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Colony Insurance Company v. Marty D. Price

April 29, 2013


The opinion of the court was delivered by: Sidney A. Fitzwater Chief Judge


In the court's prior memorandum opinion and order in this case, it raised sua sponte that plaintiff Colony Insurance Company ("Colony") is entitled to summary judgment declaring that it does not owe defendants Marty D. Price ("Price"), Mustang Town Property LP ("Mustang"), and T.O.M. GP, LLC ("T.O.M.") a duty to defend in a state court lawsuit (the "Underlying Suit"). See Colony Ins. Co. v. Price, 2013 WL 1155422, at *5 (N.D. Tex. Mar. 21, 2013) (Fitzwater, C.J.) ("Colony I"). The court did so without considering evidence extrinsic to the eight corners of the petition in the Underlying Suit (the "Petition") and the relevant commercial general liability policy (the "Policy"), and it afforded defendants an opportunity to respond. See id. at *4-5. Having considered the response, the court grants Colony's motion for summary judgment as to the duty to defend.


Because the applicable law and pertinent background facts are set out in Colony I, 2013 WL 1155422, at *1-2, the court will add only what is necessary to address defendants' opposition response.

Colony insured Tommy Sinclair d/b/a Mustang Entertainment ("Sinclair") under the Policy. Sinclair operated a nightclub where a patron allegedly was falsely imprisoned, assaulted, and thrown outside the nightclub. The next day, he died from his injuries. Following the patron's death, his estate and beneficiaries brought the Underlying Suit against several defendants, including Price, Mustang, and T.O.M. The dispute in the instant case is whether Colony is obligated to defend Price, Mustang, and T.O.M. in the Underlying Suit.

The only named insured of the Policy is Sinclair. This means that, to be covered under the Policy, defendants must qualify as additional insureds. The Policy includes as additional insureds, in relevant part, Sinclair's employees and (with certain limitations) any organization that Sinclair acquires or forms, other than a partnership, joint venture, or limited liability company, over which Sinclair maintained ownership or a majority interest, if there is no other similar insurance available to the organization.

According to the Petition, Price is Sinclair's attorney and was either an owner of the club or "act[ed] as the owner on behalf of [Sinclair]." P. App. 56, 58-59. The Petition also avers that Sinclair was Price's authorized agent. Mustang, a limited partnership, and T.O.M., a limited liability company, were formed by James Sinclair (another defendant in the Underlying Suit) and Price on December 31, 2009, which was more than one year after the incident that led to the patron's death. Id. at 52, 53. Based on such allegations, the court concluded that the Petition did not allege that defendants were Sinclair's employees or a covered organization. See Colony I, 2013 WL 1155422, at *3-4. The court therefore raised sua sponte that, even when applying the eight-corners rule to determine whether defendants are insureds, they are not covered under the Policy. In opposition to the court's conclusion, defendants maintain that the Petition alleges that they are Sinclair's employees.*fn1


Defendants contend that the Petition alleges that all defendants of the Underlying Suit were Sinclair's employees. As support for this assertion, they refer to the Petition's allegation that the decedent patron "was stopped from leaving the club by its employees and he was then falsely imprisoned in the club." P. App. 52 (emphasis added). They then cite a second allegation that states, "Defendants falsely imprisoned [decedent] against his will." Id. at 56. Defendants maintain that, because the Petition alleges that "employees" falsely imprisoned decedent, and then alleges that "Defendants" falsely imprisoned him, it alleges that all "Defendants" are employees. They contend that "[s]ince it was only 'employees' who falsely imprisoned the decedent, then the 'Defendants' referenced . . . must be employees." Ds. Br. 9. The court disagrees.

Even if the court construes the Petition to allege both that "employees" and "Defendants" falsely imprisoned decedent, the Petition still cannot be reasonably interpreted as alleging that "Defendants" are all employees. In fact, the Petition distinguishes between "Defendants" and "employees." For example, the portion of the Petition containing the allegation that "Defendants" falsely imprisoned decedent provides, in relevant part:

On the occasion in question, Defendants MARSHA MCKIE, INDIVIDUALLY AND D/B/A MUSTANG AMUSEMENTS, INC., THOMAS H. SINCLAIR, MUSTANG AMUSEMENTS, INC. D/B/A WISPERS CABARET, MUSTANG TOWN PROPERTY, L.P., T.O.M. GP, LLC, JAMES SINCLAIR, and MARTY D. PRICE and their respective agents, servants, and employees, who were at all times acting in the course and scope of their employment,*fn2 were liable for negligence, negligence per se, conspiracy, and gross negligence in the following particulars, to wit:

a. In Defendants' failing to prevent injury and harm to [decedent];

b. In Defendants' failing to take action to facilitate medical care being provided to [decedent], ...

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