Pennsylvania Pulp v. Nationwide Mut. Ins.
| Decision Date | 27 February 2003 |
| Docket Number | No. 14-01-00996-CV.,14-01-00996-CV. |
| Citation | 100 S.W.3d 566 |
| Parties | PENNSYLVANIA PULP & PAPER COMPANY, INC., Appellant, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Appellee. |
| Court | Texas Court of Appeals |
John S. Vishneski III, Chicago, IL, John Sidney Adcock, Linda K. McCloud, Houston, for Appellant.
John B. Wallace, R. Stephen Ferrell, Houston, for Appellee.
Panel consists of Justices YATES, ANDERSON, and FROST.
This case arises from an insurance-coverage dispute between appellant/policyholder Pennsylvania Pulp & Paper Company, Inc. and appellee/insurer Nationwide Mutual Insurance Company. Pennsylvania Pulp sued Nationwide to recover the cost of defending against a counterclaim. The trial court granted summary judgment in favor of Nationwide. At issue is whether counterclaims asserting tortious interference with business relationships and misappropriation of trade secrets fall under the insurance policy's coverage of "advertising injury," and whether a counterclaim alleging a groundless Deceptive Trade Practices Act ("DTPA") claim is covered as "malicious prosecution." We find the counterclaims are not covered by the insurance policy, and we affirm the summary judgment.
Nationwide issued a commercial general liability insurance policy to Pennsylvania Pulp in which it agreed to pay those sums that Pennsylvania Pulp became legally obligated to pay as damages because of certain injuries or property damage covered by the policy. Under this policy, Nationwide undertook a duty to defend Pennsylvania Pulp against any suit seeking damages for "`Advertising injury' caused by an offense committed in the course of advertising [Pennsylvania Pulp's] goods, products, or services." The policy defines "Advertising injury" to include "injury arising out of one or more of the following offenses: ... [m]isappropriation of advertising ideas or style of doing business." This policy excludes from coverage advertising injury arising out of breach of contract, "other than misappropriation of advertising ideas under an implied contract." Nationwide also agreed to defend Pennsylvania Pulp against any suit seeking damages, for "personal injury," which includes injury arising out of "[m]alicious prosecution."
Over the course of two years, Pennsylvania Pulp purchased four patented holographic imaging machines ("Light Machines") from Dimensional Arts, Inc. The fourth machine purchased did not work properly. After two attempts by Dimensional Arts to repair the Light Machine, Pennsylvania Pulp sued Dimensional Arts alleging breach of contract and DTPA violations. Dimensional Arts responded with a counterclaim in which it asserted five claims against Pennsylvania Pulp: (1) breach of the licensing agreement; (2) tortious interference with prospective business relationships; (3) misappropriation of trade secrets; (4) groundless DTPA claim by Pennsylvania Pulp; and (5) patent infringement. Nationwide refused to defend Pennsylvania Pulp in the suit, and Pennsylvania Pulp sued Nationwide to recover the cost of defending itself from Dimensional Arts' claims.
Both Nationwide and Pennsylvania Pulp moved for summary judgment. Pennsylvania Pulp argued Dimensional Arts' counterclaim included allegations of misappropriation of advertising ideas or style of doing business and allegations of malicious prosecution. Nationwide argued it was not obligated to defend under the insurance policy because Dimensional Arts' counterclaim did not allege advertising or personal-injury claims. Nationwide also argued that, even if there were advertising injuries alleged, they arose out of Pennsylvania Pulp's breach of contract, and thus were excluded from coverage. The trial court granted Nationwide's motion for summary judgment and denied Pennsylvania Pulp's motion.
Pennsylvania Pulp asserts the following arguments in four issues:
(1) The trial court erred in granting Nationwide's motion for summary judgment and denying Pennsylvania Pulp's motion for summary judgment;
(2) Dimensional Arts alleged facts in its counterclaim against Pennsylvania Pulp that triggered Nationwide's duty to defend under the policy's coverage for malicious-prosecution claims;
(3) Dimensional Arts alleged facts in its counterclaim against Pennsylvania Pulp that triggered coverage as advertising injuries; and
(4) Insurance coverage is not barred under the policy's breach-of-contract exclusion clause.
