### IN THE UNI TED STAT ES COURT OFAPPEALS FOR THE FIF TH CIRCU IT

No. 10-20817

GILBANE BUILDING COMPANY, Plaintiff - Appellee,

v. ADMIRAL INSURANCE COMPANY, Defendant - Appellant.

Appeal from the United States District Court for the Southern District of Texas

Before WIENER, CLEMENT, and ELROD, Circuit Judges. JENNIFER WALKER ELROD, Circuit Judge: This insurance coverage case arises out of an underlying personal injury lawsuit brought by Michael Parr against Gilbane Building Company. Gilbane,

a general contractor, sought defense and indemnification from Admiral Insurance Company based on an insurance policy held by Empire Steel Erectors,

a subcontractor. On cross-motions for summary judgment, the district court determined that Admiral owed a duty to defend and indemnify. We REVERSE the summary judgment on the duty to defend and AFFIRM the judgment on the duty to indemnify. U n i te d S ta te s C o u rt o f A p p ea l s F i ft h C i rc u i t 

### F I L E D Decem ber 1 2, 2 011 Lyle W . Cayce Clerk Case: 10-20817 Document: 00511692842 Page: 1 Date Filed: 12/12/2011No. 10-20817 I. Background. The material facts of this case are undisputed. Parr sustained injuries on

a construction site while climbing down a ladder. He sued Gilbane, the general contractor operating the construction project, and Baker Concrete, the company responsible for i n s talling and maintaining the ladders at the site. He did not 1

sue his employer, Empire Steel. He alleged that recent rainstorms had caused the construction site to accumulate mud and that Gilbane had been negligent in failing to keep the workplace clean. Gilbane requested that Admiral Insurance defend and indemnify it as an additional insured under the commercial general liab i l i ty (CGL) policy that Empire Steel had obtained from Admiral. The CGL policy contains the following provisions that are relevant here: SCHEDULE Name of Additional Insured Person(s) or Organization(s): Any person o r o r g a n ization that is an owner of real property or personal property on which you are performing ongoing operations, or a contractor on w hose behalf you are performing ongoing operation, but only if coverage as an additional insured is required by writt e n c o ntract or written agreement that is an “insured contract,” and provided that the “bodily injury,” “property damage” or “pe r s o nal & advertising injury” first occurs subsequent to execution of the contract or agreement. . . .
A. Section II - Who Is An Insured is amended to include as an additional insure d th e p er s o n (s) or or ganization(s) shown in the Schedule, but only with respect to liability for “bodily inju ry,” “property damage” or “personal & advertising injury” caused, in whole or in part, by: 1. Your acts or omissions; or 2. The acts or om i ssions of those acting on your behalf;

Parr event ually se ttl ed his law sui t agains t Bake r Concr ete , and Bake r is not a par ty 1 to this ap pea l. 2 Case: 10-20817 Document: 00511692842 Page: 2 Date Filed: 12/12/2011No. 10-20817 in the performance of your ongo ing operations for the additional insured(s) at the location(s) designated above. . . . 9. “Insured contract” means: . . . f. T hat part of any other contract or agreement pertaining to your business

. . . under which you assume the tort liability of another p a r ty to pay for “bodily injury” or “property damag e” to a third person or organization, provided the “bodily injury” or “property damage” is caused, in whole or in part, by you or those acting on your behalf. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.
In other words, the CGL policy provides coverage to additional insureds for their

own or their agents’ acts or omissions, so l o n g as Empire Steel had previously assumed the liability of the potential additional insured in a written contract. Gilbane requested coverage from Admiral, claiming that it qualified as an additional insured under the CGL policy. Gilbane based its claim on the Trade Contractor Agreement (TCA) between it and Empire Steel, according to which Empire Steel agreed to secure insurance coverage for Gilbane as an additional insured. Empire also agreed to “indemnify and hold harmless” Gilbane and all of its agents for any losses caused by Empire, regardless of whether those losses were caused in part by Gilbane. Admiral denie d c overage under the policy to Gilbane for reasons not relevant here. Parr and Gilbane eventually settled the lawsuit, and Gilbane filed an action for declaratory judgment and breach of contract against Empire and Admiral, seeking a declaration that Admiral had a duty to defend and indemnify it. The parties filed competing motions for summary judgment. The district court granted Gilbane’s motion as to the duty to defend but initially denied it as to the duty to indemnify because of outstanding f a c tual issues. Later, the district c o u rt h e ld a trial by written submission on stipulated facts. I t found that Parr had tripped while climbing down a ladder carryi n g a n

