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Evanston Insurance Co. v. Alden Roofing Company, LLC

United States District Court, N.D. Texas, Dallas Division

May 30, 2017

EVANSTON INSURANCE COMPANY, Plaintiff,
v.
THE ALDEN ROOFING COMPANY, LLC, ET AL., Defendants.

          MEMORANDUM OPINION AND ORDER

          A. JOE FISH Senior United States District Judge.

         Before the court is the plaintiff's motion for summary judgment (docket entry 29). For the reasons stated below, the plaintiff's motion is granted.

         I. BACKGROUND

         The plaintiff, Evanston Insurance Company (“Evanston”), brought this action seeking a judgment declaring that it has no duty to defend the insured, Omar Soto (“Soto”) and The Alden Roofing Company, LLC (“Alden”), in a pending state court action.[1] See generally Evanston's Complaint and Request for Declaratory Judgment (“Complaint”) (docket entry 1). On May 8, 2015, Evanston issued a one-year general liability insurance policy to Soto, who owns a residential roofing business.[2]See id. ¶ 8 (citing Exhibit A). On July 13, 2015, Jose Valdez-Arevalo (“Valdez-Arevalo”) fell and was injured while working on a roof for Soto. Brief in Support of Its Motion for Summary Judgment (“Evanston's Brief”) at 4 (docket entry 25); Appendix in Support of Evanston's Motion for Summary Judgment (“Appendix”) at 62-63 (docket entry 27).

         The plaintiffs in the state court action, Valdez-Arevalo and his wife Carolina Garcia (“Garcia”), assert claims for negligence against Soto and are seeking monetary damages.[3] Id. at 65-66. Specifically, Valdez-Arevalo and Garcia assert that Soto failed to provide Valdez-Arevalo with a safe work area and the requisite safety equipment. See id. at 63-64. Soto and Alden have requested defense and indemnity from Evanston under the policy in the state court action. Complaint ¶ 9. Evanston agreed to defend Soto subject to a reservation of rights.[4] Id. ¶ 11.

         Evanston commenced this action on September 13, 2016, seeking a declaration that it has no duty to defend or indemnify Soto or Alden in the state court action. Id. ¶¶ 12-20. On February 22, 2017, Evanston filed the instant motion for summary judgment. Evanston's Motion for Summary Judgment (docket entry 29). The defendants did not file a response. The motion is now ripe for decision.

         II. ANALYSIS

         A. Legal Standards

         1. Summary Judgment

         Summary judgment is proper when the pleadings, depositions, admissions, disclosure materials on file, and affidavits, if any, “show[ ] 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(a), (c)(1).[5] A fact is material if the governing substantive law identifies it as having the potential to affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue as to a material fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.; see also Bazan ex rel. Bazan v. Hidalgo County, 246 F.3d 481, 489 (5th Cir. 2001) (“An issue is ‘genuine' if it is real and substantial, as opposed to merely formal, pretended, or a sham.”). To demonstrate a genuine issue as to the material facts, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Electric Industrial Company v. Zenith Radio Corporation, 475 U.S. 574, 586 (1986). The nonmoving party must show that the evidence is sufficient to support the resolution of the material factual issues in his favor. Anderson, 477 U.S. at 249 (citing First National Bank of Arizona v. Cities Service Company, 391 U.S. 253, 288-89 (1968)).

         When evaluating a motion for summary judgment, the court views the evidence in the light most favorable to the nonmoving party. Id. at 255 (citing Adickes v. S.H. Kress & Company, 398 U.S. 144, 158-59 (1970)). However, it is not incumbent upon the court to comb the record in search of evidence that creates a genuine issue as to a material fact. See Malacara v. Garber, 353 F.3d 393, 405 (5th Cir. 2003). The nonmoving party has a duty to designate the evidence in the record that establishes the existence of genuine issues as to the material facts. Celotex Corporation v. Catrett, 477 U.S. 317, 324 (1986). “When evidence exists in the summary judgment record but the nonmovant fails even to refer to it in the response to the motion for summary judgment, that evidence is not properly before the district court.” Malacara, 353 F.3d at 405.

