IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
____________________
No. 97-50801
Summary Calendar
____________________
ESSEX INSURANCE COMPANY,
Plaintiff-Counter Defendant-
Appellee,
v.
LAMPASAS GOLF ASSOCIATION,
INC, ET AL,
Defendants-Counter Plaintiffs
MORRIS L ELLIS,
Defendant-Counter Plaintiff-
Appellant.
_________________________________________________________________
Appeal from the United States District Court
for the Western District of Texas
(A-97-CV-61)
_________________________________________________________________
August 10, 1998
Before KING, PARKER, and DENNIS, Circuit Judges.
PER CURIAM:*
Plaintiff-appellee Essex Insurance Company, Inc. sought
declaratory judgment regarding its duties to defend and indemnify
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
defendant-appellant Morris L. Ellis and another party. The
district court granted summary judgment in favor of Essex
Insurance Company, Inc. Ellis appeals from this judgment. We
affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
In December 1994, Lampasas Golf Association, Inc. (LGA) and
the City of Lampasas were involved in the expansion of a
municipal golf course. In furtherance of this project, LGA
representatives allegedly cut down and removed trees and brush
from Warren and Mona Wooten’s property, without their permission.
Consequently, the Wootens filed suit against LGA, Morris L.
Ellis, and others (collectively, Defendants). In the Wootens’
Third Amended Original Petition, they alleged mental anguish,
emotional distress, loss of use of property, and property damage
resulting from intentional tortious conduct, including, inter
alia, trespass and conversion.1 Alternatively, the Wootens
alleged that Defendants’ negligent conduct proximately caused
their injuries.
LGA and Ellis notified their insurance provider, Essex
Insurance Company, Inc. (Essex) of the suit and made a demand for
defense and indemnification. Essex refused, claiming that the
1
Additionally, the Wootens alleged intentional invasion
of privacy, harassment, assault, and an unlawful taking of
property under the Texas and U.S. constitutions. Because Ellis
does not raise any issue on appeal as to these allegations, we
limit our review to the allegations mentioned above.
2
conduct alleged in the Wootens’ complaint was outside the scope
of coverage provided by LGA’s insurance policy with Essex (the
Policy). The Policy is a Commercial General Liability (CGL)
policy covering both LGA and Ellis in his capacity as an
executive officer of LGA.
In January 1997, Essex filed a declaratory judgment action
against LGA and Ellis in federal district court based on
diversity of citizenship under the Federal Declaratory Judgment
Act, 28 U.S.C. § 2201. Specifically, Essex sought a declaration
that it owed no duty to defend or indemnify either LGA or Ellis
from the Wooten claims in the underlying state court action. LGA
and Ellis counterclaimed for declaratory relief and attorney’s
fees. Thereafter, the parties filed cross-motions for summary
judgment.
On August 8, 1997, the district court, applying Texas law,
granted Essex’s motion (and denied Ellis’s motion) for summary
judgment, holding that Essex owed no duty to defend or indemnify
either LGA or Ellis in the Wooten suit. Ellis subsequently filed
a motion to vacate, alter, or amend the judgment. The district
court partially granted the motion, amending its judgment to
apply only to the allegations of the Wootens’ Third Amended
Original Petition. Ellis now appeals the amended judgment.
II. STANDARD OF REVIEW
We review the granting of summary judgment de novo, applying
3
the same criteria used by the district court in the first
instance. See Texas Med. Ass’n v. Aetna Life Ins. Co., 80 F.3d
153, 156 (5th Cir. 1996). First, we consult the applicable law
to ascertain the material factual issues. See King v. Chide, 974
F.2d 653, 655-56 (5th Cir. 1992). We then review the evidence
bearing on those issues, viewing the facts and inferences to be
drawn therefrom in the light most favorable to the nonmoving
party. See Lemelle v. Universal Mfg. Corp., 18 F.3d 1268, 1272
(5th Cir. 1994). Summary judgment is proper “if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law.” FED. R. CIV. P.
56(c). We may affirm a district court’s grant of summary
judgment on any ground that was raised before the district court
and upon which both parties had an opportunity to present
evidence. Conkling v. Turner, 18 F.3d 1285, 1296 n.9 (5th Cir.
1994).
