Evanston Insurance Company v. The Alden Roofing Company LLC et al

Filing 30

Memorandum Opinion and Order granting 29 MOTION for Summary Judgment. (Ordered by Senior Judge A. Joe Fish on 5/30/2017) (rekc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

EVANSTON INSURANCE COMPANY,
Plaintiff,
VS.
THE ALDEN ROOFING COMPANY,
LLC, ET AL.,
Defendants.

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CIVIL ACTION NO.
3:16-CV-2626-G

MEMORANDUM OPINION AND ORDER

Before the court is the plaintiff’s motion for summary judgment (docket entry
29). For the reasons stated below, the plaintiff’s motion is granted.
I. BACKGROUND
The plaintiff, Evanston Insurance Company (“Evanston”), brought this action
seeking a judgment declaring that it has no duty to defend the insured, Omar Soto
(“Soto”) and The Alden Roofing Company, LLC (“Alden”), in a pending state court

action.1 See generally Evanston’s Complaint and Request for Declaratory Judgment
(“Complaint”) (docket entry 1). On May 8, 2015, Evanston issued a one-year
general liability insurance policy to Soto, who owns a residential roofing business.2
See id. ¶ 8 (citing Exhibit A). On July 13, 2015, Jose Valdez-Arevalo (“ValdezArevalo”) fell and was injured while working on a roof for Soto. Brief in Support of
Its Motion for Summary Judgment (“Evanston’s Brief”) at 4 (docket entry 25);
Appendix in Support of Evanston’s Motion for Summary Judgment (“Appendix”) at
62-63 (docket entry 27).
The plaintiffs in the state court action, Valdez-Arevalo and his wife Carolina
Garcia (“Garcia”), assert claims for negligence against Soto and are seeking monetary
damages.3 Id. at 65-66. Specifically, Valdez-Arevalo and Garcia assert that Soto
failed to provide Valdez-Arevalo with a safe work area and the requisite safety
equipment. See id. at 63-64. Soto and Alden have requested defense and indemnity

1

Jose Valdez-Arevalo, et al. v. The Alden Roofing Company, LLC, Cause No.
DC-16-01508, pending in the 116th Judicial District of the District Court of Dallas
County, Texas.
2

Alden is named as an “Additional Insured” under the policy, but only
with respect to claims arising from acts or omissions of Soto and only when coverage
applies to Soto. See Appendix at 52. Alden became an “Additional Insured” after
Soto entered into a subcontract with Alden. See Evanston’s Brief at 4.
3

Specifically, Valdez-Arevalo and Garcia seek damages for loss of
companionship and consortium, mental anguish, pecuniary loss, household services,
pain and suffering, physical impairment, loss of earning capacity, medical expenses,
and the cost of retrofitting the plaintiffs’ residence. Id. at 65-66.
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from Evanston under the policy in the state court action. Complaint ¶ 9. Evanston
agreed to defend Soto subject to a reservation of rights.4 Id. ¶ 11.
Evanston commenced this action on September 13, 2016, seeking a
declaration that it has no duty to defend or indemnify Soto or Alden in the state
court action. Id. ¶¶ 12-20. On February 22, 2017, Evanston filed the instant motion
for summary judgment. Evanston’s Motion for Summary Judgment (docket entry
29). The defendants did not file a response. The motion is now ripe for decision.
II. ANALYSIS
A. Legal Standards
1. Summary Judgment
Summary judgment is proper when the pleadings, depositions, admissions,
disclosure materials on file, and affidavits, if any, “show[ ] that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” FED. R. CIV. P. 56(a), (c)(1).5 A fact is material if the governing substantive
law identifies it as having the potential to affect the outcome of the suit. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue as to a material fact is
4

Evanston is not currently defending Alden because Alden is no longer a
party in the state court action. Id. ¶ 11.
5

Disposition of a case through summary judgment “reinforces the
purpose of the Rules, to achieve the just, speedy, and inexpensive determination of
actions, and, when appropriate, affords a merciful end to litigation that would
otherwise be lengthy and expensive.” Fontenot v. Upjohn Company, 780 F.2d 1190,
1197 (5th Cir. 1986).
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genuine “if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Id.; see also Bazan ex rel. Bazan v. Hidalgo County, 246 F.3d 481,
489 (5th Cir. 2001) (“An issue is ‘genuine’ if it is real and substantial, as opposed to
merely formal, pretended, or a sham.”). To demonstrate a genuine issue as to the
material facts, the nonmoving party “must do more than simply show that there is
some metaphysical doubt as to the material facts.” Matsushita Electric Industrial
Company v. Zenith Radio Corporation, 475 U.S. 574, 586 (1986). The nonmoving
party must show that the evidence is sufficient to support the resolution of the
material factual issues in his favor. Anderson, 477 U.S. at 249 (citing First National
Bank of Arizona v. Cities Service Company, 391 U.S. 253, 288-89 (1968)).
When evaluating a motion for summary judgment, the court views the
evidence in the light most favorable to the nonmoving party. Id. at 255 (citing
Adickes v. S.H. Kress & Company, 398 U.S. 144, 158-59 (1970)). However, it is not
incumbent upon the court to comb the record in search of evidence that creates a
genuine issue as to a material fact. See Malacara v. Garber, 353 F.3d 393, 405 (5th
Cir. 2003). The nonmoving party has a duty to designate the evidence in the record
that establishes the existence of genuine issues as to the material facts. Celotex
Corporation v. Catrett, 477 U.S. 317, 324 (1986). “When evidence exists in the
summary judgment record but the nonmovant fails even to refer to it in the response

