Court Opinion

ID: 6346157
Source: CourtListenerOpinion
Date Created: 2022-06-02 17:46:07.603571+00
Date Added: 2024-06-11T09:15:47.498545
License: Public Domain

Case: 20-20621     Document: 00516341209         Page: 1    Date Filed: 06/02/2022

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

                                                                      FILED
                                                                   June 2, 2022
                                  No. 20-20621                   Lyle W. Cayce
                                                                      Clerk

   Osman Moreno,

                                                           Plaintiff—Appellant,

                                      versus

   Sentinel Insurance Company, Limited,

                                                           Defendant—Appellee.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                            USDC No. 4:19-cv-2968

   Before Jones, Southwick, and Engelhardt, Circuit Judges.
   Kurt D. Engelhardt, Circuit Judge:
         Plaintiff–Appellant Osman Moreno appeals the district court’s
   summary judgment dismissal of the breach of contract claims that he has
   asserted, as a third-party beneficiary, against Sentinel Insurance Company,
   Limited. The district court determined that the insurer’s duty to defend its
   insured, on which Moreno’s claims are based, was never triggered, relative
   to Moreno’s underlying personal injury suit, because the insured, N.F.
   Painting, Inc., never requested a defense or sought coverage. Considering
   the record before us and applying Texas law, we find no error in the district
   court’s assessment. Thus, we AFFIRM.
Case: 20-20621         Document: 00516341209       Page: 2   Date Filed: 06/02/2022

                                    No. 20-20621

                                         I.
          In July 2016, Moreno worked as a painter for N.F. Painting, Inc.
   (“N.F. Painting”) on a project undertaken for Beazer Homes Texas, L.P. and
   Beazer Homes Texas Holdings, Inc. (collectively “Beazer Homes”). Beazer
   Homes, a homebuilder, contracted N.F. Painting for work on one of its
   developments. While on site, Moreno fell from a ladder and sustained
   serious injuries.
                                         A.
          In November 2016, Moreno sued N.F. Painting and Beazer Homes for
   damages, in Texas state court, alleging negligence, gross negligence, and
   negligence per se in connection with his fall.    At all relevant times, N.F.
   Painting was insured by Sentinel Insurance Company, Limited (“Sentinel”)
   under a “Business Owner’s Policy.” As part of a “Master Construction
   Agreement” with N.F. Painting, Beazer Homes was an “additional insured”
   under the Sentinel policy.
          N.F. Painting’s policy provided coverage for business liability,
   including personal injury, up to $1,000,000. Regarding payment under that
   coverage, and the provision of a defense for the insured, the policy stated, in
   pertinent part:
           A. COVERAGES
              1. BUSINESS LIABILITY COVERAGE (BODILY INJURY,
                 PROPERTY DAMAGE, PERSONAL AND ADVERTISING
                 INJURY)
                 Insuring Agreement
                 a.      We will pay those sums that the insured becomes
                 legally obligated to pay as damages because of “bodily
                 injury”, “property damage” or “personal and
                 advertising injury” to which this insurance applies.

                                         2
Case: 20-20621        Document: 00516341209        Page: 3   Date Filed: 06/02/2022

                                    No. 20-20621

                 We will have the right and duty to defend the insured
                 against any “suit” seeking those damages. However, we
                 will have no duty to defend the insured against any
                 “suit” seeking damages for “bodily injury”, “property
                 damage” or “personal and advertising injury” to which
                 this insurance does not apply.
                 We may, at our discretion, investigate any occurrence”
                 or offense and settle any claim or “suit” that may
                 result. . . .
           The Sentinel policy also contained two exclusions that are relevant
   here.
           B. EXCLUSIONS
              1. Applicable To Business Liability Coverage
                 This insurance does not apply to:
                 a.– c. [omitted]
                 d.      Workers’ Compensation and Similar Laws
                         Any obligation of the insured under a workers’
                         compensation,      disability   benefits    or
                         unemployment compensation law or any similar
                         law.
                 e.      Employer’s Liability
                         “Bodily injury” to:
                         (1) An employee” of the insured arising out of
                         and in the course of:
                          (a) Employment by the insured; or
                          (b) Performing duties related to the conduct of
                           the insured’s business[.]
                         (2) [omitted]
                         This exclusion applies:

                                         3
Case: 20-20621        Document: 00516341209        Page: 4    Date Filed: 06/02/2022

                                    No. 20-20621

                         (1) Whether the insured may be liable as an
                          employer or in any other capacity; and
                         (2) To any obligation to share damages with or
                         repay someone else who must pay damages
                         because of the injury.
                         This exclusion does not apply to liability assumed
                         by the insured under an “insured contract.”
          Regarding the insured’s “Duties In The Event of Occurrence, Of-
   fense, Claim Or Suit,” Section E.2 of the policy stated:
          E. LIABILITY AND MEDICAL EXPENSES
             GENERAL CONDITIONS
              1. [omitted]

              2. Duties In The Event of Occurrence, Offense, Claim Or Suit
                 a.      Notice of Occurrence or Offense
                         You or any additional insured must see to it that
                         we are notified as soon as practicable of an “oc-
                         currence” or an offense which may result
                         in a claim. To the extent possible, notice should
                         include:
                         (1) How, when and where the “occurrence” or
                         offense took place;
                         (2) The names and addresses of any injured
                         persons and witnesses; and
                         (3) The nature and location of any injury or
                         damage arising out of the occurrence or offense.

