Court Opinion

ID: 3214720
Source: CourtListenerOpinion
Date Created: 2016-06-20 10:13:11.053836+00
Date Added: 2024-06-11T14:46:01.715406
License: Public Domain

IN THE SUPREME COURT OF TEXAS
                                           444444444444
                                              NO . 13-0673
                                           444444444444

                               ROY SEGER, ET AL., PETITIONERS,

                                                    v.

                      YORKSHIRE INSURANCE CO., LTD. , AND
                  OCEAN MARINE INSURANCE CO., LTD, RESPONDENTS

            4444444444444444444444444444444444444444444444444444
                              ON PETITION FOR REVIEW FROM THE
                     COURT OF APPEALS FOR THE SEVENTH DISTRICT OF TEXAS
            4444444444444444444444444444444444444444444444444444

                                     Argued September 3, 2015

        JUSTICE GREEN delivered the opinion of the Court.

        After a tragic accident, a deceased derrick hand’s parents sued the company that owned the

drilling rig upon which the fatal accident occurred. The drilling company demanded that its

commercial general liability (CGL) insurers defend it in the litigation. The insurers refused based on

lack of coverage. The parents obtained a judgment against the drilling company, the company

assigned its rights against the insurers to the parents, and the parents brought a Stowers action against

the insurers. See G.A. Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544, 547–48 (Tex.

Comm’n App. 1929, holding approved). After years of litigation, the jury returned a verdict in the

parents’ favor. The court of appeals reversed the trial court’s judgment and rendered judgment that
the parents take nothing. Yorkshire Ins. Co. v. Seger, 407 S.W.3d 435, 443 (Tex. App.—Amarillo

2013, pet. granted). The court of appeals decided the issue of damages by applying our decision in

State Farm Fire & Casualty Co. v. Gandy, 925 S.W.2d 696 (Tex. 1996). We decide the case on

different grounds, holding that the parents failed to establish coverage, an essential element of any

Stowers action. The evidence is legally insufficient to support the jury’s finding that the deceased

worker was not a leased-in worker; in fact, the evidence is conclusive that he was a leased-in worker

under the definition given by the court of appeals. Coverage is therefore precluded as a matter of law.

Because the coverage issue is dispositive, we do not address the damages issue. We affirm the court

of appeals’ judgment that the parents take nothing, but on different grounds.

                              I. Facts and Procedural Background

       Randall Seger (Randy) died in 1992 while working on a hydraulic-lift drilling rig that

suddenly collapsed. At the time of the accident, Randy was employed by Employer’s Contractor

Services, Inc. (ECS), an oilfield service company. As an employee of ECS, Randy provided services

to Diatom Drilling Co., L.P., which owned the drilling rig. ECS’s president and founder, Cynthia

Gillman, was also Diatom’s general partner.

       Diatom was insured under a CGL policy issued by fifteen offshore insurers, including lead

insurers Yorkshire Insurance Co. and Ocean Marine Insurance Co. (collectively, the CGL Insurers).

The “cover note” for Diatom’s policy identified Diatom and ECS as the insureds, provided a

maximum of $500,000 of coverage for any one bodily injury accident or occurrence, and contained

a “condition” “Excluding Leased-In Employees/Workers.” The policy also excluded employees, but

                                                   2
included independent contractors, and provided that the CGL Insurers “shall have the right and duty

to defend any suit against the insured seeking damages.”

                                 A. The Wrongful Death Action

       The CGL Insurers were promptly notified of Randy’s death, but Randy was erroneously

referred to as a Diatom employee. The CGL Insurers did not investigate the incident and apparently

conducted no inquiry or review of the policy to determine coverage. Rather, the CGL Insurers’

strategy was to “keep a low profile” as they “[did] not wish to encourage any suit papers.” Randy’s

parents, Roy Seger and Shirley Faye Hoskins (the Segers), ultimately brought a wrongful death action

against Diatom and its partners in 1993, but the suit sat dormant for years.

       In October 1998, the Segers made their first offer to settle the case within policy limits for

$500,000. Diatom forwarded the offer to the CGL Insurers and made its first demand that the CGL

Insurers provide a defense and settle the case within the policy limits. The CGL Insurers denied that

Randy’s death was a covered occurrence, notified Diatom that two of the CGL Insurers had become

insolvent and therefore the demand exceeded policy limits, and refused to provide a defense or settle

the case. In June 1999, the Segers made a second settlement offer within coverage limits, offering

to accept $368,190 to “resolve all claims and all pending litigation arising out of the death of Randy

Seger.” The CGL Insurers rejected that offer. With a trial setting looming, Diatom made a second

demand for a defense, asking the CGL Insurers to “come in and accept defense and acknowledge

coverage on our behalf and settle the case within the policy limits.” In June 2000, Diatom repeated

that demand. The Segers made a third settlement offer prior to the March 2001 trial, offering to

                                                  3
accept $250,000 to “resolve all pending litigation between the parties.” The CGL Insurers again

declined to accept the settlement offer.

       Before trial, the Segers nonsuited Diatom’s individual partners, leaving Diatom as the only

defendant. Diatom’s counsel then withdrew from the case, claiming that Diatom was “unable to pay

attorney fees.”

       At trial, Diatom appeared only through Gillman, its general partner, who is not a lawyer and

had been subpoenaed to appear as a witness. Diatom did not announce ready when the proceeding

was called, presented no opening or closing argument, offered no evidence, and did not cross-examine

any witnesses. Gillman testified and was excused after her testimony. The CGL Insurers, despite

having notice of the trial, elected not to attend or participate. The Segers presented evidence to prove

both Diatom’s liability and damages. After a full day of hearing evidence, the trial court found

Diatom liable for Randy’s death and awarded the Segers $15 million, plus interest.

       Following entry of the judgment, Gillman contacted the CGL Insurers and inquired about what

they intended to do. Receiving no answer, Diatom assigned to the Segers “any and all claims and

causes of action” against the CGL Insurers, but reserved Diatom’s right to recover its attorney’s fees

incurred in the underlying suit. In exchange, the Segers agreed to release Diatom’s partners from any

personal liability, even though they had already been nonsuited.

                                       B. The Stowers Action

       The Segers filed a Stowers action, see G.A. Stowers Furniture, 15 S.W.2d at 544, against the

CGL Insurers, seeking damages for wrongful refusal to defend Diatom and negligent failure to settle

the Segers’ wrongful death claim within the $500,000 limits of Diatom’s CGL policy. Before the

                                                   4
Stowers action went to trial, all claims against the insolvent CGL Insurers were settled and dismissed,

leaving only claims against Yorkshire and Ocean Marine (collectively, the Stowers Insurers). The

Segers filed a nonsuit as to the other CGL Insurers.

       The Stowers Insurers filed a third-party claim against Diatom and ECS for declaratory relief

or for reformation of the CGL policy, arguing that the policy excluded coverage for Diatom’s

liabilities to leased-in workers. The Stowers Insurers also sought a declaration that Randy was a

leased-in worker on the date of his death and that the Stowers Insurers had no duty to defend Diatom.

At a pretrial hearing, the trial court denied the Stowers Insurers’ motion for summary judgment and

granted summary judgment in favor of Diatom and ECS on the issues of “coverage, demand within

limits, fully adversarial relationship, and trial.” The trial court then severed the third-party claims

from the Segers’ Stowers action.

       The Stowers action went to trial on the remaining issues of negligence, causation, and

damages. The jury returned a verdict in favor of the Segers as to the Stowers Insurers’ negligence and

causation, and the trial court directed verdict as to damages based on the underlying judgment against

Diatom. In April 2006, the trial court entered a $37,213,592.01 final judgment in favor of the Segers.

