Sentry Select Ins. Co. v. Home State Cnty. Mut. Ins. Co.
| Decision Date | 08 April 2021 |
| Docket Number | Civil Action No. 7:20-CV-16 |
| Citation | 533 F.Supp.3d 466 |
| Parties | SENTRY SELECT INSURANCE COMPANY, Plaintiff, v. HOME STATE COUNTY MUTUAL INSURANCE COMPANY, et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Russell J. Bowman, Bowman & Stella, P.C., Irving, TX, for Plaintiff.
Scott Graham Ball, Attorney at Law, Rockwall, TX, for Defendants Home State County Mutual Insurance Company, Snap Insurance Service, LLC.
Orlando R. Lopez, Attorney at Law, San Antonio, TX, for Defendant Juan Antonio Ortiz Ramirez.
Miguel Jose Chapa, Chapa Law Group, San Antonio, TX, for Defendant Zusuky Ortiz.
ORDER GRANTING PLAINTIFF SENTRY'S MOTION FOR SUMMARY JUDGMENT AND DENYING HOME STATE/SNAP'S MOTION FOR SUMMARY JUDGMENT
Now before the Court are Plaintiff Sentry Select Insurance Company's ("Sentry") Motion for Summary Judgment and Defendants Home State County Mutual Insurance Company ("Home State") and Snap Insurance Service, LLC's ("Snap") Cross-Motion for Summary Judgment. (Dkt. Nos. 32, 40). On January 21, 2020, Sentry filed its Complaint for Declaratory Relief against Home State, Snap, and additional Defendants Juan Antonio Ortiz Ramirez ("Ramirez") and Zusuky Ortiz ("Ortiz"), seeking a declaratory judgment that it has no duty to defend or indemnify Ramirez in Cause No. C-4004-16-G, Zusuky Ortiz and Sky Drem Ortiz v. Clark Knapp Motor Company, L.C. d/b/a Clark Knapp Honda, et al. , pending in the 370th Judicial District Court, Hidalgo County, Texas. (Dkt. No. 1). Sentry has since filed a First Amended Complaint seeking the same relief, and attaching exhibits referenced therein. (Dkt. No. 17). Sentry's amended pleading and attachments reflect that the plaintiffs in the underlying state-court lawsuit, Ortiz and Sky Drem Ortiz, are pursuing claims in that suit against Ortiz's brother, Ramirez,1 and automobile dealership Clark Knapp Motor Company, L.C. d/b/a Clark Knapp Honda ("Clark Knapp Honda"), arising from a single-auto accident occurring in Alton, Texas on August 14, 2016. . Sentry alleges that on August 11, 2016, Ortiz purchased a used 2010 Kia Forte from Clark Knapp Honda, who then loaned her a 2015 Hyundai Elantra to drive while the purchased vehicle underwent repairs at the dealership. (Id. at ¶¶ 8, 10). At the time of the accident, Ramirez was driving the loaner vehicle when he lost control of the vehicle and it crashed, injuring passengers Ortiz and Sky Drem Ortiz. (Id. at ¶ 11). The Ortiz plaintiffs’ live pleading in state court brings a single cause of action for negligence against Ramirez, and claims for negligence per se and negligent entrustment, hiring, training, supervision, and undertaking against Clark Knapp Honda. (Id. , Exh. C at §§ V-IX). In aid of its request for a declaratory judgment, Sentry alleges that Ramirez does not qualify as an insured entitled to the primary auto liability coverage afforded under Sentry's policy issued to Clark Knapp Honda, the named insured. (Id. at ¶¶ 18-20). Moreover, even if he does, Ramirez was also insured up to the minimum limits of auto liability required by Texas law under a personal auto liability policy issued to Ortiz by Home State and administered by Snap. (Id. at ¶¶ 13-15, 26-31). Since, under the limit of insurance/"step down" provision in Sentry's policy, its coverage extends only to payment of "the amount needed to comply with [Texas's] minimum limits after ... other insurance is exhausted," the coverage afforded to Ramirez under the Home State policy relieves Sentry of any obligation to provide primary coverage. (Id. at ¶¶ 20-25). Therefore, and because Ramirez is not a named or designated insured under its policy, Sentry also has no obligation to provide excess or umbrella coverage. (Id. at ¶¶ 32-35). Relying on these allegations and copies of the accident report, Home State policy, and Ortiz plaintiffs’ live state-court pleading, Sentry seeks a declaratory judgment that it has no duty under the primary, excess, or umbrella coverages of its policy to defend Ramirez in the underlying lawsuit, and for the same reasons, to indemnify him. (Id. at ¶¶ 12, 13, 16, 37, Exhs. A-C).
