Court Opinion

ID: 4561707
Source: CourtListenerOpinion
Date Created: 2020-09-01 00:00:24.633751+00
Date Added: 2024-06-11T11:33:20.240252
License: Public Domain

Case: 20-20095      Document: 00515546710        Page: 1      Date Filed: 08/31/2020

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

                                                                       FILED
                                                                 August 31, 2020
                                No. 20-20095                      Lyle W. Cayce
                                                                       Clerk

 Evanston Insurance Company,

                                                           Plaintiff—Appellant,

                                     versus

 OPF Enterprises, L.L.C.,

                                                         Defendant—Appellee.

                 Appeals from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:17-CV-2048

 Before Owen, Chief Judge, and Dennis and Haynes, Circuit Judges.
 Per Curiam:*
        Evanston Insurance Company appeals the district court’s grant of
 summary judgment in favor of OPF Enterprises, L.L.C. For the reasons set
 forth below, 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 opinion should not be published and is not precedent except under the limited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: 20-20095      Document: 00515546710           Page: 2      Date Filed: 08/31/2020

                                    No. 20-20095

                            I.     Background
        Evanston issued OPF two professional liability insurance policies.
 The first (“2016 Policy”) ran from March 20, 2016, until March 20, 2017,
 and the second (“2017 Policy,” and together with the 2016 Policy, “the
 Policies”) ran from March 20, 2017, until March 20, 2018. The Policies
 contained identical language covering general and professional liability
 insurance for claims made against OPF during the policy periods.
        The Policies included a “Discovery Clause,” which provided
 coverage for claims made against OPF after the end date of the policy period
 if OPF provided written notice to Evanston during the policy period. More
 specifically, this clause stated that
        [i]f during the Policy Period, [OPF] first becomes aware of a
        specific Wrongful Act, Personal Injury or offense which is
        reasonably expected to result in a Claim within the scope of
        coverage of this Coverage Part, then [OPF] may provide
        written notice as stated in Item 11 . . . . If such written notice is
        received by the Company1 during the Policy Period, then any
        Claim subsequently made against [OPF] shall be deemed . . . to
        have been first made on the date on which such written notice
        is received by the Company.
 Item 11 provided an email address, physical address, and fax number where
 notice could be sent.
        In January 2017, OPF purchased five million pounds of ceramic
 proppant—a solid material used in oil extraction operations—and resold the
 proppant to Apache Corporation. In February 2017, during the coverage
 period of the 2016 Policy, Apache notified OPF that some of Apache’s
 equipment sustained damage from material found in OPF’s proppant.

        1
          In the Policies, “the Company” refers to Markel Corporation, which owns
 Evanston and underwrites its policies.

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                                   No. 20-20095

        On March 1, 2017, OPF provided written notice of the potential claim
 to its insurance agent, Porter Insurance Agency, Inc. Shortly after, on March
 3, 2017, Porter notified AmWINS Brokerage of Texas, LLC of the incident
 stating, “This is for your information only at this time, since there is no claim
 demand made against [OPF].” AmWINS did not forward this message to
 Evanston.
        AmWINS had authority to complete a number of insurance brokerage
 tasks on Evanston’s behalf. AmWINS could “receive and accept proposals
 for insurance”; “effect, issue, countersign and deliver [insurance] policies”;
 “collect, receive and give receipts for premiums”; and “cancel or non-renew
 [insurance] policies.” Notably, the Producer Agreement required AmWINS
 to “immediately notify [Evanston] of all claims, suits, and notices.”
        In April 2017, during the coverage period of the 2017 Policy, Apache
 demanded that OPF pay approximately $1.5 million in damages caused by the
 contaminated proppant. OPF gave the demand letter to Porter, which then
 forwarded it to AmWINS, which in turn forwarded it to Evanston. Evanston
 received the demand letter on April 7, 2017.
        Evanston filed suit against OPF, alleging that it had no duty to defend
 or indemnify OPF for the damage caused by the contaminated proppant
 because the claim was not covered by either of the Policies. After the parties
 filed cross-motions for summary judgment, the district court granted
 summary judgment in OPF’s favor. Evanston timely appealed.
                        II.    Legal Standard
        “We review a district court’s grant of summary judgment de novo,
 applying the same standard as did the district court.” Stults v. Conoco, Inc.,
 76 F.3d 651, 654 (5th Cir. 1996). When parties have filed cross-motions for
 summary judgment, “we review each party’s motion independently, viewing
 the evidence and inferences in the light most favorable to the nonmoving
 party.” Ford Motor Co. v. Tex. Dep’t of Transp., 264 F.3d 493, 498 (5th Cir.

