IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

HOME DEPOT U.S.A., INC., §

 §

Plaintiff, §

 §

VS. §

 §

NATIONAL FIRE INSURANCE §

COMPANY OF HARTFORD, §

 § Civil Action No. 3:06-CV-0073-D

Defendant- §

Third-Party Plaintiff §

 §

VS. §

 §

EXPRESS SITE PREPARATION, INC. §

and AMERICAN EQUITY INSURANCE §

COMPANY, §

 §

Third-Party Defendants. §

MEMORANDUM OPINION

 AND ORDER 

This insurance dispute——in which the plaintiff alleges that

the defendant insurance company owed a duty to defend it in state

court litigation——presents questions governed by Florida law. The

court must decide whether the plaintiff was covered as an

additional insured and whether it was required by contract to

exhaust other available insurance (including self-insured

retention) before the defendant insurance company owed it a

defense. For the reasons that follow, the court concludes that the

plaintiff was an additional insured, that it was not required to

exhaust other available insurance (including self-insured

retention), and that it is entitled to summary judgment as to

liability on its breach of contract claim.

 

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1National Fire has filed a third-party action against two

third-party defendants. That action is not the subject of this

motion.

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I

Plaintiff Home Depot U.S.A., Inc. (“Home Depot”) sues

defendant National Fire Insurance Company of Hartford (“National

Fire”), alleging that National Fire failed to comply with its

contractual duty to defend Home Depot against claims asserted in a

Texas state court lawsuit brought by Boxcars Properties, Ltd.

(“Boxcars”). Boxcars Properties, Ltd. v. W. Hills Joint Venture,

No. 22433 (278th Dist. Ct., Walker County, Tex.) (the “Boxcars

Litigation”).1

 Boxcars filed the suit against Home Depot and

several other defendants to recover damages that Boxcars allegedly

sustained when land adjacent to its property was excavated during

the construction of a Home Depot store. According to Boxcars’s

petition, the excavation caused water run-off that resulted in a

loss of lateral support for, and damage to, Boxcars’s apartment

buildings and real property.

Home Depot hired Rockwell Construction Corp. (“Rockwell”) as

the general contractor for the store’s construction. The agreement

between them required that Rockwell procure and maintain a

comprehensive general liability insurance (“CGL”) policy that named

Home Depot as an additional insured. Rockwell was covered under a

CGL policy (the “Policy”) issued by National Fire during the period

in which the claims in the Boxcars Litigation arose.

 

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2

National Fire objects to the motion, maintaining that, if

Home Depot is also seeking to hold it liable for breaching a duty

to indemnify Home Depot, the motion is one for partial summary

judgment. It is clear, however, that Home Depot is only alleging

that National Fire breached its duty to defend Home Depot.

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After Boxcars filed the Boxcars Litigation, Home Depot made a

written demand on National Fire to provide a defense to, and to

indemnify, Home Depot, but National Fire refused. Home Depot paid

for its own defense. The Boxcars Litigation later settled, and

defendants obtained a complete release. Home Depot did not pay any

money to Boxcars as part of the settlement, but it incurred

attorney’s fees and costs in defending itself. 

Home Depot then filed this suit against National Fire,

asserting that it had breached its contractual obligation to defend

Home Depot in the Boxcars Litigation. Home Depot seeks the

attorney’s fees and costs it incurred in defending itself in the

Boxcars Litigation, and it also sues for the attorney’s fees and

costs incurred in prosecuting the instant lawsuit. Home Depot now

moves for summary judgment on its breach of contract claim.

National Fire opposes the motion.2

II

Home Depot moves for summary judgment on its claim that

National Fire breached its contractual duty to defend Home Depot in

the Boxcars Litigation. 

