Court Opinion

ID: 3104635
Source: CourtListenerOpinion
Date Created: 2015-10-16 05:40:25.54145+00
Date Added: 2024-06-11T11:51:51.995641
License: Public Domain

Opinion issued May 1, 2014.

                                    In The

                              Court of Appeals
                                   For The

                        First District of Texas
                          ————————————
                              NO. 01-13-00691-CV
                          ———————————
                 DARRELL LEE HODGES, JR., Appellant
                                      V.
          SAFECO LLOYDS INSURANCE COMPANY, Appellee

                  On Appeal from the 281st District Court
                           Harris County, Texas
                     Trial Court Case No. 2013-17765

                                 OPINION

     In this appeal, we consider whether the trial court properly granted summary

judgment in favor of an insurance company that denied coverage to a son who
negligently injured his father, with whom he resided, under a “homeowner’s

exclusion” in the father’s homeowner’s insurance policy. We affirm.

                                BACKGROUND

      On August 17, 2009, Darrell Lee Hodges, Sr. was assaulted in his home.

His son, Darrell Lee Hodges, Jr. [“DJ”], lived at the home with his father. DJ

knew the assailants, knew they were looking for his father and that they posed a

risk to his safety, but nonetheless failed to warn his father of the men’s presence

outside the home and failed to call the police to have the men removed from the

premises.

      SAFECO had a homeowner’s condominium policy in place at the time of

the offense.   Mr. Hodges is the named policy holder and DJ is also covered

because he lived at the condominium with his father. Mr. Hodges made a claim

under the policy for insurance benefits to cover his injuries.       SAFECO denied

coverage, citing the “homeowner’s exclusion” in the policy, which precludes

coverage for “bodily injury to [the named insured] or an insured.”

      Mr. Hodges sued DJ in district court alleging that DJ’s negligence in failing

to warn him about the presence of the assailants and their intentions was the

proximate cause of his bodily injuries. SAFECO initially provided a defense for

DJ under a reservation of rights, but subsequently had its attorney withdraw from

DJ’s representation. Mr. Hodges obtained a judgment against DJ in the amount of

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$99,599.96. Evidence showed that Mr. Hodges needed stitches and staples to close

a cut on his head caused when he was hit in the head with a beer mug by the

assailants, and that he would require plastic surgery to conceal the remaining scars.

      DJ then sued SAFECO, alleging that it had breached the insurance contract

by refusing to indemnify him for the judgment Mr. Hodges obtained against him,

and that SAFECO acted in bad faith denying coverage and failing to pay his claim

promptly. DJ and SAFECO filed cross-motions for summary judgment asserting

their respective positions regarding the coverage provided by the policy. The trial

court granted SAFECO’s motion, denied DJ’s, and this appeal followed.

                  PROPRIETY OF SUMMARY JUDGMENT

      In three related issues on appeal, DJ contends the trial court erred in granting

SAFECO’s motion for summary judgment and determining that the homeowner’s

condominium policy provided no coverage to him for his father’s injuries.

Standard of Review and Applicable Law

      In reviewing cross-motions for summary judgment, “we follow the usual

standard of review for traditional summary judgments.” Lockheed Martin Corp. v.

Gordon, 16 S.W.3d 127, 132 (Tex. App.—Houston [1st Dist.] 2000, pet. denied).

On appeal, we review summary judgments de novo. Provident Life & Accident Ins.

Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). Traditional summary judgment is

properly granted only when a movant establishes that there are no genuine issues

                                         3
of material fact and that it is entitled to judgment as a matter of law. TEX. R. CIV. P.

166a(c); KPMG Peat Marwick v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d
746, 748 (Tex. 1999). When a plaintiff moves for summary judgment, he must

prove that he is entitled to summary judgment as a matter of law on each element

of his cause of action. MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986) (per

curiam); Cleveland v. Taylor, 397 S.W.3d 683, 696–97 (Tex. App.—Houston [1st

Dist.] 2012, pet. denied). When a defendant moves for summary judgment, it must

either (1) disprove at least one element of the plaintiff’s cause of action or (2)

plead and conclusively establish each essential element of an affirmative defense to

rebut plaintiff’s cause. Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995) (per

curiam).

