NO. 07-05-0212-CV IN THE COURT OF APPEALS FOR THE SEVENTH DISTRICT OF TE XAS

AT AMARILLO PANEL B FEBRUARY 27, 2006

______________________________ PAUL NUNN, APPELLANT

V. CITY OF VERNON EMPLOYEE BENEFIT TR UST, APPELLEE

_________________________________ FROM THE 46 TH DISTRICT COURT OF WILBARGER COUNTY; NO. 23,56 5; HONORA BLE TOM N EELY, JU DGE

_______________________________ Before QUINN, C.J., and CAMPBELL and HANCOCK, JJ. MEMORAND UM OPINION Appellant , Paul Nunn, appeals a judgment denying his motion for summary judgmen t and granting the motion for summary judg ment of appellee, City of Vernon Employee Benefit Trust (Trust). We reverse. BACKGROUND Nunn, an employee of

the FireDepartme nt of the City of Vernon, was injured while working atan off-duty job. The off-duty employer, Vernon Fire and Safety Equi pment Co.,2

did notcarry workers’ compensation insurance at the time Nunn sustain ed his injuries. As a result, Nunn sought coverage for his medical expenses under the heal th plan provided by the City

of Vernon and administered by the Trust. After Nunn’s claim for benefits was denied by the Trust, Nunn filed suit seeking a declaratory judgment that hi s claim was covered by the health plan. Both parties moved for summary judgment. By his traditional motion f or partial summary

judgment, Nunn contended that he was entitl ed to a partial summary judgment because the termsof the health plan (Plan) did not exclude coverage for injuries sustained while working for an employer not covered by workers’ compensation insurance. The Trust also moved for summary judgment contending that the Plan specifical ly exclude d from coverage workers’ compensation related claims. As a defense to Nunn’s motion for partial summary

judgment, the Trust contended that Nunn’s suit was barred by sovereign immunity. After hearing both motions for summary judgment, the trial court granted the Trust’s motion, denied Nunn’s motion, and, without identifying the grounds relied upon, rendered judgment t hat Nunn have and recover n othing a gainst th e Trust. By two issues, Nunn appeals. Nunn contend s (1) that the proper construction of the Plan’s provision excluding “workers’ compensation expenses” from coverage appliesonly to exclude those injuries which are actuall y covered by workers’ compensation insurance, and (2) that the trial court could not have pr operly d enied hi s motion for partia l summary judgment based on his claim being barred by so vereign immunity.3 STANDARD OF REVIEW A party may prevail on a summary judgment motion by conclusively establishing the absence of any genuine issue of material fact and that the party is entitled to judgment as a matter o f law. T EX . R. C IV . P. 166a(c). We review the granting of such a traditional or conclusively-established summary ju dgment us ing the s tandards set out in Ni xon v. Mr

. Property Management Co. , 690 S.W. 2d 546, 5 48-49 (Te x. 1985) : (1) The mova nt for summ ary judgme nt has the burden o f showin g that the re is no genuine issue of material fact and that it is entitled to judgment as a matter of l aw. (2) In determ ining w hether th ere is a disputed issue of ma terial fact precluding summary

judgment, evidence favorable to the non-movant will be taken as true. (3) Every reasonable inference must be indulged in favor of the non-movant and any d oubts res olved in its favor

. When both parties move for summary judgment and the trial court grants one motion and denies t he other, the appellate court reviews the summary judgment evidence of bo t h parties, determines all questions presented, and renders the judgment that the trial court should have rendered

. Bradley v. State e x rel. Wh ite , 990 S.W.2d 245, 247(Tex. 19 99).

ISSUE 1: The “Workers’ Compensation Expense” Exclusion The Plan exc ludes co verage fo r w orkers’ c ompensati on expe nses. Nun n contended, in his summary judgment motion, that this phrase excludes coverage for only those claims w hich areactuallycovered by workers’ compensation insurance. The Trust4

conten ded, in i ts motion for summary judgment, that the exclusion applies to any workrelated injury. Neither party pled that the exclusion was ambiguous. We note tha t the Pla n is a ri sk pool a uthorize d by statu te. See T EX . L OC . G OV ’ T C ODE A NN . § 172.005 (Vernon Supp. 2005). A risk pool is not insurance and is not subject to the Insur

