Court Opinion

ID: 2681199
Source: CourtListenerOpinion
Date Created: 2014-06-28 05:00:27.743927+00
Date Added: 2024-06-11T12:12:59.209399
License: Public Domain

Case: 11-10166   Document: 00512679295    Page: 1   Date Filed: 06/27/2014

        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                            United States Court of Appeals
                                                                     Fifth Circuit

                                                                 FILED
                                No. 11-10166                    June 27, 2014

                                                                Lyle W. Cayce
                                                                     Clerk
DOUG CROWNOVER and KAREN CROWNOVER,

                                          Plaintiffs - Appellants
v.

MID-CONTINENT CASUALTY COMPANY,

                                          Defendant - Appellee

                Appeals from the United States District Court
                     for the Northern District of Texas

Before KING, BENAVIDES, and DENNIS, Circuit Judges.
JAMES L. DENNIS, Circuit Judge:
      The question in this diversity case is whether an insurance company, Mid-
Continent Casualty Co. (“Mid-Continent”), is obligated under Texas law to pay
for damage caused by one of its insureds, Arrow Development, Inc. (“Arrow”),
when Arrow failed to promptly correct work in the home that it had constructed
for Doug and Karen Crownover and which failed to conform to the requirements
of the construction contract into which Arrow and the Crownovers had entered.
An arbitrator had earlier found Arrow liable to the Crownovers for breaching
this express warranty to repair and awarded them damages. Because Arrow
filed for bankruptcy, however, the Crownovers are limited to recovering what
they can from Arrow’s insurance policies. They therefore sued Mid-Continent
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in federal court for the damages owed to them by Arrow, and both parties moved
for summary judgment. The district court granted summary judgment for Mid-
Continent.
      We conclude that, consistent with Texas law and considering the Texas
Supreme Court’s decisions in Gilbert Texas Construction, L.P. v. Underwriters
at Lloyd’s London, 327 S.W.3d 118 (Tex. 2010), and Ewing Construction Co. v.
Amerisure Insurance Co., 420 S.W.3d 30 (Tex. 2014), Mid-Continent has
demonstrated that an exclusion from coverage applies and that the Crownovers
have failed to show that an exception to that exclusion applies. We also conclude
that the district court committed no error in granting summary judgment to
Mid-Continent. Accordingly, we AFFIRM.
                               BACKGROUND
                                       I.
      In October 2001, the Crownovers entered into a construction contract with
Arrow to construct a home on their land in Sunnyvale, Texas. The contract
contained a warranty-to-repair clause, which in paragraph 23.1 provided that
Arrow would “promptly correct work . . . failing to conform to the requirements
of the Contract Documents.” The work was completed in November 2002, but
by early 2003, cracks began to appear in the walls and foundation of the
Crownovers’ home. Additional problems with the heating, ventilation, and air
conditioning (“HVAC”) system caused leaking in exterior lines and air ducts
inside the Crownovers’ home. To compensate for defects in the HVAC system,
the system’s mechanical units ran continuously in order to heat or cool the
house. In all, the Crownovers paid several hundred thousand dollars to fix the
problems with the foundation and HVAC system.
                                       II.
      The Crownovers attempted to have Arrow correct the problems and
eventually sought legal relief. Their demand letters were forwarded to Mid-
Continent, but to no avail.    The Crownovers then initiated an arbitration

