United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
May 6, 2005
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
_____________________ Clerk
No. 03-41432
_____________________
V. L. PROPERTIES, INC.,
Plaintiff-Appellant,
versus
ALLEGHANY UNDERWRITING RISK SERVICES LTD./
LLOYD’S OF LONDON,
Defendant-Appellee.
__________________________________________________
Appeal from the United States District Court
for the Southern District of Texas
USDC No. G-03-CV-445
__________________________________________________
Before REAVLEY, BENAVIDES and PRADO, Circuit Judges.
PER CURIAM:*
This diversity suit under Texas law concerns which
deductible is applicable to an insurance claim. Lloyd’s issued
the policy to V.L. Properties. Summary judgment was rendered for
Lloyd’s. We reverse.
The insured owns a yacht basin on the Gulf Coast. In 2001
strong winds caused property damage to the facility estimated at
$64,410.22. While the parties agree that the damage giving rise
*
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this opinion should not be published and is not precedent except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.
to the insurance claim was caused by wind, the record is limited
regarding the weather conditions accompanying the winds or the
extent or magnitude of the winds. The original petition contains
a paragraph, admitted in Lloyd’s answer, stating only that there
were no witnesses to the “bad weather,” that according to a
newspaper, “a spokesperson for the U.S. Weather Service said that
the wreckage could have been caused by a tornado or straight-line
winds,” that there was no damage to neighboring properties, and
that the damage to the yacht basin “was restricted to a small
portion of the overall property.”
The policy consists of a Certificate of Insurance comprising
the first three pages, followed by a printed set of Marina
Property Insurance Clauses. The Clauses begin with a set of
Definitions. The certificate provides only for insurance of
“Piers & Floating Docks Etc” under “Section 3.” There are no
sections 1 or 2.
The dispute concerns the amount of the deductible. Section
3 of the Certificate includes the following language:
Deductible each accident
1. In respect of Catastrophe
which will include wind, wave
action, earthquake and flood USD 50,000
2. Any other loss USD 5,000
Although the term “Catastrophe” is capitalized, it is not defined
in the definitions section or elsewhere.
2
In granting summary judgment, the district court held as a
matter of law that the $50,000 deductible applied because the
damage was caused by wind. The court accepted Lloyds’s position
that the policy unambiguously provides that any damage to the
insured property caused by wind was a “catastrophe” under the
policy and subject to the higher deductible.
Under Texas law, insurance policies are interpreted in
accordance with the rules of construction that apply to contracts
generally. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI
Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). If an insurance
policy is expressed in unambiguous language, its terms will be
given their plain meaning and it will be enforced as written.
Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (Tex. 1984).
If, however, a contract is susceptible to more than one
reasonable interpretation, a court will resolve any ambiguity in
favor of coverage. Id. “[W]hen the language chosen is
susceptible of more than one construction, such policies should
be construed strictly against the insurer and liberally in favor
of the insured.” Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663,
666 (Tex. 1987). Whether the contract is ambiguous is a question
of law for the court to decide. Nat’l Union, 907 S.W.2d at 520.
The mere fact that the parties disagree as to coverage does
not create an ambiguity, Forbau v. Aetna Life Ins. Co., 876
S.W.2d 132, 134 (Tex. 1994). Extrinsic evidence cannot be
3
admitted for the purpose of creating an ambiguity. Nat’l Union,
907 S.W.2d at 520. If the provisions of the insurance contract
can be given a “definite or certain legal meaning,” then the
insurance policy is not ambiguous. Id.
We think it is unreasonable to construe the language to make
any wind damage a catastrophe. The terms used in the policy
should be given their plain, ordinary meaning unless the policy
itself shows that the parties intended terms to have a different,
technical meaning. Gonzalez v. Mission Am. Ins. Co., 795 S.W.2d
734, 736 (Tex. 1990). The word “catastrophe” has a plain and
ordinary meaning: a momentous tragic event or an utter failure.
See MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 179 (10th ed. 2002). It is
not given a contrary meaning in the definitions section of the
policy. Further, if Lloyds as the drafter intended the higher
deductible to apply to any event resulting in damages caused by
wind, and not otherwise excluded from coverage, it could have
used the term “any Insured Event caused by” instead of
“Catastrophe which will include.” Insured Event is a term
included in the definitions section, and means “[a]n event which
causes loss or damage which is recoverable under this insurance.”
Or Lloyds could have substituted “loss” for catastrophe, which in
context would more clearly indicate that losses caused by wind
and the other stated causes are subject to the higher deductible
of subpart 1 of the deductible provision, regardless of the
4
amount of loss, while “[a]ny other loss” is subject to the lower
deductible of subpart 2.
We will not decide on this summary judgment record whether
this particular event could be held to be a catastrophe to the
insured’s facility, and we leave that to further development in
the district court.
REVERSED and REMANDED.
5
BENAVIDES, Circuit Judge, dissenting:
I respectfully dissent from the majority’s decision which
concludes that it is unreasonable to construe the policy language
to make any wind damage a catastrophe. In my view, the policy
unambiguously provides that any damage to the insured property
caused by wind is a “catastrophe” under the policy and,
therefore, subject to the higher deductible.
The policy explicitly states that the higher deductible will
apply to “Accidents . . . In respect of Catastrophe, which will
include wind, wave action, earthquake and flood.” Because a
plain reading of the contract demonstrates that the definition of
catastrophe specifically includes loss caused by wind, there can
be no ambiguity as to whether the higher deductible applies to
damage caused by wind; the parties clearly contemplated that
where damage to the insured property is caused by wind, the
higher deductible applies. Where, as here, the policy terms are
unambiguous, the language of the policy alone expresses the
parties’ intent, and the contract must be enforced as written.
See Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (Tex.
1984). Therefore, because the catastrophe deductible provision
unambiguously applies to damage caused by wind, and the parties
do not dispute that the damage to the yacht basin facility was
caused by wind, the higher deductible applies.
The majority notes that the word “catastrophe” has a plain
6
and ordinary meaning and that a contrary meaning is not given in
the definitions section of the policy. While the plain meaning
of “catastrophe” does take the magnitude of an event or the
quantum of damages caused by an event into account, in my view
the policy clearly gives “catastrophe” a different, and more
general, definition. Under Texas state law, where an insurance
policy clearly gives a word a different meaning than its ordinary
meaning, the meaning contemplated by the policy governs and the
ordinary meaning of that word does not apply. See Security Mut.
Cas. Co. v. Johnson, 584 S.W.2d 703, 704 (Tex. 1979). Therefore,
the ordinary meaning of the word “catastrophe” should be
irrelevant to our analysis because the parties clearly
contemplated that, for purposes of the policy, the higher
deductible would apply to damage caused by wind, wave,
earthquake, and flood – irrespective of the amount or extent of
the damage caused by such loss.
Moreover, the parties to the policy did not include any
express words of limitation limiting the applicability of the
higher deductible to only certain types of wind damage. Because
the parties can choose the language used in the contract, and the
parties here did not include express words of limitation in the
policy, we are powerless to alter the parties’ original intent,
as manifested in the clear and explicit language of the contract.
Std. Constructors, Inc. v. Chevron Chem. Co., Inc., 101 S.W.3d
7
619, 625 (Tex. App. - Houston 2003); see also Nat’l Union Fire
Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517 (Tex. 1995)
(concluding that where express words of limitation do not appear
on the face of an insurance policy, there is no ambiguity and the
contract will be enforced as written).
In my view, the policy language dictates that all loss
caused by, inter alia, wind damage amounts to a “catastrophe,”
subject to the higher deductible. Accordingly, I would affirm
the judgment of the district court, which held as a matter of law
that the higher deductible applied because the damage was caused
by wind.
8
9