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Allied Property and Casualty Insurance Co. v. Clean N Go, LLC

United States District Court, E.D. Texas, Sherman Division

November 20, 2017




         Pending before the Court is Plaintiff Allied Property and Casualty Insurance Company's Motion for Summary Judgment (Dkt. #22). After considering the motion, the responses, and the relevant pleadings, the Court finds that Plaintiff's motion is denied.


         Defendant Clean N Go, LLC (“Clean N Go”) is the named insured under a policy of insurance issued by Plaintiff Allied Property and Casualty Insurance Company (“Allied”), which is titled “Texas Business Owners Policy, ” and is numbered ACP BPAC7225400538 (the “Policy”). The Policy has a policy period of November 7, 2013, to November 7, 2014.

         On June 16, 2014, Hector Amaya (“Amaya”) was working for Clean N Go, drying vehicles at an automated car wash. Amaya claims that as he was drying a customer's vehicle that was parked in front of the automated car wash, another vehicle that was exiting the car wash pinned Amaya between the two vehicles. On February 11, 2016, a lawsuit was filed against Clean N Go in Denton County, Texas, District Court, styled Alvarez, et al. v. Spencer, et al., No. 16-01118-431, which asserted claims of negligence and gross negligence against Clean N Go (the Amaya litigation” or “underlying litigation”). Amaya and Elizabeth Alvarez (“Alvarez”), as next friend of Amaya, assert that Amaya suffered injuries due to Clean N Go's failure to provide and maintain a place of employment that is reasonably safe.

         Allied commenced this action on February 16, 2017, seeking a declaration that it has no duty to defend Clean N Go (Dkt. #1). On August 7, 2017, Allied filed the instant Motion for Summary Judgment (Dkt. #22). On August 21, 2017, Defendant Clean N Go filed its response (Dkt. #24). Defendants Amaya and Alvarez joined in on the response (Dkt. #25). On August 30, 2017, Allied filed its reply (Dkt. #28). On September 6, 2017, Defendants filed their sur-reply (Dkt. #30).


         The purpose of summary judgment is to isolate and dispose of factually unsupported claims or defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). Summary judgment is proper if the pleadings, the discovery and disclosure materials on file, and any affidavits “[show] that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A dispute about a material fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The trial court must resolve all reasonable doubts in favor of the party opposing the motion for summary judgment. Casey Enters., Inc. v. Am. Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981) (citations omitted). The substantive law identifies which facts are material. Anderson, 477 U.S. at 248.

         The party moving for summary judgment has the burden to show that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Id. at 247. If the movant bears the burden of proof on a claim or defense on which it is moving for summary judgment, it must come forward with evidence that establishes “beyond peradventure all of the essential elements of the claim or defense.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). But if the nonmovant bears the burden of proof, the movant may discharge its burden by showing that there is an absence of evidence to support the nonmovant's case. Celotex, 477 U.S. at 325; Byers v. Dallas Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000). Once the movant has carried its burden, the nonmovant must “respond to the motion for summary judgment by setting forth particular facts indicating there is a genuine issue for trial.” Byers, 209 F.3d at 424 (citing Anderson, 477 U.S. at 248-49). The nonmovant must adduce affirmative evidence. Anderson, 477 U.S. at 257. The Court must consider all of the evidence but refrain from making any credibility determinations or weighing the evidence. See Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007).


         Allied asserts it is entitled to summary judgment because the claims in the underlying litigation are not covered under the Policy because the policy includes an “Employer's Liability” exclusion that disclaims coverage for bodily injury to an employee acting in the course and scope of his employment for the insured. Defendants argue that the Policy expressly does not exclude all employees, specifically “temporary workers.” Defendants contend that looking at the face of the state court petition (the “Petition”), it is unclear whether Amaya was an “employee” or “temporary worker” and Allied had to conclusively show that Amaya was not a “temporary worker” on the face of the Petition.