ance Cod e. See T EX . L OC . G OV ’ T C ODE A NN . § 172.01 4 (V ernon 19 99). However, such governmental health benefits plans are in th e nature of contracts and controversies regarding construc tion of these plans ar e subject

to judici al revie w. See Boon-Chapman, Inc. v. T omball Hosp. Auth. , 941 S.W.2d 38 3, 385-8 6 (Tex.App .–Beaumo nt 1997, no writ). In construi ng a writ

ten contra ct, the prima ry concer n of the court is to ascertain the tr ue intentio ns of the parties a s expres sed in th e contrac t. Nat’l Union Fire Ins. Co . o f Pittsburgh v. CBI Indus., Inc. , 907 S.W. 2d 517, 5 20 (Tex. 1995). If the contract is worded such that itcan only be given one reasonable construction, it is not ambiguous a nd will be enforced as writte n. Id .; Coker v. Coker , 650 S.W. 2d 391, 3 93 (T ex. 1983) . Howeve r, a contract is ambigu ous if the terms of a contract are susceptible to more than one reasonable interpre tation. CBI Indus. , 907 S.W.2d at 520. Whet her a con tract is ambiguous is a questio n of law. Id . A court may conclude that a contract is ambiguous, even in the a bsence o f a plead ing of an ambigui ty. J.M. Davidson, Inc. v. Web ster , 1 28 S.W.3d 223, 231 (Tex. 20 03). When a contrac t contain s an ambi guity, th e grantin g of a motion for

summary

judgment is improper because the proper construction of the contract presents a genuin e issue of material fact. Coker , 650 S.W.2d at 394.5

In the prese nt case, t he excl usion sta tes th at, “No ben efits sha ll be pa yable fo r: Workers’ Compensation Expenses.” No further explana tion or definition of this phrase is contained in the Plan. We acknowledge that the Plan does identify that it s intent is to provide coveragefor non-o ccupatio nal inju ries. However, the Plan provides that disputes regarding eligibility for

benefits shall be resolved “under and pursuant to this Plan and the Trust Agreement. . . .” The Trust Agreement, which established the Trust and authorized the Plan, indicates that “[t]he employee benefits coverage contemplated by this Agreement shall not apply in any case which is compensable under Wo rkers’ Co mpensati on Laws.

.

. .” (Emphasis added). A “compensable injury,” under the Texas Workers’ Compensation laws, is one th at “arises out of and in the course and scope of employment for which compensation is payab le under this sub title.” T EX . L AB . C ODE A NN . § 401.011(10) (Vernon Supp. 2005). Thus, for a case to be compensable under theworkers’ compensation laws, the injury must relate to emplo yment with an employer who is covered by workers’ compensation insuran ce. See Martinez v. IBP, Inc. , 9 61 S.W.2d 678, 682 (Tex.App.–Amarillo 1998, pet. denied). Therefore, we conclude that Nunn’s interpretation of the exclusion as applying only to those expense s which are actually covered by workers’ compensation insurance is reasonab l e and is buttressed by the quoted language of the Trust Agr

eement. An inten t to exclude coverage must be expressed in clear and unambiguous language. Nat’l Union Fire Ins. Co. of Pittsburgh v. Hudson Energy Co. , 811 S.W.2d 552, 555 (Tex. 1991). Exclusions from coverage are to be strictly construed in favor of the insured. Id . We believe that the Plan’s exclusion of “Workers’ Compensation Expenses”6

is subject to more than one reasonable interpretation and is, therefore, ambigu ous. Thus, we conclude that summary judgment in favor of either party was precluded by the existence of a genuine issue of material fact as to the proper scope of the exclusion. ISSUE 2: Soverei gn Immuni ty Nunn correctly indicates that the Trust did not pr esent t he issue of sovereign immunity as a ground for summary judgment, rather, the Trust presented the issue as an affirmative defense to Nunn’ s motion for summary judgment. As we have determined that a material fact question exists which precludes su mmary judgment for either party, we need not and do not address whether the affirmative defense of sovereign immunity precludes the grant ing of su mmary judg ment in fa vor of Nu nn. See T EX . R. A PP . P. 47.1. CONCLUS ION Having found that a genuine issue of material fact exists i n this case, we reverse the trial court’s grant of summary judgment in favor of Trust and render ju dgment de nying bo th motions.

Mackey K. Hancock Justice