 

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3

As a threshold matter, the court must determine whether Texas

or Florida law controls its decision on Home Depot’s motion. In

making a choice-of-law determination, a federal court exercising

diversity jurisdiction must apply the choice-of-law rules of the

forum state, here Texas. Klaxon v. Stentor Elec. Mfg. Co., 313

U.S. 487, 496 (1941); see also Spence v. Glock, Ges.m.b.H., 227

F.3d 308, 311 (5th Cir. 2000). Texas courts use the “most

significant relationship” test set forth in the Restatement

(Second) of Conflict of Laws (1971) for all choice-of-law cases

except contract cases in which the parties have agreed to a valid

choice-of-law clause. Duncan v. Cessna Aircraft Co., 665 S.W.2d

414, 420-21 (Tex. 1984). National Fire argues in its response, and

Home Depot agrees in its reply brief, that Florida law applies. 

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Under Florida law,3 “[t]he burden is on the insured to prove

that the insurance policy covers a claim against it.” E. Fla.

Hauling, Inc. v. Lexington Ins. Co., 913 So.2d 673, 678 (Fla. Dist.

Ct. App. 2005) (citing Hudson Ins. Co. v. Double D Mgmt. Co., 768

F. Supp. 1542 (M.D. Fla. 1991)). “Once the insured shows coverage,

the burden shifts to the insurer to prove an exclusion applies to

the coverage.” Id. (citing LaFarge Corp. v. Travelers Indem. Co.,

118 F.3d 1511, 1516 (11th Cir. 1997)). “If there is an exception

to the exclusion, the burden once again is placed on the insured to

demonstrate the exception to the exclusion.” Id. (citing Lafarge,

118 F. 3d at 1516).

Because Home Depot bears the initial burden of proving that

the Policy entitled it to a defense, to be entitled to summary

judgment on its breach of contract claim, it “must establish

‘beyond peradventure all of the essential elements of the claim.’”

Bank One, Tex., N.A. v. Prudential Ins. Co. of Am., 878 F. Supp.

943, 962 (N.D. Tex. 1995) (Fitzwater, J.) (quoting Fontenot v.

 

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Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)). In other words,

to secure summary judgment, it must demonstrate without genuine and

material factual dispute, and as a matter of law, that it was

covered under the Policy and that National Fire owed it a defense.

III

Home Depot maintains that it was entitled to a defense in the

Boxcars Litigation because it was covered as an “additional

insured” under the terms of the Policy. National Fire contends

that Home Depot would qualify as an additional insured only if the

plaintiffs in the Boxcars Litigation sought to hold Home Depot

vicariously liable for Rockwell’s acts or omissions.

A

The Policy contained a Contractor’s Blanket Additional Insured

Endorsement (“Endorsement”) that provided:

WHO IS AN INSURED (Section II) is amended to

include as an insured any person or

organization (called additional insured) whom

you are required to add as an additional

insured on this policy under

1. A written contract or agreement; or

2. An oral contract or agreement . . . ; but

the written or oral contract or agreement must

be:

1. Currently in effect or becoming

effective during the term of this

policy; and

2. Executed prior to the “bodily

injury,” “property damage,”

“personal injury” or “advertising

injury.”

P. App. 112 (bold font omitted). Home Depot maintains, and

National Fire does not dispute, that pursuant to the express terms

 

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of the contract between Home Depot and Rockwell, Rockwell was

required to add Home Depot as an additional insured under its

policy with National Fire, and the contract between Rockwell and

Home Depot was executed prior to the property damage that served as

the basis for the Boxcars Litigation. This would seem to support

the conclusion that Home Depot was an additional insured under the

Endorsement. But there is a further limitation in determining

whether a party will be covered as an “additional insured” under

the terms of the Policy. Another provision of the Endorsement

states:

The insurance provided to the additional

insured is limited as follows:

1. That person or organization is only an

additional insured with respect to liability

arising out of:

a. Your premises

b. “Your work” for that additional

insured; or

c. Acts or omissions of the

additional insured in connection

with the general supervision of

“your work.”

Id. The Policy’s introduction defines the term “you” as the named

insured, which in this case is Rockwell, and “your work” is defined

as “work or operations performed by you or on your behalf.” Id. at

75, 86. 

