Court Opinion

ID: 4555483
Source: CourtListenerOpinion
Date Created: 2020-08-14 01:00:21.649783+00
Date Added: 2024-06-11T09:26:41.821366
License: Public Domain

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

                                                                                             FILED
                                           No. 19-10565                                August 13, 2020
                                                                                        Lyle W. Cayce
                                                                                             Clerk
GILBERT GONZALEZ, doing business as GG Construction,

                  Plaintiff-Appellee,

v.

MID-CONTINENT CASUALTY COMPANY,

                  Defendant-Appellant.

                       Appeals from the United States District Court
                            for the Northern District of Texas

Before HAYNES and OLDHAM, Circuit Judges, and HANEN, District Judge. *
ANDREW S. OLDHAM, Circuit Judge:
           Gilbert Gonzalez allegedly damaged a house’s electrical wiring while
installing siding. Although Gonzalez had purchased a commercial general
liability insurance policy underwritten by Mid-Continent Casualty Company,
Mid-Continent refused to provide him with defense and indemnity for the
accident. Gonzalez sued Mid-Continent. The district court granted Gonzalez a
partial final judgment, holding that Mid-Continent owed him a duty to defend.
We affirm.

     *   District Judge for the Southern District of Texas, sitting by designation.
                                No. 19-10565
                                       I.
      Norman Hamilton hired Gilbert Gonzalez to install new siding on his
house during the summer of 2013. To cover his liability for any accidents,
Gonzalez bought a commercial general liability (“CGL”) insurance policy
underwritten by Mid-Continent. Gonzalez’s initial policy lasted from July 15,
2012, through July 15, 2013. He renewed the policy for an additional year,
though he canceled it on June 6, 2014. It is undisputed that the policy covered
Gonzalez’s work on Hamilton’s house.
      In December 2016, Hamilton’s house was damaged in a fire. Hamilton
and his insurance provider sued Gonzalez in Texas state court (the
“Underlying Litigation”). Hamilton claimed that the fire started because
Gonzalez negligently hammered nails through the house’s electrical wiring
when he installed the siding in 2013. Gonzalez sought defense and indemnity
for the Underlying Litigation from Mid-Continent pursuant to the CGL policy
he had purchased. Mid-Continent refused to provide either. So Gonzalez sued
Mid-Continent, also in Texas state court, for breach of contract, breach of the
duty to defend, breach of the duty to indemnify, and a declaratory judgment
concerning the parties’ rights and obligations under the insurance policies.
      Mid-Continent removed the case to federal court and moved for summary
judgment. The district court denied Mid-Continent’s motion. Furthermore, it
entered a partial final judgment holding that Mid-Continent owed Gonzalez a
duty to defend, expressly finding “no just reason for delay” under Federal Rule
of Civil Procedure 54(b). In a footnote, the court explained that “Plaintiff ’s
claims regarding damages and the duty to indemnify remain pending.” Mid-
Continent appealed.
                                      II.
      Our review is de novo. United States ex rel. Drummond v. BestCare Lab’y
Servs., 950 F.3d 277, 280 (5th Cir. 2020). Because Gonzalez brings claims
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                                  No. 19-10565
under Texas law in this diversity-jurisdiction case, we apply the substantive
law of Texas. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).
      Under Texas law, Mid-Continent’s duty to defend is governed by the
“eight-corners rule.” Richards v. State Farm Lloyds, 597 S.W.3d 492, 494–95
(Tex. 2020). “The eight-corners rule provides that when an insured is sued by
a third party, the liability insurer is to determine its duty to defend solely from
[the] terms of the policy and the pleadings of the third-party claimant.”
GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305, 307
(Tex. 2006). “Resort to evidence outside the four corners of these two
documents is generally prohibited.” Ibid.
      When the language of an insurance policy “is susceptible to more than
one construction, it should be construed strictly against the insurer and
liberally in favor of the insured.” Mid-Continent Cas. Co. v. JHP Dev., Inc., 557
F.3d 207, 212 (5th Cir. 2009) (citing Barnett v. Aetna Life Ins. Co., 723 S.W.2d
663, 666 (Tex. 1987)). “The court resolves all doubts regarding coverage in favor
of coverage.” Amerisure Ins. Co. v. Navigators Ins. Co., 611 F.3d 299, 309 (5th
Cir. 2010) (citing King v. Dall. Fire Ins. Co., 85 S.W.3d 185, 187 (Tex. 2002);
Nat’l Union Fire Ins. Co. of Pittsburgh v. Merchs. Fast Motor Lines, Inc., 939
S.W.2d 139, 141 (Tex. 1997)).
      We begin by analyzing the applicable coverage provisions in the CGL
policy and conclude that they cover the Underlying Litigation. We then
consider the j(5) and j(6) exclusions from the CGL policy and conclude that they
do not apply. These two conclusions lead us to hold that Mid-Continent has a
duty to defend Gonzalez in the Underlying Litigation.
                                        A.
      Under the eight-corners rule, “[t]wo documents determine an insurer’s
duty to defend—the insurance policy and the third-party plaintiff ’s pleadings
in the underlying litigation, which the court must review ‘without regard to
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                                 No. 19-10565
the truth or falsity of those allegations.’ ” Amerisure, 611 F.3d at 309 (quoting
GuideOne, 197 S.W.3d at 308).
                                       1.
      We start with the third-party plaintiffs’ operative pleading in the
Underlying Litigation (the “Petition”). The Petition contains a single
paragraph describing the factual allegations forming the basis of the plaintiffs’
