Opinion issued May 1, 2014.
In The
Court of Appeals
For The
First District of Texas
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NO. 01-13-00691-CV
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DARRELL LEE HODGES, JR., Appellant
V.
SAFECO LLOYDS INSURANCE COMPANY, Appellee
On Appeal from the 281st District Court
Harris County, Texas
Trial Court Case No. 2013-17765
OPINION
In this appeal, we consider whether the trial court properly granted summary
judgment in favor of an insurance company that denied coverage to a son who
negligently injured his father, with whom he resided, under a “homeowner’s
exclusion” in the father’s homeowner’s insurance policy. We affirm.
BACKGROUND
On August 17, 2009, Darrell Lee Hodges, Sr. was assaulted in his home.
His son, Darrell Lee Hodges, Jr. [“DJ”], lived at the home with his father. DJ
knew the assailants, knew they were looking for his father and that they posed a
risk to his safety, but nonetheless failed to warn his father of the men’s presence
outside the home and failed to call the police to have the men removed from the
premises.
SAFECO had a homeowner’s condominium policy in place at the time of
the offense. Mr. Hodges is the named policy holder and DJ is also covered
because he lived at the condominium with his father. Mr. Hodges made a claim
under the policy for insurance benefits to cover his injuries. SAFECO denied
coverage, citing the “homeowner’s exclusion” in the policy, which precludes
coverage for “bodily injury to [the named insured] or an insured.”
Mr. Hodges sued DJ in district court alleging that DJ’s negligence in failing
to warn him about the presence of the assailants and their intentions was the
proximate cause of his bodily injuries. SAFECO initially provided a defense for
DJ under a reservation of rights, but subsequently had its attorney withdraw from
DJ’s representation. Mr. Hodges obtained a judgment against DJ in the amount of
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$99,599.96. Evidence showed that Mr. Hodges needed stitches and staples to close
a cut on his head caused when he was hit in the head with a beer mug by the
assailants, and that he would require plastic surgery to conceal the remaining scars.
DJ then sued SAFECO, alleging that it had breached the insurance contract
by refusing to indemnify him for the judgment Mr. Hodges obtained against him,
and that SAFECO acted in bad faith denying coverage and failing to pay his claim
promptly. DJ and SAFECO filed cross-motions for summary judgment asserting
their respective positions regarding the coverage provided by the policy. The trial
court granted SAFECO’s motion, denied DJ’s, and this appeal followed.
PROPRIETY OF SUMMARY JUDGMENT
In three related issues on appeal, DJ contends the trial court erred in granting
SAFECO’s motion for summary judgment and determining that the homeowner’s
condominium policy provided no coverage to him for his father’s injuries.
Standard of Review and Applicable Law
In reviewing cross-motions for summary judgment, “we follow the usual
standard of review for traditional summary judgments.” Lockheed Martin Corp. v.
Gordon, 16 S.W.3d 127, 132 (Tex. App.—Houston [1st Dist.] 2000, pet. denied).
On appeal, we review summary judgments de novo. Provident Life & Accident Ins.
Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). Traditional summary judgment is
properly granted only when a movant establishes that there are no genuine issues
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of material fact and that it is entitled to judgment as a matter of law. TEX. R. CIV. P.
166a(c); KPMG Peat Marwick v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d
746, 748 (Tex. 1999). When a plaintiff moves for summary judgment, he must
prove that he is entitled to summary judgment as a matter of law on each element
of his cause of action. MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986) (per
curiam); Cleveland v. Taylor, 397 S.W.3d 683, 696–97 (Tex. App.—Houston [1st
Dist.] 2012, pet. denied). When a defendant moves for summary judgment, it must
either (1) disprove at least one element of the plaintiff’s cause of action or (2)
plead and conclusively establish each essential element of an affirmative defense to
rebut plaintiff’s cause. Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995) (per
curiam).
To decide whether issues of material fact preclude summary judgment,
evidence favorable to the non-moving party must be taken as true, every
reasonable inference must be indulged in its favor, and any doubts resolved in its
favor. Knott, 128 S.W.3d at 215. The movant must conclusively establish its right
to judgment as a matter of law. Charida v. Allstate Indem. Co., 259 S.W.3d 870,
872 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (citing MMP, 710 S.W.2d at
60). A matter is conclusively established if reasonable people could not differ as to
the conclusion to be drawn from the evidence. City of Keller v. Wilson, 168 S.W.3d
802, 816 (Tex. 2005).