                                 C. The Stowers Action Appeals

       In the first appeal, the Stowers Insurers challenged some of the trial court’s procedural rulings,

the court’s disposition of competing motions for summary judgment, and the court’s rulings on

motions for directed verdict. Yorkshire Ins. Co. v. Seger, 279 S.W.3d 755, 761 (Tex. App.—Amarillo

                                                   5
2007, pet. denied).1 The court of appeals affirmed the trial court’s summary judgment that the Segers’

$250,000 settlement demand was within the CGL policy limits. Id. at 769, 775. However, the court

reversed the trial court on six other holdings. Id. at 775. On the issue of coverage, the court of

appeals held that Diatom’s CGL policy excluded claims for bodily injury or property damage brought

by or on behalf of persons who performed work for the insured under an agreement with another

allowing the temporary use of the worker. Id. at 768. Because there was more than a scintilla of

evidence that the Segers’ claims were excluded by the CGL policy and the Segers failed to negate the

applicability of the leased-in worker exclusion as a matter of law, the court held that the trial court

erred in granting summary judgment on the issue of coverage. Id. The court also held that the

Stowers Insurers had raised a fact issue regarding whether the underlying judgment was the result of

a fully adversarial trial, reversed the damages portion of the Stowers action judgment, and remanded

the case for a new trial. Id. at 773, 775. The court of appeals referred to this opinion as Seger I, so

we do the same.

        The Stowers Insurers also appealed the trial court’s summary judgment on the Stowers

Insurers’ third-party claim against Diatom and ECS for declaratory relief relating to the coverage

exclusion in the severed action. Yorkshire Ins. Co. v. Diatom Drilling Co., 280 S.W.3d 278, 279

(Tex. App.—Amarillo 2007, pet. denied).2 The court of appeals reversed the trial court’s judgment

that the Segers’ claims against Diatom were covered by Diatom’s CGL policy. Id. at 283. In

        1
          The court of appeals issued an opinion on April 30, 2007, but the court later granted the Segers’ motion for
rehearing and issued a substitute opinion on June 20, 2007. Seger I, 279 S.W .3d at 759.

        2
           The court of appeals issued an opinion on May 2, 2007, but the court later granted Diatom’s and ECS’s motion
for rehearing and issued a substitute opinion on August 17, 2007. Diatom Drilling Co., 280 S.W .3d at 279.

                                                          6
reviewing the summary judgment order, the court of appeals stated that “the record reflects that all

of Diatom’s drilling workers were leased in from ECS.” Id. at 282. The court, however, only

determined the issue of the construction of the leased-in worker exclusion and rendered judgment

declaring that the CGL policy “excluded liability for injury or death to leased-in employees/workers.”

Id. at 282–83. The case was then remanded to the trial court. Id. at 283.

                                    D. The Stowers Action on Remand

        On remand, the Stowers case was tried in October 2011. The jury found that: (1) the Stowers

Insurers negligently failed to settle the Segers’ wrongful death claim against Diatom, proximately

causing the underlying judgment against Diatom; (2) Randy was not an employee or leased-in worker

of Diatom; and (3) the Stowers Insurers’ wrongful refusal to provide Diatom a defense in the

underlying action waived their right to control Diatom’s defense. The trial court entered a judgment

that (1) the Segers’ claims were covered by Diatom’s CGL policy; and (2) the underlying judgment

in the wrongful death action was the result of a fully adversarial trial and thus established the Segers’

damages as a matter of law. The trial court awarded damages to the Segers in the amount of the

underlying judgment, $71,696,547.3 The Stowers Insurers appealed.

                                      E. The Present Stowers Appeal

        The Stowers Insurers raised seven issues on appeal, including issues related to Diatom’s injury

and damages, and coverage under Diatom’s CGL policy. 407 S.W.3d at 438. The court of appeals

reversed the trial court’s judgment, holding that the evidence was legally and factually insufficient

         3
            Shirley Hoskins died while the Stowers action was on remand. The trial court ordered that Don Hoskins, as
 independent executor of Shirley Hoskins’s estate, be substituted in her place and that Roy Seger be substituted as
 administrator of Randy’s estate.

                                                         7
to establish that Diatom was damaged by the Stowers Insurers. Id. at 438, 443. The court reasoned

that the Segers relied exclusively on the inadmissible underlying judgment to prove damages, and that

the trial court’s judgment was the result of a proceeding that could not be characterized as a fully

adversarial trial. Id. at 443. The court of appeals declined to reach the other issues raised on appeal,

including the coverage issue, because it held that the damages issue was dispositive. Id. at 438. The

Segers refer to this opinion as Seger II, so we do the same.

                                        II. The Stowers Issue

        A Stowers cause of action arises when an insurer negligently fails to settle a claim covered

by an applicable policy within policy limits. See G.A. Stowers Furniture, 15 S.W.2d at 547. To

prove a Stowers claim, the insured must establish that (1) the claim is within the scope of coverage;

(2) a demand was made that was within policy limits; and (3) the demand was such that an ordinary,

prudent insurer would have accepted it, considering the likelihood and degree of the insured’s

potential exposure to an excess judgment. Am. Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 849

(Tex. 1994).

        Although the parties’ focus has been on damages and whether the underlying trial was fully

adversarial, the Segers cannot be entitled to any Stowers damages unless they establish all elements

of a Stowers cause of action. See id. Therefore, we first consider the coverage element, although the

court of appeals did not reach it. See id. at 848 (“We start with the proposition that an insurer has no

duty to settle a claim that is not covered under its policy.”).

                                                   8
                                                A. Coverage

       The Segers argue that the Stowers Insurers had the burden to negate coverage and prove that

they are entitled to enforce the policy exclusions. In a Stowers action, however, the burden is on the

insured to prove coverage. See State Farm Lloyds Ins. Co. v. Maldonado, 963 S.W.2d 38, 41 (Tex.

1998) (holding that the insured had the burden to show that the second element of his Stowers claim

was met); Garcia, 876 S.W.2d at 848–49 (addressing coverage before moving on to the other

elements of the Stowers claim); Emp’rs Cas. Co. v. Block, 744 S.W.2d 940, 944 (Tex. 1988) (citation

omitted) (“An insured cannot recover under an insurance policy unless facts are pleaded and proved

showing that damages are covered by his policy.”). Under the policy, Diatom’s liabilities for bodily

injuries to third parties, including independent contractors, were covered. Accordingly, to prevail

under a Stowers cause of action, the Segers had the burden to prove that Randy was an independent

contractor or other third party. To fully understand the coverage issue in this case, a more detailed

factual background is helpful, so that is where we begin.

                                          1. Diatom’s Insurance

       Diatom could not afford workers’ compensation insurance for all of its employees. As an

alternative to purchasing workers’ compensation insurance, Gillman established an arrangement

under which ECS—a company she created—employed the drilling workers and, as Diatom’s

independent contractor, provided those workers to Diatom. Neither Diatom nor ECS furnished

workers’ compensation insurance for the drilling workers.4 Diatom instead purchased a Lloyd’s-

        4
           Instead of workers’ compensation insurance, ECS purchased an accident, death, and dismemberment policy
to cover its employees in the event of an accident. Diatom did maintain workers’ compensation insurance for a few
employees, to satisfy the requirement of some customers that Diatom provide a certificate of workers’ compensation

                                                       9
of-London-type CGL policy spread among fifteen insurers (the CGL Insurers), including Yorkshire

and Ocean Marine (the Stowers Insurers).5

       Diatom’s CGL policy provided a maximum of $500,000 coverage for any one bodily injury

accident or occurrence. In the policy’s “General Liability Standard Provisions,” “bodily injury” is

defined as “bodily injury, sickness or disease sustained by any person which occurs during the policy

period, including death.” The policy expressly excludes “bodily injury to any employee of the Insured

arising out of and in the course of his employment by the Insured.” Although a common CGL policy

endorsement excludes liability for injury to independent contractors, see Certain Interested

Underwriters at Lloyd’s, London v. Stolberg, 680 F.3d 61, 64 (1st Cir. 2012), Diatom’s CGL policy

expressly covered liability for injury to independent contractors.6 Diatom’s policy itself did not

address leased-in workers, but the cover note to Diatom’s CGL policy, which identified both Diatom

and ECS as insureds, contained the following “condition”: “To cover the Assured’s Legal Liability

to Third Parties as per American C.G.L. Form L6395a . . . Excluding Leased-in Employees/Workers.”