claims:
      The injuries and damages suffered by Plaintiffs and made the
      basis of this action arose out of an occurrence on or about December
      1, 2016, at the property in question that relates back to
      construction and/or installation of siding occurring before the date
      of loss. The property in question had a fire caused by the
      construction and/or installation of siding by Defendants when
      Defendants improperly hammered nails through electrical wiring.
      Defendants were in charge of and oversaw the construction and/or
      installation of siding at the property in question, and their acts
      and/or omissions allowed a fire to occur.
In sum, the Petition alleges that when Gonzalez installed the siding on
Hamilton’s house in 2013, he hammered nails through electrical wiring and
created a dangerous condition that caused a fire three years later in 2016.
      Next, we consider the four corners of the CGL policy. The applicable
coverage provision states:
          b. This insurance applies to “bodily injury” and “property
      damage” only if:
            (1) The “bodily injury” or “property damage” is caused by an
      “occurrence” that takes place in the “coverage territory”;
            (2) The “bodily injury” or “property damage” occurs during
      the policy period; and
            (3) Prior to the policy period, no insured listed under
      Paragraph 1. of Section II – Who Is An Insured and no “employee”
      authorized by you to give or receive notice of an “occurrence” or
      claim, knew that the “bodily injury” or “property damage” had
      occurred, in whole or in part. If such a listed insured or authorized
      “employee” knew, prior to the policy period, that the “bodily injury”
                                       4
                                  No. 19-10565
      or “property damage” occurred, then any continuation, change or
      resumption of such “bodily injury” or “property damage” during or
      after the policy period will be deemed to have been known prior to
      the policy period.
      The policy defines an “occurrence” as “an accident, including continuous
or repeated exposure to substantially the same general harmful conditions.”
And it defines “property damage” as including: “Physical injury to tangible
property, including all resulting loss of use of that property. All such loss of use
shall be deemed to occur at the time of the physical injury that caused it.”
Putting this all together, then, the policy applies to (1) an accident (2) that
causes physical injury to tangible property (3) during the policy period.
      The Petition in the Underlying Litigation satisfies these three
requirements. First, the accident. The Petition alleges that Gonzalez
“improperly hammered nails through electrical wiring.” That satisfies the
policy’s definition of an “occurrence,” which means “an accident.”
      Second, the accident caused physical injury to tangible property. Wires
are “tangible property.” Piercing those wires with nails constitutes “physical
injury.” In addition, the Petition alleges that the accidental piercing of those
wires caused the property damage that occurred in the 2016 fire.
      Third, the property damage occurred during the policy period. There is
no dispute that Gonzalez took all of his actions, including hammering the nails
in question, during the policy period. That means the alleged damage to the
electrical wiring happened during the policy period. In addition, the Petition
alleges that the 2016 fire “relates back to [the] construction and/or installation
of siding” in 2013. Recall that the CGL policy defines “property damage” as
“[p]hysical injury to tangible property, including all resulting loss of use of that
property,” and it expressly states that “[a]ll such loss shall be deemed to occur
at the time of the physical injury that caused it.” As a result of this provision,
the damage from the 2016 fire “shall be deemed” to have occurred in 2013 when
                                         5
                                  No. 19-10565
the electrical wires were damaged. Because it is alleged that both the damage
to the electrical wires and the fire can be traced to 2013, when the policies were
in effect, the property damage alleged in the Petition took place during the
policy period. All three requirements of the CGL policy’s coverage provisions
have been satisfied, triggering Mid-Continent’s duty to defend.
                                        2.
      This result is supported by Don’s Building Supply, Inc. v. OneBeacon
Insurance Co., 267 S.W.3d 20 (Tex. 2008). The question in that case was
whether property damage “occurred” when synthetic stucco imperceptibly
allowed water to seep into the walls, or later when the property damage
became noticeable from wood rot. Interpreting policy language identical to the
language in this case, the court chose the former. Id. at 29–30. The court wrote:
“Considering these provisions together and reading them for their plain
meaning, we hold that property damage under this policy occurred when actual
physical damage to the property occurred. . . . The date that the physical
damage is or could have been discovered is irrelevant under the policy.” Id. at
24. The court saw “little practical difference between an actual-injury rule and
an exposure rule” in that case because “the homeowners’ petition alleged” that
the wood rot in their houses occurred at the first penetration of moisture. Id.
at 29 n.34.
      We likewise focused on the injury alleged in the underlying litigation in
Wilshire Insurance Co. v. RJT Construction, LLC, 581 F.3d 222 (5th Cir. 2009).
In that case, RJT leveled the foundation of a home in 1999—before the effective
date of the CGL policy. The CGL policy took effect in 2004 and expired in 2006.
Id. at 224. The homeowner allegedly observed physical injury to property—
namely cracks in the walls and ceilings—during the policy period in 2005. Ibid.
The insurance company attempted to avoid its duty to defend RJT on the
