Court Opinion

ID: 67219
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:19:11+00
Date Added: 2024-06-11T17:20:53.496723
License: Public Domain

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

                                                 FILED
                                                                            July 13, 2009

                                     No. 08-20629                      Charles R. Fulbruge III
                                   Summary Calendar                            Clerk

BJB CONSTRUCTION LLC

                                    Plaintiff
v.

ATLANTIC CASUALTY INSURANCE COMPANY

                                    Defendant-Third Party Plaintiff-Appellant
v.

TEXAS MUTUAL INSURANCE CO.

                                    Third Party Defendant-Appellee

                   Appeal from the United States District Court
                        for the Southern District of Texas
                              USDC No. 4:07-CV-157

Before JOLLY, BENAVIDES, and CLEMENT, Circuit Judges.
PER CURIAM:*
       This is an appeal from a summary judgment granted in favor of Texas
Mutual Insurance Co. (“Texas Mutual”) holding that Texas Mutual was not
obligated to defend a party in the underlying lawsuit and that Atlantic Casualty

       *
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
                                  No. 08-20629

Insurance Company (“Atlantic”) was not entitled to reimbursement from Texas
Mutual. For the following reasons, we affirm the judgment of the district court.
                                        I.
      Antonio Ruiz, the plaintiff in the underlying lawsuit, asserted claims
against BJB Construction, L.L.C. (“BJB Construction”) and E. Garza &
Associates, Inc. (“E. Garza”). Ruiz alleged that he sustained injuries on or about
April 4, 2004, when scaffolding collapsed at a job site in Houston, Texas. Ruiz
claimed his injuries were caused by the negligence of E. Garza and BJB
Construction and that both E. Garza and BJB Construction were negligent in
the following respects: (1) failure to maintain and/or provide proper equipment
to workers and/or subcontractors and independent contractors; (2) failure to
provide adequate safety policies and practices; (3) failure to provide adequate
safety equipment; (4) failure to provide proper assistance; (5) failure to provide
properly trained supervisors and/or directors; and (6) requiring Ruiz to perform
tasks under the conditions stated above.
      Atlantic insured E. Garza under a commercial general liability policy and
Texas Mutual insured E. Garza under a Texas workers’ compensation/employers’
liability policy. E. Garza provided a copy of Ruiz’s petition to both Atlantic and
Texas Mutual, requesting that the carriers provide it a defense to the action.
Atlantic tendered a defense to E. Garza and to BJB Construction under a
reservation of rights.   Texas Mutual, believing that the allegations in the
petition did not implicate coverage under its policy, did not tender a defense to
E. Garza.   The underlying lawsuit settled in 2007, with Atlantic paying a
$275,000 settlement and incurring E. Garza’s defense costs.
      Atlantic filed a declaratory judgment action in which Atlantic sought
reimbursement and contribution from Texas Mutual for defense costs incurred
and settlement monies paid by Atlantic on behalf of E. Garza in the underlying
suit. Texas Mutual counterclaimed for a declaratory judgment that it had no

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                                  No. 08-20629

duty to defend or indemnify E. Garza in the underlying lawsuit and, therefore,
no liability to Atlantic.   Both Atlantic and Texas Mutual filed motions for
summary judgment regarding whether Texas Mutual had a duty to defend or
indemnify E. Garza in the underlying lawsuit. Atlantic then filed a motion for
leave to amend its complaint, which the district court denied. In a memorandum
opinion and order, the district court granted Texas Mutual’s motion for summary
judgment, holding that Texas Mutual owed E. Garza no duty to defend or to
indemnify in the underlying lawsuit. Final judgment was entered on April 23,
2008, providing that (1) “Texas Mutual owed E. Garza no duty of defense or
indemnity,” (2) “Texas Mutual has no duty to reimburse Atlantic for the costs of
defense and settlement,” and (3) “Atlantic take nothing in its claims against
Texas Mutual.” Atlantic filed a Rule 59(e) Motion on May 6, 2008, which the
court denied. Atlantic filed the instant appeal on September 15,2008.
                                        II.
      This Court reviews a district court’s grant of summary judgment de novo,
applying the same standards as the district court. Strong v. Univ. Healthcare
Sys., L.L.C., 482 F.3d 802, 805 (5th Cir. 2007). Summary judgment is proper if
the record reflects “that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c).
      Under Texas law, which governs this diversity suit, evaluation of the
petition and the policy is conducted pursuant to the “eight corners” rule.
Guaranty Nat’l Ins. Co. v. Vic Mfg. Co., 143 F.3d 192, 193 (5th Cir. 1998) (citing
Nat’l Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139,
141 (Tex. 1997)). Under this rule, “the court compares the four corners of the
insurance policy with the four corners of the plaintiff’s pleading to determine
whether any claim alleged by the pleading is potentially within the policy
coverage.” Id.   Courts “must focus their review on the pleading’s factual
allegations, not on the legal theories asserted.” Nat’l Union, 939 S.W.2d at 142.

