Appeal from the 239th District Court Brazoria County, Texas
Trial Court Case No. 94416-CV
consists of Justices Keyes, Higley, and Landau.
V. Keyes Justice
permissive interlocutory appeal, appellee, RiceTec, Inc.,
brought claims for breach of contract and breach of the
Prompt Payment Act against appellant, StarNet Insurance
Company, arising out of StarNet's failure to provide
RiceTec a defense in a property damage lawsuit filed against
RiceTec. The parties filed cross motions for summary judgment
on the question of whether the insurance policy StarNet
issued to RiceTec covered the lawsuit filed against RiceTec,
such that StarNet owed RiceTec a duty to defend. The trial
court rendered an interlocutory summary judgment order ruling
that StarNet owed RiceTec a duty to defend. The trial court
granted permission for StarNet to file a petition for
permissive interlocutory appeal of the ruling, and this Court
granted the petition for permissive appeal. See Tex.
Civ. Prac. & Rem. Code Ann. § 51.014(d);
appeal, StarNet argues that the trial court erred in granting
RiceTec's motion for summary judgment and in denying its
own motion for summary judgment on the issue of whether it
owed RiceTec a duty to defend. StarNet argues that the plain
language of an endorsement to the policy excludes coverage
for the claims at issue in the property damage lawsuit
against RiceTec and therefore StarNet does not owe a duty to
defend RiceTec in that lawsuit.
reverse and remand.
The Insurance Policy
is a company that produces and sells rice seeds. StarNet
issued a commercial general liability insurance policy (the
Policy) to RiceTec that covered a period from February 15,
2015, through February 15, 2016. The Policy had a limit of
$1, 000, 000 per occurrence and a general aggregate limit of
$2, 000, 000. The Policy provided:
a. We [StarNet] will pay those sums that the
insured [RiceTec] becomes legally obligated to pay as damages
because of "bodily injury" or "property
damage" to which this insurance applies. We will have
the right and duty to defend the insured against any
"suit" seeking those damages. However, we will have
no duty to defend the insured against any "suit"
seeking damages for "bodily injury" or
"property damage" to which this insurance does not
b. This insurance applies to "bodily
injury" and "property damage" only if:
(1) The "bodily injury" or
"property damage" is caused by an
"occurrence" that takes place in the "coverage
(2) The "bodily injury" or
"property damage" occurs during the policy period;
(3) Prior to the policy period, no insured
listed under Paragraph 1. of Section
II - Who Is An Insured and no
"employee" authorized by you to give or receive
notice of an "occurrence" or claim, knew that the
"bodily injury" or "property damage" had
occurred in whole or in part. . . .
Policy defined "bodily injury" as "bodily
injury, sickness or disease sustained by a person, including
death resulting from any of these at any time";
"coverage territory" as including "the United
States of America"; "occurrence" as "an
accident, including continuous or repeated exposure to
substantially the same general harmful conditions"; and
"suit" as "a civil proceeding in which damages
because of 'bodily injury,' 'property damage'
or 'personal and advertising injury' to which this
insurance applies are alleged." The Policy defined
"property damage" as "[p]hysical injury to
tangible property, including all resulting loss of use of
that property" or "[l]oss of use of tangible
property that is not physically injured."
Policy included multiple exclusions which set out situations
in which the insurance coverage provided by StarNet to
RiceTec did not apply. The Policy stated, in relevant part:
This insurance does not apply to: . . . .
(1) "Bodily injury" or
"property damage" arising out of the actual,
alleged or threatened discharge, dispersal, seepage,
migration, release or escape of "pollutants":
(a) At or from any premises, site or
location which is or was at any time owned or occupied by, or
rented or loaned to, any insured.
(d) At or from any premises, site or
location on which any insured or any contractors or
subcontractors working directly or indirectly on any
insured's behalf are performing operations if the
"pollutants" are brought on or to the premises,
site or location in connection with such operations by such
insured, contractor or subcontractor.
j. Damage to Property
"Property damage" to:
(5) That particular part of real property on
which you or any contractors or subcontractors working
directly or indirectly on your behalf are performing
operations, if the "property damage" arises out of
Policy defined "pollutants" as "any solid,
liquid, gaseous or thermal irritant or contaminant, including
smoke, vapor, soot, fumes, acids, alkalis, chemicals and
Policy also included numerous endorsements. At issue in this
case is the Agricultural Chemicals Applicator Coverage
endorsement (the Endorsement). Under the Endorsement, the
"per occurrence limit" was $25, 000, the
"annual aggregate" was $50, 000, and the
per-occurrence deductible for property damage was $5, 000.
The Endorsement then provided:
With respect to the "bodily injury" or
"property damage" arising out of the application of
herbicides, pesticides, fertilizers or similar agricultural
chemicals, (1)(d) of Exclusion f. Pollution under Section I -
Coverage A - Bodily Injury and Property Damage Liability and
(5) of Exclusion j. Damage to Property of SECTION I -
COVERAGES, COVERAGE A - BODILY INJURY AND PROPERTY DAMAGE
LIABILITY do not apply.
However, coverage provided by this endorsement is excluded
for any "bodily injury" or "property
damage" resulting from:
5. The application of herbicides,
pesticides, fertilizers or similar agricultural chemicals by
aircraft owned, operated by, rented or loaned to you or by
any non-owned aircraft.
B.The Dishman ...