                                         2. Leased-In Exclusion

       Diatom’s CGL Policy does not define leased-in employees or workers. The parties agree that,

when the policy was written in 1992, there was no generally accepted definition of “leased-in worker”

or “leased-in employee.” At that time, Texas had not yet adopted the Staff Leasing Services Act,

coverage. The record is undisputed that Randy was not covered by any such policy.

        5
          Yorkshire assumed 16.472 percent of the coverage under the CGL policy, and Ocean Marine assumed 10
percent. Diatom Drilling Co., 280 S.W .3d at 280.

        6
            After the policy was issued, the CGL Insurers’ representative confirmed: “If they mean independent
contractors . . . [they] are covered in this policy.”

                                                      10
which regulates the employee-leasing market. See TEX . LAB. CODE §§ 91.001–.062. The Texas

Legislature adopted the Staff Leasing Services Act in 1995. Staff Leasing Services Act, 74th Leg.,

R.S., ch. 76, § 9.20(a), 1995 Tex. Gen. Laws 635 (codified at TEX . LAB. CODE §§ 91.001–.062).

       The employee-leasing market expanded in the late 1980s and early 1990s because of the rapid

increase in the cost of workers’ compensation insurance. See Jill Williford, Reformers’ Regress: The

1991 Texas Workers’ Compensation Act, 22 ST . MARY ’S L.J. 1111, 1122 (1991) (citation omitted)

(“In Texas, the cost of workers’ compensation insurance rose by 148% between 1985 and 1989.”).

As a result, many Texas businesses were unwilling or unable to participate in the workers’

compensation system and opted out of coverage, “leaving an estimated 750,000 to one million

workers without coverage.” William O. Ashcraft & Anita M. Alessandra, A Review of the New Texas

Workers’ Compensation System, 21 TEX . TECH L. REV . 609, 610 (1990). In response to the increased

insurance costs, businesses in Texas began to lease workers from staff leasing agencies so they could

opt out of the workers’ compensation system but still utilize the common law defenses against a

workplace injury claim. See TEX . LAB. CODE § 406.033(a) (prohibiting employers that opt out of the

workers’ compensation system from asserting certain common law defenses to an employee’s claim

for damages resulting from personal injury or death within the course and scope of employment).

This was accomplished by creating a contract through which the staff leasing agency became an

independent contractor to the business. Then, because the workers were not employees of the

business, they could not recover the benefits of the workers’ compensation system from the business.

See id. § 406.122(a).

                                                 11
       Most CGL policies have provisions that exclude coverage for claims that would otherwise be

covered under workers’ compensation insurance, which is required in most states.7 Steven P.

Perlmutter, The Law of “Leased Worker” and “Temporary Worker” Under a CGL Policy, 45 TORT

TRIAL & INS. PRAC. L.J. 761, 764 (2010). In fact, CGL policies were developed alongside workers’

compensation insurance in the late 1800s and early 1900s. See Kenneth S. Abraham, The Rise and

Fall of Commercial Liability Insurance, 87 VA . L. REV . 85, 87–88 (2001). When the adoption of

workers’ compensation schemes all over the country significantly reduced employers’ liabilities to

their employees, employers became interested in insuring their liabilities to members of the public

as well. Id. at 88. Thus, public liability insurance was developed and refined over several decades

to become the modern CGL insurance. Id. at 88–90. CGL policies were never meant to cover claims

by employees against their employers. 9A STEVEN PLITT ET AL., COUCH ON INSURANCE § 129:11 (3d

ed. 2016).

       When employee leasing became more popular in the 1980s and 1990s, the question arose of

whether liabilities to “leased workers” were covered under CGL policies. Perlmutter, supra, at 762.

That question turns on whether the leased worker could be considered an employee under the policy;

if so, then the insured’s liability to the worker is excluded. Id. at 762–63. Most CGL policies now

include some kind of express leased worker exclusion. Id. at 763. As mentioned above, though,

Diatom’s policy does not include a definition of “leased-in employee/worker.”

        7
         Texas and Oklahoma are currently the only states to allow private employers to opt out of the workers’
compensation system. See Howard Berkes & Michael Grabell, Opt-Out Plans Let Companies Work Without Workers’
Comp, NPR (Oct. 14, 2015), http://www.npr.org/2015/10/14/448544926/texas-oklahoma-permit-companies-to-dump-
worker-compensation-plans.

                                                     12
        The court of appeals addressed the coverage issue in two related appeals, reaching the same

conclusion: Diatom’s CGL policy excluded claims brought on behalf of leased-in workers. Diatom

Drilling Co., 280 S.W.3d at 283; Seger I, 279 S.W.3d at 767. In its determination, the court looked

to dictionary definitions of “leased,” “worker,” and “in” to conclude, in two opinions, that the cover

note condition:

        unambiguously excludes from coverage all claims for a named insured’s liability for
        bodily injury or property damage brought by or on behalf of persons that perform
        work for the insured under an agreement with another allowing temporary use of the
        worker, even though the leased worker would not be an employee of insured.

Diatom Drilling Co., 280 S.W.3d at 283; Seger I, 279 S.W.3d at 767.

                                      3. Prior Coverage Determination

        The Stowers Insurers rely on statements in the court of appeals’ opinion in the severed third-

party case, Diatom Drilling Co., arguing that the court held that Randy was a leased-in worker.8 The

opinion states: “At the time of the formation of the CGL policy and through its effective period, the

record reflects that all of Diatom’s drilling workers were leased in from ECS.” Diatom Drilling Co.,
280 S.W.3d at 282. The Segers argue that the court of appeals made no such holding and that

coverage required resolution of a fact issue at trial post-remand. They cite evidence supporting their

position that Randy was an independent contractor and rely on the jury’s finding that Randy was not

Diatom’s employee or leased-in worker. Despite the court of appeals having defined the leased-in

worker exclusion, we conclude that the court stopped short of specifically holding that Randy was

         8
             The Stowers Insurers also made this argument to the trial court and properly objected multiple times to the
presentation of the coverage issue to the jury. They properly preserved error, and we can consider this issue. See T EX .
R. A PP . P. 33.1(a).

                                                          13
a leased-in worker at the time of his death or that the Segers’ claims were not covered. The court of

appeals’ statement in Diatom Drilling Co. was dictum and, therefore, was not binding on the trial

court.

         This Court has defined dictum as: “An opinion expressed by a court, but which, not being

necessarily involved in the case, lacks the force of an adjudication; . . . an opinion of a judge which

does not embody the resolution or determination of the court, and made without argument, or full

consideration of the point.” Grigsby v. Reib, 153 S.W. 1124, 1126 (Tex. 1913). We have recognized

two types of dicta: judicial dictum and obiter dictum. Palestine Contractors, Inc. v. Perkins, 386
S.W.2d 764, 773 (Tex. 1964). Obiter dictum is not binding as precedent. Lund v. Giauque, 416
S.W.3d 122, 129 (Tex. App.—Fort Worth 2013, no pet.); see Elledge v. Friberg–Cooper Water

Supply Corp., 240 S.W.3d 869, 870 (Tex. 2007) (per curiam) (rejecting the label of “obiter dictum”

for a prior statement and explaining that the statement should have been followed). Judicial dictum

is “a statement made deliberately after careful consideration and for future guidance in the conduct

of litigation.” Lund, 416 S.W.3d at 129; see Palestine Contractors, Inc., 386 S.W.2d at 773. As

such, “[i]t is at least persuasive and should be followed unless found to be erroneous.” Palestine

Contractors, Inc., 386 S.W.2d at 773 (citing R.R. Comm’n v. Aluminum Co. of Am., 380 S.W.2d 599,

601 (Tex. 1963)).