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to the motion for summary judgment, that evidence is not properly before the district
court.” Malacara, 353 F.3d at 405.
2. Duty to Defend
Texas follows the “eight-corners” rule of insurance contract interpretation.
See, e.g., GuideOne Elite Insurance Company v. Fielder Road Baptist Church, 197 S.W.3d
305, 308 (Tex. 2006). This rule instructs courts to determine whether an insurer has
a duty to defend based solely on the language contained within the four corners of
the insurance policy and the allegations contained within the four corners of the
plaintiff’s pleadings. Allstate Insurance Company v. Disability Services of the Southwest,
Inc., 400 F.3d 260, 263 (5th Cir. 2005); National Union Fire Insurance Company of
Pittsburgh, Pa. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997)
(per curiam). If the pleadings allege facts stating a cause of action that potentially
falls within the insurance policy’s scope of coverage, the insurer has a duty to defend.
Liberty Mutual Insurance Company v. Graham, 473 F.3d 596, 600 (5th Cir. 2006). The
duty is determined based on the presumption that the allegations in the plaintiff’s
pleadings are true. Disability Services of the Southwest, 400 F.3d at 263; Fielder Road
Baptist Church, 197 S.W.3d at 308. The insured bears the initial burden of showing
that there is coverage, while the insurer bears the burden of showing that any
exclusion in the policy applies. Trinity Universal Insurance Company v. Employers
Mutual Casualty Company, 592 F.3d 687, 691-92 (5th Cir. 2010). “If an insurer has a

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duty to defend its insured against any portion of the underlying suit, then the insurer
is required to defend the entire suit.” General Star Indemnity Company v. Gulf Coast
Marine Associates, Inc., 252 S.W.3d 450, 455 (Tex. App.--Houston [14th Dist.] 2008,
pet. denied).
A pair of countervailing considerations guides the court’s review of the facts
alleged within the four corners of the underlying pleadings. On the one hand, “the
insurer’s duty to defend is limited to those claims actually asserted in an underlying
suit” and does not extend to “a claim that might have been alleged but was not, or a
claim that more closely tracks the true factual circumstances surrounding the thirdparty claimant’s injuries but which, for whatever reason, has not been asserted.” Pine
Oak Builders, Inc. v. Great American Lloyds Insurance Company, 279 S.W.3d 650, 655-56
(Tex. 2009). “If the petition only alleges facts excluded by the policy, the insurer is
not required to defend.” Id. at 655 (citation and internal quotation marks omitted).
The court must not “(1) read facts into the pleadings, (2) look outside the pleadings,
or (3) imagine factual scenarios which might trigger coverage.” Gore Design
Completions, Limited v. Hartford Fire Insurance Company, 538 F.3d 365, 369 (5th Cir.
2008) (citation and internal quotation marks omitted). On the other hand, the
factual allegations that are contained within the pleadings must be liberally
construed: “If the petition does not state facts sufficient to bring the case clearly
within or outside the insured’s coverage, the insurer is obligated to defend if

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potentially there is a claim under the complaint within the coverage of the insured’s
policy.” Gulf Coast Marine Associates, 252 S.W.3d at 454 (citing Merchants Fast Motor
Lines, 939 S.W.2d at 141) (emphasis in original). A court may draw reasonable
inferences from the pleadings that trigger an insurer’s duty to defend, id. at 456, and
doubts about whether “‘the allegations of a complaint against the insured . . . [are]
sufficient to compel the insurer to defend the action . . . will be resolved in [the]
insured’s favor.’” Merchants Fast Motor Lines, 939 S.W.2d at 141 (quoting Heyden
Newport Chemical Corporation v. Southern General Insurance Company, 387 S.W.2d 22,
26 (Tex. 1965)). The net result is that insurers are advised to chart a cautious
course: “When in doubt, defend,” Gore Design Completions, 538 F.3d at 369.
B. Application
1. Whether Evanston Has a Duty to Defend Soto
Evanston contends that the policy specifically excludes coverage for ValdezArevalo and Garcia’s claims against Soto. Evanston’s Brief at 7. The policy states
that the following is excluded:
“Bodily injury”6 to:

6

As defined in the policy, “‘Bodily injury’ means bodily injury, sickness
or disease sustained by a person, including death resulting from any of these at any
time.” Appendix at 31. According to the Texas Supreme Court, the commonly
understood meaning of the term “bodily [injury]” “implies a physical, and not purely
mental, emotional, or spiritual harm.” Trinity Universal Insurance Company v. Cowan,
945 S.W.2d 819, 823 (Tex. 1997).
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(1) An “employee”7, “volunteer worker” or “temporary
worker”8 of the Named Insured9 arising out of and in the
course of:
(a) Employment by the Named Insured; or
(b) Performing duties related to the conduct
of the Named Insured’s business;
(2) The spouse, partner, child, parent, brother, sister or
any other relative of that “employee”, “volunteer worker”
or “temporary worker” as a consequence of Paragraph (1)
above.
This exclusion applies whether the insured may be liable as an employer
or in any other capacity and to an obligation to share damages with or
repay someone else who must pay damages because of the injury.
This exclusion applies to any liability assumed under an “insured
contract.”
Appendix at 58. The policy also excludes:
“Bodily injury” to any:
(1) Contractor or subcontractor while working on behalf
of any insured;
(2) Employee, volunteer worker, leased employee or
temporary worker of such contractor or subcontractor; or

7

“‘Employee’ includes a ‘leased worker.’ ‘Employee’ does not include a
‘temporary worker.’” Appendix at 31.
8

“‘Temporary worker’ means a person who is furnished to you to
substitute for a permanent ‘employee’ on leave or to meet seasonal or short-term
workload conditions.” Appendix at 33.
9

Soto is the “Named Insured.” Appendix at 7.
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(3) Additional subcontractor, including employees,
volunteer workers, leased employees or temporary workers
of such contractor or subcontractor indicated in Paragraph
(1) above.
This exclusion applies:
(a) Even if the claim against any insured
alleges negligence or other wrongdoing in the:
(i) Selection, hiring or
contracting;
(ii) Investigation;
(iii) Supervision or monitoring;
(iv) Training; or
(v) Retention of any contractor
or subcontractor for whom any
insured is or was legally
responsible and whose acts or
omissions would be excluded by
Paragraph (1), (2) or (3) above.
(b) Whether the insured may be liable as an
employer or in any other capacity;
(c) To any obligation to share damages with
or repay someone else who must pay damages
because of the injury; and
(d) To liability assumed by the insured under
an “insured contract.”
Id. at 58-59. After considering the relevant provisions of the policy, the court
concludes that the policy unambiguously excludes coverage for any claim arising out

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of injuries suffered by a worker on behalf of the insured. See Essex Insurance Company
v. Clark, No. 3:09-CV-1196-B, 2010 WL 3911424, at *5 (N.D. Tex. Oct. 5, 2010)
(Boyle, J.) (“Essex correctly interprets [the policy] to unambiguously bar coverage for
bodily and personal injuries sustained by employees or contractors.”).
Here, Evanston does not have a duty to defend Soto against Valdez-Arevalo
and Garcia’s negligence claims. In the state action, the plaintiffs specifically allege
that Soto hired Valdez-Arevalo as a “temporary worker.” Appendix at 63. Moreover,
the plaintiffs allege that Valdez-Arevalo was working within “the course and scope of
his employment.” Id. at 62 (emphasis added). Because Valdez-Arevalo’s injuries
occurred while he was working for Soto, Valdez-Arevalo’s injuries are excluded from
the policy coverage. See Essex Insurance Company, 2010 WL 3911424, at *5.
Additionally, the policy excludes coverage for Garcia’s alleged injuries. In the
state court action, the plaintiffs do not allege that Garcia suffered any injuries
covered by the policy: bodily injury, sickness, or disease. See generally Appendix at
61-67. Rather, Garcia seeks damages for mental anguish, loss of consortium, and
other economic injuries. See id. at 65-67. Under Texas law, emotional injuries such
as mental anguish are not considered bodily injuries in a commercial general liability
policy. See Cowan, 945 S.W.2d at 823. Thus, Evanston has no duty to defend Soto
against Garcia’s claims.

