Court Opinion

ID: 4015224
Source: CourtListenerOpinion
Date Created: 2016-07-13 11:10:09.238407+00
Date Added: 2024-06-11T07:44:54.011510
License: Public Domain

Opinion issued July 12, 2016

                                      In The

                               Court of Appeals
                                     For The

                          First District of Texas
                            ————————————
                               NO. 01-15-00152-CV
                           ———————————
                  DONALD B. MULLINS AND BLUE SKY
                   RIGHT OF WAY, L.L.C., Appellants
                                        V.
                     MARTINEZ R.O.W., LLC F/K/A
                   MARTINEZ INVESTMENTS, Appellee

                   On Appeal from the 149th District Court
                           Brazoria County, Texas
                       Trial Court Case No. 79750-CV

                                  OPINION

      In this appeal from the trial court’s summary judgment in an indemnity dispute

between two jobsite contractors, we decide whether a certificate of insurance

verifying coverage evidences the policyholder’s written agreement to indemnify the
bearer of the certificate, as the Texas Labor Code requires for an indemnity to be

enforceable in these circumstances. We agree with the trial court that it does not and

therefore affirm.

                                 BACKGROUND

      Donald Mullins owns Blue Sky Right of Way, L.L.C. In the summer of 2010,

Blue Sky acquired a contract to clear land and trim trees along a right of way in

Brazoria County. Blue Sky in turn orally subcontracted with Martinez R.O.W.

L.L.C. to secure labor to perform brush-clearing and other work on the ground while

Blue Sky performed the aerial tree trimming. This oral agreement was made

between the companies’ respective owners, Mullins and Jesse Martinez.

      Martinez R.O.W. was insured under a Texas workers’ compensation policy

and also carried general liability insurance. Prior to performing the work, Martinez

R.O.W. provided Blue Sky with a “Certificate of Liability Insurance,” which

verified that Martinez R.O.W. carried insurance, and noted the names of three

insurers “affording coverage” to Martinez R.O.W.

      While working on the clearing project, Bonifacio Gomez, an employee of

Martinez R.O.W., sustained personal injuries when an overhead tree limb fell on

him. He sued Mullins individually for negligence, as well as two other contractors

who were later dismissed from the suit, but not before one of the contractors had

designated Martinez R.O.W. as a responsible third party.

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      Mullins then brought a third-party action against Martinez R.O.W., seeking

indemnity for the claims that Gomez has asserted against Mullins arising as a result

of the services Blue Sky performed at the jobsite, including the supervision of its

employees.

      Martinez R.O.W. moved for summary judgment against Mullins’s indemnity

claim, contending that (1) no evidence raised a fact issue that a written agreement of

indemnity, as required under section 417.004 of the Texas Labor Code, existed

between Blue Sky and Martinez R.O.W. before Gomez’s injury occurred; and

(2) because no written agreement existed, Martinez R.O.W. had no duty to

indemnify Blue Sky as a matter of law. The trial court granted summary judgment.

The trial court then denied Mullins and Blue Sky’s post-ruling motions to amend

their petition against Martinez R.O.W. to plead a claim that Martinez R.O.W. owed

Blue Sky and Mullins indemnity because Martinez R.O.W. had committed gross

negligence; to supplement the summary-judgment record; and for a new trial. The

trial court severed the summary-judgment indemnity proceedings from the

underlying personal injury claims, making it a final summary judgment.

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                                  DISCUSSION

I.    Indemnity under the Texas Labor Code

      Mullins and Blue Sky contend on appeal that the trial court erred in granting

summary judgment because they adduced evidence of a written agreement between

the parties, in which Martinez R.O.W. assumed liability for any suit brought by one

of its workers against either Mullins or Blue Sky.

      A.     Standard of Review

      We review de novo the trial court’s ruling on a motion for summary judgment.

Samuel v. Fed. Home Loan Mortg. Corp., 434 S.W.3d 230, 233 (Tex. App.—

Houston [1st Dist.] 2014, no pet.) (citing Mann Frankfort Stein & Lipp Advisors,

Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009)). We consider the summary-

judgment evidence in the light most favorable to the nonmovant. Fielding, 289
S.W.3d at 848. We indulge every reasonable inference in the nonmovant’s favor.

Samuel, 434 S.W.3d at 233 (first citing Valence Operating Co. v. Dorsett, 164
S.W.3d 656, 661 (Tex. 2005); and then citing Provident Life & Accid. Ins. Co. v.

Knott, 128 S.W.3d 211, 215 (Tex. 2003)).

      After an adequate time for discovery, a party may move for a no-evidence

summary judgment on the ground that no evidence exists of one or more essential

elements of a claim or defense on which the adverse party bears the burden of proof

at trial. Tejada v. Gernale, 363 S.W.3d 699, 704 (Tex. App.—Houston [1st Dist.]

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2011, no pet.) (citing TEX. R. CIV. P. 166a(i)). The trial court must grant the motion

unless the nonmovant presents more than a scintilla of evidence to raise a genuine

issue of material fact on each element specified in the motion. Id.; see Merrell Dow

Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997) (“More than a scintilla

of evidence exists when the evidence supporting the finding, as a whole, ‘rises to a

level that would enable reasonable and fair-minded people to differ in their

conclusions.’”) (quoting Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499

(Tex. 1995)).