III. DISCUSSION
Ellis argues that the district court erred in granting
summary judgment declaring that Essex had no duty to defend or to
indemnify Ellis in the underlying lawsuit. In support of this
argument, Ellis contends that the Wootens’ alternate negligence
claim in the underlying suit qualifies as an “occurrence” under
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the Policy and triggers Essex’s duty to defend.2 Finally, Ellis
contends that unresolved fact issues preclude summary judgment on
Essex’s duty to indemnify.
A. Duty to Defend
Under Texas law, an insurer’s duty to defend is triggered
when allegations in the plaintiff’s pleadings raise a potential
for coverage under the policy. See Cornhill Ins. PLC v.
Valsamis, Inc., 106 F.3d 80, 84 (5th Cir. 1997); see also
Argonaut Southwest Ins. Co. v. Maupin, 500 S.W.2d 633, 635 (Tex.
1973). Put another way, the determination of an insurer’s duty
to defend depends exclusively upon the “eight corners” of the
pleading and the policy. See National Union Fire Ins. Co. v.
Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex.
1997). We must therefore focus our review solely on the facts
pled and the policy language, and we exclude alleged legal
theories that lend an interpretative slant to the facts. See
Farmers Tex. County Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 82
(Tex. 1997) (indicating that the court must focus on factual
allegations rather than legal theories); National Union Fire, 939
S.W.2d at 141 (same).
2
In addition, Ellis contends that the conduct he
characterizes as an “occurrence” does not fall under the rubric
of Policy exclusions preventing coverage. However, because Ellis
cannot meet the threshold requirement of an “occurrence”
triggering policy coverage, we do not reach any conclusion as to
the potential applicability of Policy exclusions.
5
Ellis argues that the district court did not properly apply
the eight corners rule because it impermissibly resolved issues
of fact in favor of Essex. Specifically, Ellis contends that,
because it is disputed whether Defendants in the Wooten suit knew
that they were on the Wootens’ property and cutting down the
wrong trees and because an alternate pleading exists alleging
negligence, the Wootens’ injuries are properly characterized as
the result of the negligent determination of property boundary
lines and therefore constitute an “accident” or “occurrence”
under the Policy’s terms. We disagree.
Ellis’s argument fails for two reasons. First, as explained
above, the district court is obligated to exclude legal theories
from its analysis of the allegations in the underlying suit.
Thus, a legal theory of negligence cannot be asserted by the
insured as a factual element triggering the insurer’s duty to
defend. See Farmers, 955 S.W.2d at 82-83. Regardless of whether
negligence caused one or more Defendants to enter the property,
the allegation is that Defendants trespassed, cut down trees that
did not belong to them, and later removed them. Thus, as the
district court correctly indicated, the mere fact that the
Wootens pled that these actions resulted from negligence has no
bearing on our eight corners review.
Second, in applying Texas law, this court has repeatedly
held that, “where liability premised on negligence is related to
and interdependent of other tortious activities, the ‘ultimate
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issue’ [in a duty to defend case] is whether the tortious
activities themselves are encompassed by the ‘occurrence’
definition.” Cornhill Ins. PLC, 106 F.3d. at 87 ; see also New
York Life Ins. Co. v. Travelers Ins. Co., 92 F.3d 336, 339 (5th
Cir. 1996); cf. Farmers, 955 S.W.2d at 82-83 (focusing on the
alleged intentional act of shooting that was the origin of
damages in determining whether the insurer on an automobile
liability policy had a duty to defend the insured driver on a
theory of negligent use of an automobile).
An application of this established rule of law precludes
distinguishing the alleged negligent conduct from the trespass
and conversion as a separate “occurrence” in this case. The
negligent identification of boundary lines is merely suggested as
a proximate cause of the alleged injury; the Wooten’s negligence
claim would not exist absent the subsequent intentional torts of
trespass and conversion. The allegation that Defendants
negligently identified boundary lines therefore cannot create a
duty on the part of Essex to defend. See Canutillo Indep. Sch.
