Pro-Tech Coatings, Inc. v. Union Standard Ins. Co.

Decision Date31 March 1995
Docket NumberNo. 05-93-01882-CV,PRO-TECH,05-93-01882-CV
Citation897 S.W.2d 885
PartiesCOATINGS, INC., Appellant, v. UNION STANDARD INSURANCE COMPANY and Union Standard Lloyds, Appellees.
CourtTexas Court of Appeals

Craig L. Reese, Gregory N. Woods, Liles, Hartley, Jensen & Woods, Fort Worth, for appellant.

Kenneth R. Stein, Matthews Carlton & Stein, Dallas, for appellees.

Before LAGARDE, CHAPMAN and MORRIS, JJ.

OPINION

LAGARDE, Justice.

Two insurance companies, Union Standard Insurance Company (Standard) and Union Standard Lloyds (Lloyds), sued their insured, Pro-Tech Coatings, Inc. (Pro-Tech), for a declaratory judgment that neither insurance company had a duty to defend Pro-Tech in two personal injury suits pending against Pro-Tech. The trial court granted Standard and Lloyds's motion for summary judgment, declared that neither had a duty to defend Pro-Tech and awarded Standard and Lloyds their attorneys' fees. We reverse the declaratory judgment portion of the trial court's judgment and render judgment that Standard and Lloyds have a duty to defend Pro-Tech. We affirm the award of Standard and Lloyds's attorneys' fees.

BACKGROUND

Pro-Tech manufactures and sells various coating products. Charles H. Adams and other plaintiffs sued Pro-Tech and other defendants in the 58th Judicial District Court in Jefferson County, Texas (the Adams suit). R.T. Burgess and other plaintiffs sued Pro-Tech and other defendants in the 136th Judicial District Court in Jefferson County, Texas (the Burgess suit). The plaintiffs in these two suits alleged that they were employed with Lufkin Industries, Texas Foundry, or Champion Paper Mill, all located in Lufkin, Texas, for various periods, during which they were exposed to products containing asbestos and silica, as well as other toxic dust, fumes, and vapors. Although the transcript contains copies of the Adams and Burgess petitions and amended petitions, it is not clear what the link is between Pro-Tech and the three companies in Lufkin, Texas. However, it would appear that products manufactured by Pro-Tech ended up in the three companies in Lufkin, Texas, where the Adams and Burgess plaintiffs were exposed to them and allegedly injured by them. The plaintiffs allege that they now have industrial dust diseases and have sued Pro-Tech for negligence, strict product liability, breach of warranties, and gross negligence. 1

Pro-Tech purchased from Standard a commercial general liability insurance policy, effective from October 27, 1987, through October 27, 1990. Pro-Tech also purchased from Lloyds a commercial general liability insurance policy, effective from October 27, 1989, through October 27, 1990. When the Adams and Burgess suits were brought against Pro-Tech, Pro-Tech asked Standard and Lloyds to defend it. Standard and Lloyds each sued Pro-Tech seeking a declaratory judgment that it had no duty to defend Pro-Tech under its respective policy. Pro-Tech filed a counterclaim seeking a declaratory judgment that Standard and Lloyds had duties to defend Pro-Tech under their respective policies.

Standard and Lloyds filed a motion for summary judgment that they had no duty to defend Pro-Tech. Pro-Tech filed a motion for summary judgment that Standard and Lloyds had a duty to defend Pro-Tech. The trial court granted Standard and Lloyds's motion, declared that they had no duty to defend Pro-Tech, and awarded Standard and Lloyds their attorneys' fees. The trial court denied Pro-Tech's motion and ordered that Pro-Tech take nothing on its counterclaim. 2

THE DUTY TO DEFEND

In point of error three, Pro-Tech argues that the trial court erred in granting Standard and Lloyds's motion for summary judgment because Standard and Lloyds did not meet their burden of showing that the causes of action alleged in the Adams and Burgess suits were not covered by Standard's and Lloyds's policies. Standard and Lloyds respond that (1) the Adams and Burgess suits did not allege causes of action that fell within the areas of coverage identified in their respective policies and (2) to the extent the Adams and Burgess suits alleged causes of action that fell within the areas of coverage identified in their respective policies, the Adams and Burgess suits fell within the pollution exclusion clause and, in the case of Lloyds, the asbestos exclusion clause, and were, therefore, excluded from coverage.