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                                       No. 08-20629

A court interprets the allegations liberally and resolves all doubts regarding the
duty to defend in favor of the insured, but the court may not read facts into the
pleadings, look outside the pleadings, or imagine factual scenarios that might
trigger coverage. Id. at 141–42; see also Trinity Universal Ins. Co. v. Cowan, 945
S.W.2d 819, 825 (Tex. 1997) (refusing to “read facts into the pleadings” for the
purpose of establishing a duty to defend).
       Texas Mutual’s policy is a workers’ compensation and employer’s liability
policy that provides coverage for claims by E. Garza’s employees or their
survivors for injuries or deaths occurring to E. Garza’s employees in the course
and scope of their employment. Unlike Atlantic’s policy, Texas Mutual’s policy
is limited to claims arising from on-the-job injuries by E. Garza’s employees and
does not provide commercial general liability coverage.
       In his pleadings in the underlying lawsuit, Ruiz never alleged that E.
Garza was his employer. E. Garza was a subcontractor on a construction project
during the period covered by the insurance policies. Ruiz pleaded allegations of
negligence relating to E. Garza’s failure to provide: proper equipment, adequate
safety policies and practices, adequate safety equipment, proper assistance, and
properly trained supervisors. Ruiz made the same allegations against both of
the defendants in the underlying suit. He did not state any additional facts that
would support an employment relationship. As reasoned by the district court,
the allegations are focused on control of the workplace environment, not Ruiz’s
employment.       A court cannot read facts into the pleadings to establish a
plausible employment relationship. Thus, under the eight-corners rule, the
petition did not allege a claim within the Texas Mutual policy’s coverage.1

       1
         In determining whether Texas Mutual had a duty to defend E. Garza in the
underlying suit, the district court considered deposition testimony submitted by Texas Mutual
that established that Ruiz worked for Francisco Garcia and not E. Garza. Although “[f]acts
outside the pleadings, even those easily ascertained, are ordinarily not material to the [duty
to defend]determination,” Liberty Mut. Ins. Co. v. Graham, 473 F.3d 596, 600 (5th Cir. 2006),

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                                       No. 08-20629

Furthermore, because Texas Mutual had no duty to defend E. Garza, Texas
Mutual has no obligation to indemnify E.Garza and no liability to Atlantic for
settlement costs.2 See Noble Energy, Inc. v. Bituminous Cas. Co., 529 F.3d 642,
649 (5th Cir. 2008) (noting that the duty to indemnify under an insurance policy
is narrower than the duty to defend).
       The judgment of the district court is AFFIRMED.

intermediate Texas appellate courts and this court have held that extrinsic evidence may be
looked to when (1) the pleadings in the underlying lawsuit fail to allege facts implicating or
excluding coverage and (2) the extrinsic evidence goes only to the coverage issue and does not
contradict anything in the pleadings. W. Heritage Ins. Co. v. River Entm’t, 998 F .2d 311, 313
(5th Cir. 1993); State Farm Fire & Cas. Co. v. Wade, 827 S.W.2d 448, 452–53 (Tex. App. 1992).
This exception has been acknowledged by the Texas Supreme Court, though it has not been
explicitly accepted. See, e.g., Zurich Am. Ins. Co. v. Nokia, 268 S.W.3d 487, 497–98 (Tex.
2008). In any event, the district court’s consideration of such evidence was not error
because—even excluding the deposition testimony— the pleadings did not allege a claim that
was within the policy’s coverage.
       2
         We do not find that the district court abused its discretion in denying Atlantic leave
to amend its complaint because the additional allegations were immaterial to the outcome of
the suit. See Cent. Laborers’ Pension Fund v. Integrated Elec. Servs. Inc., 497 F.3d 546, 551
(5th Cir. 2008) (holding that it is not an abuse of discretion to deny leave to amend when
amendment would have been futile).

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