3 Case: 10-20817 Document: 00511692842 Page: 3 Date Filed: 12/12/2011No. 10-20817

extension cord, and his f e e t had gotten tangled in the cord. The court determined that Admiral had a duty to in d emnify because a jury would have found Parr or Empire at least 1% responsible for Parr’s injuries. A d m i ral appealed. II. Standard of Review. We review a district court’s grant of summary judgment de novo , applying the same legal standards that the district court applied, an d w e vi ew the evidence in the light most favorable to the nonmoving party. Am. Int’l Specialty Lines Ins. Co. v. Rentech Steel LLC, 620 F.3d 558, 561-62 (5th Cir. 2010). We affirm “only if there is no genuine issue of material fact and one party is entitled to prevail as a matter of law.” Cedyco Corp. v. PetroQuest Energy, LLC, 497 F.3d 485, 488 (5th Cir. 2007). We review the district court’s findings of fact for clear

error. One Beacon Ins. Co. v. Crowley Marine Servs., Inc. , 648 F.3d 258, 262 (5th Cir. 2011). III. Interpreting Insurance Policies in Texas. “In this diversity action, we must apply Texas law as interpreted by Texas state courts.” Mid-Continent Cas. Co. v. Swift Energy Co. , 206 F.3d 487, 491 (5th Cir. 2000). Our primary obligation is to make an Erie guess as to how the Texas Supreme Court would decide the ques t i o n before us. Am. Int’l Specialty Lines Ins. Co. , 620 F.3d at 564. “When making an Erie guess, our task is to attempt to predict state law, not to create or modify it.” SMI Owen Steel Co. v. Marsh USA, Inc. , 520 F.3d 432, 442 (5th Cir. 2008) (internal quotation marks omitted). We consider Texas Supreme Court cases that, “while not deciding the issue, provide guidance as to how the Texas Supreme Court would decide the question before us.” Am. Int’l Specialty Lines Ins. Co. , 620 F.3d at 564. Moreover, while “the decisions and dicta of the Texas Supreme Court weigh more heavily in our Erie analysis,” we also consider decisions of the intermediate appellate courts in determining how the Texas Supreme Court would decide this issue. Id. at 566. We are bound by our own preced e n t i nterpreting Texas law unless there has
4 Case: 10-20817 Document: 00511692842 Page: 4 Date Filed: 12/12/2011No. 10-20817

been an intervening change in authority. Lee v. Frozen Food Express, Inc. , 592 F.2d 271, 272 (5th Cir. 1979); see, e.g. , OneBeacon Ins. Co. v. Don’s Bldg. Supply, Inc. , 496 F.3d 361, 364-65 (5th Cir. 2 007). Under Texas law, an i n s u rer may have two responsibilities relating to coverage—the duty to defend and the duty to indemnify. See D.R. Horton-Tex., L td. v. Markel Int’l Ins. Co. , 300 S.W.3d 740, 743 (Tex. 2009). T h e T e x a s Supreme Court has e x p l a ined that the two duties are distinct, and they are to be decided separately. Id. “Two documents determine an insurer’s duty to defend—the insurance policy and the third-party plaintiff’ s pleadings in the underlying litigation, which the court must review ‘without regard to the truth

o r falsity of those allegations.’” Amerisure Ins. Co. v. Navigators Ins

. Co . , 6 1 1 F.3d 299, 309 (5th Cir. 2010) (quoting GuideOne Elite Ins. Co. v. F i e lde r Rd. Baptist Church , 1 9 7 S.W.3d 305, 308 (Tex. 2006)). This is known as the eight-corners rule. Id. The duty to indemnify, on the other hand, is “a matter dependent on the facts and circumst a n c e s o f the alleged injury-causing event, [and] parties may introduce evidence during coverage litigation to establish or refute the duty to indemnify.” D.R. Horton-Tex. , 300 S.W.3d at 741. With these principles in mind, we now consider Admiral’s duties to defend and indemnify. IV. The Duty to Defend. In order to decide whether Admiral owed Gilbane a duty to defend under the policy, we must consider tw o issues: (1) whether Gilbane qualifies as an additional insured under the policy, and (2) whether, under Texas’s strict eightc o rners rule, the facts alleged in the underlying Parr lawsuit are suffici e n t t o trigger Admiral’s duty to defend Gilbane. An affirmative answer to both is required to affirm the district court’s determination that Admiral had a duty to defend Gilb a n e . G i lbane bears the burden on each of these issues. Canutillo Indep. Sch. Dist. v. Nat’l Union Fire Ins. Co. , 99 F.3d 695, 701 (5th Cir. 1996).

