The Cincinnati Specialty Underwriters Insurance Company v. Chajon et al

Filing 39

Memorandum Opinion and Order re: 27 Motion for Discovery filed by Juan Francisco Chajon is DENIED, 23 Motion for Summary Judgment filed by The Cincinnati Specialty Underwriters Insurance Company is GRANTED. (Ordered by Senior Judge A. Joe Fish on 7/31/2017) (ndt)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

THE CINCINNATI SPECIALTY
UNDERWRITERS INSURANCE
COMPANY,
Plaintiff,
VS.
JUAN FRANCISCO CHAJON, ET AL.,
Defendants.

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CIVIL ACTION NO.
3:16-CV-3180-G

MEMORANDUM OPINION AND ORDER

Before the court is the plaintiff’s motion for summary judgment (docket entry
23) and the motion to allow discovery under Rule 56(d) filed by the defendant, Juan
Chajon (“Chajon”) (docket entry 27). For the reasons stated below, the plaintiff’s
motion is granted and Chajon’s motion is denied.
I. BACKGROUND
The plaintiff, The Cincinnati Specialty Underwriters Insurance Company
(“CSUIC”), brought this action seeking a judgment declaring that it has no duty to

defend or indemnify the insured, Chajon, in a pending state-court negligence action.1
See Original Complaint for Declaratory Judgment (“Complaint”) ¶¶ 8-12 (docket
entry 1). On May 9, 2014, CSUIC issued a one-year general liability insurance
policy to Chajon, who operates a painting business.2 See id. ¶ 11. On January 4,
2015, Jose Manual Lopez (“Lopez”) and Samuel Mejia (“Mejia”) were electrocuted
and seriously injured while working for Chajon. Id. ¶¶ 9-10.
The plaintiffs in the state-court action, Lopez and members of his family, and
the intervenor, Mejia, assert claims for negligence and gross negligence against
Chajon and are seeking monetary damages. CSUIC’s Appendix in Support of Its

1

Erika Yanez, Individually and as Next Friend of Jose Manuel Lopez, et al. v.
N.E. Development, LLC, et al., No. DC-15-01388, pending in the 68th Judicial District
Court of Dallas County, Texas.
2

Chajon is named as the “Insured” under the policy. The policy states:
We will pay those sums that the insured
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 apply. We may,
at our discretion, investigate any “occurrence”
and settle any claim or “suit” that may
result. . . .

CSUIC’s Appendix at 61 (emphasis added).
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Motion for Summary Judgment (“CSUIC’s Appendix”) at 7, 28-29 (docket entry 25).
Specifically, in the state petitions, Lopez and Mejia allege that Chajon failed to
provide them with a safe work area and failed to warn them of nearby high-voltage
power lines. See id. Chajon has requested defense and indemnity from CSUIC under
the policy. See CSUIC’s Amended Brief in Support of Its Motion for Summary
Judgment (“CSUIC’s Brief”) at 1-2 (docket entry 26).
CSUIC commenced this action on November 14, 2016, seeking a declaration
that it has no duty to defend or indemnify Chajon. Complaint ¶ 12. On March 16,
2017, CSUIC filed the instant motion for summary judgment. CSUIC’s Motion for
Summary Judgment (docket entry 23). On April 6, 2017, Chajon filed a motion to
allow time for discovery under Rule 56(d), and Lopez and Mejia filed responses to
CSUIC’s motion for summary judgment. Chajon’s Motion to Allow Time for
Discovery Under Rule 56(d) (docket entry 27); Lopez’s Response to CSUIC’s
Motion for Summary Judgment (docket entry 32); Brief in Support of Lopez’s
Response to CSUIC’s Motion for Summary Judgment (“Lopez’s Response Brief”)
(docket entry 33); Mejia’s Response to CSUIC’s Motion for Summary Judgment
(docket entry 29); Brief in Support of Mejia’s Response to CSUIC’s Motion for
Summary Judgment (“Mejia’s Response Brief”) (docket entry 30). On April 20,
2017, CSUIC filed replies to Lopez and Mejia’s responses. CSUIC’s Reply to Lopez
(docket entry 36); CSUIC’s Reply to Mejia (docket entry 37). Lastly, on April 27,