                                         4
Case: 20-20621        Document: 00516341209         Page: 5   Date Filed: 06/02/2022

                                     No. 20-20621

                 b.      Notice of Claim
                         If a claim is made or “suit” is brought against any
                         insured, you or any additional insured must:
                         (1) Immediately record the specifics of the claim
                         or “suit” and the date received; and
                         (2) Notify us as soon as practicable.
                         You or any additional insured must see to it that
                         we receive a written notice of the claim or “suit”
                         as soon as practicable.

                 c.      Assistance And Cooperation Of The Insured
                         You and any other involved insured must:
                         (1) Immediately send us copies of any demands,
                         notices, summonses or legal papers received in
                         connection with the claim or “suit”;
                         (2) Authorize us to obtain records and other
                         information;
                         (3) Cooperate with us in the investigation, settle-
                         ment of the claim or defense against the “suit”;
                         and
                         (4) Assist us, upon our request, in the enforce-
                         ment of any right against any person or organiza-
                         tion that may be liable to the insured because of
                         injury or damage to which this insurance may
                         also apply.

                 d.      Obligations At The Insured’s Own Cost
                         No insured will, except at that insured’s own
                         cost, voluntarily make a payment, assume any
                         obligation, or incur any expense, other than for
                         first aid, without our consent.

                                           5
Case: 20-20621           Document: 00516341209        Page: 6    Date Filed: 06/02/2022

                                       No. 20-20621

             Lastly, regarding suits against Sentinel, Section E.4 of the policy
   stated:
              4. Legal Action Against Us
                No person or organization has a right under this Coverage
                Form:

                    a.      To join us as a party or otherwise bring us into a
                            “suit” asking for damages from an insured; or

                    b.      To sue us on this Coverage Form unless all of its
                            terms have been fully complied with.
                A person or organization may sue us to recover on an agreed
                settlement or on a final judgment against an insured; but we
                will not be liable for damages that are not payable under the
                terms of this insurance or that are in excess of the applicable
                limit of insurance. An agreed settlement means a settlement
                and release of liability signed by us, the insured and the
                claimant or the claimant’s legal representative.

                                            B.
             Despite being served with Moreno’s suit on March 9, 2017, N.F.
   Painting did not contact Sentinel to request, or even inquire about, coverage
   and/or a defense under its liability policy. Nor did it send Sentinel a copy of
   the petition or any other documentation received in connection with the suit.
   Instead, N.F. Painting retained the services of attorney Armando Lopez. On
   April 3, 2017, Lopez filed an answer on behalf of N.F. Painting and, on May
   12, 2017, provided responses to Moreno’s requests for admissions and dis-
   closures. In those discovery responses, N.F. Painting denied possessing any
   insurance that would cover the incident.
             N.F. Painting’s co-defendant, Beazer Homes, however, did not hesi-
   tate to contact Sentinel about Moreno’s suit. Specifically, the declaration of
   Julie Katchmir, Sentinel’s Claim Consultant, states that, on May 18, 2017,

                                             6
Case: 20-20621          Document: 00516341209              Page: 7      Date Filed: 06/02/2022

                                           No. 20-20621

   Sentinel received a copy of an April 4, 2017 letter from counsel for Beazer
   Homes that was addressed to Attorney Lopez. The April 4, 2017 letter was
   accompanied by a copy of a March 23, 2017 letter, entitled “DEMAND AND
   TENDER FOR DEFENSE AND INDEMNITY,” that Beazer Homes had
   sent, via certified mail, to Nelson Flores for N.F. Painting. In both letters,
   Beazer Homes, referencing the state court suit filed by Moreno against it and
   N.F. Painting, demanded defense and indemnity (pursuant to the indemnifi-
   cation paragraph of its contract with N.F. Painting), asked that N.F. Paint-
   ing’s insurance carrier be notified of the claim, and requested written confir-
   mation of N.F. Painting’s agreement to defend and indemnify Beazer
   Homes.1 That same day, May 18, 2017, another Sentinel claims representa-
   tive, Lori Toliver Cawley, sent a letter to “Nelson Flores dba N&F Paint-
   ing,” notifying N.F. Painting of Sentinel’s receipt of the April 4, 2017
   “claim” submitted by Beazer Home, and asking Flores to contact her “im-
   mediately” to “expedite the handling of your claim.”2
           On May 22, 2017, after receiving no response to Cawley’s May 18,
   2017 letter, Sentinel, through Katchmir, emailed and left a voice mail for
   Lopez, who was identified as N.F. Painting’s attorney in the April 4, 2017
   letter from Beazer Homes’ attorney. Katchmir queried whether Lopez was
   representing N.F. Painting in the state court suit filed by Moreno, and indi-
   cated that she was seeking contact information for N.F. Painting, so that she

           1
               Both letters identify the state court suit by name, judicial district, and docket
   number.
           2
              Although other documents in the record identify Sentinel’s insured as N.F.
   Painting, the claims documentation completed by Sentinel’s claims representatives refers
   to the company as “Nelson Flores dba N&F Painting” or simply “N&F Painting.” The
   discrepancy presumably exists because certain portions of the insurance policy identify the
   insured as “Nelson Flores dba N&F Painting.”. When quoting the claims documentation
   or Katchmir’s declaration, we will use the same business name and spelling stated therein.

