United Nat'l Ins. Co. v. Mundell Terminal Servs., Inc.

• Decision Date: 21 December 2012
• Docket Number: No. EP–11–CV–00536–DCG.,EP–11–CV–00536–DCG.
• Citation: 915 F.Supp.2d 809
• Parties: UNITED NATIONAL INSURANCE COMPANY, Plaintiff, v. MUNDELL TERMINAL SERVICES, INC.; and BAL Metals International Incorporated, Defendants, and Keith D. Peterson & Company, Inc.; and Scarbrough Medlin & Associates, Inc., Intervenor–Defendants.
• Court: U.S. District Court — Western District of Texas

915 F.Supp.2d 809

UNITED NATIONAL INSURANCE COMPANY, Plaintiff,

v. MUNDELL TERMINAL SERVICES, INC.; and BAL Metals International Incorporated, Defendants,andKeith D. Peterson & Company, Inc.; and Scarbrough Medlin & Associates, Inc., Intervenor–Defendants.

No. EP–11–CV–00536–DCG.

United States District Court,

W.D. Texas,

El Paso Division.

Dec. 21, 2012.

Alissa Puckett, Gregory K. Winslett, Quilling, Selander, Lownds, Winslett & Moser, PC, Dallas, TX, Antonio Martinez, Jr., Firth Johnston Martinez, El Paso, TX, for Plaintiff.

Darryl Scott Vereen, Norman J. Gordon, Mounce, Green, Myers, Safi & Galatzan, Francisco Javier Ortega, Scott Hulse, PC, El Paso, TX, Jordan F. Kaplan, Royston, Rayzor, Vickery & Williams, LLP, Houston, TX, for Defendants.

Jeffrey T. Lucky, Ray, Valdez, McChristian & Jeans, El Paso, TX, Leland C. De La Garza, Brian Patrick Shaw, Jr., Shackelford, Melton & McKinley LLP, Dallas, TX, for Intervenor–Defendants.

MEMORANDUM OPINION AND ORDER

DAVID C. GUADERRAMA, District Judge.

Before the Court for consideration is Plaintiff United National Insurance Company's (“UNIC”) Motion for Summary Judgment (ECF No. 28) filed in the above-captioned action. Invoking this Court's jurisdiction under 28 U.S.C. § 1332(a)(1), diversity of citizenship, Plaintiff brought this declaratory judgment action pursuant to 28 U.S.C. § 2201, seeking declaration of no duty to defend or indemnify, and no coverage under an insurance policy issued by it. In the instant motion, Plaintiff seeks summary judgment on its claims for declaratory relief. Having carefully considered the motion, the parties' briefs, the language of the policy, and the applicable law, the Court is of the view that Plaintiff's motion should be GRANTED.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Facts

The following facts are undisputed.¹

Defendant Mundell Terminal Services, Inc. (“MTS”) operates a warehouse business in El Paso, Texas. In 2008, BAL Metals International Incorporated (“BMI”) entered into a contract with MTS for warehousing services. Pursuant to that contract, BMI stored its copper sheeting at one of MTS's warehouse facilities located on Railroad Drive in El Paso, Texas. On or about November 25, 2010, and December 4, 2010, BMI's copper, valued at $483,389.20, was stolen from the warehouse. At the time of the thefts, two insurance policies were in effect: a first-party property insurance policy (policy number KMP0000170), which is the subject of this declaratory action, issued to MTS by UNIC, and a marine cargo insurance policy, with a policy limit of $25 million, issued to BMI by Aon Risk Solutions (“Aon”). The UNIC policy contains a commercial property coverage part and a commercial inland marine coverage part. Subject to numerous exclusions, conditions, and limitations, the commercial property coverage part covers direct physical loss of “Stock, including Property of Others while in the insured's care, custody and control,” with a policy limit of $500,000. At the time of the theft, BMI's copper was in MTS's care, custody, and control.

MTS made timely claims for the copper thefts, and UNIC sent a “reservation of rights” letter to MTS on December 31, 2010. The participating underwriters of the Aon policy reimbursed BMI $483,389.00 for its loss from the thefts. BMI signed a subrogation agreement, in which the underwriters were subrogated to all of its rights and remedies then existing in its favor respecting the stolen copper. On February 24, 2011, Aon, as the subrogee of BMI, sued MTS in a lawsuit styled BAL Metals International, Incorporated v. Mundell Terminal Services, Inc., under Cause No. 2011–663 in the 41st Judicial District Court of El Paso County, Texas (the “BMI suit”). In that suit, BMI asserted causes of action for breach of contract, negligent misrepresentation, negligence, negligence per se, and breach of warranty of services. On March 2, 2011, MTS tendered the BMI lawsuit to UNIC, and on March 14, UNIC sent a letter to MTS, declining to provide a defense or indemnity to MTS in that suit.

On March 6, 2012, MTS filed a lawsuit (the “MTS suit”) in the County Court at Law number 7 in El Paso, Texas, against UNIC, Keith D. Peterson & Company, Inc. (“KDP”), an underwriter for UNIC who issued the UNIC policy to MTS, and Scarbrough, Medlin, & Associates, Inc. (“SMA”), an insurance broker who requested coverage for MTS. In that suit, MTS alleged causes of action for negligence, fraud, and violations of the Texas Deceptive Trade Practices Act and the Texas Insurance Code.