Home Depot maintains that the undisputed facts establish that

Boxcars sought recovery for property damage sustained to its

apartment buildings that was allegedly caused by an excavation cut

made by Rockwell and/or one of its subcontractors. It therefore

 

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argues that the undisputed facts establish that the alleged

liability of Home Depot in the Boxcars Litigation arises out of

Rockwell’s work for Home Depot. Thus Home Depot maintains that it

is covered as an “additional insured” under the express terms of

the Endorsement, and National Fire owed Home Depot a defense in the

Boxcars Litigation.

National Fire counters that, under Florida law, Home Depot

would only qualify as an additional insured if the plaintiffs in

the Boxcars Litigation sought to hold Home Depot vicariously liable

for Rockwell’s acts and/or omissions. National Fire argues that

because the latest petition contains allegations that all

defendants were negligent in acquiring, designing, and/or

engineering the Home Depot store’s construction site, Home Depot is

not merely vicariously liable for Rockwell’s negligence. Rather,

it reasons that because the petition establishes that Boxcars is

suing Home Depot for its own negligence, Home Depot is not covered

as an additional insured.

Home Depot argues in reply that the court is not limited to

the latest amended petition, but rather is entitled to rely on all

the petitions in the Boxcars Litigation to determine whether Home

Depot’s liability arises solely from Rockwell’s work for Home

Depot. It posits that the duty to defend an insured against a

legal action arises when the complaint alleges facts that fairly

and potentially bring the suit within policy coverage. Because any

 

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doubts regarding the duty to defend are resolved in favor of the

insured, and because Boxcars alleged in its pleadings that Rockwell

performed construction on the Home Depot site and asserts claims

against Home Depot based on principles of vicarious liability

related to the construction of the Home Depot site, Home Depot

maintains that the allegations invoke National Fire’s duty to

defend Home Depot as an additional insured under the Policy.

B

By the express language of the Endorsement, Home Depot would

be considered an additional insured, and therefore entitled to a

defense from National Fire, for any allegations of liability

arising out of Rockwell’s work for Home Depot. Thus to the extent

Boxcars sought to hold Home Depot liable for Home Depot’s own

negligence, the Endorsement would not cover Home Depot. But

insofar as Boxcars sought to hold Home Depot liable for the

negligence of Rockwell, Home Depot would be covered as an

additional insured. Before the court can determine whether Boxcars

was suing Home Depot for its own conduct or vicariously, it must

first decide what documents it is permitted to consider.

Under Florida law, “[t]he general rule is that an insurance

company’s duty to defend an insured is determined solely from the

allegations in the complaint against the insured, not by the actual

facts of the cause of action against the insured, the insured’s

version of the facts or the insured’s defenses. Amerisure Ins. Co.

 

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v. Gold Coast Marine Distribs., Inc., 771 So.2d 579, 580 (Fla.

Dist. Ct. App. 2000) (citing Smith v. Gen. Accident Ins. Co. of

Am., 641 So.2d 123, 124 (Fla. Dist. Ct. App. 1994); Marr Invs.,

Inc. v. Greco, 621 So.2d 447, 449 (Fla. Dist. Ct. App. 1993);

Reliance Ins. Co. v. Royal Motorcar Corp., 534 So.2d 922, 923 (Fla.

Dist. Ct. App. 1988); Bennett v. Fid. & Cas. Co. of N.Y., 132 So.2d

788 (Fla. Dist. Ct. App. 1961)). “If the allegations in the

complaint state facts that bring the injury within the policy’s

coverage, the insurer must defend regardless of the merit of the

lawsuit.” Id. (citing Smith, 641 So.2d at 124; Klaesen Bros., Inc.

v. Harbor Ins. Co., 410 So.2d 611, 612-13 (Fla. Dist. Ct. App.

1982)). “Furthermore, any doubt about the duty to defend must be

resolved in favor of the insured.” Id. at 580-81 (citing Marr

Invs., Inc., 621 So.2d at 449).

National Fire maintains that Florida courts will only consider

the allegations included in the most recently amended complaint; it

therefore argues that this court should only take into account

those allegations in determining whether Home Depot was covered as

an additional insured. Home Depot counters that a duty to defend

arises if facts alleged in any pleading fairly and potentially

bring the legal action within policy coverage, and if a subsequent

pleading fails to assert any allegation falling within the policy’s

coverage, an insured can recover those damages attributable to the

insurer’s refusal to defend the case during the period when the

 

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pleadings invoked the duty to defend.

