Opinion ID: 7489
Heading Depth: 2
Heading Rank: 7

Heading: Lafarge's Cross-Appeal

Text: 62 Lafarge raises two issues on cross-appeal. First, Lafarge argues that the district court erred in prorating Hartford's liability for defense costs and that a recent Texas Supreme Court case specifically shows that Texas law does not permit such horizontal stacking of policy coverages. The record contains no evidence that Lafarge ever objected to the proration of defense costs. 25 We therefore find that Lafarge has waived this portion of its cross-appeal. 63 Even if error were not waived, however, we would still uphold the district court's decision here. Lafarge's argument that the Texas Supreme Court decision in American Physicians Insurance Exchange v. Garcia, 876 S.W.2d 842 (Tex.1994), prohibits policy stacking is strained. The question addressed in Garcia was whether an insurer's duty to settle a suit was triggered when the settlement demand was outside the policy limits. See Stowers Furniture Co. v. American Indemnity Co., 15 S.W.2d 544, 547-48 (Tex.Comm'n App.1929, holding approved) (duty to defend includes duty to accept reasonable settlement demands within policy limits). Although the insurer's policy limit was $500,000, the injured party never made a settlement demand less than $600,000. Garcia, 76 S.W.2d at 853. Because Garcia involved a suit for a continuing injury (the prescription of drugs over an approximately two-year period), the insured argued that the policy limits of his various insurance policies should be combined (i.e., stacked) to trigger the insurer's Stowers duty. The court disagreed: 64 The consecutive policies, covering distinct policy periods, could not be 'stacked' to multiply coverage for a single claim involving indivisible injury.... Simply because a 'Claim Occurrence' extends throughout several policy periods does not raise the per-occurrence indemnity cap established in every policy. Even the jurisdiction embracing the broadest coverage trigger rule has held that multiple coverage does not permit an insured to 'stack' the limits of multiple policies that do not overlap. Id. at 853-54 (footnotes omitted). 65 At most, then, Garcia held that an insured cannot get more than he bargained for out of the insurance contract. See id. at 854-55 ([A]t no time during the four [relevant coverage] years did Garcia carry liability insurance with a per-occurrence limit greater than $500,000.... he may not claim to benefit from $1.5 million in coverage by stacking temporally distinct policies.). Indeed, the court specifically refused to decide when and under what circumstances any particular policy would be triggered. 26 Id. at 853 n. 20. 66 As the Garcia court recognized, there is apparently no Texas law on the precise issue that faced the district court in this case. Id. In Porter v. American Optical Corp., 641 F.2d 1128 (5th Cir.), cert. denied, 454 U.S. 1109, 102 S.Ct. 686, 70 L.Ed.2d 650 (1981), the Fifth Circuit decision on which the district court in the present case relied, this Court adopted the Forty-Eight Insulations exposure theory, allowing proration of coverage. 27 Porter, 641 F.2d at 1145. Although Lafarge argues that Forty-Eight Insulations, which interpreted New Jersey and Illinois law, is not an appropriate paradigm for determining Texas law, the Court in Porter relied only on the theory of Forty-Eight Insulations; in determining to apply the exposure rule, it applied general Louisiana principles of contract interpretation, which are substantively similar to those applied in Texas. 28 Id. We conclude that the district court did not err in prorating Hartford's liability under the Porter/ Forty-Eight Insulations rule. 67 Lafarge also challenges the district court's grant of summary judgment to Hartford as to Lafarge's Texas Insurance Code claims. Although Lafarge characterizes the district court's action as sua sponte, Hartford moved for summary judgment on these claims, and Lafarge responded to that motion. Moreover, although Lafarge argues that it was entitled to further discovery because material issues of fact remained as to Hartford's state of mind, we do not think the district court erred in determining that enough discovery had occurred to justify summary judgment. 68 In addition, Lafarge argues that the district court impermissibly determined disputed issues of fact by finding that Hartford's actions in processing Lafarge's claims to a defense in the underlying suit were reasonable (albeit ultimately mistaken). Lafarge miscomprehends the nature of the reasonableness determination. While generally a question of fact, reasonableness becomes a question of law if the facts are undisputed. Continental Savings, 762 F.2d at 1243. It does not appear that there was any dispute as to the amount of time it took Hartford to investigate and respond to Lafarge's claims. Also, as Lafarge has stressed elsewhere in this appeal, the scope of the duty to defend is determined by reference to the pleadings and the policy, both of which were available to the district court. The district court therefore was clearly in a position to determine, as a matter of law, whether Hartford acted reasonably. It did not err.