5 Case: 10-20817 Document: 00511692842 Page: 5 Date Filed: 12/12/2011No. 10-20817 A. Additional Insured Status. Initially, we must address whether Gilbane qu alifies as an additional insured under th e CGL policy, which is issued solely to Empire as a named insured. According to the policy, a party is an additional insured if coverage “is required by written contract or written agreement that is an ‘insured contract.’” “Insured co n t r a c t” i s a commonly used term of art in Texas insurance law, usually defined by the insurance policy to mean a separate contract that acts as insurance. See Gilbert Tex. Const., L.P. v. Underwriters at Lloyd’s London , 327 S.W.3d 118, 124-25 (Tex. 2010). Here, the policy defines an insured contract as

one where the na m e d i n s u red “assume[s] the tort liability” of the additional insured. The district court found that the TCA, which required Empire to secure insurance coverage for Gilbane, qualified as an insured contract. Admiral argues that the TCA is not an insured contra c t because its indemnity provision is unenforceable under Texas law , a n d therefore Empire

never actually assumed any tort liability. Because indemnity provisions effect

an extraordinary result—“exculpat[in g] a p arty f ro m the consequences of its own negligence” before that negligence even occurs—Texas imposes a fair notice requirement. Dresser Indus., I n c . v . Page Petro., Inc. , 853 S.W.2d 505, 508-09 (Tex. 1993); Ethyl Corp. v. Daniel Constr. Co. , 725 S.W.2d 705, 708 (Tex. 1987). Specifically, the fair notice requirement incorporates the express n e gl igence doctrine and the con s picuousness requirement. Dresser Indus. , 853 S.W.2d at 508. A c ontract that fails to comply with either requirement is unenforceable under Texas law. Storage & Processors, Inc. v. Reyes , 134 S.W.3d 190, 192 (Tex. 2004). Admiral argues that the TCA does no t c omply with the express negligence doctrine, which requires that the intent to indemnify a party from the
consequ e n c e s of its own negligence “must be specifically stated in the four corners of the document.” Id. We assume, without deciding, that the TCA’s indemnity provi sion is unenforceable under Texas law. We therefore must decide whether the TCA can 6 Case: 10-20817 Document: 00511692842 Page: 6 Date Filed: 12/12/2011No. 10-20817

still be an insured contract under the policy. Although the Texas Supreme Court h a s n ever addressed this precise issue, it is largely resolved by our opini o n i n Swift Energy Co. , 2 0 6 F

. 3 d at 492-93. There, Swift sought coverage in an underlying negligence case as an additional insured under a policy. Id. at 489. The policy defined “insured contract” to include a contract und e r w h i c h the insured “assume[s] the tort liability of another party.” The insurance company argued that it had no duty to defend because the master servic e agreement between the contractor and Swift violate d th e T exa s O ilf i el d Anti-Indemnity Act. See Tex. Prac. & Rem. Code Ann. §§ 127.001-.007. A s s u c h , the insurance
company contended that the agreement was unenforceable and not an insured contract because it did not assume any liability. Swift Energy Co. , 206 F.3d at 492-93. We first noted that, when an insurer seeks to deny coverage, the terms of an insurance policy sh o u l d b e construed broadly in favor of coverage. Id. Based on that principle and the lack o f r e l e vant precedent, we held that the agreement was an insured contract within the context of interpreting the policy because Mid-Continent had intended to assume Swift’s tort liability. Id. at 493. The indemnity provision therefo r e qualified as an insured contract, and Swift qualified as an additional insured. Id. ; see also LeBlanc v. Global Marine D r i lling Co. , 193 F.3d 873, 875 (5th Cir. 1999) (holding that an in d e m n i ty provision need not be valid and enforceable to trigger obliga t i o n s u n der the contract, so long as the parties agreed to indemnity); Travelers Lloyds Ins. Co. v. Pac. Emp’rs Ins. Co. , 602 F.3d 677, 683 n.20 (5 th Cir. 2010). Indeed, our holding in Swift is consistent with Texas case law. The Texas Supreme Court has declined to apply requirements for indemnification clauses to additional insured provisions, noting that “the express negligence doctrine in Texas has been a p p l ied only to indemnity provisions, not insurance-shifting provisions.” Getty Oil Co. v. Ins. Co. of N. Am. , 845 S.W.2d 794, 806 (Tex. 1992) (citing Atlantic Richfield Co

. v . Petroleum Personnel, Inc. , 768 S.W.2d 724 (Tex.1989)). In Getty , the Texas Supreme Court considered whether the Texas
7 Case: 10-20817 Document: 00511692842 Page: 7 Date Filed: 12/12/2011No. 10-20817

Oilfield Anti-Indemnity Act, which “provides that an agre e ment pertaining to an oil or gas well is void if it purports to indemnify a party from loss or liability for damage arising out of its own negligence,” should be extended to render void an additional insured provision effecting the same result. Id. at 803. The insurance
company argued that allowing the oil company additional insured status would allow it to make an end run around the statute. The Texas Supreme Court rejected that argument, howev e r , e m phasizing that an insurance contract is separate and distinct from an indemnity provision. Id. at 806; see Evanston Ins. Co. v. ATOFINA Petrochems., Inc. , 256 S.W.3d 660, 670 (Tex. 200 8). Here, as in Swift , Admiral’ s argument relies on the policy language defining an insured contract as one that “assume[s] the tort liability of another party,” and concludes that an unenforceable provision does not actually assume liability. H o w ev er, as we explained in Swift , the additional insured question

