Opinion ID: 618736
Heading Depth: 2
Heading Rank: 2

Heading: Whether the Pleadings Triggered the Duty to Defend.

Text: Having determined that Gilbane is an additional insured, we must consider whether the pleadings in the underlying lawsuit are sufficient to trigger Admiral's duty to defend under the policy. In other words, we must decide whether the pleadings sufficiently allege that Empire or someone acting on its behalf, including Parr, caused Parr's injuries.
Texas strictly follows the eight-corners rule, meaning the duty to defend may only be determined by the facts alleged in the petition and the coverage provided in the policy. Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co., 279 S.W.3d 650, 654 (Tex.2009). We consider only the facts affirmatively alleged in the Third Amended Pleading, Utica Nat'l Ins. Co. v. Am. Indem. Co., 141 S.W.3d 198, 201-02 (Tex.2004), and we take those facts as true, Pine Oak Builders, 279 S.W.3d at 654. If the petition does not affirmatively allege facts that would trigger the duty under the policy, Admiral is not required to defend Gilbane. See id.; Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 643 (Tex. 2005). The eight-corners doctrine strictly circumscribe[s] a court's analysis of the duty to defend. D.R. Horton-Tex., 300 S.W.3d at 744. In performing its eight-corners review, a court may not read facts into the pleadings, look outside the pleadings, or speculate as to factual scenarios that might trigger coverage or create an ambiguity. Nat'l Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 142 (Tex.1997). Moreover, [t]he Texas Supreme Court has never recognized any exception to the strict eight corners rule. Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523, 529, 531 (5th Cir.2004). Although ambiguities will be resolved in favor of coverage, [t]he fact that the parties disagree as to coverage does not create an ambiguity. Valmont Energy Steel, Inc. v. Commercial Union Ins. Co., 359 F.3d 770, 773 (5th Cir.2004). The Texas Supreme Court has recently reiterated that a policy imposes no duty to defend a claim that might have been alleged but was not, or a claim that more closely tracks the true factual circumstances surrounding the third-party claimant's injuries but which, for whatever reason, has not been asserted. Pine Oak Builders, 279 S.W.3d at 655-56. In that case, the insurance company would only have had a duty to defend if one of Pine Oak's subcontractors had caused the damage, not if Pine Oak had itself caused it. Id. at 654. The petition alleged that Pine Oak negligently built the plaintiff's house by, among other things, construct[ing] columns that provided inadequate support and fail[ing] to properly seal seams. Id. Pine Oak argued that the complained-of work was performed by subcontractors, triggering the duty to defend. The court held that there was no duty to defend, however, because [the pleading] alleges that Pine Oak alone is liable for its own actionable conduct. Id. at 655. Based on Pine Oak Builders, intermediate courts of appeals likewise have limited review to those facts alleged in the petition without speculating as to facts that could have been alleged. See, e.g., AccuFleet, Inc. v. Hartford Fire Ins. Co., 322 S.W.3d 264, 273 (Tex.App.Houston [1st Dist.] 2009, pet. denied) (holding that it could not disregard [the] express pleadings alleging negligence by specific parties); see also Huffhines v. State Farm Lloyds, 167 S.W.3d 493, 501 (Tex.App.Houston [14th Dist.] 2005, no pet.) (holding that the insurer did not have a duty to defend because the pleadings alleged that the defendants had acted intentionally rather than negligently). Accordingly, in analyzing this case, we may not infer additional facts that are not in the pleadings.
We next consider the scope of coverage in the Admiral policy. In doing so, we examine the policy as a whole to ascertain the parties' true intent. Utica Nat'l Ins. Co., 141 S.W.3d at 203. Here, the policy provides coverage for additional insureds, but only with respect to liability for `bodily injury,' `property damage' or `personal & advertising injury' caused, in whole or in part, by . . . [Empire's] acts or omissions; or . . . [t]he acts or omissions of those acting on [Empire's] behalf. Gilbane argues that our interpretation of the policy should turn on the phrase with respect to, which has been interpreted as requiring less than proximate cause. Evanston Ins. Co., 256 S.W.3d at 666. In Evanston, ATOFINA sought coverage for the death of an employee of its subcontractor, Triple S, under a policy Triple S had with Evanston. The policy covered an additional insured only with respect to operations performed by [Triple S] or on [its] behalf, or facilities owned or used by [Triple S]. Id. at 664. Evanston argued that ATOFINA was not an additional insured because the death was caused by ATOFINA's own negligence, not by Triple S; as a result, it argued, the death was not with respect to . . . operations performed by [Triple S]. The Texas Supreme Court rejected that argument, however, explaining that Evanston was equating with respect to and proximate cause and that, in reality, the policy only required a causal connection or relation, which was satisfied by the fact that the death occurred at ATOFINA's premises. Id. at 666-67. Gilbane's argument fails, however, when we examine the policy at issue in this case as a whole. Unlike in Evanston, the policy here explicitly requires that the injuries be caused, in whole or in part, by Empire. Moreover, the Texas Supreme Court has defined caused by as requiring proximate causation. Utica Nat'l Ins. Co., 141 S.W.3d at 202-03 (citing Red Ball Motor Freight, Inc. v. Emp'rs Mut. Liab. Ins. Co., 189 F.2d 374, 378 (5th Cir.1951)). As such, Admiral owes Gilbane a duty to defend only if the underlying pleadings allege that Empire, or someone acting on its behalf, proximately caused Parr's injuries.
