National Union Fire Ins. Co. of Pittsburgh, Pennsylvania v. John Zink Co., 13-96-282-CV

• Decision Date: 28 May 1998
• Docket Number: No. 13-96-282-CV,13-96-282-CV
• Citation: 972 S.W.2d 839
• Parties: NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. and Industrial Risk Insurers, Appellants, v. JOHN ZINK COMPANY, et al., Appellees.
• Court: Texas Court of Appeals

Page 839

972 S.W.2d 839

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. and Industrial Risk Insurers, Appellants, v. JOHN ZINK COMPANY, et al., Appellees.

No. 13-96-282-CV.

Court of Appeals of Texas Corpus Christi.

May 28, 1998.

Rehearing Overruled June 18, 1998.

Peter Alden T. Sartin, Dallas, for Appellants.

Elizabeth Bonvillain Kamin, Elizabeth Hill Painter, Woodard, Hall & Primm, Houston, Gaston M. Broyles, Jr., Broyles & Pratt, Corpus Christi, Deborah R. Sundermann, Corpus Christi, Kathryn Snapka, Law Offices of Kathryn Snapka, Corpus Christi, John A. Smith, III, Frank E. Weathered, Dunn & Weathered, Corpus Christi, for Appellees.

Before SEERDEN, C.J., and FEDERICO G. HINOJOSA, Jr. and CHAVEZ, JJ.

OPINION

FEDERICO G. HINOJOSA, Jr., Justice.

This is an appeal from a summary judgment in an insurance subrogation case. Appellants, National Union Fire Insurance Company of Pittsburgh, Pennsylvania and Industrial Risk Insurers (collectively, "Insurers") brought subrogation claims against appellees, John Zink Company, Puffer-Sweiven Corpus Christi, Inc., Puffer-Sweiven, Inc., Puffer-Sweiven Trading Corporation, Puffer-Sweiven Texas, Inc., Fisher Controls International, Fisher Controls Installation & Service Company, Fisher Controls Company, Inc., and Valtek Company. ¹ Appellees moved for and were granted summary judgment. ² By ten points of error, the Insurers contend the trial court erred in denying their special exceptions and in granting appellees' motions for summary judgment. We reverse and remand.

1. FACTUAL BACKGROUND

Valero ³ entered into a $500 million contract with Kellogg ⁴ to design, engineer, and construct an expansion to a refinery in Corpus Christi. The Insurers allege that on July 13, 1984, a vertical air pre-heater exploded and caused property damage to the refinery. They also allege that on May 27, 1985, a fire occurred in a citrate scrubber stack as a result of malfunctions in bypass valves, a computing controller card, and a housing cabinet. The refinery again sustained severe damages. Because the damages were covered by insurance policies issued by both National Union and Industrial Risk, claims for the property damages were paid by both Insurers. ⁵ The Insurers paid approximately $3.6 million to Valero ($1.6 million for the air pre-heater claim and $2 million for the citrate scrubber stack claim). The claims were paid before any subrogation suit was filed.

The contract between Valero and Kellogg imposed certain obligations on the parties, including that Kellogg and its subcontractors purchase liability insurance. The Insurers allege that each of the appellees in this case were subcontractors of Kellogg who in some manner were responsible for the failed equipment. The Insurers specifically allege that:

(1) Zink manufactured the defective air pre-heater; (2) Fisher manufactured the defective computer-control system; and (3) the system was distributed by Puffer-Sweiven and Valtek.

The Insurers filed two suits against appellees seeking to recover the amounts they paid to Valero. These cases were consolidated with an action brought by Valero against appellees for recovery of uninsured losses arising from the same occurrences. Prior to consolidation, the Insurers intervened in Valero's lawsuit. Subsequently, Kellogg and another defendant, Ingersoll-Rand Company, moved for and were granted summary judgment against Valero. The Insurers' causes of action were severed into this case and abated pending Valero's appeal of Kellogg's and Ingersoll-Rand's summary judgment. We affirmed the summary judgment in Valero Energy Corp. v. M.W. Kellogg Constr. Co., 866 S.W.2d 252 (Tex.App.--Corpus Christi 1993, writ denied) ("Valero I" ). ⁶ The trial court allowed this case to proceed and subsequently granted the complained of summary judgment.

2. THE CLAIMS AND GROUNDS FOR SUMMARY JUDGMENT

Each subrogation suit claimed products liability and negligence related to the manufacture and/or installation of a different product. The suits also alleged breach of contract and breach of an agreement to indemnify Valero through insurance obtained to cover losses such as those at issue. Related to their allegation that appellees failed to obtain insurance coverage, the Insurers also alleged breach of fiduciary duty, breach of the duty of good faith and fair dealing, violation of article 21.21 of the Texas Insurance Code, and breach of the Texas Deceptive Trade Practices--Consumer Protection Act (DTPA), to the extent the DTPA is incorporated into the Texas Insurance Code. The Insurers sought recovery from all applicable insurance policies available to appellees, and from the individual defendants, if they failed to obtain the requisite insurance coverage.