2
turns not on enforceability, but on whether Empire Steel agreed to “assume the tort liability of another party.” In the TCA, Empire Steel contracted not only to indemnify Gilban e , but also to secure insurance on its behalf; by doing so, it agreed to assume Gilbane’s tort liability. That provision is not rendered void by the indemnity provision, even if it is unenforceabl e . As such, Empire Steel agreed to assume Gilbane’s tort liability, and Gilbane qualifies as an additional insured.

In sup por t of its argum ent to the c o n t r a r y , that a cont rac t can only be an ins ured 2 cont rac t if it is enf

orc eable , Adm iralc ite s tw o u nrep ort ed cas esap plying Texasla w, ne ithe r fr om the Texas Sup rem e Court or this cour t, see Tri -State Ins. Co. v. Rogers- O ’ B r i en Const. Co. , No. 05-9 5-01 639- CV, 1997 WL 211534, at *3- 4 (Tex. App .—Da llas Apri l 30, 1997) ; Mo tiv a Enters ., LLC v. Libe rty Mut. Ins. Co. , No. H- 05

- 1 473, 2006 WL 3246039 (S .D

. Tex. Nov. 6, 2006) , and one cas e app lying Mis sis sip pi law , Certa in London Mkt. Ins. Cos. v. Pa. Na t’l Mut. Cas. Ins. Co. , 269 F. Sup p. 2d 722, 733 (N .D

. Mis s. 2003)

. We do not find thos e cas es per sua sive in light of our holding in Swift

. Mo r eover , in Mo tiv a and Tri -State Ins. Co. , the par tie s agree d that st atus as an additio nal ins ured tur ned on the enf orc eabil ity of the ins ured cont rac t, so the cour ts did not squ arel y a d d r e s s wh ethe r that wa s the cor rec t inquiry. See Tri -StateIns. Co. , 1997 WL 2 11534, at*3 ; Mo tiv a , 2006 WL 3 246039, at*4

. 8 Case: 10-20817 Document: 00511692842 Page: 8 Date Filed: 12/12/2011No. 10-20817 B. Whether the Pleadings Triggered the Duty to Defend. Having determined that Gilbane is an additional insured, we must

c o n s i der whether the pleadings in the underlying lawsuit are sufficient to tri gger Admiral’s duty to defend under the policy. In other words, we must decide whether the pleadings sufficiently allege that Empire or someone acting on its behalf, including Parr, caused Parr’s injuries. 1. Texas’s eight-corners rule

. Texas strictly follows the “eight-corners rule,” meaning the duty to defend
may only be determined by the facts alleged in the petition and the coverage provided in the policy. Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co. , 279 S.W.3d 650, 654 (Tex. 2009). We consider only the facts affirmatively alleged in the Third Amended Pleading, Utica Nat’l Ins. Co. v. Am. Indem. Co. , 141 S.W.3d 198, 201-02 (Tex. 2004), and we take those facts as true, Pine Oak Builders , 279 S.W.3d at 654. I f th e p e t ition does not affirmatively allege facts that would trigger the duty under the policy, Admiral is not required to defend Gilbane. See id. ; Allstate Ins. Co. v. Hallman , 159 S.W.3d 640, 643 (Tex. 200 5). The eight-corners doctrine “strictly circumscribe[s]” a court’s ana l y s i s of the duty to defend. D.R. Horton-Tex. , 300 S.W.3d at 7 4 4

. In performing its eight-corners review, a court may not read facts into the pleadings, look outside the pleadings, or speculate as t o f actual scenarios that might trigger coverage

or create an ambiguity. Nat’l Fire Ins. Co. v. Merchants Fast Motor Lines, Inc. , 939 S.W.2d 139, 142 (Tex. 1997). Moreover, “[t]he Texas S u preme Court has

never recognized any exception to the strict eight corners rule.” Northfield Ins. Co. v. Loving Home Care, Inc. , 363 F.3d 523, 529, 531 (5th Cir. 2004). Although ambiguities will be resolved in favor of coverage, “[t]he fact that the parties disagree a s t o c o v e rage does not create an ambiguity.” Valmont Energy Steel, Inc. v. Commercial Union Ins. Co. , 359 F.3d 770, 773 (5th Cir. 200 4). The Texas Supreme Court has recently reiterated that a “policy imposes

no duty to defend a claim that might have been alleged but was not, or a claim
9 Case: 10-20817 Document: 00511692842 Page: 9 Date Filed: 12/12/2011No. 10-20817

