Transport Intern. Pool v. Continental Ins., 2-04-176-CV.

• Decision Date: 02 June 2005
• Docket Number: No. 2-04-176-CV.,2-04-176-CV.
• Citation: 166 S.W.3d 781
• Parties: TRANSPORT INTERNATIONAL POOL, INC. d/b/a GE Capital Modular Space, Appellant, v. The CONTINENTAL INSURANCE COMPANY and Continental Casualty Company, Appellees.
• Court: Texas Supreme Court

Page 781

166 S.W.3d 781

TRANSPORT INTERNATIONAL POOL, INC. d/b/a GE Capital Modular Space, Appellant, v. The CONTINENTAL INSURANCE COMPANY and Continental Casualty Company, Appellees.

No. 2-04-176-CV.

Court of Appeals of Texas, Fort Worth.

June 2, 2005.

COPYRIGHT MATERIAL OMITTED

Cotten Schmidt, L.L.P., Larry E. Cotten, Paul E. Hanson and Steven K. Hayes, Fort Worth, for Appellant.

Goins, Underkofler, Crawford & Langdon, LLP, John C. Tollefson and Stephen A. Melendi, Dallas, for Appellees.

PANEL B: DAUPHINOT, HOLMAN, and GARDNER, JJ.

OPINION

DIXON W. HOLMAN, Justice.

INTRODUCTION

In this insurance coverage dispute case, Appellant Transport International Pool, Inc. d/b/a GE Capital Modular Space (GE) appeals from the trial court's summary judgment in favor of Appellees Continental Insurance Company and Continental Casualty Company (Continental). In granting Continental's motion, the trial court held that Continental has no duty to defend or indemnify GE in the underlying lawsuit. GE also appeals from the trial court's denial of its cross-motion for summary judgment. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

On or about March 10, 2000, Tommy Doolin (Doolin) was employed by Vratsinas Construction Company (Vratsinas). Doolin was allegedly injured when a modular space unit (also referred to as a construction trailer) that he was occupying blew over in high winds. The unit was owned by GE and was being leased to Vratsinas under a lease agreement. When GE leased the unit to Vratsinas, the lease agreement provided that

Customer, at Customer's sole cost, will procure and keep in full force and effect from the initial delivery date until the return of all Equipment the following policies of insurance satisfactory to GECMS as to the insurer and as to the form and amount of coverage, with premiums prepaid;

i) Commercial General Liability Insurance with a minimum combined single limit of $1,000,000 per occurrence, written on an occurrence form, including coverage for premises, operations, contractual liability, broad form property damage, independent contractors and personal injury liability, naming GECMS as an additional insured.

ii) Commercial Property Insurance protecting against all loss and damages, at full replacement cost, sustained or suffered due to the loss of or damage to the Equipment as a result of collision, fire, lightning, theft, flood, windstorm, explosion or any other casualty, naming GECMS as a loss payee.

Vrastinas' insurance policy was with Continental. Doolin subsequently filed suit naming only GE as a defendant alleging that GE "negligently and carelessly failed to properly anchor and tie the trailer down so that it was safe for its intended use as a construction office."

GE then filed a third-party petition against Vratsinas and Continental alleging their obligation under the lease and the insurance policy to defend and indemnify GE against Doolin's claims. In its petition, GE sought a declaratory judgment¹ that Continental and Vratsinas are liable for all of Doolin's claims against GE. On June 20, 2003, Continental moved for summary judgment seeking a declaration that it had no duty to defend or indemnify GE against the claims of Doolin. On February 19, 2004, GE filed a cross-motion for partial summary judgment seeking a declaratory judgment in its favor on the issue of Continental's duty to defend and indemnify GE against Doolin's claims.² The trial court granted Continental's motion for summary judgment and denied GE's cross-motion. The trial court's judgment declared that Continental had no duty to defend or indemnify GE in Doolin's suit against it, and GE's third party petition filed against Continental was dismissed with prejudice. GE appeals from the summary judgment in favor of Continental and from the denial of its cross-motion for summary judgment.

ISSUES ON APPEAL

In four issues, GE (1) argues generally that the trial court erred by granting summary judgment for Continental; (2) argues generally that the trial court erred by denying GE's cross-motion for partial summary judgment; (3) contends that the trial court improperly construed the factual allegations in Doolin's petition against GE, rather than in favor of GE; and (4) contends that the trial court ignored other allegations in Doolin's petition that would allow proof at trial that Doolin's injuries were not caused by GE's sole negligence.

Continental presented multiple grounds in its motion for summary judgment urging that it owed no obligation of defense or indemnity under Vratsinas' general liability policy. Continental also argued that the bad faith claim under article 21.21 of the insurance code should be dismissed because there was no claim that was covered under the insurance policy and therefore there can be no bad faith on the part of Continental. The judgment in favor of Continental does not specify the grounds upon which it was granted. Therefore, if the summary judgment can be upheld on any ground presented in the motion, we must affirm. See Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex.1995).

