Certain Underwriters at Lloyds, London v. Law

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

FILED
June 2, 2009

No. 08-20159 Charles R. Fulbruge III
Clerk

CERTAIN UNDERWRITERS AT LLOYDS LONDON

Plaintiff – Appellant-Cross-Appellee
v.

WAN E LAW; SIE L TSU

Defendants – Appellees-Cross-Appellants

Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:06-CV-3360

Before O’CONNOR, Associate Justice (Ret.),* and WIENER and STEWART,
Circuit Judges.
WIENER, Circuit Judge:
Thieves stole copper tubing out of seventeen free-standing commercial air-
conditioning units permanently installed on the roof of a vacant office building
owned by Defendants-Appellees Wan E. Law and Sie L. Tsu (the “Laws”). The
Laws’ commercial property insurer, Certain Underwriters at Lloyd’s, London
(“Underwriters”), denied coverage based on the insurance policy’s theft
exclusion, and this declaratory action by Underwriters ensued. The district

*
The Honorable Sandra Day O’Connor, Associate Justice of the United States Supreme
Court, (Ret.), sitting by designation, pursuant to 28 U.S.C. § 294(a).
 No. 08-20159

court held that coverage was available, apparently (but not completely clearly)
basing its holding on either (1) the policy’s coverage of vandalism damage or (2)
the policy’s burglary exception to its theft exclusion; and both parties appealed.
We reverse the holding of the district court in favor of the Laws and render a
take-nothing judgment against them.
I. FACTS AND PROCEEDINGS
The facts of the underlying theft are not in dispute. In April 2005, thieves
climbed onto the roof of the Laws’ building in Houston, tore off portions of the
exterior panels that formed the housings of each of seventeen air-conditioning
units, then broke into the units themselves to steal their copper condenser coils.
The salvage value of the stolen copper was less than $2,000, but the total
damage to the air-conditioning units caused by the thieves in the course of
stealing the copper was closer to $200,000. The Laws reported the theft to
Houston police and filed a claim with Underwriters for the costs of repair and
replacement.
One of the coverage provisions of the Laws’ commercial property policy
expressly provides coverage for loss caused by vandalism, but excludes coverage
for damage resulting from theft. The theft exclusion contains an exception,
however, excepting from the exclusion (and thus restoring coverage for) any
damage resulting from burglars breaking into or exiting from the insured
building.
Underwriters denied coverage based on the policy’s theft exclusion and
sought a declaratory judgment in district court that it had no duty to indemnify
the Laws. The Laws counter-sued seeking a declaratory judgment that their
claim was covered.
The district court granted the Laws’ motion for summary judgment and
awarded them $177,150, the gross cost of repair minus the salvage value of the
stolen copper, plus attorneys’ fees. The award was based on the parties’

2
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stipulation of the repair costs incurred by the Laws and the salvage value of the
stolen copper tubing. Both parties filed timely notices of appeal.1
II. ANALYSIS
We review a district court’s grant of summary judgment and its
interpretation of an insurance policy de novo.2 When, as here, jurisdiction is
based on diversity of citizenship, we apply the substantive law of the forum
state, in this case, Texas.3
Underwriters makes two claims of error: The district court (1)
misinterpreted the insurance policy; and, (2) in any event, the court
miscalculated the damages.
A. The Insurance Policy
The vandalism provision at issue, which also contains both the theft
exclusion and the exception to that exclusion for damage from breaking and
entering, reads, in relevant part:
A. Covered Causes of Loss...
Covered Causes of Loss means the following:
....
8. Vandalism, meaning willful and malicious damage
to, or destruction of, the described property.
We will not pay for loss or damage caused by or
resulting from theft, except for building damage caused by
the breaking in or exiting of burglars.