Under Florida law, “[i]t is well-established that an amended

pleading supersedes an earlier pleading unless it expresses an

intent to preserve portions of the earlier pleading.” State Farm

Fire & Cas. Co. v. Tippett, 864 So.2d 31, 32 (Fla. Dist. Ct. App.

2004) (citing State Farm v. Higgins, 788 So.2d 992, 995 (Fla. Dist.

Ct. App. 2001)). “Consequently, when an original complaint has

been superseded by an amended complaint, the original complaint can

no longer furnish a basis for determining the insurer’s duty to

defend.” Baron Oil Co. v. Nationwide Mut. Fire Ins. Co., 470 So.2d

810, 815 (Fla. Dist. Ct. App. 1985) (citing Ala. Farm Bureau Mut.

Cas. Ins. Co. v. Harris, 184 So.2d 837 (Ala. 1966)). “It follows,

therefore, that where an amended complaint alleges facts that

clearly bring the entire cause of action within a policy exclusion,

and the amended complaint contains no additional counts or causes

of action which show coverage, the allegations in the amended

complaint control and the insurer’s duty to defend comes to an

end.” Id.

In Baron Oil a Florida court held that “[o]nce the insurer’s

duty to defend arises, it continues throughout the case unless it

is made to appear by the pleadings that the claims giving rise to

coverage have been eliminated from the suit.” Id. In that

instance, the insurer no longer has a continuing duty to defend.

Thus where an insurer files a declaratory judgment action against

 

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the insured to determine whether it owes the insured a duty to

defend the insured in litigation that is still pending, courts will

consider only the latest amended complaint in determining whether

the insurer’s obligation to defend the insured has arisen.

Tippett, 864 So.2d at 32-33 (“the allegations in the [plaintiff’s

latest] Amended Complaint determine State Farm[’]s duty to

defend.”). But in an action against the insurer for a breach of

the duty to defend, if the court finds that the insurer had a duty

to defend the insured, but that this duty ceased when the plaintiff

in the underlying litigation filed an amended complaint, it will

nonetheless award the insured damages attributable to the insurer’s

refusal to defend the case from the filing of the original

complaint to the filing of the amended complaint. Baron, 470 So.2d

at 815. 

To determine whether Home Depot is covered under the

Endorsement as an additional insured for all or at least part of

the Boxcars Litigation, the court will therefore consider all the

underlying pleadings. 

C

In its original petition, Boxcars relied on the theory of

respondeat superior in its negligent construction and negligent

design/engineering claims. Specifically, it alleged in its

petition: “Plaintiff asserts the principles of respondeat superior

for the construction of the Home Depot in Huntsville, Texas whether

 

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the work was negligently performed by the contractor or someone

else for the benefit of the owner of the Property.” P. App. 132.

The court assumes that the term “contractor” in the original

petition refers to Rockwell, and that in both claims relying on

theories of respondeat superior, Boxcars is seeking to hold “All

Defendants,” which would include Home Depot, liable for the

negligence of the contractor. See Baron, 470 So.2d at 814 (“If the

allegations of the complaint leave any doubt regarding the duty to

defend, the question must be resolved in favor of the insured

requiring the insurer to defend.”). The first and second amended

petitions allege this same respondeat superior theory. P. App.

144-145; 157-58. The court accordingly holds that Home Depot has

established beyond peradventure that it was covered as an

additional insured for the liability Boxcars sought to impose

vicariously on Home Depot in its original, first amended, and

second amended petitions under a respondeat superior theory based

on the work allegedly negligently performed by Rockwell, the

contractor. P. App. 132.