         When determining whether a statement is dictum, we look to the language and structure of

the opinion as we did in Palestine Contractors, Inc. Id. In that case, we determined whether

language in Gattegno v. The Parisian, 53 S.W.2d 1005 (Tex. Comm’n App. 1932, holding approved),

was dictum. Id. The language appeared after the Commission of Appeals’ determination on the

                                                  14
merits, and set out rules to be followed upon remand to the trial court even though those issues had

not been raised on appeal. Id. We held that the language was judicial dictum and should be followed

by the trial court. Id. Similarly, in Elledge, we held that the court of appeals mistakenly characterized

statements from two of our opinions regarding a statute of limitations period as obiter dictum. 240
S.W.3d at 870. After looking to the language of each opinion, we rejected the obiter dictum label and

held that although the language was not essential to the outcome of either opinion, it should have been

followed. Id.

        Here, the court of appeals was reviewing a summary judgment order. Diatom Drilling Co.,
280 S.W.3d at 279. In the trial court, the Stowers Insurers requested declaratory judgment that (1)

the policy excluded liability for injury or death to leased-in workers; (2) Randy was a leased-in

worker; and (3) the Stowers Insurers had no duty to defend Diatom. The trial court rejected the

Stowers Insurers’ declaratory judgment claim and granted summary judgment in favor of Diatom and

ECS. Id. at 281. In reviewing the trial court’s summary judgment order, the court of appeals

addressed only the construction of the leased-in worker exclusion. Id. at 282. The statement in

question appears in the middle of a paragraph discussing the Stowers Insurers’ argument that the

exclusion should be interpreted to exclude “leased-in workers.” Id. The opinion contains no other

indication that the court of appeals intended to hold that Randy was a “leased-in worker” as a matter

of law. In its conclusion, the court of appeals only rendered judgment that “the CGL policy . . .

excluded liability for injury or death to leased-in employees/workers,” without mention of whether

Randy was a leased-in worker. Id. at 284. The court then remanded the case to the trial court for

further proceedings. Id.

                                                   15
       Based on the language of the opinion and the surrounding circumstances, we cannot say that

the court of appeals held that Randy was a leased-in worker. This is not a case similar to Palestine

Contractors, Inc., where the Commission of Appeals deliberately set out rules to be followed. 386
S.W.2d at 773. Nor is it similar to Elledge, where our earlier statements about applicability of a

statutory limitations period should have been followed. 240 S.W.3d at 870. The court of appeals’

statement in this case was made in the context of reviewing record evidence to make a determination

on the construction of policy language. Diatom Drilling Co., 280 S.W.3d at 282. The statement was

made “without argument, or full consideration of the point.” Grigsby, 153 S.W. at 1126.

Accordingly, we hold that the statement was obiter dictum and had no precedential value. The issue

of coverage was therefore properly before the jury.

                                        4. Burden of Proof

       Our inquiry into the coverage issue, however, does not end there. The Segers argue that the

burden rests on the Stowers Insurers to prove that they are entitled to the contractual defense of no-

coverage. The court of appeals held that the Stowers Insurers had the burden to prove that “the

Segers’ claims are not covered by the CGL policy.” Seger I, 279 S.W.3d at 765. That court

misplaced the burden, however. See Ulico Cas. Co. v. Allied Pilots Ass’n, 262 S.W.3d 773, 782 (Tex.

2008) (“[T]here is no ‘right’ of noncoverage that is subject to being waived by the insurer.”). In any

insurance action, “[a]n insured cannot recover under an insurance policy unless facts are pleaded and

proved showing that damages are covered by his policy.” See Block, 744 S.W.2d at 944 (citing Royal

Indem. Co. v. Marshall, 388 S.W.2d 176, 181 (Tex. 1965)). “Initially, the insured has the burden of

establishing coverage under the terms of the policy.” JAW The Pointe, L.L.C. v. Lexington Ins. Co.,

                                                 16
460 S.W.3d 597, 603 (Tex. 2015) (citing Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s

London, 327 S.W.3d 118, 124 (Tex. 2010)). “To avoid liability, the insurer then has the burden to

plead and prove that the loss falls within an exclusion to the policy’s coverage.” Id. “The insurer has

neither a ‘right’ nor a burden to assert noncoverage of a risk or loss until the insured shows that the

risk or loss is covered by the terms of the policy.” Ulico Cas. Co., 262 S.W.3d at 778. To prove

coverage, the plaintiff must establish that the injury or damage is the type covered by the policy. See

Royal Indem. Co., 388 S.W.2d at 179–81 (explaining that the plaintiff had the burden to prove that

the damage to his automobiles was within the policy coverage); Bethea v. Nat’l Cas. Co., 307 S.W.2d
323, 324 (Tex. Civ. App.—Beaumont 1957, writ ref’d) (holding that to recover under the policy for

the insured’s death caused by “‘falling material,’ it was necessary that the plaintiff plead and prove

that ‘while walking on a public street or sidewalk’ the assured was fatally injured or killed by being

struck by ‘a falling signboard, awning, brick or stone from a building’”). The plaintiff must also

establish that the injury or damage was incurred at a time covered by the policy. Block, 744 S.W.2d

at 944. Finally, the plaintiff must establish that the injury or damage was incurred by a person whose

injuries are covered by the policy. See Thompson v. Travelers Indem. Co. of R.I., 789 S.W.2d 277,

278–79 (Tex. 1990) (determining whether a jockey was an employee of a race track and therefore

covered under the race track’s workers’ compensation insurance). Only by establishing each of these

elements—that a covered injury or loss was incurred at a time covered by the policy and incurred by

a person whose injuries are covered by the policy—can a plaintiff prove coverage, and only then does

the burden shift to the insurer to prove that a coverage exclusion applies. See Ulico Cas. Co., 262
S.W.3d at 782 (“[T]he insured bears the burden to show that a policy is in force and that the risk

                                                  17
comes within the policy’s coverage.”). As such, each of these elements of coverage is a precondition

to coverage, not an exception. See Block, 744 S.W.2d at 944 (“[T]he time of the insured’s damages

is a precondition to any coverage rather than an exception to general coverage.”).

          A Stowers action is no different. A Stowers plaintiff cannot recover under a Stowers cause

of action without first satisfying the precondition of establishing each element of coverage. See

Maldonado, 963 S.W.2d at 41 (holding that the insured had the burden to show that the second

element of his Stowers claim was met). Accordingly, the Segers, as Diatom’s assignees, had the

burden to prove that Diatom was covered for Randy’s death under its CGL policy. The only coverage

element at issue here is whether the injury was incurred by a person whose injuries are covered by the

policy.

                                   5. The Segers’ Initial Coverage Burden

          Although it was an element essential to recovery, the Segers did not request, and the trial court

did not submit, a jury question on the Segers’ initial coverage burden as to whether Randy was a

person whose injuries or death were covered under Diatom’s CGL policy.9 Instead, the Segers rely

on the trial court’s implied finding to support their coverage argument. In its judgment, the trial court

concluded that, based on the jury’s answers,10 the Segers’ claim was covered by Diatom’s CGL

          9
           In the jury charge, the trial court instructed the jury that it would “later determine if the Seger claim was
 covered under the Diatom CGL Policy.”

