1

COURT OF APPEALS

EIGHTH DISTRICT OF TEXAS

EL PASO, TEXAS

 

UNITED FIRE LLOYDS,

 Appellant, 

v. 

JD KUNZ CONCRETE CONTRACTOR, 

INC., and EXPLOREUSA RV, LTD., 

 Appellees.

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 No. 08-23-00047-CV

Appeal from the 

207th Judicial District Court 

 of Comal County, Texas 

 (TC# C2021-0734B)

MEMORANDUM OPINION

 This is an appeal from the trial court’s order granting Appellees’ motion for summary 

judgment and denying Appellant’s cross-motion. In its order, the trial court found that Appellant 

United Fire Lloyds (United Fire) has a duty to indemnify its insured, Appellee JD Kunz Concrete 

Contractor, Inc. (JD Kunz), pursuant to a commercial general liability policy it issued to JD Kunz 

covering damages that occurred during a construction project it performed on behalf of Appellee 

ExploreUSA RV, LTD. (ExploreUSA). For the reasons set forth below, we affirm.1

 

1 This case was transferred from our sister court in Austin pursuant to the Texas Supreme Court’s docket equalization 

efforts. See TEX. GOV’T CODE ANN. § 73.001. We follow the Austin Court’s precedent to the extent it conflicts with 

our own. See TEX. R. APP. P. 41.3. 
2

FACTUAL AND PROCEDURAL BACKGROUND

A. The construction contract 

ExploreUSA is a recreational-vehicle sales company in Alvin, Texas. In May of 2015, it

entered into a contract with JD Kunz in which JD Kunz agreed to “[p]rovide all materials and labor 

to install [a] Complete Concrete System” covering over 12 acres to be used as ExploreUSA’s

“supercenter.”2 (the Construction Contract). In exchange, ExploreUSA agreed to pay JD Kunz

$2,700,775.00 to complete the system. As discussed in more detail below, the Construction 

Contract contained detailed specifications for the work to be performed and provided that JD Kunz

was “solely responsible for, has control over, and is fully responsible for all construction means, 

methods, techniques, procedures, coordination, safety, and sequences [and] shall coordinate all 

activities related to [its] work as defined herein.”

B. The commercial general liability policy 

As required by the Construction Contract, JD Kunz obtained a commercial general liability 

(CGL) policy from United Fire, listing ExploreUSA as an additional insured, with a one-milliondollar limit per occurrence and a two-million-dollar aggregate limit.

3 The policy provided that 

United Fire had a duty to indemnify JD Kunz and to thereby pay any “sums that the insured 

becomes legally obligated to pay as damages because of . . . property damage to which this 

insurance applies.” It further provided that United Fire had the “duty to defend” JD Kunz “against 

any suit seeking those damages,” except those to which the insurance did not apply.

2 Although JD Kunz was referred to as the “subcontractor” in the Construction Contract, there is no dispute that JD 

Kunz was considered the general contractor on the project.

3 The policy stated that an “additional insured” would include “any person or organization to whom [JD Kunz] agreed 

to name as [an] additional insured by written contract or agreement.” The parties do not dispute that ExploreUSA was 

an additional insured pursuant to this provision. 
3

The policy contained a number of exclusions, three of which are germane to this appeal: 

(1) a “contractual liability” exclusion (applicable when an insured has assumed liability beyond its 

general duty to perform its work in a good and workmanlike manner); (2) a “your product” 

exclusion (applicable when the damages suffered related to a “product” that the insured 

manufactured, sold, handled, distributed, or disposed of); and (3) a “your work” exclusion

(applicable when the damages suffered were caused by the insured’s failure to perform its work in 

a good and workmanlike manner, i.e., for poor workmanship, but with an exception for work 

performed by subcontractors).

C. The underlying liability lawsuit 

Following project completion, ExploreUSA sued JD Kunz for breach of contract, alleging 

the “Concrete System showed signs of failure, unusual cracking, deterioration, and damage.”

ExploreUSA posited that the physical damage and system deterioration was attributable to 

“incorrect or inadequate performance of work by Kunz and/or its subcontractors.” In particular, 

ExploreUSA alleged the system’s failure resulted from: (1) the thickness of the concrete, which 

was not in accordance with the specifications in the Construction Contract and/or the standard 

practice in the industry; and (2) the reinforcing steel (the rebar) not being in the midsection of the 

pavement and “was in most cases placed directly upon the stabilized subgrade surface.”

ExploreUSA further alleged that after being notified of the damage, JD Kunz agreed to perform 

repairs under the Construction Contract’s warranty provisions but failed to adequately address the 

system’s failure. JD Kunz thereafter notified United Fire of the lawsuit, and United Fire agreed to 

provide JD Kunz a defense but reserved the right to refuse to indemnify JD Kunz for any damages 

awarded if it concluded a policy exclusion applied.
4

At the close of trial, the jury was asked three questions. First, it was asked if JD Kunz had 

failed to comply with the Construction Contract, to which the jury answered “Yes.” Second, the

jury was asked if JD Kunz’s “failure, if any . . . to comply with a warranty [was] a producing cause 

of damages to ExploreUSA . . . ,” to which the jury answered “No.” And third, it was asked “[w]hat 

sum of money if any . . . would fairly and reasonably compensate ExploreUSA . . . for its damages, 

if any, that resulted from such failure to comply,” to which the jury answered, “$1,700,000.” In 

determining the amount of damages, the trial court instructed the jury that it was only to consider 

“[t]he reasonable and necessary cost to repair and replace the concrete.”

The trial court thereafter entered a final judgment against JD Kunz in the amount of 

$2,291,747.73, to include attorney’s fees, costs, and prejudgment interest (the underlying liability 

judgment). 

D. The insurance coverage lawsuit 

Following the judgment, United Fire filed a petition seeking a declaratory judgment that it 

had no duty to indemnify JD Kunz due to three CGL policy exclusions: (1) the contractual-liability 

exclusion; (2) the your-product exclusion; and (3) the your-work exclusion. Both ExploreUSA and 

JD Kunz (collectively, the Kunz Defendants) filed general denials to the lawsuit and counterclaims

against United Fire for, among other things, breach of contract and violation of the Texas Insurance 

Code for United Fire’s refusal to indemnify JD Kunz. The Kunz Defendants thereafter filed 

traditional motions for summary judgment, asserting they were entitled to summary judgment on 

United Fire’s request for declaratory relief and on their counterclaims. United Fire opposed the 

motions and filed its own motion for summary judgment, which the Kunz Defendants opposed. 

As discussed in more detail below, in support of their motions for summary judgment, the 

parties all attached copies of the Construction Contract; the CGL policy; and the jury charge, jury 
5

verdict, and final judgment from the underlying lawsuit. In addition, United Fire provided copies 

of its correspondence with JD Kunz in which it agreed to assume the duty to defend JD Kunz in 

the underlying lawsuit, with its reservation of the right to contest the duty to indemnify, as well as 

its final letter to JD Kunz advising that it believed coverage was precluded by the exclusions in 

the policy. The Kunz Defendants attached excerpts from the trial and deposition testimony of 

several witnesses who testified in the underlying litigation as to the cause of the concrete failure

and damage, and which entities, i.e., which of JD Kunz’s subcontractors, performed the work that 

led to the same.

At issue in all three summary judgment motions was the interpretation and application of 

the three CGL policy exclusions identified by United Fire in its request for declaratory relief, and 

whether any of the exclusions applied to preclude coverage for the underlying liability judgment. 

E. The trial court’s ruling 

The trial court denied United Fire’s motion for summary judgment and granted the Kunz

Defendants’ motion in part, ruling in the Kunz Defendants’ favor on their claims for declaratory 

relief, declaring that United Fire had a duty to indemnify JD Kunz for the damages awarded in the 

underlying liability lawsuit. 

The Kunz Defendants then filed motions for summary judgment seeking an award of 

attorney’s fees, which United Fire initially opposed, arguing JD Kunz was not entitled to any such 

award and the amount requested was not reasonable or necessary. Shortly thereafter, however, the 

parties submitted a Rule 11 Agreement to the trial court indicating they reached an agreement on 

attorney’s fees and wished to obtain a final judgment on the issue of whether United Fire owed a 

duty to indemnify JD Kunz for the underlying liability judgment. The Rule 11 Agreement 

stipulated to the amount of reasonable and necessary attorney’s fees the Kunz Defendants had 
6

incurred “to date,” as well as the contingent amounts they would be entitled to if they prevailed on 

appeal. 

Pursuant to the Rule 11 Agreement, the parties filed an agreed motion for severance and 

abatement of the Kunz Defendant’s remaining claims. The parties also filed a joint motion for 

entry of a final judgment, stating they had “stipulated to prejudgment and post judgment interest,” 

as well as the “reasonable and necessary attorney’s fees for Defendants.” However, the motion 

expressly stated that United Fire “still contests the issue of whether the [trial court] properly

granted summary judgment on the duty to indemnify [and] reserves its right to address and contest 

this issue on appeal.” 

The trial court entered its final judgment in which it found, as a matter of law, that United 

Fire owed a “duty to indemnify J.D. Kunz for the underlying judgment.” It further recognized the 

parties’ Rule 11 Agreement and accordingly listed the attorney’s fees the Kunz Defendants had 

already incurred as well as the contingent attorney’s fees to be awarded if the Kunz Defendants 

prevailed on appeal, together with post-judgment interest on the calculated fees.4 The trial court

then severed all of the parties’ remaining claims into a separate cause number, thereby making its 

judgment a final, appealable order from which United Fire appealed. 

