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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

LAVENDER ROAD MANAGEMENT, 

LLC, d/b/a Lavender Place

vs.

HANOVER INSURANCE COMPANY

§

§

§ CASE NO. 6:23-cv-277-JDK

§

§ 

§

REPORT AND RECOMMENDATION

OF THE UNITED STATES MAGISTRATE JUDGE

Before the Court is Defendant Hanover Insurance Company’s Motion for Summary 

Judgment (ECF 10) and Plaintiff Lavender Road Management, d/b/a Lavender Place’s CrossMotion for Summary Judgment (ECF 11). The presiding judge referred the motions for proposed 

findings of fact and recommendations for disposition in accordance with 28 U.S.C. § 636(b)(1) 

and FED. R. CIV. P. 72(b) (ECF 14). Having considered the motions, responses, and reply, it is 

recommended that Defendant’s motion for summary judgment be GRANTED and Plaintiff’s 

cross-motion for summary judgment be DENIED.

BACKGROUND

Plaintiff initiated this action in the 114th Judicial District Court of Smith County, Texas, 

concerning insurance coverage pursuant to a Commercial General Liability (“CGL”) insurance 

policy issued by Defendant to Plaintiff. Defendant removed the action to federal court asserting 

diversity jurisdiction pursuant to 28 U.S.C. § 1332.

In its state court petition, Plaintiff asserts that Defendant issued a CGL policy to it that was 

effective November 20, 2020 through June 9, 2021. Plaintiff submits that coverage under the 

terms of the policy included a “right and duty to defend [Plaintiff] against any suit seeking damages 

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for bodily injury or property damage.”1 Plaintiff complains that Defendant refused to defend an 

action filed against it in Smith County, Texas, on December 16, 2020, and issued a denial letter on 

January 25, 2021. In that lawsuit, Plaintiff states that Chinquapin Point Properties, LLC (“CPP”) 

sought relief against it for alleged property damage.2

 Plaintiff submits that it was forced to provide 

its own defense due to Defendant’s refusal to provide a defense, ultimately resulting in a favorable 

resolution. Plaintiff estimates that it incurred more than $263,000.00 in attorney’s fees after 

Defendant issued its denial letter.3 Plaintiff asserts claims for breach of contract, violations of the 

Texas Insurance Code, and breach of the duty of good faith and fair dealing, seeking actual 

damages, treble damages, extra-contractual damages, exemplary damages, statutory damages for 

violations of the Texas Insurance Code, interest, attorney’s fees, and costs. 

Defendant filed a motion for summary judgment asserting that the underlying lawsuit filed 

by CPP did not trigger a duty to defend under the CGL policy. Defendant asserts that Plaintiff—

the owner and operator of a mobile home park—was sued, together with Steven Pinkston, the 

owner and manager of Plaintiff, for an alleged unauthorized construction of a sewage pipeline 

without prior consent from the affected property owners.4 Defendant submits that Plaintiff did 

not own an interest in the property on which the sewage pipeline was being constructed. In the 

underlying lawsuit, CPP sought a restraining order and temporary injunction to prohibit 

construction of the sewage pipeline without the consent of the owners. The suit additionally 

asserted that Plaintiff was not authorized to construct the pipeline or to transport sewage across 

the property.5

1 Plaintiff’s Original Petition, ECF 1-5, at *3 (Exhibit E to Defendant’s Notice of Removal). 2 Plaintiff states that the suit alleges that Plaintiff “already damaged the Property and will continue to harm the 

Property unless immediate relief is granted.”Id. at *4. 3 Id. 4 Defendant Hanover Insurance Company’s Motion for Summary Judgment, ECF 10, at *8.

5 Id. at *9.

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In its motion, Defendant agrees that it issued CGL policy RHS 9889056 08 to Plaintiff, 

Lavender Road Management LLC dba Lavender Place, with effective dates of November 24, 2020 

through June 9, 2021. A copy of the policy is attached to the motion.6 The policy coverage 

includes a duty to defend against any suit seeking damages for bodily injury or property damage 

that is covered by the terms of the policy.7 Defendant asserts that coverage under the policy 

includes “property damage” that is “caused by an ‘occurrence’ that takes place in the ‘coverage 

territory;’ ” and “during the policy period.”8 The policy defines “bodily injury” to mean “bodily 

injury, sickness or disease sustained by a person, including death resulting from any of these at 

any time.”9

 “Property damage” is defined to include “physical injury to tangible property, 

including all resulting loss of use of that property” and “[l]oss of use of tangible property that is 

not physically injured.”10 An “occurrence” is defined to mean “an accident, including continuous 

or repeated exposure to substantially the same general harmful conditions.”11 The policy includes 

an exclusion for “expected or intended injury,” stating that the insurance does not apply to 

“[b]odily injury” or “property damage” that is expected or intended from the standpoint of the 

insured.