          10
            It is unclear what the trial court meant because there were no jury questions on the Segers’ initial coverage
 burden. But, because the jury found that the leased-in worker exclusion did not apply, we can conclude only that the trial
 court determined that the Segers satisfied their initial coverage burden.

                                                            18
policy. The trial court’s judgment can be supported only by a finding that Randy was an independent

contractor or other third party.

       “When a court makes fact findings but inadvertently omits an essential element of a ground

of recovery or defense, the presumption of validity will supply by implication any omitted

unrequested element that is supported by evidence.” In re Estate of Miller, 446 S.W.3d 445, 450

(Tex. App.—Tyler 2014, no pet.); see Roberson v. Robinson, 768 S.W.2d 280, 281 (Tex. 1989) (per

curiam) (explaining that “where no findings of fact . . . are filed or requested, it is implied that the

trial court made all the necessary findings to support its judgment”). Although the Segers failed to

request a jury question on whether Randy was a third party or an independent contractor, because the

trial court found that the Segers’ claims were covered, we presume that the trial court made all

implied findings necessary to the validity of the judgment; i.e., Randy was an independent contractor

or other third party. See Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83–84 (Tex. 1992)

(quoting Burnett v. Motyka, 610 S.W.2d 735, 736 (Tex. 1980)) (“[W]here no findings of fact or

conclusions of law are filed or requested, it will be implied that the trial court made all the necessary

findings to support its judgment.”). The Segers’ failure to request a jury question on Randy’s status

as a third party or independent contractor is not fatal to their claims.

       We note that the Segers only pled coverage generally, alleging that Randy’s death was a

covered occurrence under the terms of the policy, “and all other requirements of coverage were met.”

While the Segers never explicitly alleged that Randy was a third party, the Segers’ general pleading

is sufficient in this case because we “construe the pleadings liberally” in favor of coverage when

reviewing a Stowers action. Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487, 491 (Tex. 2008);

                                                   19
see also Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 643 (Tex. 2005) (“[I]n the event of an

ambiguity, we construe the pleadings liberally, resolving any doubt in favor of coverage.”). As

explained above, CGL policies are broad, general policies meant to cover the insured for damages

caused by covered injuries to third parties, including the general public, as a result of the insured’s

business operations. See Gehan Homes, Ltd. v. Emp’rs Mut. Cas. Co., 146 S.W.3d 833, 838 (Tex.

App.—Dallas 2004, pet. denied) (“The insurer’s duty to defend arises when a third party sues the

insured on allegations that, if taken as true, potentially state a cause of action within the terms of the

policy.”); PLITT , supra, at § 129:1 (“[C]ommercial general liability insurance policies provide for

broad coverage generally.”); Perlmutter, supra, at 764 (noting that CGL policies are “designed to

cover an employer’s liability to third persons for the negligence of its agents, servants, and

employees”). Here, Cynthia Gillman, acting on behalf of Diatom and ECS, procured the CGL policy.

The policy lists the insureds as “Diatom Drilling Company” and “Employer Contractor Services, Inc.”

The policy does not include employees of Diatom or ECS as insureds—in fact it expressly excludes

bodily injury to employees from coverage—and Randy is not otherwise included as a “person[]

insured” as described in the policy. Therefore, because Randy was not a party to the insurance policy,

he is necessarily a third party. See Third Party, BLACK’S LAW DICTIONARY 1708 (10th ed. 2014)

(“Someone who is not a party to a lawsuit, agreement, or other transaction but who is usu[ally]

somehow implicated in it . . . .”). Therefore, the policy covers Diatom’s liabilities to Randy unless

one of the policy exclusions applies.

                                                   20
                                 6. The Stowers Insurers’ Exclusion Burden

                                   a. Enforcement by the Stowers Insurers

        To recover under a Stowers cause of action, the Segers must prove that their claim meets all

of the Stowers elements, beginning with coverage. See Garcia, 876 S.W.2d at 849. The Stowers

Insurers are not obligated to defend against or offer to settle a claim that is not within the scope of

coverage. See id. at 848 (“If a petition does not allege facts within the scope of coverage, an insurer

is not legally required to defend a suit against its insured.”). Because we hold that the Segers met

their initial burden to prove coverage, the burden shifts to the Stowers Insurers to prove that the

Segers’ claim is excluded from coverage under the policy. See JAW The Pointe, L.L.C., 460 S.W.3d

at 603. The Segers, however, argue that the Stowers Insurers cannot enforce the policy exclusions

because the Stowers Insurers are unauthorized insurers.

        Under Texas Insurance Code section 101.201(a), “[a]n insurance contract effective in this state

and entered into by an unauthorized insurer is unenforceable by the insurer.” TEX . INS. CODE

§ 101.201(a). Neither party disputes that the Stowers Insurers are unauthorized to write insurance in

Texas.11 The Stowers Insurers, however, contend that because they are eligible surplus lines insurers,

they qualify for the exception provided in section 101.201(b). See id. § 101.201(b) (providing an

exception to section 101.201(a)’s limitation to eligible surplus lines insurers). As we recognized in

Mid-American Indemnity Insurance Co. v. King, “the general term ‘unauthorized insurers’ does

         11
                An insurer may not “do an act that constitutes the business of insurance . . . except as authorized by statute.”
T EX . I N S . C OD E § 101.102(a). To be authorized to write insurance in Texas, the insurer must have a certificate of
authority obtained from the Department of Insurance. Id. §§ 801.051(a), .052. “The certificate of authority must state
the specific kinds of insurance authorized under the certificate.” Id. § 801.052.

                                                             21
include eligible surplus lines insurers, because by definition such insurers are unlicensed.” 22 S.W.3d
321, 326 (Tex. 1995). Although the Insurance Code levies harsh penalties on unauthorized insurers,

the Legislature carved out several exceptions for eligible surplus lines insurers, such as the exception

in section 101.201(b). See Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83, 88–89 (Tex. 2006); Mid-

Am. Indem. Ins., 22 S.W.3d at 326. Under section 101.201(b), the limitation in section 101.201(a)

“does not apply to insurance procured by a licensed surplus lines agent from an eligible surplus lines

insurer . . . that are reported and on which premium tax is paid in accordance with Chapter 225.”

TEX . INS. CODE § 101.201(b).

        Under Chapter 981 of the Insurance Code, to be an eligible surplus lines insurer, the insurer

must provide proof of authorization to write insurance from its domiciliary state or country to the

Texas Department of Insurance, must maintain at least $15 million in capital and surplus,12 and “must

comply with all applicable nationwide uniform standards adopted by this state.” TEX . INS. CODE

§§ 981.051(a), .057(a), .066. Additionally, “[a]n agent licensed by this state may not issue or cause

to be issued an insurance contract with an eligible surplus lines insurer unless the agent possesses a

surplus lines license issued by the department.” Id. § 981.202.

        Despite the Segers’ arguments to the contrary, the Stowers Insurers did produce evidence to

establish that they were eligible surplus lines insurers and that the CGL policy was procured through

a licensed agent. During trial, the Stowers Insurers introduced two certificates certified by the

custodian of records at the Department of Insurance that conclusively show that both Stowers Insurers

         12
            The minimum surplus and capital requirement “does not apply to alien surplus lines insurers listed on the
 Quarterly Listing of Alien Insurers maintained by the International Insurers Department, National Association of
 Insurance Commissioners.” T EX . I N S . C OD E § 981.057(b).

                                                         22
were eligible surplus lines insurers at the time the policy issued in January 1992. See City of Keller

v. Wilson, 168 S.W.3d 802, 814 (Tex. 2005) (quoting St. Joseph Hosp. v. Wolff, 94 S.W.3d 513,

519–20 (Tex. 2002) (plurality op.)) (holding that an appellate court “cannot ‘disregard undisputed

evidence that allows of only one logical inference’”). The Stowers Insurers also presented evidence

that Diatom procured the CGL policy from a licensed surplus lines agent.