Dist. v. National Union Fire Ins. Co., 99 F.3d 695, 704-5 (5th
Cir. 1996) (“Where the legal claims asserted by the plaintiffs
are not independent and mutually exclusive, but rather related to
and dependent upon excluded conduct, the claims are not covered,
even if asserted against an insured who did not himself engage in
the prohibited conduct.”). Ellis’s negligence, if any, is
“related to and interdependent of” the tortious conduct alleged
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and cannot be considered apart from the trespass and conversion
claims. See Columbia Mut. Ins. Co. v. Fiesta Mart, Inc., 987
F.2d 1124, 1128 (5th Cir. 1993) (finding that the “occurrence”
inquiry focused on fraud alleged, not precipitating negligence).
Our only inquiry is therefore whether the intentional acts are
covered in the Policy definition of “occurrence.”
Under Texas law, the insured bears the burden of showing
that the claim against it is potentially within policy coverage.
See New York Life Ins. Co., 92 F.2d at 338. The Policy provides
coverage for “bodily injury” or “property damage” and creates a
duty on the part of Essex to defend the insured in lawsuits
alleging an “occurrence” under the Policy. The district court
found, and Ellis does not dispute, that the emotional injuries
complained of do not fall within the definition of “bodily
injury” as set forth in the Policy. Neither party disputes that
the Wootens incurred “property damage.” Therefore, the only
remaining issue is a threshold determination of whether an event
classified as an “occurrence” took place, thereby triggering
Essex’s duty to defend.
The Policy defines “occurrence” as “an accident, including
continuous or repeated exposure to substantially the same general
harmful conditions.” The term “accident” is not defined. In
construing an insurance policy, the Texas Supreme Court recently
reaffirmed that intentional conduct does not constitute an
“accident,” even if the actor does not intend or expect the
8
consequences that follow from the intentional conduct. Trinity
Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 827-28 (Tex. 1997).
In reaching its holding in Trinity, the court cited with approval
Argonaut Southwest Insurance Co. v. Maupin, 500 S.W.2d 633 (Tex.
1973), a case factually similar to the case at bar. In Argonaut,
the defendant removed dirt from property under an agreement with
an individual the defendant mistakenly believed to be its owner.
Id., at 633-34. When the true owner sued, the defendant argued
that its conduct was an “accident” and therefore within its
policy coverage. Id. The court rejected this argument, stating:
The plaintiff’s act in trespassing upon the Meyers’
property did not constitute an accident. They did what
they intended to do by removing the [dirt] from the
property. The fact that they were unaware of the true
owner of the property has no bearing upon whether the
trespass was caused by accident. The respondent’s acts
were voluntary and intentional, even though the result
or injury may have been unexpected, unforeseen and
unintended.
Id. at 635.
An identical analysis is applied in this case. The fact
that Ellis may have been unaware that he was sending LGA agents
to the Wootens’ property is irrelevant in determining whether
they intended to clear the plot of land once they got there. It
is clear that the conduct causing the Wootens’ property damage
did not constitute an accident and therefore did not constitute
an occurrence. Essex thus has no duty to defend LGA or Ellis.
B. Duty to Indemnify
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An insurer’s duties to defend and indemnify are distinct and
separate. See Trinity, 945 S.W.2d at 821-22. The duty to defend
is broader than the duty to indemnify. See Lafarge Corp. v.
Hartford Cas. Ins. Co., 61 F.3d 389, 393 (5th Cir. 1995). Unlike
the duty to defend, the duty to indemnify is not based on
allegations but on the actual facts proven that underlie the
cause of action and result in the insured’s liability. See
Canutillo, 99 F.3d at 701. As the Texas Supreme Court held in
Farmers:
[T]he duty to indemnify is justiciable before the
insured’s liability is determined in the liability
lawsuit when the insurer has no duty to defend and the
same reasons that negate the duty to defend likewise
negate any possibility the insurer will ever have a
duty to indemnify. . . . No facts can be developed in
the underlying tort suit that can transform [cutting
down and removing trees] into an [“accident”].
Farmers, 955 S.W.2d at 84.
Ellis contends that a declaratory judgment as to future
indemnity is improper because the Wootens can potentially amend
their complaint to allege other conduct that may fall within
Policy coverage and trigger the duty to defend or indemnify.
However, the district court limited its judgment that Essex had
no duty to indemnify LGA or Ellis to the allegations contained
within the Wootens’ Third Amended Original Petition. Therefore,
the district court’s judgment does not preclude the existence of
a duty on the part of Essex to indemnify should the Wootens
further amend their complaint.
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IV. CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the
district court.
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