Northfield Ins. Co. v. Rodriguez

• Decision Date: 05 June 2017
• Docket Number: Civil Action No. SA–16–CV–932–XR
• Parties: NORTHFIELD INSURANCE COMPANY, Plaintiff, v. Alex RODRIGUEZ d/b/a Alex Tire Shop, Defendant.
• Court: U.S. District Court — Western District of Texas

261 F.Supp.3d 705

NORTHFIELD INSURANCE COMPANY, Plaintiff,

v.Alex RODRIGUEZ d/b/a Alex Tire Shop, Defendant.

Civil Action No. SA–16–CV–932–XR

United States District Court, W.D. Texas, San Antonio Division.

Signed June 5, 2017

Kennetha W. Lucas, Lashandra Nichole Wooten, Christopher W. Martin, Martin Disiere Jefferson & Wisdmon, L.L.P., Houston, TX, for Plaintiff.

Mark Darling, Mark Darling, Attorney at Law, PC, San Antonio, TX, for Defendant.

ORDER

XAVIER RODRIGUEZ, UNITED STATES DISTRICT JUDGE

Before the Court is Plaintiff Northfield Insurance Company's ("Northfield") Motion for Summary Judgment (docket no. 16). Defendant Alex Rodriguez ("Rodriguez") did not file a response to Northfield's motion. After consideration, the Court will grant Plaintiff's motion.

Background

This is a declaratory judgment action, stemming from an insurance coverage dispute after a lawsuit was filed in the 438th Judicial District Court of Bexar County, Texas styled Maria Rocha, Individually, as next friend of Amy Garcia, A Minor, and as Representative of the Estate of Christian Garcia, Deceased vs. Wal–Mart Stores, Inc., Wal–Mart Stores Texas, LLC and Alex's Tire Shop , Cause No. 2016–CI–10692 (the "Underlying Lawsuit"). The Underlying Lawsuit arises from an automobile accident that occurred on June 10, 2016. Pl.'s Mot. Summ. J. Ex. A–5, First Original Pet. at ¶ 4. Doc. No. 16. Maria Rocha was allegedly driving on Interstate 10 in Kerr County, Texas with her son, Christian Garcia, and her daughter, Amy Garcia, when Ms. Rocha's left-rear tire delaminated. Id. Ms. Rocha lost control of her vehicle and it entered into a roll sequence. Id. Ms. Rocha and Amy Garcia were seriously injured in the incident, and Christian Garcia was killed. Id. Ms. Rocha purchased the alleged delaminated tire from Rodriguez a short time before the incident. Id. Ms. Rocha asserts Rodriguez committed acts of negligence that were the proximate causes of the incident. Id.

At the time of the incident, Northfield had issued a commercial general liability policy No. WS242784 to Rodriguez, effective July 31, 2015 through July 31, 2016 (the "Policy"). In relevant part, the Policy provides coverage for

Those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" ... to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages even if the allegations are groundless, false or fraudulent. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" ... to which this insurance does not apply.

Policy, Section 1—Coverages at ¶ 1(a). The policy, however, contains a "products-completed operations hazard" exclusion, which excludes from coverage:

a. All "bodily injury" and "property damage" occurring away from premises you own or rent and arising out of "your product" or "your work" except:

(1) Products that are still in your physical possession; or

(2) Work that has not yet been completed or abandoned. However, "your work" will be deemed completed at the earliest of the following times:

(a) When all of the work called for in your contract has been completed.

(b) When all of the work to be done at the job site has been completed if your contract calls for work at more than one job site.

(c) When that part of the work done at a job site has been put to its intended use by any person or organization other than another contractor or subcontractor working on the same project.

Work that may need service, maintenance, correction, repair or replacement, but which is otherwise complete, will be treated as completed.

Policy, Section 5—Definitions at ¶ 16(a).

In the Underlying Lawsuit, Ms. Rocha sued Rodriguez for negligence. Pl.'s Mot. Summ. J. Ex. A–5, First Original Pet. at ¶ 6. Rodriguez forwarded notice to Northfield that the Underlying Lawsuit had been filed on June 27, 2016. Northfield sent Rodriguez a letter denying coverage under the Policy, reasoning that the products-completed operations hazard exclusion precludes coverage. Pl.'s Mot. Summ. J. Ex. C, Letter to Rodriguez.

On September 19, 2016, Northfield filed the lawsuit currently before the Court seeking declarations that they have no duty to defend or indemnify Rodriguez against the claims in the Underlying Lawsuit. Rodriguez filed an answer on October 27, 2016. Northfield then filed this motion for summary judgment.