1
The Laws never filed a brief in support of their appeal; they only responded to
Underwriters’ brief and, in so doing, made no claim of error.
2
See, e.g., Gore Design Completions, Ltd. v. Hartford Fire Ins. Co., 538 F.3d 365, 368
(5th Cir. 2008) (summary judgment); Assurity Life Ins. Co. v. Grogan, 480 F.3d 743, 745 (5th
Cir. 2007) (citing Riner v. Allstate Life Ins. Co., 131 F.3d 530, 533 (5th Cir. 1997))
(interpretation of insurance policy).
3
See, e.g., Foradori v. Harris, 523 F.3d 477, 486 (5th Cir. 2008) (citing Erie R.R. v.
Tompkins, 304 U.S. 64 (1938)). The parties here are diverse. Underwriters is a foreign
citizen; the Laws are citizens of California.

3
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The instant dispute turns on whether the damage to the Laws’ air conditioners
is (1) vandalism (the “vandalism coverage”), (2) damage caused by or resulting
from theft (the “theft exclusion”), or (3) building damage caused by the breaking
in or exiting of burglars (the “ingress/egress exception”).
Underwriters asserts that the damage done to the roof-mounted air
conditioners resulted from theft and is therefore excluded from coverage by the
theft exclusion, insisting that the district court misconstrued the policy by
finding coverage under the ingress/egress exception to that exclusion. The Laws
counter that the district court correctly found coverage under the vandalism
provision, but that, alternatively, coverage would also have been available under
the ingress/egress exception.
The parties thus disagree about the basis of the district court’s ruling, and
the reasons for the court’s decision are less than pellucid to us. There can be no
question, however, that because the district court found coverage for damage to
the air conditioners, its judgment must rest on one of two different findings: The
damage resulted either from vandalism or from the actions of burglars breaking
into or exiting from the Laws’ building.
1. Texas Law
We look first to background principles of Texas law that govern the
interpretation of contracts in general and insurance policies in particular.4 We
must interpret the contract in a manner that gives effect to every provision and
to the “intention of the parties as expressed in the instrument.” 5 Words not
defined in a contract are to be understood “according to their plain and ordinary

4
Don’s Bldg. Supply, Inc. v. OneBeacon Ins. Co., 267 S.W.3d 20, 23 (Tex. 2008)
(principles of contract interpretation also apply to the interpretation of insurance policies).
5
R & P Enters. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518-19 (Tex. 1980).

4
 No. 08-20159

meaning.” 6 Texas finds ambiguity in a contract only when its words are
susceptible of at least two different but reasonable interpretations.7 Ambiguity
will not be found, however, simply because the parties or the lawyers — or even
judges — can come up with different interpretations of the words of a contract.8
If — but only if — ambiguity is found, the contractual language will be
“liberally” construed in favor of the insured.9 This is so even when the insurer’s
interpretation appears to be the more likely reflection of the parties’ intent,
provided the insured’s interpretation “is not itself unreasonable.”10
The dissent concludes that the controlling provisions of the policy are
ambiguous then relies on the pro-insured penumbra in Texas law to find
coverage. But, even recognizing that reasonable minds can disagree, we are
compelled to repeat for emphasis that this Texas maxim favoring the insured
applies only after the court determines that there is ambiguity in a policy’s
wording — and we find none here. Therefore, like the courts of Texas, we
conduct our analysis pursuant to ordinary principles of contract interpretation.

6
Gray & Co. Realtors, Inc. v. Atl. Hous. Found., Inc., 228 S.W.3d 431, 434 (Tex.
App.–Dallas 2007, no pet.).
7
See, e.g., DeWitt County Elec. Co-op, Inc. v. Parks, 1 S.W.3d 96, 100 (Tex. 1999) (“A
term is not ambiguous because of a simple lack of clarity. . . . [A]mbiguity arises only after the
application of established rules of construction leaves an agreement susceptible to more than
one meaning. Further, for an ambiguity to exist, both potential meanings must be
reasonable.”) (internal citations omitted).
8
Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex.
1996); see also Cent. States, Se. & Sw. Areas Pension Fund v. Creative Dev. Co., 232 F.3d 406,
414 n.28 (5th Cir. 2000) (“A Court will not torture words to import ambiguity where the
ordinary meaning leaves no room for ambiguity, and words do not become ambiguous simply
because lawyers or laymen contend for different meanings.” (quoting Wards Co. v. Stamford
Ridgeway Assocs., 761 F.2d 117, 120 (2d Cir. 1985) (internal quotation marks and citation
omitted))).
9
Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 666 (Tex. 1987).
10
U.S. Fid. & Guar. Co. v. Bimco Iron & Metal Corp., 464 S.W.2d 353, 355 (Tex. 1971).

