Opinion ID: 741760
Heading Depth: 2
Heading Rank: 2

Heading: Grand Lockwood's Right to Recover

Text: 40 Kraft, Maxwell, and Vista Chemical (referred to collectively as Kraft) object to the district court's award of $158,430.76 to Grand Lockwood, for the costs Grand Lockwood incurred in removing debris from the warehouse and cleaning up the warehouse property site after the fire. Grand Lockwood contends that Lockwood terminated its lease with Grand Lockwood and refused to clean up the warehouse site and remove debris from the premises, as it was obligated to do under the lease. 41 The Marine Indemnity policy contained two provisions governing debris removal and clean-up expenses. Section 13 provided: 42 This policy is extended, subject otherwise to its full terms, conditions and limitations, to cover the Insured's expenses incurred in the removal of all debris of the property insured hereunder, at the premises where the loss occurs, which may be occasioned by loss or damage directly caused by any of the perils insured against in this policy.... 43 The Debris Removal and Cost of Clean Up Extension (debris removal extension) provided: 44 [I]n the event of direct physical loss or damage to the property insured hereunder, this Policy ... also insures, within the sum insured 45 (a) expenses reasonably incurred in removal of debris of the property insured hereunder destroyed or damaged from the premises of the Assured; and/or 46 (b) cost of clean up, at the premises of the Assured, made necessary as a result of such direct physical loss or damage.... 47 The special master found that, after the fire, Grand Lockwood spent in excess of $384,000 to remove debris and clean up the warehouse premises. Taking into consideration the $5,000 deductible under the Marine Indemnity policy, the magistrate judge then concluded that Grand Lockwood incurred damages of $379,000 that were covered by the Marine Indemnity Policy. The district court, in adopting these findings, granted Grand Lockwood a pro rata portion of the interpleaded funds, thereby diminishing the pool of interpleaded funds available to the other parties with claims. 48 On appeal, Kraft contests the court's disbursement of interpleaded funds to Grand Lockwood on the following grounds: (1) the Marine policy does not provide coverage to Grand Lockwood; (2) claims for damaged property should receive first priority; (3) Lockwood did not present evidence that it established the condition precedent under the Marine policy, which requires that Lockwood give notice of its intent to claim recovery for debris removal or clean-up costs; and (4) Grand Lockwood failed to offer evidence that the debris removal expenses it incurred were related to the removal of property insured under the policy. 49 Insurance policies are no exception to the rule that one for whose benefit a contract is made may enforce the contract. However, under Texas law, a presumption exists that parties intended to contract only for themselves. Talman Home Fed. Sav. & Loan Assoc. of Ill. v. American Bankers Ins., 924 F.2d 1347, 1351 (5th Cir.1991). Because Grand Lockwood is not a party to the Marine Indemnity insurance contract, it follows that [the Marine Indemnity insurance] contract will not be construed as having been made for the benefit of [Grand Lockwood] unless it clearly appears that this was the intention of the contracting parties. Id.; see also Resolution Trust Corp. v. Kemp, 951 F.2d 657, 662 (5th Cir.1992). If there is any doubt concerning the intent in this regard as it appears from the contract itself, such doubt should be construed against such intent. Talman, 924 F.2d at 1351 (quoting Republic Nat'l Bank v. National Bankers Life Ins. Co., 427 S.W.2d 76, 80 (Tex.Civ.App.--Dallas 1968, writ ref'd n.r.e.)). 50 The first provision of the Marine Indemnity policy concerning debris removal costs explicitly states that the policy covers the Insured's expenses for debris removal. The policy also expressly states that Lockwood is the Insured. The second provision relating to debris removal, which is contained in the debris removal extension, does not state who can claim debris removal costs. While the debris removal extension does not explicitly exclude coverage to a third party, it also does not explicitly provide coverage to a third party. Nor do any other portions of the insurance contract demonstrate that Grand Lockwood was intended to be a beneficiary under the debris removal and clean-up cost provisions. In contrast, the property coverage provisions of the contract, by referring to the property of others, specifically provide that certain third parties storing property in the Lockwood warehouse were intended beneficiaries under the policy. 51 Moreover, the debris removal extension contains a requirement that the Assured shall give notice to the Underwriters of intent to claim for cost removal of debris or cost of clean up.... In effectuating the intent of the parties to a contract, [i]t is the duty of the Court to construe the contract as an entire instrument, and to consider each part with every other part so that the effect and meaning of one part on any other part may be determined. Steeger v. Beard Drilling, Inc., 371 S.W.2d 684, 688 (Tex.1963); see also Mustang Tractor & Equip. Co. v. Liberty Mut. Ins. Co., 76 F.3d 89, 91 (5th Cir.1996) (Texas law requires that the court read all provisions of a contract together in order to give each provision its intended effect). The notice requirement in the debris removal extension is rendered meaningless, unless the parties intended that only Lockwood could claim expenses for debris removal and clean-up costs. In order to give effect to the notice requirement, which requires that Lockwood provide notice to Marine Indemnity of its intent to claim debris removal and clean-up costs, we find that Grand Lockwood was not entitled to make a claim for these costs. In summary, Grand Lockwood has failed to meet its burden of proof in establishing that it was an intended beneficiary under the debris removal and clean up provisions of the Marine Indemnity contract, and, for this reason, we reverse the judgment of the district court.