UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 00-11339
Summary Calendar
ST. PAUL GUARDIAN INSURANCE COMPANY,
Plaintiff-Appellee,
VERSUS
CENTRUM GS LIMITED; GOODYORK CORPORATION; STEINER & ASSOCIATES,
INC.; YAROMIR STEINER; BRENDA BRUSHABER,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of Texas
March 11, 2002
Before EMILIO M. GARZA, STEWART and PARKER, Circuit Judges.
ROBERT M. PARKER, Circuit Judge:
Centrum GS Limited, et al., appeal the district court’s denial
of their motion for summary judgment and grant of summary judgment
in favor of St. Paul Guardian Insurance Company upon a finding that
the insurance company had no duty to defend any defendant in Gerry
Perdue’s underlying state court action. We affirm in part, reverse
in part and remand for further proceedings not inconsistent with
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this opinion.
FACTS AND PROCEDURAL HISTORY
The relevant facts in this case are not in dispute. St. Paul
Guardian Insurance Company (hereinafter “St. Paul”) is an insurance
company headquartered in St. Paul, Minnesota. Centrum GS Limited
(hereinafter “Centrum”) is a Texas limited partnership and owner of
the Centrum Building, a nineteen-story office tower located in
Dallas, Texas.1 Goodyork Corporation (hereinafter “Goodyork”) is
a Texas corporation headquartered in Los Angeles, California and
general partner of Centrum. Steiner & Associates, Inc.
(hereinafter “Associates”) is a Florida corporation and property
manager of the Centrum Building. Yaromir Steiner (hereinafter
“Steiner”) is a citizen of the state of Florida, employed by
Associates and an officer of Associates. Brenda Brushaber
(hereinafter “Brushaber”) is a citizen of the state of Texas and
employed by Associates as the General Manager of the Centrum
Building.2 Gerry Perdue (hereinafter “Perdue”) was a building
engineer hired during the construction of the Centrum Building.
Under various property management companies, Perdue maintained this
position for approximately eight years until he assumed the
position of Chief Building Engineer for the Centrum Building
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Centrum’s only limited partner is Spurlington Incorporated,
a Texas corporation headquartered in Los Angeles, California.
Spurlington Incorporated is not a party to this suit.
2
We refer to Centrum, Goodyork, Associates, Steiner and
Brushaber collectively as “Appellants.”
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beginning February 1, 1995.
In 1994, St. Paul issued a Commercial General Liability
insurance policy (hereinafter “CGL policy”) to Centrum effective
from December 23, 1994, to December 23, 1995. The CGL policy
covers inter alia, bodily injury, property damage and personal
injury liability.
On March 6, 1995, Perdue’s employment as Chief Building
Engineer was terminated. Perdue filed suit against Brushaber,
Associates and Steiner on August 23, 1995. Perdue’s claims
included wrongful termination, intentional infliction of emotional
distress, libel, slander, invasion of privacy, fraud, negligence
and breach of contract. On February 7, 1996, Perdue filed his
First Amended Original Petition adding Centrum and Goodyork as
defendants. On July 18, 1997, Perdue filed his Fourth Amended
Original Petition alleging that on or about December 21, 1994,
Steiner, Brushaber and Associates, on their behalf and on behalf of
Centrum and Goodyork, entered into an employment contract with him
for a one year period beginning February 1, 1995.
Perdue further alleged that he was wrongfully terminated on
March 6, 1995, and subsequent to his termination, Appellants hired
eight uniformed Dallas police officers to patrol the building’s
lobby and parking garage and Appellants also circulated to the
general public, including contractors, tenants and customers in the
building, color “WANTED POSTERS” and a memorandum requesting anyone
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who saw him to call security. The “WANTED POSTERS” allegedly
included a color photograph of Perdue, his name, his home address,
his driver’s license number, his social security number and his car
tag number. Perdue also alleged that Appellants made defamatory
statements about him and that Bill Jones, an employee and agent of
Appellants, stated that Perdue tampered with or cut off pumps at
the Centrum Building.
Perdue contends that his wrongful termination caused him to
suffer damages including loss of salary, bonuses, benefits,
commissions, medical expenses and benefits, retirement benefits,
vacation, insurance and a down payment on an automobile financed
during his employment. Additionally, Perdue contends that as a
result of Appellants’ libel, slander, invasion of privacy and
intentional infliction of emotional distress, he has suffered
mental distress, mental anguish, physical sickness and loss of
reputation.
