The Burlington Northern v. Nat'l Union Fire Ins. Co. of Pittsburgh

• Decision Date: 09 December 2009
• Docket Number: No. 08–06–00022–CV.,08–06–00022–CV.
• Citation: 334 S.W.3d 235
• Parties: The BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY f/k/a/ The Atchison, Topeka and Santa Fe Railway Company, Appellant,v.NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Appellee.
• Court: Texas Court of Appeals

334 S.W.3d 235

The BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY f/k/a/ The Atchison, Topeka and Santa Fe Railway Company, Appellant,

v.NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Appellee.

No. 08–06–00022–CV.

Court of Appeals of Texas, El Paso.

Dec. 9, 2009.

Donald E. Herrmann, Kelly Hart & Hallman LLP, Fort Worth, TX, for Appellant.Jeffrey R. Parsons, Beirne, Maynard & Parson, L.L.P., Houston, TX, for Appellee.Before CHEW, C.J., McCLURE, and CARR, JJ.

OPINION

DAVID WELLINGTON CHEW, Chief Justice.

The Burlington Northern and Santa Fe Railway Company (“BNSF” or “the railroad”) appeals the entry of summary judgment in favor of National Union Fire Insurance Company (“National Union”). The trial court below entered a take-nothing judgment that determined that National Union did not have a duty to defend the railroad, and that the railroad had no right to indemnity. The railroad raises four issues challenging the entry of judgment on both claims.

In February of 1994, BNSF entered into a three-year contract with SSI Mobley for vegetation control along the railroad's right-of-ways in Texas. As part of the contract, SSI Mobley agreed to purchase a comprehensive general liability policy and a contractual liability policy insuring itself for one million dollars per occurrence, or three million dollars aggregate.¹ SSI Mobley also agreed that BNSF would be named as an “additional insured” on the policies, with coverage to extend to incidents occurring within fifty feet of a railroad track. SSI Mobley purchased the required insurance from National Union.

BNSF filed this lawsuit against National Union following the insurance company's decision to deny the railroad's claims for defense and indemnity for liability arising out of a railroad crossing accident near Shallowater, Texas. On August 25, 1995, two people were killed and a third was injured when a BNSF train collided with an automobile. The decedents' families (“Lara” and “Rosales”) sued the railroad alleging, in part, that the collision was caused by the railroad's failure to properly maintain the vegetation at the crossing. BNSF settled one of the cases, and the second proceeded to a multi-million dollar jury verdict.

BNSF and National Union filed competing summary judgment motions in early 2002. The trial court denied National Union's motion on May 30, 2002. On June 5, 2003, the trial court granted partial summary judgment in the railroad's favor on the insurance company's duty to defend and BNSF's indemnity claim. The order provided that damages would be determined at a later date.

On July 8, 2003, National Union filed a motion to reconsider the partial summary judgment order. There is no record that the trial court ruled on this motion expressly. On June 17, 2005, BNSF filed a motion for entry of final summary judgment on the damages issues remaining from the court's June 2003 partial summary judgment. On October 5, 2005, National Union filed a second motion for summary judgment, raising both traditional and no-evidence grounds. The trial court entered a final, take-nothing judgment in National Union's favor on December 27, 2005. The court withdrew its June 5, 2003, partial summary judgment order and denied the railroad's motion for entry of summary judgment on the damages issue. The trial court also granted National Union's October 5 motion for summary judgment “in all things.” BNSF filed its notice of appeal on January 26, 2006.

There are four issues: (1) whether the trial court erred by granting summary judgment in National Union's favor on no-evidence grounds; (2) whether the trial court properly granted National Union's traditional motion for summary judgment, and properly denied BNSF's partial motion for summary judgment on its claim for breach of the duty to defend; (3) whether summary judgment was appropriate regarding BNSF's claim for indemnity; and (4) whether a material fact issue remains regarding apportionment of liability.

When both sides move for summary judgment, and the trial court grants one motion and denies the other, the reviewing court considers both sides' summary judgment evidence and determines all issues presented. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005). The reviewing court must consider all the grounds presented in both motions, and render the judgment the trial court should have rendered. Id. The cross motions in this case presented both traditional and no-evidence grounds for summary judgment. See Tex.R.Civ.P. 166a(c) and 166a(i). An appellate court reviews summary judgment de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.2003).

