Primo v. Great Am. Ins. Co.

• Court: Texas Court of Appeals
• Writing for the Court: J. Brett BusbyJustice
• Citation: Primo v. Great Am. Ins. Co., 455 S.W.3d 714 (Tex. App. 2014)
• Decision Date: 18 December 2014
• Docket Number: NO. 14–13–00492–CV,14–13–00492–CV
• Parties: Robert Primo, Appellant v. Great American Insurance Company, Appellee

455 S.W.3d 714

Robert Primo, Appellant

v.Great American Insurance Company, Appellee

NO. 14–13–00492–CV

Court of Appeals of Texas, Houston (14th Dist.

Opinions filed December 18, 2014

Rehearing and Rehearing En Banc Overruled March 10, 2015

Robert Primo, Houston, TX, pro se.

Stephen Venable, Houston, TX, for Appellee.

Panel consists of Justices McCally, Busby, and Donovan

MAJORITY OPINION

J. Brett Busby Justice

Appellant Robert Primo appeals a summary judgment in favor of appellee Great American Insurance Company in his suit to recover under an insurance policy issued by Great American. Primo contends summary judgment was improper because (1) his claim does not fall within the scope of the policy's “Insured v. Insured” exclusion upon which Great American relied in the trial court; and (2) although he prevailed in seeking indemnity for some of his costs in another lawsuit against a third party, because his petition in this lawsuit alleged injuries and damages that were neither litigated in nor essential to the judgment in the lawsuit in which he prevailed, collateral estoppel and the one satisfaction rule do not preclude his seeking further damages from Great American.

We hold that Great American did not establish as a matter of law that Primo's claim fell within the exclusion from coverage. We further hold that although collateral estoppel applied to preclude relitigation of the amount of Primo's reasonable and necessary attorney's fees in the prior lawsuit, Great American has not established as a matter of law that Primo has been fully satisfied for the damages he seeks in the current lawsuit. We therefore reverse the summary judgment and remand for further proceedings.

Background

There are many different lawsuits that set the stage for the case before us. The principal protagonists in this series of suits include Briar Green Condominium Association, its former officer and director Primo, and Briar Green's insurance companies.

Great American issued Briar Green Condominiums a Non-Profit Organization Executive Protection and Employment Practices Liability Insurance Policy (“E & O policy”) covering “any proceeding initiated against an insured,¹ including any appeals therefrom.” This policy, which is at issue here, excluded coverage for “any Claim made against any Insured ... by, or for the benefit of, or at the behest of the Organization² or a Subsidiary or any entity which controls, is controlled by, or is under common control with the Organization or a Subsidiary or any person or entity which succeeds to the interest of the Organization or a Subsidiary. ”

In 2008, disputes arose regarding checks that Primo—who was serving as a director and the Treasurer of Briar Green Condominium Association at the time—had written himself from Briar Green's account. Briar Green's board of directors filed a claim for a final total of $115,558.77 on a fidelity bond Travelers Casualty and Surety had issued it, as well as a complaint with the Houston Police Department. Travelers paid Briar Green the $115,558.77, in exchange for which Briar Green assigned Travelers all of its claims and rights against Primo.

In July 2009, Travelers filed suit against Primo. Travelers alleged in its petition that Primo “used [Briar Green's] money for personal, self-benefitting expenses by making withdrawals from the ATM card [and] writing checks to himself and his family members;” that “[p]ursuant to the terms and conditions of the Bond, TRAVELERS paid BRIAR the sum of $115,558.77 for the loss incurred by BRIAR;” and that “[a]s the bonding company for BRIAR, TRAVELERS was assigned all rights to this matter, including recovery rights of the amount paid on the Bond.” Travelers pled causes of action for fraud and fraud in the inducement, conversion, unjust enrichment, indemnity for payment on bond, theft of property, and breach of fiduciary duty in its petition. Travelers alleged as part of one of those causes of action—its indemnity for payment on bond theory—that it had “stepped into the shoes of the Association.”