         The Court must “apply Texas law as interpreted by Texas state courts.” Gilbane Bldg. Co. v. Admiral Ins. Co., 664 F.3d 589, 593 (5th Cir. 2011) (quoting Mid-Continent Cas. Co. v. Swift Energy Co., 206 F.3d 487, 491 (5th Cir. 2000)). Under Texas law, “insurance policies are construed according to common principles governing the construction of contracts, and the interpretation of an insurance policy is a question of law for a court to determine.” Am. Int'l Specialty Lines Ins. Co. v. Rentech Steel LLC, 620 F.3d 558, 562 (5th Cir. 2010). The Court must interpret the policy to discern the intention of the parties as it is expressed in the policy. Id. “Whether a contract is ambiguous is [also] a question of law.” Id. (citing Kelley-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex. 1998)). An ambiguity is not present simply because the parties advance conflicting interpretations, but exists “only if the contractual language is susceptible to two or more reasonable interpretations.” Id. (quoting Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003)). “Effectuating the parties' expressed intent is [the Court's] primary concern.” Don's Bldg. Supply, Inc. v. OneBeacon Ins. Co., 267 S.W.3d 20, 23 (Tex. 2008). “No one phrase, sentence, or section [of the policy] should be isolated from its setting and considered apart from the other provisions.” Id. (quoting Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 134 (Tex. 1994)). A policy's terms should be given their plain meaning, without inserting additional provisions in the contract. Id.

         “Under Texas law, an insurer may have two responsibilities relating to coverage-the duty to defend and the duty to indemnify.” Gilbane, 664 F.3d at 594 (citing D.R. Horton - Tex., Ltd. v. Markel Int'l Ins. Co., 300 S.W.3d 740, 743 (Tex. 2009)). The duties to defend and indemnify are distinct, and one may exist without the other. Id.; see also Colony Ins. Co. v. Peachtree Const., Ltd., 647 F.3d 248, 253-54 (5th Cir. 2011). An insurer's duty to defend is determined by the application of the “eight-corners rule.” GuideOne Elite Ins. Co. v. Fielder Road Baptist Church, 197 S.W.3d 305, 308 (Tex. 2006). “The rule takes its name from the fact that only two documents are ordinarily relevant to the determination of the duty to defend: the policy and the pleadings of the third-party claimant.” Id. (citing King v. Dallas Fire Ins. Co., 85 S.W.3d 185, 187 (Tex. 2002)). “[T]he duty to defend does not rely on the truth or falsity of the underlying allegations; an insurer is obligated to defend the insured if the facts alleged in the petition, taken as true, potentially assert a claim for coverage under the insurance policy.” Colony, 647 F.3d at 253 (citing GuideOne, 197 S.W.3d at 308). All doubts regarding the duty to defend are resolved in favor of the duty, and the pleadings are construed liberally. Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487, 491 (Tex. 2008). If a complaint potentially includes a covered claim, the insurer must defend the entire suit. Id. (citation omitted).

         In determining whether an insurer has a duty to defend, the policyholder “bears the initial burden of showing that the claim [in the underlying action] is potentially within the insurance policy's scope of coverage.” Harken Exploration Co. v. Sphere Drake Ins. PLC, 261 F.3d 466, 471 (5th Cir. 2001) (citation omitted). “However, it is the insurer that carries the burden of establishing that ‘the plain language of a policy exclusion or limitation allows the insurer to avoid coverage of all claims, also within the confines of the eight corners rule.” Regency Title Company, LLC v. Westchester Fire Ins., No. 4:11-cv-390, 2013 WL 6054820, at *4 (E.D. Tex. Nov. 15, 2013) (citing Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523, 528 (5th Cir. 2004)). In addition, “[e]xclusions [in the insurance policy] are narrowly construed, and all reasonable inferences must be drawn in the insured's favor.” Gore Design Completions, Ltd. v. Hartford Fire Ins. Co., 538 F.3d 365, 370 (5th Cir. 2008). An exclusion is ambiguous only if it is clearly susceptible to multiple reasonable interpretations. Regency Title Company, 2013 WL 6054820, at *4 (citing Carolina Cas. Ins. Co. v. Sowell, 603 F.Supp.2d 914, 923 (N.D. Tex. 2009)). “[The] rules favoring the insured . . . are applicable only when there is an ambiguity in the policy; if the exclusions in question are susceptible to only one reasonable interpretation, the [the rules favoring the insured] do not apply.” Id. (quoting Am. States Ins. Co. v. Bailey, 133 F.3d 363, 369 (5th Cir. 1998)). “Courts should not strain to find an ambiguity, if, in doing so, they defeat the probable intentions of the parties, even though the insured may suffer an apparent harsh result as a consequence.” Ohio Cas. Group of Ins. Companies v. Chavez, 942 S.W.2d 654, 658 (Tex. App.-Houston [14th Dist.] 1997, writ denied). “Furthermore, if a policy provision is susceptible to only one reasonable interpretation, the court is obligated to give the words their ‘plain meaning' even if this means coverage is denied.” Regency Title Co., 2013 WL 6054820, at *4 (citing Evanston Ins. Co. v. Legacy of Life, Inc., 645 F.3d 739, 744-45 (5th Cir. 2011)).

         Four ...

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