                                                  7
Case: 20-20621          Document: 00516341209              Page: 8       Date Filed: 06/02/2022

                                           No. 20-20621

   could “discuss the matter” with it. Eight days later, on May 30, 2017, after
   still receiving no response from Lopez or N.F. Painting, Sentinel contacted
   Nelson Flores, the owner of N.F. Painting, by telephone. According to
   Katchmir’s declaration, Flores told her that Lopez was representing N.F.
   Painting in the state court suit filed by Moreno and recommended that she
   contact Lopez to obtain a copy of the complaint; Flores did not request that
   Sentinel defend and indemnify N.F. Painting in the state court suit.
          By letter dated June 2, 2017, from Katchmir to counsel for Beazer
   Homes, Sentinel acknowledged receipt of the April 4, 2017 letter addressed
   to Attorney Lopez, identified itself as the business liability carrier for N.F.
   Painting, and agreed to defend and indemnify Beazer Homes “without a res-
   ervation of rights” (pursuant to the construction contract between Beazer
   Homes and N.F. Painting) in the state court suit filed by Moreno.3
          On June 12, 2017, having not yet received a response to her inquires,
   Katchmir sent a letter to Lopez, by both email and U.S. Mail, referencing her
   May 22, 2017 email and phone call, Sentinel’s receipt of the letter addressed
   to Lopez from Beazer Homes’ counsel, and Sentinel’s insurance carrier sta-
   tus for N.F. Painting.4 Katchmir’s letter also requested that Lopez call her,
   as soon as possible, if he were representing N.F. Painting in the state court
   suit file by Moreno, to discuss the matter.
          The next day, June 13, 2017, Katchmir talked to Lopez by telephone.
   According to Katchmir’s declaration, Lopez confirmed, during the call, that
   he was representing N.F. Painting in the Moreno’s state court suit and that
   N.F. Painting had hired him, rather than reporting or tendering the suit to

          3
              The letter identified the name of the attorney to whom Sentinel would be
   assigning Beazer Home’s representation.
          4
              The letter indicates that a copy was sent to Flores via U.S. mail.

                                                  8
Case: 20-20621       Document: 00516341209          Page: 9     Date Filed: 06/02/2022

                                     No. 20-20621

   Sentinel, “because Flores did not believe that there would be coverage for
   [the suit] due to the fact that Moreno, the plaintiff [], was an employee of
   N&F Painting.” Katchmir’s declaration also states: “Despite the lack of ten-
   der from N&F Painting to Sentinel, I expressly asked Attorney Lopez to pro-
   vide me with the complaint in the Underlying Litigation.”5
            Later the same day, June 13, 2017, a person associated with Lopez’s
   law firm emailed N.F. Painting’s “Original Answer & Request for Disclo-
   sure,” “Responses to Plaintiff’s Request for Admissions,” “Responses to
   Plaintiff’s Request for Production,” “Responses to Plaintiff’s Request for
   Disclosures,” and “Answers to Plaintiff’s Interrogatories” to Katchmir, but
   failed to include the complaint that Katchmir had requested.
            On June 19, 2017, Katchmir sent another email to Lopez, thanking
   him for the previously sent documents and again requesting a copy of the
   complaint. Later that day, Lopez sent a copy of the complaint (petition) to
   Katchmir by reply email, which simply stated: “Attached.” As noted in
   Katchmir’s declaration, Lopez’s email communication did not request that
   Sentinel defend and indemnify N&F Painting [in the underlying state court
   suit].
            Thereafter, in a July 5, 2017 letter to “Nelson Flores DBA N&F Paint-
   ing,” which was sent to Flores by certified mail and by regular U.S. Mail to
   Lopez, Katchmir (on behalf of Sentinel) referenced the materials provided to
   her by Lopez and stated:
          “Based on our review, we must respectfully disclaim coverage
          under the Business Liability policy. As such, we will not be
          providing the Defense or Indemnification for Nelson Flores or

            5
              Although Katchmir refers to the document as a “complaint,” the document
   actually is styled as a “petition.”

                                           9
Case: 20-20621     Document: 00516341209           Page: 10   Date Filed: 06/02/2022

                                    No. 20-20621

          N&F Painting under the policy in connection with [Moreno’s
          state court suit]. Our coverage determination is outlined below.
   The remainder of the July 5, 2017 letter explains that Sentinel’s “no cover-
   age” determination is based on Moreno’s status as employee of N.F. Paint-
   ing, who was injured while in the course and scope of his employment duties,
   thereby triggering Exclusions B(1)(d) and (e). Notably, however, the July 5
   letter also states:
           Our analysis is based on the facts as we presently understand
           them. If there are new allegations or additional information
           that you feel may alter our position as to the coverage, please
           forward that information to us for consideration.
   Finally, the July 5 letter concludes with a request that Katchmir be contacted
   regarding any questions about “this matter or the contents of this letter.”
          In her declaration, Katchmir characterizes the July 5, 2017 letter as
   “confirm[ing] that Sentinel would not be providing a defense or indemnifi-
   cation to N&F Painting for the [Moreno state court suit].” In any event, the
   letter mailed to “Nelson Flores DBA N&F Painting” was returned “un-
   claimed” and, though a copy of the letter also was mailed to Lopez on July 5,
   and then emailed on September 6, 2017 (upon the return of the certified letter
   as “unclaimed”), Sentinel never received any response to the letter from
   Lopez or Flores.
                                        C.
          In mid-September 2018, Beazer Homes settled with Moreno and was
   dismissed from the state court suit. The litigation between N.F. Painting and
   Moreno, however, progressed and, on October 23, 2018, Moreno filed a
   “First Amended Petition,” alleging (for the first time) that he was injured
   while working “as an independently contracted painter.” It is undisputed
   that Sentinel was not notified when the amended petition was filed. Nor did
   any of the remaining parties to the state court suit, or their counsel, send a