       As recognized by the court of appeals in Seger I, the insurance was placed through London

American Risk Specialists, Inc. (LARSI). 279 S.W.3d at 765. At the time the policy was issued,

LARSI was licensed to provide surplus lines insurance as a managing general agency. Id. Under

Insurance Code section 981.220, however, a managing general agent can accept surplus lines business

only through a licensed general property and casualty agent. TEX . INS. CODE . § 981.220. Therefore,

LARSI was required to go through a licensed general property and casualty agent to provide surplus

lines insurance to Diatom and ECS. See id. Cynthia Gillman’s testimony shows that she obtained

the CGL policy at issue from Dan Pavillard. It is undisputed that Pavillard was a licensed property

and casualty agent at the time the policy was issued. The Segers argue that because the CGL policy

lists AMM Insurance Agency, Inc. as the “producing agent,” it was AMM Insurance and not Pavillard

that procured the policy for Diatom and ECS. The Stowers Insurers, however, produced a document,

certified by the Department of Insurance, showing that, at the time the policy was issued, Pavillard

was doing business as AMM Insurance. Therefore, it was Pavillard, acting through AMM Insurance,

who procured the policy for Diatom and ECS. Because Pavillard was a licensed property and casualty

agent at the time the policy was issued, the CGL policy was procured through a licensed agent as

contemplated by Insurance Code section 101.201(b). See id. § 101.201(b).

                                                 23
        The Stowers Insurers, however, failed to present evidence that the premium tax was paid, and

therefore, do not qualify for the exception in section 101.201(b). See id. In Chapter 225, the

Insurance Code imposes a 4.85-percent tax rate on surplus lines insurance gross premiums. Id.

§ 225.004(a). A surplus lines agent must file a tax report and pay the tax on behalf of the insurer.

Id. § 225.008(b). Although the agent is responsible for paying the tax, to qualify for the section

101.201(b) exception, the insurer must present evidence that the premium tax was paid. See id.

§ 101.201(b). Because the Stowers Insurers did not present evidence that the premium tax was paid,

they are limited by section 101.201(a)’s restriction on unauthorized insurers, and the insurance policy

is “unenforceable” by the Stowers Insurers. See id. § 101.201(a).

        The Segers argue that because the policy is “unenforceable” by the Stowers Insurers under

section 101.201(a), the Stowers Insurers are unable to plead or prove that the policy exclusions

preclude coverage of the Segers’ claims. Additionally, the Segers argue that under Insurance Code

section 981.005(a), the Stowers Insurers are unable to enforce the policy exclusions because the jury

found in Questions 2 through 6 that material and intentional violations of Chapter 981 occurred.

Specifically, the jury found that the agent did not complete a diligent search for authorized

insurance,13 the policy did not contain the requisite informational language in 11-point type,14 the

         13
           See id. § 981.004(a)(1) (“An eligible surplus lines insurer may provide surplus lines insurance only if: . . . the
full amount of required insurance cannot be obtained, after a diligent effort, from an insurer authorized to write and
actually writing that kind of insurance in this state.”).

         14
            See id. § 981.101(b) (“A surplus lines document must state, in 11-point type, the following: This insurance
contract is with an insurer not licensed to transact insurance in this state and is issued and delivered as surplus line
coverage under the Texas insurance statutes. The Texas Department of Insurance does not audit the finances or review
the solvency of the surplus lines insurer providing this coverage, and the insurer is not a member of the property and
casualty insurance guaranty association created under Chapter 462, Insurance Code. Chapter 225, Insurance Code
requires payment of a ______ (insert appropriate tax rate) percent tax on gross premium.”).

                                                            24
policy did not contain the address of each insurer,15 the agent did not make a reasonable effort to

determine the financial condition of each insurer,16 and the agent did not verify that all of the insurers

were eligible to write insurance in Texas.17 Because of the jury’s findings, the Segers argue that the

Stowers Insurers cannot enforce the policy exclusions under section 981.005(a). The Segers’

interpretation of the term “unenforceable” in this context would essentially invalidate policy

exclusions and allow Stowers plaintiffs to write them out of insurance policies.

         When interpreting a statute, “[w]e look first to the ‘plain and common meaning of the statute’s

words.’” City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003) (quoting State ex. Rel.

State Dept. of Highways & Pub. Transp. v. Gonzalez, 82 S.W.3d 322, 327 (Tex. 2002)). Therefore,

we first consider what “unenforceable” means in the context of the statute. Under section 981.005(a),

“an insurance contract obtained from an eligible surplus lines insurer is . . . valid and enforceable as

to all parties” unless a material and intentional violation of Chapter 981 exists. TEX . INS. CODE

§ 981.005(a). “A material and intentional violation of [Chapter 981, however,] does not preclude the

insured from enforcing the insured’s rights under the contract.” Id. § 981.005(b). Similarly, section

101.201(a) restricts an insurer’s ability to enforce a policy when the insurer is unauthorized, but the

section still allows the insured to enforce the contract to obtain “the full amount of a claim or loss

          15
              See id. § 981.101(c)(4), (5) (“A surplus lines document must show: . . . the name and address of . . . the
 insured[,] . . . the insurer[,] and . . . the insurance agent who obtained the surplus lines coverage[ ] and[,] if the direct risk
 is assumed by more than one insurer[,] the name and address of each insurer . . . .”).

          16
             See id. § 981.211(a) (“A surplus lines agent must make a reasonable effort to determine the financial condition
 of an eligible surplus lines insurer before placing insurance with that insurer.”).

          17
           See id. § 981.210 (“A surplus lines agent may not place surplus lines coverage with an insurer unless: (1) the
 insurer meets the eligibility requirements of [this Chapter] . . . .”).

                                                               25
under the terms of the contract.” Id. § 101.201(a). Therefore, while the policy is unenforceable as

to the insurer under certain circumstances, the insured is still able to enforce the policy under the

terms of the contract. Id.

        A voidable policy or agreement is one that “can be affirmed or rejected at the option of one

of the parties.”    Voidable Contract, BLACK’S LAW DICTIONARY 398 (10th ed. 2014); see

RESTATEMENT (SECOND ) OF CONTRACTS § 7 (AM . LAW INST . 1981) (“A voidable contract is one

where one or more parties have the power, by a manifestation or election to do so, to avoid the legal

relations created by the contract, or by ratification of the contract to extinguish the power of

avoidance.”). The Restatement (Second) of Contracts recognizes that voidable contracts can be

“defined as one type of unenforceable contract.” RESTATEMENT (SECOND ) OF CONTRACTS § 8 cmt. a

(AM . LAW INST . 1981). Because the statute at issue, under certain circumstances, allows one party

to elect to enforce the contract while preventing the other party from doing so, the statute makes the

policy voidable. See TEX . INS. CODE §§ 101.201, 981.005. As a result, an insured in this situation

has the option to either enforce its rights “under the contract,” or rescind the contract. See id.

§ 981.005(b); Urrita v. Decker, 992 S.W.2d 440, 443 (Tex. 1999).

        To protect the insured’s rights under the policy it bargained for, we have held in similar

situations that the insured may elect to either rescind or enforce a policy that is unenforceable by the

insurer. See, e.g., Urrutia, 992 S.W.2d at 443 (holding that agreements written on unapproved

insurance forms were unenforceable, but allowing the insured to enforce the terms of the agreement

or “elect to rescind it”). In Urrutia, a truck-leasing company provided liability insurance to its lessee.