ISSUES ON APPEAL

United Fire’s appellant’s brief lists ten issues, which we group into four categories. United 

Fire generally asserts that the trial court erred by granting the Kunz Defendants’ motions for 

summary judgment, by denying United Fire’s motion for summary judgment, and by finding that 

4 The judgment provided that JD Kunz would be awarded “an additional $31,500 in attorney’s fees for any appeal of 

this case to the Court of Appeals [and] an additional $9,000 in attorney’s fees if there is oral argument at the Court of

Appeals.” And it further provided that ExploreUSA would be awarded “an additional $54,250 in attorney’s fees for

any appeal of this case to the Court of Appeals [and] an additional $15,500 in attorney's fees if there is oral argument 

at the Court of Appeals.”
7

United Fire owed a duty to indemnify JD Kunz for the underlying judgment (Issues One, Two and 

Three). Although these issues are separately enumerated, they are not separately briefed. We 

analyze them according to the following categories within which they are subsumed.

In the first category, United Fire contends the contractual-liability exclusion in the CGL 

policy precludes coverage for the underlying liability judgment (Issues Four, Five, and Six). In the 

second category, United Fire contends the your-work exclusion precludes coverage (Issue Seven). 

In the third category, United Fire contends the your-product exclusion precludes coverage (Issues 

Eight and Nine). And in the fourth category, United Fire asks for clarification regarding when

post-judgment interest on an award of appellate attorney’s fees will begin to accrue if an appellate 

court enters judgment in favor of the Kunz Defendants (Issue Ten). 

STANDARD OF REVIEW

We review a trial court’s ruling on a motion for summary judgment de novo. Eagle Oil & 

Gas Co. v. TRO-X, L.P., 619 S.W.3d 699, 705 (Tex. 2021) (citing Nall v. Plunkett, 404 S.W.3d 

552, 555 (Tex. 2013)). When, as here, a party moves for traditional summary judgment, the movant 

has the burden of demonstrating that no genuine issue of material fact exists and it is entitled to 

judgment as a matter of law. See TEX. R. CIV. P. 166a(c); Nassar v. Liberty Mut. Fire Ins. Co., 508 

S.W.3d 254, 257 (Tex. 2017) (per curiam). When a plaintiff moves for summary judgment, it must 

establish its right to summary judgment by conclusively proving all elements of its cause of action 

as a matter of law. See Havlen v. McDougall, 22 S.W.3d 343, 345 (Tex. 2000). “A matter is 

conclusively established if reasonable people could not differ as to the conclusion to be drawn 

from the evidence.” See Hibernia Energy III, LLC v. Ferae Naturae, LLC, 668 S.W.3d 745, 761 

(Tex. App.—El Paso 2022, no pet.) (citing City of Keller v. Wilson, 168 S.W.3d 802, 815–16 

(Tex. 2005)). “If the movant establishes its right to judgment as a matter of law, the burden shifts 
8

to the nonmovant to present evidence raising a genuine issue of material fact precluding summary 

judgment, applying the same standard in determining whether reasonable and fair-minded jurors 

could differ in their conclusions considering all the evidence presented.” Id. (citing Goodyear Tire 

& Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007) (per curiam); Nevarez v. USAA Fed. 

Sav. Bank, 630 S.W.3d 416, 421–22 (Tex. App.—El Paso 2021, pet. denied)). Although the 

nonmoving party is not required to marshal all of its proof in response to a summary judgment 

motion, it must present countervailing evidence that raises a genuine fact issue on the challenged 

elements. Duchene v. Hernandez, 535 S.W.3d 251, 258 (Tex. App.—El Paso 2017, no pet.) (citing 

Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002)). The nonmovant fails in its burden 

of creating a fact issue when the evidence is “so weak as to do no more than create a mere surmise 

or suspicion of material fact.” Wade Oil & Gas, Inc. v. Telesis Operating Co., Inc., 417 S.W.3d 

531, 540 (Tex. App.—El Paso 2013, no pet.); see also Frost Nat’l Bank v. Fernandez, 315 S.W.3d 

494, 508 (Tex. 2010). If the movant fails to meet its burden, the burden does not shift to the 

nonmovant and the nonmovant need not respond or present any evidence at all. See Chavez v. 

Kansas City S. Ry. Co., 520 S.W.3d 898, 899–900 (Tex. 2017) (per curiam); see also Amedisys, 

Inc. v. Kingwood Home Health Care, LLC, 437 S.W.3d 507, 511 (Tex. 2014)).

In reviewing the trial court’s decision on summary judgment, we view the evidence in a

light most favorable to the nonmovant, “crediting evidence favorable to the non-movant if 

reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not.”

Zive v. Sandberg, 644 S.W.3d 169, 173 (Tex. 2022) (citing Erikson v. Renda, 590 S.W.3d 557, 

563 (Tex. 2019)). We indulge every reasonable inference in favor of the nonmovant and resolve 

any doubts against the motion. See Lightning Oil Co. v. Anadarko E&P Onshore, LLC, 520 S.W.3d 
9

39, 45 (Tex. 2017) (citing City of Keller, 168 S.W.3d at 824); see also Valence Operating Co. v. 

Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).

When, as here, both parties move for summary judgment on the same issue and the trial 

court grants one motion but denies the other, the reviewing court must review the evidence 

presented by both sides, determine all questions presented, and render the judgment the trial court 

should have rendered. Valence Operating, 164 S.W.3d at 661. 

APPLICABLE LAW

A. General principles of contract construction apply to insurance policies 

“An insurance policy is a contract that establishes the respective rights and obligations to 

which an insurer and its insured have mutually agreed.” Am. Nat’l Ins. Co. v. Arce, 672 S.W.3d 

347, 353 (Tex. 2023), reh’g denied (Sept. 1, 2023) (citing USAA Tex. Lloyds Co. v. Menchaca, 

545 S.W.3d 479, 488 (Tex. 2018) (internal quotation marks omitted)). Accordingly, we generally 

construe an insurance policy “using the same rules that govern the construction of any other 

contract.” In re Farmers Tex. Cnty. Mut. Ins. Co., 621 S.W.3d 261, 270 (Tex. 2021) (citing 

Menchaca, 545 S.W.3d at 488 (internal quotation marks omitted)); see also Arce, 672 S.W.3d at 

353 (“Insurance policies are construed as contracts and enforced as contracts”).

When, as here, the parties dispute the meaning of the terms used in a contract, “our primary 

objective is to ascertain and give effect to the parties’ intent as expressed in the instrument.” URI, 

Inc. v. Kleberg Cnty., 543 S.W.3d 755, 763 (Tex. 2018) (citing Valence Operating, 164 S.W.3d at

662); see also RSUI Indem. Co. v. The Lynd Co., 466 S.W.3d 113, 118 (Tex. 2015) (recognizing 

that a court’s primary concern in construing an insurance policy is to ascertain the intentions of 

the parties as expressed in the document). The parties’ “[o]bjective manifestations of intent 

control,” and we therefore presume the “parties intended what the words of their contract say.”
10

URI, Inc., 543 S.W.3d at 763-64; see also Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s 

London, 327 S.W.3d 118, 126 (Tex. 2010) (to ascertain the parties’ intent, a court must look to the 

language of the insurance policy itself and presume that the parties intended “what the words of 

their contract say”) (citing Don’s Bldg. Supply, Inc. v. OneBeacon Ins. Co., 267 S.W.3d 20, 23 

(Tex. 2008)). Thus, a “policy’s terms are given their ordinary and generally-accepted meaning 

unless the policy shows the words were meant in a technical or different sense.” Gilbert., 327 

S.W.3d at 126 (citing Don’s Bldg. Supply, 267 S.W.3d at 23); see also URI, Inc., 543 S.W.3d at 

764 (courts “interpret the terms used in a contract according to their plain, ordinary, and generally 

accepted meaning unless the instrument directs otherwise”). We examine the entire agreement and 

seek to harmonize and give effect to all provisions so that none will be rendered meaningless. 

Gilbert, 327 S.W.3d at 126 (citing MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 

647, 652 (Tex. 1999)).

When interpreting an insurance policy, we must also be “mindful of other courts’ 

interpretations of policy language that is identical or very similar to the policy language at issue.”

RSUI Indem. Co., 466 S.W.3d at 118 (citing Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 

824 (Tex. 1997)). Thus, in general, courts should “strive for uniformity in construing insurance 

provisions, especially where . . . the contract provisions at issue are identical across the 

jurisdictions.” Id. (citing Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI Indus., Inc., 907 

S.W.2d 517, 522 (Tex. 1995); Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487, 496–97 

(Tex. 2008) (stressing “the importance of uniformity when identical insurance provisions will 

necessarily be interpreted in various jurisdictions”)).

When there is an ambiguity in an insurance policy, or any “uncertainty” with respect to the 

terms used, we must construe the policy in favor of coverage. RSUI Indem. Co., 466 S.W.3d at 
11

118 (citing Grain Dealers Mut. Ins. Co. v. McKee, 943 S.W.2d 455, 459 (Tex. 1997)). In other 

words, when there are two reasonable interpretations of the terms used, we must resolve the matter 

by “adopting the construction that most favors the insured.” Id. (quoting Nat’l Union Fire Ins. Co. 

of Pittsburgh, Pa. v. Hudson Energy Co., 811 S.W.2d 552, 555 (Tex. 1991)); see also Don’s Bldg. 

Supply, 267 S.W.3d at 23 (recognizing that if a “contract is susceptible to more than one reasonable 

interpretation, we will resolve any ambiguity in favor of coverage”). A policy is only ambiguous 

“if it is genuinely subject to more than one meaning after applying the pertinent rules of contract 

interpretation.” Nassar., 508 S.W.3d at 258 (citing RSUI Indem. Co, 466 S.W.3d at 118). However, 

it is well-established that an ambiguity does not exist simply because the parties provide 

conflicting interpretation of the terms set forth in a policy. Gilbert, 327 S.W.3d at 133 (citing Am. 

Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003)). “If a contract as written can be 

given a clear and definite legal meaning, then it is not ambiguous as a matter of law.” Id. (citing 

Progressive Cnty. Mut. Ins. Co. v. Sink, 107 S.W.3d 547, 551 (Tex. 2003)). The question of 

whether an ambiguity exists in a contract and the interpretation of an unambiguous contract are 

both questions of law subject to de novo review. URI, Inc., 543 S.W.3d at 763; see also Kachina 

Pipeline Co., Inc. v. Lillis, 471 S.W.3d 445, 449 (Tex. 2015) (court reviews de novo the trial court’s 

interpretation of an unambiguous contract). 

B. Interpreting CGL policies and their exclusions: the shifting burdens 

As the Texas Supreme Court has recognized, a “CGL policy is a standard form developed 

by the Insurance Services Office, Inc. (ISO) and is used throughout the United States.”5 Lamar 

Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 5–6 (Tex. 2007) (citing 2 Jeffrey W.

5

 “The ISO is the industry organization responsible for drafting the industry-wide standard forms used by insurers.” 

Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 6, n. 1 (Tex. 2007). 
12

Stempel, Stempel on Insurance Contracts § 14.01 (3d ed. 2007)). Unlike a performance bond that 

guarantees a contractor’s performance, a standard CGL policy is not intended to do so, as reflected 

in the exclusions. Id. at 9-10; see also Ewing Const. Co., Inc. v. Amerisure Ins. Co., 420 S.W.3d 

30, 38-39 (Tex. 2014) (recognizing that “CGL policies are not performance bonds”). In general, a 

CGL policy initially “grants the insured broad coverage for property damage . . . liability, which 

is then narrowed by exclusions that restrict and shape the coverage otherwise afforded.” Id. at 10. 

And in turn, some exclusions contain exceptions, which, when applicable, narrow the scope of the 

exclusions and thereby reinstate or “add back” coverage the exclusion took away. Greystone 

Const., Inc. v. Nat’l Fire & Marine Ins. Co., 661 F.3d 1272, 1289–90 (10th Cir. 2011), as amended 

on reh’g in part (Dec. 23, 2011); see also JAW The Pointe, L.L.C. v. Lexington Ins. Co., 460 S.W.3d 

597, 603 (Tex. 2015) (discussing structure of a CGL policy’s exclusions and exceptions). 

As with any insurance policy, an insured bears the initial burden of establishing coverage 

under the terms of a CGL policy. See JAW The Pointe, 460 S.W.3d at 603 (citing Gilbert, 327 

S.W.3d at 124). “To avoid liability, the insurer then has the burden to plead and prove that the loss 

falls within an exclusion to the policy’s coverage.” Id. (citing Gilbert, 327 S.W. 3d at 124). In 

general, any such exclusions or limitations on liability are “strictly construed against the insurer 

and in favor of the insured,” and therefore, “[a]n intent to exclude coverage must be expressed in 

clear and unambiguous language.” Evanston, 256 S.W. at 668 (citing Nat’l Union Fire., 811 

S.W.2d at 555). In turn, “[i]f the insurer proves that an exclusion applies, the burden shifts back to 

the insured to show that an exception to the exclusion brings the claim back within coverage.” 

JAW The Point, 460 S.W.3d at 603. 

In general, when interpreting an insurance contract, including a CGL policy, we “must 

adopt the construction of an exclusionary clause urged by the insured as long as that construction 
13

is not unreasonable, even if the construction urged by the insurer appears to be more reasonable or 

a more accurate reflection of the parties’ intent.” Nat’l Union Fire., 811 S.W.2d at 555.

Accordingly, we must adopt the Kunz Defendants’ interpretation of the policy’s exclusionary 

terms in favor of coverage unless we find “clear and unambiguous” policy language that requires 

us to construe the terms otherwise. Id.

THE CGL POLICY COVERS THIS OCCURRENCE SUBJECT TO ANY APPLICABLE 

EXCLUSIONS

The CGL policy expressly states that United Fire will pay those sums the insured becomes

legally obligated to pay because of property damage not “expected or intended from the standpoint

of the insured.” In turn, it defines “property damage” as “physical injury to tangible property.”

United Fire recognizes that the CGL policy provided coverage for the construction defects that

caused the concrete system’s failure, subject to the CGL policy exclusions, and we agree. In

interpreting similar CGL policies, the Texas Supreme Court has held that the insurer may owe a

duty to both defend and indemnify an insured who has been sued for causing property damage

resulting from “unintended construction defects,” i.e., poor workmanship on a construction

project, subject to any applicable exclusions. See Lamar Homes Inc., 242 S.W.3d at 4; see also

Grimes Const., Inc. v. Great Am. Lloyds Ins. Co., 248 S.W.3d 171, 171–72 (Tex. 2008) (per

curiam) (allegations that property damage arose from homebuilder’s defective workmanship was

sufficient to trigger the insurer’s duty to defend under a CGL policy). To hold otherwise would

render the various exclusions to coverage, including the “your work” exclusion for poor

workmanship in particular, meaningless or “illusory.” See Greystone Const., 661 F.3d at 1289–90

(given the structure of CGL policies, the “your work” exclusion for poor workmanship would be

rendered illusory if damages caused by poor workmanship were not covered in the first place).
14

We therefore turn to whether any of the three CGL policy exclusions at issue on appeal

would preclude coverage for the construction defects at issue such that United Fire would have no

duty to indemnify JD Kunz for the underlying liability judgment.

6 Id.

THE CONTRACTUAL-LIABILITY EXCLUSION

United Fire argues the contractual-liability exclusion precludes coverage because 

ExploreUSA’s lawsuit and the jury’s verdict were based solely on the claim that JD Kunz breached 

the Construction Contract. 

The contractual-liability exclusion provides that this insurance coverage does not apply to: 

“[P]roperty damage” for which the insured is obligated to pay damages by reason 

of the assumption of liability in a contract or agreement. This exclusion does not 

apply to liability for damages:

(1) That the insured would have in the absence of the contract or agreement; 

or

(2) Assumed in a contract or agreement that is an “insured contract . . . ”

According to United Fire, JD Kunz was obligated to pay damages to ExploreUSA because of the 

obligations it contractually assumed. And according to United Fire, neither of the two exceptions 

to the exclusion applies: (1) JD Kunz’s liability for damages in the underlying lawsuit was based 

on specific Construction Contract violations, not on the liability JD Kunz would have had in the 

absence of the contract; and (2) JD Kunz’s liability was not based on an “insured contract,” as the 

Construction Contract did not fit within that category. The parties agree that second exception does 

6 As we discuss in more detail below, the duty to defend and the duty to indemnify generally turn on different 

questions. Here, United Fire does not contend that it did not have a duty to defend JD Kunz in the lawsuit, only that it 

did not owe a duty to indemnify it for the damages awarded in the underlying lawsuit. 
15

not apply here, as it does not fit within any of the various “insured contract” definitions in the

policy.7

Accordingly, we address only: (1) whether JD Kunz was liable to ExploreUSA due to the 

contractual assumption of liability; and (2) if so, whether JD Kunz would have been liable in the 

absence of the Construction Contract. 

A. Applicable Law 

For a contractual-liability exclusion in a CGL policy to apply, by its express terms, the 

insurer has the burden to show that its insured’s liability for damages arose “by reason of the 

assumption of liability in a contract or agreement.” See Ewing, 420 S.W. 3d at 34, 37; Gilbert, 327 

S.W. 3d at 127. United Fire correctly points out, that while some earlier Texas cases had held that 

this exclusion only applied when the insured assumed the liability of a third party, the Texas 

Supreme Court has expressly rejected this view. See Gilbert, 327 S.W.3d at 124, 127. In Gilbert, 

the court recognized that although the contractual-liability exclusion does pertain to situations in 

which an insured assumed the liability of a third party, the exclusion is not so narrow as to only

apply in that instance, otherwise the language would have simply said so. Id. Thus, the court held 

the exclusion could apply to cases in which the insured was sued for breach of contract and no 

third party was involved. Id. at 133.

Later, in Ewing, the court clarified that the contractual-liability exclusion does not apply in 

every breach-of-contract case.8 Instead, the court clarified that an insured does not “contractually 

7 The CGL policy defines an “insured contract” as a contract for the lease of property; a “sidetrack” agreement; an 

easement or license agreement; an agreement to indemnify a municipality; an elevator maintenance agreement; and 

an agreement assuming tort liability on behalf of a third party for either bodily injury or property damages. 

8 As United Fire points out, the court in Ewing only resolved on the merits the issue of whether the insurer had a duty 

to defend its insured. However, the analysis it used in explaining when the contractual liability exclusion in a CGL 

policy is triggered is applicable to situations in which either the duty to defend or the duty to indemnify is at issue. In 

fact, the court relies heavily on Gilbert—a case involving the duty to indemnify—in explaining when the exclusion is 
16

assume liability for damages within the meaning of the policy exclusion unless the liability for 

damages it contractually assumed was greater than the liability it would have had under general 

law.” Ewing, 420 S.W.3d at 36 (citing Gilbert, 327 S. W. 3d at 127); see also Siplast, Inc. v. 