Primo retained counsel for the lawsuit³ and filed third-party claims against Briar Green for contractual indemnity for his defense costs in the suit. Travelers nonsuited its claims against Primo and the trial court dismissed Travelers' claims on November 5, 2010. Primo eventually non-suited his third-party claims, resulting in a final judgment in March 2011.⁴

Prior to the trial court's dismissal of Travelers' claims, in October 2010, Primo requested that Great American provide his costs of defense in the Travelers lawsuit under its E & O policy with Briar Green, contending he was covered under the policy as a former director and officer. Great American contended in a June 3, 2011 letter that there were “coverage issues pertaining to the reporting of the matter by Dr. Primo” but expressed a willingness to reimburse his reasonable and necessary costs of defense. Great American offered to reimburse Primo the full amount owed his first attorney, as reflected on submitted invoices. Great American also offered to reimburse Primo for $162,000 of the $201,631.77 reflected on the invoices from his subsequent counsel, citing a clause in the policy that precludes an insured from incurring costs of defense in connection with any claim without the insurer's prior approval.⁵ Great American asserted that it was continuing “to reserve all of its rights and defenses under the Policy.”

In June 2011, Primo filed a suit for contractual indemnity against Briar Green, alleging it had breached its bylaws by failing to indemnify him for costs incurred in defending the Travelers action.⁶ Great American assumed Briar Green's defense and, after invoking settlement procedures under Chapter 42 of the Texas Civil Practice and Remedies Code, offered Primo $300,000 to settle his claims. Primo rejected the offer and his damages were submitted to the jury for determination.

The jury in the Briar Green suit determined that a reasonable fee for the necessary services of Primo's attorneys in his suit against Briar Green was $55,124.84. The jury also determined that $102,598.97 “would compensate Robert Primo for his losses, costs, and expenses, including counsel fees, reasonably incurred by him in connection with any action, suit, or proceeding to which he was made a party by reason of his being or having been a manager or officer of Briar Green.” The trial court reduced the awards based on the rejected settlement offer and signed a final judgment awarding Primo damages in the amount of $70,853.99 and attorney's fees in the amount of $29,340.90.

During the pendency of the Briar Green suit, Primo sued Great American in the cause before us, alleging unfair settlement practices in violation of the Texas Insurance Code, breach of the duty of good faith and fair dealing, violation of the Prompt Payment of Claims Act, breach of contract, fraud, and negligent misrepresentation. Primo sought “reimbursement for the defense costs and attorney's fees in the Travelers Suit,” as well as exemplary damages and interest.

Primo alleged that as a direct result of a misrepresentation by a Great American employee, he was dissuaded to provide a written notice of claim to Great American, which caused him “to bear with his own savings the full cost of the extensive litigation expenses in the Travelers Suit.” Primo alleged that discovering the existence of the coverage that should have prevented him from bearing those costs in advance of judgment “took an extraordinary effort and expense.”

After Primo obtained a final judgment in the Briar Green suit, Great American filed a traditional motion for summary judgment in this case, presenting two alternative grounds. First, according to Great American, Primo's suit was barred by the combination of collateral estoppel and the one satisfaction rule because he had already collected his defense costs and attorney's fees incurred in the Travelers suit as determined and awarded in the Briar Green suit.

Second, Great American alternatively contended it did not owe Primo a duty to defend him in the Travelers suit because that suit fell within the E & O policy's exclusion for claims between insured parties. Great American asserted the policy “excluded claims against any Insured by Briar Green and/or any entity which succeeded to Briar Green's interest, i.e., Travelers.” In Great American's view, because Travelers alleged in its petition that it had been “assigned all rights” against Primo by Briar Green, all of Travelers' claims were brought as a successor to the interests of Briar Green.

Following a hearing held on March 28, 2013, the trial court granted Great American's motion for summary judgment and signed a take-nothing judgment on Primo's claims. The court's judgment stated that it had considered Great American's motion for summary judgment “and the supplement, response and reply thereto.” The judgment stated that it was disposing of all matters pending before the court in the case. This appeal followed.

Analysis

Great American presented two grounds for traditional summary judgment in the trial court, and Primo's eight issues on appeal attack both grounds. We examine each ground in turn.

I. Standard of review

We review a trial court's grant of summary judgment de novo. Lyda Swinerton Builders, Inc. v. Cathay Bank, 409 S.W.3d 221, 229 (Tex.App.–Houston [14th Dist.] 2013, pet. filed). Summary judgment for a defendant is proper “when the defendant negates at least one element of each of the plaintiff's theories of recovery ... or pleads and conclusively establishes each element of an affirmative defense.” Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.1997) (internal citation omitted).

In a traditional motion for summary judgment, the defendant has the initial burden of “demonstrat[ing] that no genuine issues of material fact exist and that he is entitled to judgment as a matter of law.” Lyda Swinerton Builders, Inc., 409 S.W.3d at 229. The burden then shifts to the non-mova...