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proceeding against Arrow. The arbitrator determined that the Crownovers had
a meritorious claim for breach of the express warranty to repair contained in
paragraph 23.1 of their contract with Arrow, which was not barred by the
statute of limitations.    Because the arbitrator awarded damages to the
Crownovers on that ground, she declined to decide whether the Crownovers’
other claims were barred by a statute of limitations.
      Arrow later filed for bankruptcy. In June 2009, the bankruptcy court
lifted the automatic stay but limited the Crownovers’ recovery to any amount
they could recover from an applicable insurance policy. (To date, Arrow has not
paid the Crownovers any money.) In July 2009, the Crownovers sent a letter to
Mid-Continent, demanding that the insurance company pay the arbitration
award. Mid-Continent denied their demand in August 2009, citing several
insurance policy defenses and exclusions.
      The Crownovers then sued Mid-Continent for breach of contract. Both
parties moved for summary judgment. Ultimately, the district court granted
Mid-Continent’s motion and denied the Crownovers’ motion. In its opinion, the
district court examined an “Insuring Agreement,” a provision that appeared (in
exactly the same form) in a series of comprehensive general liability (“CGL”)
policies, by which Mid-Continent insured Arrow, from August 2001 through
2008. The district court concluded that the Insuring Agreement covered Arrow
while it constructed the Crownovers’ home. The Insuring Agreement states that
Mid-Continent “will pay those sums that [Arrow] becomes legally obligated to
pay as damages because of . . . ‘property damage’ to which this insurance
applies.”
      Several exclusions apply to this general coverage provision, however. The
district court concluded that one of them, the contractual-liability exclusion,
applied in the instant case, such that Mid-Continent was not obligated to
indemnify Arrow for the damages it owed the Crownovers. This exclusion states
that “[t]his insurance does not apply to[] ‘property damage’ for which the insured

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is obligated to pay damages by reason of the assumption of liability in a contract
or agreement.” There is, however, an exception to this exclusion, for “liability
. . . [t]hat the insured would have in the absence of the contract or agreement.”
The district court noted that the arbitration award to the Crownovers was based
only on Arrow’s breach of the express warranty to repair contained in paragraph
23.1; the arbitrator explicitly declined to decide whether Arrow was liable to the
Crownovers on any other ground. Thus, the district court held that because
Arrow “became legally obligated to pay the arbitration damages on the basis of
[its] contractually assumed liability,” the contractual-liability exclusion applied
with no applicable exception to the exclusion.
      The Crownovers had argued that the district court should consider
whether Arrow would have been liable in the absence of the express warranty
to repair. Specifically, they had contended that the “implied warranty of good
workmanship” continued to apply to the contract they had with Arrow because
the contract contained no express disclaimer of such a warranty. The district
court declined to adopt this argument, however. First, it noted that under
Gilbert, it was confined to the actual facts of the case and could not consider
hypothetical scenarios. Second, the district court reasoned that when a contract
contains an express warranty of good workmanship, that warranty supersedes
any implied warranty of the same.
      The Crownovers subsequently filed motions for a new trial, to amend or
modify the judgment, and for relief from the judgment, arguing that the district
court had erred in ruling on implied warranties, a ground that had not been
raised in Mid-Continent’s motion for summary judgment. They further argued
that no such waiver or disclaimer exists under Texas law. The district court
denied their motions, finding that the Crownovers had raised the implied
warranty issue in their briefing and that Mid-Continent was thus allowed to
respond to their argument in its sur-reply. The district court also adhered to its

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earlier reasoning that the express warranty of good workmanship superseded
any implied warranty of the same. The Crownovers timely appealed.
                          STANDARD OF REVIEW
      “[We] appl[y] a de novo standard of review when determining whether a
district court erred in granting summary judgment.” LaBarge Pipe & Steel Co.
v. First Bank, 550 F.3d 442, 449 (5th Cir. 2008). Summary judgment should be
granted “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.” FED. R. CIV. P.
56(a). “A genuine issue of material fact exists when the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Gates v. Tex.
Dep’t of Protective & Regulatory Servs., 537 F.3d 404, 417 (5th Cir. 2008).
“[S]ubstantive law will identify which facts are material.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). “When, as here, jurisdiction is based on
diversity, we apply the substantive law of the forum state.” Holt v. State Farm
Fire & Cas. Co., 627 F.3d 188, 191 (5th Cir. 2010). Thus, in this case, Texas law
determines which facts are material.
                                 DISCUSSION
      In light of the Texas Supreme Court’s controlling analysis in Gilbert, and
further explication in Ewing, we conclude that Mid-Continent has demonstrated
that an exclusion to coverage applies and that the Crownovers have failed to
show that an exception to that exclusion applies. We also conclude that the
district court committed no error in granting summary judgment for Mid-
Continent.
                                        I.
      Under Texas law, “the insured has the [initial] burden of establishing
coverage under the terms of the policy.” Gilbert, 327 S.W.3d at 124 (citing Ulico
Cas. Co. v. Allied Pilots Ass’n, 262 S.W.3d 773, 782 (Tex. 2008)). “If the insured
proves coverage, then to avoid liability the insurer must prove the loss is within
an exclusion.” Id. (citing Ulico Cas. Co., 262 S.W.3d at 782). “If the insurer