In Boxcars’ third, fourth, and fifth amended petitions,

Boxcars no longer used the term “respondeat superior” to describe

its theory of liability. But the liability Boxcars sought to

impose on Home Depot nonetheless arose out of Rockwell’s work for

Home Depot and thus made Home Depot an “additional insured” under

the Policy. Boxcars alleged that the Home Depot store was

 

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constructed by Rockwell and owned by Home Depot. P. App. 166, 178;

D. App. 79. It nowhere averred that Home Depot took part in the

construction of the Home Depot store. Additionally, Boxcars

alleged that “an ordinary prudent contractor/engineer in the same

or similar circumstances would have noted that the excavation of

the whole of the Property including drainage and sewer lines would

have, in reasonable probability, caused loss of support to

neighboring property regardless of the skill in performing the

excavation.” P. App. 168, 181; see also D. App. 82 (emphasis

added). By this allegation, Boxcars asserted that Rockwell——the

contractor——should have predicted the result of the excavation.

Boxcars did not allege that Home Depot——a reasonably prudent

owner——should have known. Furthermore, the claim is one for

damages for negligent construction. Home Depot’s employees did not

construct the Home Depot store, and Boxcars nowhere alleged that

they did. Thus to the extent Boxcars sought to hold Home Depot

liable for the negligent construction of its store, this was

necessarily based on the negligence of the builder, in this case,

Rockwell. Thus the court concludes that at least part of the

theory for holding Home Depot liable was based on the negligent

acts of its contractor, Rockwell. And this liability certainly

arose from the work Rockwell performed for Home Depot. 

To the extent Boxcars’s other theories of liability did not

rely on the work of Rockwell, but sought to hold Home Depot

 

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directly liable for Home Depot’s own acts or omissions——such as,

for example, the strict liability claims against the owner of the

Property (Home Depot)——Home Depot may not be an “additional

insured.” It is clearly established under Florida law, however,

that once the duty to defend arose as to part of the suit, National

Fire was obligated to defend Home Depot against all claims asserted

against it. See Baron Oil Co., 470 So.2d at 813-14 (“The duty to

defend is distinct from and broader than the duty to indemnify the

insured against damages assessed, and if the complaint alleges

facts showing two or more grounds for liability, one being within

the insurance coverage and the other not, the insurer is obligated

to defend the entire suit.”); Tropical Park, Inc. v. U.S. Fid. &

Guar. Co., 357 So.2d 253, 256 (Fla. Dist. Ct. App. 1978) (“Where

the complaint contains allegations partially within and partially

outside the scope of coverage, the insurance carrier is required to

defend the entire suit.”). Because the third, fourth, and fifth

amended petitions established that at least one ground for holding

Home Depot liable was the negligence of Rockwell in constructing

the Home Depot store, Home Depot is an additional insured, giving

rise to National Fire’s duty to defend Home Depot against all of

the claims asserted against it.

 

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IV

National Fire also maintains that even if Home Depot is

considered an “additional insured” under the Endorsement, it

nonetheless is not entitled to a defense because Home Depot failed

to exhaust its other sources of insurance coverage. Home Depot

responds that there was no other valid and collectible insurance

available for it to exhaust, because Florida law does not recognize

a self-insured retention as other valid and collectible insurance,

and its own primary liability policy was an excess policy that did

not apply until it had exhausted its self-insured retention.

A

National Fire relies on the Endorsement’s “other insurance”

clause, which states that the insurance provided

is excess over: Any other valid and

collectible insurance available to the

additional insured whether primary, excess,

contingent or on any other basis unless a

contract specifically requires that this

insurance be either primary or primary and

noncontributing. Where required by contract,

we will consider any other insurance

maintained by the additional insured for

injury or damage covered by this endorsement

to be excess and noncontributing with this

insurance.

D. App. 219. Because the contract between Home Depot and Rockwell

did not require that the additional insured coverage be on a

primary or primary and noncontributing basis, National Fire argues

that it only had a duty to defend Home Depot once Home Depot

exhausted its “other valid and collectible insurance.” It

 

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maintains that the American Alternative Insurance Corporation

policy (“AAIC Policy”), which is Home Depot’s own primary liability

policy, and Home Depot’s self-insured retention, constitute “other

valid and collectible” insurance. National Fire argues that Home

Depot was obligated to exhaust its $1 million per-occurrence selfinsured retention before coverage under the AAIC Policy came into

play and, in turn, coverage under National Fire’s Policy could not

be implicated unless and until Home Depot exhausted the AAIC

Policy’s $4 million limit of liability.

