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Regency Development & Construction Services, LLC v. Carrington

Court of Appeals of Texas, Fifth District, Dallas

August 28, 2019


          On Appeal from the 95th District Court Dallas County, Texas Trial Court Cause No. DC-16-15186

          Before Justices Bridges, Brown, and Nowell



         Regency Development & Construction Services, LLC, appeals the trial court's summary judgments in favor of Ralph Carrington d/b/a Carrington Air Conditioning and Heating and Anthony Turpin, Ralph Carrington and Carrington AC and Heat LLC, and Turpin and Turpin, Inc. In two issues, Regency argues the trial court erred in granting summary judgment on the grounds that Regency had no evidence of damages because its insurance carrier paid the underlying personal injury settlement and defense costs, and none of the other summary judgment grounds asserted by any of the appellees had merit. We affirm the trial court's judgments.

         As stated in Regency's fourth amended petition, the facts are that Regency signed a contract with "Carrington AC & Heating" to perform HVAC work at a jobsite where Regency was the general contractor. The HVAC subcontract was signed by "Ralph N. Carrington, Owner." At the time the contract was signed, Carrington's HVAC business was operating either as a sole proprietorship using the LLC as a subcontractor, as an LLC, or both. Regency alleged Carrington the sole proprietorship and Carrington LLC were a single business enterprise or a joint enterprise because they were not operated as separate entities, they did not have an implied agreement between them, and they combined their resources to achieve a common business purpose. As a result, Regency argued, Carrington the individual and Carrington LLC were each liable for the actions of the other.

         Carrington's agreement with Regency required Carrington to obtain general liability insurance and add Regency as an additional insured on the policy. Carrington contacted his insurance agent, Anthony Turpin, to obtain the required coverage. Turpin was provided with the written insurance requirements or had access to such requirements. After determining what additional coverage Carrington was required to purchase, Turpin sent a certificate of insurance to Regency that indicated Regency was an insured under Carrington's general liability policy. However, Regency was not actually added as an additional insured at the time Turpin said it was.

         Under the HVAC subcontract agreement with Regency, Carrington was also obligated to indemnify Regency for claims arising out of the HVAC work performed under the subcontract. The subcontract required Carrington or Carrington LLC to have insurance coverage in place ensuring this indemnity obligation owed to Regency.

         Although Carrington did not know it, Turpin sold Carrington a general liability policy of the type that would rarely provide the coverage Carrington needed under construction contracts. In effect, Regency alleged, the additional insured endorsement Turpin sold Carrington was worthless, and a certificate of insurance stating general liability coverage was in place created a false impression regarding the existence of coverage.

         On January 13, 2014, while performing HVAC work at the jobsite, Raymond Kirchmeyer was injured. Kirchmeyer sued Regency and other defendants for his injuries. On December 31, 2015, Kirchmeyer filed his fourth amended original petition alleging negligence claims against Regency.

         Regency tendered the lawsuit to Carrington and Carrington's insurer for defense and indemnity under the subcontract and as an additional insured under Carrington's liability policy. Carrington did not accept the defense of Regency in the lawsuit. Further, Carrington's insurer denied Regency's request for defense and indemnity as an additional insured, stating the policy at issue did not cover Carrington for claims arising out of injuries to Carrington's employees.

         On January 13, 2016, Regency filed a third party petition against Carrington d/b/a Carrington Air Conditioning and Heating and Turpin d/b/a Turpin and Turpin. On October 20, 2016, Regency filed a second amended third party petition against Carrington and Turpin alleging claims of breach of contract, negligence, negligent misrepresentation, DTPA violations, breach of fiduciary duty, fraud, and fraudulent concealment. On November 28, 2016, the trial court entered an order severing Regency's third-party claims from the Kerchmeyer lawsuit.

         By check dated January 20, 2017, Regency's insurer, The Cincinnati Insurance Company, paid $3, 000, 000 to Kirchmeyer, and Kirchmeyer settled his lawsuit against Regency.

         On August 9, 2017, Carrington d/b/a Carrington Air Conditioning and Heating filed a traditional and no evidence motion for summary judgment asserting, among other things, that there was no evidence Regency paid any portion of (1) the $3, 000, 000 settlement paid to resolve Kirchmeyer's claims and (2) the attorney's fees and expenses incurred in defending Regency against Kirchmeyer's claims. Therefore, the motion alleged, there was no evidence Regency had been damaged.

         On August 15, 2017, Regency filed its third amended petition adding Carrington AC and Heat, LLC and Turpin and Turpin, Inc. as defendants. On September 18, 2017, Regency filed its joint response to the motions for summary judgment of Turpin and Carrington. The response argued the indemnity provision of the contract between Regency and Carrington was enforceable, and "the only evidence of damages sets out the defense costs and settlement payments incurred by Regency." Regency claimed it "incurred attorney's fees of $126, 730.00 and expenses of $121, 728.47 in defense of the Kirchmeyer lawsuit" and "also paid $3, 000, 000 in settlement." Regency argued the "contention that an insurer paid the defense costs and made the settlement payment" was not a defense to liability because such a defense was in contradiction to the collateral source rule. Citing Haygood ...

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