                                         10
Case: 20-20621        Document: 00516341209            Page: 11     Date Filed: 06/02/2022

                                        No. 20-20621

   copy of the amended petition to Sentinel, or request coverage relative
   thereto.
              In late 2018, an April 15, 2019 trial date was set in the state court suit.
   But, for reasons not specified in the record, the trial did not commence in
   April as scheduled. Instead, by order dated May 3, 2019, the April 2019 trial
   date was reset to the two-week period commencing on August 19, 2019. Ap-
   proximately two weeks later, however, on May 17, 2019, the parties submit-
   ted a “Proposed Agreed Judgment” to the state court.
              Despite the April 2019 trial date having been reset to August 2019,
   the May 17, 2019 “Proposed Agreed Judgment” surprisingly represents that
   the case “proceeded to trial” on April 15, 2019, and, “at the conclusion of
   the evidence, the Court considered the evidence presented by way of live tes-
   timony, exhibits, pleadings, and deposition designations and issued Findings
   of Fact and Conclusions of Law.” Referencing the “Court’s Findings of Fact
   and Conclusions of Law,” the “Proposed Agreed Judgment” “order[s], ad-
   judge[s], and decree[s],” among other things, that:
              (1) Moreno was “an independently contracted painter” and not an
   employee at the time of his July 3, 2016 injury;
              (2) Sentinel provided Business Liability insurance with a $1,000,000
   limit of liability to N.F. Painting, Inc., at the time of Moreno’s injury;
              (3) N.F. Painting, Inc., placed Sentinel on proper notice of Moreno’s
   claims; and
              (4) Moreno was entitled to recover a total of $1,627,541.35 in dam-
   ages, before interest and costs, from N.F. Painting, Inc.
          The “Proposed Agreed Judgment” was signed by the state court
   judge on May 20, 2019.6 According to Katchmir’s declaration, neither N.F.

          6
             The word “Proposed” remains in the title of the document signed by the state
   court judge on May 20, 2019. Nevertheless, to distinguish the document signed by the

                                              11
Case: 20-20621      Document: 00516341209             Page: 12     Date Filed: 06/02/2022

                                       No. 20-20621

   Painting nor Lopez reported the May 20, 2019 “Agreed Judgment” to Sen-
   tinel. Nor did N.F. Painting, through Flores or Lopez, request insurance cov-
   erage, or defense, from Sentinel in connection with the Agreed Judgment.
                                            II.
          Approximately one month later, on June 26, 2019, Moreno com-
   menced the instant action by suing Sentinel and The Hartford Financial Ser-
   vices Group, Inc. (“Hartford”) in Texas state court. The state court petition
   largely restates the “findings” of the May 20, 2019 Agreed Judgment, and
   alleges that Sentinel and Hartford “failed to satisfy their obligations pursu-
   ant to their insurance policy with [N.F. Painting, Inc.],” which constituted a
   “material breach of contract.” Based on these assertions, Moreno, proceed-
   ing as a third-party beneficiary to the liability insurance contract, requested,
   inter alia, damages in the amount awarded against N.F. Painting in the May
   20, 2019 Agreed Judgment”($1,627,541.35). The defendants removed the
   case to federal court under diversity jurisdiction.
          Once in federal court, Moreno voluntarily dismissed his claims against
   Hartford. Thereafter, Sentinel and Moreno filed cross-motions for summary
   judgment. Sentinel maintained that Moreno’s claims fail because: (1) Senti-
   nel did not breach its contractual duties to N.F. Painting, including its duty
   to defend, since N.F. Painting never requested defense or coverage from Sen-
   tinel relative to Moreno’s state court suit; thus, Sentinel’s duty to defend NF
   Painting was never triggered; and (2) the Sentinel policy’s exclusions appli-
   cable to “employees” preclude coverage for Moreno’s damages because
   Moreno was an employee. Conversely, Moreno argued that N.F. Painting
   had properly notified Sentinel of his personal injury claim, and that Sentinel

   state court judge, on May 20, from the document submitted by the parties on May 19, we
   hereafter refer to the May 20 document as the “Agreed Judgment.”