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2017, CSUIC filed a response to Chajon’s Rule 56(d) motion. CSUIC’s Response to
Chajon’s Motion Under Rule 56(d) (docket entry 38). The motions are 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).3 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
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

3

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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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
to the motion for summary judgment, that evidence is not properly before the district
court.” Malacara, 353 F.3d at 405.
2. Insurance Policy Interpretation Under Texas Law
The parties agree that Texas law applies to this diversity case. CSUIC’s Brief
at 5; Mejia’s Response Brief at 5; Lopez’s Response Brief at 7; see generally Erie
Railroad Company v. Tompkins, 304 U.S. 64 (1938). Texas courts interpret insurance

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contracts according to the “rules of interpretation and construction which are
applicable to contracts generally.” National Union Fire Insurance Company of Pittsburgh,
Pennsylvania v. CBI Industries, Inc., 907 S.W.2d 517, 520 (Tex. 1995). “The primary
concern of a court in construing a written contract is to ascertain the true intent of
the parties as expressed in the instrument.” Id. (citation omitted). In determining
the intent of the parties, the court construes the policy to give effect to each of its
terms and to avoid rendering any term meaningless. Ideal Mutual Insurance Company
v. Last Days Evangelical Association, Inc., 783 F.2d 1234, 1238 (5th Cir. 1986) (citation
omitted).
In construing a contract, the court must determine whether its meaning is
ambiguous. “Whether a contract is ambiguous is a question of law for the court to
decide by looking at the contract as a whole in light of the circumstances present
when the contract was entered.” CBI Industries, 907 S.W.2d at 520. A written
contract is ambiguous if its language “is subject to two or more reasonable
interpretations” but is not ambiguous if it is “so worded that it can be given a definite
or certain legal meaning.” Id. Mere disagreement between the parties about the
correct interpretation of the term will not render the term ambiguous, nor will it
transform the issue of law into an issue of fact. D.E.W., Inc. v. Local 93, Laborers’
International Union of North America, 957 F.2d 196, 199 (5th Cir. 1992) (citations
omitted).

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Where a policy term is ambiguous, the court will construe that term in favor of
the insured. Toops v. Gulf Coast Marine Inc., 72 F.3d 483, 486 (5th Cir. 1996)
(quoting Adams v. John Hancock Mutual Life Insurance Company, 797 F. Supp. 563, 567
(W.D. Tex. 1992), aff’d, 49 F.3d 728 (5th Cir. 1995)). In addition, when construing
a policy term that excludes or limits coverage, the court must adopt any reasonable
interpretation of the exclusion urged by the insured, even if the interpretation of the
insurer appears more reasonable or a more accurate reflection of the parties’ intent.
Id. These rules of construction, however, apply only when the terms of the policy are
“susceptible to several reasonable constructions.” Ranger Insurance Company v. Bowie,
574 S.W.2d 540, 542 (Tex. 1978) (citations omitted).
3. 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

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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
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

-8-

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
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.

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B. Application
1. Whether the Action Should Be Stayed
Lopez contends that the court should stay the case until the state-court action
concludes. Lopez’s Response Brief at 4. The Declaratory Judgment Act “confers
discretion on the courts rather than an absolute right on a litigant.” Sherwin-Williams
Company v. Holmes County, 343 F.3d 383, 389 (5th Cir. 2003) (quoting Wilton v.
Seven Falls Company, 515 U.S. 277, 287 (1995)). The Fifth Circuit has identified
seven nonexclusive factors district courts should consider when deciding whether to
adjudicate, dismiss, or stay a declaratory-judgment action: (1) whether there is a
pending state action in which all of the matters in controversy may be fully litigated;
(2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant;
(3) whether the plaintiff engaged in forum shopping in bringing the suit; (4) whether
possible inequities exist in allowing the declaratory plaintiff to gain precedence in
time or to change forums; (5) whether the federal court is a convenient forum for the
parties and witnesses; (6) whether retaining the lawsuit in federal court would serve
the purposes of judicial economy; and (7) whether the federal court is being called on
to construe a state judicial decree involving the same parties and entered by the court
before whom the parallel state suit between the same parties is pending. St. Paul
Insurance Company v. Trejo, 39 F.3d 585, 591 (5th Cir. 1994).