In their motions for summary judgment, appellees claimed that the Insurers' wholly derivative claims had been eliminated when we found in Valero I that, under the terms of the contract, Valero had waived all of its claims against Kellogg and its subcontractors. In addition, appellees argued that under the law of the case doctrine, the Insurers were bound by Valero I. Puffer-Sweiven and Zink also contended that summary judgment was proper because limitations and judicial estoppel barred the Insurers' claims. Zink further argued that the express terms of the Kellogg/Zink contract precluded the Insurers' claims.

The Insurers specially excepted and responded to appellees' motions. The Insurers' special exceptions were denied. By ten points of error, the Insurers contend the trial court erred in:

1) granting summary judgment;

2) granting summary judgment on the basis that Valero I barred the Insurers' different claims in a separate case;

3) granting summary judgment on the basis of Valero I because Valero did not raise the Insurers' claims in that claim;

4) denying the Insurers' special exceptions to the "Background" portion of the motions which asserted that the Insurers had agreed to be bound by Valero I and then granting summary judgment on that basis;

5) denying special exceptions and granting summary judgment because the Insurers did not agree to be bound on issues not addressed in Valero I;

6) granting summary judgment based on the doctrine of the law of the case;

7) granting summary judgment based on the terms of the alleged agreement between Kellogg and Zink;

8) granting summary judgment based on any statute of limitations 9) denying special exceptions going to the absence of pleadings to support summary judgment based on judicial estoppel; and

10) granting summary judgment based on judicial estoppel.

3. STANDARD OF REVIEW

The proper inquiry on appeal is whether the defendant, in seeking summary judgment, fulfilled his initial burden (1) to establish as a matter of law that there remained no genuine issue of material fact as to one or more essential elements of the plaintiff's cause of action or (2) to establish his affirmative defense to the plaintiff's cause of action as a matter of law. Casso v. Brand, 776 S.W.2d 551, 556 (Tex.1989); Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985); Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex.1972). In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant must be taken as true. Nixon, 690 S.W.2d at 549. Every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in his favor. Id. Once the movant establishes an affirmative defense which would bar the suit as a matter of law, the non-movant must produce summary judgment proof raising a fact issue in avoidance of the affirmative defense. Gonzalez v. City of Harlingen, 814 S.W.2d 109, 112 (Tex.App.--Corpus Christi 1991, writ denied). When a party moves for summary judgment on several theories and the trial court enters summary judgment without specifying the ground relied upon, we affirm the summary judgment if any one of the theories advanced is meritorious. State Farm Fire & Casualty Co. v. S.S., 858 S.W.2d 374, 380 (Tex.1993); Martinez v. Corpus Christi Area Teachers Credit Union, 758 S.W.2d 946, 950 (Tex.App.--Corpus Christi 1988, writ denied).

A motion for summary judgment must expressly state the grounds upon which it is made. TEX.R. CIV. P. 166a(c); McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 339 (Tex.1993). Summary judgments may not be affirmed or reversed on grounds not expressly set forth in the motions presented to the trial court. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 677 (Tex.1979); Carlisle v. Philip Morris, Inc., 805 S.W.2d 498, 518 (Tex.App.--Austin 1991, writ denied); Dhillon v. General Accident Ins. Co., 789 S.W.2d 293, 295 (Tex.App.--Houston [14th Dist.] 1990, no writ); see City of Mission v. Ramirez, 865 S.W.2d 579, 581 (Tex.App.--Corpus Christi 1993, no writ). A motion for summary judgment must stand or fall on the grounds expressly presented in the motion, and a court may not rely on briefs or summary judgment evidence in determining whether grounds are expressly presented. McConnell, 858 S.W.2d at 339.

4. APPLICATION

a. Wholly Derivative Claims

As their first ground for summary judgment, appellees assert that the Insurers' claims are wholly derivative of and can be no greater than Valero's claims. Appellees contend that because we found in Valero I that under the Valero/Kellogg contract Valero waived all its claims against Kellogg's subcontractors, the Insurers have no causes of action against the subcontractors. Appellees argue they hold the same legal position under the contract as Kellogg's subcontractors, and because the Insurers' claims are derivative of Valero's, the Insurers have no causes of action against appellees.

Appellees' assertions regarding the derivative nature of the Insurer's claims are accurate. Upon payment of a loss under a policy, the insurer acquires the right to be subrogated pro tanto to any cause of action the insured may have against any...