Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

The Landing Council of Co-Owners v. Federal Insurance Co.

United States District Court, S.D. Texas, Houston Division

March 23, 2017

The Landing Council of Co-Owners, Plaintiff,
Federal Insurance Company, Defendant.


          Gray H. Miller United States District Judge

         Pending 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.

         I. Background

         This is 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.[1]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.

         On 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”).

         In the 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.[2] 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.

         Following 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[3] and the counterclaims against the Council in the Lloyds lawsuit.[4]Id. The state court later consolidated the Lloyds lawsuit with the Rafferty lawsuit. See App. 237-38.

         On May 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).

         The 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.

         The court will first consider the objection and motion to strike evidence and will then address the cross-motions for summary judgment.

         II. Legal Standards

         A. Motion for Summary Judgment

         A court 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).

         On 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)).

         B. Duty to Defend

         Under 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 ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.