Employers Mut. Cas. Co., 23 F.4th 486, 498 (5th Cir. 2022) (recognizing Ewing’s interpretation 

of the contractual liability exclusion). In Ewing, the insured had agreed by contract to construct a 

tennis court in a “good and workmanlike manner,” but the court noted that this express contractual 

duty “did not add anything to the obligation [the insured] has under general law to comply with 

the contract's terms and to exercise ordinary care in doing so.” Ewing, 420 S.W.3d at 36; see also

Sipes v. Langford, 911 S.W.2d 455, 457 (Tex. App.—Texarkana 1995) (“Implicit in every contract 

is a common-law duty to perform the terms of the contract with care, skill and reasonable 

experience.”); Crownover v. Mid-Continent Cas. Co., 772 F.3d 197, 209 (5th Cir. 2014) (“there is 

a general law duty to perform the terms of a contract with reasonable care”). Accordingly, the 

court expressly held that a “general contractor who agrees to perform its construction work in a 

good and workmanlike manner, without more, does not enlarge its duty to exercise ordinary care 

in fulfilling its contract [and] thus it does not assume liability for damages arising out of its 

defective work so as to trigger the Contractual Liability Exclusion.” Ewing, 420 S.W.3d at 38. The 

relevant question is “not whether the obligation was contained in an express contractual provision, 

but whether that provision reflected an expansion of liability.” Crownover, 772 F.3d at 207 (citing

Ewing, 420 S.W.3d at 36); see also Siplast, Inc., 23 F.4th at 498 (recognizing that under Ewing, 

the relevant question “is not whether the relevant duty is contractual; it is whether the contractual 

duty represents an expansion of liability”).

triggered. Ewing Const. Co., Inc. v. Amerisure Ins. Co., 420 S.W.3d 30, 35–37 (Tex. 2014) (citing Gilbert Tex. Constr., 

L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 126–127, 133-35 (Tex. 2010)). United Fire has not explained 

why Ewing’s analysis is inapplicable to its duty to indemnify JD Kunz in this instance. 
17

B. Analysis 

As a preliminary matter, United Fire insists that the Ewing analysis is based on the 

exception to the contractual-liability exclusion, and the Kunz Defendants therefore had the burden 

to establish that JD Kunz did not assume any obligations beyond its duty to perform its obligations 

under the Construction Contract in a good and workmanlike manner. We disagree. In Ewing, the 

court considered what was intended by the language of the exclusion itself, i.e., the “assumption 

of liability,” which it concluded “means that the insured has assumed a liability for damages that 

exceeds the liability it would have under general law.” Ewing, 420 S.W.3d at 37 (citing Gilbert, 

327 S.W.3d at 127); see also Crownover, 772 F.3d at 207 (recognizing same). And the court 

expressly stated it was considering only whether the “contractual liability exclusion” was 

triggered; finding that it was not—given that the contractor in that case did not assume any liability 

beyond what the general law required—it did not need to address the question of whether any 

exception to the exclusion applied. Ewing, 420 S.W.3d at 31; see also Crownover, 772 F.3d at 210 

(applying the Ewing analysis in determining the contractual-liability exclusion in a CGL policy 

did not apply, and it therefore did not need to address whether the insureds could “establish an

exception to that exclusion”). 

Next, United Fire attempts to distinguish Ewing, contending that in Ewing, the insured was 

only sued for failing to perform its construction work in a “good and workmanlike manner,” but 

here, ExploreUSA’s suit against JD Kunz included several very specific contractual violations. 

United Fire points out that ExploreUSA specifically alleged JD Kunz failed to “comply with the 

diagram in the Construction Contract,” failed to properly install the rebar at the correct level, failed 

to pour the concrete to the required thickness, and failed to “exercise quality control” over its 

subcontractors. And United Fire contends that the lawsuit was therefore premised on JD Kunz’s 
18

“assumption of liability” beyond its general duty to perform work in a good and workmanlike 

fashion. We disagree. 

In Ewing, the court noted that in the underlying lawsuit, the defendant construction 

company was sued based on breaching several express contractual provisions, including, as here, 

the defendant’s failure to complete construction in accordance with the contract plans and 

specifications, failing to exercise ordinary care in the preparation, management and execution of 

construction; failing to perform in a good and workmanlike manner; and failing to properly retain 

and supervise subcontractors. Ewing, 420 S.W. 3d at 33–34. And the court noted that the defendant 

thereby did no more than agree to perform the “contract’s terms” in a good and workmanlike 

manner, and it therefore did not agree to assume any liability beyond the general law, rendering 

the contractual-liability exclusion inapplicable. Ewing, 420 S.W.3d at 36. In other words, the court 

held that a contractor does not assume any obligations beyond the general law by agreeing to 

adhere to the contract’s express terms. Accordingly, as in Ewing, the only relevant question before 

us is whether JD Kunz agreed to assume any obligations beyond agreeing to comply with the terms 

of the Construction Contract itself. Id. And thus, the fact that ExploreUSA listed express violations 

of the Construction Contract in its pleading in the underlying lawsuit is irrelevant to the question 

of whether JD Kunz assumed any liability beyond agreeing to fulfill those very same terms in a 

good and workmanlike manner. Id.; see also Siplast, Inc., 23 F.4th at 498 (although plaintiffs in 

the underlying lawsuit alleged the contractor violated an express term of its construction contract, 

which caused damage to the plaintiff’s property, the allegation did not open the contractor “up to 

additional liability beyond that found at law”); AIX Specialty Ins. Co. v. Universal Cas. Co., No. 

CV H-12-507, 2014 WL 12599325, at *13 (S.D. Tex. July 30, 2014) (although plaintiff alleged a 

breach of an express provision in a construction contract, under Ewing, the contractual-liability 
19

exclusion in the insured’s CGL policy was not triggered, as the contractor did not assume any 

liabilities beyond performing the terms of the contract in a good and workmanlike fashion); 

Crownover, 772 F.3d at 207–08 (applying Ewing in concluding that the fact that an arbitrator’s 

award was based on the breach of an express contractual duty rather than an implied general-law 

duty is “inconsequential” in finding that the contractual-liability exclusion did not apply). 

United Fire, however, argues that through several Construction Contract provisions, JD 

Kunz agreed to assume liability beyond its obligations under the general law, pointing out that JD 

Kunz agreed to adhere to a particular project schedule; to refrain from assigning the contract; to 

properly request approval to hire subcontractors to perform its work; and to require its 

subcontractors to maintain insurance. But United Fire does not explain how the damages Explore 

USA suffered were caused by JD Kunz’s assumption of these obligations. As set forth above, to 

trigger the contractual-liability exclusion, by its express terms, the insurer has the burden to show 

that its liability for damages arose “by reason of the assumption of liability in a contract or 

agreement” (emphasis added). See Ewing, 420 S.W. 3d at 34, 37; see also Gilbert, 327 S.W. 3d at 

127. Here the jury’s verdict—and the underlying judgment awarding damages for which JD Kunz 

is seeking indemnification under the CGL policy—was based solely on the cost to repair and 

replace the concrete system that JD Kunz agreed to install. In other words, JD Kunz was not 

obligated to pay the underlying judgment to Explore USA for any reason other than its failure to 

ensure that the concrete system was properly installed. 

Accordingly, the record does not support United Fire’s contention that JD Kunz assumed 

any liability beyond its obligation to perform the terms of the Construction Contract in a good and 

workmanlike manner such that the contractual-liability exclusion would apply. And because we 
20

find JD Kunz did not assume any contractual liability within the meaning of the policy exclusion, 

we need not address whether the exception to the exclusion applies. 

United Fire’s Issues Four, Five and Six are overruled. 

THE YOUR-PRODUCT EXCLUSION 

Next, United Fire contends coverage is precluded by the your-product exclusion, a 

“business risk” exclusion that generally excludes coverage for the insured’s manufacture, sale, or 

installation of defective or substandard products. See generally Zurich Am. Ins., 268 S.W.3d at 500

(recognizing that the “business risk” exclusions in a CGL policy are “intended to provide coverage 

for tort liability, not for the contractual liability of the insured for loss which takes place due to the 

fact that the product or completed work was not that for which the other party had bargained”); 

Dallas Nat’l Ins. Co. v. Calitex Corp., 458 S.W.3d 210, 216 (Tex. App.—Dallas 2015, no pet.)

(CGL exclusions, known as “business risk” exclusions, “preclude[] coverage for the repair or 

replacement of defective workmanship and substandard goods and services”). 

The your-product exclusion in the CGL policy provides that this insurance does not apply 

to: “[p]roperty damage to your product arising out of it or any part of it.” “Your product” is defined 

as: “[a]ny goods or products, other than real property, manufactured, sold, handled, distributed or 

disposed of by [the insured],” as well as “[c]ontainers (other than vehicles), materials, parts or

equipment furnished in connection with such goods or products.” “Your product” also includes 

any “[w]arranties or representations made at any time with respect to the fitness, quality, durability, 

performance or use of your product.” 

United Fire argues there are two reasons why the your-product exclusion applies to 

preclude coverage. First, the failed concrete system itself and its “component parts” can be 

considered JD Kunz’s “product.” And second, JD Kunz supplied and installed the materials that 
21

were used in the failed system, and ExploreUSA’s lawsuit was based in part on the “defective” 

nature of those materials. We find neither argument availing.

