United States District Court, W.D. Texas, San Antonio Division
RODRIGUEZ, UNITED STATES DISTRICT JUDGE
date, the Court considered the status of the above
captioned-case. After careful consideration, the Court hereby
GRANTS Defendant's Motion for Summary Judgment (Docket
no. 19) and DENIES Plaintiff's Counter-Motion for Partial
Summary Judgment (Docket no. 21).
I. Factual Background
13, 2017, Plaintiff Richard Brett Frederking filed his
Original Petition in the 408th Judicial District Court of
Bexar County, Texas, bringing claims related to commercial
insurance coverage for an automobile collision that was the
subject of an underlying lawsuit. Docket no. 1-2. On July 18,
2017, Defendant Cincinnati Insurance Company
(“Cincinnati”) removed the case to this Court on
the basis of diversity jurisdiction. Docket no. 1.
September 14, 2014, Plaintiff allegedly suffered serious
personal injuries in a motor vehicle collision that was
caused by Carlos Xavier Sanchez. Docket no. 1-2 at 3. Sanchez
was allegedly operating a motor vehicle owned by his
employer, Advantage Plumbing Services
(“Advantage”), at the time of the collision.
Id. Advantage was the named insured under a Business
Auto Coverage insurance policy issued by Defendant that was
in full force and effect at the time of the collision.
filed suit against Sanchez and Advantage in state court in
the case Richard Brett Frederking v. Carlos Xavier
Sanchez and Advantage Plumbing Services, Ltd., No.
2015-CI-060614 (224th Dist. Ct., Bexar County, Tex. Apr. 10,
2015) (the “Underlying Lawsuit”). In that case,
Plaintiff alleged Sanchez drove while intoxicated, failed to
yield the right-of-way at an intersection, and struck
Plaintiff's vehicle. Docket no. 21 at 8. Sanchez was
arrested after the collision, taken to the Bexar County jail,
later pled guilty to criminal charges of driving while
intoxicated, and admitted his actions or inactions were the
cause of the collision. Docket no. 19 at 15.
Plaintiff alleged that at the time of the wreck, Sanchez was
operating a vehicle owned by and assigned to him by his
employer, Advantage, Plaintiff sued both Sanchez and
Advantage. Plaintiff brought claims for negligence, gross
negligence, respondeat superior, and negligent entrustment.
Defendant defended Sanchez and Advantage in the Underlying
Lawsuit under a reservation of rights. The trial court
granted Advantage partial summary judgment and dismissed the
respondeat superior claim, finding that Sanchez did not act
in the course and scope of his employment for Advantage at
the time of the collision. The jury considered claims of
negligence and gross negligence against Sanchez and a claim
of negligent entrustment against Advantage. Docket no. 19-6.
The jury found that Sanchez was negligent and that Advantage
was negligent under the theory of negligent entrustment.
Id. The jury also found that Sanchez was grossly
negligent. Id. Plaintiff was awarded $137, 025.00 in
compensatory damages and interest, jointly and severally,
against Sanchez and Advantage. Docket no. 19-1. Plaintiff was
further awarded $207, 550.00 in punitive damages with
interest against Sanchez. Id.
paid Plaintiff an amount of $153, 086.94 in satisfaction of
the full amount of the compensatory damages awarded against
Advantage and Sanchez jointly and severally. Docket no. 19-6.
Plaintiff then fully released Advantage from the judgment
against it. Id. Plaintiff also partially released
Sanchez from the compensatory portion of the judgment, but
not from the punitive damages portion resulting from the
finding of gross negligence. Id.
filed this action after he attempted to collect the award for
punitive damages in the Underlying Lawsuit from Defendant.
Plaintiff alleges he is a third-party beneficiary under the
insurance policy, and although he has repeatedly demanded
that Defendant pay him the punitive damages on behalf of
Sanchez, Defendant refuses to pay that award. Docket no. 1-2
at 4. Plaintiff brings a claim for breach of contract against
Defendant for failure to pay the punitive damages given the
relevant insurance policy. Id. Plaintiff also seeks
a declaration that Sanchez was operating a “covered
vehicle” under the insurance policy with
Advantage's permission at the time of the collision, that
Sanchez was a permissive user and additional insured under
the insurance policy, and that Defendant is contractually
obligated to pay the punitive damage award from the
Underlying Lawsuit. Id. at 5.
filed its answer denying that Sanchez had Advantage's
permission to be operating the vehicle at the time of the
collision and denying it is obligated to pay the punitive
damages award. Docket no. 2. Defendant also asserted a
counterclaim, seeking a declaration of its obligations under
the insurance policy to indemnify Sanchez in the Underlying
Lawsuit. Id. at The insurance policy under which
Defendant provided Advantage coverage has two relevant
sections. First, the policy addresses Commercial Auto
Coverage (the “Auto Policy”), which carries a
per-occurrence limit of $1, 000, 000. Language in the Auto
Policy speaks to who is covered and defines certain terms
under the policy:
Throughout this policy the words “you” and
“your” refer to the Named Insured shown in the
Declarations. The words “we”, “us”
and “our” refer to the Company providing this
. . .
II - LIABILITY COVERAGE
pay all sums an “insured” legally must pay as
damages because of “bodily injury” or
“property damage” to which this insurance
applies, caused by an “accident” and resulting
from the ownership, maintenance or use of a covered
. . .
Who is an Insured?
following are “insureds”:
You for any covered “auto”.
Anyone else while using with your permission a covered
“auto” you own, hire or borrow except:
The owner or anyone else from whom you hire or borrow a
covered “auto”. This exception does not apply if
the covered “auto” is a “trailer”
connected to a covered “auto” you own.
Your “employee” if the covered “auto”
is owned by that “employee” or a member of his or
Someone using a covered “auto” while he or she is
working in a business of selling, servicing, repairing,
parking or storing “autos” unless that business
Anyone other than your “employees”, partners (if
you are a partnership), members (if you are a limited
liability company), or a lessee or borrower of any of their