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proves that an exclusion applies, the burden shifts back to the insured to show
that an exception to the exclusion brings the claim back within coverage.” Id.
(citing Comsys Info. Tech. Servs., Inc. v. Twin City Fire Ins. Co., 130 S.W.3d 181,
193 (Tex. Ct. App. 2003)).
      “The principles [Texas] courts use when interpreting an insurance policy
are well established.” Id. at 126.
      Those principles include construing the policy according to general
      rules of contract construction to ascertain the parties’ intent. First,
      we look at the language of the policy because we presume parties
      intend what the words of their contract say. We examine the entire
      agreement and seek to harmonize and give effect to all provisions so
      that none will be meaningless. The policy’s terms are given their
      ordinary and generally-accepted meaning unless the policy shows
      the words were meant in a technical or different sense. Courts
      strive to honor the parties’ agreement and not remake their contract
      by reading additional provisions into it.
Id. (citations omitted).
                                        II.
                                        A.
      In Gilbert, the Texas Supreme Court addressed a contractual-liability
exclusion and an exception to that exclusion identical to those here. The insured
party was Gilbert Texas Construction (“Gilbert”), which contracted with the
Dallas Area Rapid Transit Authority (“DART”) to build a light rail system. Id.
at 121-22. As part of the contract, Gilbert agreed to “protect the work site and
surrounding property.” Id. at 122. “During construction, Dallas suffered an
unusually heavy rain, and a building adjacent to the construction area flooded.”
Id. The building owner (“RTR”) sued Gilbert and DART for, inter alia, breach
of contract. Id. Gilbert eventually settled with RTR, but Gilbert’s insurer,
Lloyd’s of London (“Lloyd’s”), refused to indemnify Gilbert on the ground that the
contractual-liability exclusion applied. See id. Gilbert sued Lloyd’s, and the case
eventually reached the Texas Supreme Court. Id.

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      The Texas Supreme Court first explained that the contractual-liability
exclusion “means what it says: it excludes claims when the insured assumes
liability for damages in a contract or agreement, except . . . when the insured
would be liable absent the contract or agreement.” Id. at 128; see also Ewing,
402 S.W.3d at 37 (“[W]e . . . determined in Gilbert that ‘assumption of liability’
means that the insured has assumed a liability for damages that exceed the
liability it would have under general law.” (citing 327 S.W.3d at 127)). The court
concluded that Gilbert had “assumed” liability by taking on liability in its
contract that it would not otherwise have had under the law:
      Independent of its contractual obligations, Gilbert owed RTR the
      duty to comply with law and to conduct its operations with ordinary
      care so as not to damage RTR’s property[] . . . . In its contract with
      DART, however, Gilbert undertook a legal obligation to protect
      improvements and utilities on property adjacent to the construction
      site, and to repair or pay for damage to any such property “resulting
      from a failure to comply with the requirements of this contract or
      failure to exercise reasonable care in performing the work.”
      (emphasis added). The latter obligation—to exercise reasonable
      care in performing its work—mirrors Gilbert’s duty to RTR under
      general law principles. The obligation to repair or pay for damage
      to RTR’s property “resulting from a failure to comply with the
      requirements of this contract” extends beyond Gilbert’s obligations
      under general law and incorporates contractual standards to which
      Gilbert obligated itself.
Gilbert, 327 S.W.3d at 127. The trial court had granted summary judgment in
favor of Gilbert on all of RTR’s theories of liability apart from breach of
contract—in other words, all that remained was RTR’s claim that Gilbert had
breached the contract by causing damage “resulting from . . . failure to comply
with the requirements of th[e] contract.” See id. Therefore, when Gilbert settled
with RTR, its “only potential liability remaining in the lawsuit was liability in
excess of what it had under general law principles.” Id. Thus, the court
concluded that RTR’s breach-of-contract claim “was founded on an obligation or
liability contractually assumed by Gilbert within the meaning of the policy
exclusion.” Id.; see also Ewing, 420 S.W.3d at 36 (“In other words, Gilbert did