B. Procedural Background

On December 15, 2011, UNIC brought this declaratory judgment action. In its Original Complaint for Declaratory Judgment (ECF No. 1), UNIC seeks a declaration that it has no obligation to defend or indemnify MTS against the claims asserted in the BMI suit and a further declaration that its policy provides no coverage for the thefts of the copper. As originally filed, the lawsuit named only MTS and BMI as defendants.

On June 6, 2012, UNIC filed the instant motion, seeking summary judgment on its declaratory judgment claims asserted in its complaint. Pl. UNIC's Mot. for Summ. J. [hereinafter Pl.'s Mot. for Summ. J.], ECF No. 28. MTS and BMI filed responses on July 5, and UNIC followed by filing a reply. Def. MTS's Resp. & Br. in Opp'n to Pl.'s Mot. for Summ. J. [hereinafter MTS's Resp.], ECF No. 29; Def. BMI's Resp. & Br. in Opp'n to Pl.'s Mot. for Summ. J. [hereinafter BMI's Resp.], ECF No. 31; Pl. UNIC's Reply in Supp. of Its Mot. for Summ. J. [herein after Pl.'s Reply to BMI & MTS], ECF No. 37. KDP filed a motion to intervene in this action on July 6, and SMA on August 8. The Court granted their motions, which were not opposed. Thereafter, KDP filed an amicus brief and SMA a responsive brief in response to UNIC's summary judgment motion, and UNIC filed its replies. Amicus Curiae Br. of KDP [hereinafter KDP's Br.], ECF No. 40; SMA's Resp. to Pl.'s Mot. for Summ. J. & Br. in Support [hereinafter SMA's Resp.], ECF No. 58.

Having examined multiple briefs filed by the parties, the Court, on November 29, 2012, issued an order directing the parties to file a supplemental brief to clarify their arguments made in their briefs. Thereafter, on December 3, UNIC filed its supplemental brief, and on December 6, MTS, BMI, KDP, and SMA (hereinafter collectively “Defendants”) jointly filed a response to UNIC's supplemental brief. PL UNIC's Supplemental Br. in Supp. of Its Mot. for Summ. J. [hereinafter Pl.'s Supplemental Br.], ECF No. 91; Joint Br. in Resp. to UNIC's Supplemental Br. in Supp. of Its Mot. for Summ. J. [hereinafter Defs.' Supplemental Br.], ECF No. 95.

II. APPLICABLE LAW

A. Summary Judgment Standard

Summary judgment is appropriate if the record discloses that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Kovacic v. Villarreal, 628 F.3d 209, 211 (5th Cir.2010). “A fact is ‘material’ if its resolution in favor of one party might affect the outcome of the lawsuit under governing law.” Sossamon v. Lone Star State of Tex., 560 F.3d 316, 326 (5th Cir.2009) (quoting Hamilton v. Segue Software, Inc., 232 F.3d 473, 477 (5th Cir.2000) ( per curiam )). “A factual dispute is ‘genuine’ if a reasonable trier of fact could return a verdict for the nonmoving party.” James v. Tex. Collin Cnty., 535 F.3d 365, 373 (5th Cir.2008). In assessing whether a genuine dispute as to material fact exists, a trial court reviews the evidence from the summary judgment record, drawing all justifiable inferences in the light most favorable to the nonmovant, Man Roland, Inc. v. Kreitz Motor Express, Inc., 438 F.3d 476, 478–79 (5th Cir.2006) (citation omitted), but refrains from making “credibility determinations or weighing the evidence,” Deville v. Marcantel, 567 F.3d 156, 164 (5th Cir.2009) (citation omitted). Thus, the ultimate inquiry in a summary judgment motion is “ ‘whether the evidence presents a sufficient disagreement to require submission to a [trier of fact] or whether it is so one-sided that one party must prevail as a matter of law.’ ” Septimus v. Univ. of Hous., 399 F.3d 601, 609 (5th Cir.2005) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251–52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

“Procedurally, the party moving for summary judgment bears the initial burden 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 issue of material fact.” ²Taita Chem. Co. v. Westlake Styrene Corp., 246 F.3d 377, 385 (5th Cir.2001) (internal quotation marks and brackets omitted). “ ‘If the moving party fails to meet this initial burden, the motion must be denied, regardless of the nonmovant's response.’ ” United States v. $92,203.00 in U.S. Currency, 537 F.3d 504, 507 (5th Cir.2008) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) ( per curiam )). If, on the other hand, the moving party satisfies its burden, the nonmovant must, by submitting or referring to evidence, set out “specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

Sufficient support for the assertion that there is or is not a genuine dispute as to a material fact may be adduced from depositions, documents, affidavits or declarations, stipulations, admissions, interrogatory answers, and other materials in the record. Fed.R.Civ.P. 56(c). However, conclusory statements, improbable inferences, unsupported speculation, and unsubstantiated assertions are insufficient to either support or defeat a motion for summary judgment. Brown v. City of Hous., 337 F.3d 539, 541 (5th Cir.2003); RSR Corp. v. Int'l Ins. Co., 612 F.3d 851, 857 (5th Cir.2010); Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir.1985).

B. Law Governing Interpretation of Insurance Contract

Because this...