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Texas Political Subdivisions Property/Casualty Joint Self Insurance Fund v. Pharr-San Juan-Alamo ISD

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

September 26, 2019


          On appeal from County Court at Law No. 4 of Hidalgo County, Texas.

          Before Benavides, Hinojosa, and Perkes Memorandum, Justices.


          GREGORY T. PERKES, Justice.

         In this insurance-coverage dispute, appellant Texas Political Subdivisions Property/Casualty Joint Self Insurance Fund (TPS) filed a petition against appellee Pharr-San Juan-Alamo ISD (PSJA) seeking a declaration of its rights and obligations under an automobile liability policy (Auto Policy). PSJA countersued for declaratory relief and breach of contract. Both parties moved for summary judgment, and the trial court rendered judgment in favor of PSJA, finding TPS breached its duties to defend and indemnify.

         By four issues that we treat as three, TPS argues on appeal that the trial court erred by (1) denying its motion for summary judgment, (2) granting PSJA's motion for summary judgment, and (3) failing to apply the one satisfaction rule. Because neither party carried its summary judgment burden, we reverse and remand.

         I. Background

         Lorena Flores sued PSJA for damages sustained by a minor who, according to her petition, "was severely injured after being thrown from a golf cart" driven by a PSJA employee.[1] PSJA demanded that TPS defend and indemnify it in the underlying suit and TPS denied coverage.

         The Auto Policy provides liability coverage as follows:

[TPS] will pay all sums the [PSJA] legally must pay as damages because of bodily injury or property damage to which this self-insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto.
[TPS] has the right and duty to defend any suit asking for these damages. However, [TPS] has no duty to defend suits for bodily injury or property damage not covered by this self-insurance. [TPS] may investigate and settle any claim or suit as [TPS] or its authorized representative considers appropriate. [TPS]'s duty to defend or settle ends when the applicable Limit of Self-Insurance has been exhausted by payment of judgments or settlements.

         The bolded terms are given a specific meaning under the Auto Policy. An "auto" is defined as "a land motor vehicle, trailer or semitrailer designed for travel on public roads but does not include mobile equipment." "Mobile equipment" is defined, in part, as "vehicles designed for use principally off public roads."

         TPS maintains that golf carts are necessarily "mobile equipment" under Texas law because the Texas Transportation Code defines a "golf cart" as "a motor vehicle designed by the manufacturer primarily for use on a golf course." See Tex. Transp. Code Ann. § 502.001(18). In other words, TPS contends that a golf cart cannot, under any circumstances, be designed for use principally on public roads. As such, TPS concludes that the allegations in the underlying petition negate its duties to defend and indemnify PSJA. See Farmers Tex. Cty. Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 84 (Tex. 1997) (per curiam) ("We now hold that the duty to indemnify is justiciable before the insured's liability is determined in the liability lawsuit when the insurer has no duty to defend and the same reasons that negate the duty to defend likewise negate any possibility the insurer will ever have a duty to indemnify."). TPS filed three separate traditional motions for summary judgment based on this argument, relying only on the Auto Policy and the petition in the underlying lawsuit to support its argument. See GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305, 308 (Tex. 2006) ("Under the eight-corners or complaint-allegation rule, an insurer's duty to defend is determined by the third-party plaintiff's pleadings, considered in light of the policy provisions, without regard to the truth or falsity of those allegations." (citing Argonaut Sw. Ins. Co. v. Maupin, 500 S.W.2d 633, 635 (Tex. 1973))). The trial court denied each motion.

         PSJA acknowledges that golf carts were traditionally designed primarily for use on a golf course, but argues the term has a broader meaning today because manufacturers now design and advertise some golf carts primarily for use on public roads. In a combined motion, PSJA filed a traditional motion for summary judgment on the duty to defend and a no-evidence motion on the duty to indemnify. To support its traditional motion on the duty to defend, PSJA submitted advertisements from golf cart manufacturer E-Z-GO's website that depicted people using several models of golf carts to perform everyday errands on public roads. One such advertisement says:

Inspired by get-up-and-go lifestyles, the 2-passenger E-Z-GO® 2Five' is compact, offers ample storage and all the power you need to head out for errands, dinner or a leisurely drive. Fully electric, your only pit stop at the corner gas station will be for coffee or a Sunday paper.
The following picture accompanies the advertisement:
(Image Omitted)

         The standard features on this model include a speedometer, three-point seat belts, an automatic parking brake, a passenger side locking glove box, turn signals and four-way flashers, headlights and taillights, brake lights, a rear-view mirror, and driver and passenger side mirrors.

         PSJA argued that because the petition failed to describe the "golf cart" in question, a reasonable interpretation of the petition included a golf cart designed for use on a public road like those in the advertisements, thus triggering the duty to defend. See GuideOne, 197 S.W.3d at 310 ("A plaintiff's factual allegations that potentially support a covered claim is all that is needed to invoke the insurer's duty to defend . . . ." (citing Heyden Newport Chem. Corp. v. S. Gen. Ins. Co., 387 S.W.2d 22, 26 (Tex. 1965))). In its no-evidence motion on the duty to indemnify, PSJA argued "mobile equipment" was an exclusion under the Auto Policy; therefore, TPS carried the burden to prove that the loss falls within the exclusion. See Gilbert Tex. Const., L.P. v. Underwriters at Lloyd's London, 327 S.W.3d ...

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