Court Opinion

ID: 7552
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:29:21+00
Date Added: 2024-06-11T08:49:46.127282
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS

                        FOR THE FIFTH CIRCUIT

                        _____________________

                             No. 95-10261
                           Summary Calendar
                        _____________________

STATE FARM FIRE & CASUALTY
COMPANY,

                                                  Plaintiff-Appellee,

                               versus

JAMES L. FRANKLIN, ET AL.,

                                                           Defendants,

JAMES L. FRANKLIN and
TONYA JEAN FRANKLIN,

                                                Defendants-Appellants.

_________________________________________________________________

      Appeal from the United States District Court for the
                    Northern District of Texas
                          (6:94-CV-060-C)
_________________________________________________________________
                        (October 10, 1995)

Before JOLLY, JONES, and STEWART, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:*

     In this declaratory judgment action, we are presented with the

primary question of whether under Texas law an insurance policy

clearly excluding coverage of claims against the insured for bodily

    *
     Local Rule 47.5 provides: "The publication of opinions that
have no precedential value and merely decide particular cases on
the basis of well-settled principles of law imposes needless
expense on the public and burdens on the legal profession."
Pursuant to that Rule, the court has determined that this opinion
should not be published.
injury caused by the insured's intentional acts also precludes

coverage of any claim against the insured based on his alleged

sexual molestation of a minor and thereby releases the insurer from

its duty to defend such a claim.

                                    I

       On February 7, 1994, Tonya Jean Franklin filed suit in Texas

state court against her grandfather, James L. Franklin, alleging

that he sexually molested her while she was a minor.             In this

action, Tonya Franklin contended that her injuries were caused by

her grandfather's intentional conduct and also his negligence in

failing to seek treatment for himself to prevent the molestation.

       During the time of the alleged sexual molestation, State Farm

Fire   &   Casualty   Company   ("State   Farm")   provided   homeowner's

insurance for James Franklin.       The terms of this policy required

State Farm to "pay on behalf of the Insured all sums which the

Insured shall become legally obligated to pay as damages because of

bodily injury . . . and defend any suit against the Insured

alleging such bodily injury."           Based on this provision, James

Franklin requested that State Farm provide his defense in the tort

suit filed by Tonya Franklin.       His homeowner's insurance policy,

however, excluded coverage under this provision when the bodily

injury was "caused intentionally by or at the direction of the

Insured" and also released State Farm from defending the insured

against any claim caused by such acts.

                                   -2-
     On October 26, 1994, State Farm filed the present suit in the

United States District Court for the Northern District of Texas

against James Franklin and Tonya Franklin, seeking a declaratory

judgment under 28 U.S.C. § 2201, that it had no duty to defend

James Franklin against Tonya Franklin's sexual molestation claims

because of the "intentional injury" exclusion in the policy.     In

this action, State Farm additionally requested that it recover its

attorneys' fees associated with the declaratory judgment action.

On December 7, 1994, State Farm moved for summary judgment based on

the intentional injury exclusion in the homeowner's insurance

policy.1   On December 29, 1994, the district court entered an order

summarily granting summary judgment in favor of State Farm on the

issue of its duty to defend and stated that State Farm was entitled

to its attorneys' fees. The court, however, delayed final judgment

pending resolution of all issues with regard to State Farm's

attorneys' fees.    On February 23, 1995, the court ordered that

James Franklin and Tonya Franklin pay State Farm $1,858.75 in

attorneys' fees and $429.21 in out-of-pocket expenses related to

the declaratory judgment and entered final judgment in favor of

State Farm.

     On appeal, James and Tonya Franklin argue that the district

court erred in granting summary judgment in favor of State Farm

with regard to State Farm's duty to defend James Franklin in the

     1
      Neither James Franklin nor Tonya Franklin responded to this
motion.

                                 -3-
underlying state court suit and additionally erred in awarding

State Farm attorneys' fees and other expenses.                 James and Tonya

Franklin contend that an allegation of sexual abuse by a minor does

not    constitute    an   intentional       injury   as   a    matter   of    law,

necessarily excluding coverage under the insurance policy.                   Thus,

they argue that Tonya Franklin's negligence claim against James

Franklin is a covered claim under the State Farm policy requiring

State Farm to defend James Franklin in the underlying state court

tort action.

                                     II

                                        A

       We review the district court's grant of summary judgment de

novo.    Davis v. Illinois Central R.R., 921 F.2d 616, 617-18 (5th

Cir.    1991).      Summary   judgment      is   appropriate    if   the   record

discloses "that there is no genuine issue of material fact and that

the moving party is entitled to judgment as a matter of law."                 FED.

R. CIV. P. 56(c).

       In Commercial Union Ins. v. Roberts, 7 F.3d 86 (5th Cir.

