United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND OPINION
Lee'H. R enthal Chief United States District Judge
Surplus Lines Insurance Company sued its insured, Seibert
Enterprises, seeking a declaratory judgment that it has no
duty to defend or indemnify Seibert in an underlying lawsuit.
The underlying suit alleged that Seibert, a roofing company,
failed to have a working fire extinguisher at hand when it
did “torch work” on a roof. The suit alleged that
Seibert's torch work ignited a fire that spread because
there was no working fire extinguisher. Starr Surplus
contends that Seibert's failure to have the extinguisher
relieves Starr Surplus of any duty to defend or indemnify.
parties filed cross-motions for summary judgment on whether
Starr Surplus has a duty to defend and indemnify in the
underlying lawsuit. (Docket Entry Nos. 22, 25). 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 Seibert's summary judgment motion,
(Docket Entry No. 25), and denies Starr Surplus's
cross-motion, (Docket Entry No. 22). The reasons are
explained in detail below. A status conference is set for
August 2, 2017 at 10:00 a.m. to address the remaining issues
in this case.
Surplus issued Seibert a Commercial General Liability policy.
(Docket Entry No. 1 at ¶ 10). In September 2016, Valley
Forge Insurance Company, as subrogee of ADB Commercial
Construction, Inc. and as assignee of James Coney Island,
Inc., sued Seibert in Texas state court. (Docket Entry No. 1,
Ex. A). ADB Commercial Construction had contracted with James
Coney Island, Inc., which owned hot-dog restaurants in
Houston, to remodel the restaurant's exterior.
(Id. at ¶ 9). James Coney Island and ADB
Commercial Construction entered into a second contract for
roof repairs. (Id.). ADB Commercial Construction in
turn subcontracted some of the roof work to Seibert.
(Id. at ¶ 10).
subcontract required Seibert to install a new base sheet to
the walls, apply asphalt primer to old field membrane as
needed, install flashing to cover the new modified primer,
and to “torch down” the new modified membrane or
modified bitumen product. (Id.).
“Torching” or “torch down” operations
include using a wand, an open flame, a torch, or other
electric or gas-powered heated appliance on a roof.
(Id.). Torching is often used to install or repair
flat roofs like the one on the James Coney Island restaurant.
(Id.). Valley Forge alleged that torching operations
on a roof are inherently dangerous, particularly in a South
Texas summer, and that the risk of fire is both high and
highly foreseeable. (Id. at ¶ 11).
Forge included the following allegations in its state-court
petition against Seibert:
On the morning of September 9, 2014, while performing
torching operations to the roof using a propane gas torch,
SEIBERT's personnel caused a fire to erupt by igniting
initially the fiberglass installation along the parapet wall,
which fire spread behind the wood framing and extended along
the parapet wall. The fire, with the resultant smoke and
water penetration, resulted in extensive damage to the JCI
restaurant, including extensive damage to the electrical
wiring, the HVAC system, and interior walls and ceiling
tiles, which caused the restaurant to close down for several
months with the resultant loss of at' least $443, 000 in
business income, with restoration expenses themselves
amounting to over $86, 000.00. There was also smoke and water
damage to restaurant food items as well as fire and related
damage, including discoloration of the brick exterior and
holes at various places that were necessary to be punched by
the Houston Fire Department in order to locate, confine and
extinguish the fire, to the interior ceilings, exterior
walls, and the roof itself.
(Id. at ¶ 12). Valley Forge also alleged that:
It was later determined that SEIBERT had not taken proper
precautions in performing the torching operations and in
containing the fire once it began. For example, once the fire
started the fire extinguisher that the SEIBERT work crew had
on the roof did not work. The crew had to frantically leave
the restaurant roof and attempt to extinguish the fire with a
hose. This delay in being able to contain the fire once it
started facilitated the spread of the fire on the roof, into
the interior walls, and elsewhere. SEIBERT did not have
available a working fire extinguisher to be used by those
skilled in torching operations, and neither did it have
readily available a charged hose, redundant fire
extinguishers, or other customary firefighting equipment that
would mitigate any fire loss. SEIBERT was solely responsible
for causing and in failing to contain the fire.
(Id. at ¶ 13). Valley Forge paid its insured,
ADB Commercial Construction, $529, 135.15 under the policy
for the losses from the fire and smoke damage to the
restaurant. (Id. at ¶ 17).
September 8, 2016, Valley Forge Insurance sued Seibert in
Texas state court, as the subrogee of ADB Commercial
Construction and the assignee of James Coney Island. (Docket
Entry No. 1, Ex. A). Valley Forge asserted common-law claims
for negligence and negligent trespass, strict liability,
breach of common-law express and implied warranties, and
breach of the construction subcontract between ADB Commercial
Construction and Seibert, as well as statutory violations of
the DTPA. Starr Surplus filed this federal diversity
jurisdiction coverage suit on November 23, 2016, seeking a
declaratory judgment that it has no duty to defend or
indemnify Seibert for the claims Valley Forge asserted
against it in the underlying suit. (Docket Entry No. 1).
Starr Surplus moved for a summary judgment that it had no
duty to defend. (Docket Entry No. 22). Seibert cross-moved
for a summary judgment that Starr Surplus owes Seibert a duty
to defend and indemnify in the underlying suit. (Docket Entry
No. 25). The court heard oral argument on the cross-motions.
(Docket Entry No. 31). The parties' motions and briefs,
counsels' arguments, the pleadings, 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. Haydel
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 ...