C O U R T O F A P P E A LS EI GHTH D I STRI CT OF TEXAS ELPASO, TEXAS REEVES COUNTY, TEXA S AND A R N U LF O G O M E Z , IN D IV ID U A LLY AND AS SHERI FF OF REEV ES COUNTY, Ap pe lla nts , v. HOUSTON CASUAL TY COMPANY, Appellee
. § § § § § § No . 0 8- 09 -0 02 56 -C V

Appea l from the 143rd District Court of Re e ve s Co un ty , T e xas (TC# 09-09-19461- CVR)

O P I N I O N Th is i s an a

pp e a l f ro m a summa ry jud g me nt r e nd e re d in

fa vo r o f H ou sto n Ca su a lty Com pa ny (“ Ho us ton

Ca su a lty” ) i n a

de c larator

y a c tio n th at H ou sto n Ca su a lty ha d a duty to de fe nd and ind e mni fy

Re e ve s Co un ty

and She ri ff Go me z un de r a

no n- pr of it o rg anizatio n li a

bil ity policy . On appe al, Reeve s County and Sheriff

Gomez argue that the c ourt err ed in g ranting Houston Casualty ’s motion for summary judgme nt, and in denying the ir motion for partial
summa ry jud g me nt. In I ssue One, Re eves County and Sheriff

Gomez contend the tria l court er red in g ranting Houston Casualty ’s motion for summary judgme nt. In I ssue Two, Ree ves County and Sheriff Go me z co nte nd

the tr ia l c ourt

e rr e d in de nyingthe ir

mot ion fo r p art ia l summa

ry jud g me nt. In 2 00 1, Mr . Pa sc ua l O lib a s b ro ug ht a c tio n a g a ins t Re e ve s Co un ty and She ri ff Go me z in the Un ite d St ate s D istri c t Co ur t f or the Wes te rn

Di str ic t of

Te xas ( “ 20 01 su it” ). In th is s uit , Mr . O lib a s a lle g e d th e de fe nd ants “ vio late d [hi s] c ivi l r ig hts by int e rf e ri ngwi th h is a

bil ity to-2-

op e rate a s a

ba il b on ds man in

Re e ve s Co un ty

in r e ta liatio n f

or [his ] exe rc isi ngc e rt a in constitutionally

protec ted rig hts, including his rig ht to free dom of speec h and to see k redr ess of g rieva nces unde r the F irst Amendment.” This suit was settled in 2002, and the insurance car riers wh o p ro vid e d a

de fe ns e to S he ri ff

Go me z an d Re e ve s Co un ty we re name d a s th ir d- pa

rt y be ne fi c iari e s. In Dec ember

2004, Houston Casualty

issued a non-pr ofit org anization liabili ty policy
namin gRe e ve s Co un ty

a s in sure d ( “ the Pol ic y ” ). Th is “ c la ims -m a de ” po lic y c ov e re d c e rt a in ty pes of c laims “first made” ag ainst the insured be tween the policy period of D ece mber 1, 2004 and De cembe r 2005. In 2005, Mr. and Mrs. O libas broug ht action ag ainst Reeves County and Sheriff G omez in the United States District Court for the Western District of T exas (“2005 suit”). Th e re a ft e r, Re e ve s Co un ty and She ri ff Go me z of

fe re d th e Ol iba se s’ c omp la int in t he 20 05 su it t o Houston Casualty , and re quested insura nce de fense and indemnity under the Policy . Howeve r, Ho us ton Ca su a lty re fu se d to pr ov ide c ov e ra g e fo r t his c la im. In May 2007, Reeve s County

and Sheriff

Gomez filed the instant action, and r equeste d a decla ration fr om the trial court that Houston Casua lty and L exington Insuranc e Company owed the m a de fe ns e and

ind e mni ty

un de r t he ir ins ur a nc e po lic ie s. In O c tob e r 2 00 7, Re e ve s Co un ty and Sheriff

Gomez filed a motion for pa rtial summary

judgme nt on their claims for de fense and ind e mni ty , a

nd Ho us ton Ca su a lty fi le d a mot ion fo r s umm a

ry jud g me nt o n th e pla int if

fs ’ c la ims for de fense and indemnity . Reeve s County and Sheriff

Gomez then filed objec tions to Houston Ca su a lty ’s summa

ry jud g me nt e vid e nc e on

the ba sis of

the “ e ig ht c or

ne rs ” ru le , s pe c if

ic a lly a s to Mr. Olibas’s c omplaint in the 2001 suit , the settlement agree ment betwee n Mr. Olibas and the Appellants in 2002, and a portion of attac hed Exhibi t E, which included Ree ves County ’s-3-

application for

the Houston Casualty

policy at issue in this suit , as we ll as Reeves County ’s fi na nc ia l st ate me nt a

nd ind e pe nd e nt a

ud ito r’ s r e po rt

fr om D e c e mbe r 3 1, 20 03 . In it s September 1, 2009 or der, the trial court grante d Houston Casualty ’s motion for summary judgme nt, denied Ree ves County and Sheriff