theory that the cracks related back to negligence that occurred during the
                                        6
                                  No. 19-10565
foundation work in 1999. We held the insurance company had a duty to defend
because the homeowner’s complaint alleged actual physical damage to the
home during the policy period in 2005, and the insurance company could not
avoid that duty by pointing to other events outside the policy period. Id. at 225.
      We again focused on the injury to property alleged in the underlying
litigation in VRV Development L.P. v. Mid-Continent Casualty Co., 630 F.3d
451 (5th Cir. 2011). That case involved a defective retaining wall built “within
the property lines of four individual homeowners.” Id. at 454. The wall did not
collapse and damage the homeowners’ backyards until after the coverage
period expired. Id. at 457. We held that the damage to the homeowners’
properties did not occur until the wall collapsed, and we distinguished the case
from one involving “latent,” “undiscovered” damage to the homeowners’
properties that occurred during the policy period. Id. at 458.
      All of these cases—Don’s Building, Wilshire, and VRV Development—
have one thing in common. They focus on the actual, physical damage alleged
in the underlying litigation. If the only alleged damage occurred outside of the
policy period, then there is no duty to defend (VRV Development). But if any of
the alleged damage occurred during the policy period, then the duty to defend
attaches (Don’s Building and Wilshire). This case easily falls on the Don’s
Building-Wilshire side of the line.
                                        3.
      Here the Petition in the Underlying Litigation plainly alleges physical
injury to property that occurred within the policy period. Start with 2013. The
Petition alleges numerous negligent acts that occurred in that year. These
include   allegations   of   “substandard     work,”    “failure   to   proper[l]y
inspect . . . work on the property in question,” “[f]ailure to perform safe
construction and/or installation on the property in question,” and “[o]ther acts
of negligence.” See Second Amended Petition ¶ 15(1), (5), (7), (19).
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                                  No. 19-10565
Furthermore, the Petition’s description of the damages includes “actual
damages to property contained within the property in question,” such as the
electrical wires. Id. ¶ 28. The Petition thus alleges that the electrical wires
were damaged in 2013. That alone is sufficient to establish the duty to defend
because the duty to defend arises when “the plaintiff alleges facts that would
give rise to any claim against the insured that is covered by the policy.” Don’s
Building, 267 S.W.3d at 31 (emphasis added); see also, e.g., Zurich Am. Ins. Co.
v. Nokia, Inc., 268 S.W.3d 487, 491 (Tex. 2008) (noting that if a pleading
“potentially includes a covered claim, the insurer must defend the entire suit”);
GuideOne, 197 S.W.3d at 310 (“A plaintiff’s factual allegations that potentially
support a covered claim is all that is needed to invoke the insurer’s duty to
defend.”); Utica Nat’l Ins. Co. of Tex. v. Am. Indem. Co., 141 S.W.3d 198, 201
(Tex. 2004) (“A liability insurer is obligated to defend a suit if the facts alleged
in the pleadings would give rise to any claim within the coverage of the
policy.”).
       But the Petition alleges more. It also alleges that the 2016 fire “relates
back to [the] construction and/or installation of siding” in 2013. That is, the
theory of the Petition in the Underlying Litigation is that the pierced wires
were latent fire hazards—like the latent water damage in Don’s Building. See
267 S.W.3d at 24. Though Hamilton did not know about the wire damage until
2016 when the fire broke out, Don’s Building says that the date the damage is
discovered is “irrelevant.” Ibid. So does the CGL policy, which deems property
damage “to occur at the time of the physical injury that caused it” and not at
the time it was discovered. Because we are bound by the Petition’s allegations
and the CGL policy’s terms, we respectfully disagree with our learned
colleague that “the alleged property damage does not relate back to the time of
the negligent act when determining when the property damage occurred.” Post,
at 14 (Haynes, J., dissenting in part).
                                          8
                                  No. 19-10565
      It’s unclear whether the Petition’s factual allegations are meritorious.
But it is not our prerogative to evaluate the merits of Hamilton’s lawsuit while
ruling on the duty to defend. Under the “eight-corners rule,” we look at the case
as it was pleaded by the plaintiffs. See, e.g., Don’s Building, 267 S.W.3d at 29
n.34; GuideOne, 197 S.W.3d at 308. And we must do so “without regard to the
truth or falsity of those allegations.” GuideOne, 197 S.W.3d at 308. Even “if the
allegations are groundless, false, or fraudulent the insurer is obligated to
defend.” Zurich, 268 S.W.3d at 491 (quoting 14 COUCH ON INSURANCE
§ 200:19). The Petition clearly sets forth a theory in which electrical wires
damaged in 2013 caused a fire in 2016, and regardless of the merits of that
theory, it alleges that “actual physical damage to the property” occurred in
2013. Don’s Building, 267 S.W.3d at 24. We therefore do not think this is a
close case.
      But even if it were, we’d be obliged to “construe the pleadings liberally”
and “resolve all doubts regarding the duty to defend in favor of the duty.”
Zurich, 268 S.W.3d at 491. Where the pleading “does not state facts sufficient
to clearly bring the case within or without the coverage, the general rule is that
the insurer is obligated to defend if there is, potentially, a case . . . within the
coverage of the policy.” Ibid. (quoting Heyden Newport Chem. Corp. v. S. Gen.
Ins. Co., 387 S.W.2d 22, 26 (Tex. 1965)). This presumption further corroborates
our conclusion that the Underlying Litigation falls within the coverage
provisions of the CGL policy and hence obligates Mid-Continent to defend
Gonzalez.