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Insurance policies are controlled by rules of interpretation and construction
applicable to contracts generally. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v.
CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). The primary concern of a court
in construing a written contract is to ascertain the true intent of the parties as
expressed in the instrument. Id. Terms in contracts are given their plain, ordinary,
and generally accepted meaning unless the contract itself shows that particular
definitions are used to replace that meaning. W. Reserve Life Ins. Co. v.
Meadows, 261 S.W.2d 554, 557 (Tex. 1953). If a written contract is so worded that
it can be given a definite or certain legal meaning, then it is not ambiguous. Nat’l
Union Fire Ins. Co., 907 S.W.2d at 520. The interpretation of an unambiguous
contract is a question of law for the court. Perry v. Houston Indep. Sch. Dist., 902
S.W.2d 544, 547 (Tex. App.—Houston [1st Dist.] 1995, writ dism’d w.o.j.). If an
insurance policy is ambiguous, however, it will be interpreted in favor of the
insured. Grain Dealers Mut. Ins. Co. v. McKee, 943 S.W.2d 455, 458 (Tex. 1997).
Relevant Contractual Provisions
The definition of “You”
The policy lists Darrell Hodges [Senior] as the named insured and states that
the terms “‘you’ and ‘your’ refer to the ‘named insured’ shown on the declarations
and the spouse if a resident of the same household.”
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The definition of “Insured”
Under section 4a of the policy’s definitions, the term “‘Insured’ means you
and residents of your household who are your relatives.”
The “household” exclusion
The exclusions section of the policy provides that “Coverage C (Personal
Liability) does not apply to bodily injury to you or an insured within the meaning
of part a, or part b, of insured as defined.”
The “severability” clause
The severability of insurance clause provides that “[t]his insurance applies
separately to each insured. This condition will not increase our limit of liability for
any one occurrence.”
Analysis
DJ argued in his motion for summary judgment and on appeal that “[t]he
bodily injury exclusion, when read in conjunction with the policy’s severability of
insurance clause, applies only if the insured claiming liability coverage seeks
compensation for his or her own bodily injuries.” Specifically, DJ contends that
“[t]he correct reading of [the exclusion] is that the policy will not provide ‘you,’
(as “the ‘named insured’ shown on the declarations) liability coverage for bodily
injuries suffered by ‘you’ in a claim made by ‘you[,]” and that similarly “the
separate policy of ‘an insured’ will not provide it coverage for bodily injuries
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suffered by it in a claim made by it.” Essentially, DJ argues that because the
claims are for his father’s bodily injuries and not his own, he should be covered by
the policy.
SAFECO responds, both in its own motion for summary judgment and on
appeal, that “the severability clause does not affect the [coverage] analysis because
the household exclusion applies based on the identity of the injured party, not the
identity of the actor or the insured seeking coverage.” SAFECO admits that DJ is
an insured under the policy, and that, pursuant to the severability clause, the
contract’s coverage must be evaluated through his eyes. See Commercial Standard
Ins. Co. v. Am. Gen. Ins. Co., 455 S.W.2d 714, 721 (Tex. 1970) (stating that in
insurance policy with severability clause, “‘[t]he insured’ does not refer to all
insureds; rather the term is used to refer to each insured as a separate and distinct
individual apart from any and every other person who may be entitled to coverage
thereunder”) However, SAFECO argues that even if this Court considers the policy
from DJ’s standpoint, it cannot “ignore[] the existence of other insureds or
change[] the Policy’s terms or definitions.” SAFECO contends that no matter
whose standpoint the court considers in interpreting the policy, it unambiguously
excludes coverage for bodily injuries suffered by “you,” which is contractually
defined as Mr. Hodges.
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This Court considered the interaction between an exclusion and a
severability clause in Bituminous Casualty Corp. v. Maxey, 110 S.W.3d 203 (Tex.
