Court Opinion

ID: 7797155
Source: CourtListenerOpinion
Date Created: 2022-08-02 18:00:20.945061+00
Date Added: 2024-06-11T16:28:35.039716
License: Public Domain

Case: 21-20595      Document: 00516415506         Page: 1     Date Filed: 08/02/2022

              United States Court of Appeals
                   for the Fifth Circuit                              United States Court of Appeals
                                                                               Fifth Circuit

                                                                             FILED
                                                                        August 2, 2022
                                   No. 21-20595                         Lyle W. Cayce
                                                                             Clerk

   Scottsdale Insurance Company,

                                                              Plaintiff—Appellee,

                                       versus

   Discovering Me Academy, L.L.C.; Tanisha Butler,

                                                         Defendants—Appellants.

                   Appeal from the United States District Court
                       for the Southern District of Texas
                            USDC No. 4:20-CV-2449

   Before Richman, Chief Judge, and Wiener and Willett, Circuit
   Judges.
   Per Curiam:*
          This case arises from an insurance dispute over defense and indemnity
   obligations for a child’s accidental death when he was left on a bus by a school
   employee. The district court found that an automobile exclusion in the policy
   precluded coverage. We AFFIRM.

          *
            Pursuant to 5th Circuit Rule 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   opinion should not be published and is not precedent except under the limited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 Circuit Rule 47.5.4.
Case: 21-20595            Document: 00516415506             Page: 2      Date Filed: 08/02/2022

                                            No. 21-20595

            This tragedy began when three-year-old R.P. attended a field trip with
   his classmates. A caretaker checked R.P. off the list for having exited the
   school bus. When a teacher noticed that R.P. was missing, a classmate
   reported that he had left the field trip with his parents. Later, when his parent
   arrived to pick him up from school, R.P. was not in the building. He was
   eventually found dead from heat exhaustion on the floor of the school bus.
            Plaintiff-Appellee Scottsdale Insurance Company (“Scottsdale”)
   insured         Defendant-Appellant          Discovering       Me      Academy,        LLC
   (“Discovering Me”). Scottsdale filed this suit to determine its obligation, if
   any, to defend and indemnify Discovering Me and its manager, Tanisha
   Butler, the other Defendant-Appellant. The district court granted
   Scottsdale’s motion for summary judgment, holding that the policy’s
   automobile exclusion applied so that Scottsdale had no obligation to defend
   or indemnify the Defendants-Appellants.
            We review summary judgments de novo. 1 Summary judgment is
   appropriate “if the movant shows that there is no genuine dispute as to any
   material fact and the movant is entitled to judgment as a matter of law.” 2
   Under Texas law, insurance policies are interpreted under the general
   guiding canons of contract interpretation. 3 The primary goal “is to effectuate
   the parties’ intent as expressed in the contract.” 4

            1
                Capio Funding, L.L.C. v. Rural/Metro Operating Co., 35 F.4th 353, 356 (5th Cir.
   2022).
            2
                Fed. R. Civ. P. 56(a).
            3
                Monroe Guar. Ins. Co. v. BITCO Gen. Ins. Corp., 640 S.W.3d 195, 198 (Tex. 2022).
            4
                Id. at 198-99.

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Case: 21-20595                Document: 00516415506         Page: 3      Date Filed: 08/02/2022

                                            No. 21-20595

            To determine whether an insurer has a duty to defend, we apply the
   eight corners rule. 5 That rule refers to two documents: (1) the operative
   pleading and (2) the insurance policy. 6 We compare the two documents
   “without regard to the truth or falsity of those allegations and without
   reference to facts otherwise known or ultimately proven.” 7 “[T]he insurer is
   entitled to rely on the plaintiff’s allegations in determining whether the facts
   are within the coverage. If the petition only alleges facts excluded by the
   policy, the insurer is not required to defend.” 8 Any doubt about the duty to
   defend is resolved in favor of the insured. 9
            Discovering Me had a commercial general liability policy with
   Scottsdale, and the school paid an additional premium for sexual and/or
   physical-abuse liability coverage. That form specifies that Scottsdale will pay
   damages “arising out of sexual and/ or physical abuse, caused by one of your
   employees, or arising out of your failure to properly supervise.” “Sexual
   and/ or physical abuse” is defined as “sexual or physical injury or abuse,
   including assault and battery, negligent or deliberate touching.”
            Defendants-Appellants do not contest “whether injuries arose out of
   the use of an auto.” Instead, they contend that the policy’s sexual and
   physical-abuse liability coverages do not include an auto exclusion. They

            5
                Id. at 199.
            6
             Nat’l Union Fire Ins. Co. of Pittsburgh v. Merchs. Fast Motor Lines, Inc., 939 S.W.2d
   139, 141 (Tex. 1997) (per curiam).
            7
                Monroe Guar., 640 S.W.3d at 199.
            8
                Fidelity & Guar. Ins. Underwriters, Inc. v. McManus, 633 S.W.2d 787, 788 (Tex.
   1982).
            9
                Ewing Constr. Co. v. Amerisure Ins. Co., 420 S.W.3d 30, 33 (Tex. 2014).

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Case: 21-20595          Document: 00516415506             Page: 4      Date Filed: 08/02/2022

                                          No. 21-20595

   focus on the use of the phrase “physical injury” in the definition of sexual
   and/or physical abuse, which they insist would trigger coverage.
          Even assuming without deciding that the sexual and/or physical injury
   or abuse liability coverage includes R.P.’s accidental death, the automobile
   exclusion is incorporated into the form. The sexual and/or physical abuse
   provision states that “[c]overage is subject to this coverage form and the
   exclusions, conditions and other terms of this policy.” The policy included
   an automobile exclusion for “‘[b]odily injury’ . . . arising out of the
   ownership, maintenance, use or entrustment to others of any aircraft, ‘auto’
   or watercraft owned or operated by or rented or loaned to any insured.”
          Again, Defendants-Appellants do not contest that the automobile
   exclusion applies to the facts in this case. Instead, they contend that the
   exclusion does not apply to the policy’s coverage of sexual and/or physical
   abuse-liability. However, that form states that “[c]overage is subject to this
   coverage form and the exclusions, conditions and other terms of this policy.”
          “[I]t has again long been the rule that we must read all parts of a policy
   together, giving meaning to every sentence, clause, and word to avoid
   rendering any portion inoperative.” 10 The use of the word “and” here clearly
   incorporates those exclusions in the policy as a whole into the particular form.
   The coverage of sexual and/or physical-abuse liability is limited by both the
   form itself and the exclusions, conditions, and other terms of the policy.
          Defendants-Appellants point to what they contend is a more generous
   interpretation of the phrase “subject to” from a 2006 Texas Court of
   Appeals case. 11 But even that case defines the phrase “subject to” as

          10
               Fiess v. State Farm Lloyds, 202 S.W.3d 744, 748 (Tex. 2006).
          11
               Glob. Aerospace v. Pinson, 208 S.W.3d 687 (Tex. App. 2006).

                                                4
Case: 21-20595          Document: 00516415506               Page: 5       Date Filed: 08/02/2022

                                            No. 21-20595

   “connot[ing] ‘subordinate to,’ ‘subservient to’ or ‘limited by.’” 12 Here, the
   sexual and/or physical abuse coverage is limited by the exclusions of the
   policy. The district court was correct to apply the exclusion and deny
   coverage.
          AFFIRMED.

          12
               Id. at 692 (quoting Cockrell v. Tex. Gulf Sulphur Co., 299 S.W.2d 672 (Tex. 1956)).

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