      To decide whether issues of material fact preclude summary judgment,

evidence favorable to the non-moving party must be taken as true, every

reasonable inference must be indulged in its favor, and any doubts resolved in its

favor. Knott, 128 S.W.3d at 215. The movant must conclusively establish its right

to judgment as a matter of law. Charida v. Allstate Indem. Co., 259 S.W.3d 870,

872 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (citing MMP, 710 S.W.2d at

60). A matter is conclusively established if reasonable people could not differ as to

the conclusion to be drawn from the evidence. City of Keller v. Wilson, 168 S.W.3d
802, 816 (Tex. 2005).

                                          4
      Insurance policies are controlled by rules of interpretation and construction

applicable to contracts generally. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v.

CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). The primary concern of a court

in construing a written contract is to ascertain the true intent of the parties as

expressed in the instrument. Id. Terms in contracts are given their plain, ordinary,

and generally accepted meaning unless the contract itself shows that particular

definitions are used to replace that meaning. W. Reserve Life Ins. Co. v.

Meadows, 261 S.W.2d 554, 557 (Tex. 1953). If a written contract is so worded that

it can be given a definite or certain legal meaning, then it is not ambiguous. Nat’l

Union Fire Ins. Co., 907 S.W.2d at 520. The interpretation of an unambiguous

contract is a question of law for the court. Perry v. Houston Indep. Sch. Dist., 902
S.W.2d 544, 547 (Tex. App.—Houston [1st Dist.] 1995, writ dism’d w.o.j.). If an

insurance policy is ambiguous, however, it will be interpreted in favor of the

insured. Grain Dealers Mut. Ins. Co. v. McKee, 943 S.W.2d 455, 458 (Tex. 1997).

Relevant Contractual Provisions

      The definition of “You”

      The policy lists Darrell Hodges [Senior] as the named insured and states that

the terms “‘you’ and ‘your’ refer to the ‘named insured’ shown on the declarations

and the spouse if a resident of the same household.”

                                        5
      The definition of “Insured”

      Under section 4a of the policy’s definitions, the term “‘Insured’ means you

and residents of your household who are your relatives.”

      The “household” exclusion

      The exclusions section of the policy provides that “Coverage C (Personal

Liability) does not apply to bodily injury to you or an insured within the meaning

of part a, or part b, of insured as defined.”

      The “severability” clause

      The severability of insurance clause provides that “[t]his insurance applies

separately to each insured. This condition will not increase our limit of liability for

any one occurrence.”

Analysis

      DJ argued in his motion for summary judgment and on appeal that “[t]he

bodily injury exclusion, when read in conjunction with the policy’s severability of

insurance clause, applies only if the insured claiming liability coverage seeks

compensation for his or her own bodily injuries.” Specifically, DJ contends that

“[t]he correct reading of [the exclusion] is that the policy will not provide ‘you,’

(as “the ‘named insured’ shown on the declarations) liability coverage for bodily

injuries suffered by ‘you’ in a claim made by ‘you[,]” and that similarly “the

separate policy of ‘an insured’ will not provide it coverage for bodily injuries

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suffered by it in a claim made by it.” Essentially, DJ argues that because the

claims are for his father’s bodily injuries and not his own, he should be covered by

the policy.

      SAFECO responds, both in its own motion for summary judgment and on

appeal, that “the severability clause does not affect the [coverage] analysis because

the household exclusion applies based on the identity of the injured party, not the

identity of the actor or the insured seeking coverage.” SAFECO admits that DJ is

an insured under the policy, and that, pursuant to the severability clause, the

contract’s coverage must be evaluated through his eyes. See Commercial Standard

Ins. Co. v. Am. Gen. Ins. Co., 455 S.W.2d 714, 721 (Tex. 1970) (stating that in

insurance policy with severability clause, “‘[t]he insured’ does not refer to all

insureds; rather the term is used to refer to each insured as a separate and distinct

individual apart from any and every other person who may be entitled to coverage

thereunder”) However, SAFECO argues that even if this Court considers the policy

from DJ’s standpoint, it cannot “ignore[] the existence of other insureds or

change[] the Policy’s terms or definitions.”     SAFECO contends that no matter

whose standpoint the court considers in interpreting the policy, it unambiguously

excludes coverage for bodily injuries suffered by “you,” which is contractually

defined as Mr. Hodges.

                                         7
      This Court considered the interaction between an exclusion and a

severability clause in Bituminous Casualty Corp. v. Maxey, 110 S.W.3d 203 (Tex.