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Indeed, this is where, with the utmost respect, we part company with the
dissent: It finds ambiguity then finds coverage by crediting the insured’s
interpretation of the putatively ambiguous language over that of the insurer; we
find no ambiguity in the operable terms of the Laws’ policy then interpret the
plain meaning of the words to ascertain the mutual intent of the parties to the
contract. And when we do so, we discern no possibility that the parties intended
to extend the theft exception’s coverage of damage incidentally caused by
burglars while entering or leaving the building to include damage caused by
rooftop (exterior) thieves to freestanding air-conditioning units.
Consideration of the pertinent policy provisions at issue in this case
appears to be one of first impression in Texas and in this Circuit.11 We therefore
begin, as we must, with the text, and we assess each potentially applicable
category of coverage and exclusion in turn.
2. Vandalism
Although the district court never expressly labeled the damage as
resulting from vandalism per se, the Laws insist that the district court
nevertheless based its holding on a determination that the damage was caused
by acts of vandalism.12 We acknowledge that, in its broadest conversational
meaning, “vandalism” could encompass essentially all willful damage, including

11
In Bimco, the Texas Supreme Court considered the theft-vandalism issue in the
context of an insurance policy the wording of which is so different that it is of little assistance
here. Id. at 354-55.
12
We reject Underwriters’ contention that the Laws waived this argument by failing
to raise it to the district court. The Laws’ assertions of vandalism to the district court were
perhaps not robust, but they were sufficient to eschew waiver. In their response to
Underwriters’ motion for summary judgment, the Laws repeatedly referred to the possibility
that the damage was vandalism. Furthermore, the parties’ arguments are based entirely on
the policy’s vandalism provision, in which (1) coverage of vandalism, (2) the theft exclusion,
and (3) the ingress/egress exception are found.

6
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damage caused in the course of a burglary.13 The Laws’ commercial property
policy, however, defines “vandalism” more narrowly, as “willful and malicious
damage to, or destruction of, the described property” (emphasis added), from
which it then carves out and excludes from coverage that subset of damage
which is caused in the course of committing a theft.
The Laws nevertheless contend that the purpose for which damage is done
is irrelevant to determining whether the cause of the damage is vandalism. But
their position ignores the distinction that the policy makes and would render the
theft exclusion meaningless, in contravention of the rule that each element of a
contract or insurance policy must be given effect. We reject the Laws’
contention. The policy provisions at issue, viz., the vandalism coverage, the theft
exclusion, and the ingress/egress exception, indisputedly turn on the purpose for
which the damage at issue is done: (1) Damage done for no purpose other than
to destroy property for destruction’s sake is “vandalism;” 14 (2) incidental damage
done in furtherance of thievery falls within the narrower category of damage
resulting from theft; (3) damage to the insured building done by burglars
entering or leaving the building that they attempt to burglarize falls into the
even narrower ingress/egress exception. That said, however, we should not be
misunderstood to say that vandalism can never occur during a theft and vice
versa. These are not per se mutually exclusive events.15 We hold only that

13
Webster’s defines “vandalism” as “1. deliberately mischievous or malicious destruction
or damage of property.” WEBSTER ’S ENCYCLOPEDIC UNABRIDGED DICTIONARY , 1579 (1989).
14
Smith v. Shelby Ins. Co. of Shelby Ins. Group, 936 S.W.2d 261, 265 (Tenn. Ct. App.
1996) (defining “vandalism,” as “ordinarily understood” as “damaging something simply for
the sake of damaging it”). The court in Shelby considered a vandalism provision identical to
the one at issue here and held that a portion of damage done during a theft for which there
could have been no purpose other than destruction was vandalism. The remainder of the
damage, committed in furtherance of the theft, was not vandalism. Id. Here, there is no
evidence that any part of the damage was damage for damage’s sake.
15
See id.