St. Paul first received notification of Perdue’s claims
against Centrum on February 26, 1997, when it received from
Appellants’ counsel a copy of the suit papers from the Perdue
lawsuit. On June 18, 1997, St. Paul filed a complaint seeking a
declaratory judgment that it has no duty to defend or indemnify
Centrum or any other defendant in Perdue’s state court action.
Subsequently, St. Paul filed a motion for summary judgment
contending that Perdue’s claims are not covered under the CGL
policy and thus it has no duty to defend nor indemnify Appellants.
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Appellants in turn filed a cross-motion for summary judgment
arguing that Perdue’s claims are covered under the CGL policy and
therefore, St. Paul is obligated to defend Appellants.
Perdue alleged both physical damages (mental distress, mental
anguish, physical sickness and loss of reputation resulting from
slander and invasion of privacy) and economic damages (lost salary,
bonuses, benefits, health insurance, vacation, commissions and loss
of property resulting from wrongful termination) in his underlying
state court action. Although the district court agreed that
Perdue’s economic damages resulting from wrongful termination would
be covered under the definition of personal injury as that term is
defined in the CGL policy, the court held that Perdue’s claims for
economic damages were not covered because the damages were not the
result of a personal injury offense as defined in and required
under the CGL policy for personal injury coverage.
Furthermore, the district court found that under Texas law,
Perdue alleged facts sufficient to state a cause of action for
invasion of privacy and slander as those terms are defined in the
personal injury provisions of the CGL policy. However, the
district court found that Perdue’s alleged physical damages from
the personal injury offenses, invasion of privacy and slander, did
not result from Appellants’ “business activity” (owning and
managing property) as also required for coverage under the personal
injury provisions of the CGL policy. Therefore, the district court
held that Perdue’s claims for physical damages resulting from
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personal injury offenses were not covered and that St. Paul had no
duty to defend or indemnify under the personal injury provisions of
the CGL policy. St. Paul’s motion for summary judgment was granted
and Appellants’ cross-motion for summary judgment was denied.
On this appeal, Appellants argue that 1) the district court
erred in not granting summary judgment to Appellants because
sufficient facts were pled in the Perdue lawsuit to potentially
state a claim under the CGL policy’s personal injury provisions, 2)
the district court erred in granting summary judgment to St. Paul
in finding that St. Paul had no duty to defend under the CGL
policy’s personal injury provisions, 3) the district court erred in
not granting summary judgment to the Appellants on St. Paul’s late
notice defense, and 4) the district court erred in excluding
Perdue’s libel and libel per se claims as personal injury offenses.
STANDARDS OF REVIEW
We review a district court’s grant of summary judgment de
novo. New York Life Ins. Co. v. Travelers Ins. Co., 92 F.3d 336,
338 (5th Cir. 1996)(citation omitted). “On summary judgment the
inferences to be drawn from the underlying facts . . . must be
viewed in the light most favorable to the party opposing the
motion.” United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.
Ct. 993, 994, 8 L. Ed. 2d 176 (1962). Summary judgment is
appropriate “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
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affidavits, if any show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as
a matter of law.” FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett,
477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986).
We review a district court’s interpretation of an insurance
contract de novo. Potomac Ins. Co. of Ill. v. Jayhawk Med.
Acceptance Corp., 198 F.3d 548, 550 (5th Cir. 2000).
ANALYSIS
“In a diversity case state law provides the elements of the
plaintiff’s case.” Thrash v. State Farm Fire & Cas. Co., 992 F.2d
1354, 1356 (5th Cir. 1993) (citation omitted). “In Texas,
insurance policies are construed according to ordinary contract
principles. The interpretation of an insurance policy is a
question of law.” New York Life Ins. Co., 92 F.3d at 338
(citations omitted).
Under Texas law, courts follow the “Eight Corners” or
“Complaint Allegation” rule to determine if there is a duty to
defend. Id. at 338 (citing Gulf Chem. & Metallurgical Corp. v.
Associated Metals & Minerals Corp., 1 F.3d 365, 369 (5th Cir.
1993)). “This rule requires the trier of fact to examine only the
allegations in the [underlying] complaint and the insurance policy
in determining whether a duty to defend exists.” Id. “The 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
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the terms of the policy.” Houston Petroleum Co. v. Highlands Ins.
Co., 830 S.W.2d 153, 155 (Tex. App.-Houston [1st Dist.] 1990, writ
denied)(citation omitted).
Appellants argue that the district court erred in not granting
summary judgment in their favor because sufficient facts were pled
in the Perdue lawsuit to potentially state a claim under the CGL
policy’s personal injury provisions. The personal injury
provisions of the CGL policy state that coverage is provided for
damages for personal injuries that: 1)result from the insured’s
business activities, and 2)are caused by a personal injury offense.