                                         9
                                   No. 19-10565
                                        B.
        Mid-Continent argues that even if the Underlying Litigation falls within
the coverage provisions of the CGL policy, the policy’s j(5) and j(6) exclusions
apply. Those exclusions preclude coverage for property damage to:
      (5) That particular part of real property on which you [(the
      insured)] or any contractors or subcontractors working directly or
      indirectly on your behalf are performing operations, if the
      “property damage” arises out of those operations; or
      (6) That particular part of any property that must be restored,
      repaired or replaced because “your work” was incorrectly
      performed on it.
The policy goes on to define “your work” as “[w]ork or operations performed by
you or on your behalf; and [m]aterials, parts or equipment furnished in
connection with such work or operations.” The parties do not dispute that the
work Gonzalez was hired to perform was the construction and installation of
the siding, which required hammering nails through the exterior wall of the
home.
        The j(5) and j(6) exclusions apply only to “that particular part” on which
the insured “performed” work. The plain and ordinary meaning of “particular”
is “[r]elating to a part or portion of anything; separate; sole; single; individual;
specific; as, the particular stars of a constellation.” WEBSTER’S NEW
INTERNATIONAL DICTIONARY 1783 (2d ed. 1934; 1950). “Part,” in turn, means
“something less than a whole.” Id. at 1781. And “perform” means “[t]o carry
out or into full execution; esp. some action ordered or prompted by another or
previously promised; to put into complete effect; to fulfill; as, to perform
another’s will or one’s vow; to perform certain conditions.” Id. at 1818.
Hamilton ordered Gonzalez to perform work on the siding. Gonzalez promised
to do it. That was the individual, separate, sole, specific part of the home upon
which Gonzalez agreed to perform work. Hamilton did not order Gonzalez—
and Gonzalez did not promise—to work on the house’s electrical wires. The
                                 10
                                  No. 19-10565
house’s internal wiring system is entirely separate from its external siding.
And no reasonable person would think that a promise to install siding on the
outside of a home carries with it a promise to (and liability for) work on the
electrical system inside the home. The siding and wires are, in short, separate
“particular part[s].”
      We have already discussed how Texas law requires us to construe
insurance policies “strictly against the insurer and liberally in favor of the
insured.” Barnett, 723 S.W.2d at 666. When it comes to policy exclusions,
however, “an even more stringent construction is required.” Ibid. We “must
adopt the construction of an exclusionary clause urged by the insured as long
as that construction is not itself unreasonable, even if the construction urged
by the insurer appears to be more reasonable or a more accurate reflection of
the parties’ intent.” Ibid. (quoting Glover v. Nat’l Ins. Underwriters, 545 S.W.2d
755, 761 (Tex. 1977)).
      This is not the first time our court has confronted exclusions like the ones
in this case. See Crownover v. Mid-Continent Cas. Co., 772 F.3d 197, 207–10
(5th Cir. 2014); JHP, 557 F.3d at 213–14; Harken Expl. Co. v. Sphere Drake
Ins. PLC, 261 F.3d 466, 474–76 (5th Cir. 2001); Mid-Continent Cas. Co. v. Swift
Energy Co., 206 F.3d 487, 499–500 (5th Cir. 2000). In each of those cases, we
correctly applied Barnett and strictly construed the exclusion against the
insurer.
      The case of Gore Design Completions, Ltd. v. Hartford Fire Insurance
Co., 538 F.3d 365 (5th Cir. 2008), is particularly instructive on the meaning of
“[t]hat particular part” in j(5) and j(6). In that case, Gore installed an in-flight
entertainment/cabin management system (“IFE/CMS”) on an aircraft. Id. at
367. Hartford issued a CGL policy to cover the work. One of Gore’s
subcontractors miswired an IFE/CMS component during installation and
damaged the aircraft. Ibid. We held that the insurance company could not
                                        11
                                       No. 19-10565
dodge its duty to defend Gore by relying on a policy exclusion similar to j(6).
We said that the exclusion applied only to the IFE/CMS—that is, the particular
part upon which Gore worked—not the entire aircraft. Id. at 371. And we held
that if the insurance company wanted to “leave an insured exposed for
damages to the entire property,” the exclusion should not contain language
limiting it to “[t]hat particular part” of the property on which the insured
worked. Ibid.
       Like the insurance policy in Gore, the policy in this case excludes only
damages to “[t]hat particular part” of the property on which the insured
worked. Gonzalez was hired to work on the siding. That was the “particular
part” of the property upon which he performed his “operations” and “work,” for
purposes of j(5) and j(6). Gonzalez was not hired to work on the electrical
wiring. And he did not perform any work on the electrical wiring. Under Gore
and the plain text of the CGL policy, the j(5) and j(6) exclusions do not apply. †
       Mid-Continent’s contrary interpretation of the exclusions renders the
coverage provisions superfluous. Under Texas law, “[w]e must read all parts of
the contract together, striving to give meaning to every sentence, clause, and
word to avoid rendering any portion inoperative.” Balandran v. Safeco Ins. Co.
of Am., 972 S.W.2d 738, 741 (Tex. 1998) (citation omitted). But Mid-Continent
urges us to conclude that Gonzalez performed work on every “particular part”
of the property that was accidentally damaged, including property damaged in
the fire. If that were true, it would be unclear what work the coverage