Gomez’s motion for partial summary judgme nt, and
overr uled the Appe llants’ objections to Houston Casualty ’s summary judgme nt evidence
. Reeve s County

and Sheriff

Gomez then filed its notice of a ppeal to appe al the trial c ourt’s orde r. When both sides move for summary judgme nt, and the trial c ourt g rants one motion and denies the othe r, the re viewingcourt c onsiders both sides’ summary judgme nt evidence and deter mines all issues presente d. Va le nc e Op e ra ting Co . v . D or se tt , 1 6 4 S. W. 3 d

6 5 6 , 6 6 1 ( T e x. 2005). The r eviewingcourt must consider a ll the gr ounds prese nted in both motions , and re nder the judg ment the trial cour t should have re ndere d. Id . The c ross-motions in thi s case prese nted traditional g rounds for summar y judgme nt. See T EX .R.C IV .P. 166a(c) . An appe llate cour t
re vie ws summa

ry jud g me nt de novo
. Prov ide nt L ife&Ac c ide nt I ns . Co . v . Kn ott , 128 S.W .3d 211, 215 (Tex. 2003). The standa

rds for r eviewingtraditional summary judgme nts are w ell established. In a traditional summary

judgme nt proce eding , the standar d of re view on appe al asks whe ther the
succe ssful movant car

ried the bur den to show that there is no ge nuine issue of mate rial fa ct, and that the judg ment was prope rly g rante d as a matter of law
. See T EX .R.C IV .P. 16 6a (c ); Fertic v. Spence r , 247 S.W .3d 242, 248 (Tex.App.--El Paso 2007, pet. de nied). Thus, the que stion before the re viewingcourt is limited to whether the summar y judgme nt proof esta

blishes as a matter

of law that ther e is no g enuine issue of materia l fac t as to one or more elements of the underly ing claim. Se e Fe rti c , 2 47 S.W. 3d at 24 8. To re so lve thi s q ue sti on , th e re vie wi ngc ourt wi ll t ake a ll-4-

e vid e nc e fa

vo ra ble to t he no nmo va

nt a s tr ue ; and a ll r e a so na

ble inf e re nc e s, inc lud ingany

do ub ts, must be resolved in the nonmova nt’s favor
. Id ., citing Nixon v. Mr. Property M gmt. Co., Inc. , 690 S.W .2d 546, 548-49 (Te x . 1985). Be cause the trial cour

t’s order did not specify

the g round(s) on which Houston Casualty ’s summary judgme nt was g rante d, and bec ause the re w ere multipl e g rounds on which summary judgme nt may

have be en g rante d in the instant case, Re eves County and Sheriff

Gomez are require d to neg ate a ll gr ounds on appea l. See Star-Tele gram, Inc., v . Doe , 915 S.W .2d 471, 474 (T e x. 19 95 ); State Farm Fire &Cas. Co. v. S.S ., 85 8 S. W.2 d 3 74 , 3 81 (T e x. 19 93 ); Lewis v. Adams , 979 S.W .2d 831, 833 (Tex.App.--Houston [14th Dist.] 1998, no pet.)(holdingthat summary judgme nt must be affirme d wher e multiple gr ounds are asser ted and the a

ppellant does
no t atta c k a ll gro un ds on

a pp e a l) ; Ev an s v . F

irs t Na t’ l B an k

of B e llv ille , 946 S.W .2d 367, 377 (Tex.App.--Houston [14th Dist.] 1997, writ denied) . I f an a ppellant fa ils to negate ea ch g round upon which the judg ment may have be en g rante d, the appe llate cour t must uphol d the summary judgme nt. See Star-Tele

gram, Inc. , 9 15 S.W. 2d

at 47 4; State Farm Fire &Cas. Co. , 858 S.W .2d
at 38 1; Le wis , 9 79 S.W. 2d at 83 3; Evans , 946 S.W .2d at 377. In I ssue One, Re eves County and Sheriff

Gomez argue the tria l court er red in g ranting Houston Casualty ’s motion for summary judgme nt as to their claims that it had a duty to defe nd
and a duty to i nd e mni fy . H ou sto n Ca su a lty re sp on ds by

arguin gthat th e tr ia l c ourt wa s c or re c t in concludingthat it did not owe duties to defend or indemnify

Reeve s County

or Sheriff

Gomez. In I ssue Two, Ree ves County and Sheriff

Gomez challeng e the tria l court’s de nial of their motion for pa rtial summary

judgme nt by

arguing that beca

use Houston Casualty

had a duty

to defe nd and indemnify

them as a matter of law , the cour t erre d in denying the ir motion for summaryThere is no dispute between the parties that the Policy in this case wa s a “c laims-made” 1 policy in that its ex press ter

ms cover “ claims . . . first made” ag ainst Reeves County and Sheriff Gomez during the policy

period fr om Dece mber 1, 2004 to De cembe r 1, 2005.