A. The concrete system and its component parts were not JD Kunz’s “product”

We first consider United Fire’s argument that the failed concrete system itself, its 

component parts, or both, can be considered JD Kunz’s “product” for purposes of the your-product 

exclusion. As the Kunz Defendants point out, the Austin Court of Appeals rejected a similar 

argument in which an insurer alleged that a building its insured had constructed could be 

considered a “product” for purposes of applying the your-product exclusion in a CGL policy. See

CU Lloyd’s of Texas v Main Street Homes, Inc., 79 S.W.3d 687, 690 (Tex. App.—Austin 2002, 

no pet.). In that case, the parties’ CGL policy defined “your product” to mean “goods or products 

. . . manufactured, sold, distributed, or disposed of . . . [.]” Id. The court concluded that this 

definition did not apply to the construction of a building or its component parts, recognizing that 

in “ordinary language buildings are constructed or erected, not manufactured.” Id. (citing MidUnited Contractors, Inc. v. Providence Lloyds Ins. Co., 754 S.W.2d 824, 826 (Tex. App.—Fort 

Worth 1988) (“neither the building nor its component parts were the appellant’s product” for 

purposes of the “your product” exclusion in a CGL policy)); see also Amerisure Mut. Ins. Co. v. 

McMillin Tex. Homes, LLC, No. SA-20-CV-01332-XR, 2022 WL 686727, at *9-10 (W.D. Tex. 

Mar. 8, 2022) (applying Texas law in rejecting insurer’s argument that a lawsuit against 

homebuilders for construction defects fell under the your-product exclusion to its CGL policy, as 

the homes could not be considered a “product” within the meaning of the policy); AIX Specialty 

Ins., 2012 WL 6862489, at *12 (recognizing that the your-product exclusion in a CGL policy did 

not apply to a lawsuit relating to construction defects in a condominium complex as the buildings 

in the complex could not be considered a “product”).
22

United Fire seeks to distinguish the above holdings, contending that, unlike a building or 

other similar structure that may not be considered a “product,” the concrete system JD Kunz

constructed—which was in effect a parking lot—can be considered a “product” for purposes of 

the your-product exclusion. United Fire, however, cites no cases for this proposition.

9 Moreover, 

we agree with the Kunz Defendants that the concrete system is more analogous to a building or 

other structure that is constructed than it is to “goods or services” that are manufactured, sold, 

handled, or distributed to third parties, for purposes of applying the your-product exclusion.

We find it significant that the CGL policy, as is standard in the industry, provides that the 

your-product exclusion does not apply to “real property.” See 9A Couch on Ins. § 129:20

(recognizing that the “standard definition of your product expressly provides that real property is 

not included within the purview of this phrase”). Accordingly, “[t]he work performed by 

contractors on dwellings, buildings, structures, and any other form of realty is therefore not 

considered to be the product of the insured (emphasis added).” Id.; see also Prisco Serena Sturm 

Architects, Ltd. v. Liberty Mut. Ins. Co., 126 F.3d 886, 892 (7th Cir. 1997) (recognizing that a 

building is “real property” and therefore construction defects arising from the building’s 

construction do not fall within the your-product exclusion in a CGL policy); 4 LAW AND PRAC. OF 

INS. COVERAGE LITIG. § 45:13 (recognizing that the “better reasoned cases find that the [your 

product] exclusion does not apply to a completed structure”). And in turn, we conclude that a 

parking lot must, by its very nature, be considered a form of real property. See, e.g., Reynolds v. 

9 In support of its argument that we should consider the concrete system a “product,” United Fire relies solely on Mt. 

Hawley Ins. Co. v. Steve Roberts Custom Builders, Inc., 215 F.Supp.2d 783, 792 (E.D. Tex. 2002) in which a contractor 

was responsible for installing a driveway at an individual’s home but incorrectly placed it in an area that encroached 

on the neighbor’s property. The homeowners thereafter sued the contractor for damages, and the trial court held that 

the insurer had a duty to defend the contractor under the CGL policy finding that no exclusion precluded coverage for 

that duty. Id. at 794. Significantly, the court in that case did not discuss the duty to indemnify, nor did it discuss the 

your-product exclusion or make any pronouncements as to whether the driveway could be considered a “product” 

under a CGL policy. We therefore do not find the holding in this case relevant to our analysis. 
23

State, 390 S.W.2d 493, 495 (Tex. App.—Texarkana 1965, no writ) (recognizing that a parking lot 

is an improvement on land that is subject to real property taxes); Samuel v. KTVU P’ship, No. 08-

02-00010-CV, 2003 WL 22405384, at *2 (Tex. App.—El Paso Oct. 22, 2003, no pet.) (mem. op.) 

(not designated for publication) (recognizing that a parking lot is subject to real estate property 

taxes); Torres v. Chauncey Mansell & Mueller Supply Co., Inc., 518 S.W.3d 481, 491 

(Tex. App.—Amarillo 2017, pet. denied) (recognizing that a parking lot is considered an 

improvement to real property for purposes of Chapter 95 of the Texas Code of Civil Procedure,

which provides that a property owner is generally not liable to a contractor who constructs an 

improvement to real property for damages arising from the failure to provide a safe workplace); 

Majeski v. Estate of Majeski, 163 S.W.3d 102, 105, 108 (Tex. App.—Austin 2005, no pet.)

(treating parking lot adjacent to property as part of individual’s homestead); see also TEX. PROP.

CODE ANN. § 53.001(2)(A) (listing a parking structure as an “improvement” for purposes of 

obtaining a mechanics, contractor’s or materialman’s lien).

United Fire also points out that some courts have held that the your-product exclusion may 

apply when a defendant is sued for improperly installing its own product in a building, which 

thereby results in damage, reasoning that the installation of the insured’s own product into a 

building is more analogous to selling or distributing a product than it is to constructing the building 

itself. See, e.g., Bldg. Specialties, Inc. v. Liberty Mut. Fire Ins. Co., 712 F. Supp. 2d 628, 646–47 

(S.D. Tex. 2010). For example, in Bldg. Specialties, Inc., the court held that the insulation ducts 

an insured had installed in an HVAC system in a building—which were improperly installed—

were “more similar to components that are manufactured and later installed into a house or 

building” than they were to the construction of the building itself, rendering the your-product 

exclusion applicable. Id. at 647 (citing Valmont Energy Steel, Inc. v. Commercial Union Ins. Co., 
24

359 F.3d 770, 776 (5th Cir. 2004) (holding that steel flanges made for use in the construction of 

microwave towers were the insured’s “product,” triggering the your-product exclusion in the 

parties’ CGL policy); Dal-Tile Corp. v. Zurich Am. Ins. Co., No. Civ. A. 3:02–CV–0751–K, 2004 

WL 414900, at *5 (N.D. Tex. Feb. 2, 2004) (holding that floor tiles and flooring materials used in 

the construction of a shopping mall were the insured’s product and that the your-product exclusion 

precluded coverage for damages for their repair or replacement)). 

As set forth above, however, JD Kunz’s role was not limited to simply installing a product 

into the concrete system. Instead, JD Kunz was responsible for the entire construction project. 

Accordingly, its role was more analogous to constructing a building or other structure than to 

simply installing a component part into the concrete system. 

More importantly, as the Kunz Defendants point out, there is nothing in the record to 

suggest that JD Kunz manufactured, supplied, or installed the two component parts at issue in the 

concrete system’s failure, i.e., the rebar and the concrete, such that they could be considered JD 

Kunz’s “product.” To the contrary, as we discuss in more detail below, the uncontradicted evidence 

in the record before us demonstrates that both products were supplied and separately installed by 

JD Kunz’s subcontractors. 10 Accordingly, we conclude that the concrete system JD Kunz

constructed is not a “product” within the meaning of the your-product exclusion.

10 If we were to hold, as United Fire would have us do, that the improper installation of non-defective products—

which were not manufactured, supplied or even installed by the general contractor—triggered the your-product 

exclusion, there would be no functional distinction between the your-work exclusion for poor workmanship and the 

your-product exclusion; this would render the your-work exclusion meaningless. We will not construe the policy in a 

manner that renders a provision meaningless. See generally Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s 

London, 327 S.W.3d 118, 126 (Tex. 2010) (under general contract principles, we must “give effect to all [insurance 

policy] provisions so that none will be meaningless”). 
25

B. The materials used in the project were not defective 

United Fire also contends that the your-product exclusion should apply to preclude 

coverage because ExploreUSA’s lawsuit was based in part on allegations that the materials used 

in constructing the concrete system were defective. 

The primary intent of the your-product exclusion is to “preclude coverage for economic 

loss claims based on product defects.” See, e.g., Zurich Am. Ins., 268 S.W.3d at 500. Therefore, as 

various courts have recognized, when an insured is sued for installing a faulty product into a 

building, which is the cause of the plaintiff’s damages, the your-product exclusion will preclude

coverage. See, e.g., Lee-Var, Inc. v. AIG Specialty Ins. Co., No. 4:18-CV-1516, 2019 WL 

13109759, at *8 (S.D. Tex. Aug. 12, 2019) (memo) (the installation of defective water tanks into 

a building came under the your-product exclusion); Lexington Ins. Co. v. Nat’l Oilwell NOV, Inc., 

355 S.W.3d 205, 214 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (where a “defective 

component” in a water heater caused damage to the water heaters themselves and the buildings 

where the heaters were installed, the your-product exclusion applied); Fritz Indus., Inc. v. Wausau 

Underwriters Ins. Co., No. Civ. A. 3:02–CV–894–L, 2004 WL 396258, at *5 (N.D. Tex. Jan. 26, 

2004) (holding that coverage for damages incurred to replace the insured’s allegedly defective tile 

installed in a racetrack was precluded by the your-product exclusion). 