                                            12
Case: 20-20621       Document: 00516341209              Page: 13      Date Filed: 06/02/2022

                                         No. 20-20621

   could have provided coverage, defense, and indemnification to N.F. Painting,
   but refused. Additionally, regarding the policy’s “employee” coverage ex-
   clusions, Moreno maintained that, by virtue of the May 20, 2019 state court
   judgment, Sentinel was collaterally estopped from denying that Moreno was
   an independent contractor, and in any event, the summary judgment evi-
   dence established that Moreno was not an employee.
           Rejecting Moreno’s collateral estoppel assertion, the district court
   reasoned that Moreno had not shown that relevant “facts” were “actually
   litigated” by true adversaries and were essential to the judgment; nor had
   Moreno established privity.7 The district court additionally determined that
   N.F. Painting had not satisfied the notice requirements of the policy, and had
   failed to otherwise notify Sentinel of Moreno’s suit and had failed to request
   a defense. Accordingly, the district court concluded, Sentinel had not
   breached the insurance contract by not defending N.F. Painting against the
   Moreno’s state court suit and by not paying the May 20, 2019 Agreed Judg-
   ment against N.F. Painting. Given these determinations, the district court
   denied Moreno’s motion, and granted Sentinel’s, without the necessity of
   considering the parties’ competing positions regarding the applicability of
   the policy’s “employee” coverage exclusions. This appeal followed.

           7
              The district court discussed the Agreed Judgment at length, noting that this
   “curious document” referenced a trial that did not occur and findings of fact and law that
   were never made before decreeing N.F. Painting liable. The court then queried why N.F.
   Painting “should suddenly confess judgment for damages in excess of $1.6 million.” The
   district court concluded that “the Agreed Judgment transparently intended to establish
   Sentinel’s liability for the judgment” and serve as the basis for the present suit.

                                              13
Case: 20-20621     Document: 00516341209           Page: 14   Date Filed: 06/02/2022

                                    No. 20-20621

                                        III.
          We review grants of summary judgment de novo. Renwick v. PNK
   Charles, LLC, 901 F.3d 605, 611 (5th Cir. 2018). Summary judgment is
   appropriate where 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. Material facts are those that “might affect the outcome of the suit under
   the governing law.” Leasehold Expense Recovery, Inc. v. Mothers Work, Inc., 331
   F.3d 452, 456 (5th Cir. 2003) (internal quotation marks and citation omitted).
   “A genuine [dispute] of material fact exists when the evidence is such that a
   reasonable jury could return a verdict for the non-moving party.” Austin v.
   Kroger Tex., L.P., 864 F.3d 326, 328 (5th Cir. 2017). If the moving party
   initially shows that the non-movant's case lacks support, “the non-movant
   must come forward with ‘specific facts’ showing a genuine factual issue for
   trial.” TIG Ins. Co. v. Sedgwick James of Washington, 276 F.3d 754, 759 (5th
   Cir. 2002). All facts and reasonable inferences are construed in favor of the
   nonmovant, and the court should not weigh evidence or make credibility
   findings. Deville v. Marcantel, 567 F.3d 156, 163–64 (5th Cir. 2009). The
   resolution of a genuine dispute of material fact “is the exclusive province of
   the trier of fact and may not be decided at the summary judgment
   stage.” Ramirez v. Landry’s Seafood Inn & Oyster Bar, 280 F.3d 576, 578 n.3
   (5th Cir. 2002).
                                        IV.
          As clarified on appeal, Moreno’s claims against Sentinel are premised
   upon on his assertion that Sentinel had wrongly refused to defend its insured,
   N.F. Painting, relative to the personal injury claim that Moreno previously
   asserted against N.F. Painting in state court and, thus, is legally responsible
   for the damages awarded against N.F. Painting in the May 20, 2019 Agreed
   Judgment. See Great Am. Ins. Co. v. Hamel, 525 S.W.3d 665, 665–71 (Tex.
   2017) (an insurer who breaches its duty to defend cannot collaterally attack a

                                         14
Case: 20-20621        Document: 00516341209              Page: 15       Date Filed: 06/02/2022

                                         No. 20-20621

   covered judgment or settlement if the insured had an actual risk of liability at
   the time of trial or settlement, or had some other meaningful incentive to
   ensure the judgment or settlement accurately reflects the plaintiff’s damages
   and thus the insured’s covered liability loss).8 For the reasons aptly stated in
   its comprehensive, twenty-one page “Memorandum and Order,” the district
   court rejected Moreno’s position. Having carefully considered the parties’
   submissions, pertinent portions of the record in this matter and in the
   underlying state court litigation, as well as applicable principles of Texas law,
   we agree with the district court.
                            A. Duty to Defend and Indemnify
           As noted by the district court, it is well-established, under Texas law,
   that “[m]ere awareness of a claim or suit does not impose a duty on the
   insurer to defend under the policy. . . .” Nat’l Union Fire Ins. Co. of Pittsburgh,
   PA v. Crocker, 246 S.W.3d 603, 608 (Tex. 2008).9 “Put simply, there is no
   duty to provide a defense absent a request for coverage.” Id. at 607. Indeed,
   the Texas Supreme Court has consistently held that an insurer has no duty
   to defend or to indemnify an insured unless the insured forwards suit papers
   to the insurer and requests a defense in compliance with the policy’s notice-
   of-suit conditions. See Crocker, 246 S.W.3d at 606–10; Harwell v. State Farm

           8
               As stated above, Moreno additionally sought judgment in the district court based
   on collateral estoppel grounds. The district court rejected this argument. Moreno has not
   urged this argument on appeal; thus, it is abandoned. See, e.g., Cinel v. Connick, 15 F.3d
   1338, 1345 (5th Cir. 1994) (“An appellant abandons all issues not raised and argued in its
   initial brief on appeal.”).
           9
              The parties agree that Texas law governs this diversity suit. “Where, as here,
   the proper resolution of the case turns on the interpretation of Texas law,” this court is
   “‘bound to apply [Texas] law as interpreted by the state’s highest court.’” Am. Int’l
   Specialty Lines Ins. Co. v. Rentech Steel LLC, 620 F.3d 558, 564 (5th Cir. 2010) (quoting
   Barfield v. Madison County, 212 F.3d 269, 271–72 (5th Cir. 2000)).

