2200 West Alabama, Inc. v. Western World Insurance Company
MEMORANDUM OPINION AND ORDER granting 10 MOTION for Summary Judgment; denying 11 Cross MOTION for Summary Judgment. Any claim for an attorneys fee and a proposed final judgment are to be submitted within 10 days of the filing of this Memorandum. Responses are due within 10 days of any claim. (Signed by Judge Kenneth M Hoyt) Parties notified.(chorace)
United States District Court
Southern District of Texas
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
2200 WEST ALABAMA, INC.,
WESTERN WORLD INSURANCE
September 13, 2017
David J. Bradley, Clerk
CIVIL ACTION NO. 4:16-CV-2244
MEMORANDUM OPINION AND ORDER
Before the Court are the plaintiff’s, 2200 West Alabama, Inc., (“the plaintiff”),
motion for summary judgment [DE#10] and the response and cross-motion for summary
judgment of the defendant’s, Western World Insurance Company, [DE#11]. Also before
the Court are the reply and response of the plaintiff to the defendant’s cross-motion [DE#
12] and the defendant’s reply in support of its cross-motion [DE# 13]. The Court has
reviewed the parties’ papers and submissions and determines that the plaintiff’s motion
should be granted and the defendant’s cross-motion should be denied.
The defendant issued its “Commercial General Lines” insurance Policy Number
NPP1356289, effective December 15, 2013, for one-year and thereafter renewed the
coverage in Policy Number NPP1402213 for an additional year during which term(s), the
plaintiff enjoyed liability coverage for “sums that [the plaintiff] becomes legally
obligated to pay for damages because of . . . personal and advertising injur[ies].” The
Policy also obligated the defendant to . . . “defend [the plaintiff] against any suit” . . .
that seeks damages covered by the terms of the Policy.
In 2014, the plaintiff was sued in state court, concerning a commercial lease where
the negotiations went awry and the tenant, Dubrow Partners (“Dubrow”) sought to
recover damages against the plaintiff and its prime tenant, Soray, LLC, for failure to
timely complete negotiating a lease agreement in order that Dubrow might take physical
possession and open its restaurant. The lease was not consummated and Dubrow never
took physical possession of the space.
After being served with a complaint, in an underlying suit, the plaintiff tendered
the suit to the defendant claiming that, under the terms of the Policy, the defendant owed
the plaintiff a duty to defend the suit brought by Dubrow. The defendant disclaimed any
duty owed to the plaintiff while arguing that Dubrow’s claim(s) were not a “covered”
event because Dubrow never physically moved into the premises.
defendant refused to defend the plaintiff in the underlying suit.
The Policy that is the subject of this suit covers “personal and advertising injury”
and, in this respect defines, in relevant part, the scope of coverage and define injury as
. . . [I]njury . . . arising out of . . . the wrongful eviction from,
wrongful entry into, or invasion of the right of private
occupancy of a room, dwelling or promises that a person
occupies, committed by or on behalf of its owner, landlord or
See [DE 10-1, p. 38-39]. The defendant contends that the plaintiff
cannot establish that
Dubrow was wrongfully evicted, that another party wrongfully enter[ed] the premises or,
that an invasion occurred circumventing Dubrow’s right of occupancy of the premises.
The defendant also asserts that the plaintiff knowingly violated Dubrow’s right to take
occupancy and thereby breached the contract. Therefore, the defendant asserts, the
plaintiff’s conduct absolves the defendant of any contractual duty to defend the suit.
The plaintiff asserts that at the time that negotiations ceased, Dubrow had a right
of occupancy. It asserts as well that physical occupancy of the premises is not required
by the Policy(s). The question that controls coverage, contends the plaintiff, is whether
Dubrow gained a “right of private occupancy.” In support of its claim that Dubrow
gained that right, the plaintiff points to the claims of Dubrow in the underlying suit.
There, Dubrow asserts that the plaintiff interfered with its “right of occupancy”. To the
defendant’s claim that even if Dubrow gained such a right coverage is excluded, the
plaintiff asserts that Dubrow’s assertions against the plaintiff in the underlying suit do not
trigger the Exclusion provision without proof. Continuing, the plaintiff asserts that the
defendant has failed to proffer any evidence that it violated the lease agreement or
otherwise breached it.
The parties agree that Texas law applies, and Texas law generally endorses the
eight-corners rule. “The eight-corners rule provides that when an insured is sued by a
third party, the liability insurer is to determine its duty to defend solely from the terms of
the policy and the pleadings of the third-party claimant. Resort to evidence outside the
four corners of these two documents is generally prohibited.” GuideOne Elite Ins. Co. v.
Fielder Rd. Baptist Church, 197 S.W.3d 305, 307 (Tex. 2006). “If the [claimant’s]
petition only alleges facts excluded by the policy, the insurer is not required to defend.”
Fidelity & Guar. Ins. Underwriters, Inc. v. McManus, 633 S.W.2d 787, 788 (Tex. 1982).
Further, “[t]he court may not read facts into the pleadings or imagine factual scenarios
which might trigger coverage.” VRV Dev. L.P. v. Mid-Continent Cas. Co., 630 F.3d 451,
456-57 (5th Cir. 2011) (internal quotations omitted).