      B.     Analysis

      Section 417.004 of the Texas Labor Code governs indemnity agreements

when the employee of a covered ‘workers’ compensation employer sues for injuries

sustained on the job. It provides:

      In an action for damages brought by an injured employee . . . against a
      third party liable to pay damages for the injury . . . under this chapter
      that results in a judgment against the third party or a settlement by the
      third party, the employer is not liable to the third party for
      reimbursement or damages based on the judgment or settlement unless
      the employer executed, before the injury . . . occurred, a written
      agreement with the third party to assume the liability.

TEX. LAB. CODE ANN. § 417.004 (West 2015).

      Mullins and Blue Sky do not dispute that Martinez R.O.W. is a workers’

compensation subscriber and that Section 417.004 applies. Thus, to prevail on their

claim seeking indemnification, Mullins and Blue Sky must prove that a written

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contract of indemnity exists in which Martinez R.O.W. assumed liability for

reimbursement or damages arising out of any judgment or settlement in the

underlying personal injury case.

            1. Existence of written contract

      The normal rules of contract construction apply to written indemnity

agreements. Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 423 (Tex. 2000).

Like other contracts, a written indemnity agreement may consist of more than one

document. See In re Lisa Laser USA, Inc., 310 S.W.3d 880, 885 (Tex. 2010)

(quoting In re Laibe Corp., 307 S.W.3d 314, 317 (Tex. 2010)).

      Mullins admitted in his deposition that he and Martinez R.O.W. had no written

contract:

      Q. You would agree with me that written contracts in your business,
         like the one that you’ve signed here [with Southern Brush SW, Inc.],
         are a good business practice because it outlines what everybody’s
         duties are?
      A. Yes, sir.
      Q. And you did not do that with Martinez?
      A. I did not.
      Q. Could have?
      A. Could have.
      Q. But you chose not to?
      A. Yes, sir.

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Mullins and Blue Sky nevertheless point to the certificate of liability insurance

furnished by Martinez R.O.W. and the underlying commercial general liability

policy it references as evidence raising a fact issue on the existence of an indemnity

agreement. The certificate, however, merely verifies that Martinez R.O.W. carries

insurance; it does not purport to confer a right of indemnity to the certificate holder.

It states: “This is to certify that the policies of insurance listed below have been

issued to the insured named above [Martinez R.O.W.] for the policy period . . . .” It

further disclaims that it is any evidence of an agreement with the certificate holder:

      This certificate is issued as a matter of information only and confers no
      rights upon the certificate holder [Blue Sky]. This certificate does not
      affirmatively or negatively amend, extend or alter the coverage
      afforded by the policies below. This certificate of insurance does not
      constitute a contract between the issuing insurers, authorized
      representative or producer, and the certificate holder.
Because the certificate does not purport to memorialize any indemnity obligation

with the certificate holder, it cannot be evidence of an indemnity agreement between

Blue Sky and Martinez R.O.W.

      Turning to the policies of insurance that are part of the summary-judgment

record, Mullins and Blue Sky refer to provisions insuring Martinez R.O.W. against

damages for bodily injury claims, and defining coverage for contractual

indemnification. But these provisions do not identify Mullins or Blue Sky. They

apply to an “insured,” a designation which, in this policy, belongs to Martinez

R.O.W., its members when acting as Martinez R.O.W.’s agents, and its managers.

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Neither Mullins nor Blue Sky is identified as a named insured anywhere in the

policy. As a result, the policy does not afford coverage to Mullins or Blue Sky in

Gomez’s lawsuit against them; nor does it evidence an agreement that Martinez

R.O.W. would indemnify them.

      Mullins and Blue Sky further claim that written evidence that Blue Sky

performed work pursuant to the parties’ oral agreement and was later paid for that

work sufficiently demonstrates the existence of an agreement to indemnify. Mullins

and Blue Sky presumably refer to the exception to the statute of frauds under which

a parol agreement otherwise subject to the requirement that it be in writing may be

enforced in equity if denial of enforcement would amount to a virtual fraud. See

Sewing v. Bowman, 371 S.W.3d 321, 346–47 (Tex. App.—Houston [1st Dist.] 2012,

pet. dism’d) (quoting Exxon Corp. v. Breezevale Ltd., 82 S.W.3d 429, 439 (Tex.

App.—Dallas 2002, pet. denied)). Chapter 417 of the Labor Code, however, has no

exception based on fraud, and we decline any invitation to read a common-law

exception into the statutory scheme. Because Martinez R.O.W. is a subscriber under

the workers’ compensation statute, its employees are prohibited from seeking

common-law remedies against it for personal injuries sustained in the course and

scope of employment. See HCBeck, Ltd. v. Rice, 384 S.W.3d 349, 356 (Tex. 2009)

(quoting Wingfoot Enters. v. Alvarado, 111 S.W.3d 134, 142 (Tex. 2003)).

