Texas Mut. Ins. Co. v. Wood Energy Group, Inc., Civil No. A-07-CA-530-LY.

CourtU.S. District Court — Western District of Texas
Writing for the CourtLee Yeakel
Citation604 F.Supp.2d 942
PartiesTEXAS MUTUAL INSURANCE COMPANY, Plaintiff, v. The WOOD ENERGY GROUP, INC., Defendant.
Docket NumberCivil No. A-07-CA-530-LY.
Decision Date19 February 2009
604 F.Supp.2d 942
TEXAS MUTUAL INSURANCE COMPANY, Plaintiff,
v.
The WOOD ENERGY GROUP, INC., Defendant.
Civil No. A-07-CA-530-LY.
United States District Court, W.D. Texas, Austin Division.
February 19, 2009.

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R. Scott Placek, Kyle M. Jones, Arnold & Placek, P.C., Round Rock, TX, for Plaintiff.

Richard A. Wunderlich, Lewis, Rice, & Fingersh, L.C., St. Louis, MO, Alex Valdes, Winstead, P.C., Austin, TX, for Defendant.

ORDER

LEE YEAKEL, District Judge.


Before the Court is the above styled and numbered cause, which is a declaratoryjudgment action that Plaintiff Texas Mutual Insurance Company ("Texas Mutual") commenced after denying Defendant The Wood Energy Group, Inc.'s ("Wood Energy") indemnification request for Oklahoma workers' compensation benefits awarded by the Oklahoma Workers' Compensation Court to Benny Joe Beshear, a former Wood Energy employee. By its action, Texas Mutual maintains that the workers' compensation policy it issued to Wood Energy provides coverage only for Texas benefits, therefore, Beshear's Oklahoma benefits are beyond the scope of the policy.1

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Texas Mutual seeks a declaration by the Court that under the Policy Texas Mutual had no duty to defend and no duty to indemnify Wood Energy with regard to Beshear's Oklahoma benefits. Wood Energy responds, contends that the Policy covers Beshear's Oklahoma benefits, and alleges several counterclaims, including that Texas Mutual breached the Policy, lacked a reasonable basis to deny coverage, and acted in bad faith in denying coverage.

Texas Mutual moved for summary judgment. The Court referred Texas Mutual's Amended Motion for Final Summary Judgment, filed on October 3, 2008 (Clerk's Document No. 41); Wood Energy's Memorandum in Opposition to Plaintiffs Amended Motion for Final Summary Judgment, filed on October 14, 2008 (Clerk's Document No. 48); and Texas Mutual's Reply in Support of its Amended Motion for Final Summary Judgment, filed on October 22, 2008 (Clerk's Document No. 53) to the United States Magistrate Judge for a report and recommendation (Clerk's Document No. 55). See 28 U.S.C. § 636(b); Fed.R.Civ.P. 72; Loc. R.W.D. Tex. Appx. C, 1(d).

The Magistrate Judge rendered his Report and Recommendation on January 16, 2009, which recommends that this Court grant Texas Mutual's motion (Clerk's Document No. 56). The Magistrate Judge finds that under "Part One—Workers Compensation Insurance" of the Policy as there has been "no determination by any court or agency that Texas workers compensation law requires Wood Energy to pay benefits to Beshear, there is no coverage here."

The Magistrate Judge also finds that "Part Two—Employers Liability Insurance" provides no coverage because the Exclusions to Part Two expressly provide that Part Two is inapplicable "to any obligation imposed by a workers' compensation, occupational disease, unemployment compensation, or disability benefits law, or any similar law."

Additionally, with regard to "Part Three—Other States Insurance," the Magistrate Judge finds that if the Court were to adopt Wood Energy's position, Part Three would be rendered meaningless.

Addressing Wood Energy's counterclaims, the Magistrate Judge finds that, in light of the finding that the Policy provides no coverage for Beshear's Oklahoma benefits, all of Wood Energy's counterclaims must fail.

Finally, the Magistrate Judge recommends that this Court render judgment declaring that Texas Mutual has no duty to defend and no duty to indemnify Wood Energy for the Oklahoma benefits awarded to Beshear and that Wood Energy take nothing by its counterclaims.

The parties received the Report and Recommendation on January 16, 2009, and any objections were due on or before February 2, 2009. See Fed R. Civ. P. 72(b) (within ten days after service of report and recommendation, party may serve and file specific written objections to proposed findings and recommendations). Wood Energy filed objections on January 30, 2009 (Clerk's Document No. 57). Texas Mutual filed a Response To [Wood Energy's] Objections To The Magistrate's Report And Recommendation On Summary Judgment on February 13, 2009 (Clerk's Document No. 58). In light of the objections, the Court has undertaken a de novo review of the entire case file. See Fed. R.Civ.P. 72.