12 

Defendant asserts that it had no duty to defend under the terms of the policy because the 

petition filed in the CPP lawsuit did not allege property damage caused by an occurrence falling 

within the policy period. Defendant submits that the petition fails to allege facts of a physical 

harm meeting the policy definition of “property damage.” Further, Defendant argues that the 

allegations do not show an “occurrence” within the policy definition because the claim against 

6 Id., ECF 10-2, at *6–112 (App.4–110). 7 Id. at *44 (App.42). 8 Id. 9 Id. at *56 (App.54). 10 Id. 11 Id. 12 Id. at *45 (App.43).

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Plaintiff in the underlying petition is for the intentional tort of trespass. Finally, Defendant 

contends that the underlying petition does not allege any damage that occurred during the policy 

period. 

Defendant asserts that the lack of coverage bars recovery, including extra-contractual 

claims and a claim for breach of the common law duty of good faith and fair dealing. To the extent 

Plaintiff seeks relief pursuant to the Texas Insurance Code, Defendant argues that those claims are 

barred by the applicable statute of limitations. Additionally, Defendant submits that Plaintiff has 

not alleged facts sufficient to state a claim for misrepresentation under section 541 of the Texas 

Insurance Code. Because it did not wrongfully reject its duty to defend, Defendant states that 

Plaintiff cannot assert a Prompt Payment Act claim. For these reasons, Defendant denies that 

Plaintiff is entitled to any of the relief requested.

Plaintiff filed a cross-motion for summary judgment and response. Plaintiff asserts that 

the underlying lawsuit stems from a dispute between it and CPP involving the construction of a 

sewage pipeline. Plaintiff states that CPP alleged in the underlying lawsuit that Plaintiff bored 

underneath and damaged its property to construct a sewage pipeline.13 CPP sought to recover 

actual, consequential, and exemplary damages related to construction of the pipeline and the 

related property damage.14 Plaintiff submits that it incurred reasonable attorney’s fees totaling 

$263,430.00, after reducing the total amount by ten percent, procuring its own defense in the 

underlying suit and it continues to incur fees in the prosecution of this lawsuit.

Plaintiff argues that CPP’s operative complaint in the underlying lawsuit triggered 

coverage under the CGL policy at issue. Plaintiff contends that the CPP complaint “undeniably 

13 Plaintiff Lavender Road Management, LLC d/b/a Lavender Place’s Cross-Motion for Summary Judgment and 

Response to Defendant Hanover Insurance Company’s Motion for Summary Judgment, ECF 11, at *4.

14 Id.

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asserts that Lavender damaged its property during the construction of the sewage pipeline.”15 

Viewing the allegations most favorably to Lavender, Plaintiff submits that the pleading in the 

underlying lawsuit clearly asserts property damage that was caused by an occurrence, as that term 

is defined in Texas case law. Plaintiff complains that Defendant denied coverage, asserting that 

the decision to construct the pipeline was not an accident, but Plaintiff reasons that the damage to 

CPP’s property that resulted from construction of the pipeline was an accident because it was not 

the intended or expected result.16 Plaintiff argues that Defendant wrongly denied coverage by 

focusing only on Plaintiff’s decision to construct the sewage pipeline, without recognizing that 

CPP was suing Lavender for property damage that resulted from the construction.17 Plaintiff states 

that there are no allegations in the underlying lawsuit that the property damage was anything other 

than accidental. While acknowledging that the underlying lawsuit refers to potential future 

property damage, Plaintiff points to the allegation in the petition stating that Lavender “already 

damaged the Property and will continue to harm the Property unless immediate relief is granted.”18

As to the statute of limitations for its chapter 541 claim, Plaintiff asserts that Defendant 

induced it to postpone the filing of this lawsuit, which results in a 180-day extension of the 

limitations period. More specifically, Plaintiff submits that a letter from Defendant’s adjustor 

denying the duty to defend under the policy, dated January 25, 2021, states “[i]f you disagree with 

our position the statute of limitations for any action on the insurance policy for this claim will 

expire on January 25, 2025.”19 Plaintiff further argues that it is entitled to recover attorney’s fees 

as a result of Defendant’s bad faith.

