Court Opinion

ID: 5119872
Source: CourtListenerOpinion
Date Created: 2021-10-21 00:00:37.650763+00
Date Added: 2024-06-11T08:22:14.461907
License: Public Domain

Case: 21-10010     Document: 00516062288          Page: 1    Date Filed: 10/20/2021

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

                                                                                FILED
                                                                         October 20, 2021
                                   No. 21-10010                            Lyle W. Cayce
                                                                                Clerk

   Covington Specialty Insurance Company,

                                                            Plaintiff—Appellant,

                                       versus

   USAI LP; Lara Briggs-Tafel, JD,

                                                         Defendants—Appellees.

                  Appeal from the United States District Court
                      for the Northern District of Texas
                            USDC No. 3:18-CV-3271

   Before Stewart, Ho, and Engelhardt, Circuit Judges.
   Per Curiam:*
          This case arises from the tragic death of Calvin Marcus McCullers, Jr.
   Because McCullers perished while working as a security guard at a property
   allegedly owned by Defendants-Appellees USAI and Lara Briggs-Tafel (the
   “USAI Defendants”), McCullers’ survivors sued them in state court (the

          *
            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   opinion should not be published and is not precedent except under the limited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: 21-10010        Document: 00516062288              Page: 2      Date Filed: 10/20/2021

                                         No. 21-10010

   “McCullers Suit”). 1 But we do not have that suit before us. Instead, we must
   decide whether USAI Defendants or Plaintiff-Appellant Covington Specialty
   Insurance Company (“Covington”), with whom USAI Defendants have a
   policy, must defend the McCullers Suit. For the reasons stated by the district
   court below in denying summary judgment to Covington and granting
   summary judgment to USAI Defendants, 2 we hold that Covington is bound
   by the terms of its policy with USAI Defendants to defend the McCullers
   Suit. Accordingly, we AFFIRM.
                                  A. Standard of Review
           We review a grant of summary judgment de novo, apply the same
   standard as the district court, and view the evidence in the light most
   favorable to the nonmovant. First Am. Title Ins. v. Cont’l Cas. Co., 709 F.3d
   1170, 1173 (5th Cir. 2013). The interpretation of an insurance contract is also
   reviewed de novo. Nat’l Cas. Co. v. W. World Ins., 669 F.3d 608, 612 (5th
   Cir. 2012). 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(a).

           1
             The underlying case is Tiffany Renee McCullers, individually and on behalf of the
   Estate and Heirs-at-Law of Calvin Marcus McCullers, Jr., deceased v. USAI, LP f/k/a Porky
   Realty Investments, LP, et al., case no. DC-18-08709, filed in the District Court of Dallas
   County, Texas on July 5, 2018.
           2
              The district court’s May 4, 2020 opinion and order denied Covington’s motion
   for summary judgment. Covington Specialty Ins. v. USAI LP, No. 18-CV-3271-N, 2020 WL
   2132598, at *1 (N.D. Tex. May 4, 2020) [hereinafter Covington I]. Its December 9, 2020
   opinion and order granted summary judgment for USAI Defendants sua sponte. Covington
   Specialty Ins. v. USAI LP, No. 18-CV-3271-N, 2020 WL 7245073, at *1 (N.D. Tex. Dec. 9,
   2020) [hereinafter Covington II].

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                                     No. 21-10010

                                 B. Applicable Law
            Because this is a diversity case, Texas substantive law applies. Erie
   R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); see ACE Am. Ins. v. Freeport
   Welding & Fabricating, Inc., 699 F.3d 832, 839 (5th Cir. 2012). The parties
   agree.
            Under Texas law, the insured bears the burden of establishing
   coverage under the policy. JAW The Pointe, L.L.C. v. Lexington Ins., 460
   S.W.3d 597, 603 (Tex. 2015). If the insured carries its burden, the insurer
   must “plead and prove” that the insured’s loss falls within an exclusion to
   coverage. Id. If the insurer succeeds, the pendulum swings and the insured
   must show that there is an applicable exception to the exclusion that renews
   coverage. Id.
            Texas courts resolve duty-to-defend disputes like this one using the
   “eight corners” rule, looking only to the terms of the policy and the pleadings
   in the underlying suit to determine if the suit implicates the policy and, if so,
   an exclusion to that policy. Zurich Am. Ins. v. Nokia, Inc., 268 S.W.3d 487,
   491 (Tex. 2008). The truth of the allegations is irrelevant. Gore Design
   Completions, Ltd. v. Hartford Fire Ins., 538 F.3d 365, 368 (5th Cir. 2008).
   Allegations must be liberally construed, and all doubts are resolved in favor
   of the insured. Nat’l Union Fire Ins. v. Merchs. Fast Motor Lines, Inc., 939
   S.W.2d 139, 141 (Tex. 1997) (per curiam).
                                 C. Relevant Facts
            We first look to the allegations in the operative pleading, the Third
   Amended Petition in the McCullers Suit. McCullers was working as a private
   security guard, “sitting post” inside his vehicle. A thunderstorm passed
   through, causing a nearby stream to rise and flood. After his vehicle became
   “inundated,” McCullers called for help but could not safely move to higher
   ground. “Immediately thereafter,” his vehicle was “engulfed” in