App.—Houston [1st Dist.] 2003, pet. denied). In Maxey, we addressed “a case of

first impression under Texas law regarding the application of a separation of

insureds clause to a policy exclusion that refers to ‘any insured.’”1 Id. at 211. We

noted that the effect of the separation of insureds clause on a particular exclusion

in an insurance contract depends on the terms of that exclusion. Id. at 214

(citing Petticrew v. ABB Lummus Global, Inc., 53 F. Supp. 2d 864, 871 (E. D. La.

1999)). “If the exclusion clause uses the term ‘the insured,’ application of the

separation of insureds clause requires that the term be interpreted as referring only

to   the   insured   against    whom     a       claim   is   being   made   under    the

policy.” Id. (citing Commercial Standard Ins. Co., 455 S.W.2d at 721). However,

we further explained that if “the exclusion clause uses the term ‘any insured,’ then

application of the separation of insureds clause has no effect on the exclusion

clause; a claim made against any insured is excluded.” Id. (citing Petticrew, 53 F.

Supp. 2d at 871; Michael Carbone, Inc. v. General Acc. Ins. Co., 937 F. Supp. 413,

420 (E. D. Pa. 1996)). In so holding, this Court stated as follows:

      To hold that the term “any insured” in an exclusion clause means “the
      insured making the claim” would collapse the distinction between the

1
      The policy in Maxey excluded coverage for “‘Bodily injury’ or ‘property damage’
      arising out of the ownership . . .of any . . . ‘auto’ . . . owned or operated by or
      rented or loaned to any insured.” 110 S.W.3d at 209 (emphasis added).
                                             8
      terms “the insured” and “any insured” in an insurance policy
      exclusion clause, making the distinction meaningless. It would also
      alter the plain language of the clause, frustrating the reasonable
      expectations of the parties when contracting for insurance. We should
      not adopt an unreasonable construction of an insurance contract.

      Moreover, construing the term “any” the same as the word “the” in an
      exclusion clause when an insurance policy contains a separation of
      insureds or severability of interests clause would require a tortured
      reading of the terms of the policy.

Id. (citations omitted).

      DJ argues that Maxey does not apply because the policy at issue in this case

excludes coverage for “an insured,” not “any insured.” Essentially, DJ argues that

the policy excludes bodily injury coverage only for the insured making the claim.

We disagree for two reasons.

      First, as noted by this Court in Maxey, the terms are “an” and “any” are

interchangeable when used in this context. See Maxey, 110 S.W.3d at 214 (“Here,

nothing in the CGL policy indicates that ‘any insured’ is be construed in the text of

the policy differently from the way ‘an insured’ is defined in the declarations;

therefore, we find that they should be construed the same.”). As stated in Maxey,

the effect of the separation of insureds clause on a particular exclusion in an

insurance contract depends on the terms of that exclusion. Id. at 214. The majority

of cases addressing the issue have held that severability clauses affect

interpretation of policy exclusions using the term “the insured” (by modifying that

term to mean “the insured claiming coverage”), but have no effect on the
                                         9
interpretation of exclusions using the term “an insured” or “any insured.” See,

e.g., Ooida Risk Retention Group, Inc. v. Williams, 579 F.3d 469, 472–73 (5th Cir.

2009) (separation of insureds provision operates to give “effect to the separate

coverage promised each insured by using the term ‘the insured’ to refer to the

particular insured seeking coverage”); Ohio Cas. Inc. Co. v. Holcim (US), 744 F.

Supp. 2d 1251, 1271–73 (S.D. Ala. 2010) (holding severability clause has no effect

on the interpretation of exclusions using the term “an insured” or “any insured”);

Starwood Hotels & Resorts Worldwide, Inc. v. Century Sur. Co., No. H-06-

12102007, 2007 WL 1644041, at *8 (S.D. Tex. June 5, 2007) (“If, however, the

exclusion clause uses the term ‘any insured,’ then application of the separation of

insureds clause has no effect on the exclusion clause; a claim made against any

insured is excluded.”) (citations omitted); Evanston Ins. Co. v. OEA, Inc., No.

CIV02-1505DFL PAN, 2005 WL 1828796, at *8 (E.D. Cal. July 25, 2005) (“The

history of this clause makes clear that the ‘separation of insureds’ clause only

affects exclusionary clauses referring to ‘the insured,’ not ‘any insured.’”);

Michael Carbone, Inc. v. Gen. Acc. Ins. Co., 937 F. Supp. 413, 419–20 (E. D. Pa.

