Sewer Constructors, Inc. v. Employers Cas. Co.

• Decision Date: 04 February 1965
• Docket Number: No. 14489,14489
• Citation: 388 S.W.2d 20
• Parties: SEWER CONSTRUCTORS, INC., a Corporation, Appellant, v. EMPLOYERS CASUALTY COMPANY, a Corporation, Appellee.
• Court: Texas Court of Appeals

Page 20

388 S.W.2d 20

SEWER CONSTRUCTORS, INC., a Corporation, Appellant, v. EMPLOYERS CASUALTY COMPANY, a Corporation, Appellee.

No. 14489.

Court of Civil Appeals of Texas, Houston.

Feb. 4, 1965.

Rehearing Denied Feb. 25, 1965.

Second Rehearing Denied March 18, 1965.

Kirchheimer & Kirchheimer, Joseph K. Kirchheimer, Houston, for appellant.

Fulbright, Crooker, Freeman, Bates & Jaworski, Charles D. Boston, Houston, Tex., for appellee.

BELL, Chief Justice.

Appellant filed suit against appellee, seeking to recover the expenses it had incurred in defending a suit filed against appellant by George Clark in which Clark sought to recover damages for personal injuries. Appellee, who was the insurer against certain risks in a policy of liability insurance issued appellant, refused to defend the suit because it contended the injuries did not grow out of a risk covered by the policy. In this suit by appellant to recover his expenses, the trial court granted appellee's motion for summary judgment and rendered judgment that appellant take nothing. The court also denied appellant's motion for summary judgment seeking judgment as to appellee's liability but not seeking such as to the amount of recovery, the latter being a question of fact.

Appellant's suit was not one to recover for any judgment rendered against it in favor of Clerk. In fact appellant's counsel successfully defended the Clark suit. Under the undisputed facts of this case as made by the record before us, appellee would not be liable for any judgment for damages because in fact, it seems to be conceded, the injuries to Clark did arise subsequent to the completion of work by appellant. However, we are of the view that appellee's obligation to defend suit is not determined by whether such is in fact the case but whether the allegations in the petition filed against an assured, when fairly and reasonably construed, state a cause of action covered by the policy.

Clark sued the City of Houston and appellant for damages for personal injuries received August 7, 1959. The petition of Clark, insofar as material here, alleges as follows:

VI.

'Plaintiff would further show this Honorable Court that Defendant, Sewer Constructors, Inc., heretofore and at the time of the committing of the grivances herein alleged, was engaged in laying sewer lines from the main sewer to private homes on Weaver Street and that the Defendant, Sewer Constructors, Inc., dug and excavated and permitted to be dug and excavated deep ditches in and across the public street * * *; that while Defendant was thus engaged in digging and excavating said ditch or trench it became and was the duty of the Defendant * * * to use reasonable and ordinary care for the safety of the general public travelling the said street * * * as well as for the safety of this Plaintiff.

VII.

'The Defendant, Sewer Constructors, Inc., not regarding its duty, did not use due and proper care for the safety of Plaintiff while so engaged wrongfully and negligently permitted the ditch or trench to be covered over with dirt without proper packing and topping causing the ditch or trench to cave in and sink leaving large ruts, holes and depressions and leaving same to remain open, exposed and without guards, lights or other protection, or notice to travellers. * * *

VIII.

'That on the date aforesaid, your Plaintiff was travelling in an automobile upon and along Weaver Street in an easterly direction, and while Plaintiff, both before and at the time of his injuries, was in the exercise of ordinary care for his own safety, solely by the carelessness and negligence of the Defendants as aforesaid, Plaintiff's automobile then and there ran and sank and fell into said hole, rut and depression whereby Plaintiff lost control of his car and ran into a ditch and culvert throwing him upon and against the various portions of the car.'

It appears that after the accident, but before suit was filed, Clark's attorneys wrote appellant asserting a claim for damages. Mr. Steele, appellant's president, on September 25, 1959, forwarded the correspondence from Clark's attorneys to appellee. In this letter he stated as follows:

'In connection with this claim, it is remotely possible that we might have some liability. However, we had no operations on this street at the time of the accident, August 7, 1959.

'We did, however, install sanitary sewer lines on Weaver Street * * * This project was completed on March 24, 1959, and formally accepted by the City of Houston on April 7, 1959.

'It is our opinion that the damages claimed * * * are probably due to operations of someone other than ourselves.

'We trust that you will investigate promptly and advise us if you need further assistance in the matter.'

Suit was filed by Clark September 13, 1960. Immediately after citation was served, appellant delivered it and a copy of the petition to appellee. Appellee returned the citation, and the letter making the return contained this language: 'We are attaching your letter, along with the Citation on the above styled case. We advised you on November 17, 1959 by letter, that it was our thinking that this accident was not covered under your policy.'

Appellant then told appellee it would, since appellee was refusing to defend, employ its own counsel but would hold appellee responsible for all expenses and attorneys fees incurred in defending suit.

It seems to be agreed, or at least appellant does not dispute, that as a matter of fact the work or operation had been completed at the time of Clark's accident, according to the date set out in the petition. The policy excludes coverage where the accident occurs off of assured's premises if the operation or work out of which the injuries grow has been completed or abandoned, that is, it excludes an obligation to pay any damages for the injuries. It is not contended that the policy would entitle appellant to be indemnified by appellee for any amount appellant paid by way of damages for injuries resulting from the accident. The contention of appellant is that an insurer's obligation to defend is determined not by a resolution of whether in fact the policy covered the accident but whether under the allegations of a plaintiff's petition against an assured it shows an accident covered by the policy.

Appellee apparently contends the trial court correctly sustained its motion for summary judgment for two reasons. First, because in fact the accident was not covered by the policy, and, second, the petition of Clark did not allege facts showing affirmatively an accident covered by the policy.

We need notice specifically only the provision of the policy creating the obligation to defend assured where suit is filed against him. It reads as follows:

'With respect to such insurance as is afforded by this policy, the company shall.

'(a) defend any suit against the insured alleging [emphasis ours unless otherwise stated] such injury, sickness, or disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; * * *'

It seems to be well settled that under a provision using the language above quoted, creating the obligation of an insurer to defend suits, the duty of the insurer to defend a given suit is determined by the allegations of the petition filed by a claimant against the assured. If such petition alleges facts showing an occurrance that comes within the coverage of the policy, then the insurer must defend. If, to the contrary, the petition alleges facts showing that the occurrence is without the coverage, there is no duty to defend. This last statement should, perhaps, be qualified to the extent of saying that even though there be inconsistent theories alleged, one of which shows coverage and one shows no coverage, the insurer is still obligated to defend. These rules are applicable, we think, whether the facts alleged are true or not. The reason is the contract itself. The insurer's undertaking to defend is not to defend those suits that in fact come within the coverage, but to defend those suits alleging liability within the coverage. In the policy here involved it is provided that: 'With respect to such insurance as is afforded by this policy, the company shall: (a) defend any suit against the insured alleging such injury * * * even if such suit is groundless, false or fraudulent.' Maryland Casualty Company v. Moritz, 138 S.W.2d 1095 (Tex.Civ.App.), writ ref.; United States F. and G. Co. v. Baldwin, 34 S.W.2d 815 (Tex.Com.App.); General Insurance Corp. v. Harris, 327 S.W.2d 651 (Tex.Civ.App.), no writ hist.; Travelers Insurance Co. v. Newsom, 352 S.W.2d 888 (Tex.Civ.App.), ref., n....