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damage done in furtherance of a theft or attempted theft is damage that falls
within the theft exclusion of the instant policy.
We also reject the Laws’ contention that any damage which is excessive
and unnecessary to accomplish a theft, even if in furtherance of it, is vandalism.
That one thief chooses to pick a lock to gain entry while another takes an axe to
the door cannot be the basis for different coverage outcomes under the same
insurance policy. The Laws would have us deny recovery to the first
hypothetical policyholder because the damage was minimal or non-existent and,
therefore, entirely necessary to accomplish the theft, but grant recovery to the
latter one because the damage was significant or excessive and, therefore,
vandalism.16 Courts would have to consider hypothetical alternative methods
of breaking and entering to determine whether the damage actually inflicted was
or was not greater than necessary. We decline to adopt such a convoluted
approach and instead look to the purpose of the damage, not its degree.
Here, the damage was solely in furtherance of stealing the copper. Just
enough of the air-conditioning units’ exterior metal paneling was torn away to
allow access to the machinery inside. Likewise, the actual cooling mechanisms
inside the paneling were damaged by the thieves for the sole purpose of gaining
access to the copper. There is no evidence of “malicious” damage in any of this,
yet the policy defines vandalism conjunctively as willful and malicious damage
to the property. Even though the damage done might have exceeded the
minimum required to gain access to the copper tubing, it was done entirely to
gain such access. As such, the damage was done solely to further the theft and
was not vandalism as that term is used in the policy.

16
At least one court has expressly considered and rejected this sort of relational
distinction. Gen. Star Indem. Co. v. Zelonker, 769 So. 2d 1093, 1094 (Fla. Dist. Ct. App. 2000)
(finding an argument that thieves could have stolen electrical wiring without damaging the
meter box “beside the point”).

8
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The plain language of the instant insurance policy leaves little room for
debate that this was damage “caused by or resulting from” theft and is thus
excluded from coverage by virtue of the theft exclusion to the coverage of
vandalism. Thieves caused the damage in the course of gaining access to the
object of their theft, i.e., the copper tubing components of the air-conditioning
units. But for the thieves’ desire to steal the copper tubing, the damage would
not have occurred. The damage therefore falls squarely within the theft
exclusion — unless, that is, it is covered by virtue of the theft exclusion’s
ingress/egress exception.
3. The Ingress/Egress Exception
In the vandalism/theft/burglary inquiry, the most narrow and complex
question asks whether the incidental damage to the housings and machinery of
the roof-mounted air-conditioning units can be shoe-horned into the
ingress/egress exception to the theft exclusion from vandalism coverage. Again,
we first turn to the text: “ . . . except for building damage caused by the breaking
in or exiting of burglars.” The district court determined that the air conditioners
were part of the insured building because they are fixtures, and the insurance
policy defines “building” to include fixtures.17
The Laws insist that because of that definition, the thieves’ entry into the
roof-top fixtures is equivalent to “breaking in or exiting” the building. Following
the Laws’ argument, the air conditioners as fixtures are essentially surrogates
for the building itself. The dissent agrees, finding the policy ambiguous and the
Laws’ contention a reasonable interpretation of it. Relying on the pro-insured

17
The “Building and Personal Property Coverage Form” (the “Coverage Form”) states
that “Covered Property, as used in this Coverage Part, means the type of property described
in this section. . . . a. Building, meaning the building or structure described in the
Declarations, including . . . (2) Fixtures, including outdoor fixtures.” (emphasis added).