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As to the first factor, courts look to whether the lawsuits are parallel, involving
the same parties and the same issues. Canal Insurance Company v. XMEX Transport,
LLC, 1 F. Supp. 3d 516, 526 (W.D. Tex. 2014). Here, the court concludes that the
two lawsuits are not parallel because the two actions do not involve the same parties
or the same issues. First, CSUIC is not a party to the state action. Moreover, the
state suit involves Chajon’s potential tort liability to Lopez and Mejia, and the
federal suit pertains solely to CSUIC’s duty to defend Chajon. The lack of a parallel
proceeding in a different forum “weighs strongly against” staying the case. See
Sherwin-Williams, 343 F.3d at 394.
As to factors two and three, the filing of every lawsuit requires forum selection.
“Federal declaratory judgment suits are routinely filed in anticipation of other
litigation. . . . Merely filing a declaratory judgment action in a federal court with
jurisdiction to hear it . . . is not in itself improper anticipatory litigation or otherwise
abusive ‘forum shopping.’” Id. at 391. The court further concludes that the
remaining Trejo factors are either inapplicable or do not militate in favor of staying
the case. Therefore, Lopez’s request to stay the action is denied.
2. Whether CSUIC Has a Duty to Defend Chajon
CSUIC contends that the policy specifically excludes coverage for the
allegations against Chajon in state court. CSUIC’s Brief at 1-2. The exclusion
provisions in the policy state:

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EXCLUSION -- BODILY INJURY TO CONTRACTORS’
OR SUBCONTRACTORS’ EMPLOYEES
***
“Bodily injury” to:
a.

Any “employee”4 of any:
(1) Contractor; or
(2) Subcontractor; and
(a) Arising out of and in the
course of
1) Employment; or
2) Performing
duties related to
the conduct of an
insured’s business
or the business of a
contractor or
subcontractor. . . .
***
EXCLUSION -- EMPLOYER’S LIABILITY

“Bodily injury” to:

4

The policy defines “employee” as “any person who is hired for wage,
salary, fee or payment to perform work. ‘Employee’ includes any leased worker or
temporary worker, loaned worker, or ‘volunteer worker.’” CSUIC’s Appendix at 83.
Furthermore, the policy defines “volunteer worker” as “a person who is
not your ‘employee,’ and who donates his or her work and acts at the direction of
and within the scope of duties determined by you, and is not paid a fee, salary or
other compensation by you or anyone else for their work performed for you.” Id. at
76.
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1. An “employee” of the insured arising out of and in the
course of:
a. Employment by the insured; or
b. Performing duties related to the conduct
of the insured’s business; or
2. The spouse, child, parent, brother or sister of that
“employee” 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 any obligation to share damages with or repay someone
else who must pay damages because of the injury.
CSUIC’s Appendix at 83-84.
The state-court petition alleges that:
The N.E. Entities contracted with ACN to provide
construction services. The N.E. Entities also contracted
with D. Torres Construction to assist with the completion
of the project. D. Torres Construction was contractually
responsible for completing exterior projects at the
Construction Site. D. Torres Construction subcontracted
certain projects to Juan Francisco Chajon dba Poncho
Painting (hereinafter “Chajon”), including projects to paint
various aspects of the Anatole at Westinghouse Apartment
Complex. In turn, Chajon contacted a site foreman to
supervise on behalf of Poncho Painting. Plaintiff Jose
Lopez and Samuel Mejia were performing work for Chajon,
including the painting and caulking work. Samuel Mejia
witnessed Jose Lopez’s electrocution. Each of these
contractors and subcontractors were negligent by, inter alia,
failing to warn Jose Lopez of the close proximity of the
high-voltage lines, by not providing to Jose Lopez a plastic
or fiberglass ladder that would not conduct electricity, and
by failing to ensure a safe work environment at the
Construction Site.