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             2. Gross negligence

      The Texas Labor Code creates an exception from that prohibition for certain

claims against a subscribing employer based on gross negligence. See TEX. LABOR

CODE ANN. § 408.001 (West 2015). Mullins and Blue Sky contend that the gross

negligence exception should be extended, in circumstances like those present here,

to allow a third party to seek contribution or indemnity from the employer.

      Martinez R.O.W. relies on Fairfield Insurance Co. v. Stephens Martin Paving,

L.P., 246 S.W.3d 653 (Tex. 2008), in contending that the gross negligence exception

should apply here.   In that case, the Supreme Court of Texas answered a certified

question from the Fifth Circuit asking whether Texas public policy prohibited a

liability insurance provider from indemnifying an award for punitive damages on its

insured because of gross negligence. Id. at 654 (citing Fairfield Ins. Co. v. Stephens

Martin Paving, LP, 381 F.3d 435, 437 (5th Cir. 2004)). The Supreme Court

concluded that such coverage was not against public policy and indemnification was

available under the Fairfield policy for the punitive damages award. Id. at 670.

       Fairfield is inapposite to the circumstances in this case. Gomez’s petition

does not allege a gross negligence claim against Martinez R.O.W. And, even if it

did, the Labor Code does not exempt a third party from the requirement that any

indemnification agreement be in writing to be enforceable against a subscribing

employer. By requiring that indemnity agreements between employers and third

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parties be made in writing, the Legislature took care to ensure that an employer

evinced an intent to assume that additional responsibility. We decline to expand the

carefully drawn statutory scheme to create a new source of employer liability.

             3. Responsible third party designation

      Mullins and Blue Sky also invoke Chapter 33 of the Texas Civil Practice and

Remedies Code in support of their gross negligence argument, contending that, as a

“responsible third party,” Martinez R.O.W. can be held liable in gross negligence as

“a defendant against whom a judgment can be entered for at least a portion of the

damages awarded to the claimant.” See TEX. CIV. PRAC. & REM. CODE ANN.

§ 33.011 (West 2015).     Based on that designation, Mullins and Blue Sky claim,

Martinez R.O.W. can be required to indemnify Mullins and Blue Sky to the extent

of Martinez R.O.W.’s proportionate responsibility for injuries to Gomez that were

caused by Martinez’s gross negligence. We disagree.

      Chapter 33 defines a “responsible third party” as “any person who is alleged

to have caused or contributed to causing in any way the harm for which recovery of

damages is sought, whether by negligent act or omission, by any defective or

unreasonably dangerous product, by other conduct or activity that violates an

applicable legal standard, or by any combination of these.” TEX. CIV. PRAC. & REM.

CODE ANN. § 33.011(6) (emphasis added). The mere designation of a person as a

responsible third party does not impose liability on that person, nor does it provide

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a basis for imposing liability on that person in another proceeding. Id. § 33.004(i);

City of El Paso v. Collins, 440 S.W.3d 879, 882 (Tex. App.—El Paso 2013, no pet.).

As a result, the designation of Martinez R.O.W. as a responsible third party in

Gomez’s suit does not provide a basis for imposing on it a duty to indemnify Mullins

and Blue Sky.

II.   Post Summary-Judgment Rulings
      The abuse-of-discretion standard applies to our review of a motion to

reconsider a prior summary judgment based on new evidence, Macy v. Waste Mgmt.,

Inc., 294 S.W.3d 638, 651 (Tex. App.—Houston [1st Dist.] 2009, no pet.); the denial

of a motion for continuance, BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d
789, 800 (Tex. 2002); the denial of a motion for leave to amend pleadings, see

Tex-Air Helicopters, Inc. v. Galveston Cty. Appraisal Rev. Bd., 76 S.W.3d 575,

581 (Tex. App.—Houston [14th Dist.] 2002, pet. denied); and the denial of a motion

for new trial, In re R.R., 209 S.W.3d 112, 114 (Tex. 2006). A trial court abuses its

discretion only when it makes a decision without reference to any guiding rules or

principles. Garcia v. Martinez, 988 S.W.2d 219, 222 (Tex. 1999). Further, we may

not reverse a lower court’s judgment unless we conclude that the complained-of

error probably caused the rendition of an improper judgment or probably prevented

the appellant from properly presenting the case on appeal. TEX. R. APP. P. 44.1(a).

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      The proposed amended pleadings, the proposed supplemental evidence, and

the arguments made in the post-summary-judgment briefing do not contain any new

material facts or raise any issues beyond those we have considered in determining

the merit of the trial court’s summary judgment. Accordingly, we hold that Mullins

and Blue Sky have not shown that the trial court reversibly erred in refusing these

various requests.

                                 CONCLUSION

      We hold that a certificate of insurance verifying the existence of liability

coverage does not evidence an agreement to indemnify the certificate holder for

claims brought by an insured’s employee against the holder. We further hold that

Mullins and Blue Sky fail to raise a genuine issue of material fact based on any of

the other asserted grounds for indemnification. Accordingly, we affirm the summary

judgment of the trial court.

                               Jane Bland
                               Justice

Panel consists of Justices Bland, Brown, and Lloyd.

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