15 Id. at *9. 16 Id. 17 Id. 18 Id. at *10 (quoting Plaintiff’s Original Petition for Ex Parte Temporary Restraining Order, Temporary Injunction 

and Permanent Injunction, and Request for Disclosure, ECF 11-1 (Appendix to Cross-Motion for Summary 

Judgment), at *115).

19 Id. at *11; ECF 11-1, at *154.

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In response to the cross-motion for summary judgment, Defendant re-asserts that the CPP 

lawsuit did not trigger a duty to defend under the policy. Defendant reasons that damage to 

property is an expected and reasonably anticipated result from the construction of a pipeline on 

property, such that it is not property damage caused by an “occurrence.” So long as the insured 

intended to do the act that caused the resulting injury, Defendant argues that the conduct is not an 

accident and does not trigger a duty to defend. Here, the underlying lawsuit alleges that Plaintiff 

intentionally trespassed on CPP’s property, constructing a pipeline without permission, and 

Defendant submits that the only damage alleged is damage naturally resulting from the trespass. 

Defendant also objects to the affidavit of Don Colleluori that was submitted with Plaintiff’s 

motion. Defendant complains that the affidavit purports to support Plaintiff’s claim for attorney’s 

fees incurred in defending the underlying lawsuit, but Mr. Colleluori has not been designated as 

an expert witness and costs represented in the affidavit are not limited to those incurred by 

Lavender, the insured under the policy. In response to the adjustor’s letter providing a statute of 

limitations expiration date, Defendant contends that the statement clearly refers to only a 

contractual claim in connection with the policy.

Plaintiff’s reply again argues that the underlying lawsuit “contained explicit averments 

potentially triggering this foundational benefit of having and holding insurance.”20 Plaintiff makes 

no claim concerning indemnity—only that at least one allegation in the underlying lawsuit 

potentially triggered coverage under the policy. Plaintiff submits that Defendant is asking the 

Court to assume that property damage naturally flows from Plaintiff’s act of constructing a 

pipeline. Indeed, Plaintiff asserts that it prevailed in the underlying lawsuit because no property 

20 Plaintiff Lavender Road Management, LLC d/b/a Lavender Place’s Reply to Defendant Hanover Insurance 

Company’s Objections and Response to Plaintiff Lavender Road Management, LLC d/b/a Lavender Place’s CrossMotion for Summary Judgment, ECF 15, at *1 (emphasis in original).

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damage occurred.21 Nevertheless, looking only at the pleadings in the underlying lawsuit, and 

viewing the allegations in Plaintiff’s favor, Plaintiff argues that the duty to defend was triggered.

SUMMARY JUDGMENT STANDARD 

Summary judgment is proper when the pleadings and evidence show that “there is no 

genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter 

of law.” FED. R. CIV. P. 56(a). The moving party has the burden of showing there is no genuine 

dispute as to any material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A genuine 

dispute of material fact exists “if the evidence is such that a reasonable jury could return a verdict 

for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A “material 

fact” is one that might affect the outcome of the suit under governing law. Id. Issues of material 

fact are “genuine” only if they require resolution by a trier of fact and if the evidence is such that 

a reasonable jury could return a verdict in favor of the non-moving party. Id. When ruling on a 

motion for summary judgment, the Court must make all inferences from the factual record in the 

light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 

475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The moving party may meet its burden 

by pointing to the absence of evidence supporting any claim. Celotex Corp., 477 U.S. at 325.

If the movant meets its burden, the nonmovant must go beyond the pleadings and set forth 

specific facts in the record sufficient to support his claim. Anderson, 477 U.S. at 257. The 

nonmovant’s burden may not be satisfied by argument, conclusory allegations, unsubstantiated 

assertions, metaphysical doubt as to the factors, or a mere scintilla of evidence. Matsushita, 475 

U.S. at 585; Wallace v. Tex. Tech. Univ., 80 F.3d 1042, 1047 (5th Cir. 1996); Little v. Liquid Air 

Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). The nonmovant must submit competent summary 

21 Id. at *6.

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judgment evidence sufficient to defeat a properly supported motion for summary judgment. Ragas 

v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). “The nonmovant is also required to 

articulate the precise manner in which the submitted or identified evidence supports his or her 

claim.” Smith v. United States, 392 F.3d 621, 625 (5th Cir. 2004).

Summary judgment is inappropriate if the evidence before the court, viewed as a whole, 

could lead to different factual findings and conclusions. Honore v. Douglas, 833 F.2d 565 (5th Cir. 