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By its objections, Wood Energy, inter alia, challenges the Magistrate Judge's findings and conclusions to the extent that they are premised on the fact that Wood Energy lacked Part Three—Other States Insurance and contends that the Magistrate Judge's analysis with regard to that portion of the Policy is erroneous. Wood Energy also objects to the Magistrate Judge's Footnote 9, and contends that "Wood Energy is penalized for not having `other state' coverage under the Policy (which [Texas Mutual] and the [Magistrate] Court apparently believes was necessary to afford coverage for the Beshear claim), yet the [Report and Recommendation] notes that [Texas Mutual] `may not issue policies with Part Three coverage.'" Further, Wood Energy objects,

It is patently unfair to suggest that Wood Energy needed to obtain Part Three of the Policy in order to get coverage, but also conclude that such coverage is unattainable. The gist of such reasoning is that Wood Energy could have never obtained insurance coverage for the Beshear claim, and such a conclusion is error. In any event, [Texas Mutual]'s corporate representative testified that other states coverage could have been added for no additional premiums, which raises a legitimate question as to exactly what coverage Wood Energy was getting for its money.

Having reviewed the record de novo, including the Policy, and the applicable law, this Court will sustain Wood Energy's objections in part and only with regard to Wood Energy's request that this Court reject the entire portion of the Report and Recommendation that discusses and analyzes Part Three of the Policy. With regard to Part Three, this Court finds and concludes only that, because Part Three expressly provides that it "applies only if one or more states are shown in Item 3.C. of the Information Page" and because Item 3.C. of the Information Page states, "NOT APPLICABLE," Part Three provides Wood Energy no coverage for Beshear's Oklahoma benefits.

Additionally, the Court notes an inadvertent erroneous reference to the date Beshear was injured. Although the Report and Recommendation states, "Beshear was injured in a work-related accident in Houston, Texas on or about December 31, 2008," based on the pleadings and summary-judgment proof, it is undisputed that Beshear was injured on or about December 31, 2005, and this Court so finds.

Finally, the Court finds that the remainder of Wood Energy's objections should be overruled as the Magistrate Judge's findings and conclusions are proper and, for substantially the reasons stated in the Report and Recommendation, the Court will approve and accept the remaining portions of the Report and Recommendation.

IT IS ORDERED that Defendant Wood Energy's Objections to Magistrate's Report and Recommendation filed January 30, 2009 (Clerk's Document No. 57) are SUSTAINED IN PART and to the extent that the Court REJECTS only the portion of the Report and Recommendation that discusses and analyzes Part Three of the Policy; in all other respects the objections are OVERRULED. The Court finds and concludes that because Part Three expressly provides "applies only if one or more states are shown in Item 3.C. of the Information Page" and because Item 3.C. of the Information Page states, "NOT APLICABLE," Part Three provides Defendant Wood Energy no coverage for Beshear's Oklahoma benefits.

IT IS FURTHER ORDERED that the United States Magistrate Judge's Report and Recommendation (Clerk's Document No. 56) is MODIFIED to reflect that Beshear was injured on or about December 31, 2005.

IT IS FURTHER ORDERED that, but for the rejected portion of the Report and

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Recommendation and the corrected date of Beshear's injury, the Report and Recommendation is APPROVED AND ACCEPTED AS MODIFIED.

IT IS FURTHER ORDERED that Plaintiff Texas Mutual Insurance Co.'s Amended Motion for Final Summary Judgment, filed on October 3, 2008 (Clerk's Document No. 41) is GRANTED.

IT IS FURTHER ORDERED AND DECLARED that Plaintiff Texas Mutual Insurance Company under its Workers' Compensation and Employers Liability Insurance Policy No. TSF000150767 20050430 has no duty to defend and has no duty to indemnify Defendant Wood Energy Group, Inc. for the benefits awarded by the Oklahoma Workers' Compensation Court to Benny Joe Beshear.

IT IS FURTHER ORDERED that with regard to its counterclaims, Defendant Wood Energy Group, Inc. TAKES NOTHING.

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Notes:

1. The Texas Mutual policy at issue is Workers' Compensation and Employers Liability Insurance Policy No. TSF-000150767 20050430 ("Policy").

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REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

ANDREW W. AUSTIN, United States Magistrate Judge.

TO: THE HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE

Before the Court are Plaintiffs Amended Motion for Final Summary Judgment, filed on October 3, 2008 (Clerk's Doc. No. 41); Defendant's Memorandum in Opposition to Plaintiff's Amended Motion for Final Summary Judgment, filed on October 14, 2008 (Clerk's Doc. No. 48); and Plaintiffs Reply in Support of its Amended Motion for Final Summary Judgment, filed on October 22, 2008 (Clerk's Doc. No. 53).

On October 22, 2008, the District Judge referred the foregoing to the undersigned Magistrate Judge for a Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1)(B), Federal Rule of Civil Procedure 72, and Rule 1(d) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas, Local Rules for the Assignment of Duties to United States Magistrate Judges. After reviewing the parties' briefs, relevant law, as well as the entire case file, the undersigned...

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