-5- jud g me nt. We w ill a dd

re ss t he duty to d e fe nd argume nts fi rs t. B oth pa rt ie s mo ve d f

or summa ry jud g me nt o n th e duty

to d e fe nd . H ou sto n Ca su a lty
argue d th e Ol iba se s’ c omp la int in t he 20 05 su it f

a ile d to a lle g e a

c ov e re d c la im that w ou ld trig g er its duty

to defe nd or indemnify

Reeve s County

or Sheriff

Gomez. Specifica lly , Houston Casualty contende d (1) the 2005 suit re sulted from a dispute involvingthe oper ation of the Reeve s County

jail, and did not occur

duringthe policy

period, but ar ose in 2001, and we re “mer e continuations of the 2001 L itigation, a la wsuit that was settled, albe it unsuccessfully ,” and (2) the Policy

did not cover the opera

tion or activities of any

jail or detention fa cility . In the mot ion of Re e ve s Co un ty

and She ri ff Go me z, th e y

argue d th e y

we re e nti tle d to c ov e ra g e be c a us e (1) a rea sonable interpr etation of the f acts a s pleade d by

the Olibases ne g ate a

pplication of the “jail oper ations” exclusion, and (2) a rea sonable interpr etation of the f acts a s pleade d by

the Olibases neg ate a

pplication of the “ prior litigation” exclusion. On a pp e a l, R e e ve s Co un ty

and She ri ff Go me z fi rs t argue that H ou sto n Ca su a lty ’s duty to defe nd was trig g ere d beca use the insura

nce c overa g e wa s a “c laims-made policy ,” rather than a n
occur renc e cove rag e, and the Olibases made their “c laim” within the policy cover ag e per iod. 1 Th e re fo re , th e y

argue , H ou sto n Ca su a lty wr on g ly c on te nd e d at tr ia l th at it

wa s r e lie ve d o f i ts d

uty beca use some of the acts the O libases alleg ed in the 2005 suit occur red prior to the policy ’s eff ective da te. Whether a duty

to defe nd exis ts is a question of law, re viewed de novo
. KLN Steel Prod. Co., Ltd. v. CNA Ins. Co. , 278 S.W .3d 429, 434 (Tex.App.--San Antonio 2008, pet. de nied). The-6-

i n s ure d b ea rs th e i n i t i al b urd en t o es t ab l i s hth ati t s cl ai mfa l l s wi th i nth e s co p e o f c o v er age provided by

the policy
. CNA Ins. Co. , 2 78 S.W. 3d at 43 4. Sho uld

the ins ur e d e sta

bli sha ri g ht t o
cover ag e, the bur den then shifts to the insurer to demonstrate that the c laim is subject to a policy exclusion. Venture Enc oding Serv., Inc . v. Atl. Mut. Ins. Co. , 107 S.W .3d 729, 733 (Tex.App.-- For t Worth 2003, pet. denied). I f the insure r is able to esta blish that an exclusion applies, the burden shifts bac k to the insured to show that an e x ception to the exclusion brings the claim bac k within the terms of the policy
. Id
. Re e ve s Co un ty

and She ri ff Go me z co nte nd

Ho us ton Ca su a lty fa ile d to c arr

y its burd e n to prove that the “interr elated a cts” e x clusion rende rs Olibases’ 2001 suit and the Olibases’ 2005 suit the same “c laim.” Howe ver, H ouston Casualty argues the “ interre lated ac ts” provision was
no t an e xclu sio n, but c on sti tut e d “ oth e r c on dit ion s a nd a g re e me nts ,” and

a s su c h, Re e ve s Co unty and Sheriff

Gomez bore the initial burden to e stablish that a claim was f irst made duringthe po lic y pe ri od , a nd no t at an e arl ie r t ime un de r t he “ int e rr e late d a c ts” pr ov isi on . We a g re e wi th Houston Casualty . This provision was listed apar t from the four

teen e x clusions as set forth unde r Section V of the Policy ; instead, it was listed under Sec tion VI I , entitled “Other Conditi ons and Ag ree ments.” Ther efor e, it was not an e x clusion, and so Reeve s County and Sheriff

Gomez bore the initial burden to show their c laim falls within the scope of c overa g e provide d by the Policy
. See CNA Ins. Co. , 278 S.W .3d at 434. Reeve s County

and Sheriff

Gomez argue that the plea dings do not support Houston Ca su a lty ’s summa

ry jud g me nt a

rgume nts . T he y

c la im that c on str

uin gthe 20 05 c omp la int

in favor of cove rag e, the Olibase s did not plead any wrong ful ac t so interrelated with any act Pasqual Olibas alleg ed in the 2001 suit that it should be considered a single claim, and that to do-7-

so would be nonsensica l beca use the Olibase s settled all of their c laims related to a ny conduct Pasqual Olibas alleg ed in the 2001 suit. They argue that all the “ wrong ful ac ts” pleade d in the 2005 suit occurr ed af

ter the 2001 suit was se ttled in 2002. Houston Casualty , on the other ha nd, claims that contra

ry to the Appellants’ a

rgument, nothing in the languag e of the “interr elated
a c ts” pr ov isi on

in t he Pol ic y re qu ir e d th e a lle g e d h arm be ide nti c a l. F ur the rm or e , Re e ve s Co un ty and She ri ff Go me z co nte nd

that a lth ou g h n o T e xas a uth or ity has interpr eted the “ interre lated ac ts” provision, other jurisdictions have inter prete d simil ar
e xclu sio ns c on tr ary

