Court Opinion

ID: 52718
Source: CourtListenerOpinion
Date Created: 2010-04-26 01:18:39+00
Date Added: 2024-06-11T17:16:35.684541
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                   United States Court of Appeals
                                                                            Fifth Circuit
                                                                         F I L E D
                                     No. 07-20102
                                   Summary Calendar                     September 14, 2007

                                                                     Charles R. Fulbruge III
                                                                             Clerk
SCOTTSDALE INSURANCE CO.

                                                  Plaintiff - Appellee
v.

MASON PARK PARTNERS LP

                                                  Defendant - Appellant
v.

KATY INSURANCE AGENCY, INC.

                                                  Third-Party Defendant - Appellee

                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:05-CV-1443

Before REAVLEY, SMITH, and BARKSDALE, Circuit Judges.
PER CURIAM:*
       Mason Park Partners LP (“Mason Park”) appeals from grants of summary
judgment to Scottsdale Insurance Co. (“Scottsdale”) and Katy Insurance Agency,
Inc. (“Katy”) on claims arising from a dispute over insurance proceeds for

       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
                                       No. 07-20102

property losses after a fire at a leased restaurant. The insured lessee of the Taste
of Katy restaurant (Parvin Shahinpour), the owner of the premises and the
insured’s landlord (Mason Park), and a judgment creditor (Burke Orr), all sought
to be paid proceeds following the fire under a Scottsdale policy issued to
Shahinpour (“the Policy”). Holding that Mason Park is not covered under the
Policy, the district court granted summary judgment to Scottsdale and against
Mason Park on Mason Park’s breach of contract claim, and it dismissed Mason
Park’s extra-contractual claims against Scottsdale. Separately, the court granted
summary judgment to Katy, Shahinpour’s insurance agent, on Mason Park’s
extra-contractual claims against Katy. For the following reasons, we affirm.
       1.     We review the district court’s grants of summary judgment de novo.
              Texas Indus., Inc. v. Factory Mut. Ins. Co., 486 F.3d 844, 846 (5th
              Cir. 2007). Summary judgment is appropriate if the record shows
              “that there is no genuine issue as to any material fact and that the
              moving party is entitled to a judgment as a matter of law.” FED. R.
              CIV. P. 56(c). In a diversity case such as this one, state substantive
              law applies. Abraham v. State Farm Mut. Auto. Ins. Co., 465 F.3d
              609, 611 (5th Cir. 2006) (citing Erie R. Co. v. Tompkins, 304 U.S. 64,
              78–80, 58 S. Ct. 817 (1938). All parties agree that Texas law applies
              here.
       2.     The Policy issued to Shahinpour contained two separate coverage
              parts: a Commercial Property Coverage Part (covering business
              personal property and business interruption losses) and a
              Commercial General Liability Coverage Part.1 Mason Park contends
              both parts covered its property losses incurred during the fire.
              Under Texas contract law, “[i]f policy language is worded so that it

       1
          These parts of the Policy will be referred to as the “property coverage part” and the
“liability coverage part.”

                                              2
                     No. 07-20102

can be given a definite or certain legal meaning, it is not ambiguous
and we construe it as a matter of law.” Am. Mfrs. Mut. Ins. Co. v.
Schaefer, 124 S.W.3d 154, 157 (Tex. 2003). The fact that the parties
offer different contract interpretations does not create an ambiguity.
“An ambiguity exists only if the contract language is susceptible to
two or more reasonable interpretations.” Id.
      A review of the Policy reveals that Mason Park was not
covered under the property coverage part. The loss payable
provision, which modified the property coverage part, originally
stated that the name and address of the loss payee was “to follow.”
Nothing in the loss payable provision or anywhere else gave
Scottsdale notice that Mason Park was the intended loss payee. The
loss payable provision was properly cancelled by a change
endorsement order prior to the fire. Contrary to Mason Park’s
argument, because Mason Park was never identified as the loss
payee, Scottsdale was under no obligation to give Mason Park notice
of the cancellation. And because nothing in the property coverage
part indicates that Mason Park is a loss payee, an additional
insured, or otherwise has coverage, it cannot recover under the
property coverage part.
      Mason Park’s claim that its losses are covered under the
Policy’s liability coverage part also fails. Commercial liability
coverage is triggered when the insured is “legally obligated to pay
damages,” such as when the insured is subject to “legal liability”
recognized and enforced by a court of competent jurisdiction. 7A
COUCH ON INSURANCE § 103:14 (3d ed. 2005); see Data Specialties,
Inc. v. Trancon. Ins. Co., 125 F.3d 909, 911 (5th Cir. 1997). All
parties agree that Mason Park was added as an additional insured