Standards of Review

I. Declaratory Judgment

The Declaratory Judgment Act provides that "[i]n a case of actual controversy within its jurisdiction ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declarations, whether or not further relief is or could be sought." 28 U.S.C. § 2201(a). The Declaratory Judgment Act is "an enabling Act, which confers a discretion on the courts rather than an absolute right upon the litigant." Wilton v. Seven Falls Co. , 515 U.S. 277, 286, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995) (citing Public Serv. Comm'n of Utah v. Wycoff Co. , 344 U.S. 237, 241, 73 S.Ct. 236, 97 L.Ed. 291 (1952) ). Consequently, "the propriety of declaratory relief in a particular case will depend upon a circumspect sense of its fitness informed by the teachings and experience concerning the functions and extent of federal judicial power." Id.

Insurance coverage disputes are frequently resolved in actions for declaratory judgment. Harris v. United States Fid. & Guar. Co. , 569 F.2d 850, 852 (5th Cir. 1978). However, § 2201 is only a procedural provision that extends to controversies in the jurisdiction of the federal courts. Gaar v. Quirk , 86 F.3d 451, 453–54 (5th Cir. 1996). Therefore, the declaratory judgment must have an independent basis for subject matter jurisdiction. Lowe v. Ingalls Shipbuilding, Inc. , 723 F.2d 1173, 1179 (5th Cir. 1984). The jurisdictional requirements are met in the present case as there is diversity of citizenship under 28 U.S.C. § 1332. Consequently, the requests for declaratory relief are properly before this Court.

II. Summary Judgment

Summary judgment should be granted only when the moving party has shown that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(A). The moving party always has the initial burden of informing the court of the basis of the motion and identifying portions of the record it believes shows an absence of a genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party overcomes its initial burden, the nonmoving party must provide specific facts that shows a genuine issue exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Facts must be viewed in the light most favorable to the nonmoving party. Id.

Discussion

Northfield seeks declaratory judgment on both its duty to defend and duty to indemnify Rodriguez. Texas's rules of construction govern this case since it is a diversity case. Amica Mut. Ins. Co. v. Moak , 55 F.3d 1093, 1095 (5th Cir. 1995). In Texas, an insurer's duty to defend is distinct from its duty to indemnify. D.R. Horton–Texas, Ltd. v. Markel Int'l Ins. Co. , 300 S.W.3d 740, 743 (Tex. 2009) ; see also King v. Dallas Fire Ins. Co. , 85 S.W.3d 185, 187 (Tex. 2002).

The duty to defend is determined by applying the "eight corners" or "complaint allegation" rule. Canutillo Indep. Sch. Dist. v. Nat'l Union Fire Ins. Co. , 99 F.3d 695, 701 (5th Cir. 1996). This rule requires the trier of fact to only look at the allegations in the complaint and the insurance policy to determine whether a duty to defend exists. Id. A duty to defend only exists when the facts alleged in the complaint, if taken as true, have the potential to state a cause of action that falls within the policy. Cont'l Sav. Ass'n v. U.S. Fid. & Guar. Co. , 762 F.2d 1239, 1243 (5th Cir.), amended on other grounds , 768 F.2d 89 (5th Cir. 1985).

The insured has the burden of establishing that the claim falls within the policy, and the insurer has the burden of establishing that an exclusion in the policy avoids or defeats coverage. Canutillo , 99 F.3d at 701. Any ambiguities in the policy will be liberally construed in favor of the insured. Id. However, if the policy is not ambiguous, the fact finder must apply the one reasonable construction of the policy. Id.

Although the duty to defend is based solely on the allegations of the complaint and the insurance policy, the duty to indemnify is based on the facts of the case. City of Coll. Station v. Star Ins. Co. , 735 F.3d 332, 340 (5th Cir. 2013) ; see also Canutillo , 99 F.3d at 701. Consequently, the duty to indemnify is a narrower duty. See Canutillo , 99 F.3d at 701. Usually, a duty to indemnify is only justiciable after a judgment has been rendered against the insured. Farmers Texas Cty. Mut. Ins. Co. v. Griffin , 955 S.W.2d 81, 83 (Tex. 1997). The policy coverage may turn on facts from the underlying lawsuit and, therefore, the duty to indemnify will be contingent on the findings. See id. at 84. However, an insurer's duty to indemnify can be determined with the pleadings alone if the same reasons that negate the duty to defend also negate any possible duty to indemnify. City of Coll. Station , 735 F.3d at 340.

I. Duty to Defend

Northfield argues it is entitled to summary judgment regarding its duty to defend Rodriguez because the products-completed operations hazard exclusion contained in the Policy excludes completed work that results in bodily injury away from Rodriguez's premises. Specifically, Northfield argues that Rodriguez's work, which allegedly caused the bodily injuries, had been completed and the injury occurred away from Rodriguez's premises, which falls within the Policy exclusion. Since a duty to defend is based on the terms of the insurance contract, Northfield argues there is no duty to defend...