to H ou sto n Ca su a lty ’s int e rp re tatio n. Re e ve s Co un ty and She ri ff Go me z re ly
on Axis Surplus Ins. Co. v. Johnson , 2008 WL4525409, No. 06-CV-500- GKF -PJ C, *9-10 (N.D. Okla. Oc t. 3, 2008) and AceAmerican I ns. Co. v. Ascend O ne Corp. , 570 F.Supp.2d 789, 800-01 (D.Md. 2008) c ases f

rom other jurisdictions, in advanc ing the ir argument that the “inter related acts” provision would be inapplicable in this case. Houston Casualty argues that the two fore g oing c ases a

re disting uishable fr om the instant case, a nd are not controlling. Mor eover , Houston Casualty

relies on KB Home v . St. Paul Mercury Ins. Co. , 621 F.Supp.2d 1271, 1272 (S.D. Fla . 2008) and Informix Corp. v. Lloyd’s of London , 1992 WL469802, No. C-91-1506- FMS, at *3 (N.D . Cal. Oct. 15, 1992) in ar g uing that although no de finition of “interre lated
wr on g fu l a c ts” e xist in

the Pol ic y , th os e c a se s il lus tr ate that a c omm on de fi nit ion

of thi s te rm is

“ [al l w ro ng fu l a c ts] th at ha ve a s a c omm on ne xus a ny fa c t, c ir c ums tanc e , s itu atio n, e ve nt, transac tion, cause or

series of related fa cts, circ umstances, situations, events, tra nsactions or
cause s.” In their re ply

brief, Re eves County

and Sheriff

Gomez argue that whe n Houston Casualty interpre ted the Policy ’s “inter related ac ts” languag e in its brief, it relied on a uthorities that involved policies which include d a def inition of “interre lated ac ts,” wher eas the Policy at-8-

dispute in this case did not incorporate such a definition, and as suc h, “Houston Casualty
. . . cannot r ely

on languag e it did not include in its own poli cy simply beca use other policie s commonly

include it.” Insuranc e policies a

re inter prete d acc ordingto the g ener al rules of contra ct construc tion. American M

frs. Mut. Ins. Co. v. Schaefe r , 124 S.W .3d 154, 157 (Tex. 2003). The pr imary
conce rn in interpre ting a

contra ct is to determine the tr ue intent of the pa

rties. Nat ’l

Un ion Fi re Ins. Co. of Pitts burgh, PA v. CBI I ndus., Inc. , 907 S.W .2d 517, 520 (Tex. 1995). When a policy permits only

one interpr etation, we c onstrue it as a matter of law and enf orce it as written. Up sh aw v . Tr ini ty

Cos
. , 8 42 S.W. 2d

63 1, 63 3 ( Te x. 19 92 ). Whe n th e te rm to b e c on str

ue d is unambig uous, we will construe the languag e ac cordingto the plain meaningof the wor ds. Archon Inv estments, Inc . v. Gre at Am. Lloyds Ins. Co. , 174 S.W .3d 334, 338 (Tex.App.--Houston [1st Dist.] 2005, pet. denied) . The Te x as Supreme Court ha s held that in construingthe terms of an insuranc e contr act, c ourts “must rea d all parts of a contra ct tog ether .” Sta teFa rm LifeIn s. Co. v. Beaston , 907 S.W .2d 430, 433 (Tex. 1995). “Indeed, c ourts must be particular ly war y of isolating fr om its surroundings or c onsideringapar t from other pr ovisions a single phr ase, sentenc e, or se ction of a c ontrac t.” Id
. Gene rally , the duty

to defe nd is dependa

nt on the ty

pe and sc ope of c overa g e provide d by the policy ag ree ment. See King v. D allas Fire Ins. Co. , 85 S.W .3d 185, 187 (Tex. 2002). An insurer’ s duty

to defe nd is determined a ccor ding to the “ eig ht corne rs,” or “complaint alleg ations” rule. See King , 8 5 S. W.3 d at 18 7; Trini ty Unive rsal Ins. Co. v. Cowan , 945 S.W .2d 81 9, 82 1 ( Te x. 19 97 ). Th e ins ur e r’ s d uty to d e fe nd is d e te rm ine d e nti re ly

by the a lle g atio ns in the pleading s and the languag e of the insurance policy
. King , 8 5 S. W.3 d at 18 7. Al l th at is-9-

neede d to invoke the duty are fac tual alleg ations which support a c laim potentially cover ed by

the policy
. See G uideOne E lite Ins. Co. v. Fielder Road Baptist Church , 1 9 7 S. W. 3 d 3 0 5 , 3 1 0 ( T e x. 2006). Any

doubt that the fac ts alleg ed g ive rise to the duty are resolved in f

avor of the insured. See National Union Fire Ins. Co. of Pittsbur gh, PA v. M

erchants Fast Motor Lines, Inc. , 939 S.W .2d 139, 141 (Tex. 1997). Fa cts outside the pleading s, reg ardle ss of how ea sily they can be found or va lidated, ar e not ordinar ily considere d. GuideOneElite Ins. Co. , 197 S.W .3d at 308;
se e als o A rgon au t Sw . I

ns . Co . v . M

au pin , 500 S.W .2d 633, 636 (Tex. 1973)(“T he duty to defe nd does not depe nd on what the f acts a re, or what mig ht be deter

mined finally

by the trier of

the fac ts. I t depends only

on what the f

acts a re a lleg ed to be.” ). When applying the eig ht-corne rs rule, a revie wingcourt interpr ets the alleg ations in the petition liberally , and re solves any doubts in favor of the duty to defe nd. KLN