   † Moreover, we have previously emphasized that the j(5) exclusion is written in the
present tense. JHP, 557 F.3d at 213. It excludes certain damages to certain property on which
certain people “are performing operations.” Ibid. (emphasis added). We interpreted that
present-tense clause to exclude only damages that occur during “the active performance of
work.” Ibid. Here, the fire damage occurred in 2016, years after the conclusion of “the active
performance of work.” Therefore, under JHP, the j(5) exclusion cannot apply to the fire
damage.
                                             12
                                 No. 19-10565
provisions are doing. The insurance policy would cover certain “property
damages” but then exclude all of them.
                                      III.
      Finally, Mid-Continent asks us to hold that it does not owe Gonzalez a
duty to indemnify. The duty to indemnify is distinct from the duty to defend.
Utica, 141 S.W.3d at 203. Whereas the facts alleged by the plaintiff control the
duty to defend, the “facts actually established in the underlying suit control
the duty to indemnify.” GuideOne, 197 S.W.3d at 310. The district court in this
case entered a partial final judgment pursuant to Federal Rule of Civil
Procedure 54(b) holding that Mid-Continent owed Gonzalez a duty to defend.
In a footnote, the court said that “Plaintiff ’s claims regarding damages and the
duty to indemnify remain pending.” Because the district court never entered a
final judgment regarding the duty to indemnify, we lack jurisdiction to
consider that issue on appeal. See 28 U.S.C. § 1291.
                                 *     *      *
      The district court’s judgment is AFFIRMED.