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not contractually assume liability for damages within the meaning of the policy
exclusion unless the liability for damages it contractually assumed was greater
than the liability it would have had under general law—in Gilbert’s case,
negligence.”).
        The Gilbert court then considered whether the exception to the exclusion
brought Gilbert’s liability to RTR back into coverage. See 327 S.W.3d at 133-35.
The court concluded that no exception applied to the exclusion—in other words,
that Gilbert had not shown that it would have been liable to RTR “in the absence
of the contract or agreement”—because Gilbert’s only liability for damages was
for breach of contract. Id. at 133-35. Because the exclusion applied and the
exception did not, the Gilbert court concluded that there was no coverage. Id. at
135.
                                         B.
        Following oral argument in this case, a panel of this court certified two
questions to the Texas Supreme Court that are germane to the Crownovers’
dispute with Mid-Continent. See Ewing Constr. Co. v. Amerisure Ins. Co., 690
F.3d 628, 633 (5th Cir. 2012). Those questions were:
              1. Does a general contractor that enters into a contract in
        which it agrees to perform its construction work in a good and
        workmanlike manner, without more specific provisions enlarging
        this obligation, “assume liability” for damages arising out of the
        contractor’s defective work so as to trigger the Contractual Liability
        Exclusion.
               2. If the answer to question one is “Yes” and the contractual
        liability exclusion is triggered, do the allegations in the underlying
        lawsuit alleging that the contractor violated its common law duty to
        perform the contract in a careful, workmanlike, and non-negligent
        manner fall within the exception to the contractual liability
        exclusion for “liability that would exist in the absence of contract.”
Id. The Texas Supreme Court answered the first question “no” and did not
answer the second question, Ewing, 420 S.W.3d at 31, and, in so doing, further
explicated the contours of the rule announced in Gilbert.

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      Ewing had entered into a contract with the Tuluso-Midway Independent
School District (“TMISD”) “to serve as general contractor to renovate and build
additions to a school in Corpus Christi, including constructing tennis courts.”
420 S.W.3d at 31.      “Shortly after construction of the tennis courts was
completed,” however, “TMISD complained that the courts started flaking,
crumbling, and cracking, rendering them unusable for their intended purpose
of hosting competitive tennis events.” Id. TMISD then brought suit against
Ewing; “[i]ts damages claims against Ewing were based on faulty construction
of the courts and its theories of liability were breach of contract and negligence.”
Id. at 31-32.
      Ewing tendered defense of the underlying suit to its insurer, Amerisure
Insurance Co. (“Amerisure”), under an insurance policy that included CGL
coverage. Id. at 32. Amerisure denied coverage, and Ewing brought suit,
seeking “a declaration that Amerisure had, and breached, duties to defend
Ewing and indemnify it for any damages awarded to TMISD in the underlying
suit.” Id. Amerisure“urged that policy exclusions, including the contractual
liability exclusion, precluded coverage and negated its duties to defend and
indemnify.” Id.
      As in this case, “[t]he contractual liability exclusion in Amerisure’s policy
excude[d] claims for damages based on an insured’s contractual assumption of
liability except . . . where the insured’s liability for damages would exist absent
the contract.”    Id. at 36.   Amerisure, relying on Gilbert, argued that the
contractual-liability exclusion applied “because Ewing contractually undertook
the obligation to construct tennis courts in a good and workmanlike manner and
thereby assumed liability for damages if the construction did not meet that
standard.” Id. Ewing, distinguishing Gilbert, argued that its “agreement to
construct the courts in a good and workmanlike manner d[id] not enlarge its
obligations beyond any general common-law duty it might have,” namely “the
obligation it ha[d] under general law to comply with the contract’s terms and to