1987). The district court must look to the full record, including the pleadings, affidavits, and 

depositions. Williams v. Adams, 836 F.2d 958, 961 (5th Cir. 1988). Under this standard, fact 

questions are considered with deference to the nonmovant. Reid v. State Farm Mutl. Auto. Ins. Co., 

784 F.2d 577, 578 (5th Cir. 1986). The evidence of the nonmovant is to be believed and all 

inferences are to be drawn in his favor. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513. The Court 

resolves factual controversies for purposes of summary judgment in favor of the nonmoving party, 

but only when there is an actual controversy, that is, when both parties have submitted evidence 

of contradictory facts. Little, 37 F.3d at 1075. The Court does not, however, in the absence of any 

proof, assume that the nonmoving party could or would prove the necessary facts. Wallace, 80 

F.3d at 1048 (citing Little, 37 F.3d at 1075).

An issue is genuine if the evidence supporting its resolution in favor of the party opposing 

summary judgment, together with any inference in such party's favor that the evidence allows, 

would be sufficient to support a verdict in favor of the party. St. Amant v. Benoit, 806 F.2d 1294, 

1297 (5th Cir. 1987). A material fact is one that might affect the outcome of the suit under 

governing law. Anderson, 477 U.S. at 248.

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APPLICABLE LAW

This case was removed to federal court asserting diversity jurisdiction over claims brought 

pursuant to Texas law. Generally, under Texas law, an insurer’s duty to defend will be determined 

by looking only at the complaint filed in the underlying lawsuit and the policy, commonly referred 

to as the “eight-corners rule” or the “complaint allegation rule.” GuideOne Elite Ins. Co. v. Fielder 

Road Baptist Church, 197 S.W.3d 305, 308 (Tex. 2006); King v. Dallas Fire Ins. Co., 85 S.W.3d 

185, 187 (Tex. 2002). The truth or falsity of the allegations in the pleadings is irrelevant and the 

allegations are to be liberally construed in favor of coverage. Id. (citing Argonaut Sw. Ins. Co. v. 

Maupin, 500 S.W.2d 633, 635 (Tex. 1973) and Nat’l Union Fire Ins. Co. v. Merchants Fast Motor 

Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997)). The insurer does not have a duty to defend if the 

underlying lawsuit pleadings do not allege facts within the scope of coverage. Nat’l Union Fire 

Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d at 141. The insurer has a duty to defend 

if the facts alleged in the latest amended pleading, if taken as true, would potentially state a cause 

of action falling within the terms of the policy. Northfield Ins. Co. v. Loving Home Care, Inc., 363 

F.3d 523, 528 (5th Cir. 2004); Nat’l Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 

S.W.2d at 141.

In determining whether the pleadings potentially state a cause of action that is covered by 

the policy, the focus is on the alleged facts rather than the legal theories asserted in the pleadings. 

Id. A court should not read facts into the pleadings or imagine factual scenarios that might trigger 

coverage. Nat’l Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d at 142. The 

burden is on the insured to establish that a claim is potentially within the scope of coverage. 

Lincoln General Ins. Co. v. Reyna, 401 F.3d 347, 350 (5th Cir. 2005) (citing Northfield Ins. Co. v. 

Loving Home Care, Inc., 363 F.3d at 528). If the insured successfully establishes that a claim is 

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potentially within the scope of coverage, the burden is then on the insurer to show, within the 

confines of the eight-corners rule, that the plain language of a policy exclusion or other limitation 

excludes coverage. Id. If the insurer then proves that an exclusion applies, the burden shifts back 

to the insured to show that the claim falls within an exception to the exclusion. Guaranty Nat. Ins. 

Co. v. Vic Mfg. Co., 143 F.3d 192, 193 (5th Cir. 1998).

ANALYSIS

Here, the facts alleged in the CPP petition are that Plaintiff, together with Steven Pinkston, 

constructed an unauthorized pipeline to dispose of sewage from a mobile home park owned by 

Plaintiff.

22 Specific to Plaintiff, the petition alleges that “Lavender – the owner of the mobile 

home park – does not own an interest in Hitts Lake Property and has not obtained permission (in 

the form of an easement, license or otherwise) from the owners of Hitts Lake Property to construct 

a sewage pipeline on the Property or to allow sewage from its mobile home park to flow through 

the Property.”23 CPP asserts a trespass claim against Plaintiff and seeks to enjoin Plaintiff from 

“laying, constructing, testing, using or in any manner operating a sewage pipeline on the Property 

without the express consent of all of the owners of the Property.”24

The policy provides a duty to defend for property damage that is caused by an occurrence 

in the coverage territory during the policy period. The policy defines an occurrence to include an 

accident and excludes property damage that is expected or intended from the standpoint of the 

insured. “Whether there has been an accident and thus an occurrence, is judged from the viewpoint 

22 Defendant Hanover Insurance Company’s Motion for Summary Judgment, ECF 10-3, at *3 (App.112), Exhibit 2 

(Plaintiff’s Original Petition for Ex Parte Temporary Restraining Order, Temporary Inunction and Permanent 

Injunction, and Request for Disclosure).