Here, while United Fire correctly points out that JD Kunz agreed to furnish all necessary 

“labor and materials” for the project—including the rebar and the concrete used in the concrete 

system’s construction—ExploreUSA did not base its underlying lawsuit on any claim that the 

system failed because those component parts were defective. To the contrary, as set forth above, 

ExploreUSA’s sole theory of liability in the underlying litigation was based on two claims: (1) that 

the rebar was not placed at the proper depth; and (2) that the concrete was not poured at the required 
26

six-inch thickness. Moreover, in support of their summary judgment motions, the Kunz Defendants 

produced excerpts from the testimony of various witnesses, including two expert witnesses who

investigated the cause of the system’s failure. These witnesses expressly testified at the underlying 

trial that, based on their testing, there was nothing wrong with the concrete or the rebar used in the 

project, and in their opinions, the system damage resulted solely from the improper installation of 

the rebar and the fact that the concrete was poured too thin. 11 United Fire produced no 

countervailing evidence suggesting that the system failed as the result of any defects in the 

materials used in the project. 

We therefore conclude that United Fire did not meet its burden of establishing that the 

your-product exclusion in the CGL policy precluded coverage. 

United Fire’s Issue Seven is overruled. 

THE YOUR-WORK EXCLUSION AND THE SUBCONTRACTOR EXCEPTION

Next, United Fire contends coverage is precluded by another “business risk” exclusion—

the your-work exclusion, which generally excludes coverage for the insured’s poor workmanship.

The your-work exclusion excludes “[p]roperty damage to your work arising out of it or any part 

of it and included in the products-completed operations hazard.” The Kunz Defendants appear to 

acknowledge that the your-work exclusion applies to its allegedly deficient performance in 

11 In support of their summary judgment motions, the Kunz Defendants provided an excerpt from the trial testimony 

of Donald Illingworth, a structural engineer, who testified that the testing he performed on the failed concrete structure 

caused him to conclude that the strength of the concrete was adequate but that it was poured “way too thin.” He further 

opined that this, along with the improper installation of the rebar, caused the system’s failure. In addition, they 

provided an excerpt from the trial testimony of Mickey Barrett, a civil engineer, who testified that he also believed 

the system’s failure was caused by the concrete having been poured too thin and by the rebar having been improperly

placed. They also produced an excerpt from the trial testimony of Ron Vernon, whose company was hired to provide 

an estimate of the cost of repairing the failed system. Vernon testified that he believed the primary reason for the 

failure stemmed from the concrete having been poured too thin in places. And finally, they presented an excerpt from 

the deposition testimony of John Kunz, the owner of JD Kunz Construction, who testified that he also believed the 

system failed because the concrete was poured too thin in some areas, and he had no reason to believe the concrete 

itself was defective. 
27

constructing the concrete system. And we agree that it does, as ExploreUSA’s underlying lawsuit 

against JD Kunz was expressly based on property damage resulting from its deficient work 

performance in constructing the system. 

However, the your-work exclusion contains an exception: “[t]his exclusion does not apply 

if the damaged work or the work out of which the damage arises was performed on your behalf by 

a subcontractor.” (the subcontractor exception). Accordingly, we must determine whether the 

Kunz Defendants met their burden of demonstrating that the subcontractor exception to the yourwork exclusion applies. 

A. Applicable law 

CGL policies will often exclude faulty workmanship “because that is the CGL’s structure.” 

Lamar Homes, 242 S.W.3d at 10 (citing 2 Stempel on Insurance Contracts § 14.01). However, the 

Texas Supreme Court has recognized a “notable exception” in most standard CGL policies “for 

work performed for the insured by a subcontractor.” Id. at 11. As the court observed, in the past, 

standard CGL policies did not typically include such an exception, and instead, CGL policies 

routinely excluded property damage caused in a construction project for poor workmanship as a 

general matter. Id. at 12. However, in 1986, the ISO inserted the subcontractor exception to the 

your-work exclusion as a broad-form endorsement in the standard CGL policy.Id. (citing See Am. 

Family Mut. Ins. Co. v. Am. Girl, Inc., 268 Wis. 2d 16, 673 N.W.2d 65, 82 (2004)). “This resulted 

both because of the demands of the policyholder community (which wanted this sort of coverage) 

and the view of insurers that the CGL was a more attractive product that could be better sold if it 

contained this coverage.” Greystone Const., 661 F.3d at 1288 (citing 2 Stempel on Insurance 

Contracts § 14.13[D]). By adding the subcontractor exception, the “insurance industry specifically 

contemplated coverage for property damage caused by a subcontractor’s defective performance,” 
28

thereby reinstating the coverage under a CGL policy for such damage the your-work exclusion 

would otherwise negate. Lamar Homes, 242 S.W.3d at 11, 14 (citing 2 Stempel on Insurance 

Contracts § 14[13][D] at 14–224.8–14–224.9); see also Feaster v. Mid-Continent Cas. Co., No. 

4:13-CV-3220, 2015 WL 164041, at *5–6 (S.D. Tex. Jan. 13, 2015), aff’d, 620 Fed. Appx. 300 

(5th Cir. 2015) (discussing the operation of the subcontractor exception). Thus, the “insurance 

industry essentially agreed to cover a huge portion of faulty workmanship claims, particularly 

those arising out of home building or other construction.”12 Lamar Homes, 242 S.W.3d at 12, n. 

12 (quoting, Stempel on Insurance Contracts § 14 [13][D] at 14–224.9). 

B. United Fire did not waive its right to address the subcontractor exception 

Before addressing the merits of whether the subcontractor exception applies, we address 

the Kunz Defendants’ argument that United Fire waived its right to dispute the exception’s 

applicability because it addressed the issue for the first time in its reply brief.

As the Kunz Defendants correctly point out, although they raised the subcontractor 

exception in their summary judgment pleadings and provided evidence of using subcontractors on 

the construction project, United Fire failed to address the subcontractor exception in the trial court 

and presented no countervailing evidence on the issue. United Fire again failed to address the 

subcontractor exception in its appellant’s brief and instead only addressed the exception for the 

first time in its reply brief—arguing against its applicability—in response to the Kunz Defendants’ 

arguments in their appellees’ briefs that the exception applied. 

12 We note that the ISO subsequently “issued an endorsement that may be included in the CGL to eliminate the 

subcontractor exception to the your-work exclusion.” Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 

12 (Tex. 2007); see also Greystone Const., Inc. v. Nat’l Fire & Marine Ins. Co., 661 F.3d 1272, 1288 (10th Cir. 2011), 

as amended on reh’g in part (Dec. 23, 2011) (recognizing insurer’s option to eliminate the subcontractor exception). 

However, United Fire did not utilize this endorsement, and instead, as set forth above, its CGL policy included the 

subcontractor exception to the your-work exclusion. 
29

The Kunz Defendants contend United Fire should be prohibited from addressing the 

subcontractor exception for the first time in its reply brief, and we should conclude that the 

subcontractor exception applies to reinstate coverage without considering United Fire’s arguments

against its application. In support of their argument, the Kunz Defendants correctly point out that 

in general, “[a]n issue raised for the first time in a reply brief is waived and need not be considered 

by an appeals court.” See Reyes v. Burrus, 411 S.W.3d 921, 923 n.2 (Tex. App.—El Paso 2013, 

pet. denied). However, as United Fire counters, Texas Rule of Civil Procedure 38.3 allows an 

appellant to respond in its reply brief to any issues appellee raises in its brief. TEX. R. APP. P. 38.3

(“The appellant may file a reply brief addressing any matter in the appellee’s brief.”); Interest of 

D.Z., 583 S.W.3d 284 (Tex. App.—Houston [14th Dist.] 2019, no pet.) (recognizing that appellant 

was entitled to respond to arguments made by the appellee in her responsive brief). Accordingly, 

United Fire was permitted to respond to the Kunz Defendants’ arguments regarding the 

applicability of the subcontractor exception in its reply brief. 

More importantly, we conclude that United Fire was not required to address the 

subcontractor exception in the summary judgment proceedings in the trial court to preserve its 

right to argue on appeal that the exception did not apply. See generally TEX. R. APP. P. 33.1 (as a 

prerequisite to presenting a complaint for appellate review, the record must typically show that

“the complaint was made to the trial court by a timely request, objection, or motion”). But here, in 

the trial court, the Kunz Defendants bore the burden of establishing that the subcontractor 

exception applied. See JAW The Point., 460 S.W.3d at 603 (if the insurer proves that an exclusion 

applies, “the burden shifts back to the insured to show that an exception to the exclusion brings 

the claim back within coverage”). Therefore, unless the Kunz Defendants met that burden, United 

Fire was not required to come forward with any evidence (or arguments) to rebut the Kunz
30

Defendants’ claim that the exception applied. See Chavez, 520 S.W.3d at 899–900 (where movant 

fails to meet its initial burden of establishing its entitlement to summary judgment, the nonmovant 

need not respond or present any evidence at all). And in its reply brief, United Fire contends that 

the Kunz Defendants did not meet that burden—as they failed to conclusively establish that the 

concrete system’s failure was caused solely by the work performed by their subcontractors. We 

therefore conclude that United Fire may address the issue of whether the Kunz Defendants met 

their burden of establishing the applicability of the subcontractor exception for the first time on 

appeal and for the first time in its reply brief. 

C. The parties were not required to litigate the issue of insurance coverage or the 

subcontractor exception in the underlying liability lawsuit 

We next address United Fire’s contention that the Kunz Defendants failed to meet their 

burden of establishing that the subcontractor exception applies because the issue of the 

subcontractor’s performance was not expressly litigated in the underlying liability lawsuit. 

In this regard, United Fire contends that ExploreUSA’s underlying lawsuit was based 

solely on JD Kunz’s allegedly defective performance in constructing the concrete system, and

neither ExploreUSA nor JD Kunz can now “turn around . . . and blame the subcontractors when it 

comes to coverage.” This is an inaccurate characterization of ExploreUSA’s lawsuit. 

