Weingarten Realty Mgmt. Co. v. Liberty Mut. Fire Ins. Co.

• Decision Date: 26 May 2011
• Docket Number: No. 14–09–00860–CV.,14–09–00860–CV.
• Citation: 343 S.W.3d 859
• Parties: WEINGARTEN REALTY MANAGEMENT COMPANY and Scottsdale Insurance Company, Appellants,v.LIBERTY MUTUAL FIRE INSURANCE COMPANY, Appellee.
• Court: Texas Court of Appeals

343 S.W.3d 859

WEINGARTEN REALTY MANAGEMENT COMPANY and Scottsdale Insurance Company, Appellants,

v.LIBERTY MUTUAL FIRE INSURANCE COMPANY, Appellee.

No. 14–09–00860–CV.

Court of Appeals of Texas, Houston (14th Dist.).

May 26, 2011.

Kyle Douglas Giacco, Willie B. Daw, III, Houston, for Appellants.Douglas T. Gosda, Charles Creighton Carr II, Houston, for Appellee.Panel consists of Justices ANDERSON, FROST, and BROWN.

OPINION

JEFFREY V. BROWN, Justice.

Appellants Weingarten Realty Management Company and Scottsdale Insurance Company appeal the trial court's order granting summary judgment in favor of appellee Liberty Mutual Fire Insurance Company and denying their motion for partial summary judgment, for a new trial, for rehearing, and for clarification. We affirm.

I

This case involves an insurance-coverage dispute arising from an underlying lawsuit, Johnson, et ux. v. Weingarten Realty Management Co., No. 2002–46187. In that case, Connie Johnson, a manager of a Fashion Cents retail store, was assaulted by an unknown man who entered the store after business hours. Johnson sued her employer, Norstan Apparel Shops, Inc., d/b/a Fashion Cents, and Weingarten Realty Management Company (“Weingarten Management”), the entity she alleged leased the retail space occupied by Fashion Cents. However, the actual lessor was Weingarten Realty Investors (“Weingarten Investors”), an entity separate and distinct from Weingarten Management. As its name suggests, Weingarten Management only managed the property. Although Johnson amended her petition seven times, the error was never corrected and Weingarten Management never challenged the assertion.

In accordance with the lease between Norstan and Weingarten Investors, Norstan secured a general commercial-liability insurance policy through Liberty Mutual Fire Insurance Company. The policy contained an endorsement naming “all lessors of the premises leased to [Norstan] as additional insureds under the policy.” Weingarten Investors therefore became an insured lessor under the Liberty Mutual policy. Weingarten Management, however, maintained its own general commercial-liability policy with Scottsdale Insurance Company. When Johnson named Weingarten Management in her suit, Weingarten Management initially defended pursuant to a self-insured retention, and Scottsdale later assumed the defense.

Shortly before trial, Weingarten Management made demand on Liberty Mutual for a defense as an additional insured under the Liberty Mutual policy between Norstan and Weingarten Investors. Liberty Mutual refused. The case was eventually tried and the jury found no liability on the part of Weingarten Management. Weingarten Management and Scottsdale then brought this suit against Liberty Mutual for $242,391.57 in incurred defense costs, arguing Liberty Mutual owed a duty to defend because Johnson named Weingarten Management as a lessor in her underlying petition. Weingarten Management and Scottsdale concede Weingarten Management is not actually a lessor of the property. Nevertheless, the appellants argue that the mistaken allegation gave rise to a duty to defend because the “eight-corners rule” restricted the trial court from looking outside the pleadings and insurance policy to determine Weingarten Management was not the true lessor.

In considering the cross-motions for summary judgment, however, the trial court examined evidence extrinsic to Johnson's petition in the underlying suit and the Liberty Mutual policy to determine Weingarten Management was not a lessor and therefore was not entitled to coverage under the Liberty Mutual policy's “additional insured” endorsement. The trial court entered summary judgment in favor of Liberty Mutual and denied the appellants' motions for partial summary judgment, for a new trial, for rehearing, and for clarification. This appeal followed.

II

In their first issue, the appellants argue the trial court was bound by the eight-corners rule and erred when it considered extrinsic evidence in granting Liberty Mutual's motion for summary judgment. In their second issue, the appellants contend that in its examination of the extrinsic evidence, the trial court erred by finding as a matter of law that Weingarten Management was not a lessor because the terms of the lease require Norstan to name Weingarten Management as an additional insured. In their third issue, the appellants argue there was a fact issue as to whether Liberty Mutual was estopped from contesting that Weingarten Management was a lessor. In their fourth, fifth, and sixth issues, the appellants contend that the trial court erred to the extent its order can be read to deny the appellants' subrogation rights, pre-tender defense costs, and attorneys' fees. Because we find the trial court correctly entered summary judgment in favor of Liberty Mutual, and correctly denied the appellants' motion for partial summary judgment, we overrule appellants' issues one through three and consequently do not reach issues four through six.