23 Id. at *6 (App.115). 24 Id. at *6–8 (App.115–117).

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of the insured under the provisions of this commercial general liability policy.” Federal Ins. Co. 

v. Ace Property & Casualty, 420 F.3d 120, 123 (5th Cir. 2005).

Defendant contends that Maupin is dispositive here. See Argonaut Southwest Ins. Co. v. 

Maupin, 500 S.W.2d 633 (Tex. 1973). In Maupin, a construction company contracted with a 

tenant, instead of the owner, to remove dirt from property. The owner then sued Maupin, asserting 

a trespass claim for the wrongful removal of their dirt. Regardless of Maupin’s mistake in 

contracting with the wrong person, the Texas Supreme Court held that “[t]he plaintiff’s act in 

trespassing upon the [owners’] property did not constitute an accident.” Id. at 635. The “acts were 

voluntary and intentional, even though the result or injury may have been unexpected, unforeseen 

and unintended.” Id. As a result, the Court held that the damage asserted in the underlying lawsuit 

“was not an accident or occurrence within the meaning of [the] policy.” Id. “As Maupin 

voluntarily, intentionally, and without the true owner’s consent removed dirt from property belong 

to the owner, and as trespass in Texas is a strict liability tort without a scienter element, the court 

concluded that inquiry into whether Maupin expected or intended to cause damage to the owner 

was not relevant in determining if a tort had been committed.” Federated Mut. Ins. Co. v. 

Grapevine Excavation Inc., 197 F.3d 720, 724 (5th Cir. 1999).

Looking only at the factual allegations in the most recent petition filed in the underlying 

lawsuit and the language of the insurance policy, as required by the eight-corners rule, the petition 

does not allege facts stating a cause of action that is potentially within the policy’s coverage. Even 

taking as true Plaintiff’s assertion that the underlying lawsuit alleges that Plaintiff damaged CPP’s 

property during the construction of the sewage pipeline, the factual allegations of the underlying 

lawsuit do not allege a coverage-triggering occurrence, as that term is used in the policy. The CPP 

petition specifically alleges that Plaintiff—Lavender—committed a trespass when it constructed a 

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sewage pipeline on property that it does not own and without the permission of the owners. All 

that is alleged against Plaintiff is the intentional tort of trespass, which is a voluntary and 

intentional act. The act of trespass was not an accident and any damage resulting from that trespass 

is not an accident or occurrence within the terms of the policy. Argonaut Southwest Ins. Co. v. 

Maupin, 500 S.W.2d at 635; Federal Ins. Co. v. Ace Property & Casualty, 420 F.3d at 123. Plaintiff 

has not shown a claim potentially within the scope of coverage. 

There are no genuine issues of material fact and Defendant is entitled to judgment as a 

matter of law finding no duty to defend Plaintiff in the CPP lawsuit. Because there is no coverage, 

Plaintiff’s remaining claims for relief fail. 

RECOMMENDATION

It is hereby RECOMMENDED that Defendant’s Motion for Summary Judgment (ECF 

10) be GRANTED and that Plaintiff’s Cross-Motion for Summary Judgment (ECF 11) be 

DENIED. 

Within fourteen days after receipt of the magistrate judge’s report, any party may serve and 

file written objections to the findings and recommendations of the magistrate judge. 28 U.S.C. § 

636(b). Written objections shall not exceed eight pages. Local Rule CV-72(c).

A party’s failure to file written objections to the findings, conclusions and 

recommendations contained in this Report within fourteen days after service shall bar that party 

from de novo review by the district judge of those findings, conclusions and recommendations 

and, except upon grounds of plain error, from attacking on appeal the unobjected-to proposed 

factual findings and legal conclusions accepted and adopted by the district court. Douglass v. 

United Servs. Auto. Assn., 79 F.3d 1415, 1430 (5th Cir.1996) (en banc), superseded by statute on 

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other grounds, 28 U.S.C. § 636(b)(1) (extending the time to file objections from ten to fourteen 

days). 

So ORDERED and SIGNED this 23rd day of July, 2024.

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