         2. Duty to Defend

         Texas follows the “eight-corners” rule of insurance contract interpretation. See, e.g., GuideOne Elite Insurance Company v. Fielder Road Baptist Church, 197 S.W.3d 305, 308 (Tex. 2006). This rule instructs courts to determine whether an insurer has a duty to defend based solely on the language contained within the four corners of the insurance policy and the allegations contained within the four corners of the plaintiff's pleadings. Allstate Insurance Company v. Disability Services of the Southwest, Inc., 400 F.3d 260, 263 (5th Cir. 2005); National Union Fire Insurance Company of Pittsburgh, Pa. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997) (per curiam). If the pleadings allege facts stating a cause of action that potentially falls within the insurance policy's scope of coverage, the insurer has a duty to defend. Liberty Mutual Insurance Company v. Graham, 473 F.3d 596, 600 (5th Cir. 2006). The duty is determined based on the presumption that the allegations in the plaintiff's pleadings are true. Disability Services of the Southwest, 400 F.3d at 263; Fielder Road Baptist Church, 197 S.W.3d at 308. The insured bears the initial burden of showing that there is coverage, while the insurer bears the burden of showing that any exclusion in the policy applies. Trinity Universal Insurance Company v. Employers Mutual Casualty Company, 592 F.3d 687, 691-92 (5th Cir. 2010). “If an insurer has a duty to defend its insured against any portion of the underlying suit, then the insurer is required to defend the entire suit.” General Star Indemnity Company v. Gulf Coast Marine Associates, Inc., 252 S.W.3d 450, 455 (Tex. App.--Houston [14th Dist.] 2008, pet. denied).

         A pair of countervailing considerations guides the court's review of the facts alleged within the four corners of the underlying pleadings. On the one hand, “the insurer's duty to defend is limited to those claims actually asserted in an underlying suit” and does not extend to “a claim that might have been alleged but was not, or a claim that more closely tracks the true factual circumstances surrounding the third-party claimant's injuries but which, for whatever reason, has not been asserted.” Pine Oak Builders, Inc. v. Great American Lloyds Insurance Company, 279 S.W.3d 650, 655-56 (Tex. 2009). “If the petition only alleges facts excluded by the policy, the insurer is not required to defend.” Id. at 655 (citation and internal quotation marks omitted). The court must not “(1) read facts into the pleadings, (2) look outside the pleadings, or (3) imagine factual scenarios which might trigger coverage.” Gore Design Completions, Limited v. Hartford Fire Insurance Company, 538 F.3d 365, 369 (5th Cir. 2008) (citation and internal quotation marks omitted). On the other hand, the factual allegations that are contained within the pleadings must be liberally construed: “If the petition does not state facts sufficient to bring the case clearly within or outside the insured's coverage, the insurer is obligated to defend if potentially there is a claim under the complaint within the coverage of the insured's policy.” Gulf Coast Marine Associates, 252 S.W.3d at 454 (citing Merchants Fast Motor Lines, 939 S.W.2d at 141) (emphasis in original). A court may draw reasonable inferences from the pleadings that trigger an insurer's duty to defend, id. at 456, and doubts about whether “‘the allegations of a complaint against the insured . . . [are] sufficient to compel the insurer to defend the action . . . will be resolved in [the] insured's favor.'” Merchants Fast Motor Lines, 939 S.W.2d at 141 (quoting Heyden Newport Chemical Corporation v. Southern General Insurance Company, 387 S.W.2d 22, 26 (Tex. 1965)). The net result is that insurers are advised to chart a cautious course: “When in doubt, defend, ” Gore Design Completions, 538 F.3d at 369.

         B. Application

         1. Whether Evanston Has a Duty to Defend Soto

         Evanston contends that the policy specifically excludes coverage for Valdez-Arevalo and Garcia's claims against Soto. Evanston's Brief at 7. The policy states that the following is excluded:

“Bodily injury”[6] to:
(1) An “employee”[7], “volunteer worker” or “temporary worker”[8] of the Named Insured[9] arising out of and in the course of:
(a) Employment by the Named Insured; or
(b) Performing duties related to the conduct of the Named Insured's business;
(2) The spouse, partner, child, parent, brother, sister or any other relative of that “employee”, “volunteer worker” or “temporary worker” as a consequence of Paragraph (1) above.
This exclusion applies whether the insured may be liable as an employer or in any other capacity and to an obligation to share damages with or repay someone else who ...

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