STANDARD OF REVIEW

To be entitled to summary judgment, Continental was required to show, as a matter of law, that there is no genuine issues of material fact as to one or more of the essential elements of the plaintiff's cause of action. Tex.R. Civ. P. 166(a)(i); Union Pump Co. v. Allbritton, 898 S.W.2d 773, 774 (Tex.1995); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.1985). In reviewing the summary judgment record, we must consider the evidence in the light most favorable to the non-movant and resolve any doubt in the non-movant's favor. Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 476-77 (Tex.1995). Because the question of an insurance carrier's contractual duty to defend is one of law, we must conduct a de novo review. State Farm Gen. Ins. Co. v. White, 955 S.W.2d 474, 475 (Tex.App.-Austin 1997, no writ).

DUTY TO DEFEND

Applicable Law

An insurer's duty to defend its insured is determined according to the "eight corners" rule, which requires that we compare the allegations in the petition filed against the insured and the insurance policy. King v. Dallas Fire Ins. Co., 85 S.W.3d 185, 187 (Tex.2002). The plaintiff's petition must allege facts within the scope of coverage; otherwise, the insurer will not be legally bound to provide a defense for the insured. Id. When the allegations are reviewed to determine whether a liability insurer has a duty to defend its insured, a liberal interpretation in favor of the insured should be given. Nat'l Union Fire Ins. Co. v. Merchs. Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex.1997). The insurer owes a duty to defend if the plaintiff's pleadings "potentially" state a claim within coverage. Utica Nat'l Ins. Co. of Texas v. Am. Indem. Co., 141 S.W.3d 198, 201 (Tex.2004); Nat'l Union Fire Ins. Co., 939 S.W.2d at 141 (citing Heyden Newport Chem. Corp. v. Southern Gen. Ins. Co., 387 S.W.2d 22, 26 (Tex.1965)). Nevertheless, it is not every doubt that requires resolution of the duty to defend in favor of the insured; the plaintiff's pleadings must create "that degree of doubt which compels resolution of the issue for the insured." Nat'l Union Fire Ins. Co., at 142.

In reviewing the plaintiff's pleadings in light of the policy provisions, we must focus on the facts alleged, not on the legal theories. Id. at 141; Saint Paul Surplus Lines Ins. Co. v. Geo Pipe Co., 25 S.W.3d 900, 903 (Tex.App.-Houston [1st Dist.] 2000, no pet.) (op. on reh'g); State Farm Gen. Ins. Co., 955 S.W.2d at 475-76. "It is not the cause of action alleged that determines coverage, but the facts giving rise to the alleged actionable conduct." Nat'l Union Fire Ins. Co., 939 S.W.2d at 141. If the plaintiff's petition does not allege facts within the scope of the policy's coverage, an insurer is not legally required to provide a defense. Trinity Univ. Ins. Co. v. Cowan, 945 S.W.2d 819, 821 (Tex.1997); Nat'l Union Fire Ins. Co., 939 S.W.2d at 141; Fid. & Guar. Ins. Underwriters, Inc. v. McManus, 633 S.W.2d 787, 788 (Tex.1982).

Whether an insurer of a liability policy is obligated to defend the insured is a question of law to be decided by the court. State Farm Lloyds v. Kessler, 932 S.W.2d 732, 736 (Tex.App.-Fort Worth 1996, writ denied). Thus, the duty to defend is not affected by facts ascertained before suit or developed during the process of litigation, or by the ultimate outcome of the suit. Argonaut S.W. Ins. Co. v. Maupin, 500 S.W.2d 633, 636 (Tex.1973); Heyden Newport Chem. Corp., 387 S.W.2d at 24; Fielder Rd. Baptist Church v. Guideone Elite Ins. Co., 139 S.W.3d 384, 388 (Tex.App.-Fort Worth 2004, pet. filed).

Vratsinas' Policy

Continental issued general liability policy L1 63623610 to GE's lessee, Vratsinas. The insurance policy also included an endorsement that stated the following:

A. Who Is An Insured (Section II) is amended to include as an insured any person or organization from whom you lease equipment when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an insured only with respect to their liability arising out of the maintenance, operation or use by you of equipment leased to you by such person or organization. A person's or organizations's status as an insured under this endorsement ends when their contract or agreement with you for such leased equipment ends.

B. With respect to the insurance afforded these additional insureds, the following additional exclusions apply;

This insurance does not apply:

1. To any "occurrence" which takes place after the equipment lease expires 2. To "bodily injury" or "property damage" arising out of the sole negligence of such person or organization.

Doolin's Petition

In his petition, Doolin alleges as follows about GE's conduct:

5. The Plaintiff is an employee...