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exercise ordinary care in doing so.” Id. The Texas Supreme Court agreed with
Ewing. Id.
       The court first noted that “TMISD’s claim that Ewing failed to perform in
a good and workmanlike manner and its claims that Ewing negligently
performed under the contracts [were] substantively the same” and then observed
that Ewing “had a common law duty to perform its contract with skill and care.”
Id. at 37. On this basis, the court held that “a general contractor who agrees to
perform its construction in a good and workmanlike manner, without more, does
not enlarge its duty to exercise ordinary care in fulfilling its contract” and “thus
does not ‘assume liability’ for damages arising out of its defective work so as to
trigger the Contractual Liability Exclusion.” Id. at 38. The Texas Supreme
Court therefore answered the first certified question from this court “no” and
declined to address the second question.1
                                             III.
                                              A.
       The district court did not err in concluding that Mid-Continent had
demonstrated that the contractual-liability exclusion applies. The arbitrator
found in favor of the Crownovers, concluding that Arrow had breached the
express warranty to repair contained in paragraph 23.1 of the contract. That
paragraph—which is virtually indistinguishable from the contract provision in
Gilbert that the Texas Supreme Court determined “extend[ed] beyond Gilbert’s
obligations under general law and incorprate[d] contractual standards to which
Gilbert obligated itself,” see 327 S.W.3d at 122, 127—obligated Arrow to
“promptly correct work . . . failing to conform to the requirements of the Contract
Documents.” Whereas contractually agreeing to repair damage resulting from
a failure to exercise reasonable care in performing the work or agreeing to

       1
        This court subsequently vacated the orderof the district court granting summary
judgment in favor of Amerisure on the ground that coverage was excluded under the
contractual-liability exclusion and remanded the case to the district court for further
proceedings. See Ewing Constr. Co. v. Amerisure Ins. Co., 744 F.3d 917, 917-18 (5th Cir. 2014).

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perform work in a good and workmanlike manner would mirror a contractor’s
duty under general law, see Ewing, 420 S.W.3d at 37-38; Gilbert, 327 S.W.3d at
127, contractually agreeing to repair damage resulting from a failure to comply
with the requirements of the contract would not, see Gilbert, 327 S.W.3d at 127.
We therefore conclude that Mid-Continent has demonstrated that the
contractual-liability exclusion applies.
      In arguing to the contrary, the Crownovers cite paragraph 14.4 of the
construction contract, which states that “[t]he Contractor warrants to the Owner
. . . that the Work will be free from defects not inherent in the quality required
or permitted, and that the Work will conform with the requirements of the
Contract Documents” and submit that this express warranty of workmanship is
equivalent to the implied warranty of workmanship that already exists under
Texas law. Under Gilbert, the contractual-liability exclusion applies only if
Arrow “assumed” a duty in its contract with the Crownovers that it did not
already have under the law. However, the Crownovers’ focus on whether
paragraph 14.4 involved an assumption of liability beyond what Arrow would
have been subject to under Texas law is misplaced. As Mid-Continent points
out, paragraph 14.4 was not the basis for liability under the arbitration award.
Rather, paragraph 23.1, which contains the “express warranty to repair,” was
the provision that the arbitrator decided that Arrow had breached.            The
Crownovers respond that paragraph 23.1 “merely states that Arrow must repair
nonconforming work under paragraph 14.4” and that, therefore, a violation of
paragraph 23.1 means that there was also a violation of paragraph 14.4.
      However, that Arrow is liable under paragraph 23.1 does not
automatically mean that it is liable under paragraph 14.4, even if under some
circumstances, such as the instant case, the latter provision must be violated in
order for the former provision to be violated. This is so because paragraph 14.4
includes a warranty by Arrow “that the Work will conform with the
requirements of the Contract Documents,” and paragraph 23.1 states that Arrow