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                                    No. 21-10010

   floodwater. “As [McCullers] escaped the vehicle, floodwaters swept it and
   [him] over [an] embankment and into Turtle Creek.” Rescue workers found
   the vehicle that day but did not find McCullers’ body until almost two
   months later.
          At the time, USAI Defendants were covered by an insurance policy
   (the “Policy”) issued by Covington. The Policy covers bodily injury and
   property damage, but not when such injuries “aris[e] out of or result[] from
   . . . use [of an] ‘auto’. . . .” The parties do not dispute that the Policy’s
   definition of “auto” includes the vehicle discussed in the McCullers Suit.
                                    D. Analysis
          Covington does not dispute that the Policy is implicated by the
   underlying suit. Thus, it bears the burden of establishing that the auto
   exclusion applies. JAW The Pointe, 460 S.W.3d at 603. Covington argues that
   the district court erred in holding that it failed to show that the injuries to
   McCullers resulted from the “use” of his vehicle, which would bring the
   injuries within the auto exclusion. We agree with the district court’s
   reasoning, hold that Covington failed to show that the injuries resulted from
   use of the vehicle, and therefore affirm the district court’s grant of summary
   judgment to USAI Defendants on the duty-to-defend issue.
          As the district court found, under Texas law an injury arises out of
   the use of a vehicle for insurance purposes when it 1) arises “out of the
   inherent nature of the automobile,”2) arises “within the natural territorial
   limits of an automobile” before the actual use has terminated, and 3) the
   automobile does not “merely contribute to cause the condition which

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                                          No. 21-10010

   produces the injury, but . . . itself produce[s] the injury.” Covington I at *3
   (quoting Mid-Century Ins. v. Lindsey, 997 S.W.2d 153, 156 (Tex. 1999)). 3
           Applying that law to these allegations, the district court correctly
   concluded that Covington failed as a matter of law to establish either that the
   incident occurred within the territorial limits of the vehicle or that the vehicle
   was a producing cause of McCullers’ death. Id. at *3–4. On the territorial
   limit prong, it is not clear from the allegations whether McCullers died in the
   vehicle before being swept away or was swept away and then died. Id. at *3.
   Thus, the district court was correct to find that Covington failed to meet its
   burden on the territorial limit factor. The court was likewise correct to hold
   that because the allegations state that the floodwaters caused McCullers’
   death, not the vehicle, Covington had failed to establish that the vehicle was
   the producing cause of the injury. Id. at *4.
           Covington’s arguments to the contrary were properly rejected below
   and are rejected here as well. Covington argues that the relevant “accident”
   was McCullers’ “sitting post” in the vehicle, which “render[ed]
   [McCullers] unable to seek refuge.” But the underlying allegations do not
   state that McCullers was restricted from exiting the vehicle. Instead, they
   state that McCullers was swept away while escaping it, and that McCullers’
   body was found miles away from the vehicle nearly two months after the
   vehicle was found. Further, the court below properly found that Lindsey and
   its progeny, when ascertaining the relevant event to analyze, “looked to the
   event that caused the injury.” Covington II at *3. Here, the event that caused
   the injury was the flood, not sitting in a vehicle. This argument fails.

           3
            To the extent Covington argues that Lindsey does not apply, that argument was
   not presented to the district court and is waived. See Patterson v. Dean Morris, L.L.P., 448
   F.3d 736, 741 n.5 (5th Cir. 2006).

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                                          No. 21-10010

           Covington also argues that the district court erred in not applying a
   “but for” causation analysis, asserting that this was the proper standard and
   that McCullers “sitting post” in the vehicle was a but-for cause of his death.
   If McCullers had been sitting post in a different location, Covington opines,
   he would have been protected from the elements or, at least, would have
   noticed the rising floodwaters. This argument is tenuous at best. The
   allegations provide no basis to conclude that the vehicle prevented McCullers
   from noticing the flooding (which occurred in the dead of night), or that the
   vehicle had any causal significance whatsoever. The district court both
   correctly applied the producing cause standard and correctly reasoned that,
   even under but-for causation, Covington failed to carry its burden to show
   that the vehicle played any causative role in McCullers’ death. Id. at *3–4.
                                       E. Conclusion
           The court below correctly found that Covington failed to carry its
   burden to show that the auto exclusion applies to the facts as alleged in the
   underlying suit. Thus, Covington must defend the McCullers Suit and
   summary judgment for USAI Defendants was proper. For the reasons stated
   above, we AFFIRM. 4

           4
              Because Covington has a duty to defend, we also affirm the district court’s
   determination that the question of a duty to indemnify is not ripe until the underlying suit
   is resolved. Covington I at *4.

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