9
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treatment of insurance policy ambiguity, the dissent asserts that we must adopt
the Laws’ view.
Again, however, we perceive no ambiguity. The policy employs a common
phrase in a familiar context: “breaking in,” as in a burglary. Texas courts have
stated that the phrase “to break in” in the context of burglary is commonly
understood.18 Despite the dissent’s comprehensive disquisition on motor vehicle
burglary cases, we remain convinced that “breaking in” to a building
unambiguously contemplates nothing more expansive than an attempt to enter
bodily into the interior space of the building as bounded by the walls, floors and
ceilings. The courts of Texas agree:
The protection is to the interior or enclosed part of the
described object, be it a house, a building or a vehicle. . . .
Taking items attached to the outside of the vehicle, house, or
building that does not reflect an entry into an interior or
enclosed part of the described object in order to steal does not
constitute the offense of burglary.19

We certainly do not doubt that the large, self-contained air-conditioning
units installed atop the exterior roof of the Laws’ building can be considered
fixtures.20 Neither do we ignore the policy provision that describes the insured
“building” to include fixtures, inter alia.21 But neither fact convinces us that the

18
Landry v. State, 653 S.W.2d 28, 29 (Tex. Crim. App. 1983); see also Hopkins v. State,
864 S.W.2d 119, 120 (Tex. App.—Houston [14th Dist.] 1993, pet ref’d) (emphasizing that the
thief must break the “plane” of the thing, here, the bed of a pickup truck, he is entering to
constitute burglary).
19
Griffin v. State, 815 S.W.2d 576, 579 (Tex. Crim. App. 1991) (emphasis added).
20
A “fixture” is “1. something securely, and usually permanently, attached or appended,
as to a house, apartment, building, etc.” WEBSTER ’S ENCYCLOPEDIC UNABRIDGED DICTIONARY ,
538 (1989). Black’s defines the term as “[p]ersonal property that is attached to land or a
building and that is regarded as an irremovable part of the real property.” BLACK ’S LAW
DICTIONARY , 669 (8th ed. 2004).
21
We do note, though, that immediately following the description on which the Laws
(and the dissent) rely is an entirely separate “definition” of “Your Business Personal Property”

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phrase “breaking into or exiting” should be given a meaning any broader than
its ordinarily understood meaning: entry into the interior space of the building
itself. Entry into a fixture is not automatically congruent with entry into the
building;22 that air conditioners as fixtures are part of the building cannot so
radically alter the common understanding of what “breaking in” to a building
entails. We interpret the language of the burglary ingress/egress exception to
the theft exclusion to mean that the insurer will only pay for collateral damage
caused by the burglars’ attempt to gain access to the interior of the building, as
commonly understood. We are not alone in this view. The Zelonker court, one
of two courts to have considered the instant policy language, noted that “the
plain meaning of this provision is that the policy provides coverage where
thieves bodily enter or exit the building, as by breaking a door or window.”23
Texas’s definition of “burglar” offers further support. A “burglar” is one
who, without the owner’s consent, “(1) enters a habitation, or a building (or any

which also includes the term “fixtures” without distinction. The Laws offer no explanation for
how the description of “building” can be the sole applicable understanding of “fixtures” when
it is immediately followed by a description of an entirely different term that also includes
“fixtures.” Given the two competing provisions, we hardly think the “definition” on which the
Laws rely can bear the weight they place on it.
22
In the more common case, entry into the building will be a prerequisite to entry into
a fixture, mooting the issue. In the more extreme case, it is possible that a fixture may be a
means of entry into the building itself. Underwriters concedes that coverage would apply to
damage caused during a Mission: Impossible-style entry through an air-conditioning duct
(referring, of course, to the Tom Cruise movie franchise and former television series). Neither
scenario applies here.
23
Gen. Star Indem. Co. v. Zelonker, 769 So. 2d 1093, 1094 (Fla. Dist. Ct. App. 2000).
In that case, thieves broke into a building’s exterior meter boxes to steal copper electric wire
and also damaged an air conditioner. The court denied coverage for the damage to the meter
boxes because the damage was the result of theft and did not constitute building entry. The
court affirmed the award for damage to the air conditioner based on a jury finding that the
damage was vandalism, not theft.
In the second case that considered the language here at issue, the plaintiff did not claim
that any of the loss would fall within the ingress/egress exception. Smith v. Shelby Ins. Co.
of Shelby Ins. Group, 936 S.W.2d 261, 265 (Tenn. Ct. App. 1996).

