The Phx. Ins. Co. v. Knife River Corp. S.
| Docket Number | 4:22-CV-02859 |
| Decision Date | 27 July 2023 |
| Parties | THE PHOENIX INSURANCE COMPANY, Plaintiff, v. Knife River Corporation South, Defendant. |
| Court | U.S. District Court — Southern District of Texas |
MAGISTRATE JUDGE'S REPORT & RECOMMENDATION
This case arises from an insurance coverage dispute involving Plaintiff Phoenix Insurance Company's (“Phoenix”) duty to defend and indemnify Defendant Knife River Corporation South (“Knife River”).[1] Pending before the Court is Knife River's motion for judgment on the pleadings, ECF No. 13 Phoenix's motion for summary judgment, ECF No. 15, and Knife River's cross motion for partial summary judgment ECF No. 20.
The issue before the Court is whether Phoenix owes Knife River a duty to defend under Phoenix's insurance policy with Knife River's subcontractor Pavement Marking, Inc. (“PMI”).[2] In its motion for summary judgment, Phoenix contends that certain indemnity provisions in Knife River's subcontract with PMI violate the Texas Anti-Indemnity Act and, as a result, the indemnity and insurance sections of the subcontract are void. ECF No. 15 at 8. If those provisions are void, Phoenix contends that it does not owe a duty to defend in an underlying lawsuit for personal injury damages that was pending against Knife River and PMI in Texas state court. In its motion for judgment and cross-motion for summary judgment, Knife River argues under the eight corner's rule, the court can only consider the insurance contract and the complaint in the underlying lawsuit to determine whether there is a duty to defend. Therefore, Knife River asserts that its subcontract with PMI cannot be considered to determine coverage. In addition, Knife River argues that the provisions do not violate the Texas Anti-Indemnity Act, and, even if they did, it would not void the indemnity and insurance sections of the subcontract in their entirety. Accordingly, Knife River claims Phoenix owes it a duty to defend as an additional insured under the policy issued to PMI.
After thoroughly considering the briefing,[3] the evidence, and the applicable law, the Court concludes that Knife River is an additional insured under the Phoenix policy issued to PMI and the underlying suit falls within the coverage provided.
Further, the state court personal injury suit triggered Phoenix's duty to defend Knife River. Therefore, Knife River is entitled to partial summary judgment as a matter of law and Phoenix's motion for summary judgment should be denied. Further, Knife River's motion for judgment on the pleadings should be denied as moot.
Knife River is the general contractor on a highway construction project with the Texas Department of Transportation (“TxDOT”). Letter from McKinney to McGoldrick at 6, ECF No. 15-4. On June 25, 2018, PMI entered into a subcontract agreement with Knife River to provide roadway striping services (the “subcontract”). ECF No 20 at 12. PMI agreed that the work specifications in the TxDOT contract would be binding on it. Subcontract at 27, ECF No. 15-4. The subcontract required PMI to obtain insurance “naming [Knife River] as an additional insured.” Id. at 37. The subcontract also contained an indemnification provision. Id. at 38. PMI obtained an insurance policy from Phoenix covering May 1, 2019 through May 1, 2020 (the “policy”). Policy at 3, ECF No. 15-1. The policy provided that any “person or organization” with whom PMI “agree[d] in a written contract or agreement to include as additional insured . . . is an insured.” Id. at 108.
On July 28, 2019, Thomas Henry was in a one car accident on the stretch of road subject to the subcontract. He died from his injuries sustained in the accident. On June 17, 2020, the heirs to the estate of Mr. Henry filed an action against Knife River claiming that its negligence caused his death (the “Henry Suit”). Original Petition at 2-8, ECF No. 15-2. The petition in the Henry Suit was subsequently amended, adding PMI as a defendant, and alleging that PMI was liable for Mr. Henry's death. Fifth Amended Petition at 2-16, ECF No. 20-7.
On July 29, 2021, Knife River tendered the Henry Suit to Phoenix for defense and indemnity pursuant to the subcontract and the policy. Letter from McGoldrick to McKinney, ECF No. 20-5. On September 20, 2021, Phoenix informed Knife River that it was not an additional insured under the policy because provisions in the subcontract's indemnity section violated the Texas Anti-Indemnity Act and denied coverage or a duty to defend. Letter from Darensburg to McGoldrick at 59, ECF No. 23-4. Consequently, Phoenix filed the instant suit seeking a declaratory judgment that it owed no defense or indemnity to Knife River and a determination as to the rights and obligations of the parties under the policy. Compl., ECF No. 1; Am. Compl., ECF No. 18.