1996) (determining that separation of insured clause alters meaning of exclusion

only if exclusion uses phrase “the insured,” and does not alter meaning of

exclusion using phrase “any insured”); Paylor v. First Mountain Mortg. Corp., No.

278076, 2008 WL 4605304, at *7 (Mich. Ct. App. Oct. 9, 2008) (stating that

                                        10
separation of insureds provision does not affect exclusions using phrase “any

insured” rather than “the insured”); Travelers Indem. Co. v. Bloomington Steel &

Supply Co., 718 N.W.2d 888, 894–95 (Minn. 2006) (separation of insureds clause

“requires that coverage exclusions be construed only with reference to the

particular insured seeking coverage,” such that insurer can make exclusions

unambiguous by wording them to exclude coverage for “an” or “any” insured

rather than “the” insured); Am. Motorists Ins. Co. v. Moore, 970 S.W.2d 876, 880–

81 (Mo. Ct. App. 1998) (holding that use of phrase “an insured” made exclusion

unambiguous even in light of severability clause); Co-operative Ins. Cos. v.

Woodward, 45 A.3d 89, 95 (Vt. 2012) (holding severability clause “cannot

override” an “an insured” exclusion); Mutual of Enumclaw Ins. Co. v. Cross, 10
P.3d 440, 444 (Wash. Ct. App. 2000) (holding that use of phrase “an insured”

made exclusion unambiguous even in light of severability clause); J.G. v.

Wangard, 753 N.W.2d 475, 487 (Wis. 2008) (citing with approval authorities for

the proposition that an exclusion concerning “any insured” is “unambiguous, even

when read in context with the severability clause in the policy”).

      We find no basis to distinguish Maxey simply because the policy excludes

coverage for “an insured,” rather than “any insured.” The language of the policy

does not limit the exclusion of personal injury coverage to simply the person

                                         11
making the claim, but also excludes bodily injury coverage to the named insured

and all his relatives residing in his home with him.2

      The second reason we find DJ’s argument unpersuasive is that it completely

overlooks the fact that the policy excludes coverage for bodily injury to “you,” and

that “you” is contractually defined as Mr. Hodges.

      In Starwood Hotels and Resorts Worldwide, Inc. v. Century Surety

Company, No. H-06-1210, 2007 WL 1644041 (S.D. Tex. June 5, 2007), the court

considered an exclusion for bodily injury to an employee of the “named insured.”

Id. at *6. An additional insured contended that it was entitled to coverage when an

employee of the named insured made a claim against it, arguing that because the

policy had a severability clause, the term “the named insured” in the exclusion

must be read as “the insured against whom claim is made or suit is brought.” Id.

The court disagreed, and, following Maxey, held that nothing in the policy

indicated that the term ‘the named insured’ in the exclusion was to be construed as

the “‘insured against whom claim is made or ‘suit’ is brought.” Id. at *8. Because

2
      As such, this case is distinguishable from State Farm Fire & Cas. Ins. Co. v.
      Keegan, which, interpreting the same policy provisions, held that claims by a
      granddaughter against her grandfather, the named insured, were not excluded
      because the grandfather had moved out of the insured home so that the
      granddaughter no longer lived in his household. 209 F.3d 767, 769 (5th Cir.
      2000). This was true even though the granddaughter resided with grandmother,
      who was another named insured. Id. at 770. Here, it is undisputed that Mr.
      Hodges and DJ resided together in the same household.
                                          12
the injured employee was an employee of the named insured, the policy excluded

coverage even when the party seeking coverage was the additional insured. Id.

      The same is true here. The policy excludes coverage for “you,” which is

contractually defined as Mr. Hodges. Nothing in the policy indicates that “you” is

to be interpreted in any other way. The severability clause cannot alter this clearly

defined provision in the exclusion, even when viewed from DJ’s standpoint.

      Accordingly, we conclude that the trial court did not err when it denied DJ’s

motion for summary judgment and granted SAFECO’s.

                                 CONCLUSION

      We affirm the trial court’s judgment.

                                              Sherry Radack
                                              Chief Justice

Panel consists of Chief Justice Radack and Justices Massengale and Huddle.

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