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Id. at 7, 28-29.
a. Applying the “Eight-Corners” Rule
Adhering to the “eight-corners” rule, the issue before the court is whether
Lopez and Mejia were Chajon’s “employee[s]” at the time of their injuries. If Lopez
and Mejia fall within the policy’s definition of “employee,” then the “Employer’s
Liability” exclusion precludes coverage. CSUIC contends that, although the fifth
amended petition does not expressly state that Lopez and Mejia were employees of
Chajon, Lopez and Mejia fit within the policy’s broad definition of “employee.” See
CSUIC’s Brief at 9-11. Lopez and Mejia, on the other hand, contend that there is a
dispute of fact as to whether Lopez and Mejia were “employee[s]” under the policy
and thus excluded from coverage, or whether they were independent contractors.
Lopez’s Response Brief at 10, 13-14; Mejia’s Response Brief at 4-5.
In determining the employment status of an injured worker, courts look to
whether the state-court complaint specifically alleges the worker’s status or whether it
contains sufficient factual allegations to classify the worker under the policy. Castle
Point National Insurance Company v. Lalo, 642 Fed. App’x 329, 331 (5th Cir. 2016)
(“[C]ontrary to the district court’s determinations, Lalo’s state-court complaint
contains no allegation that Lalo was an employee of B.S. Trucking; nor does it
contain sufficient factual allegations to classify Lalo as an employee under the
policy.”). For example, in Nautilus Insurance Company v. Home Remedy Services, LLC,

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No. CV H-09-3508, 2011 WL 13130886 (S.D. Tex. May 31, 2011), the underlying
petition did not specifically allege that the injured worker was an “employee.” Id. at
*4. Nonetheless, the court concluded that the insured was an “employee” under the
policy. Id. The court first looked to the policy’s broad definition of “employee.”5 Id.
at *2. Then, the court considered the state-court petition’s allegation that the injured
worker was “working for and/or under the direct control” of the insured. Id. at *4.
Because this allegation was “consistent with” the broad definition of “employee,” the
court held that the injured worker was an “employee.” Id.
It is true that the state petitions here do not explicitly use the term “employee”
to describe Lopez and Mejia’s employment relationship to Chajon. However, the
state petitions contain sufficient factual allegations to classify Lopez and Mejia as
“employee[s]” under the policy. The petitions allege that Lopez and Mejia were

5

That policy in in Nautilus Insurance Company defined “employee” as
“any person or persons who provides services
directly or indirectly to any insured,
regardless of whether the services are
performed or where the ‘bodily injury’ occurs
including, but not limited to, . . . a
contractor, a subcontractor, an independent
contractor, and any person or persons hired
by, loaned to, employed by, or contracted by
any insured or any insured’s contractor,
subcontractor, or independent contractor.”

Id. at *2.
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“performing work for Chajon” at the time of their injuries. CSUIC’s Appendix at 7,
28-29. These allegations are not merely “consistent with” the policy’s definition of
“employee” as in Nautilus Insurance Company, but directly mirror it.6 Compare
CSUIC’s Appendix at 7, 28-29 with CSUIC’s Appendix at 76, 83. Moreover, it is
reasonable to infer that Lopez and Mejia were compensated for their work. General
Star Indemnity Co. v. Gulf Coast Marine Associates, Inc., 252 S.W.3d 450, 456 (Tex.
App.--Houston [14th Dist.] 2008, pet. denied) (noting that the “eight corners rule
does not require [the court] to ignore those inferences logically flowing from the facts
alleged in the petition”). This brings Lopez and Mejia directly within the
compensation provision of the policy’s definition of “employee.”
Despite Lopez and Mejia’s insistence, there is no basis for the court to
conclude that there is a dispute of fact over whether Lopez and Mejia were
independent contractors under the policy. The state petitions do not use the term
“independent contractor” in reference to either Mejia or Lopez as the state-court
plaintiff’s did in authority cited by Lopez and Mejia. See Mejia’s Response Brief at 8