                                               15
Case: 20-20621     Document: 00516341209            Page: 16    Date Filed: 06/02/2022

                                     No. 20-20621

   Mut. Auto. Ins. Co., 896 S.W.2d 170, 174–75 (Tex. 1995); Weaver v. Hartford
   Accident & Indem. Co., 570 S.W.2d 367, 370 (Tex. 1978).
          In Crocker, the Texas Supreme Court explained “that notice and
   delivery-of-suit-papers provisions in insurance policies serve two essential
   purposes: (1) they facilitate a timely and effective defense of the claim against
   the insured, and more fundamentally, (2) they trigger the insurer’s duty to
   defend by notifying the insurer that a defense is expected.” 246 S.W.3d at 608
   (emphasis added). Thus, in Crocker, “despite its actual knowledge of a
   covered suit against and service of process on [the additional insured], [the
   insurer] did not incur a duty to inform [the additional insured] of available
   coverage or his entitlement to a defense or to sua sponte provide one without
   any indication from [the additional insured], either explicit or implicit, that
   he wanted or expected to be defended.” Id. at 610 (emphasis added).
          “The rule from Weaver, Harwell, and Crocker is clear: an insurer has
   no duty to defend and no liability under a policy unless and until the insured
   in question complies with the notice-of-suit conditions and demands a
   defense.” Jenkins v. State & Cty. Mut. Fire Ins. Co., 287 S.W.3d 891, 897
   (Tex. App. 2009, pet. denied). “The rule applies regardless of whether the
   insurer knows that the insured has been sued and served, regardless of
   whether the insurer actually defends another insured in the same litigation
   and regardless of whether the insurer was aware of an interlocutory default
   judgment against the insured.” Hudson v. City of Houston, 392 S.W.3d 714,
   726 (Tex. App. 2011)(citing Jenkins, 287 S.W.3d at 897).
          In other words, despite having knowledge and opportunity, an insurer
   is not required to simply interject itself into a proceeding on its insured’s
   behalf. See Crocker, 246 S.W.3d at 610 (“Insurers owe no duty to provide an
   unsought, uninvited, unrequested, unsolicited defense.”). As explained in
   Crocker:

                                          16
Case: 20-20621     Document: 00516341209           Page: 17    Date Filed: 06/02/2022

                                    No. 20-20621

                  [T]he requirement that an additional insured provide
          notice that it has been served with process is driven by a
          purpose distinct from the purpose underlying the requirement
          for notice of a claim or occurrence. Notice of service of process
          lets the insurer know that the insured is subject to default and
          expects the insurer to interpose a defense. An insurer cannot
          necessarily assume that an additional insured who has been
          served but has not given notice to the insurer is looking to the
          insurer to provide a defense. Potential insureds, for a variety of
          reasons, might well opt against seeking a defense from an
          insurer. For example, an additional insured may opt against
          invoking coverage because it wants to hire its own counsel and
          control its own defense.
   246 S.W.3d at 610.
          In L’Atrium on the Creek I, L.P. v. Nat'l Union Fire Ins. Co. of
   Pittsburgh, PA, 326 F. Supp. 2d 787, 792–93 (N.D. Tex. 2004), a federal
   district court similarly explained the need for clarity regarding the insured’s
   “duty to defend” expectations:
          Here, plaintiffs argue that the notice could come from any
          source, and that defendants received notice of the Ball
          litigation through the demand letters sent by Ball’s attorneys.
          Pertinent authorities do not support such a broad proposition.
          Rather, it is the “action by the insured” in sending the suit
          papers to the insurer that “triggers the insurer’s obligation to
          tender a defense and answer the suit.” [Members Ins. Co. v.
          Branscum, 803 S.W.2d 462, 467 (Tex. App.—Dallas 1991, no
          writ)]. Plaintiffs may have had any number of reasons for failing
          to notify defendants that they had been served with process and
          were looking to defendants to defend and indemnify them.
          Defendants were entitled to rely on the fact that plaintiffs were
          represented by counsel and surely would have made a demand
          for defense and indemnification if they wanted defendants to
          be involved.