App.—Houston [1st Dist.] 2003, pet. denied). In Maxey, we addressed “a case of
first impression under Texas law regarding the application of a separation of
insureds clause to a policy exclusion that refers to ‘any insured.’”1 Id. at 211. We
noted that the effect of the separation of insureds clause on a particular exclusion
in an insurance contract depends on the terms of that exclusion. Id. at 214
(citing Petticrew v. ABB Lummus Global, Inc., 53 F. Supp. 2d 864, 871 (E. D. La.
1999)). “If the exclusion clause uses the term ‘the insured,’ application of the
separation of insureds clause requires that the term be interpreted as referring only
to the insured against whom a claim is being made under the
policy.” Id. (citing Commercial Standard Ins. Co., 455 S.W.2d at 721). However,
we further explained that if “the exclusion clause uses the term ‘any insured,’ then
application of the separation of insureds clause has no effect on the exclusion
clause; a claim made against any insured is excluded.” Id. (citing Petticrew, 53 F.
Supp. 2d at 871; Michael Carbone, Inc. v. General Acc. Ins. Co., 937 F. Supp. 413,
420 (E. D. Pa. 1996)). In so holding, this Court stated as follows:
To hold that the term “any insured” in an exclusion clause means “the
insured making the claim” would collapse the distinction between the
1
The policy in Maxey excluded coverage for “‘Bodily injury’ or ‘property damage’
arising out of the ownership . . .of any . . . ‘auto’ . . . owned or operated by or
rented or loaned to any insured.” 110 S.W.3d at 209 (emphasis added).
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terms “the insured” and “any insured” in an insurance policy
exclusion clause, making the distinction meaningless. It would also
alter the plain language of the clause, frustrating the reasonable
expectations of the parties when contracting for insurance. We should
not adopt an unreasonable construction of an insurance contract.
Moreover, construing the term “any” the same as the word “the” in an
exclusion clause when an insurance policy contains a separation of
insureds or severability of interests clause would require a tortured
reading of the terms of the policy.
Id. (citations omitted).
DJ argues that Maxey does not apply because the policy at issue in this case
excludes coverage for “an insured,” not “any insured.” Essentially, DJ argues that
the policy excludes bodily injury coverage only for the insured making the claim.
We disagree for two reasons.
First, as noted by this Court in Maxey, the terms are “an” and “any” are
interchangeable when used in this context. See Maxey, 110 S.W.3d at 214 (“Here,
nothing in the CGL policy indicates that ‘any insured’ is be construed in the text of
the policy differently from the way ‘an insured’ is defined in the declarations;
therefore, we find that they should be construed the same.”). As stated in Maxey,
the effect of the separation of insureds clause on a particular exclusion in an
insurance contract depends on the terms of that exclusion. Id. at 214. The majority
of cases addressing the issue have held that severability clauses affect
interpretation of policy exclusions using the term “the insured” (by modifying that
term to mean “the insured claiming coverage”), but have no effect on the
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interpretation of exclusions using the term “an insured” or “any insured.” See,
e.g., Ooida Risk Retention Group, Inc. v. Williams, 579 F.3d 469, 472–73 (5th Cir.
2009) (separation of insureds provision operates to give “effect to the separate
coverage promised each insured by using the term ‘the insured’ to refer to the
particular insured seeking coverage”); Ohio Cas. Inc. Co. v. Holcim (US), 744 F.
Supp. 2d 1251, 1271–73 (S.D. Ala. 2010) (holding severability clause has no effect
on the interpretation of exclusions using the term “an insured” or “any insured”);
Starwood Hotels & Resorts Worldwide, Inc. v. Century Sur. Co., No. H-06-
12102007, 2007 WL 1644041, at *8 (S.D. Tex. June 5, 2007) (“If, however, the
exclusion clause uses the term ‘any insured,’ then application of the separation of
insureds clause has no effect on the exclusion clause; a claim made against any
insured is excluded.”) (citations omitted); Evanston Ins. Co. v. OEA, Inc., No.
CIV02-1505DFL PAN, 2005 WL 1828796, at *8 (E.D. Cal. July 25, 2005) (“The
history of this clause makes clear that the ‘separation of insureds’ clause only
affects exclusionary clauses referring to ‘the insured,’ not ‘any insured.’”);
Michael Carbone, Inc. v. Gen. Acc. Ins. Co., 937 F. Supp. 413, 419–20 (E. D. Pa.