Home Depot argues in reply that Florida law does not recognize

a self-insured retention as “other valid and collectible insurance”

within the meaning of an “other insurance” clause. Thus because a

self-insured retention does not constitute “other valid and

collectible insurance,” Home Depot maintains that it was under no

obligation to exhaust its self-insured retention before seeking a

defense from National Fire. It also posits that because the AAIC

Policy was itself an excess policy that did not apply until Home

Depot had exhausted its self-insured retention, and because it is

undisputed that the attorney’s fees and defense costs that Home

Depot incurred did not exceed the self-insured retention, the

excess insurance policy provided by the AAIC Policy did not provide

valid and collectible insurance to Home Depot. Home Depot

therefore argues that there was no other valid and collectible

insurance available for Home Depot to exhaust before seeking a

 

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defense from National Fire.

B

The court must first determine whether, under Florida law,

Home Depot’s self-insured retention constituted “other valid and

collectible insurance” that Home Depot was required to exhaust

before seeking a defense from National Fire. Under the Florida

Insurance Code, “Insurance” is defined as “a contract whereby one

undertakes to indemnify another or pay or allow a specified amount

or a determinable benefit upon determinable contingencies.” Fla.

Stat. Ann. § 624.02. “Self-insurance . . . does not fall within

this definition and, therefore, is not ‘other collectible

insurance.’” State Farm Mut. Auto. Ins. Co. v. Universal Atlas

Cement Co., 406 So.2d 1184, 1186-87 (Fla. Dist. Ct. App. 1981)

(citing 8A Appleman, Insurance Law and Practice § 4912 (1981)),

review denied, 413 So.2d 877 (Fla. 1982).

National Fire urges that Home Depot’s self-insurance policy

did constitute “other valid and collectible insurance,” citing

Aetna Casualty & Surety Co. v. Market Insurance Co., 296 So.2d 555,

557 (Fla. Dist. Ct. App. 1974), as an example that supports its

argument. National Fire’s reliance on this case is misplaced. 

In Aetna Casualty & Surety Co. Judith Morse (“Morse”) rented

a vehicle from National Car Rentals (“National”) and purchased the

collision damage waiver. Id. at 557. The collision damage waiver

stated that “a customer who has accepted purchase of C.D.W. is

 

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covered by an automobile liability insurance policy which is

[p]rimary [i]n respect to other insurance as may be carried by the

renter.” Id. National was self-insured for $25,000 and was

insured by Market Insurance Company (“Market”) under an excess

liability policy with a liability limit of $975,000. Morse’s own

insurance policy with Aetna Insurance Company (“Aetna”) contained

an “other insurance” clause that provided that Aetna’s coverage for

a non-owned vehicle would be excess insurance over any other valid

and collectible insurance. Id. 

While driving the rented vehicle, Morse struck a pedestrian,

who subsequently sued Morse, National, Aetna, and Market. Id. at

556-557. Market defended National and Morse, stipulating with

Aetna that the coverage issue would be resolved separately. Id. at

557. Market settled with the pedestrian for $750,000. Id. at 557.

On appeal, the court held that, pursuant to Morse’s rental

agreement, National was a primary insurer to Morse, and it was

therefore obligated to defend Morse up to the limit of its

liability ($25,000). Id. at 558. The court also concluded that

because the Aetna policy explicitly provided with respect to a nonowned vehicle operated by the named insured that the coverage would

be excess insurance over any other valid and collectible insurance,

and because the Market policy contained no such “excess coverage”

provision, Market’s excess liability policy constituted “other

valid and collectible insurance,” and Market was therefore

 

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obligated to pay the remainder of the settlement. Id.

Accordingly, although National was self-insured up to $25,000 with

respect to the renter (Morse), National was a primary insurer.

National’s agreement with Morse therefore fit within the statutory

definition of “insurance,” because National entered into a contract

with Morse to indemnify her in the event of a vehicle accident.

Id. at 557. 