If an insurance contract is worded such that it “can be given a definite or certain
legal meaning,” then it is unambiguous and enforceable as written. Nat'l Union Fire Ins.
Co. of Pittsburgh, Pa. v. CBI Indus., 907 S.W.2d 517, 520 (Tex. 1995). Only if an
insurance contract is susceptible to multiple reasonable interpretations must a court adopt
the interpretation most favorable to the insured. Nat’l Union Fire Ins. Co., 907 S.W.2d at
520. Nevertheless, a court will not find a contract ambiguous merely because the parties
offer contradictory interpretations. See Cent. States, Se. & Sw. Areas Pension Fund v.
Creative Dev. Co., 232 F.3d 406, 414 n.28 (5th Cir. 2000) (citing Wards Co. v. Stamford
Ridgeway Assocs., 761 F.2d 117, 120 (2d Cir. 1985).
The Court is of the opinion that the facts support the plaintiff’s claim that
Dubrow’s pleadings triggered terms under the Policy that gave rise to a duty to defend on
the part of the defendant. The Court interprets the language in the policy i.e.,, “right of
private occupancy” plainly to mean that occupancy of the premises is unnecessary to
implicate the duty to defend provision of the Policy. The term “possession”, therefore,
refers to the right to occupy the premises, not necessarily physical occupancy. See Hobbs
Realty & Construction Co. v. Scottsdale, Ins., Co. 593 S.E.2d 103, 107-08 (2004). This
interpretation of the Policy language is consistent with the controlling case law of this
state that informs on insurance policy interpretation. See Zurich Am. Ins. Co. v. Nokia,
Inc., 268 S.W. 3d 487 (Tex. 2008). In Zurich, the Supreme Court of Texas stated that . .
.”an insurer’s duty to defend is determined by the third party plaintiff’s pleadings,
considered in the light of the policy provisions, without regard to the truth or falsity of
those allegations”. Id.
It is undisputed that Dubrow asserted a cause of action against the plaintiff
contending that Dubrow had tenant rights to a space at the premises. Accepting these
pleadings as true, according to Zurich, the duty to defend provision is triggered and the
plaintiff is covered by the Policy. In reaching this conclusion, the Court reviewed the
case law proffered by the defendant and declares that the case law authority proffered is
either distinguishable and/or inapplicable to the facts in this case. Therefore, the Court
rejects the defendant’s interpretation and application of those cases as authority for
requiring physical occupancy before a duty to defend arises.
The Court also rejects the defendant’s view that the “Exclusions” provision of the
Policy applies to the case. The defendant asserts that no duty to defend arises because of
an exclusion that bar recovery. The defendant also asserts that the plaintiff knowingly
violated Dubrow’s right to occupy the premises and therefore breached its contractual
duty to Dubrow under the terms of the lease agreement. The Court notes that these
assertions are based on the third-party’s assertions in the underlying suit.
“The plaintiff bears the burden showing that there is coverage, however, the
[defendant] bears the burden of proving the applicability of any exclusions in the policy”
that permits the insurer to deny coverage. Guar. Nat'l Ins. Co. v. Vic Mfg. Co., 143 F.3d
192, 193 (5th Cir. 1998) (citing Telepak v. United Servs. Auto. Ass'n, 887 S.W.2d 506,
507 (Tex. Civ. App. – San Antonio 1994, writ denied); see also Venture Encoding Serv.,
Inc. v. Atl. Mut. Ins. Co., 107 S.W.3d 729, 733 (Tex. App. – Fort Worth 2003, pet.
denied) (stating that the Texas Insurance Code places the burden on the insurer to prove
any exception to coverage). That proof is absent here and cannot be supplied by the
pleading of the plaintiff in the underlying suit.
Moreover, the Texas Supreme Court has repeatedly emphasized that there are no
recognized exceptions to the eight-corners rule. D.R. Horton-Texas, Ltd. v. Markel Int’l
Ins. Co., 300 S.W.3d 740, 744 (Tex. 2009) (“analysis of the duty to defend has been
strictly circumscribed by the eight-corners doctrine”); Zurich Am. Ins. Co. v. Nokia, Inc.,
268 S.W.3d 487, 497 (Tex. 2008). Therefore, it would be error to decide that an insurer’s
claim of Exclusion may be based on what was unsaid in an underlying complaint. The
duty to defend is decided solely on what was said in the four corners of the underlying
complaint and the four corners of the relevant policy; and, any Exclusion is subject to
proof that is absent here. Accordingly, the Court disallows the defendant’s references to
extrinsic statement, such as the plaintiff’s pleadings as evidence or proof of an exclusion
under the Policy.
Therefore, the Court concludes that the plaintiff’s motion for summary judgment
should be GRANTED and that the defendant’s cross-motion for summary judgment
should be DENIED. Any claim for an attorney’s fee and a proposed final judgment are
to be submitted within 10 days of the filing of this Memorandum. Responses are due
within 10 days of any claim.
It is so Ordered.
SIGNED on this 13th day of September, 2017.
Kenneth M. Hoyt
United States District Judge
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