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 , 279 S.W.3d at 655-56. In that case, the insurance company would only have had a duty to defend if one of Pine Oak’s subcontractor s h ad caused the damage, not if Pine Oak had itself caused it. Id. at 654. The petition alleged that Pine Oak negligently built the plaintif f ’ s house by, among other things, “construct[ing] columns that provided inadequate support” and “fail[ing] to properly seal seams.” Id. Pine Oak argued that the complained-of work was performed by subcontractors, triggering the duty to defend. The court held that there was no duty to defend, however, because “[the pleading] alleges that Pine Oak alone is liable for its own actionable conduct.” Id. at 655. Based on Pine Oak Builders , intermediate c o urts of appeals likewise have limited review to those facts alleged in the petition without speculating as to facts that could have been alleged. See, e.g. , AccuFleet, Inc. v. Hartford Fire Ins. Co. , 322 S.W.3d 264, 273 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) (holding that it could not “disregard [the] expres s pleadings” alleging negligence by specific parties); see also Huffhines v. State Farm Lloyds , 167 S.W.3d 493, 501 (Tex. App.—Houston [14th Dist.] 2005, no pet.) (holding that the insurer did not have a duty to defend because the plea din g s all e ged that the defendants had acted intentionally rather than negligently). Accordingly , in analyzing this case, we may not infer additional facts that are not in the pleadings. 2. The policy. We next consider the scope of coverage in the Admiral policy. In doing so,

we examine the policy as a whole to ascertain the parties’ true intent. Utica Nat’l Ins. Co. , 141 S.W.3d at 203. Here, the pol i cy provides coverage for additiona l insureds, “but only with respect to liability for ‘bodily injury,’ ‘property damage’ or ‘personal & advertising injury’ caused, in whole or in part, by

. . . [Empire’s] acts or omissions; or . . . [t]he acts or omissions of those acting on [Empire’s] behalf.”
10 Case: 10-20817 Document: 00511692842 Page: 10 Date Filed: 12/12/2011No. 10-20817

Gilbane argues that our i n t erpretation of the policy should turn on the phra s e “w i th respect to,” which has been interpreted as requiring less than proximate cause. Evanston Ins. Co. , 256 S.W.3d at 666. In Evanston , ATOFINA sought coverage for the death of an employee of its subcontractor, Trip l e S, under a policy Triple S had with Eva n ston. The policy covered an additional in s ured “only with respect to operations performed by [Triple S] or on [its] behalf, or facilities owned or used by [Triple S].” Id. a t 664. Evanston argued that ATOFINA was not an additional insured because the death was caused by ATOFINA’s own negligence, not by Triple S; as a result, it argued, the death was not “with respect to

. . . operations performed by [Triple S].” The Texas Supreme Court rejected that argument, however, explaining that Evanston was equating

“w ith respect to” and proximate cause and that, in reality, the pol i c y o n l y required “a causal connection or relation,” which was satisfied by the fact that the death occurred at ATOFINA’s premises. Id. at 666-67. Gilbane’s argument fails , h o w ever, when we examine the policy at issue in this case as a whole. Unlike in Evanston , the policy here explicitly requires that the injuries be “caused , i n w h o l e or in part, by” Empire. Moreover, the Texas Supreme Court has defined “caused by” as requiring proximate causation. Utica Nat’l Ins. Co. , 141 S.W.3d at 202-03 (citing Red Ball Motor Freight, Inc.

v. Emp’rs Mut. Liab. Ins. Co. , 189 F.2d 374, 378 (5th Cir. 1 9 5 1 )). As such, Admiral owes Gilbane a duty to defend only if the underlying pleadings allege that Empire, or someone acting on its behalf, proximately caused Parr’s injuries. 3. The petition. We turn now to the facts alleged in the pleadings. Parr’s Third Amended Petition alleges only one cause of his injuries: “[Parr’s] injuries were brought to

occ u r , di r e c tly and proximately by reason of the negligence of the Defendants herein (the ‘Gilbane Defendants’).” Specifically, it alleges: [T]he Gilbane Defendants failed to keep the construction site in a clean and functional condition. During the month of January 2007

11 Case: 10-20817 Document: 00511692842 Page: 11 Date Filed: 12/12/2011No. 10-20817

the Houston area received large amounts of rainfall. As a result of this rainfall, the constructio n s ite accumulated large amounts of mud. This mud was tracked in from the surrounding area into the building under construction. As a result of the mud being tracked inside, the work area became slippery and hazardous. The Gilbane Defendants had actual notice of the danger caused by the mud from e - m ail s an d other information given to them by their subcontractor s . Despite the Gilbane Defendants’ knowledge of the dangers posed by th e m ud, these Defendants took no action to correct the probl e m , a n d as a result, Plaintiff slipped and fell causing his injuries.