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 No. 08-20159

portion of a building) not then open to the public with intent to commit a felony,
theft, or an assault; . . . (3) enters a building or habitation and commits or
attempts to commit a felony, theft, or an assault.” 24 That statute defines “enter”
as “to intrude: (1) any part of the body; or (2) any physical object connected with
the body.”25 The second half of the insurance policy exception, “or exiting,”
provides further illumination. “Exit” is commonly defined as: “1. a way or
passage out. 2. a going out or away; departure.” 26 The definitions make clear
that “breaking in or exiting” requires bodily intrusion into the interior of the
building. The thieves in this case sought no bodily passage into or out of the
building; they sought only the copper innards of free-standing exterior fixtures.
Although the thieves might have damaged a part of the building during the
commission of their crime, they did not do so while in the act of breaking into or
exiting the building itself. Indeed, the thieves never sought or gained access to
the interior of the building itself, i.e., they never became “burglars” vis a vis the
building qua building.
As we observed earlier, the dissent’s entire reasoning is founded on its
view of the policy’s wording as ambiguous. In contrast, we find no ambiguity in
the words of the insurance policy or in the policy as a whole. As we thus follow
the dictates of Texas law and rely on the plain meaning of the policy’s language,
we never reach the competing interpretations proffered by the parties as we
would if we were first to conclude that the governing provisions of the policy
were ambiguous.

24
T EX . PENAL CODE ANN . § 30.02 (Vernon 2008).
25
Id.
26
W EBSTER ’S ENCYCLOPEDIC UNABRIDGED DICTIONARY , 500 (1989).

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We are guided in our analysis by the charge under Texas law to construe
the contract consistently with the parties’ original intent.27 When we view the
policy in this manner, we are convinced that the parties could not possibly have
intended the ingress/egress exception to apply to acts that fall outside the
universally understood meaning of breaking and entering into a building. We
see nothing in the words and phrases of the policy that would support an
inference of any other intent. This is underscored by the very inclusion of the
narrow ingress/egress exception within the much broader theft exclusion. The
dissent’s acceptance of the Laws’ proffered interpretation of the ingress/egress
exception, however, renders it broader than the exclusion within which it is
contained, an illogical result that cannot be reconciled with what the parties
must have intended when they fit the one within the other.
As a result, we reject the Laws’ assertion that the thieves’ physical
intrusion into the seventeen free-standing, self-contained air conditioners
themselves was sufficient to qualify the thieves as “burglars” or their actions as
“breaking in or exiting” the building. Such a determination would turn almost
entirely on the fact that the air conditioners were outside the building proper.
Had the same units been inside the building, they could not be damaged by
burglars gaining entry into the building, but rather by burglars already inside.28
We will not strain to adopt an overly expansive interpretation of the
ingress/egress exception that turns artificially on the location of the fixtures,
either inside or outside the building proper. Furthermore, accepting the Laws’

27
Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). “To achieve this objective, courts
should examine and consider the entire writing in an effort harmonize and give effect to all the
provisions of the contract . . . No single provision taken alone will be given controlling effect.”
Id.
28
The dissent would have us find multiple entries with each intrusion by burglars
further into the interior of the building — into the interior courtyard, into the fixture itself,
and so on. Such an interpretation strays into the absurd and would eviscerate the theft
exclusion.