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“shall promptly correct Work rejected by the architect or failing to conform to the
requirements of the Contract” (emphasis added). The arbitrator indicated that
she was not ruling on whether any other claims were “barred by limitations,”
which suggests that it is possible that she thought that the Crownovers had a
viable claim under paragraph 14.4 but that such a claim would nonetheless fail
because it was barred by the statute of limitations. As such, her determination
that Arrow was liable under paragraph 23.1 does not require a determination
that Arrow must have also been liable under paragraph 14.4. Moreover, a
builder may violate paragraph 14.4 by doing non-conforming work, but the
failure to promptly correct such work as required by paragraph 23.1 is a
separate violation of the contract.2
       Amicus Texas Association of Builders (“TAB”) argues that applying the
contractual-liability exclusion here renders another exclusion and its
corresponding exception, which are part of CGL contracts, meaningless. TAB
refers to the “Your Work” exclusion, under which insurance does not cover
“‘property damage’ to ‘your work’ arising out of it or any part of it and included
in the ‘products-completed operations hazard.’” The exception to this exclusion
provides for coverage “if the damaged work or the work out of which the damage
arises was performed on your behalf by a subcontractor.” Here, subcontractors
were involved in the work on the foundation of the Crownovers’ home. TAB
argues that applying the contractual-liability exclusion here would remove
coverage when subcontractors caused the property damage, even though the
subcontractor exception to the “Your Work” exclusion should bring the
Crownovers’ claim back under coverage.

       2
         In their reply brief, the Crownovers suggest, for the first time and with little analysis,
that in agreeing to paragraph 23.1, Arrow did not assume any obligation it did not already
have under Texas law. “We need not address this argument, as it is raised for the first time
in a reply brief.” E.g., Medina Cnty. Envtl. Action Ass’n v. Surface Transp. Bd., 602 F.3d 687,
702 (5th Cir. 2010)). Nonetheless, paragraph 23.1 parallels the provision that the Gilbert
court held constituted an exclusion. 327 S.W.3d at 127.

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      However, this argument assumes that the basis for liability here pertained
to the work done initially by the subcontractors on the Crownovers’ home. Yet
the arbitrator held Arrow liable for failing to repair, per paragraph 23.1, not for
the work done initially. Thus, the “Your Work” exclusion and the subcontractor
exception would not apply in this case. Accordingly, we conclude that Mid-
Continent has demonstrated that the contractual liability exclusion applies.
                                        B.
      Because Mid-Continent has demonstrated that a contractual-liability
exclusion applies, the burden shifts to the Crownovers to establish that an
exception to that exclusion applies. Gilbert, 327 S.W.3d at 124. They have failed
to do so.
      The Crownovers argue that the exception to the contractual-liability
exclusion for “liability . . . [t]hat the insured would have in the absence of the
contract or agreement” applies and that, therefore, Mid-Continent still has the
duty to indemnify. Specifically, they contend that under Gilbert, the district
court should have looked beyond the arbitration award. If the district court had
done so, they reason, it would have determined that Arrow was liable for
breaching not only the express warranty of good workmanship under paragraph
14.4, but also the implied warranty of good workmanship, which is identical in
substance to the express warranty, but with a longer statute of limitations.
Relatedly, they argue that the district court contravened Texas law in concluding
that the express warranty of good workmanship contained in Arrow’s
construction contract with the Crownovers superseded any implied warranty of
the same.
      These arguments are unavailing. First, Gilbert does not permit us to look
beyond the arbitration award. “[I]t is well settled that a claim based on a
contract that provides indemnification from liability does not accrue until the
[insured’s] liability becomes fixed and certain.” 327 S.W.3d at 134 (internal
quotation marks omitted).      “[T]he duty to indemnify arises from proven,