6

Additionally, the definition of “employee” also includes a “volunteer
worker.” The definition of “volunteer worker” includes someone who is not an
employee of Chajon, but performs under Chajon’s direction. See CSUIC’s Appendix
at 76. Here, it is clear that the state petitions allege that Lopez and Mejia were
performing work at Chajon’s direction. Id. at 7, 28-29 (“[Lopez and Mejia] were
performing work for Chajon, including the painting and caulking work.”). Therefore,
alternatively, Lopez and Mejia fall under the definition of “employee” because they
can be considered “volunteer workers.”
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(citing Wellington Specialty Insurance Company v. Ling, No. CIV.A. 3:08-CV-0738-L,
2009 WL 2136399, at *3-5 (N.D. Tex. July 17, 2009) (Lindsay, J.) (determining that
there was an issue of fact as to the duty to defend when the complaint specifically
alleged that the injured worker was an independent contractor)); see also CSUIC’s
Appendix at 7, 28-29. Moreover, the state petitions do not contain factual
allegations to permit the conclusion that Lopez and Mejia were independent
contractors. See CSUIC’s Appendix at 7, 28-29. The state pleadings do not provide
sufficient information for the court to apply Texas’s five-factor test to determine
employment status as urged by Mejia. See Mejia’s Response Brief at 8-9. The court
cannot “read facts into the pleadings” or “imagine factual scenarios which might
trigger coverage.” See Gore Design Completions, Limited, 538 F.3d at 369.
Furthermore, both Lopez and Mejia rely heavily on First Mercury Insurance
Company v. Rosenbloom Welding & Fabrication, L.L.C., No. 3:12-CV-4374-L, 2014 WL
3809045 (N.D. Tex. Aug. 1, 2014) (Lindsay, J.), for the proposition that summary
judgment is inappropriate because the policy does not explicitly exclude independent
contractors. Mejia’s Response Brief at 6; Lopez’s Response Brief at 14. It is true that
the First Mercury court emphasized that the policy’s exclusion for employees of
independent contractors did not exclude independent contractors. First Mercury
Insurance Company, 2014 WL 3809045, at *1. However, First Mercury is inapposite to
the situation here for two reasons. First, as CSUIC correctly contends, the First

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Mercury policy did not define the term “employee.” See id. at *5. Consequently, the
First Mercury court resorted to the narrower common law definition of “employee.”
See id. at *4-5 (looking to whether the employer had sufficient control over the
worker). It is instructive to note, however, that the First Mercury court specifically
stated that “[w]hen a term is defined in the policy, that definition controls.” Id. at
*3. Here, the court is bound to apply the policy’s broad definition of “employee.”
More importantly, in First Mercury, the policy’s failure to specifically exclude
independent contractors was determinative because the state petition specifically
alleged that the injured workers were “independent contractors and/or subcontractors
of [Defendants] and not employees.” Id. at *4. Here, as discussed above, there is no
indication from the state petition that Mejia or Lopez were independent contractors.
Instead, they fall squarely within the definition of “employee.” From the facts
eligible for consideration under the “eight-corners” rule, it would be unreasonable to
infer anything other than that Lopez and Mejia were “employees” of Chajon, as that
term is defined in the policy.
b. Exception to the “Eight-Corners” Rule
Lopez and Mejia also contend that evidence they submitted raises an issue of
fact as to whether Lopez and Mejia were independent contractors. See Mejia’s
Response Brief at 8-11; Lopez’s Response Brief at 9. To consider this evidence, the
court must determine whether the “very narrow” exception to the “eight-corners” rule