ExploreUSA’s petition alleged that the physical damage and deterioration of the system was the 

“result of the incorrect or inadequate performance of work by JD Kunz and/or its subcontractors

(emphasis added).” In addition, ExploreUSA also alleged that JD Kunz breached the Construction 

Contract by failing “to exercise quality control during the performance of [its] work on the 

Project,” which United Fire recognizes goes directly to the issue of whether JD Kunz breached the 

contract by failing to properly supervise the work of its subcontractors. And, the jury could have 
31

concluded that JD Kunz’s failure to supervise its subcontractors was the basis of its breach of the 

Construction Contract regardless of who performed the actual work on the project. But nothing in 

the underlying lawsuit precludes the Kunz Defendants from asserting the subcontractor exception 

applies to reinstate coverage under the language of the CGL policy. 

United Fire also contends that the Kunz Defendants cannot or should not now be heard to 

raise the subcontractor exception because JD Kunz did not seek to hold the subcontractors 

responsible for the damage in the underlying litigation—such as by filing a third-party complaint 

against them—and because JD Kunz failed to obtain a jury answer on the question of who 

performed the deficient work that led to the concrete system’s failure. We disagree. 

In part, United Fire’s argument appears to be based on the language that various courts 

have used when distinguishing between an insurer’s duty to defend its insured in a lawsuit and the 

insurer’s duty to indemnify the insured for any damages awarded in the underlying lawsuit. See 

D.R. Horton-Tex., Ltd. v. Markel Intern. Ins. Co., Ltd., 300 S.W.3d 740, 743 (Tex. 2009)

(recognizing that the duty to defend and the duty to indemnify are “distinct and separate” from 

each other). In general, the duty to defend initially arises from a review of the four corners of the 

policy itself and the four corners of the plaintiff’s pleadings in the underlying lawsuit (i.e., the 

“eight-corners doctrine”) and is based on whether the allegations in the pleadings support the 

possibility that there may be coverage under the policy.13 Id. at 744. In other words, the duty to 

defend “depends not on what the facts are or what might finally be determined to be the facts” but 

“only on what the facts are alleged to be.” Pharr-San Juan-Alamo Indep. Sch. Dist. v. Tex. Political 

13 Although not at issue here, there may be situations in which it is necessary for the parties to present “extrinsic 

evidence” to determine an insurer’s duty to defend when the pleadings do not make it clear that the duty has been 

triggered. See Pharr-San Juan-Alamo Indep. Sch. Dist. v. Tex. Political Subdivisions Prop./Cas. Joint Self Ins. Fund, 

642 S.W.3d 466, 473-77 (Tex. 2022).
32

Subdivisions Prop./Cas. Joint Self Ins. Fund, 642 S.W.3d 466, 471 (Tex. 2022) (citing Heyden 

Newport Chem. Corp. v. S. Gen. Ins. Co., 387 S.W.2d 22, 25 (Tex. 1965)). 

On the other hand, the duty to indemnify is not based on the pleadings, but on “the facts 

that establish liability.” See Archon Investments, Inc. v. Great Am. Lloyds Ins. Co., 174 S.W.3d 

334, 339 (Tex. App.—Houston [1st Dist.] 2005, pet. denied) (citing Great Am. Ins. Co. v. Calli 

Homes, 236 F. Supp.2d 693, 697 (S.D. Tex. 2002)); see also Gomez v. Allstate Tex. Lloyds Ins. 

Co., 241 S.W.3d 196, 205 (Tex. App.—Fort Worth 2007, no pet.) (recognizing that unlike the duty 

to defend, “the duty to indemnify is not based on the eight corners of the policy and the underlying 

petition, but on the actual facts that form the underlying claim”) (citing Alliance Ins. Co. v. FritoLay, Inc., 788 S.W.2d 152, 154 (Tex. App.—Dallas 1990, writ dism’d)). United Fire correctly 

points out that, in general, the duty to indemnify cannot be determined until after the underlying 

litigation has concluded and the insured’s liability has been adjudicated, in part because the issue 

of indemnification “may turn on facts actually proven in the underlying lawsuit.” See D.R. Horton, 

300 S.W. 3d at 745; see also Gilbert, 327 S.W.3d at 134; Colony Ins. Co. v. Peachtree Const., 

Ltd., 647 F.3d 248, 253 (5th Cir. 2011) (applying Texas law in recognizing that “an insurer’s duty 

to indemnify generally cannot be ascertained until the completion of litigation, when liability is 

established, if at all”); In re Farmers Tex. Cnty. Mut. Ins. Co., 621 S.W.3d 261, 270–71 (Tex. 2021)

(recognizing that, in general, the duty to indemnify “arises only after an insured’s legal 

responsibility for covered damages has been established by judgment or settlement”). And in turn, 

many cases have stated that the “facts actually established in the underlying suit control the duty 

to indemnify.” Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co., 279 S.W.3d 650, 656 

(Tex. 2009) (quoting GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305, 310 

(Tex. 2006)); see also Hartrick v. Great Am. Lloyds Ins. Co., 62 S.W.3d 270, 275 (Tex. App.—
33

Houston [1st Dist.] 2001, no pet.) (“[T]he duty to indemnify arises from proven, adjudicated 

facts.”). 

However, the Texas Supreme Court has expressly recognized that the facts necessary to 

establish coverage “are not required to be proven in an underlying trial against the insured and are 

often proven in coverage litigation.” See In re Farmers, 621 S.W.3d at 276 (citing D.R. Horton,

300 S.W.3d at 744). Thus, there may be occasions, such as when the parties settle the plaintiff’s 

liability claim without a trial, in which it will be necessary for the parties to submit new or 

additional evidence in the coverage litigation—either in a coverage trial, or as here, in a summary 

judgment proceeding—to determine the question of the insurer’s duty to indemnify. Id.; see also

D.R. Horton, 300 S.W.3d at 744 (citing Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Puget 

Plastics Corp., 532 F.3d 398, 404 (5th Cir. 2008) (recognizing that a party may present evidence 

at a coverage trial on the issue of an insured’s duty to indemnify, where the “facts necessary to 

determine coverage . . . were not adjudicated in the underlying case”)). Moreover, United Fire has 

not cited any authority, nor are we aware of any, that would require an insured to resolve the issue 

of insurance coverage with any finality in the underlying liability litigation—such as by seeking a 

jury verdict or answer on the issue. To the contrary, as the Fifth Circuit has recognized, “[t]he 

underlying case often does not resolve all the factual issues necessary to determine coverage 

because issues relevant to the question of coverage can be irrelevant to the question of the insured’s 

liability.” Puget Plastics Corp., 532 F.3d at 404; see also Swicegood ex rel. Swicegood v. Med. 

Protective Co., No. CIV.A.3:95-CV-0335-D, 2003 WL 22234928, at *14 (N.D. Tex. Sept. 19, 

2003) (construing Texas law to allow “new evidence” at a “coverage trial when the proof is 

necessary to resolve a controlling coverage question that was not conclusively decided in the 

indemnity suit,” such as when an insurer raises an exclusion issue to avoid coverage). 
34

As such, we conclude that JD Kunz was not required to establish the applicability of the 

subcontractor exception during the underlying liability litigation, nor was it required to obtain a 

jury ruling on the issue in order to raise the exception in the coverage litigation. Accordingly, the 

only remaining issue is whether the trial court correctly found that JD Kunz met its burden of 

establishing the applicability of the exception, as a matter of law, based on the evidence the parties 

submitted in support of their summary judgment motions.

14

D. The undisputed evidence established that the subcontractors performed the 

faulty work that led to the underlying judgment

United Fire contends the Kunz Defendants failed to meet their burden of establishing that 

the subcontractor exception applies, arguing that the Kunz Defendants did not conclusively 

establish that the subcontractors were “solely” responsible for the conditions that caused the 

concrete system’s failure, i.e., for pouring the concrete too thin and for failing to properly position 

the rebar. While United Fire expressly “admits there is some evidence that subcontractors did some 

work on the construction project,” it contends there was “conflicting evidence on the issue of who 

did what work” and who was ultimately responsible for performing the defective work. We find 

no such conflict in the evidence.

In support of their motion for summary judgment, the Kunz Defendants submitted 

uncontradicted evidence establishing that the subcontractors performed all of the work leading to 

the concrete system’s failure. In particular, the Kunz Defendants attached excerpts from the 

deposition of John Kunz, the owner of JD Kunz, as well as deposition and trial testimony of Joshua 

14 As discussed below, in support of their summary judgment motions, the Kunz Defendants produced evidence 

outside the record of the underlying trial, including deposition testimony from two of its witnesses, to establish that 

its subcontractors performed all of the work that caused the damages Explore USA suffered and for which the jury 

awarded it damages. United Fire did not object to the admission of the deposition testimony in the summary judgment 

proceedings. 
35

Luke Roach, the project manager. Both Kunz and Roach testified that they used multiple 

subcontractors on the project at virtually all phases of the construction, beginning with using a 

subcontractor for the first step of the project to install the subgrade on the surface of the 

construction site. Roach explained that the next step in the process involved the placement of 

wooden form boards on the subgrade to lay out the paving sections, which boards were intended 

to be placed at a height of six inches—the same thickness for which the concrete was to be poured. 

Roach testified that he hired a second subcontractor, as well as several other independent 

contractors, to lay them on the subgrade. Roach also testified that this same subcontractor was 

responsible for the bricking process, which involves placing bricks on the subgrade to ensure that 

the rebar would be installed at the correct level, and for laying out and tying the rebar in place. 

Both Kunz and Roach further testified that they hired yet a third subcontractor—a “place 

and finish” subcontractor—responsible for pouring the concrete in the last step of the process. 

They both testified that when pouring the concrete, the place-and-finish subcontractor used a laser 

screed, which allows the operator to enter data into a computer program to set the grade of the 

pour, which in turn is transmitted to a laser that works “to the grades that were entered into it.” 