Steel Prod. Co., Ltd. , 278 S.W .3d at 435. The insure d need only show that a re asonable rea ding of the alleg ations
wo uld a llo w e vid e nc e of

a c la im that is c ov e re d b y

the po lic y , n ot t

hat th e c la im i tse lf

be c le arl y demonstrated by

the languag e of the pleading s. KLN Steel Prod. Co., Ltd. , 278 S.W .3d at 435. In addition, the revie wingcourt must rea d the under lying pe titions in light of the insura nce policy ’s provisions, and foc us the ana ly sis on the “orig in of the dama g es rather than on the leg al theories a lleg ed.” Nat’l Union Fire Ins., Co. , 9 39 S.W. 2d at 14 1; se e als o A da mo v . S tate Fa rm Lloyds Co. , 853 S.W .2d 673, 676 (Tex.App.--Houston [14th Dist.] 1993, writ denied) (“It is not the ca use of a ction alleg ed which de termines cove rag e but the fa cts g iving r ise to the alleg ed actionable conduct.” ). In th e pr e se nt c a se , Se c tio n I of the Pol ic y

state s: Th e Com pa ny sh a ll p ay on be ha lf of the I NSU RED a ll L OSS and

DE F EN SEHouston Casualty conce des this in its brief. 2 -10- COSTS t hat the I

NSURED become s leg ally obligated to pay

solely beca use of a CL AI M first made a g ainst the I NSURED duringthe POL I CY PERI OD, or the Ex tended Repor

ting Per iod if in effe ct, for a WR ONGF UL

ACT committed or alleg edly committed by

the I NSURED. Section VI Iconce rningthe Policy ’s other c onditions and ag ree ments state under “Interre lated Ac ts”: A CL AI M or CL AI MS by one or more claimants made ag ainst one or more I NSUREDS which arise out of the same WRONGF UL

ACT or interr elated WR ONGF UL

ACTS shall be deeme d to be a sing le CL AI M and shall be de emed to have be en made when the f irst of such CLAI MS is m ade. Any interre lated WR ONGF UL

ACTS shall be deeme d to have be en committed when the first of any such WRONGFUL

ACTS was committed.

“ Wro ng fu l a c t” is d e fi ne d und e r t he Pol ic y a s: [A] ny err or, misstatement, misleadingstatement, ac t, omissi on, neg lect or br eac h of duty committed, attempted or a lleg edly committed or attempted, by any I NSURED, individually

or otherw ise, in an I

NSURED capa city , including WRON GF UL

EM PL OY MENT PRA CTI CES , PE RSO NA LI NJUR Y o r T HI RD PARTY DI SCR I MI

NATI ON. Our re view of the rec ord shows that the Policy did not define the te rm “interr elated wrong ful ac ts.” Moreove r, the Policy itself did not indicate that any particula r def inition, or a lim ite d o r r e str ic te d d e fi nit ion , s ho uld be us e d to re pla c e the pla in, or din ary , a nd g e ne ra lly
acc epted mea

ning of “interr elated.” No Texas appellate court, or the Fifth Circuit, has int e rp re te d th e te rm

“ int e rr e late d wro ng fu l a c t.” Ho we ve r, Te xas c ourt s h ave ha d o c c a sio n to 2 interpre t the term “r elated” in an insuranc e policy
. See, e .g., Columbia Cas . Co. v. CP Nat., Inc. , 175 S.W .3d 339, 347 (Tex.App.--Houston [1st Dist.] 2004, no pet.). In Columbia Cas . Co. , our sister court g ave the term “r elated” its ordinary and g ener ally

acc epted mea

ning. Id . at 348. Citi ngthe Merr iam-Webster’s Colleg iate Dictionar y , that court c oncluded that “ related” mea nt-11-

“havinga log ical or c ausal c onnection.” Id . at 348. As such, we will construe “inter related”
ac co rd i n g t o i t s o rd i n ary

m ea n i n g. Be fore discussing the specific fac ts of this case, we must first address Ree ves County and Sheriff G omez’s argument that the trial cour t erre d in overrulingtheir objec tion that Mr. Olibas’s orig inal complaint from the 2001 suit constituted inadmissible ex trinsic evidenc e under the

“ e ig ht c or ne rs ” ru le . T he y

argue that e ve n if

the tr ia l c ourt

imp ro pe rl y

c on sid e re d e xtri ns ic evidenc e, such e vidence did not support summ ary judgme nt in Houston Casualty ’s favor. Houston Casualty

claims the complaint in the 2001 suit was re levant only to cover ag e issues, and neither touc hed upon the mer its of the 2005 suit reg ardingthe Appellants’ liability , nor
c on tr a dic te d a

ny a lle g atio ns ma de in t

he 20 05 su it. The Te x as Supreme Court ha s never rec og nized an exception to the strict eig ht-corne rs
ru le so a s to a llo w c ourt s to e xami ne e xtri ns ic e vid e nc e in d e te rm ini ngan in sure r’ s d uty to defe nd. See Zurich Ame rican Ins. Co. v. Nokia, Inc