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applies. The Texas Supreme Court implied that courts may consider “extrinsic
evidence only when relevant to an independent and discrete coverage issue.” Fielder
Road Baptist Church, 197 S.W.3d at 308. This exception may apply “when it is
initially impossible to discern whether coverage is potentially implicated and when
the extrinsic evidence goes solely to a fundamental issue of coverage which does not
overlap with the merits of or engage the truth or falsity of any facts alleged in the
underlying case.” Id. at 309 (quoting Northfield Insurance Company v. Loving Home
Care, Inc., 363 F.3d 523, 531 (5th Cir. 2004) (emphasis in original)).
Here, as discussed above, the state petitions almost verbatim quote the policy’s
definition of “employee” when describing Lopez and Mejia’s employment with
Chajon. The court cannot conclude that it is initially impossible to determine
whether coverage is implicated. See Shanze Enterprises, Inc. v. American Casualty
Company of Reading, Pa, 150 F. Supp. 3d 771, 778 (N.D. Tex. 2015) (Fitzwater, J.)
(declining to apply the exception where the court resolved the issue from the facts
alleged in the state-court complaint).
Moreover, not only is it unnecessary to consider the proposed extrinsic
evidence, doing so could potentially affect the merits of the state-court action. The
state petitions contain allegations of agency against all defendants. See CSUIC’s
Appendix at 14, 35. As such, analyzing the employee-independent contractor
dichotomy with the proposed extrinsic evidence could potentially affect “the merits

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of the underlying state court case and the theories of liability asserted therein.” James
River Insurance Company v. Affordable Housing of Kingsville II, Ltd., No. CIV.A. H-112937, 2012 WL 1551529, at *5 n.3 (S.D. Tex. Apr. 27, 2012). Therefore, the court
declines to apply the narrow exception to the “eight-corners” rule.
3. CSUIC’s Duty to Indemnify Chajon
CSUIC contends that it has no duty to indemnify for the same reason that it
has no duty to defend: because the conduct giving rise to the state action is explicitly
excluded from coverage under the policy. See CSUIC’s Brief at 10. 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 state-court action, the policy also
excludes any duty to indemnify Chajon. See 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.) (“[T]he same reasons that negate

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the duty to defend likewise negate any possibility [the insurer] will ever have a duty
to indemnify.”).
4. Chajon’s Rule 56(d) Motion
Chajon moves for relief under Rule 56(d), contending that he has not had
adequate time for discovery in order to prepare a response. Chajon’s Brief in Support
of His Motion to Allow Time for Discovery Under Rule 56(d) at 1 (docket entry 28).
Chajon avers that CSUIC’s motion is premature because it was filed before discovery
began and discovery is “likely to reveal facts that will raise a genuine issue of material
fact.” Id. at 7.
Rule 56(d) provides:
If a nonmovant shows by affidavit or declaration that, for
specified reasons, it cannot present facts essential to justify
its opposition, the court may: (1) defer considering the
motion or deny it; (2) allow time to obtain affidavits or
declarations or to take discovery; or (3) issue any other
appropriate order.
FED. R. CIV. P. 56(d). To succeed on a Rule 56(d) motion, the “movant ‘must
set forth a plausible basis for believing that specified facts, susceptible of collection
within a reasonable time frame, probably exist and indicate how the emergent facts, if
adduced, will influence the outcome of the pending summary judgment motion.’”
McKay v. Novartis Pharmaceutical Corporation, 751 F.3d 694, 700 (5th Cir. 2014)
(quoting Raby v. Livingston, 600 F.3d 552, 561 (5th Cir. 2010)).

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Here, Chajon has failed to meet his burden. As CSUIC correctly contends,
CSUIC’s duty to defend is determined by the “eight-corners”: the allegations in the
state petition and the policy. Fielder Road Baptist Church, 197 S.W.3d at 306.
Because the court can decide this motion by adhering to the “eight-corners” rule, any
evidence obtained in discovery will not influence this case. Thus, Chajon’s Rule
56(d) motion is denied.
III. CONCLUSION
For the reasons stated above, CSUIC’s motion is GRANTED and Chajon’s
motion is DENIED.
SO ORDERED.

July 31, 2017.

___________________________________
A. JOE FISH
Senior United States District Judge

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