A

We review the trial court's grant of summary judgment de novo. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 156–57 (Tex.2004). A movant must establish its right to summary judgment by showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.1985). We take as true all evidence favorable to the non-movant, and we indulge every reasonable inference and resolve any doubts in the non-movant's favor. Joe, 145 S.W.3d at 157. We review a summary judgment for evidence that would enable reasonable and fair-minded jurors to differ in their conclusions. Wal–Mart Stores, Inc. v. Spates, 186 S.W.3d 566, 568 (Tex.2006) (per curiam). When we review cross-motions for summary judgment, we consider both motions and render the judgment that the trial court should have rendered. Coastal Liquids Transp., L.P. v. Harris Cnty. Appraisal Dist., 46 S.W.3d 880, 884 (Tex.2001).

The appellants first argue that the trial court erred in granting summary judgment in Liberty Mutual's favor because it considered evidence in contravention of the eight-corners rule. The eight-corners rule provides that Texas courts may look only to the pleadings and the insurance policy to determine whether a duty to defend exists. Nat'l Union Fire Ins. Co. of Pittsburg, Pa. v. Merch. Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex.1997). The allegations in the pleadings are considered in light of the policy provisions without regard to their truth or falsity. Argonaut Sw. Ins. Co. v. Maupin, 500 S.W.2d 633, 635 (Tex.1973); Heyden Newport Chem. Corp. v. S. Gen. Ins. Co., 387 S.W.2d 22, 24 (Tex.1965). Even if the allegations are groundless, false, or fraudulent, the insurer is obligated to defend. Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487, 491 (Tex.2008). Facts outside the pleadings, even those easily ascertained, are not ordinarily material to the determination of whether the duty to defend exists, and allegations against the insured are liberally construed in favor of coverage. See Nat'l Union, 939 S.W.2d at 141.

The Supreme Court of Texas has never expressly recognized an exception to the eight-corners rule. But it has acknowledged that other courts have drawn a “very narrow exception” allowing extrinsic evidence “only when relevant to an independent and discrete coverage issue, not touching on the merits of the underlying third-party claim.” GuideOne Elite Ins. Co. v. Fielder Road Baptist Church, 197 S.W.3d 305, 308 (Tex.2006); see also Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co., 279 S.W.3d 650, 654 (Tex.2009). In GuideOne, the court noted the Fifth Circuit's observation that if the Supreme Court of Texas were to recognize an exception to the eight-corners rule, it would likely do so only under circumstances where “it is initially impossible to discern whether coverage is potentially implicated and when the extrinsic evidence goes solely to a fundamental issue of coverage which does not overlap with the merits of or engage the truth or falsity of any facts alleged in the underlying case.” 197 S.W.3d at 308–09 (citing Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523, 531 (5th Cir.2004)) (emphasis in original). The GuideOne court resolved the case before it without expressly approving of this exception because the extrinsic evidence in that case was relevant to both coverage and the merits, so the exception did not apply. Id. at 309.

The exception was first articulated in International Service Insurance Co. v. Boll, 392 S.W.2d 158 (Tex.Civ.App.-Houston 1965, writ ref'd n.r.e.). In Boll, the insured's automobile-liability policy excluded coverage of “any claim arising from accidents which occur while any automobile is being operated by Roy Hamilton Boll.” Id. at 160. Roy was the insured's only son. Id. The suit brought against the insured alleged that the insured's son drove the automobile in question but did not name Roy expressly. Id. The parties later stipulated, however, that the son referred to in the petition was indeed Roy. Id. The court considered the stipulation and found the insurer owed no duty to defend, reasoning that an insurer “cannot be called on to defend a suit against the [insured] in which the petition upon its face alleges a state of facts not covered by but excluded from the provisions of the policy.” Id. In the GuideOne decision, the supreme court observed that the extrinsic evidence in Boll “went strictly to the coverage issue” and “did not contradict any allegation in the third-party claimant's pleadings material to the merits of that underlying claim.” GuideOne, 197 S.W.3d at 310. In other words, the insurer did not claim Roy Hamilton Boll was not liable for the accident. Rather, the insurer argued that even if he were, there were no potential underlying facts under which his liability could be covered by his father's policy. See Boll, 392 S.W.2d at...