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adjudicated facts.” Hartrick v. Great Am. Lloyds Ins. Co., 62 S.W.3d 270, 275
(Tex. Ct. App. 2001). The Gilbert court explained:
      As modified by the . . . exception, the exclusion precludes the
      insurer’s liability for indemnity if the insured is obligated to pay
      only because of its contractually assumed liability. If the insured’s
      liability is because of an otherwise covered basis in addition to its
      contractually-assumed liability, the . . . exception brings the claim
      back into coverage.
327 S.W.3d at 134 (emphasis added).
      Thus, the exception applies only if Arrow is liable to the Crownovers
“because of an otherwise covered basis in addition to its contractually-assumed
liability.” Id. Here, the only ground on which the arbitrator awarded damages
to the Crownovers was the breach of the express warranty to repair contained
in paragraph 23.1, which was part of Arrow’s contractually assumed liability.
Furthermore, the Crownovers’ argument on this point depends on the premise
that the arbitrator awarded damages based on paragraph 14.4 and, as
previously explained, she did not. Accordingly, the exception does not apply. See
id. at 134 (“Gilbert asserts no other basis for its settlement than the breach of
contract claim; thus, Gilbert’s settlement payment for which it seeks indemnity
simply was not a liability for damages it had apart from its contract with DART,
as it must have been in order for the . . . exception to apply.”).
      Additionally, the Crownovers’ argument fails because the implied
warranty of good workmanship was superseded by the express warranty of good
workmanship. In Beucher, the Texas Supreme Court has held that “the parties’
agreement may supersede the implied standard for workmanship [and thus] the
implied warranty of good workmanship may be disclaimed by the parties when
their agreement provides for the manner, performance or quality of the desired
construction.” 95 S.W.3d at 274-75. The Crownovers have failed to articulate
any reason why the express warranty here fails to meet this requirement.

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                                       IV.
      Finally, the Crownovers argue that the district court erred in granting
summary judgment by: (1) basing its decision on a rejection of the implied
warranty of good workmanship; and (2) failing to give the Crownovers time to
file a response, or a motion for leave to file a response, to Mid-Continent’s sur-
reply regarding this issue. We disagree.
                                       A.
      The district court did not impermissibly base its decision on a rejection of
the implied warranty of good workmanship. Both parties moved for summary
judgment and each briefed all issues related to coverage, exclusions to coverage,
and exceptions to exclusions. The Crownovers raised the implied warranty of
good workmanship in their briefing. That the district court agreed with Mid-
Continent’s analysis on that issue is not comparable to granting summary
judgment on a ground of which the non-movant had no notice. See Lozano v.
Ocwen Fed. Bank, FSB, 489 F.3d 636, 641 (5th Cir. 2007) (noting that the non-
movant must be “on notice to present arguments” on each claim in their response
to a summary judgment motion). Accordingly, the district court did not “grant
summary judgment sua sponte on grounds not requested by the moving party.’”
Baker v. Metro. Life Ins. Co., 364 F.3d 624, 632 (5th Cir. 2004) (internal
quotation marks omitted).
                                       B.
      The Crownovers cite no authority for reversing the grant of summary
judgment based on the district court’s refusal to provide them an opportunity to
respond to Mid-Continent’s arguments regarding the implied warranty of good
workmanship. Moreover, as we have now fully considered the Crownovers’
arguments on this point, and conclude that they lack merit, any alleged error by
the district court here is harmless.
                                CONCLUSION
      For the foregoing reasons, we AFFIRM the judgment of the district court.

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