. , 2 68 S.W. 3d 48 7, 49 7- 98 (T e x. 20 08 ); GuideOneElite Insurance Co. , 197 S.W .3d 308-09. Houston Casualty conce des this in its brief. Howeve r, Houston Casualty points out t hat re g ardle ss of whethe r the trial c ourt consider ed the 20 01 c omp la int , th e c omp la int in t he 20 05 su it c on ta ine d s uf fi c ie nt f a c ts a bo ut t he 20 01 su it “ to demonstrate the two suits allege interre lated wr ong ful ac ts.” In 2 00 5, Pa sq

ua l O lib a s and

Che ry l O lib a s, ind ivi du a lly

and d/b /a F re e do m B a il B on ds , filed an a ction ag ainst Sheriff Gome z, R eeve s County , Gene ral Star Ma nag ement Company , and Summit Ris k Se rv ic e s, Inc . T he 20 05 c omp la int a lle g e d in

pa rt that: In 2001, in Cause No. EP-01-CA- 0371-DB , Plaintiff Pascual Olibas sued Def endants Gome z and Reeves County , Gover nment Def

endants he rein, in the United States District Court for the Wester n District of Texas, El Paso Division,-12-

alleg ing that these De fenda nts had violated Plaintiff’s civil rig hts by interfe ring with his abilit y

to operate as a

bail bondsman in Reeves County in retaliation for Pla int if f e xer c isi ngc e rt a in c on sti tut ion a lly pr ote c te d r ig hts , in c lud inghis ri g ht t o fr e e do m of

sp e e c h a nd to s e e k r e dr e ss o f gri e va

nc e s und e r t

he F ir st A me ndme nt. The 2005 c omplaint also alleg ed the pa rties settled the 2001 suit in 2002, and the insurance car

riers who provided a

defe nse to Sheriff G omez and Reeve s County wer e name d as third-par ty benef iciarie s. The settlement a g ree ment stated that Mr. Olibas a nd his bail bond
c omp any wo uld “ be a c c or de d a ll the ri g hts and pr ivi le g e s a c c or de d g e ne ra lly to b a il b on ds me n in Reeve s County , Texas,” and that a ll future Ree ves Countybail bond policies would be nondiscriminatory

in both content and application. The 2005 complaint alleg ed that

“ [n]otwi ths tand ingthe se ttl e me nt o f t he fe de ra l la

ws uit , [Mr . O lib a s] c on tin ue d to e xer c ise constitutionally

protec ted rig hts to the displeasure of [S heriff Gomez] .” The Olibases alleg ed that a s a re su lt o f t

he se a c tio ns , “ re latio ns be tw e e n [Mr . O lib a s a nd She ri ff Go me z] co nti nu e d to de te ri or ate and

. . . [Sh e ri ff

Go me z] co nti nu e d to e xer c ise his po we rs un de r c olo r o f l aw t o reta liate ag ainst Plainti ffs.” The Olibase s alleg ed fr om May 3, 2002 to October

2003, Sheriff Go me z pe rm itt e d B & M B on din gto wri te ba il b on ds , a lth ou g h h e wa s a wa re that c omp any

wa s in defa ult in bail bonds, and as such wa s prohibited from wr iting bail bonds. They alleg ed this was done so that B &M B onding ma y continue to compete ag ainst the Olibases’ busine ss. The Olibases fur

ther c omplained that Sheriff Gomez favore d Mr. B ill W einac ht’s bail bond firm, AQu i ckOu tBa i l Bo n d s , i nv ar i o u s m an n er s , s u ch as b y as s i s t i n g th i s fi rm “i no b t ai n i n g a l ar ge po rt ion of the bu sin e ss o f b a il b on ds wr itt e n in re le a se inm ate s f

ro m th e Re e ve s Co un ty

Jail , throug h means not wholly known to Plaintiffs but which Plainti ffs be lieve and the ref ore a ssert involved unequal, a dverse treatment of Plaintiffs,” and by “[steering ] . . . clients to W einac ht’s-13-

ba il b on d f

ir m and awa y fr om P la int if

fs ’ b a il b on d c omp any .” Th e Ol iba se s a sse rt e d th at th is was in re taliation ag ainst their exercise of their constitutional rig hts. I n 2003, the Olibases
a lle g e dly le arn e d th at th e sh e ri ff

g ave oth e r b on ds me n a c c e ss t o inmate s at Re e ve s Co un ty ja il, while deny

ing this privileg e to the Olibase s. Despite their r equest for this acce ss, Sheriff Gome z continued to deny

it to them. The Olibases also re fer red to spec ific instance s where Sheriff Gomez assisted Mr. Weinacht’s ba il bond company in obtaining bonds, or pr evente d detainee s from obtainingbonds from the Olibase s’ company . The Olibase s also alleg ed that Sheriff Gomez “soug ht to inti midate, har ass, annoy , and impede” their employ ees a nd ag ents “in an eff ort to keep Plaintiffs fr om conductingbusiness” in Reeve s County . Finally , the Olibases
c omp la ine d th at th e sh e ri ff re qu ir e d th e m to fi le a