. . . [T] he Gilbane Defendants controlled the construction elevator o n the jobsite

. . . . Despite the fact that the construction workers worked until five o’clock each day, the Gilbane Defendants sent the elevator operator home around four o’clock. Due to the fact that the elevators were left unmanned and useless after the elevator oper a t o r went home, Plaintiff was forced to walk down the ladder where he ultimately slipped and fell. In deciding that Admiral had a duty to defend, the district court characterized the petition as stating that “the injuries occurred when Parr was walking down the ladder with muddy boots,” which it considered sufficient to implicate Parr’s

c o ntrib utory negligence. Contrary to that ch ar act eri z atio n , how ever , th e p etitio n does not allege that Parr climbed down the ladder with “muddy boots.” Rather, it alleges that Gilbane’s negligence caused the work area to become “slippery an d hazardous,” causing Parr’s injuries. Gilbane argued before the district court, as it does here, that because Parr

or Empire could potentially be found contributorily ne gl i gent at a later trial, inferring f

a c ts to support the plaintiff’s contributory negligence does not run afoul of the eight-cor n e r s ru l e . The district court accepted that argument, determining, “After reviewing only the eight-corners of the pet i ti on and the Admiral policy, the court cann o t say that Parr himself, acting on behalf of Empire Steel in the course of his job, was not possibly a contributing, proximate cause of his injuries .” In other words, it determined that the pleadings did not conclusively rule out Parr’s negligence; it was possible a jury coul d eventually find that Parr caused his own injuries.

12 Case: 10-20817 Document: 00511692842 Page: 12 Date Filed: 12/12/2011No. 10-20817

Such a c o n s t ruction, however, improperly shifts the burden of proof, requiring the party disputing coverage to estab l i s h th at the pleadings do not p o t entially support a covered claim. Although the Texas Supreme Court h a s held that an insurer has a duty to defend “if a plaintiff’s factual allegations potentially s u p p ort a covered claim,” it has never applied the “potentiality” standard to deviate from the eight-corners rule. Zurich Am. Ins. v. Nokia, Inc. , 268 S.W.3d 487, 490 (Tex. 2008). Rather, it has u sed the standard to characterize the description of claims in the petition, determining whether they potentially were covered. In Zurich , for example, the Texas Supreme Court held that the allegations in the pleadings that the plaintiffs had suffered “biological injury” potentially i n cluded a claim for “bodily injury.” Id. at 492-93. It considered only the facts alleged in the pleadings and did not make any factual assumptions or inferences that were not pleaded. Id. ; see, e.g. , GuideOne Elite Ins. Co. , 197 S.W.3d at 310 (holding that allegations of sexual as s a u l t b y a n employee of the church fell within coverage for “sexual misconduct”). Likewise, the Texas Supreme Court has held tha t , even applying the potentiality standard, courts cannot “imagine factual scenarios” th a t would trigger coverage. Nat’l Union Fire Ins. Co. , 939 S. W

. 2 d at 142. There, the insu r a n c e p olicy provided coverage for “bodily injury or property damage to which this insurance applies, caused b y an accident and resulting from the ownership, maintenance or u s e o f a covered auto.” Id. at 141. The pleading alleged that the defendant “negligently discharged a firearm and caused a bullet to strike” the victim. Id. The court of a p p e a l s had incorrectly applied the
p otentiality standard, hypothesizing that “[i]f a driver were authorized by Merchants to carry a weapon when operating i t s t r uck in order to protect the truck and its contents and if the driver negligently discharged a firearm while

o perating that truck, then damages caused by the discharge would arguably arise out of the operation of that vehicle.” Nat’l Union Fire Ins. Co. of Pittsburgh

v. Merchs

. F

ast Motor Lines, Inc. , 919 S.W.2d 903, 906 (Tex. App.—Eastland
13 Case: 10-20817 Document: 00511692842 Page: 13 Date Filed: 12/12/2011No. 10-20817

1996, writ granted). The Texas Supreme Court reversed, holding that the facts affirmatively alleged did not potentially state a covered claim. 939 S.W.2d at 142. The district court should only have considered whether the facts pleaded affirmatively implicated Parr’s or Empire’s negligence. Applying the correct standard, the allegation s i n the pleadings do not implicate either Parr’s or Empire Steel’s fault. Indeed, even the portion of the petition relied on by the district court alleges that P a rr ’ s injuries were caused

o n l y by Gilbane: “Despite the Gilbane Defendants’ knowledge of the danger s posed by the mud, these Defendants took no action to correct the problem, and

as a result, Plaintiff slipped and fell causing his injuri es.” Simply put, the petition does not allege any facts suggesting that Parr ’s own negligence could have caused his injuries. Nor does the petition allege that Empire caused Parr’s injuries. Indeed, the only mention of Empire in the pleadings is, “Plaintif f w a s a n employee of Empire Steel Erectors, L.P., performing work under a contract between Empire Steel Erectors, L.P. and Gilbane