1996) (determining that separation of insured clause alters meaning of exclusion
only if exclusion uses phrase “the insured,” and does not alter meaning of
exclusion using phrase “any insured”); Paylor v. First Mountain Mortg. Corp., No.
278076, 2008 WL 4605304, at *7 (Mich. Ct. App. Oct. 9, 2008) (stating that
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separation of insureds provision does not affect exclusions using phrase “any
insured” rather than “the insured”); Travelers Indem. Co. v. Bloomington Steel &
Supply Co., 718 N.W.2d 888, 894–95 (Minn. 2006) (separation of insureds clause
“requires that coverage exclusions be construed only with reference to the
particular insured seeking coverage,” such that insurer can make exclusions
unambiguous by wording them to exclude coverage for “an” or “any” insured
rather than “the” insured); Am. Motorists Ins. Co. v. Moore, 970 S.W.2d 876, 880–
81 (Mo. Ct. App. 1998) (holding that use of phrase “an insured” made exclusion
unambiguous even in light of severability clause); Co-operative Ins. Cos. v.
Woodward, 45 A.3d 89, 95 (Vt. 2012) (holding severability clause “cannot
override” an “an insured” exclusion); Mutual of Enumclaw Ins. Co. v. Cross, 10
P.3d 440, 444 (Wash. Ct. App. 2000) (holding that use of phrase “an insured”
made exclusion unambiguous even in light of severability clause); J.G. v.
Wangard, 753 N.W.2d 475, 487 (Wis. 2008) (citing with approval authorities for
the proposition that an exclusion concerning “any insured” is “unambiguous, even
when read in context with the severability clause in the policy”).
We find no basis to distinguish Maxey simply because the policy excludes
coverage for “an insured,” rather than “any insured.” The language of the policy
does not limit the exclusion of personal injury coverage to simply the person
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making the claim, but also excludes bodily injury coverage to the named insured
and all his relatives residing in his home with him.2
The second reason we find DJ’s argument unpersuasive is that it completely
overlooks the fact that the policy excludes coverage for bodily injury to “you,” and
that “you” is contractually defined as Mr. Hodges.
In Starwood Hotels and Resorts Worldwide, Inc. v. Century Surety
Company, No. H-06-1210, 2007 WL 1644041 (S.D. Tex. June 5, 2007), the court
considered an exclusion for bodily injury to an employee of the “named insured.”
Id. at *6. An additional insured contended that it was entitled to coverage when an
employee of the named insured made a claim against it, arguing that because the
policy had a severability clause, the term “the named insured” in the exclusion
must be read as “the insured against whom claim is made or suit is brought.” Id.
The court disagreed, and, following Maxey, held that nothing in the policy
indicated that the term ‘the named insured’ in the exclusion was to be construed as
the “‘insured against whom claim is made or ‘suit’ is brought.” Id. at *8. Because
2
As such, this case is distinguishable from State Farm Fire & Cas. Ins. Co. v.
Keegan, which, interpreting the same policy provisions, held that claims by a
granddaughter against her grandfather, the named insured, were not excluded
because the grandfather had moved out of the insured home so that the
granddaughter no longer lived in his household. 209 F.3d 767, 769 (5th Cir.
2000). This was true even though the granddaughter resided with grandmother,
who was another named insured. Id. at 770. Here, it is undisputed that Mr.
Hodges and DJ resided together in the same household.
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the injured employee was an employee of the named insured, the policy excluded
coverage even when the party seeking coverage was the additional insured. Id.
The same is true here. The policy excludes coverage for “you,” which is
contractually defined as Mr. Hodges. Nothing in the policy indicates that “you” is
to be interpreted in any other way. The severability clause cannot alter this clearly
defined provision in the exclusion, even when viewed from DJ’s standpoint.
Accordingly, we conclude that the trial court did not err when it denied DJ’s
motion for summary judgment and granted SAFECO’s.
CONCLUSION
We affirm the trial court’s judgment.
Sherry Radack
Chief Justice
Panel consists of Chief Justice Radack and Justices Massengale and Huddle.
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