Roach testified that the place-and-finish subcontractor owned the laser screed, and its employees 

were responsible for entering the data into the laser screed and operating it as the concrete was 

being poured.

15 Roach further testified that this subcontractor’s employees were responsible for 

controlling how much concrete was poured and for spreading out the concrete with trowel 

machines. According to Roach, although he was present when the concrete was poured, he did not 

15 One of ExploreUSA’s experts testified at trial that a laser screed is “no better than the information you plug into it. 

It’s kind of like a computer: Garbage in, garbage out.”
36

physically touch the concrete and was not responsible for checking the thickness of the concrete 

after it was poured. 

United Fire presented no countervailing evidence of its own on the issue of who was 

responsible for performing these portions of the work on the project. However, in its reply brief, 

United Fire points to various passages from the testimony excerpts that JD Kunz supplied, which 

it contends supports a finding that JD Kunz performed at least some of the work that led to the 

concrete failure. We find United Fire’s arguments unavailing. 

First, citing to John Kunz’s deposition testimony, United Fire argues the record contains 

evidence that JD Kunz did the form setting and saw cutting on the project. However, the record 

cites to which United Fire refers us is a passage in which Kunz testified that when working locally, 

his company typically does its own form setting and saw cutting. But Kunz did not testify that his 

company did its own form setting or saw cutting on the project in question, and in fact, Roach 

expressly testified that they used a subcontractor for both. More importantly, United Fire does not 

point to any evidence that the form setting and saw cutting in any way contributed to the concrete 

system’s failure, nor do we see any such evidence in the record.

Second, United Fire contends that the record contains testimony that JD Kunz did the 

concrete pour and the steel reinforcement, i.e., tying the rebar in place. The record reference to 

which United Fire cites, however, is to Roach’s testimony that he was “responsible” for the steel 

reinforcement during the concrete pour, but again, Roach made it abundantly clear that the 

subcontractors—and only the subcontractors—tied (and laid) the rebar and poured the concrete, 

and Roach’s only role was to be present to supervise their work.

Third, United Fire finds significant Kunz’s testimony that he did not know if it was his 

employees or the subcontractors who were responsible for placing the bricks on the subgrade to 
37

raise the rebar off the ground to the proper height. However, Kunz testified that Roach would know 

who was responsible for laying the bricks, and as set forth above, Roach testified that a 

subcontractor was responsible for the bricking. 

Fourth and finally, United Fire finds significant Roach’s acknowledgment that he was 

responsible for supervising the subcontractors’ work and was on site during the concrete pour for 

quality control purposes. And United Fire argues that, at least in part, ExploreUSA’s damages 

were caused by JD Kunz’s failure to properly supervise the subcontractors’ work and/or its failure 

to maintain quality control on the project. United Fire contends that this breach was an independent 

violation of the contract—separate and distinct from any of the subcontractors’ allegedly deficient 

performance.16

We find this argument irrelevant to the question of who performed the actual work that led 

to the damages ExploreUSA incurred. While JD Kunz’s alleged failure to properly supervise its 

subcontractors or otherwise ensure quality control was clearly relevant to the question of its 

liability to ExploreUSA, United Fire has not explained its relevance to the subcontractor exception 

to the your-work exclusion. As set forth above, the subcontractor exception was added to standard 

CGL policies in recognition of the growing use of subcontractors in construction projects and 

expressly states that it reinstates coverage when the “damaged work or the work out of which the 

16 United Fire also lists several other breaches ExploreUSA alleged in its petition that United Fire contends were 

independent of the work performed by the subcontractors, including JD Kunz’s alleged failure to provide all labor for 

the subsurface preparation; its failure to properly request written approval to hire subcontractors to perform its work 

on the project; its failure to procure insurance; and its failure to hold its subcontractors to insurance requirements in 

the Construction Contract. United Fire, however, does not explain how any of these alleged contractual violations—

even if true—caused the damages Explore USA suffered for which JD Kunz was seeking indemnification, i.e., for the 

cost to repair and replace the concrete system. And, as set forth above, the very language of the subcontractor exception 

in the CGL policy states that the exception applies when the “damaged work or the work out of which the damage 

arises was performed on your behalf by a subcontractor.” Accordingly, we find no relevance to the other alleged 

breaches under the contract United Fire raises in determining whether the subcontractor exception applies according 

to the CGL policy.
38

damage arises was performed on your behalf by a subcontractor.” See Lamar Homes, 242 S.W.3d 

at 11, 14 (recognizing that by adding in the subcontractor exception, the “insurance industry 

specifically contemplated coverage for property damage caused by a subcontractor’s defective 

performance”). In other words, the entire focus of the subcontractor exception is on who performed

the work, not on who supervised it. And as set forth above, when, as here, the language of a policy 

is unambiguous, we must construe it as written based on its plain language and presume that the 

parties intended what the words of the policy say. See Gilbert, 327 S.W.3d at 126 (to ascertain the 

parties’ intent, a court must look to the language of the insurance policy itself and presume that 

the parties intended “what the words of their contract say”). Accordingly, we conclude that the 

only relevant issue in determining the applicability of the subcontractor exception is whether the 

insured demonstrated that subcontractors actually performed the defective work. JD Kunz’s 

undisputed summary judgment evidence demonstrated that they did. 

Accordingly, we conclude that the Kunz Defendants met their burden of establishing that 

the subcontractor exception to the your-work exclusion reinstated coverage for the damages

ExploreUSA incurred as the result of the concrete system’s failure. United Fire’s Issues Eight and 

Nine overruled. 

In sum, because we find that none of the CGL policy exclusions preclude coverage, we 

conclude that the trial court did not err in finding United Fire owed JD Kunz a duty to indemnify,

in granting the Kunz Defendants’ motion for summary judgment, and in denying United Fire’s 

cross-motion. Accordingly, United Fires’ Issues One, Two and Three are also overruled. 

POST-JUDGMENT INTEREST ON APPELLATE ATTORNEY’S FEES

In Issue Ten, United Fire seeks clarification regarding when post-judgment interest would 

begin to run on any attorney’s fees award to which the Kunz Defendants would be entitled if they 
39

prevailed on appeal.

17 United Fire correctly points out that pursuant to the parties’ Rule 11 

Agreement, the trial court awarded the Kunz Defendants the attorney’s fees they had incurred to 

date, stating that post-judgment interest on those awards would begin to run from the date of the 

trial court’s judgment. However, it then set forth the amount of attorney’s fees to which the Kunz

Defendants would be entitled if they were successful on appeal, but was silent as to when postjudgment interest would begin to run on any such award, simply stating that it would “bear postjudgment interest at the rate of 7% per annum.”

We agree with United Fire and hereby clarify that post-judgment interest on a contingent

award of appellate attorney’s fees will not begin to accrue until the appellate court enters its 

judgment and the matter is resolved in the party’s favor to whom the fees were contingently 

awarded. See 1st & Trinity Super Majority, LLC v. Milligan, 657 S.W.3d 349, 381–382 

(Tex. App.—El Paso 2022, no pet.) (“[i]interest on a conditional award of attorney’s fees for 

prosecuting an unsuccessful appeal begins to accrue from the time the appellate court renders its 

judgment, rather than the from the time when the trial court signs its judgment”) (citing Ventling 

v. Johnson, 466 S.W.3d 143, 156–57 (Tex. 2015) recognizing that an “award for conditional 

appellate attorney’s fees accrues post-judgment interest from the date the award is made final by 

17 The Kunz Defendants argue that because United Fire did not raise this “issue” in the trial court, it waived its right 

to raise the issue on appeal. The Kunz Defendants correctly point out that any error in the “calculation of interest in a 

judgment must be raised in the trial court in the first instance.” See 1st & Trinity Super Majority, LLC v. Milligan, 657 

S.W.3d 349, 381 (Tex. App.—El Paso 2022, no pet.) (citing Watts v. Oliver, 396 S.W.3d 124, 133–34 (Tex. App.—

Houston [14th Dist.] 2013, no pet.) (complaint that the trial court misapplied the law in awarding a six-percent rate of 

interest on the attorney’s fees award was not a challenge to the legal sufficiency of the judgment and therefore had to 

be raised in the trial court in the first instance)); see also Allright, Inc. v. Pearson, 735 S.W.2d 240, 240 (Tex. 1987)

(per curiam) (stating that error in prejudgment interest must be preserved); Robertson County v. Wymola, 17 S.W.3d 

334, 344 (Tex. App.—Austin 2000, pet. denied) (county waived its right to challenge the trial court’s alleged error in 

awarding prejudgment interest on a judgment where it failed to challenge the award in the trial court). But here, United 

Fire is not arguing a post-judgment interest accrual error and the parties seem to recognize there was no error; the trial 

court’s judgment was simply silent as to when the interest would begin to accrue on the contingent attorney’s fee 

award. We therefore find the Kunz Defendants’ error preservation argument irrelevant.
40

the appropriate appellate court’s judgment”); see also Raia v. Crockett, No. 03-16-00562-CV, 

2017 WL 2062268, at *9 (Tex. App.—Austin May 10, 2017, pet. denied) (mem. op., not 

designated for publication) (same)).

United Fire’s Issue Ten is sustained. 

CONCLUSION

The trial court’s judgment is affirmed. We award in our judgment the conditional appellate 

attorney’s fees set forth in the trial court’s final judgment to the Kunz Defendants, with postjudgment interest to begin accruing from the date of entry of our judgment. 

LISA J. SOTO, Justice

October 31, 2023

Before Rodriguez, C.J., Palafox, and Soto, JJ.