The district court found that Perdue stated at least two
claims (slander and invasion of privacy) that fell within the CGL
policy’s definition of personal injury offense. However, St. Paul
asserts that Perdue’s claims were not the result of Appellants’
business activities and alternatively, that Appellants’ late notice
of suit negates coverage under the CGL policy provisions. In
finding that the “business activity” criterion was not satisfied,
the district court did not reach the merits of St. Paul’s late
notice defense.
The CGL policy does not define the term “business activity.”
Appellants argue that the circumstances relating to the termination
of an employee are “business activities” while St. Paul argues that
circumstances relating to the termination of an employee are
internal employment practices and are not a “business activity.”
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When the language of an insurance policy is not ambiguous, it is
our duty to give the words used their plain meaning. See Houston
Petroleum Co., 830 S.W.2d at 155 (citing Puckett v. U.S. Fire Ins.
Co., 678 S.W.2d 936, 938 (Tex. 1984)). “[W]hen the language of a
policy is susceptible to more than one construction, ‘the polic[y]
should be construed strictly against the insurer and liberally in
favor of the insured.’” Gulf Chem. & Metallurgical Corp. v.
Associated Metals & Minerals Corp., 1 F.3d 365, 369 (5th Cir. 1993)
(quoting Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 666 (Tex.
1987)). “And where the question of interpretation ‘involves an
exception or limitation on [the insurer’s] liability under the
policy, an even more stringent construction is required.’” Id.
The district court characterized the Appellants’ actions as
“the posting of an employee’s personal and private information
around [the] employee’s former place of employment, for public view
and possible misuse by others” and then found this inconsistent
with the Appellants’ “business activity” of owning and managing
property. We disagree.
Perdue’s Fourth Amended Original Petition alleges that the
complained of actions, including the personal injury offense of
invasion of privacy, were undertaken by Brushaber as part of her
property management of the Centrum Building to protect its tenants
and the real estate on behalf of Centrum. “Usually, the criminal
conduct of a third party is a superseding cause relieving the
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negligent actor from liability. However, the tortfeasor’s
negligence will not be excused where the criminal conduct is a
foreseeable result of such negligence.” Nixon v. Mr. Prop. Mgmt.
Co., Inc., 690 S.W.2d 546, 550 (Tex. 1985). “In the landlord-
tenant relationship, for example, a landlord who retains control
over the security and safety of the premises owes a duty to a
tenant’s employee to use ordinary care to protect the employee
against an unreasonable and foreseeable risk of harm from the
criminal acts of third parties.” Centeq Realty, Inc. v. Siegler,
899 S.W.2d 195, 197 (Tex. 1995) (citation omitted).
In light of the potential duty and perceived risk, Appellants’
posted information concerning a perceived risk to the Centrum
Building and its tenants in a place where it could be viewed and
appropriately used. Giving the term “business activity” its plain
meaning, Appellants’ actions were consistent with their business of
owning and managing property. Even if we found the term, “business
activity,” to be ambiguous, construing the policy strictly against
St. Paul and liberally in favor of Appellants, would require that
we find error in the district court granting summary judgment in
favor of St. Paul.
Appellants furthermore contend that the district court erred
in not granting summary judgment in favor of Appellants on St.
Paul’s late notice defense. The district court found that
Appellants’ actions relating to the termination of Perdue were not
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“business activities” as required under the CGL policy and
therefore, St. Paul had no duty to defend. As it was not necessary
in light of the district court’s findings on the issue of “business
activities,” the district court did not reach the merits of St.
Paul’s late notice defense. Therefore, we remand to the district
court for determination of the merits of St. Paul’s late notice
defense.
Finally, Appellants argue that the district court erred in
excluding Perdue’s libel and libel per se claims as personal injury
offenses. “If coverage exists for any portion of a suit, the
insurer must defend the insured in the entire suit.” St. Paul Fire
& Marine Ins. Co. v. Green Tree Fin. Corp.-Tex., 249 F.3d 389, 391
(5th Cir. 2001) (citation omitted). Because we have already
concluded that the damages resulting from the personal injury
offense of invasion of privacy were the result of Appellants’
business activities, and barring some other defense are therefore
covered under the CGL policy, it is not necessary for this court to
consider the libel and libel per se claims.
CONCLUSION
The district court will decide on remand the merits of St.
Paul’s late notice defense and determine whether St. Paul has a
duty under the CGL policy to defend Appellants against the claims
set forth in Perdue’s underlying state court action.
AFFIRMED in part, REVERSED in part and REMANDED.
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