A summary judgment movant must establish its right to summary judgment on the issues presented to the trial court by conclusively proving all elements of the movant's claim or defense as a matter of law. See TEX.R. CIV. P. 166a(c); Havlen v. McDougall, 22 S.W.3d 343, 345 (Tex.2000). When both parties move for summary judgment, each party must carry its own burden, and neither can prevail because of the failure of the other to discharge its burden. INAC Corp. v. Underwriters at Lloyd's, 56 S.W.3d 242, 247 (Tex.App.-Houston [14th Dist.] 2001, no pet.). Because each party was a movant, the burden for each was the same: to establish entitlement to a summary judgment by conclusively proving all the elements of the claim or defense as a matter of law. Id. When both sides move for summary judgment and the trial court grants one motion and denies the other, the appellate court must review all summary-judgment proof, determine all issues presented, and render the judgment that the trial court should have rendered. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex.2000).
This court reviews the summary-judgment proof using familiar standards of review. See Dolcefino v. Randolph, 19 S.W.3d 906, 916 (Tex.App.-Houston [14th Dist.] 2000, pet. denied). When a trial court's order granting summary judgment does not specify the grounds for the ruling, this court must affirm summary judgment if any of the summary-judgment grounds are meritorious. FM Props. Operating Co., 22 S.W.3d at 872.
To resolve this insurance-coverage dispute, we apply the rules of contract construction. See Kelley-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex.1998). In applying these rules, our primary concern is to ascertain the parties' intent as expressed in the language of the policy. See id. In determining the intention of the parties, we look only within the four corners of the insurance agreement to see what is actually stated, and not what was allegedly meant. See Esquivel v. Murray Guard, Inc., 992 S.W.2d 536, 544 (Tex.App.-Houston [14th Dist.] 1999, pet. denied). We must consider all of the provisions with reference to the entire contract; no single provision will be controlling. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983). If a written contract is so worded that it can be given a definite or certain legal meaning, then it is unambiguous, and we may not accept parol evidence as to the parties' intent. Kelley-Coppedge, 980 S.W.2d at 464. Whether a contract is ambiguous is a question of law. Id.
In analyzing insurance-coverage disputes of this nature, we conduct a two-part analysis, looking first to the policy and then to the pleading to determine if coverage exists. If a pleading does not allege facts within the scope of coverage, an insurer is not legally required to defend a suit against its insured. Nat'l Union Fire Ins Co. v. Merch. Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex.1997). An insurer's duty to defend is determined by the allegations in the pleadings and the language of the insurance policy. Id. This standard for determining coverage from the four corners of the pleading and the four corners of the insurance policy is referred to as the "eight corners" rule. See id. When we apply the "eight corners" rule, we give the allegations in the petition a liberal interpretation. Id. If the pleading does not state facts sufficient to bring the case clearly within or without the coverage, the general rule is that the insurer is obligated to defend if potentially there is a case under the pleading within the coverage of the policy. See id. In making this determination, we must focus on the underlying pleading's factual allegations that show the origin of the damages rather than on the legal theories alleged. See id. We will not read facts into the pleadings, nor will we look outside the pleadings, or imagine factual scenarios which might trigger coverage. See id. at 142.
Dimensional Arts' counterclaim against Pennsylvania Pulp included claims for tortious interference with prospective business relationships and misappropriation of trade secrets. Pennsylvania Pulp asserts these are claims seeking damages for advertising injury, which Nationwide has a duty to defend. To determine whether Dimensional Arts alleged advertising injuries, we utilize the "eight corners" rule and compare Dimensional Arts' counterclaim with the terms of the policy, focusing on the origin of damages rather than the legal theories alleged. See id.
In its counterclaim, Dimensional Arts made the following factual allegations:
(1) The Light Machines operate using patented technology and Pennsylvania Pulp purchased the Light Machines under a nontransferable License Agreement, preventing Pennsylvania Pulp from duplicating, reselling, transferring, reprogramming, or modifying the Light Machines without Dimensional Arts' express written consent;
(2) The License Agreement requires Pennsylvania Pulp to maintain the confidentiality of Dimensional Arts' patent applications and trade secrets and to exercise all" necessary precautions and safeguards to prevent the unauthorized disclosure of Dimensional Arts' proprietary technology and information; and
(3) The License Agreement prohibits Pennsylvania Pulp from making the Light Machines available for inspection to...
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