fi na nc ia l st ate me nt p re pa

re d b y c e rt if ie d p ub lic
a c c ounta nts , whe re a s h e did

no t r e qu ir e the same fr om t he ir c omp e tit or s. B a se d o n o ur

re vie w o f t

he re c or d, we c on c lud e that th e c omp la int in t he 20 05 su it alleg ed suff

icient fa cts reg ardingthe 2001 suit to establish the invocation of the “inter related acts” provision. In Axis Surplus Ins. Co. v. Johnson , a fe dera l court held that two suits ag ainst insured corpor ate dire ctors did not involve interre lated wr ong ful ac ts where the first suit was pre mised on the dir e c tor s’ fa ilure to p ay a loa n to a thi rd pa rt y , whil e the latte r s uit

wa s b a se d o n th e dir e c tor s’ mismanag ement of the company ’s business. 2008 WL4525409, at *9-10. The court indicated the mere fac t that both suit s “alleg e bre ache s of fiducia ry duty and g ross neg lige nce do not provide the ‘ common nexus’ required by the policy ’s def

inition of I nterre lated Wrong ful Acts.” Axis Surplus Ins. Co. , 2008 WL4525409, at *9. In AceAmerican I

ns. Co. v. Ascend O ne Corp. , a fe dera l court conc luded that an-14-

int e rr e late d wro ng fu l a c ts e xclu sio n d id n ot a pp ly wh e re tw o c la ims la c ke d a su ff ic ie nt “ ne xus” of fa cts, circ umstances, e vents, or ca uses. 570 F.Supp.2d at 800- 01. The AceAmerican I ns. Co. court distinguishe d the instant case from other case s in which courts found the interre lated wrong ful ac ts provision to apply by rea soning that here , one cla im was based on oc curr ence s differ ent in scope a

nd time from the alleg ed wr ong ful ac ts in the second cla im. Id . at 800. Moreove r, the two c laims differe d in that one ac tion was a private suit by individuals seeking
mon e tary dama g e s, and

aro se fr om t

he sp e c if ic e xpe ri e nc e s o f t

ho se ind ivi du a ls r e late d to the ir enrollment in debt mana g ement plans, whe rea s the other c laim was a g overnme ntal investigation into alleg ed violations of var ious Consum er Protec tion statutes, under which the g overnme nt was able to see k injunctive relief , as we ll as civil and criminal pena lties. Id . at 801. Fina lly , the scope of the g overnme ntal investigation was broade r than the pr ivate ac tion. Id . at 801. Ba sed on the fa cts alleg ed in the under lying suits, we a g ree with Houston Casualty that this is not a ca se whe re only a slig ht or attenuated conne ction exis ted betwe en two sets of wrong ful ac ts. See, e .g., Axis Surplus Ins. Co. , 2008 WL4525409, at *9-10. Contrar y to Ax is Surplus Ins. Co. , the alleg ed wr ong ful ac ts were not separate and distinct in this case; the two suits both presented alleg ed fa cts as to Sheriff Gomez’s reta liatory

actions. Se e id . In c on tr a st t o AceAmerican I

ns. Co. , both actions wer e private in this case, a nd involved the same pa

rties and same or similar a lleg ed wr ong ful ac tions taken by Sheriff G omez. See A ce A merican I ns. Co. , 57 0 F .Su pp .2 d at 80 0- 01 . We c on c lud e the wr on g fu l a c ts that f or me d th e ba sis of

the 20 05 su it
wer e interr elated wrong ful ac ts under the plain mea ning of the Policy

languag e, and a s such, the claims as to the 2001 and 2005 suits constituted a sing le claim under the Policy . Ba sed on the plain languag e of the Policy , beca use the 2005 suit involved an interr elated wrong ful ac t with the-15-

2001 suit, and any

such ac t occur

red pr ior to the commenc ement of the policy period, whic h was
o nD e c e mb e r

1 , 2 0 0 4 , an y c l a i m s r e l at e d t o th e 2 0 0 5 s u i tw e r e n o tc o v e r e d un d e r th e P o l i c y. Reeve s County

and Sheriff

Gomez argue Houston Casualty ’s interpre tation of the “interr elated a cts” provision contra dicts the fundame ntal purpose of claims-made insurance po lic ie s. Th e y

argue that th e a

pp lic atio n o f t

he “ int e rr e late d a c ts” pr ov isi on to t his c a se wo uld not limi t, but inst ead e x pand the pe riod that the insurer is ex posed to potential liability . Houston Ca su a lty c la ims that c on tr ary

to t he Ap pe lla

nts ’ a rgume nt, the ins ur anc e po lic y pe ri od in t his
c a se wa s n ot e la sti c , a

nd the “ int e rr e late d a c ts” pr ov isi on sim ply e ns ur e d th at on ly

c la ims fi rs t made within that finite policy period we re c overe d. Moreove r, Houston Casualty contends that claims relating ba ck to prior c laims were not cover ed, and so the re w as no expansion of the
c ov e ra g e , a s th e Ap pe lla

nts ha d a rgue d. We a g re e wi th A

pp e lle e . Are a din gof

the pla in langua g e of

the Pol ic y

ind ic ate s th at th e “ int e rr e late d a c ts” pr ov isi on e ns ur e s th at on ly