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2. Whether Evanston Has a Duty to Defend Alden
Evanston contends that it has no duty to defend Alden in the state court
action. Evanston’s Brief at 14-15. First, Evanston avers that because the policy does
not afford coverage for Soto, Alden is also not entitled to coverage. See id. The
policy explicitly states, “[w]hen coverage does not apply for [Soto], no coverage or
defense shall be afforded to [Alden].” Appendix at 52. Accordingly, Evanston has no
duty to defend Alden under this provision. Evanston also contends that the
indemnity provision10 of Soto’s subcontract with Alden does not create a duty for

10

That provision states,
To the fullest extent permitted by law, the
Subcontractor [Soto] will defend, indemnify
and hold harmless the Company [Alden
Roofing] and its agents and employees from
and against any and all claims, damages,
losses and expenses, including but not limited
to attorney’s fees, arising out of or resulting
from Subcontractor’s performance of Work
under this Agreement, including the negligent
acts or omissions of the Subcontractor, the
Subcontractor’s subcontractors, anyone
directly or indirectly employed by them, or
anyone for whose acts they may be liable,
regardless of whether or not such claim,
damage, loss or expense is caused in part
by Company, its agents or employees.

Complaint ¶ 17 (citing Exhibit C) (bold in original).
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Evanston to defend Alden. Evanston’s Brief at 15-16; Complaint ¶ 17 (citing Exhibit
C).
The policy states:
This insurance does not apply to:
“Bodily injury” or “property damage” for which the insured
is obligated to pay damages by reason of the assumption of liability
in a contract or agreement. This exclusion does not apply to
liability for damages:
(1) That the insured would have in the
absence of the contract or agreement; or
(2) Assumed in a contract or agreement that
is an “insured contract”11, provided the
“bodily injury” or “property damage” occurs
subsequent to the execution of the contract or
agreement. Solely for the purposes of liability
assumed in an “insured contract”, reasonable

11

“Insured contract” means:
a. A contract for a lease of premises. . . . ;
b. A sidetrack agreement;
c. Any easement or license agreement, except
in connection with construction or demolition
operations on or within 50 feet of a railroad;
d. An obligation, as required by ordinance, to
indemnify a municipality, except in
connection with work for a municipality;
e. An elevator maintenance agreement.

Appendix at 31.
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attorney fees and necessary litigation
expenses incurred by or for a party other than
an insured are deemed to be damages because
of “bodily injury” or “property damage”,
provided:
(a) Liability to such party for,
or for the cost of, that party’s
defense has also been assumed
in the same “insured contract”;
and
(b) Such attorney fees and
litigation expenses are for
defense of that party against a
civil or alternative dispute
resolution proceeding in which
damages to which this insurance
applies are alleged.
Appendix at 20 (emphasis added). The court concludes that the policy excludes any
liabilities that Soto assumed under the subcontract with Alden because the above
provision clearly excludes liability assumed under a contract.
Moreover, Soto’s subcontract with Alden does not fall within the exception in
subsection (2) above because the subcontract does not appear to be an “insured
contract.” Soto entered into the subcontract with Alden to furnish services relating
to roof repair. See Complaint ¶ 17 (citing Exhibit C). However, furnishing services
relating to roof repair does not appear to be within the five categories of “insured
contracts.” See Appendix at 31.

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Even if it is assumed arguendo that the subcontract could be considered an
“insured contract,” the policy excludes any liability acquired through an “insured
contract” by an employee or a contractor at the time of his injuries. See Appendix at
58-59 (“This insurance does not apply to. . . . [a] [c]ontractor or subcontractor while
working on behalf of any insured. . . . This exclusion applies . . . [t]o liability
assumed by the insured under an ‘insured contract.’”). Because Valdez-Arevalo was
working either as an employee or a contractor at the time of his injury, see Appendix
at 62-63, Evanston has no duty to defend Alden in the state court action.
3. Evanston’s Duty to Indemnify Soto or Alden
Evanston contends that it has no duty to indemnify Soto or Alden for the
same reason that it has no duty to defend: the negligent conduct giving rise to the
state action is explicitly excluded from coverage under the policy. See Evanston’s
Brief at 17. A court may decide the duty to indemnify prior to the termination of the
underlying litigation if “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.” Markel American Insurance Company v. Verbeek, 657 Fed. App’x
305, 311 (5th Cir. 2016) (quoting Farmers Texas County Mutual Insurance Company v.
Griffin, 955 S.W.2d 81, 84 (Tex. 1997)). The court concludes that because the
policy clearly excludes any coverage for the conduct giving rise to the underlying state
court action, the policy also excludes any duty to indemnify Soto or Alden. See

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American States Insurance Company v. Bailey, 133 F.3d 363, 368 (5th Cir. 1998)
(“Logic and common sense dictate that if there is no duty to defend, then there must
be no duty to indemnify.”); Atlantic Casualty Insurance Company v. PrimeLending, No.
3:15-CV-1475-D, 2017 WL 951878, at *2 n.4 (N.D. Tex. Mar. 10, 2017) (Fitzwater,
J.).
III. CONCLUSION
For the reasons stated above, the plaintiff’s motion is GRANTED. Judgment
will be entered that Evanston has no duty to defend Soto or Alden in the underlying
state court action.
SO ORDERED.

May 30, 2017.

___________________________________
A. JOE FISH
Senior United States District Judge

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