Opinion ID: 571470
Heading Depth: 1
Heading Rank: 1

Heading: the exclusion

Text: 3 The original plaintiff who sued Beaumont for negligence was receiving compensation benefits from his employer under the Longshore and Harbor Workers' Compensation Act (LHWCA). Mid-American's policy to Beaumont provides that it does not apply to 4 (m) any losses arising out of injuries covered under the United States Longshore and Harbor Workers['] Act, Federal Employees Liability Act, Maritime or Admiralty Law whether brought by the injured employee or any third party. 5 Mid-American denied coverage under the foregoing exclusion, deeming the claim a loss[ ] arising out of an injury covered under the [LHWCA]. Beaumont asserts that exclusion (m) excludes claims by only its own employees entitled to recovery under the LHWCA. 6 Losses Arising out of Injuries Covered under the [LHWCA]. Beaumont's interpretation of this phrase is untenable: Beaumont replaces the word losses with the definition of loss so that exclusion (m) excludes any  'sums the insured is legally obligated to pay as damages ...' arising out of injuries covered under the [LHWCA]. Beaumont then concludes that exclusion (m) excludes either claims under LHWCA or legal obligations under LHWCA. 7 The phrase under the [LHWCA] does not modify damages or legally obligated, newly inserted from the definition of loss. As the exclusion is written, under the [LHWCA] plainly modifies covered. If the insurance contract is expressed in plain and unambiguous language, a court cannot resort to the various rules of construction; 1 the contract must be construed in accordance with its plain language. Great American Indem. Co. v. Pepper, 161 Tex. 263, 339 S.W.2d 660, 661 (1960). 8 Beaumont argues further that the legal theory of Henderson's claim against Beaumont is negligence, not LHWCA, so that his claim is not excluded. The legal theory under which an employee institutes suit is irrelevant under the plain terms of the policy. The only requirements for exclusion are that the loss arose out of the injury and that the injury was covered under the LHWCA. The loss, or damages Beaumont was obligated to pay Henderson, indisputably arose out of his injury, and his injury was admittedly covered under LHWCA. As the exclusion reads, whether the employee's theory arose under LHWCA is of no moment. 9 Injured Employee or Any Third Party. Beaumont construes the phrase injured employee as injured employee of Beaumont. The addition of such a qualifying phrase violate[s] the construction rule of giving the language its ordinary meaning. Glenn v. Gidel, 496 S.W.2d 692, 702 (Tex.Civ.App.--Amarillo 1973, no writ). We agree with Mid-American that injured employee refers to a type of claimant and will not read employee as insured's employee. 10 We need not look beyond this case to understand that the phrase third party denotes a type of claimant, such as an injured employee's employer seeking contribution or a compensation carrier seeking reimbursement. In the context of the policy provision, the phrase any third party signifies such a third-party claimant. 11 The Policy as a Whole. Reading the policy as a whole lends further support to Mid-American's reading of exclusion (m). For example, the definitional section of the policy provides as follows: 12 Employer's Liability losses means personal injury sustained by employees in the course of their employment by the insured, however no coverage is provided under this policy for any losses arising out of injuries covered under the United States Longshore and Harbor Workers Act, Federal Employees Liability Act or Maritime or Admiralty Law. 13 The qualifying phrase by the insured specifically modifies employment in the foregoing provision; therefore, the omission of such a qualifier in exclusion (m) suggests that employee does not signify employee of the insured. 14 Still another provision supports Mid-American's construction of exclusion (m). According to a separate exclusion, the policy does not apply to 15 (j) any obligation for which the Insured or any carrier as his insurer may be held liable under any workmen's compensation, unemployment compensation or disability benefits law, or under any similar law. 16 The fact that exclusion (j) is specifically tailored to injuries sustained in the course of employment by the insured suggests that exclusion (m) serves another purpose. Generally the parties to an instrument intend every clause to have some effect and in some measure to evidence their agreement. City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515, 518 (Tex.1968). If we accept Beaumont's interpretation of exclusion (m) as excluding only its own employees' claims covered under the LHWCA, exclusion (m) would be redundant. 17 Additionally, exclusion (j) undermines Beaumont's public policy argument about avoiding duplication of insurance coverage for its employees covered by compensation insurance: exclusion (j) serves the very purpose or policy Beaumont suggests that exclusion (m) was intended to serve. 18 Upon considering exclusion (m) alone and in the context of the entire policy, we find Mid-American's interpretation reasonable and Beaumont's interpretation unreasonable.