The duty of an insurer to defend depends upon the factual allegations in the petition. Argonaut Southwest Ins. Co. v. Maupin, 500 S.W.2d 633, 636 (Tex.1973). The truth or falsity of those allegations is not a factor; similarly, what the parties know or believe to be the true facts is not a factor. Colony Ins. Co. v. H.R.K., Inc., 728 S.W.2d 848, 850 (Tex.App.--Dallas 1987, no writ). When determining a duty to defend, courts should examine only the allegations in the petition and the provisions of the insurance policy; "[t]he duty to defend is not affected by facts ascertained before suit, developed in the process of litigation, or by the ultimate outcome of the suit." American Alliance Ins. Co. v. Frito-Lay, Inc., 788 S.W.2d 152, 153-54 (Tex.App.--Dallas 1990, writ dism'd w.o.j.). When reviewing the allegations in the petition to determine whether they fall within the provisions of the insurance policy, courts liberally interpret the meaning of those allegations in the insured's favor. Heyden Newport Chem. Corp. v. Southern Gen. Ins. Co., 387 S.W.2d 22, 26 (Tex.1965). "Even where the injured person's complaint does not state facts sufficient to clearly bring the case within or without the coverage, the insurer is obligated to defend if there is potentially a case under the complaint within the coverage of the policy." Colony Ins. Co., 728 S.W.2d at 850. However, if the petition alleges only facts excluded by the policy, the insurer is not required to defend. Fidelity & Guar. Ins. Underwriters, Inc. v. McManus, 633 S.W.2d 787, 788 (Tex.1982).

Both the Standard policy and the Lloyds policy provide three areas of coverage. Both policies identify these three areas as:

Coverage A. Bodily Injury and Property Damage Liability

Coverage B. Personal and Advertising Injury Liability

Coverage C. Medical Payments

If we determine that any one of these three areas of coverage applies and that the coverage is not otherwise excluded, we will sustain Pro-Tech's third point of error. See Maryland Cas. Co. v. Moritz, 138 S.W.2d 1095, 1097-98 (Tex.Civ.App.--Austin 1940, writ ref'd). For the reasons discussed below, we hold that Coverage A applies and is not otherwise excluded; accordingly, we sustain point of error three.

In their motion for summary judgment and in this Court, Standard and Lloyds argue that they have no duty to defend Pro-Tech under Coverage A for multiple reasons. We consider each argument in turn.

Standard and Lloyds argue that neither the Adams suit nor the Burgess suit alleged "property damage." They conclude that there is no coverage, unless there is coverage for "bodily injury."

The Standard policy provides, in pertinent part:

COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY

1. Insuring Agreement.

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies.... We will have the right and duty to defend any "suit" seeking those damages....

The Standard policy then provides a list of exclusions.

The Lloyds policy provides, in pertinent part:

COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY

1. Insuring Agreement.

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend any "suit" seeking those damages.

The Lloyds policy then provides a list of exclusions.

These policies cover "bodily injury" or "property damage." Accordingly, the plaintiffs in the Adams and Burgess suits were not required to plead both "bodily injury" and "property damage" before coverage applied. The plaintiffs in the Adams and Burgess suits alleged "bodily injury," which, under the terms of the policies, was sufficient to invoke coverage, absent an exclusion. Standard and Lloyds's first argument has no merit.

Standard and Lloyds argue that not all of the plaintiffs in the Adams and Burgess suits were allegedly injured during the terms of the policies. Because the policies require the injury to occur during the policies' terms, Standard and Lloyds maintain there is no coverage.

The Standard policy provides, in pertinent part: "This insurance applies only to 'bodily injury' and 'property damage' which occurs during the policy period." The policy period of the Standard policy was from October 27, 1987 to October 27, 1990. The Lloyds policy provides, in pertinent part, "This insurance applies to 'bodily injury' and 'property damage' only if: (1) ... and (2) The 'bodily injury' or 'property damage' occurs during the policy period." The policy period of the Lloyds policy was from October 27, 1989 to October 27, 1990.

Both Standard and Lloyds admit that some, but not all, of the plaintiffs in both the Adams and the Burgess suits claim injuries that allegedly occurred during the respective policy periods. Standard and Lloyds both argue that as to those plaintiffs who did not allege injuries that occurred during the respective policy periods, there is no coverage. The trial court, however, did not make this distinction. The trial court ruled that Standard and Lloyds had no duty to defend any of the plaintiffs' suits in both the Adams and Burgess actions. Without deciding whether some of the plaintiffs were outside the policy period, absent an exclusion clause, as long as there was one plaintiff whose claims came within Pro-Tech's coverage, the trial court erred in ruling that Standard and Lloyds had no duty whatsoever to defend. Maryland Cas. Co., 138 S.W.2d at...

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