We turn now to the facts alleged in the pleadings. Parr's Third Amended Petition alleges only one cause of his injuries: [Parr's] injuries were brought to occur, directly and proximately by reason of the negligence of the Defendants herein (the `Gilbane Defendants'). Specifically, it alleges: [T]he Gilbane Defendants failed to keep the construction site in a clean and functional condition. During the month of January 2007 the Houston area received large amounts of rainfall. As a result of this rainfall, the construction site accumulated large amounts of mud. This mud was tracked in from the surrounding area into the building under construction. As a result of the mud being tracked inside, the work area became slippery and hazardous. The Gilbane Defendants had actual notice of the danger caused by the mud from e-mails and other information given to them by their subcontractors. Despite the Gilbane Defendants' knowledge of the dangers posed by the mud, these Defendants took no action to correct the problem, and as a result, Plaintiff slipped and fell causing his injuries. . . . [T]he Gilbane Defendants controlled the construction elevator on the jobsite . . . . Despite the fact that the construction workers worked until five o'clock each day, the Gilbane Defendants sent the elevator operator home around four o'clock. Due to the fact that the elevators were left unmanned and useless after the elevator operator went home, Plaintiff was forced to walk down the ladder where he ultimately slipped and fell. In deciding that Admiral had a duty to defend, the district court characterized the petition as stating that the injuries occurred when Parr was walking down the ladder with muddy boots, which it considered sufficient to implicate Parr's contributory negligence. Contrary to that characterization, however, the petition does not allege that Parr climbed down the ladder with muddy boots. Rather, it alleges that Gilbane's negligence caused the work area to become slippery and hazardous, causing Parr's injuries. Gilbane argued before the district court, as it does here, that because Parr or Empire could potentially be found contributorily negligent at a later trial, inferring facts to support the plaintiff's contributory negligence does not run afoul of the eight-corners rule. The district court accepted that argument, determining, After reviewing only the eight-corners of the petition and the Admiral policy, the court cannot say that Parr himself, acting on behalf of Empire Steel in the course of his job, was not possibly a contributing, proximate cause of his injuries.  In other words, it determined that the pleadings did not conclusively rule out Parr's negligence; it was possible a jury could eventually find that Parr caused his own injuries. Such a construction, however, improperly shifts the burden of proof, requiring the party disputing coverage to establish that the pleadings do not potentially support a covered claim. Although the Texas Supreme Court has held that an insurer has a duty to defend if a plaintiff's factual allegations potentially support a covered claim, it has never applied the potentiality standard to deviate from the eight-corners rule. Zurich Am. Ins. v. Nokia, Inc., 268 S.W.3d 487, 490 (Tex. 2008). Rather, it has used the standard to characterize the description of claims in the petition, determining whether they potentially were covered. In Zurich, for example, the Texas Supreme Court held that the allegations in the pleadings that the plaintiffs had suffered biological injury potentially included a claim for bodily injury. Id. at 492-93. It considered only the facts alleged in the pleadings and did not make any factual assumptions or inferences that were not pleaded. Id.; see, e.g., GuideOne Elite Ins. Co., 197 S.W.3d at 310 (holding that allegations of sexual assault by an employee of the church fell within coverage for sexual misconduct). Likewise, the Texas Supreme Court has held that, even applying the potentiality standard, courts cannot imagine factual scenarios that would trigger coverage. Nat'l Union Fire Ins. Co., 939 S.W.2d at 142. There, the insurance policy provided coverage for bodily injury or property damage to which this insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto. Id. at 141. The pleading alleged that the defendant negligently discharged a firearm and caused a bullet to strike the victim. Id. The court of appeals had incorrectly applied the potentiality standard, hypothesizing that [i]f a driver were authorized by Merchants to carry a weapon when operating its truck in order to protect the truck and its contents and if the driver negligently discharged a firearm while operating that truck, then damages caused by the discharge would arguably arise out of the operation of that vehicle. Merchs. Fast Motor Lines v. Nat'l Union Fire Ins. Co. of Pittsburgh, Inc., 919 S.W.2d 903, 906 (Tex.App.Eastland 1996, writ granted). The Texas Supreme Court reversed, holding that the facts affirmatively alleged did not potentially state a covered claim. 939 S.W.2d at 142. The district court should only have considered whether the facts pleaded affirmatively implicated Parr's or Empire's negligence. Applying the correct standard, the allegations in the pleadings do not implicate either Parr's or Empire Steel's fault. Indeed, even the portion of the petition relied on by the district court alleges that Parr's injuries were caused only by Gilbane: Despite the Gilbane Defendants' knowledge of the dangers posed by the mud, these Defendants took no action to correct the problem, and as a result, Plaintiff slipped and fell causing his injuries. Simply put, the petition does not allege any facts suggesting that Parr's own negligence could have caused his injuries. Nor does the petition allege that Empire caused Parr's injuries. Indeed, the only mention of Empire in the pleadings is, Plaintiff was an employee of Empire Steel Erectors, L.P., performing work under a contract between Empire Steel Erectors, L.P. and Gilbane . . . . In its brief, Gilbane concedes that the requisite language is not in the pleadings, recognizing Parr's petition's silence as to any acts or omissions of Empire. Limiting our review to the face of the petition, as we must, it does not affirmatively allege any facts implicating the negligence of either Empire or Parr, and Admiral has no duty to defend.