                           3
                                     No. 07-20102

             under the Policy’s liability coverage part. However, this coverage
             does not extend to the fire damage caused to Mason Park’s property.
             The liability coverage part obligates Scottsdale to pay the insured
             “those sums that the insured becomes legally obligated to pay as
             damages because of ‘bodily injury’ or ‘property damages’ to which
             this insurance applies.” It does not mandate that Scottsdale pay
             Mason Park to compensate for its property losses as a result of the
             fire. Mason Park’s attempts to twist the language of the Policy to
             create the appearance of coverage are without merit. Because the
             Policy did not cover Mason Park for the damages the fire caused, the
             district court properly granted summary judgment to Scottsdale.
      3.     Mason Park also argues that the district court erred when it
             granted summary judgment to Scottsdale on Mason Park’s claims
             under the Texas Insurance Code, under the Texas Deceptive Trade
             Practices-Consumer Protection Act (the “DTPA”), and for breach of
             the common law duty of good faith and fair dealing. Mason Park’s
             evidence for these claims relates to its rejected insurance claim and
             Scottsdale’s conduct during its investigation of the fire. We have
             already held that Scottsdale appropriately rejected Mason Park’s
             insurance claim. Furthermore, the district court properly found that
             there is no evidence related to Scottsdale’s investigation of Mason
             Park’s claim indicating any wrongful act or bad faith. Therefore, the
             district court correctly rejected Mason Park’s common law claim.
                    The district court also properly rejected Mason Park’s
             statutory claims. Mason Park brought a claim under former Article
             21.55 of the Texas Insurance Code, recodified as Section 542.055,2

      2
      See Lundstrom v. United Svcs. Auto. Ass’n-CIC, 192 S.W.3d 78, 83 n.6 (Tex.
App.—Houston [14th Dist.] 2006, pet. denied) (detailing the history of the current Section

                                            4
                                No. 07-20102

            which relates to the prompt investigation and paying of claims.
            Summary judgment for Scottsdale under former Article 21.55 is
            appropriate because Mason Park did not have a valid claim under
            the Policy, and the evidence does not reveal any improper delay in
            investigating Mason Park’s insurance claim. Mason Park’s claims
            under the former Article 21.55 of the Texas Insurance Code and the
            DTPA were properly dismissed. To recover under these provisions,
            Texas law requires that an insured show that it is entitled to
            recover for a breach of the duty of good faith and fair dealing.
            Crawford v. GuideOne Mut. Ins. Co., 420 F. Supp. 2d 584, 599 (N.D.
            Tex. 2006). Mason Park has not done that.
      4.    Mason Park also brought claims against Katy under former Article
            21.21 of the Texas Insurance Code and Articles 17.46 and 17.50 of
            the DTPA. The entirety of the relationship between Katy,
            Shahinpour’s insurance agent, and Mason Park consists of a
            Certificate of Liability Insurance (“COI”) that Katy provided to
            Mason Park and that accurately reflected Shahinpour’s insurance
            coverage and named Mason Park as a “Certificate Holder.”
                  Mason Park cannot recover on its statutory claims against
            Katy because it has not provided even a scintilla of evidence that
            Katy made a misrepresentation to it. “In the absence of some
            specific misrepresentation by the insurer or agent about the
            insurance, a policyholder’s mistaken belief about the scope or
            availability of coverage is not generally not actionable under the
            DTPA.” Sledge v. Mullin, 927 S.W.2d 89, 94 (Tex. App.—Fort Worth
            1996, no writ). For the same reason, a claim based solely on a

542.055).

                                      5
                             No. 07-20102

        mistaken belief generally fails under the Texas Insurance Code.
        Moore v. Whitney-Vaky Ins. Agency, 966 S.W.2d 690, 692–93 (Tex.
        App.—San Antonio 1998, no writ). The COI here accurately
        reflected the terms of the Policy and the fact that Mason Park was
        only a “Certificate Holder.”    And there is nothing in the COI
        identifying Mason Park as an additional insured under the property
        coverage part of the Policy. In this case, the COI clearly states that
        it is provided for information only and that it does not alter the
        terms of the Policy, which further undercuts Mason Park’s claims.
        The district court’s grant of summary judgment to Katy was proper.

AFFIRMED.

                                   6