United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND ORDER
Rosenthal, Chief United States District Judge
Corporation, LLC sued Westchester Surplus Lines Insurance
Company, alleging a breach of Westchester's duty to
defend in an underlying lawsuit, a breach of
Westchester's contractual duty to defend and indemnify,
and violations of Westchester's duty under the Texas
Insurance Code to promptly pay claims.
parties cross-moved for partial summary judgment on the
duty-to-defend claim. (Docket Entry Nos. 7, 9). Based on a
careful review of the pleadings; the motions, responses, and
reply; the record; the arguments of counsel; and the relevant
law, the court grants Westchestert's motion for partial
summary judgment, (Docket Entry No. 9), and denies HCC
Corporation's cross-motion, (Docket Entry No. 7), for the
reasons explained in detail below. A status conference is set
for July 14, 2017 at 2:00 p.m. in Courtroom 11-B.
issued an Employed Lawyers' Professional Liability Policy
to Heritage-Crystal Clean, Incorporated. (Docket Entry No.
lat¶5). In October 2016, Florida Gas Transmission, LLC
filed a second amended petition in Florida Gas
Transmission Co., LLC v. FCC Environmental, LLC, et
al.; Cause No. 2014-68677, in the 11th Judicial District
Court of Harris County, Texas. (Id., Ex. A). Florida
Gas Transmission Company had sued FCC Environmental in that
action. Heritage Crystal Clean, LLC purchased FCC
Environmental and changed the name to HCC Corporation, LLC,
which is the plaintiff in this federal insurance coverage
suit. (Docket Entry No. 7, Ex. A at ¶ 2). Heritage
Crystal Clean, LLC is a wholly owned subsidiary of
Heritage-Crystal Clean, Inc., the named insured in the
Westchester insurance policy at issue. (Docket Entry No. 14,
Ex. 1 at ¶ 3).
underlying lawsuit, Florida Gas Transmission alleged that FCC
Environmental breached an agreement to defend and indemnify
Florida Gas Transmission in yet another lawsuit. This second
lawsuit was filed in state court by Oscar Villegas for
work-related personal injuries. (Docket Entry No. 1, Ex. A).
Florida Gas Transmission and FCC Environmental had an
Environmental Services Agreement, under which FCC
Environmental would provide "firac tank cleaning and
transportation services" for the 5, 500 miles of Florida
Gas Transmissions's natural-gas pipelines. (Id.
at ¶¶ 11-13). In May 2012, Florida Gas Transmission
asked FCC Environmental to arrange to deliver a firac tank
and clean the tank after it was removed from the site.
(Id. at ¶¶ 14-15). FCC Environmental hired
a subcontractor to help perform the work. (Id. at
¶ 16). Oscar Villegas was an employee of that
subcontractor. (Id. at ¶ 17). He was injured in
an explosion while he was cleaning a firac tank.
(Id.). Villegas sued Florida Gas Transmission and
FCC Environmental in the underlying personal-injury suit.
underlying suit by Florida Gas Transmission against FCC
Environmental at issue, Florida Gas Transmission alleged that
the Environmental Services Agreement required FCC
Environmental to provide a defense and indemnity for any
claims arising out of the work FCC Environmental performed
under the Agreement, and that it had refused to do so.
(Id. at ¶¶ 18-20).
Gas Transmission also alleged that FCC Environmental had
breached an email agreement to "immediately demand a
defense of Florida Gas Transmission from FCC's and
[Heritage-Crystal Clean, Inc.]'s insurance carriers in
connection with the underlying litigation brought by Mr.
Villegas." (Id. at ¶ 28).
Corporation tendered the underlying suit to Westchester and
demanded a defense and indemnity. (Docket Entry No.
lat¶7). When Westchester refused, HCC Corporation filed
this suit for a declaratory judgment that Westchester has a
duty to defend and indemnify it in the underlying suit.
(Id. at ¶¶ 13-17). HCC Corporation alleges
that Westchester's failure to defend and indemnify
breached its contractual duties and violated the Texas
Insurance Code. (Id. at ¶¶ 18-31).
Corporation moved for summary judgment seeking a declaratory
judgment on the duty-to-defend claim. (Docket Entry No. 7).
Westchester cross-moved for a declaratory judgment that it
did not owe a duty to defend. (Docket Entry No. 9). The
parties' arguments and the record evidence are analyzed
under the applicable legal standards.
The Legal Standards
judgment is required when 'the 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.'" Trent
v. Wade, 776 F.3d 368, 376 (5th Cir. 2015) (quoting FED.
R. Civ. P. 56(a)). "A genuine dispute of material fact
exists when the ' evidence is such that a reasonable jury
could return a verdict for the nonmoving party.'"
Nola Spice Designs, LLC v. Hayde I Enters., Inc. ,
783 F.3d 527, 536 (5th Cir. 2015) (quoting Anderson v.
Liberty Lobby, 477 U.S. 242, 248 (1986)). "The
moving party 'bears the initial responsibility of
informing the district court of the basis for its motion, and
identifying those portions of [the record] which it believes
demonstrate the absence of a genuine issue of material
fact.'" Id. (quoting EEOC v. LHC Grp.,
Inc., 773 F.3d 688, 694 (5th Cir. 2014)); see also
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
the non-movant bears the burden of proof at trial, the movant
may merely point to the absence of evidence and thereby shift
to the non-movant the burden of demonstrating by competent
summary judgment proof that there is an issue of material
fact warranting trial." Id. (quotation marks
omitted); see also Celotex, 477 U.S. at 325.
Although the party moving for summary judgment must
demonstrate the absence of a genuine issue of material fact,
it does not need to negate the elements of the
nonmovant's case. Boudreaux v. Swift Transp.
Co.,402 F.3d 536, 540 (5th Cir. 2005). "A fact is
'material' if its resolution in favor of one party
might affect the outcome of the lawsuit under governing
law." Sossamon v. Lone Star State of Texas, 560
F.3d 316, 326 (5th Cir. 2009) (quotation omitted). "If
the moving party fails to meet [its] initial burden, the
motion [for summary judgment] must be ...