Summary judgment is appropriate when the movant has established that the pleadings, affidavits, and other evidence available to the court demonstrate that no genuine issue of material fact exists, and the movant is thus entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). “A genuine dispute of material fact exists when the ‘evidence is such that a reasonable jury could return a verdict for the nonmoving party.'” Zavala v. Texas Lehigh Cement Co., LP, No. 1:21-CV-00082-DAE, 2022 WL 18046467, at *2 (W.D. Tex. Oct. 12, 2022) (quoting Bennett v. Hartford Ins. Co. of Midwest, 890 F.3d 597, 604 (5th Cir. 2018)). A fact is material “if and only if proof of its existence might affect the outcome of the case.” Roy v. City of Monroe, 950 F.3d 245, 254 (5th Cir. 2020). The party moving for summary judgment “bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of [the record] which it believes demonstrate the absence of a genuine [dispute] of material fact.” MDK Sociedad De Responsabilidad Limitada v. Proplant Inc., 25 F.4th 360, 368 (5th Cir. 2022) (quoting Nola Spice Designs, L.L.C. v. Haydel Enterprises, Inc., 783 F.3d 527, 536 (5th Cir. 2015)).
“Once the moving party has initially shown ‘that there is an absence of evidence to support the non-moving party's cause,' the non-movant must come forward with ‘specific facts' showing a genuine factual issue for trial.” Houston v. Texas Dep't of Agric., 17 F.4th 576, 581 (5th Cir. 2021) (quoting TIG Ins. Co. v. Sedgwick James of Washington, 276 F.3d 754, 759 (5th Cir. 2002)). When ruling on a motion for summary judgment, the Court views all facts and inferences in the light most favorable to the nonmoving party and resolves all disputed facts in its favor. Rodriguez v. City of Laredo, 459 F.Supp.3d 809, 814 (S.D. Tex. 2020).
The Court “may not make credibility determinations or weigh the evidence” in ruling on a summary-judgment motion. Id. (quoting Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000)). “Summary judgment cannot be defeated through ‘[conclusory] allegations and denials, speculation, improbable inferences, unsubstantiated assertions, and legalistic argumentation.'” Acker v. Gen. Motors, L.L.C., 853 F.3d 784, 788 (5th Cir. 2017) (quoting Oliver v. Scott, 276 F.3d 736, 744 (5th Cir. 2002)). Rather, the non-movant must demonstrate specific facts identifying a genuine issue to be tried to avoid summary judgment. FED. R. CIV. P. 56(e). “Thus, once it is shown that a genuine issue of material fact does not exist, “[s]ummary judgment is appropriate . . . if the non-movant ‘fails to make a showing sufficient to establish the existence of an element essential to that party's case.'” Tri Invs., Inc. v. United Fire & Cas. Co., 553 F.Supp.3d 400, 404 (S.D. Tex. 2020) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)).
“A motion for judgment on the pleadings under Rule 12(c) is subject to the same standard as a motion to dismiss under Rule 12(b)(6).” Doe v. MySpace, Inc., 528 F.3d 413, 418 (5th Cir. 2008).
As a preliminary matter, the Court must consider Phoenix's objections to Knife River's summary judgment evidence. Phoenix objects to exhibits A through G attached to Knife River's cross motion for summary judgment as inadmissible hearsay and exhibits C, D, F and G because they are not properly certified public records. ECF No. 23 at 6.
Phoenix's hearsay objections to exhibits A through G are conclusory and lack specificity. Phoenix's explanation for these objections is limited to identifying the hearsay rule the evidence allegedly fails to satisfy. This is not sufficient. “Objections lacking specificity do not satisfy the requirements of Rule 103.” Patton v. Meridian Sec Ins. Co., 617 F.Supp.3d 516, 526 (N.D. Tex. 2022). “ ” Id. (quoting United States v. Polasek, 162 F.3d 878, 883 (5th Cir. 1998)); see also In re Slamdunk Enterprises, Inc., No. 17-60566, 2021 WL 389081, at *24 (Bankr. E.D. Tex. Jan. 29, 2021) (). Therefore, these objections are overruled. Phoenix also objected to Knife River's exhibit A, which is the subcontract, because there is no affidavit establishing that it is a business record of a regularly conducted activity. ECF No. 23 at 6. However, Phoenix submitted the same document as an exhibit to its motion for summary judgment, Subcontract at 24, ECF No. 15-4, thereby waiving any objection. Michael Kors, L.L.C v. Hernandez Int'l Inc., No. 4:15-CV-0844, 2016...
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