On August 27, 2020, the Court denied Ramirez and Ortiz's motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6), finding that the factors outlined in St. Paul Ins. Co. v. Trejo , 39 F.3d 585 (5th Cir. 1994), weighed against dismissal and in favor of the Court exercising its jurisdiction to decide Sentry's declaratory judgment action. (Dkt. No. 25; see Dkt. Nos. 15, 16). With the Court's leave, Ramirez has since filed a counterclaim against Sentry, seeking a declaration that he is entitled to a defense and indemnity under Sentry's policy, as well as attorney's fees incurred in obtaining this relief. (Dkt. No. 30; see Dkt. No. 29).2 Now, Sentry seeks summary judgment on its own claims, as well as Ramirez's counterclaim for attorney's fees. (Dkt. No. 32). No Defendant disputes that, to the extent the Home State policy provides coverage to Ramirez in the underlying suit, Sentry's step down provision relieves it of any obligation to defend Ramirez under its primary policy, nor does any Defendant contest the absence of a duty to defend under Sentry's umbrella policy.3 Further, Ramirez makes no effort to dispute that he is not entitled to recover attorney's fees from Sentry. Instead, Sentry's Motion, Home State/Snap's ensuing Cross-Motion, and the parties’ extensive, responsive briefing identify the issue of Ramirez's coverage under the Home State policy as the chief dispute among them. See (Dkt. Nos. 32, 34, 36, 37, 39, 40, 42, 46, 48, 51, 52).4 Upon consideration of the Motions, the parties’ briefing,5 and the summary judgment evidence,6 in light of the relevant law, the Court finds that Sentry's Motion must be granted and Home State/Snap's Motion denied, for the following reasons.
A district court must grant summary judgment when there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a). A fact is material if it might affect the outcome of the lawsuit under the governing law, and is genuinely in dispute only if a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A party moving for summary judgment has the initial responsibility of informing the court of the basis for its motion and identifying those portions of the pleadings and materials in the record, if any, which it believes demonstrate the 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) ; FED. R. CIV. P. 56(a), (c). Once the moving party carries its burden, the burden shifts to the nonmovant to go beyond the pleadings and provide specific facts showing the existence of a genuine issue for trial. Celotex , 477 U.S. at 324, 106 S.Ct. 2548 ; FED. R. CIV. P. 56(c). In conducting its review of the summary judgment record, the court "may not make credibility determinations or weigh the evidence" and must resolve doubts and reasonable inferences regarding the facts in favor of the nonmoving party. Reeves v. Sanderson Plumbing Prods., Inc. , 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) ; Anderson , 477 U.S. at 255, 106 S.Ct. 2505 ; Dean v. City of Shreveport , 438 F.3d 448, 454 (5th Cir. 2006). However, the nonmovant cannot satisfy its burden with "conclusory allegations, speculation, and unsubstantiated assertions which are either entirely unsupported, or supported by a mere scintilla of evidence." Chaney v. Dreyfus Serv. Corp. , 595 F.3d 219, 229 (5th Cir. 2010) ; see also Brown v. City of Houston , 337 F.3d 539, 541 (5th Cir. 2003) ().
Under the "settled feature of Texas law" known as the "eight-corners rule," an insurer's duty to defend is determined by the four corners of the policy and the four corners of the underlying pleading, "without regard to the truth or falsity" of the pleaded allegations. Richards v. State Farm Lloyds , 597 S.W.3d 492, 499 (Tex. 2020) ; GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church , 197 S.W.3d 305, 308 (Tex. 2006). The Fifth Circuit, applying Texas law, recognizes a "very limited" exception to the eight-corners rule, allowing for the consideration of evidence extrinsic to the policy and pleading "when it is initially impossible to discern whether coverage is potentially implicated and when the extrinsic evidence goes solely to a fundamental issue of coverage which does not overlap with the merits of or engage the truth or falsity of any facts alleged in the underlying case." Northfield Ins. Co. v. Loving Home Care, Inc. , 363 F.3d 523, 531 (5th Cir. 2004).7 "Any doubt regarding the duty to defend is resolved in favor of the duty," but "if the only facts alleged [or permissibly shown] are excluded from the policy's coverage, the insurer is not required to defend." Lincoln Gen. Ins. Co. v. Reyna , 401 F.3d 347, 350 (5th Cir. 2005) (citing Northfield , 363 F.3d at 528 ).
"While the duty to defend depends on the allegations in the pleadings, the duty to indemnify is triggered by the actual facts that establish liability in the underlying lawsuit." Ooida Risk Retention Grp., Inc. v. Williams , 579 F.3d 469, 472 (5th Cir. 2009) ) (internal quotation marks omitted). "Accordingly, an insurer's duty to defend and duty to indemnify are distinct, as in general the underlying suit must be resolved in order to determine the latter." Id. An exception to this general...
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