Utica Lloyd's of Texas v. Sitech Engineering Corp.

• Decision Date: 02 February 2001
• Docket Number: No. 06-00-00050-CV,06-00-00050-CV
• Citation: 38 S.W.3d 260
• Parties: (Tex.App.-Texarkana 2001) UTICA LLOYD'S OF TEXAS, Appellant v. SITECH ENGINEERING CORPORATION AND RONALD A. SAIKOWSKI, Appellees
• Court: Texas Court of Appeals

Page 260

38 S.W.3d 260 (Tex.App.-Texarkana 2001)

UTICA LLOYD'S OF TEXAS, Appellant v. SITECH ENGINEERING CORPORATION AND RONALD A. SAIKOWSKI, Appellees

No. 06-00-00050-CV

Court of Appeals of Texas, Texarkana.

Submitted December 13, 2000.

Decided February 2, 2001.

On Appeal from the 284th Judicial District Court Montgomery County, Texas Trial Court No. 98-07-02534-CV

[Copyrighted Material Omitted]

Before Cornelius, C.J., Grant and Ross, JJ.

OPINION

Opinion by Chief Justice Cornelius.

This is an insurance case involving a liability insurance company's refusal to defend its insured that had been sued in a wrongful death action. Utica Lloyd's of Texas issued a liability policy to Sitech Engineering Corporation. The survivors of Jarred Lindsley sued Sitech and its president, Ronald Saikowski, to recover damages resulting from Lindsley's death in a trench cave-in. Utica initially undertook to defend Sitech in the litigation, but ultimately refused to defend it, contending that the Lindsley claim was excluded from coverage in Utica's policy covering Sitech.

Utica filed suit for declaratory judgment declaring that it was not obligated to defend Sitech. Sitech counterclaimed, asking for a declaration that Utica was obligated to defend it in the Lindsleys' suit. Sitech also asserted causes of action against Utica for misrepresentations and violations of the Deceptive Trade Practices Act and the Insurance Code, contending that in its initial actions representing Sitech it had misrepresented facts and had misled Sitech to its detriment by its negligent and bad faith acts.

Both Utica and Sitech moved for summary judgment. The trial court granted Sitech's motion in part, holding, among other things, that Utica was obligated to defend Sitech from the date of the judgment forward, and was obligated to indemnify Sitech if any judgment was rendered against it in favor of the Lindsleys.

The Lindsleys, in their sixth amended original petition, alleged that Jarred Lindsley was killed as a result of a cave-in, and that Sitech was negligent in three respects: (1) it was responsible for "[d]aily inspections of excavations, the adjacent area and protective systems," and it "failed to make these required inspections on a daily basis, failed to be present during all excavations and failed to make inspections after every rainstorm or other hazardous condition and to be present at all excavations"; (2) Sitech was "negligent and grossly negligent in the design of the system for the excavation, negligent in drafting of the plans and negligent in failing to indicate in the slope of the spoil pile adjacent to the excavation"; and (3) Sitech misrepresented its qualifications to prepare the safety requirements, to design the excavation system, and that it would properly inspect and monitor the excavation.

Sitech's policy with Utica contains the following exclusion of coverage provision:

This insurance does not apply to "bodily injury," "property damage," "personal injury" or "advertising injury" arising out of the rendering or failure to render any professional services by or for you, including:

1.The preparing, approving, or failing to prepare or approve maps, drawings, opinions, reports, surveys, change orders, designs or specifications; and

2.Supervisory, inspection or engineering services.

In their ninth amended original petition, the Lindsleys amended their negligence allegations to state that Sitech's negligent acts were done by its "engineers and non-engineering personnel." The essential factual allegations of what Sitech did and failed to do, however, were not changed in the ninth amended original petition.

Sitech contended below that the allegations by the Lindsleys refer, at least in part, to acts and omissions of nonengineering personnel, and that the Lindsleys' claim is therefore not excluded from coverage under the policy because the exclusion applies only to professional services. The trial court apparently accepted Sitech's view and, after finding the exclusion provision ambiguous, determined that it did not apply to the alleged acts and omissions of Sitech because they were not all professional or engineering services. We conclude that the trial court was in error in its conclusion.

Whether an insured in 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, 735 (Tex. App. Fort Worth 1996, writ denied). In determining whether the insurer is obligated to defend the insured, we use the eight corners rule. Nat'l Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997). The eight corners rule compares the provisions within the four corners of the policy with the factual allegations contained within the four corners of the plaintiff's pleadings to determine whether any claim alleged in the pleadings is within the coverage of the policy. Nat'l Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d at 141.

Where the terms of the policy are ambiguous, or where the petition in the underlying suit does not contain factual allegations sufficient to enable the court to determine whether the claims are within the policy coverage, the court may consider extrinsic evidence to assist it in making the determination. State Farm Lloyds v. Kessler, 932 S.W.2d at 736; State Farm Fire & Cas. Co. v. Wade, 827 S.W.2d 448, 450 (Tex. App. Corpus Christi 1992, writ denied); see John Deere Ins. Co. v. Truckin' U.S.A., 122 F.3d 270, 272 (5th Cir. 1997).

The trial court here found the exclusion provisions of the insurance policy ambiguous and considered extraneous summary judgment evidence...