Id. at 441. The insurance, however, was not written on a form approved by the State Board of

                                                   26
Insurance. Id. at 443. We held that if an insurance policy is written on an unapproved form, the

insurer may not enforce it. Id. Because the insurer was unable to enforce the policy, the policy was

voidable. Id. Accordingly, the insured, the lessee in Urrutia, could elect to rescind or enforce the

voidable policy. Id. However, if an insured elects to enforce the policy, “he or she must do so under

the agreed terms.” Id. at 443–44; see Dairyland Cty. Mut. Ins. Co. of Tex. v. Roman, 498 S.W.2d 154,

158 (Tex. 1973) (holding that while a contract is voidable at the election of a minor, the minor “is not

entitled to enforce portions that are favorable to him and at the same time disaffirm other portions that

he finds burdensome. He is not permitted to retain the benefits of a contract while repudiating its

obligations.”).

        The principle we set out in Urrutia also holds true in this case. Because the Segers, as

Stowers plaintiffs, rely on Diatom’s CGL policy to bring their Stowers action, they are also bound by

the policy’s terms. See Jackson v. Thweatt, 883 S.W.2d 171, 174 (Tex. 1994) (quoting FDIC v.

Bedsloe, 989 F.2d 805, 810 (5th Cir. 1993)) (recognizing that an assignee “stands in the shoes of his

assignor”). Despite the fact that the burden to prove policy exclusions rests on the Stowers Insurers,

the exclusions are provisions that ultimately determine coverage, and the Segers must accept those

terms if they want to enforce the policy itself. See TEX . INS. CODE § 981.005(b) (“A material and

intentional violation of this chapter . . . does not preclude the insured from enforcing the insured’s

rights under the contract.” (emphasis added)); TEX . INS. CODE § 101.201(a) (recognizing that an

insured can recover “the full amount of a claim or loss under the terms of the contract” from a person

who assists in the procurement of an insurance contract from an unauthorized insurer (emphasis

added)); Urrutia, 992 S.W.2d at 443.

                                                   27
        We reject the Segers’ arguments that section 101.201 and section 981.005 preclude the

Stowers Insurers from asserting policy exclusions in a Stowers case in which the plaintiffs rely on the

policy to present their case. In such a case, the plaintiffs bringing a claim to enforce the policy and

asserting coverage under the policy must accept all policy terms and cannot avoid unfavorable ones.

Therefore, the Stowers Insurers may plead and prove that the policy exclusions, as terms of the

contract, preclude coverage as a matter of law.

                                         b. Application of Exclusions

        At trial, the jury found that Randy was neither a leased-in worker nor an employee of Diatom.

First, we consider the jury’s finding that Randy was not an employee of Diatom.18 When reviewing

the legal sufficiency of the evidence, we consider whether the evidence at trial would enable a

reasonable and fair-minded juror to reach the verdict in question. City of Keller, 168 S.W.3d at 827.

        Evidence is legally insufficient “when (a) there is a complete absence of evidence of
        a vital fact, (b) the court is barred by rules of law or of evidence from giving weight
        to the only evidence offered to prove a vital fact, (c) the evidence offered to prove a
        vital fact is no more than a scintilla, or (d) the evidence conclusively establishes the
        opposite of the vital fact.”

Regal Fin. Co. v. Tex Star Motors, Inc., 355 S.W.3d 595, 603 (Tex. 2010) (quoting Merrell Dow

Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)). Our review is restricted to the jury

charge as submitted when there was no objection to the instruction. See Colombia Med. Ctr. of Las

Colinas, Inc. v. Hogue, 271 S.W.3d 238, 254 (Tex. 2008). “[I]t is the court’s charge, not some other

unidentified law, that measures the sufficiency of the evidence when the opposing party fails to object

         18
            While the jury’s finding on whether Randy was Diatom’s employee was not appealed, we must consider the
coverage issue, which subsumes the employee determination. See T EX . R. A PP . 38.1(f) (explaining that “[t]he statement
of an issue or point will be treated as covering every subsidiary question that is fairly included”).

                                                          28
to the charge.” Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000) (citing TEX . R. CIV . P. 272, 274,

278, 279). Even if another legal theory was argued to the jury and explained by the lawyers in

argument, we are bound by the instructions given to the jury and presume that the jury followed those

instructions. Colombia Rio Grande Healthcare, L.P. v. Hawley, 284 S.W.3d 851, 861–62 (Tex.

2009). “Statements from lawyers as to the law do not take the place of instructions from the judge

as to the law. It is the trial court’s prerogative and duty to instruct the jury on the applicable law.”

Id. at 862.

        Here, the jury was instructed, in Instruction No. 5, that an “employee” “is a person in the

service of another with the understanding, express or implied, that such other person has the right to

direct the details of the work and not merely the result to be accomplished.” During trial, the Stowers

Insurers argued that Randy was an employee of Diatom because ECS was Diatom’s alter ego. Despite

the Stowers Insurers’ arguments at trial, the jury was not instructed on alter ego, and the Stowers

Insurers neither objected to Instruction No. 5 nor requested an instruction on alter ego. Therefore,

we cannot consider those legal theories when reviewing the legal sufficiency of the jury’s finding.

See Osterberg, 12 S.W.3d at 55.

        Based on the instruction provided to the jury in this case, we hold that the evidence was

legally sufficient to support the jury’s finding that Randy was not an employee of Diatom. Both

parties presented testimony and evidence that Randy was an employee of ECS. Because the jury was

not instructed on alter ego, it was entitled to disregard the Stowers Insurers’ evidence and argument

that ECS really operated as the alter ego of Diatom, and find that Randy was not Diatom’s employee.

                                                   29
       Next, we review the jury’s finding that Randy was not a leased-in worker. The Stowers

Insurers argue that the evidence in the record conclusively establishes that Randy was a leased-in

worker as a matter of law under the definition supplied by the court of appeals in both Diatom

Drilling Co. and Seger I. In those opinions, the court of appeals concluded as a matter of law that the

term “leased-in employees/workers” was defined as “persons that perform work for the insured under

an agreement with another allowing temporary use of the worker, even though the leased worker

would not be an employee of insured.” Diatom Drilling Co., 280 S.W.3d at 283; Seger I, 279 S.W.3d

at 767. This definition was submitted to the jury in Instruction No. 6 of the jury charge.

       When a party properly preserves error by objecting to an erroneous definition used in the jury

charge, we measure the legal sufficiency of the evidence against the definition that should have been

used in the charge. St. Joseph Hosp., 94 S.W.3d at 530. In this case, the Stowers Insurers properly

objected to the submission of the definition of “leased-in worker” in Instruction No. 6 and submitted

their own version of the instruction, which the trial court rejected. The Stowers Insurers contend that

the definition in the jury charge should have included only the definition of “leased-in worker” as

supplied by the court of appeals, and that the charge was improper because the definition included

“beneficial words not found in the court of appeals’ definition.” “Whether a definition used in the

charge misstated the law is a legal question,” which we review de novo. Id. at 525.

       While trial courts have wide discretion in determining the necessity of explanatory instructions

and definitions in the jury charge, the trial court must give definitions of legal and other technical

terms. See H.E. Butt Grocery Co. v. Bilotto, 985 S.W.2d 22, 23 (Tex. 1998); Standley v. Sansom, 367
S.W.3d 343, 350 (Tex. App.—San Antonio 2012, pet. denied) (citing TEX . R. CIV . P. 277, which

                                                  30
states that “[t]he court shall submit such instruction and definitions as shall be proper to enable the

jury to render a verdict”). “An instruction is proper if it (1) assists the jury, (2) accurately states the

law, and (3) finds support in the pleadings and evidence.” Union Pac. R.R. Co. v. Williams, 85
S.W.3d 162, 166 (Tex. 2002) (citing TEX . R. CIV . P. 278). Including definitions of words of ordinary

meaning that are “readily understandable by the average person” in the jury charge is unnecessary.

Standley, 367 S.W.3d at 350.

