & Recreation Center. The Visitors & Recreation Center was under the control of the developer, Trendmaker Homes, Inc. and/or the general contractor, Millis Development and Construction, Inc. On the day in question, Plaintiff was attempting to climb an attic ladder when he fell.¹⁰

Gordon initially amended his petition in the Underlying Action five times, making very similar allegations.¹¹

Plaintiff's First Amended Petition

On February 2, 2009, Plaintiff Wayne Gordon, was in the course and scope of his employment for Dynamic Air Balancing Inc., was performing his job duties at the Cross Creek Ranch Fitness Center. The Fitness Center was under the control of the developer, Trendmaker Homes, Inc. and/or the general contractor, Millis Development and Construction, Inc. On the day in question, Plaintiff was attempting to climb an attic ladder when he fell.¹²

Plaintiff's Second Amended Petition

On February 2, 2009, Plaintiff Wayne Gordon, was in the course and scope of his employment for Dynamic Air Balancing, Inc., was performing his job duties at the Cross Creek Ranch Fitness Center. The Fitness Center was under the control of the developer, Trendmaker Homes, Inc. and/or the general contractor, Millis Development and Construction, Inc. On the day in question, Plaintiff was attempting to climb an attic ladder when he fell.¹³

Plaintiff's Third Amended Petition

On February 2, 2009, Plaintiff Wayne Gordon, was in the course and scope of his employment for Dynamic Air Balancing, Inc., was performing his job duties at the Cross Creek Ranch Fitness Center. The fitness center was under the control of the developer, Trendmaker Homes, Inc. and/or the general contractor, Millis Development and Construction, Inc, and/or Insite Architecture, Inc. On the day in question, Plaintiff was attempting to climb an attic ladder when he fell.¹⁴

Plaintiff's Fourth Amended Petition

On February 2, 2009, Plaintiff Wayne Gordon, was in the course and scope of his employment for Dynamic Air Balancing, Inc., was performing his job duties at the Cross Creek Ranch Fitness Center. The fitness center was under the control of the developer, Trendmaker Homes, Inc. and/or the general contractor, Millis Development and Construction, Inc, and/or Insite Architecture, Inc. On the day in question, Plaintiff was attempting to climb an attic ladder when he fell.¹⁵

Plaintiff's Fifth Amended Petition

On February 2, 2009, Plaintiff Wayne Gordon, was in the course and scope of his employment for Dynamic Air Balancing, Inc., was performing his job duties at the Cross Creek Ranch Fitness Center. The fitness center was under the control of the developer (Trendmaker Homes, Inc.), the general contractor (Millis Development and Construction, Inc.) and the architect (Insite Architecture Inc.) On the day of his injury, Plaintiff was utilizing an attic ladder that had been specified by Insite, order and installed by Millis Development, and inspected and approved by Trendmaker. Unfortunately, the attic ladder was insufficient for its intend use as it was too short and unstable. The ladder was the only means of ingress/egress into the area. As a result of the negligent acts and omissions of Defendants and the deficiencies that existed with regards to the ladder, Plaintiff fell and sustained severe injuries.¹⁶

On June 23, 2010, Gordon filed his sixth amended original petition, which, in addition to the same allegations set forth in the first through fifth amended petitions, specifically identified Texas Mechanical Contractors (“TMC”) as the party who hired Dynamic Air to do the heating, ventilation, and air conditioning (“HVAC”) work at the Fitness Center.¹⁷ The relevant portion of Gordon's sixth amended petition appeared as follows:

On February 2, 2009, Plaintiff Wayne Gordon, was in the course and scope of his employment for Dynamic Air Balancing, Inc., was performing his job duties at the Cross Creek Ranch Fitness Center. The Cross Creek Ranch Fitness Center was part of a development undertaken by Trendmaker. Plaintiff will show onto this Court and jury that Trendmaker contractually retained the Millis Development to serve as the general contractor for the construction project that included the Fitness Center facility where Plaintiff was injured. Millis Development, in turn, contracted with Texas Mechanical Contractors retained Dynamic Air Balancing, Inc. (the employer of Plaintiff) to balance the air-conditioning flow from the units that had been installed by Texas Mechanical Contractors. During this ongoing construction project/process, Trendmaker, Millis and Texas Mechanical Contractors supervised and scheduled the work activities as the construction was not yet completed.

It was during the work in progress that Plaintiff sustained his injuries on the job site.¹⁸

In each amended petition in the Underlying Action, Gordon averred that he was injured during the course and scope of his employment and while performing his assigned job duties.¹⁹ Specifically, Gordon alleged defective and negligent construction, an unreasonably dangerous property condition, violations of the Texas Deceptive Trade Practices Act, and gross negligence by both Millis and Trendmaker.²⁰ Gordon's sixth through ninth amended petitions are the only ones that mention TMC.²¹ TMC is not a named defendant in any petition.²² Trendmaker and Millis are named defendants in every amended petition in the Underlying Action.²³

B. The America First Policy

America First issued policy No. CCP8069882 to TMC (“America First Policy”), which included commercial general liability (“CGL”) coverage for the policy period of September 3, 2008, through September 3, 2009.²⁴ The America First Policy contained the following provision for additional insured coverage (“Additional Insured Provision”):

Who Is An Insured is amended to include as an insured any person or organization when you and such a person or organization have agreed in writing in a contract, agreement or permit that such person or organization be added as an additional insured on your policy to provide insurance such as afforded under this coverage part. Such person or organization is an additional insured only with respect to liability...