. . . .” In i t s b rief, Gilbane concedes that the requisite language is not in the pleadings, recognizing “Parr’s petition’s silence

as to any acts or omission s o f E m p i r e . ” Limiting our review to the face of the peti t ion, as we must, it does not affirmatively allege any facts implicating the negligence of either Empire or Parr, and Admiral has no duty to defend.

4. Should we make an exception to the eight-corners rule? Gilbane nonetheless asks us to create an ex c e p tion to the strict eightcorners rule—even though the Texas Supreme Court has never done so—that would allow us to consider facts not alleged in the petition. The Texas Supreme Court has made clear that a “policy imposes no duty to defend . . . a claim that

more closely tracks the true factual circumstances surrounding the third-party claimant’s injuries but which, for whatever reason , has not been asserted.” Pine Oak Builders , 279 S.W.3d at 655-56 (emphasis added). Employing that principle, we decline to look outside the petition as requested by Gilbane.

14 Case: 10-20817 Document: 00511692842 Page: 14 Date Filed: 12/12/2011No. 10-20817

First, Gilbane asks us to create an exception to the eight-corners rule because, it argues, a plaintiff would never allege his own negligence. It therefore argues that we should infer that Parr’s negligence would be implicated at trial. Gilb ane argues that Texas’s contributory negligence statute, which re quire s th at the trier of fact determine the percentage of responsibility for multiple parties, i n c l uding for each claimant, automatically implicates a plaintiff’s o w n negligence. See Tex. Civ. Prac. & Rem. Code § 33.003(a). Thus, under this logic,

a plaintiff would be assumed to be contributorily negligent for purposes of a duty to defend regardless of whether any negligence is alleged. Gilbane’s argument is contrary to Texas law. A plaintif f’s negligence is not automatically implicated in every case. Texas does not require the trier of fact to consider contributory negligence unless that allegation is in the pleadings and the evidence presented at trial. See Tex. R. Civ. P. 278 (“The court shall submit the questions, instructions and definitions in the form provi d e d by Rule 277, which are raised by the written p l e a di n gs and the evidence.”). In fact, section 33.003(b) mandates that a plaintiff’s negligence will not be submitted to the jury “without sufficient evidence to support the submission.” Tex. Civ. Prac. & Rem. Code § 33.003(b )

. As such, Texas’s contributory negligence statute has no bearing on the duty to defend. Moreover, the Texas Supreme Court recently recognized that if it were to create an exception to the eight-corners rule, it would do so only “‘when it is in itially impossible to discern whether coverage is potentially implicated and when the extrinsic evidence goes solely to a fundamental issue of coverage which does no t overlap with the merits of or engage the truth or falsity of any facts alleged in the underlying case.’” G u i deOne Elite Ins. Co. , 197 S.W.3d at 309 (quoting Northfield Ins. Co. , 363 F.3d at 531 (emphasis in original)). It declined to create an exception for evidence that goes both to coverage and the merits of the case b e c a u s e d o i ng so would conflate the duty to defend with the duty to indemnify, which is determined by the facts proven in the underlying trial. Id.
15 Case: 10-20817 Document: 00511692842 Page: 15 Date Filed: 12/12/2011No. 10-20817

at 310. Here, whether Parr acted negligently in climbing down the ladder goes directly to the merits of the underlying negligence suit, as well as to the duty to defend. We are without authority to c r e a te an exception where the Texas Supreme Court has specifically declined to do so. See SMI Owen Steel Co. , 520 F.3d at 442. Second, Gilbane argues that we should go outside the eight corners of the pleadings and policy in this case because Parr coul d n o t plead Empire’s

n e gligence without triggering workers’ compensation issues. Gilbane rec o gni z e s the “sile n c e” i n the pleadings as to Empire’s negligence but asks that we disregard it because it “indicate[s] not that Empire comm i t t e d no acts or omissions, but onl y that Empire is statutorily immune to suit.” Importantly, however, there is no allegation of a workers’ compe n s a tion policy in the pleadings, and “[f]acts outside the pleadings, even those easily ascertained, are ordinarily not material to the determination.” Liberty Mut. Ins. Co. v. Graham , 473 F.3d 596, 600 (5th Cir. 2006). The Texas Supreme Court has refused to recognize an exc e p t ion to the eight-corners rule even when everyone involved in the suit knows the true facts. See Pine Oak Builders , 279 S.W.3d at 655. For example, in GuideOne Elite Ins. , the court declined to consider undisputed evidence that the employee who had allegedly assaulted the plaintiff ceased working for the defendant b e fore the policy took effect. 197 S.W.3d a t 3 0 7