c la ims first made w ithin the policy period a re c overe d, and any

claims that trig g er r elation bac k to prior claims are not cover ed. As such, the re is no expansion of cove rag e. Be cause Reeve s County

and Sheriff

Gomez have f

ailed to satisfy

their burde n of establishing that the claims wer e first made duringthe policy period, a nd the claims in the 2005 suit were f

irst made in 2001, no cove rag e exists as to t he 2005 cla ims under the Policy . Having de te rm ine d th at H ou sto n Ca su a lty ’s mot ion fo r s umm ary

jud g me nt a s to the c la im o f d uty to defe nd was prope rly

g rante d on the basis that the compa ny did not owe any

duties to defend Reeve s County

and Sheriff

Gomez under the “ eig ht corne rs” r ule, we ne ed not addr ess the other g ro un ds ra ise d in

its mot ion

a s to thi s p art ic ula

r d uty . A s su c h, we ov e rr

ule I ssu e On e wi th
re sp e c t to Ho us ton

Ca su a lty ’s duty

to d e fe nd c la im.Houston Casualty raised this as their

second issue in their br ief. 3 -16- Finally , Reeve s County

and Sheriff

Gomez assert that the tria l court er red in g ranting H o u s t o nC a s u a l ty’ s m o t i o nf o r s um m ar y j u d g m e n ta s t o th e c l a i mo f d u ty o f i n d e m n i ty. Citi ng

3 Northfi eld InsuranceCo. v. Loving Home Care, I nc. , 363 F.3d 523, 537 ( 5th Cir. 2004), the Appellants ar g ue that Te x as law c onsiders the duty to indemnify

question justiciable only afte r the un de rl yingsu it i s c on c lud e d. Ho us ton Ca su a lty argue , in re sp on se , th at th e Te xas S up re me Court ha s h e ld t

hat “ the duty

to i nd e mni fy

is j us tic ia

ble be fo re the ins ur e d’ s li a bil ity is deter mined in the liability

lawsuit when the insure r has no duty to defe nd and the same re asons tha t ne ga tethedu ty

to d e fe nd lik e wis e ne ga tean ypo ssi bil ity

theins ur e r wi ll e v e r h av e a d uty to ind e mn ify .” [Emphasis in orig.]. Fa rm e rs T e x . Co un ty Mu t. I ns . Co . v . G rif

fin , 955 S.W .2d 81, 84 (Tex. 1997). Howe ver, a rec ent dec ision from the Texas Supreme Court has c autioned that “the holdingin Gr iff

in was fa ct-spec ific and c annot be c onstrued so broa dly .” D.R. HortonTexas, Ltd. v. Marke l Intern. Ins. Co., Ltd. , 300 S.W .3d 740, 744 (Tex. 2009). In contra st to a duty to defe nd, the fa cts ac tually established in the under lying suit control the duty to indemnify
. D.R. Horton-Tex as, Ltd. , 3 00 S.W. 3d at 74 4; GuideOneElite Ins. Co. , 197 S.W .3d at 310. The Texas Supreme Court has noted:

The insure r’s duty

to indemnify

depends on the fac ts proven and whether the dama g e s c a

us e d b y the a c tio ns or

omi ssi on s p ro ve n a

re c ov e re d b y

the te rm s of the po lic y . E vid e nc e is u su a lly ne c e ssa ry in t he c ov e ra g e lit ig atio n to e sta bli sh or re fute a

n insurer’ s duty

to indemnify . This is especially true whe n the underlying liability

dispute is resolved bef

ore a trial on the merits and the re w as no opportunity

to develop the e vidence
. . . . D. R. Ho rto n- Te

x as , Lt d ., 300 S.W .3d at 744. Howeve r, our r eview of

the re cord doe s not revea l any evidenc e that esta

blishes if and-17-

when the 2005 suit wa s conclude d. Moreove r, if the pe rtinent summary judgme nt evidence considere d by

the trial cour

t is not i n the appe llate re cord, w e pre sume the omitted evidenc e supports the trial cour

t’s judgme nt. See E

nter. Leasing Co. Of Houston v. Barrios , 156 S.W .3d 547, 550 (Tex. 2004)(per curiam). Ther efor e, we conclude the trial cour t did not err in g ranting Ho us ton Ca su a lty ’s mot ion

fo r s umm ary

jud g me nt a s to the duty

of ind e mni ty , a

nd we ov e rr ule I ssue One w ith respec t to this claim. Havingconclude d that the trial cour t properly g rante d Ho us ton Ca su a lty ’s mot ion

fo r s umm ary

jud g me nt a s to the c la ims of duty to d e fe nd and duty to indemnify

as a matter of law , we c onclude that the c ourt proper ly denied the A

ppellants’ par

tial motion for summary

judgme nt as to these cla ims. According ly , we ove rrule I ssue Two. Havingoverr

uled Reeve s County

and Sheriff

Gomez’s issues prese nted for r eview, w e
a ff ir m th e tr ia l c ourt ’s jud g me nt.
September 14, 2011 DAVI D WEL L I NGTONCHEW, C hief Just ice B e f o r e C h e w , C
. J. , M c C l ur e , a n d R i v e r a , JJ.