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argument would permit coverage to turn on the discrete burglary methodology
employed by the thieves. For example, had the thieves taken a crane and lifted
the units intact off the building’s roof, there obviously would have been no
“entry,” even under the Laws proffered definition.29 We have already rejected
an approach that results in such varied and illogical outcomes, supra. Again, the
Laws’ arguments veer too far from the common understanding of what is meant
by breaking into and exiting from a building — the unambiguous language of the
ingress/egress exception.
We likewise reject the Laws’ contention that, at the very least, the metal
housings that contained the air-conditioning units are tantamount to
outbuildings that the thieves had to break into and enter to gain access to the
air conditioners inside and strip their copper. The housings in question are
essentially large, custom-made metal boxes, the size of a small shed or shipping
container, that contain the actual cooling machinery. They are integral parts of
the air-conditioning units; the air conditioners are defined with the housings as
integral components and each is mounted onto the roof as a single contraption.
The metal housings are merely the most exterior components of the free-
standing air-conditioning units. The fact that they come from their
manufacturer with permanent protective housings made specifically for these
machines and are integral components of them precludes the transformation of
the thieves into burglars or their actions in gaining access to the machinery into
breaking into a building. The thief who breaks into the casing is breaking into
the air conditioner itself, rather than first breaking into a shed or outbuilding

29
Under the Laws’ interpretation, if the thieves had removed the air conditioners intact
to some secure place and had then broken into them, the act would still constitute breaking
into the building. The Laws’ argument offers no explanation for how the air conditioners could
continue to be part of the building (which they would have to be following the Laws’ logic) after
they had been moved far away from the insured building, long before their integrity was ever
violated.

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 No. 08-20159

to burglarize it of the copper within the air-conditioning units inside the
building.
In sum, we decline to credit any of the Laws’ tortured interpretations of
the uncomplicated language of the policy’s ingress/egress exception. The phrase
“building damage caused by the breaking in or exiting of burglars” is
straightforward and unambiguous, ineluctably requiring breaking through (or
attempting to break through) a building’s exterior to gain access to its interior
for the purpose of committing a theft crime. There is no room in the ordinary
understanding of the phrase for extending its ambit to include damage caused
to a roof-mounted air conditioner during the course of stealing its copper tubing.
We cannot imagine that the parties could have intended this meaning when they
entered into this contract of insurance. Simply put, damage caused to an
exterior fixture to gain access to its own internal components is not building
damage caused in gaining access to the building itself, even if that fixture is
determined to be part of the building for some other policy purpose. We hold
that the damage done to the casings and machinery of the Laws’ roof-mounted
air conditioners resulted from theft, which falls within the theft exclusion to the
policy’s coverage of vandalism, and did not result from the breaking into the
insured building by burglars. The ingress/egress exception to the theft exclusion
is inapplicable to the facts of this case.
III. CONCLUSION
The damage suffered by the Laws resulted from neither vandalism nor the
breaking into or exiting of the insured building by burglars. Rather, the damage
to the Laws’ air conditioners was caused by or resulted from acts of theft. As
such, the policy expressly excludes coverage of the costs of repair or replacement
of the Laws’ air-conditioning units. We therefore reverse the judgment of the
district court, vacate its award of damages and attorneys’ fees to the Laws, and
render judgment that the Laws take nothing. As the Laws thus recover no

15
 No. 08-20159

damages, we need not, and therefore do not, address Underwriters’ claim of error
in the district court’s calculation of damages.
REVERSED; VACATED; and RENDERED.

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 No. 08-20159

O’Connor, Justice (Ret.), dissenting:

I agree with the majority’s conclusion that the damage at issue is not covered “vandalism”

under the policy. See ante, Part II(A)(2). I reach a different conclusion as to the construction of

the building damage exception to the theft exclusion, what the majority terms “the most narrow

and complex question” before the court. Id. at 11. For this reason, I would affirm the judgment

of the District Court.