. Similarly, here, it is only by looking to evidence outside of the pleadings—which we may not do—that we know about the existence of the policy. Cr e a t i ng an exception here would be contrary to T e x a s l a w , and we decline to do so. Moreover, even if we could conside r th e 3

We rec o gnize that this policy pr es ents a se em ingly dif fic ult hurdle for additio nal 3 ins ured s to tri gger cover age wh ile navigati ng dif fic ult workers ’ co mp en sation and cont ribut ory negligenc e iss ues . None thel es s, it is not our pl a c e t o c r e a te excep tio ns wh ere the Texas Sup rem e Court has not sho wn that it wo uld. As a pr act ical mat ter , how ever, we obs erve that par tie s so me tim es ame nd thei r ple adin gs to tri gger cover age on the verge of se ttl em ent. See,
e. g. , Huff

hine s , 167 S. W.3 d at 496. 16 Case: 10-20817 Document: 00511692842 Page: 16 Date Filed: 12/12/2011No. 10-20817

workers’ compensation policy, Texas law would still r e qu ire an affirmative allegation of Empire’s negligence in the pleadings, as discussed above. Pine Oak Builders , 279 S.W.3d at 655-56

. Thus, the distric t court erred in granting summary judgment in favor of Gilbane on the duty to defend. V. The Duty to Indemnify. Next, we consider wheth e r A d miral owes a duty to indemnify under the CGL policy. The duty to indemnify is separat e a n d distinct from the duty to def e n d

. Zurich Am. Ins. Co. , 268 S.W.3d at 490-91. The duty to defend is circumscribed by the eight-corners doctrine; the duty to indemnify, on the other hand, is controlled by the facts proven in the underlying suit

. Pine Oak Builders , 279 S.W.3d at 656. Accordingly, we consider facts outside of those alleged in the petition in determining the duty to indemnify. Burlington N. & Santa Fe Ry. Co. v. Nat’l Union Fire Ins. Co. , 334 S.W.3d 217, 219 (Tex. 2011). Here, if the facts proven at trial establish “liability for ‘bodily injury’

. . . caused, in whole or in part, by

. . . [ E m p i r e ’ s] acts or omissions; or . . . [t]he acts or omissions of those acting on [Empire’s] behalf, ” th e n Admiral owed a duty to indemnify. The district court found that Parr was inj u r e d w hen he slipped while descending a ladder carrying an extension cord. He told a co-worker immediately after he fell tha t his “feet got wrapped up in the extension cord.” T h e district court concluded that “Parr’s own conduct was a contributing proximate cause of his damages claimed in the Underlyin g L a wsuit” and that “[a] jury in the Underlying L a w s u i t would have found Michael Parr or his employer, Empire Steel, 1% or more responsible for causing the occurrence and/or injuries at issue.” Thus, under the terms of the policy, the district court concluded that Admiral had a duty to indemnify Gilbane. Admiral does n o t argue that the district court erred in making those findi n g s . R a ther, it argues only that there was no duty to indemnify Gilbane bec a u s e the TCA is not an insured contract, and Gilbane therefore does not
17 Case: 10-20817 Document: 00511692842 Page: 17 Date Filed: 12/12/2011No. 10-20817

qualify as an additional insured. As explained above, supra Part IV.A., Gilbane does qualify as an additional insured. Therefo r e , th e district court did not clearly err in determining that Admiral owes Gilbane a duty to indemnify for the cost of its settlement with Parr. 4 VI. Conclusion. Accordingly, we REVERSE the summary judgment on the duty to defend and AFFIRM the judg m e nt o n the duty to indemnify. We remand for proceedings consistent with this opinion.

Altho ugh this may se em lik e an unus ual res ult, wh ere ther e is no dut y to def end but 4 the narr ow er dut y to inde mni fy is tri ggered , the Texas Sup rem e Court has cons ide red just this sit uatio n. In D. R. Ho rton- Tex

. , 300 S. W.3 d at 744, the ins uranc e com pany argued that it coul d not have a dut y to inde mni fy if the fac ts allege d i n t he unde rlying ple adin gs did not tri gger the du ty to def

end. Id. The Texas Sup rem e Courtreject ed tha t argum ent, holdin g that it is pos sib le to pr ove fac ts at tri al that give ris e to a dut y to inde mnify even wh en thos e sam e fac ts we re not suf

fic ient ly p lead ed to tri gger the duty t o d efe nd. Id. 18 Case: 10-20817 Document: 00511692842 Page: 18 Date Filed: 12/12/2011