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Inc. v. Western World Insurance Co.

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

September 13, 2017

2200 WEST ALABAMA, INC., Plaintiff,


          Kenneth M. Hoyt United States District Judge


         Before the Court are the plaintiff's, 2200 West Alabama, Inc., (“the plaintiff”), motion for summary judgment [DE#10] and the response and cross-motion for summary judgment of the defendant's, Western World Insurance Company, [DE#11]. Also before the Court are the reply and response of the plaintiff to the defendant's cross-motion [DE# 12] and the defendant's reply in support of its cross-motion [DE# 13]. The Court has reviewed the parties' papers and submissions and determines that the plaintiff's motion should be granted and the defendant's cross-motion should be denied.


         The defendant issued its “Commercial General Lines” insurance Policy Number NPP1356289, effective December 15, 2013, for one-year and thereafter renewed the coverage in Policy Number NPP1402213 for an additional year during which term(s), the plaintiff enjoyed liability coverage for “sums that [the plaintiff] becomes legally obligated to pay for damages because of . . . personal and advertising injur[ies].” The Policy also obligated the defendant to . . . “defend [the plaintiff] against any suit” . . . that seeks damages covered by the terms of the Policy.

         In 2014, the plaintiff was sued in state court, concerning a commercial lease where the negotiations went awry and the tenant, Dubrow Partners (“Dubrow”) sought to recover damages against the plaintiff and its prime tenant, Soray, LLC, for failure to timely complete negotiating a lease agreement in order that Dubrow might take physical possession and open its restaurant. The lease was not consummated and Dubrow never took physical possession of the space.

         After being served with a complaint, in an underlying suit, the plaintiff tendered the suit to the defendant claiming that, under the terms of the Policy, the defendant owed the plaintiff a duty to defend the suit brought by Dubrow. The defendant disclaimed any duty owed to the plaintiff while arguing that Dubrow's claim(s) were not a “covered” event because Dubrow never physically moved into the premises. Therefore, the defendant refused to defend the plaintiff in the underlying suit.


         The Policy that is the subject of this suit covers “personal and advertising injury” and, in this respect defines, in relevant part, the scope of coverage and define injury as follows:

. . . [I]njury . . . arising out of . . . the wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or promises that a person occupies, committed by or on behalf of its owner, landlord or lessor.

See [DE 10-1, p. 38-39]. The defendant contends that the plaintiff cannot establish that Dubrow was wrongfully evicted, that another party wrongfully enter[ed] the premises or, that an invasion occurred circumventing Dubrow's right of occupancy of the premises. The defendant also asserts that the plaintiff knowingly violated Dubrow's right to take occupancy and thereby breached the contract. Therefore, the defendant asserts, the plaintiff's conduct absolves the defendant of any contractual duty to defend the suit.

         The plaintiff asserts that at the time that negotiations ceased, Dubrow had a right of occupancy. It asserts as well that physical occupancy of the premises is not required by the Policy(s). The question that controls coverage, contends the plaintiff, is whether Dubrow gained a “right of private occupancy.” In support of its claim that Dubrow gained that right, the plaintiff points to the claims of Dubrow in the underlying suit. There, Dubrow asserts that the plaintiff interfered with its “right of occupancy”. To the defendant's claim that even if Dubrow gained such a right coverage is excluded, the plaintiff asserts that Dubrow's assertions against the plaintiff in the underlying suit do not trigger the Exclusion provision without proof. Continuing, the plaintiff asserts that the defendant has failed to proffer any evidence that it violated the lease agreement or otherwise breached it.


         The parties agree that Texas law applies, and Texas law generally endorses the eight-corners rule. “The eight-corners rule provides that when an insured is sued by a third party, the liability insurer is to determine its duty to defend solely from the terms of the policy and the pleadings of the third-party claimant. Resort to evidence outside the four corners of these two documents is generally prohibited.” GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305, 307 (Tex. 2006). “If the [claimant's] petition only alleges facts excluded by the policy, the insurer is not required to defend.” Fidelity & Guar. Ins. Underwriters, Inc. v. McManus, 633 S.W.2d 787, 788 (Tex. 1982). Further, “[t]he court may not read ...

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