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                                    No. 19-10565
HAYNES, Circuit Judge, dissenting in part:
      I respectfully dissent from Part II of the majority opinion, and I would
reverse the district court judgment on Mid-Continent’s duty to defend. 1 My
disagreement with the majority opinion revolves around when the property
damage occurred.       The majority opinion holds that the property damage
occurred during the policy period: when Gonzalez allegedly nailed through
electrical wiring in 2013. I would hold that the property damaged occurred
after the policy period ended, when the fire broke out in 2016.
      I agree that Don’s Building Supply, Inc. v. OneBeacon Insurance Co., 267
S.W.3d 20 (Tex. 2008), Wilshire Insurance Co. v. RJT Construction, LLC, 581
F.3d 222 (5th Cir. 2009), and VRV Development L.P. v. Mid-Continent Casualty
Co., 630 F.3d 451 (5th Cir. 2011), control this case. I also agree that, in these
cases, the focus is on the actual, physical damage alleged in the underlying
litigation. But these cases also hold that when an underlying plaintiff alleges
actual, physical damage due to the insured’s negligent conduct, the alleged
property damage does not relate back to the time of the negligent act when
determining when the property damage occurred.
       For example, in VRV Development, the plaintiffs alleged that negligent
construction of a retaining wall resulted in actual physical damage to the wall,
which cracked, and to their backyards when the wall later collapsed. 630 F.3d
at 454, 457. The damage to the plaintiffs’ backyards related back to the
defendant’s allegedly negligent construction of the retaining wall and to the
crack in the wall, but we held that the actual property damage to the backyard
occurred when the wall collapsed. Id. at 458. We noted that when determining
whether an event is an “occurrence,” courts “must focus on the time of the