        When an appellate court remands a case to the trial court, the trial court “has no authority to

take any action that is inconsistent with or beyond the scope of that which is necessary to give full

effect to the appellate court’s judgment and mandate.” Phillips v. Bramlett, 407 S.W.3d 229, 234

(Tex. 2013); see also TEX . R. APP . P. 51.1(b) (enforcement of judgment). Here, the court of appeals

rendered judgment on the definition of a legal term in Diatom’s CGL policy. Diatom Drilling Co.,
280 S.W.3d at 283. Accordingly, the trial court was bound by the court of appeals’ definition and was

required to enforce it. See City of San Antonio v. Gonzales, 737 S.W.2d 78, 80 (Tex. App.—San

Antonio 1987, no writ) (“[T]he trial court was bound to apply the legal principles pronounced by [the

court of appeals].”). While the court of appeals’ definition of “leased-in worker” was included in the

jury instruction, the dictionary definitions of “lease,” “worker,” and “in” were also included in the

instruction. Although the definitions of those words were used by the court of appeals to reach its

conclusion on the ultimate definition of “leased-in worker,” inclusion of those definitions in

Instruction No. 6 was completely unnecessary. Any error was harmless, however, because the proper

definition was included in the instruction. See TEX . R. APP . P. 61.1 (standard for reversible error).

                                                    31
         Because those additional definitions were unnecessary, we apply only the court of appeals’

ultimate definition to our legal sufficiency review: A leased-in worker is a person who performs work

for the insured under an agreement with another allowing temporary use of the worker, even though

the leased worker would not be an employee of the insured.19 Diatom Drilling Co., 280 S.W.3d at

283; Seger I, 279 S.W.3d at 767; see also St. Joseph Hosp., 94 S.W.3d at 530 (explaining that we

measure the legal sufficiency of the evidence against the definition that should have been used). In

conducting our review, we consider each element of the definition in light of the evidence in the

record. See St. Joseph Hosp., 94 S.W.3d at 530–31.

         The Stowers Insurers argue that the evidence conclusively proves that Randy was a leased-in

worker as a matter of law. The Segers argue that because Randy was an employee of ECS, which was

an independent contractor to Diatom, Randy was also an independent contractor. However, under

the definition at issue, the two arguments are not mutually exclusive. The definition first calls for “a

person who performs work for the insured.” There is no doubt that Randy was a person or that he

performed work for Diatom as a derrick hand. Both the Segers and the Stowers Insurers have

presented conclusive and undisputed evidence that Randy was working at the Diatom drilling site

when the accident occurred.

         Both parties also presented conclusive and undisputed evidence of the existence of “an

agreement with another allowing temporary use of the worker.” The Segers argue that for Randy to

be a leased-in worker, there would need to be a lease between ECS and Diatom, but that is not what

          19
             It should be noted, however, that this definition of “leased-in worker” applies only to the facts of this case
 based on the holdings of the court of appeals’ opinions in Seger I and Diatom Drilling Co. W e do not suggest that the
 definition of “leased-in worker” used in this case should be applied in any other case.

                                                            32
the definition given by the trial court required. The definition required only that there be an

agreement between the insured and the entity providing the worker for temporary use of that worker.

The Segers entered that agreement into evidence at trial.20 The agreement, titled “Contract for

Personnel Services,” was signed by Gillman twice, both as the general partner of Diatom and as the

president of ECS. The lawyer for Diatom prepared the agreement in December 1990 as a way for

Gillman and Diatom to have workers on Diatom’s drilling rigs without having to pay for workers’

compensation.21

       The express terms of the agreement offered into evidence show that the agreement was only

for the temporary use of personnel. The agreement states that ECS would “provide Diatom with all

necessary personnel for the operation of one or more drilling rigs in accordance with the needs of

Diatom.” Under these terms, ECS would provide Diatom with workers only “as needed” depending

on Diatom’s project. If Diatom was raising an oil rig, ECS would send out derrick hands, tool

pushers, and other necessary personnel to raise the rig. Not every worker was necessary for every

stage of Diatom’s drilling business, so the use of each worker was only temporary. The evidence

shows that Randy was hired by ECS on March 18, 1991, and worked on seven rigs for Diatom before

        20
           The Stowers Insurers also presented evidence of an agreement between Diatom and ECS through the
testimony of one of the Segers’ expert witnesses.

        Q: The ECS contract that we’re just talking about, that’s an agreement between ECS and Diatom, isn’t
        it?
        A: It is.
        Q: And it’s an agreement between ECS and Diatom to perform work for the insure[d]. True?
        A: It is.

        21
             At the same time, the lawyer also incorporated ECS as a provider of personnel services for Diatom.

                                                          33
his death in July 1992.22 Randy was a temporary worker on each of those seven rigs because his

services as a derrick hand would not be needed unless Diatom entered into a new drilling contract for

a similar project.

         Finally, the last section of the definition, “even though the leased worker would not be the

employee of the insured,” has also been proven by conclusive and undisputed evidence from both

parties. The Segers produced Randy’s employment file with ECS and the agreement between ECS

and Diatom, which stated that the workers would be the employees of ECS and not Diatom. In

addition, they produced testimony from Gillman and two experts that Randy was an employee of

ECS. The Stowers Insurers also produced testimony that Randy was an employee of ECS.

         The Segers argue that Randy could not be a leased-in worker because, as an employee of ECS,

he was an independent contractor. In support, they produced testimony from several witnesses and

pointed to the agreement between Diatom and ECS in which ECS is referred to as an “independent

contractor” to Diatom. However, under the definition at issue, even if Randy were an independent

contractor to Diatom through his employment at ECS, he would still be considered a “leased-in

worker” under the policy.23

          22
             The evidence in the record is unclear on whether Randy was continuously employed by ECS from March 1991
 until his death.

          23
             During trial, the Segers asked one of their experts, Jay Thompson, if under the dictionary definitions of the
 words “lease,” “worker,” and “in,” Randy could be considered a leased-in worker. Mr. Thompson answered that Randy,
 in his opinion, would not be a leased-in worker or employee of Diatom. However, Mr. Thompson was not provided with
 the definition of “leased-in worker” that was required as a result of the court of appeals’ opinions. See St. Joseph Hosp.,
 94 S.W .3d at 530; Diatom Drilling Co., 280 S.W .3d at 283. An expert’s opinion that relies on flawed methodology is
 unreliable, even if the underlying data is sound. Merrell Dow Pharm., Inc., 953 S.W .2d at 714. Unreliable expert
 testimony is legally no evidence. Id. Because Mr. Thompson’s testimony regarding Randy’s status as a leased-in worker
 relied on an incorrect definition, it is unreliable, and therefore, no evidence.

                                                            34
       The undisputed evidence in the record clearly shows that the elements of the court of appeals’

definition were met. The evidence in the record is legally insufficient to support the jury’s verdict

because “the evidence conclusively establishes the opposite” of the fact vital to the verdict.

Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 903 (Tex. 2004). Accordingly, the evidence

is legally insufficient to support the jury’s finding that Randy was not a leased-in worker.

                                          III. Conclusion

       Because the evidence is legally insufficient to support a jury verdict to the contrary, we hold

that Randall Seger was a leased-in worker as a matter of law. The Segers’ claimed loss was therefore

excluded from coverage under the CGL policy and their Stowers action fails as a result. We do not

reach the damages issue addressed by the court of appeals because the coverage issue is dispositive.

We therefore affirm the judgment of the court of appeals, which reversed the trial court’s judgment

and rendered judgment that the Segers take nothing, but on different grounds. See Trinity Universal

Ins. Co. v. Bleeker, 966 S.W.2d 489, 492 (Tex. 1998); Maldonado, 963 S.W.2d at 41–42.

                                              __________________________________
                                              Paul W. Green
                                              Justice

OPINION DELIVERED: June 17, 2016

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