Gilbane nonetheless asks us to create an exception to the strict eight-corners ruleeven though the Texas Supreme Court has never done sothat would allow us to consider facts not alleged in the petition. The Texas Supreme Court has made clear that a policy imposes no duty to defend. . . a claim that more closely tracks the true factual circumstances surrounding the third-party claimant's injuries but which, for whatever reason, has not been asserted. Pine Oak Builders, 279 S.W.3d at 655-56 (emphasis added). Employing that principle, we decline to look outside the petition as requested by Gilbane. First, Gilbane asks us to create an exception to the eight-corners rule because, it argues, a plaintiff would never allege his own negligence. It therefore argues that we should infer that Parr's negligence would be implicated at trial. Gilbane argues that Texas's contributory negligence statute, which requires that the trier of fact determine the percentage of responsibility for multiple parties, including for each claimant, automatically implicates a plaintiff's own negligence. See Tex. Civ. Prac. & Rem.Code § 33.003(a). Thus, under this logic, a plaintiff would be assumed to be contributorily negligent for purposes of a duty to defend regardless of whether any negligence is alleged. Gilbane's argument is contrary to Texas law. A plaintiff's negligence is not automatically implicated in every case. Texas does not require the trier of fact to consider contributory negligence unless that allegation is in the pleadings and the evidence presented at trial. See Tex.R. Civ. P. 278 (The court shall submit the questions, instructions and definitions in the form provided by Rule 277, which are raised by the written pleadings and the evidence.). In fact, section 33.003(b) mandates that a plaintiff's negligence will not be submitted to the jury without sufficient evidence to support the submission. Tex. Civ. Prac. & Rem.Code § 33.003(b). As such, Texas's contributory negligence statute has no bearing on the duty to defend. Moreover, the Texas Supreme Court recently recognized that if it were to create an exception to the eight-corners rule, it would do so only `when it is initially impossible to discern whether coverage is potentially implicated and when the extrinsic evidence goes solely to a fundamental issue of coverage which does not overlap with the merits of or engage the truth or falsity of any facts alleged in the underlying case.' GuideOne Elite Ins. Co., 197 S.W.3d at 309 (quoting Northfield Ins. Co., 363 F.3d at 531 (emphasis in original)). It declined to create an exception for evidence that goes both to coverage and the merits of the case because doing so would conflate the duty to defend with the duty to indemnify, which is determined by the facts proven in the underlying trial. Id. at 310. Here, whether Parr acted negligently in climbing down the ladder goes directly to the merits of the underlying negligence suit, as well as to the duty to defend. We are without authority to create an exception where the Texas Supreme Court has specifically declined to do so. See SMI Owen Steel Co., 520 F.3d at 442. Second, Gilbane argues that we should go outside the eight corners of the pleadings and policy in this case because Parr could not plead Empire's negligence without triggering workers' compensation issues. Gilbane recognizes the silence in the pleadings as to Empire's negligence but asks that we disregard it because it indicate[s] not that Empire committed no acts or omissions, but only that Empire is statutorily immune to suit. Importantly, however, there is no allegation of a workers' compensation policy in the pleadings, and [f]acts outside the pleadings, even those easily ascertained, are ordinarily not material to the determination. Liberty Mut. Ins. Co. v. Graham, 473 F.3d 596, 600 (5th Cir.2006). The Texas Supreme Court has refused to recognize an exception to the eight-corners rule even when everyone involved in the suit knows the true facts. See Pine Oak Builders, 279 S.W.3d at 655. For example, in GuideOne Elite Ins., the court declined to consider undisputed evidence that the employee who had allegedly assaulted the plaintiff ceased working for the defendant before the policy took effect. 197 S.W.3d at 307. Similarly, here, it is only by looking to evidence outside of the pleadingswhich we may not dothat we know about the existence of the policy. Creating an exception here would be contrary to Texas law, and we decline to do so. [3] Moreover, even if we could consider the workers' compensation policy, Texas law would still require an affirmative allegation of Empire's negligence in the pleadings, as discussed above. Pine Oak Builders, 279 S.W.3d at 655-56. Thus, the district court erred in granting summary judgment in favor of Gilbane on the duty to defend.