      1 I concur in the majority opinion’s holding that we lack jurisdiction to consider
Gonzalez’s duty-to-indemnify claim on appeal.
                                          14
                                  No. 19-10565
‘actual physical damage’ to the property, and not the time of the ‘negligent
conduct’ or the ‘process that later results in’ the damage.” Id. at 458 (ellipsis
omitted) (quoting Don’s Bldg., 267 S.W.3d at 24, 29–30); see also Wilshire Ins.,
581 F.3d at 224–25 (rejecting a similar argument that the actual physical
damage occurred at the time the insured did the work rather than the first
sign of deterioration).
      Consistent with our precedent in VRV Development and Wilshire, I
would hold that the actual physical damage to Hamilton’s house occurred when
the fire broke out, not when the alleged negligent hammering happened. The
majority opinion, however, focuses on the time of the negligent conduct. It
holds that “the damage from the 2016 fire ‘shall be deemed’ to have occurred
in 2013” for three reasons: (1) the Petition stated “that the 2016 fire ‘relates
back to [the] construction and/or installation of siding’ in 2013,” (2) the policy
defined “property damage” to include “all resulting loss of use of that property,”
so damage to the wire includes damage to the entire house, and (3) the
underlying plaintiffs’ claim of damages “alleg[ed] that the electrical wires were
damaged in 2013.” I disagree with all three points.
      First, the Petition’s factual background begins, “The injuries and
damages suffered by Plaintiffs and made the basis of this action arose out of an
occurrence on or about December 1, 2016” (emphasis added).          The majority
opinion overlooks this first part of the factual allegations and concludes that
the allegedly negligent hammering was the damage, which was later
discovered when the fire broke out. Thus, contrary to the majority opinion’s
determination, the underlying plaintiffs alleged facts that made a claim for
property damage incurred by the fire.
      Second, VRV Development dealt with the same definition of “property
damage,” see 630 F.3d at 454–55, a definition that is not as broad as the
majority opinion contends. As the majority opinion holds, Gonzalez’s alleged
                                        15
                                  No. 19-10565
negligence caused physical injury to the electrical wiring. Thus, “all resulting
loss of use of that property” is limited to the electrical wires and does not extend
to the entire house. See That, OXFORD ENGLISH DICTIONARY (2d ed. 1989)
(defining “that” as a “demonstrative pronoun” denoting the thing “that has just
been mentioned” or “pointed out”); see also VRV Dev., 630 F.3d at 457–58
(concluding that “property damage” to the retaining walls did not extend to
damage to the plaintiffs’ backyards).
      Third and last, the majority opinion incorrectly interprets the Petition’s
damages section. The majority opinion contends that the underlying plaintiffs’
allegation of “‘actual damages to property contained within the property in
question,’ such as the electrical wire,” plainly entails that electrical-wire
damage occurred in 2013. The Petition states that the “damages . . . arose out
of [the fire]” and that the fire caused damage to Hamilton’s entire house, which
includes the electrical wires. Thus, the factual allegations within the Petition
are that “the time of the ‘actual physical damage’” to Hamilton’s property was
when the fire broke out. See VRV Dev., 630 F.3d at 458 (quoting Don’s Bldg.,
267 S.W.3d at 24). Accordingly, Mid-Continent has no duty to defend Gonzalez
in the Underlying Litigation because the fire caused the property damage and
occurred after the policy period expired. Thus, I would reverse the district
court’s judgment on that issue and remand the case for further proceedings.
From the majority opinion’s failure to do so, I respectfully dissent.

                                        16