                                          17
Case: 20-20621     Document: 00516341209             Page: 18   Date Filed: 06/02/2022

                                      No. 20-20621

          Given the foregoing authorities, construing insurance policy
   conditions comparable to those in Sentinel’s policy, it is clear that, under
   Texas law, an insurer’s duty to defend is not triggered unless and until the
   insured requests that a defense be provided. And, if a duty to defend is not
   triggered, it likewise is not breached when a defense is not provided. See
   Crocker, 246 S.W.3d at 609 (“Absent a threshold duty to defend, there can
   be no liability.”); Jenkins, 287 S.W.3d at 896–97 (“If there is no duty to
   defend, there is not duty to indemnify.”).
          Here, as stated, N.F. Painting did not seek defense or coverage from
   Sentinel when it was served with Moreno’s original state court petition; nor
   did it forward the suit papers that it received to Sentinel for that purpose.
   Rather, because N.F. Painting’s owner, Flores, reportedly did not think
   Moreno’s claim would be covered by the Sentinel policy—and so
   represented in its responses to Moreno’s discovery requests—N.F. Painting
   hired its own counsel, Lopez. Indeed, N.F. Painting never sought to discuss
   the matter with Sentinel at all, and seemingly never would have, if Sentinel
   would not have initiated contact, in late May 2017, after receiving a copy of
   Beazer Homes’ demand for defense and indemnity from Beazer Homes, not
   its insured, earlier that month.
          Even after Sentinel assumed defense of Moreno’s claims against
   Beazer Home, in June 2017, N.F. Painting did not tender (to Sentinel)
   defense of the claims that Moreno had asserted against it, or request coverage
   from Sentinel for the claims. Rather, Lopez’s representation of N.F. Painting
   continued, without further request, or inquiry, by N.F. Painting regarding
   Sentinel’s duty of defense or coverage. This remained true even when
   Moreno amended his complaint, in October 2018, to allege independent
   contractor (rather than employee) status, and N.F. Painting agreed, in May
   2019, to entry of the Agreed Judgment against it for approximately $1.6
   million in damages.

                                           18
Case: 20-20621     Document: 00516341209            Page: 19   Date Filed: 06/02/2022

                                     No. 20-20621

          Moreno’s arguments on appeal do not convince us that the district
   court erred in concluding that Sentinel’s duty to defend N.F. Painting was
   never triggered, and thus was not breached, because N.F. Painting never
   sought a defense from Sentinel against Moreno’s personal injury claims.
   That another insured, Beazer Homes, notified Sentinel of the suit against it
   and demanded a defense by Sentinel, as N.F. Painting’s insurer, did not
   obligate Sentinel to also undertake N.F. Painting’s defense. As explained
   above, Texas law requires a request from the insured for whom a defense
   would be provided, not someone else, to trigger the duty to defend.
          Nor was Sentinel’s duty to defend triggered when, on June 19, 2017,
   N.F. Painting’s attorney, Lopez, emailed a copy of Moreno’s state court
   petition to Katchmir, Sentinel’s claims consultant, in response to Katchmir’s
   request. As the notice of suit and delivery-of-suit-papers policy provisions
   have been construed by the Texas courts, an insured’s transmittal of suit
   papers to the insurer triggers the duty of defense because, in the ordinary case,
   the documents are sent with the expectation that having the documents will
   enable and cause the insurer to promptly provide (or at least fund) the
   insured’s defense against the claims asserted against it. This, however, is not
   the ordinary case.
          Rather, on the summary judgment record before us—given N.F.
   Painting’s initial determination that the Sentinel policy did not cover
   Moreno’s claims, Attorney Lopez’s continued representation of N.F.
   Painting, and the absence of any contemporaneous communications
   regarding N.F. Painting’s defense, Lopez’s role as counsel, possible
   substitution of counsel, or even the costs of defense—Lopez’s June 19
   transmittal of Moreno’s petition to Katchmir cannot reasonably be construed
   to convey an expression of expectation, intent, or desire by N.F. Painting to

                                          19
Case: 20-20621        Document: 00516341209              Page: 20       Date Filed: 06/02/2022

                                         No. 20-20621

   have Sentinel assume its defense.10 Indeed, considering the instant undisputed
   facts, there is no indication that Lopez’s transmittal of a copy of the petition
   to Katchmir, solely in response to Katchmir’s request, expressed anything
   more than professional courtesy.
           Contrary to Moreno’s assertions, Katchmir’s July 5, 2017 letter to
   Flores, on behalf of N.F. Painting, likewise does not reflect the awareness
   necessary to trigger Sentinel’s duty to defend N.F. Painting, i.e., awareness
   that N.F. Painting expected Sentinel to assume its defense against Moreno’s
   claims. In that letter, Sentinel “disclaimed coverage” (upon completing its
   review of the materials provided by N&F Painting’s private attorney), stating
   “[a]s such, we will not be providing the Defense or Indemnification for
   Nelson Flores or N&F Painting under the policy in connection with this
   matter.” Although Moreno argues this letter demonstrates that Sentinel
   understood N.F. Painting expected Sentinel to provide it with a defense, thus
   obviating the necessity of an express request by N.F. Painting for defense or
   coverage, the letter cannot reasonably support that inference.
           First, the July 5, 2017 letter follows Katchmir’s May 30, 2017
   telephone conversation with Flores, who told Katchmir that Lopez was
   representing N.F. Painting, and Katchmir’s June 13, 2017 phone
   conversation with Lopez, who informed her that N.F. Painting had hired him,
   rather than “report[ing] or tender[ing] the Underlying Lawsuit to Sentinel,”
   based on N.F. Painting’s principal’s belief that there would be no coverage,
   under the Sentinel policy, because Moreno was an employee of the N.F.

           10
               It is these additional facts that distinguish this case from the “mom and pop
   hardware store” scenario discussed in Moreno’s reply brief. In that scenario, if a customer
   is injured upon falling in the hardware store and sues the business for negligence, the “mom
   and pop” insureds’ prompt forwarding of the lawsuit papers (served upon them) to the
   insurer ordinarily would, without more, trigger the insurer’s duty of defense.