1993), an insured adult requested that his insurance company

provide a defense for him against a minor's allegation of sexual

molestation.     Commercial Union Ins., 7 F.3d at 87.            The insured's

insurance carrier brought suit against the insured and the minor

seeking a declaration that it had no duty to defend the insured

based on an intentional injury exclusion in the insurance policy--

identical to that found in James Franklin's policy. Id. Upholding

                                    -4-
the district court's summary judgment in favor of the insurer, we

held that an adult's "intent to injure may be inferred as a matter

of law in cases involving sexual contact between a child and an

adult" regardless of the subjective intent of the adult.                      Id. at

88; see Allen v. Automobile Ins. Co., 892 S.W.2d 198, 199 (Tex. Ct.

App. 1994) (holding "[s]exual molestation is an intentional injury

as a matter of law").             Thus, we concluded that the insured's

actions fell within the "intentional injury" exclusion in his

insurance policy, precluding coverage.              Id.

         Here, James Franklin is accused of sexually molesting a minor

and his insurance policy clearly excludes coverage for bodily

injury caused by intentional acts of the insured and also releases

State Farm from the obligation of defending the insured against

claims based on these intentional acts.             Accordingly, we find this

case     indistinguishable       in   all   respects      from   Commercial    Union

Insurance.         We therefore hold that the allegations of sexual

molestation by the minor Tonya Franklin against James Franklin are

as   a    matter    of   law   excluded     under   the    "intentional   injury"

exclusion from his insurance coverage and thus State Farm has no

duty      to   defend    James    Franklin      against     these    allegations.2

          2
       Based on C.T.W. v. B.C.G., 809 S.W.2d 788 (Tex. Ct. App.
1991), James and Tonya Franklin argue that Texas recognizes a claim
for negligence based on the sexual molestation of a minor and thus
contend that Commercial Union Insurance was improperly decided
because it failed to consider C.T.W.. In essence, James and Tonya
Franklin are asking us to overrule Commercial Union Insurance. Not
only are we bound to follow this well-reasoned case, we find C.T.W.
inapplicable to the facts here as C.T.W. did not involve an issue

                                          -5-
Accordingly, we hold that summary judgment in favor of State Farm

is appropriate on the question of its duty to defend and affirm the

district court as to this issue.

     We now turn to decide whether State Farm is entitled to its

attorneys' fees and other expenses from James and Tonya Franklin.

                                        B

     We review the district court's award of attorney's fees for

abuse of discretion and the supporting factual findings for clear

error.   Watkins v. Fordice, 7 F.3d 453, 457 (5th Cir. 1993).

     Here, State Farm filed suit and requested attorney's fees

under the Declaratory Judgments Act, 28 U.S.C. § 2201.                       The

Declaratory Judgments Act does not explicitly provide for payment

of attorney's fees to the prevailing party, but, under § 2202, does

award "[f]urther necessary or proper relief based on a declaratory

judgment."    We    have       interpreted   this   provision      to   authorize

attorney's   fees   in     a    diversity    action,   such   as   here,   where

applicable state law would otherwise allow them.              Mercantile Nat'l

Bank v. Bradford Trust Co., 850 F.2d 215, 218 (5th Cir. 1988).

Section 37.009 of the Texas Civil Practice and Remedies Code

provides that in a declaratory judgment action, the court "may

award costs and reasonable and necessary attorneys' fees as are

of insurance coverage, but rather quite simply the liability of the
adult for sexually molesting the child. The issues of coverage and
liability are separate and distinct. See Hargis v. Maryland Am.
Gen. Ins. Co., 567 S.W.2d 923, 927 (Tex. Ct. App. 1978) (holding
that judgments of liability are not binding on insurer in
determining question of coverage).

                                       -6-
equitable and just."   TEX. CIV. PRAC. & REM. CODE ANN. § 37.009 (West

19___).   An award under § 37.009 lies within the sound discretion

of the trial court and will not be overturned absent a clear

showing that the decision was arbitrary or unreasonable.      Oake v.

Collin Co., 692 S.W.2d 454, 455 (Tex. 1985).

     The district court awarded State Farm attorneys' fees after

properly considering the factors and following the guidelines set

out in Johnson v. Georgia Highway Express, 488 F.2d 714, 717 (5th

Cir. 1974).   For this reason, we hold that the district court's

award of attorneys' fees and expenses to State Farm in this case

was appropriate and reasonable.3

                                III

     For the foregoing reasons, the judgment of the district court

is

                                                    A F F I R M E D.

     3
      In fact, James and Tonya Franklin do not contend that the
district court's award was arbitrary or unreasonable, but only
argue, however incorrectly, that § 37.009 of the Texas Civil
Practice and Remedies Code is a procedural, rather than a
substantive, provision of Texas law and as such has no application
in a federal diversity action. But see Gulf Union Ind., Inc. v.
Formation Sec., Inc., 842 F.2d 762, 766 (5th Cir. 1988) (holding
that award of attorney's fees is matter of substantive Texas law);
Shelak v. White Motor Co., 636 F.2d 1069, 1072 (5th Cir. 1981)
(characterizing issue of awarding attorney's fees under Texas law
as substantive).

                                -7-