Unlike National, Home Depot did not agree to indemnify any

other party. Rather, its self-insurance only covers its own

losses. This fact distinguishes this case from Aetna Casualty &

Surety Co. and undercuts National Fire’s argument. Given the

holding of State Farm Mutual Automobile Insurance Co., 406 So.2d at

1186-87, Home Depot’s self-insurance does not fit within the

statutory definition of “insurance” under Florida law. Therefore,

Home Depot’s self-insurance does not constitute “other valid and

collectible insurance.”

C

The court next considers whether the AAIC Policy constituted

“other valid and collectible insurance available to the additional

insured.” The plain meaning of the Endorsement language requires

that the “other valid and collectible insurance” actually be

available for collection by the additional insured. The AAIC

Policy provides, in relevant part:

 

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4

This amount actually represents the costs incurred by Home

Depot in defending itself in the Boxcars Litigation and in bringing

the present suit to recover its costs from National Fire. P. App.

192. Therefore, the court assumes that the amount Home Depot spent

in defending itself in the Boxcars Litigation was actually less

than $128,708.47.

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We will assume charge of the settlement or

defense of any claim or suit against the

insured only after the Retained Amount is

exhausted by payments made by or on behalf of

the insured for injury or damage to which this

policy applies; provided there is no duty to

defend under any other insurance.

D. App. 97 (bold font omitted). The retained amount under the AAIC

Policy is $1 million per occurrence. Home Depot maintains that it

incurred $128,708.47 in consequential damages stemming from the

breach of the duty to defend.4

 It is undisputed that Home Depot

did not approach exhaustion of its retained amount “by payments

made by or on behalf of the insured for injury or damage to which

[the AAIC] policy applies.” D. App. 97. Home Depot maintains that

it did not pay any amount of money for damages in the settlement

with Boxcars in the Boxcars Litigation. And even if the court

assumes that the costs Home Depot incurred in defending itself

would be counted in determining whether Home Depot had exhausted

its self-insured retention (an assumption the court is unsure the

AAIC Policy would even support), Home Depot’s defense costs were

nowhere near $1 million. It is therefore undisputed that Home

Depot could not have collected its attorney’s fees and defense

costs under the AAIC Policy. Accordingly, the AAIC Policy did not

 

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- 21 -

constitute “other valid and collectible insurance available to the

additional insured.” 

V

Home Depot maintains that it is entitled to recover

$128,708.47 for the attorney’s fees and costs it incurred in

defending its interests in the Boxcars Litigation. This figure,

however, appears to include not only expenses that Home Depot

incurred in defending itself in the Boxcars Litigation but some of

the attorney’s fees and costs it has incurred in prosecuting the

instant case. This potentially blends two different decisions, one

to be made by the trier of fact and the other to be made by the

court. Attorney’s fees and costs incurred in the Boxcars

Litigation defense are determined by the trier of fact as part of

Home Depot’s breach of contract claim. Those expended in

prosecuting the present lawsuit are awarded by the court under the

procedures specified in Fed. R. Civ. P. 54(d) and N.D. Tex. Civ. R.

54.1. The court is therefore unable to grant summary judgment

awarding Home Depot specific relief on its breach of contract claim

without the possibility of awarding duplicative attorney’s fees and

costs. It will therefore limit its grant of summary judgment to

liability alone. 

* * *

The court grants Home Depot’s motion for summary judgment on

its breach of contract claim to the extent of holding that National

 

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5National Fire can stipulate to the amount of attorney’s fees

and costs without waiving its arguments that Home Depot is not

entitled to recover against it on the merits.

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Fire breached its duty to defend Home Depot in the Boxcars

Litigation. Home Depot is entitled to recover from National Fire

the attorney’s fees and costs it incurred defending itself in the

Boxcars Litigation, as determined by the trier of fact or by

stipulation of the parties.5 It is also entitled to recover its

reasonable attorney’s fees and costs incurred in prosecuting this

lawsuit, to be determined after the court enters a final judgment.

SO ORDERED.

March 21, 2007.

_________________________________

SIDNEY A. FITZWATER

UNITED STATES DISTRICT JUDGE

 

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