United States District Court, S.D. Texas, Houston Division
MEMORANDUM OPINION & ORDER
H. Miller United States District Judge
before the court is a motion for partial summary judgment
filed by plaintiff The Landing Council of Co-Owners (the
“Council”) (Dkt. 22) and a motion for summary
judgment filed by defendant Federal Insurance Company
(“Federal”) (Dkt. 23). Federal also files an
objection and a motion to strike the Council's summary
judgment evidence (Dkt. 25 at 15-16). Having considered the
motions, objection, related filings, and applicable law, the
court is of the opinion that the Council's motion for
partial summary judgment (Dkt. 22) should be GRANTED, and
Federal's motion for summary judgment (Dkt. 23) should be
DENIED. Additionally, Federal's objection (Dkt. 25 at 15)
should be DENIED, and Federal's motion to strike (Dkt. 25
at 16) should be DENIED AS MOOT.
an insurance coverage dispute on the defendant's duty to
defend the insured plaintiff. The Council is a
homeowners' association that managed and maintained a
condominium development called “The Landing” in
El Lago, Texas. Dkt. 13. Federal issued a ForeFront Portfolio
for Not-for-Profit Organizations insurance policy (policy
number 8208-8151) (the “Policy”) to the Council
for the policy period between July 27, 2009, and July 27,
2010. Dkt. 22, Ex. 3, App. 6.The Policy included directors and
officers liability and entity liability coverage with a
maximum aggregate limit of liability of $1, 000, 000.
Id. In addition, Federal issued a Chubb Commercial
Excess and Umbrella Insurance Policy (policy number
7957-94-92) to provide coverage for claims in excess of the
Policy's $1, 000, 000 limit. Dkt. 13.
September 9, 2008, The Landing was damaged during Hurricane
Ike. Dkts. 22, 23. Over the next two years, several
condominium owners filed lawsuits against the Council in
state court (the “Underlying Lawsuits”), three of
which were the subject of an earlier duty to defend lawsuit.
See Landing Council of Co-Owners v. Fed. Ins. Co.,
No. H-CV-12-2760, 2013 WL 4787954 (S.D. Tex. Sept. 9, 2013)
(Miller, J.) (the “First Coverage Lawsuit”).
First Coverage Lawsuit, the Council alleged that Federal
wrongfully denied coverage for the Council's defense of
the Underlying Lawsuits. Id. Federal moved for
summary judgment, arguing that the property damage exclusion
in the Policy precluded coverage for all of the Underlying
Lawsuits. Id. The court held that Federal had a duty
to defend in one of the three Underlying Lawsuits filed
against the Council, the Bull Capital
Lawsuit. Id. The court found that the
property damage exclusion did not apply to the claims of
breach of fiduciary duty and failure to make assessments for
common expenses, because these claims appeared to have arisen
independently of the hurricane property damage. Landing
Council, 2013 WL 4787954, at *7-8.
the court's ruling in the First Coverage Lawsuit, the
parties settled. Dkt. 13. But they agreed that “nothing
in the settlement constituted a release or waiver of [the
Council's] right to seek defense or coverage for any new
pleadings filed in the Rafferty suit . . . or
Federal's right to deny coverage or raise coverage
defenses to such pleading.” See App. at 1. By
the terms of the settlement, the Council could still raise a
claim that Federal has a duty to defend based on pleadings
filed in the remaining Underlying Lawsuits, including
pleadings filed after the Second Amended Petition in the
Rafferty lawsuit and the counterclaims against the
Council in the Lloyds lawsuit.Id. The
state court later consolidated the Lloyds lawsuit
with the Rafferty lawsuit. See App. 237-38.
2, 2013, the plaintiffs in the Rafferty lawsuit
filed their Third Amended Original Petition. See
App. 120-68. On May 22, 2013, the Rafferty
plaintiffs filed their Fourth Amended Original Petition.
See App. 169-218. Subsequently, the
Rafferty plaintiffs filed their First and Second
Supplements to their Fourth Amended Original Petition.
See App. 219-236. On December 24, 2014, the
Rafferty plaintiffs filed their Fifth Amended
Original Petition, which contains substantially the same
allegations as the Third, Fourth, and Supplemental Petitions
and thus was not included in the parties' stipulated
appendix. See Dkt. 13 at 8. The plaintiffs asserted
the following causes of action against the Council: breach of
fiduciary duty, negligence, gross negligence, tortious
interference with contract, slander of title, damage to
title, breach of contract, and conspiracy. See App.
206 (Fourth Amended Original Petition).
Council moves for partial summary judgment and seeks
declaratory judgment on Federal's duty to defend the
remaining Underlying Lawsuits (the now-consolidated
Rafferty and Lloyds lawsuits). Dkt. 22;
see App. 237-38. The Council alleges that Federal
failed to defend the Underlying Lawsuits or reimburse the
Council for the cost of defense. Dkt. 13. Federal also moves
for summary judgment for a declaration that it has no duty to
defend. Dkt. 23. Federal argues that the Policy's
property damage exclusion applies to all of the
Rafferty claims against Council, even after the
Rafferty plaintiffs filed amended pleadings and
filed supplements. Id. Furthermore, Federal raises
an objection to the Council's evidence used in its motion
for partial summary judgment and moves to strike an
affidavit. Dkt. 25 at 15-16.
court will first consider the objection and motion to strike
evidence and will then address the cross-motions for summary
Motion for Summary Judgment
shall grant summary judgment when a “movant shows 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(c). “[A] fact is genuinely in dispute
only if a reasonable jury could return a verdict for the
non-moving party.” Fordoche, Inc. v. Texaco,
Inc., 463 F.3d 388, 392 (5th Cir. 2006). The moving
party bears the initial burden of demonstrating the absence
of a genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548 (1986). If
the party meets its burden, the burden shifts to the
non-moving party to set forth specific facts showing a
genuine issue for trial. Fed.R.Civ.P. 56(e). The court must
view the evidence in the light most favorable to the
non-movant and draw all justifiable inferences in favor of
the non-movant. Envtl. Conservation Org. v. City of
Dall., Tex., 529 F.3d 519, 524 (5th Cir. 2008).
cross-motions for summary judgment, [the court] review[s]
each party's motion independently, viewing the evidence
and inferences in the light most favorable to the nonmoving
party.'” Amerisure Ins. Co. v. Navigators Ins.
Co., 611 F.3d 299, 304 (5th Cir. 2010) (quoting Ford
Motor Co. v. Tex. Dep't of Transp., 264 F.3d 493,
498 (5th Cir. 2001)).
Duty to Defend
Texas law, courts follow the “eight corners” rule
to determine whether an insurer has a duty to defend.
Federated Mut. Ins. Co. v. Grapevine Excavation
Inc., 197 F.3d 720, 723 (5th Cir. 1999). “Under
this rule, courts compare the words of the insurance policy
with the allegations of the plaintiff's complaint to
determine whether any claim asserted in the pleading
is potentially within the policy's coverage.”
Id. “The duty to defend analysis is not
influenced by facts ascertained before the suit, developed in
the process of litigation, or by the ultimate outcome of the
suit.” Primrose Operating Co. v. Nat'l Am. Ins.
Co., 382 F.3d 546, 552 (5th Cir. 2004). Rather, it is
determined by examining the eight corners of the pleadings
and the policy. Zurich Am. Ins. Co. v. Nokia, Inc.,
268 S.W.3d 487, 491 (Tex. 2008). All doubts with regard to
the duty to defend are resolved in favor of the duty.
Id. Courts applying the eight corners rule
“give the allegations in the petition a liberal
interpretation.” Nat'l ...