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                                       No. 20-20095

 2001). Summary judgment is appropriate only “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).
                              III.     Discussion
         This dispute centers on whether OPF provided sufficient notice to
 trigger coverage under the 2016 Policy. To answer this question, we first
 consider whether the policy required OPF to provide written notice to
 Evanston as specified in Item 11 (OPF’s notice did not comport with Item
 11). We then consider whether AmWINS was Evanston’s agent for purposes
 of receiving notice. Because we conclude that OPF was not required to
 provide notice in accordance with Item 11 and that AmWINS acted as
 Evanston’s agent, we affirm that OPF’s notice was sufficient.
         Under Texas law,2 insurance policies are interpreted “using the same
 rules of interpretation and construction applicable to contracts generally.”
 Tesoro Ref. & Mktg. Co. v. Nat’l Union Fire Ins. Co., 833 F.3d 470, 474 (5th
 Cir. 2016). The first step of the policy interpretation is to analyze the policy’s
 language. See RSUI Indem. Co. v. Lynd Co., 466 S.W.3d 113, 118 (Tex. 2015).
 Texas law requires that language be given its plain meaning unless the
 wording shows an intention to “impart a technical or different meaning.”
 Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 158 (Tex. 2003). To
 determine plain meaning, courts may look to dictionary definitions and a
 term’s ordinary usage. See Anadarko Petrol. Corp. v. Hous. Cas. Co., 573
S.W.3d 187, 192 (Tex. 2019).
         The 2016 Policy states that OPF “may provide written notice” in the
 manner specified in Item 11.             Common usage and dictionary entries
 demonstrate that may usually suggests that an action is optional. See, e.g.,

         2
           In this diversity case, Texas substantive law applies. See RSR Corp. v. Int’l Ins.
 Co., 612 F.3d 851, 857 (5th Cir. 2010).

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                                  No. 20-20095

 May, Merriam-Webster.com (last visited Aug. 13, 2020) (defining “may” as
 “used to indicate possibility or probability” and “sometimes used
 interchangeably with can”). Though may can be used in an “auxiliary
 function expressing purpose or expectation,” this is an alternate (not
 primary) definition, see id., and we decline to use an “auxiliary” definition as
 the most widely understood meaning of a term.
        Further, we do not “simply stop at the dictionary definitions” or
 “isolate any word, phrase, sentence, or section from its setting and construe
 it without considering its context.” Anadarko, 573 S.W.3d at 193. Context
 here demonstrates that Evanston affirmatively chose to use the word may—
 not an imperative like must or shall—in this provision. Indeed, in other
 provisions, the policy did use the imperative shall: The next sentence
 contained the phrase “shall be deemed.” If Evanston wanted to require that
 written notice be sent to the email address, fax number, or physical mailing
 address listed in Item 11, then it could have done so. But Evanston did not.
        For these reasons, we affirm that a plain reading of the 2016 Policy’s
 language shows that OPF had the option to provide written notice according
 to Item 11, but OPF was not required to provide notice in that manner.
        We next consider whether OPF’s notice to AmWINS through Porter
 constituted sufficient notice. To determine whether notice to AmWINS
 counted as notice to Evanston, we must determine whether AmWINS was
 properly considered an agent who could receive notice. Evanston asserted in
 the district court that AmWINS was OPF’s broker and thus agent. Even
 assuming that were true, there are “some narrow sets of circumstances [in
 which] an insurance agent may be deemed to have acted as the agent of both
 the insured and the insurer.” Monumental Life Ins. Co. v. Hayes-Jenkins, 403
F.3d 304, 318 (5th Cir. 2005). One such circumstance is when an agent “has
 authority to perform various functions on the insurer’s behalf.” Duzich v.
 Marine Office of Am. Corp., 980 S.W.2d 857, 865 (Tex. App.—Corpus Christi

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                                  No. 20-20095

 1998, pet. denied). If notice falls under an agent’s responsibilities, then
 notice to that agent qualifies as notice to the principal. Preston Farm & Ranch
 Supply, Inc. v. Bio-Zyme Enters., 625 S.W.2d 295, 300 (Tex. 1981); cf. Berkley
 Reg’l Ins. Co. v. Phila. Indem. Ins. Co., 600 F. App’x 230, 235 (5th Cir. 2015)
 (per curiam).
        Here, AmWINS was Evanston’s agent under a “Producer
 Agreement” that contained express language requiring AmWINS to
 “immediately notify [Evanston] of all claims, suits, and notices.” Under this
 agreement, AmWINS was clearly responsible for providing notice of claims
 to Evanston, so it served as Evanston’s agent for this purpose. Accordingly,
 we conclude that the communication from OPF to AmWINS about the
 contaminated proppant and corresponding potential claim constituted
 sufficient notice to Evanston.
                          IV.     Conclusion
        Based on the foregoing reasons, the judgment of the district court is
 AFFIRMED.

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