                                               20
Case: 20-20621     Document: 00516341209           Page: 21   Date Filed: 06/02/2022

                                    No. 20-20621

   Painting.11 Furthermore, though the letter includes the word “Defense,” it
   is apparent that the main focus of the letter was the scope of coverage,
   particularly given Katchmir’s awareness of N.F. Painting’s continued
   engagement of Attorney Lopez, and the absence of any mention of an express
   written or verbal request for defense by N.F. Painting. Thus, as the district
   court correctly concluded, the July 5, 2017 letter simply communicated
   Sentinel’s agreement with N.F. Painting’s own “no coverage”
   determination and confirmed that defense and indemnity would not be
   provided. Notably, however, it does not confirm that a defense and/or
   indemnity ever were sought.
          Finally, any possible uncertainty regarding Sentinel’s understanding
   of N.F. Painting’s intentions relative to its defense disappears when N.F.
   Painting’s handling of Moreno’s October 23, 2018 amended petition,
   asserting independent contractor status for the first time, and the May 17,
   2019 “Proposed Agreed Judgment” that Moreno and N.F. Painting
   submitted to the state court, are considered.        Specifically, there is no
   evidence that N.F. Painting, despite having had the benefit of legal counsel
   throughout the duration of the litigation with Moreno, ever contacted
   Sentinel to discuss the possibility that either of these events would impact
   Sentinel’s and/or N.F. Painting’s earlier assessments of the policy’s
   coverage. Indeed, N.F. Painting never even informed Sentinel that the
   amended petition had been filed or, later, that an Agreed Judgment,
   obligating N.F. Painting to pay approximately $1.6 million in damages to
   Moreno, was even under consideration, much less submitted to the court for
   entry. And N.F. Painting certainly never satisfied its “delivery of suit
   documents” obligation relative to these pleadings. These omissions are

          11
            Moreno points to no evidence in the summary judgment record disputing
   Katchmir’s accounts of these telephone conversations.

                                         21
Case: 20-20621     Document: 00516341209            Page: 22    Date Filed: 06/02/2022

                                     No. 20-20621

   particularly telling given Sentinel’s express directive, in Katchmir’s July 5
   letter, to forward “any new allegations or additional information that you feel
   might alter [Sentinel’s coverage determination] to [Sentinel] for
   consideration, and to contact Katchmir “should you have any questions
   about this matter or the contents of this letter.”
          In short, the undisputed facts before us show that N.F. Painting chose,
   with the assistance of counsel, to handle Moreno’s personal injury claims in
   its own way, without involving Sentinel in its defense, as it was entitled to do.
   And Moreno has put forth no evidence suggesting that Sentinel was not
   entitled to rely on that decision. Having made that decision, it is N.F.
   Painting, and thus Moreno, as third-party beneficiary, not Sentinel, who must
   bear responsibility for any resulting adverse consequences. In other words,
   the law will not permit a third-party beneficiary to simply disregard an
   insured’s litigation decisions, i.e., essentially re-write history, merely because
   he has no other means of satisfying his judgment against the insured. Thus,
   because no defense ever was sought, it was not owed.
                                     B. Prejudice
          Moreno additionally maintains that any noncompliance by N.F.
   Painting relative to the Sentinel policy’s notice requirements does not excuse
   Sentinel’s indemnity obligations unless Sentinel shows resulting prejudice.
   In Crocker, the Texas Supreme Court distinguished prejudice requirements
   for cases where notice to the insurer of service of process was “wholly
   lacking” (prejudice not required) from cases where such notice to the insurer
   was merely late (requiring actual prejudice). See Crocker, 246 S.W.3d at 609
   (distinguishing PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630 (Tex. 2007)).
          Here, as the district court correctly concluded, the undisputed
   summary judgment evidence demonstrates that Sentinel’s duty to defend
   N.F. Painting was never triggered, much less breached, relative to Moreno’s

                                          22
Case: 20-20621     Document: 00516341209              Page: 23    Date Filed: 06/02/2022

                                       No. 20-20621

   claim, because N.F. Painting never requested a defense from Sentinel and
   Sentinel did not have an obligation to sua sponte interject itself into the state
   court action. Even so, Sentinel’s inability to control N.F. Painting’s defense
   against Moreno’s injury claim, together with N.F. Painting’s agreement to
   entry of judgment against it in the amount of approximately $1.6 million
   (without any prior notice to Sentinel), constitute prejudice as a matter of law.
   See Crocker, 246 S.W.3d at 609 (“National Union was obviously prejudiced
   in the sense that it was exposed to a $1 million judgment”); Hudson, 392
   S.W.3d at 727-28 & n.11 (despite insurer’s actual knowledge of the suit
   against the insured, rendition of $3.5 million default judgment constituted
   prejudice as a matter of law); Hoel v. Old American Cty. Mut. Fire Ins. Co.,
   No. 01-16-00610-CV, 2017 WL 3911020,*5 (Tex.App-Hous. [1st Dist.] Sept.
   7, 2017) (despite actual knowledge that insured had been sued, insurers were
   prejudiced as a matter of law by entry of default judgment and being deprived
   of the right to answer, defend, conduct discovery and fully litigate the merits
   of the claims asserted against the insured).
                                           V.
          For the reasons stated herein, the judgment of the district court
   dismissing    Moreno’s     claims     against      Sentinel   with   prejudice   is
   AFFIRMED.

                                           23