We turn first to National Union's tradition motion under Rule 166a(c). The standards for reviewing traditional summary judgments are well established. In a traditional summary judgment proceeding, the standard of review on appeal asks whether the successful movant carried the burden to show that there is no genuine issue of material fact, and that the judgment was properly granted as a matter of law. See Tex.R.Civ.P.166a(c); Fertic v. Spencer, 247 S.W.3d 242, 248 (Tex.App.-El Paso 2007, pet. denied). Thus, the question before the reviewing court is limited to whether the summary judgment proof establishes as a matter of law that there is no genuine issue of material fact as to one or more elements of the underlying claim. See Fertic, 247 S.W.3d at 248. To resolve this question, the reviewing court will take all evidence favorable to the nonmovant as true; and all reasonable inferences, including any doubts, must be resolved in the non-movant's favor. Id., citing Nixon v. Mr. Property Mgmt. Co., Inc., 690 S.W.2d 546, 548–49 (Tex.1985).

In Issue Two, BNSF contends the trial court erred in granting summary judgment on its duty to defend claim by misapplying the “eight corners rule.” National Union responds by arguing that the trial court was correct in concluding that the petitions in the underlying personal injury lawsuits fail to allege any fact that could potentially place the claims within coverage provisions.

Whether a duty to defend exists is a question of law, reviewed de novo. KLN Steel Prod. Co., Ltd. v. CNA Ins. Co., 278 S.W.3d 429, 434 (Tex.App.-San Antonio 2008, pet. denied). The insured bears the initial burden to establish that its claim falls within the scope of coverage provided by the policy. CNA Ins. Co., 278 S.W.3d at 434. Should the insured establish a right to coverage, the burden then shifts to the insurer to demonstrate that the claim is subject to a policy exclusion. Venture Encoding Serv., Inc. v. Atl. Mut. Ins. Co., 107 S.W.3d 729, 733 (Tex.App.-Fort Worth 2003, pet. denied). If the insurer is able to establish that an exclusion applies, the burden shifts back to the insured to show that an exception to the exclusion brings the claim back within the terms of the policy. Id.

Generally, the duty to defend is dependant on the type and scope of coverage provided by the policy agreement. See King v. Dallas Fire Ins. Co., 85 S.W.3d 185, 187 (Tex.2002). An insurer's duty to defend is determined according to the “eight corners,” or “complaint allegations” rule. See id. at 187; Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 821 (Tex.1997). The insurer's duty to defend is determined entirely by the allegations in the pleadings and the language of the insurance policy. King, 85 S.W.3d at 187. All that is needed to invoke the duty are factual allegations which support a claim potentially covered by the policy. See GuideOne Elite Ins. Co. v. Fielder Road Baptist Church, 197 S.W.3d 305, 310 (Tex.2006). Any doubt that the facts alleged give rise to the duty are resolved in favor of the insured. See National Union Fire Ins. Co. of Pittsburgh, PA v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex.1997). Facts outside the pleadings, regardless of how easily they can be found or validated, are not ordinarily considered. GuideOne Elite Ins. Co., 197 S.W.3d at 308; see also Argonaut Sw. Ins. Co. v. Maupin, 500 S.W.2d 633, 636 (Tex.1973)(“The duty to defend does not depend on what the facts are, or what might be determined finally by the trier of the facts. It depends only on what the facts are alleged to be.”).

Both parties moved for summary judgment on the duty to defend. National Union's argument was two-fold: first, the insurer argued that BNSF was barred from coverage because it could not qualify as an insured according to the terms of the policy; second, to the extent BNSF was an insured, National Union argued that one or more policy exclusions excused it from providing a defense. In its own motion, BNSF argued it was entitled to coverage as an additional insured by the terms of the policy. The railroad further argued that the petitions in the underlying case established its right to a defense, and that the policy exclusions are not applicable or not established as a matter of law.

We begin by considering whether BNSF qualifies as an “additional insured” under the terms of the CGL policy. The policy provides coverage for bodily injury and property damage, and obligates National Union to defend any suit seeking damages for such injuries. Section II of the CGL policy defines “WHO IS AN INSURED” as those individuals, partnerships, or organizations listed in the policy declaration.² Who is an insured is amended by an “Additional Insured” endorsement page attached to the policy. The endorsement states, “(Section II) is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising out of ‘your work’ for that insured by or for you.” The endorsement provides further:

BLANKET–AS REQUIRED BY WRITTEN CONTRACT, BUT ONLY WITH RESPECT TO LIABILITIES ARISING OUT OF THEIR OPERATIONS PERFORMED BY OR FOR THE NAMED INSURED, BUT EXCLUDING ANY NEGLIGENT ACTS COMMITTED BY SUCH ADDITIONAL INSURED.

Whether BNSF can be considered an “additional...