Court Opinion

ID: 766887
Source: CourtListenerOpinion
Date Created: 2012-04-18 08:18:10+00
Date Added: 2024-06-11T11:49:58.198395
License: Public Domain

197 F.3d 730 (5th Cir. 1999)
FEDERATED MUTUAL INSURANCE COMPANY, PLAINTIFF,v.GRAPEVINE EXCAVATION INC.; ET AL, DEFENDANTS,GRAPEVINE EXCAVATION           INC., DEFENDANT - THIRD PARTY PLAINTIFF - APPELLANT,v.MARYLAND LLOYDS, A LLOYDS INSURANCE COMPANY, THIRD PARTY           DEFENDANT - APPELLEE.
No. 98-10904
U.S. Court of Appeals, Fifth Circuit
December 01, 1999

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

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Before Jones and Wiener, Circuit Judges, and Walter, District Judge.*

Per Curiam

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CERTIFICATE FROM THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT           TO THE SUPREME COURT OF TEXAS, PURSUANT TO THE TEXAS CONSTITUTION, ART.           5,  3-C AND RULE 58 OF THE TEXAS RULES OF APPELLATE PROCEDURE

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TO THE SUPREME COURT OF TEXAS AND THE HONORABLE JUSTICES THEREOF:I. STYLE OF THE CASE

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The style of the case in which certification is made is Grapevine Excavation, Inc., Defendant-Third Party           Plaintiff-Appellant versus Maryland Lloyds, Third Party Defendant-Appellee, Case No. 98-10904, in the           United States Court of Appeals for the Fifth Circuit, on appeal from the United States District Court for           the Northern District of Texas. This case involves a determinative question of state law, and jurisdiction of           the case in the federal courts is based solely on diversity of citizenship.

II. STATEMENT OF THE CASE

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Maryland Lloyds ("Maryland") issued a commercial general liability insurance policy to Grapevine           Excavation, Inc. ("GEI"). Under the policy, Maryland had a duty to defend GEI from proceedings           instituted to recover damages covered by the insurance policy. We have now held that Maryland breached           this duty and have rendered judgment in favor of GEI. We have retained jurisdiction, however, for the           limited purpose of deciding if GEI is entitled to recover attorney's fees that it incurred in obtaining this           favorable judgment against Maryland for breach of contract, i.e., failure to provide a legal defense.

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Chapter 38 of the Texas Civil Practice and Remedies Code first sets forth the general rule that litigants can           recover reasonable attorney's fees incurred in a valid claim on, inter alia, a written contract.1 It then           lists five exceptions:

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This chapter does not apply to a contract issued by an insurer that is subject to the provision of:

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(1) Article 3.62, Insurance Code [this Article was repealed in 1991];

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(2) Section 1, Chapter 387, Acts of the 55th Legislature, Regular Session, 1957 (Article 3.62-1, Vernon's           Texas Insurance Code) [this Article was repealed in 1991];

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(3) Chapter 9, Insurance Code;

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(4) Article 21.21, Insurance Code; or

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(5) the Unfair Claims Settlement Practices Act (Article 21.21-2, Insurance Code).2

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In Dairyland Mutual Ins. Co. v. Childress, an insurance company was held liable for its policyholder's           attorney's fees by a state appellate court because the policyholder had successfully pursued an action for           breach of an insurance contract.3 On appeal to the Supreme Court of Texas, the insurance company           argued that it was not liable for attorney's fees under the predecessor to Chapter 38 of the Texas Civil           Practice and Remedies code because, as an insurance company, it was shielded from liability for attorney's           fees by the predecessor to  38.006. The Texas Supreme Court held that:

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Dairyland is a county mutual insurance company and as such is not one of the insurors exempt from the           provisions of Art. 2226 [the predecessor to Chapter 38 of the Civil Practice and Remedies Code]. See           Tex. Ins. Code Ann. Art. 7.22. Therefore, it is not exempt from a claim for attorney's fees pursuant to Art. 2226.4

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Texas appellate courts and this court have disagreed as to the significance of this statement. We have           interpreted the statement to imply that "an insurer who falls within the provisions of section 38.006 is           exempt from the payment of attorney's fees and that only those insurers who do not qualify for the           exemption are subject to the payment of attorney's fees."5 By contrast, Texas appellate courts have           held that no such implication was intended, and that, consistent with the decision of thecourt in Prudential           Ins. Co. v. Burke,6 the purpose of the exceptions now codified at  38.006 is "to exclude only those           claims against insurance companies where attorney's fees [are] already available by virtue of other specific           statutes."7

III. QUESTION CERTIFIED

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In a policyholder's successful suit for breach of contract against an insurance company that is subject to           one or more of the provisions listed in  38.006, is the insurance company liable to its policyholder for           reasonable attorney's fees incurred in pursuing the breach-of-contract action, either under an Insurance           Code provision listed in  38.006, or under  36.001 if application of one or more of those sections does           not result in the award of attorney's fees?

IV. CONCLUSION

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We disclaim any intention or desire that the Supreme Court of Texas confine its reply to the precise form           or scope of the question certified. The answer provided by the Supreme Court of Texas will determine the           remaining issue in this case.

Notes:

*
 District Judge of the Western District of Louisiana, sitting by designation.

1
 See Tex. Civ. Prac. & Rem. Code  38.001(8).

2
 See id.  38.006.

3
 See 636 S.W.2d 282, 284 (Tex. App. -- Eastland, 1982).

4
 See Dairyland County Mutual Ins. Co. v. Childress, 650 S.W.2d 770, 774 (Tex. 1983).

5
 Bituminous Cas. Corp. v. Vacuum Tanks, Inc., 975 F.2d 1130, 1133 (5th Cir. 1992); see also           Lafarge Corp. v. Hartford Cas. Ins. Co., 61 F.3d 389, 402-03 (5th Cir. 1995).

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 614 S.W.2d 847 (Tex. App. -- Texarkana), writ ref'd n.r.e., 621 S.W.2d 596 (1981).

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 Id. at 850.