As the majority recognizes, when a court interprets an insurance policy under Texas law,

“[a]mbiguity is ‘liberally’ construed in favor of the insured.” Id. at 5 (quoting Barnett v. Aetna

Life Ins. Co., 723 S.W.2d 663, 666 (Tex. 1987)); see also Puckett v. U.S. Fire Ins. Co., 678

S.W.2d 936, 938 (Tex. 1984) (“It is well established that insurance policies are strictly construed

in favor of the insured in order to avoid exclusion of coverage.”). Thus, we adopt the

construction that favors the insured “as long as [it] ‘is not itself unreasonable.’ ” Ante at 6

(quoting U.S. Fid. & Guar. Co. v. Bimco Iron & Metal Corp., 464 S.W.2d 353, 355 (Tex. 1971)).

Notably, we do so “[e]ven when the insurer’s interpretation appears to be the more likely

reflection of the parties’ intent.” Id.; see also Ramsay v. Maryland Am. Gen. Ins. Co., 533

S.W.2d 344, 349 (Tex. 1976) (“When the language of a policy is susceptible of more than one

reasonable construction, the courts will apply the construction which favors the insured and

permits recovery.”).

Adhering to these interpretive mandates, I reach two conclusions as to the proper

construction of the ambiguous provision before the court: First, the air conditioners must be

understood to be part of the building. Second, the damage at issue is properly characterized as

damage caused when burglars broke into those units. This understanding of the policy is

reasonable and “avoid[s] exclusion of coverage.”

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Under the terms of the policy, the air conditioning units are part of the “building.” The

policies “Building and Personal Property Coverage Form” defines the term “building” to

“includ[e] . . . [f]ixtures, including outdoor fixtures.” Ante at 11, n.17. Construed in the

insured’s favor, this definition no doubt extends to the roof-mounted air conditioning units.

Even if the coverage form could not reasonably be construed to extend to all of the policy’s

provisions, we would be obliged to adopt a definition of the term “building” that included

fixtures, as this would be a reasonable definition that favored the insured. There is nothing in the

policy to prevent construing “building” to include fixtures. Understanding a building to

comprise in part its fixtures is perfectly reasonable. Indeed, it is the most natural understanding

of the term. Specifically, “[i]t is common knowledge that a furna[c]e, or air conditioner, or light

‘fixture’ . . . is generally regarded by us all as part of the building to which the item is attached.”

Alphonse M. Squillante, The Law of Fixtures: Common Law and the UCC, 89 COM . L.J. 501,

501 (1984) (emphasis added). We are thus obliged to consider the air conditioning units to be

part of the building. Parkins Int’l v. Zurich Ins. Co., 299 F.3d 514, 520 (2002) (“When

interpreting an insurance contract, Texas courts will read its terms in their plain, ordinary, and

popular sense unless the policy defines a term in some other way.”).

In terms of ordinary usage, it is natural to describe the damage at issue as the result of

“breaking in . . . of burglars.” Cf., e.g., Allstate Ins. Co. v. Smith, 450 S.W.2d 957, 959 (Tex.

Civ. App. 1970) (“breaking into the floor”). The majority itself writes that the criminals “broke

into the [air conditioning] units themselves to steal their copper condenser coils.” Ante at 2

(emphasis added); see also id. at 18 (“The thief who breaks into the casing is breaking into the

air conditioner itself[.]” (emphasis added)). They “caused the damage in the course of gaining

access to the object of their theft.” Id. at 10 (emphasis added). The damage underlying the claim

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was “solely in furtherance of stealing the copper.” Id. (emphasis added); see also id. (“[T]he

actual cooling mechanisms inside the paneling were damaged by the thieves for the sole purpose

of gaining access to the copper.”). In every sense, penetrating a structure in order to steal

something inside is aptly described as “breaking in.”

Contrary to the majority, I conclude that Texas’ burglary statute further supports this

construction of the policy. The majority recognizes that the Texas law definition of “burglar”

includes a criminal who “ ‘enters a habitation, or a building (or any portion of a building) . . .

with intent to commit a . . . theft.’ ” Ante at 15 (quoting Tex. Penal Code Ann. § 30.02 (Vernon

2008)) (emphasis added). The statute also “defines ‘enter’ as ‘to intrude . . . any part of the body;

or . . . any physical object connected with the body.’ ” Id. (quoting Tex. Penal Code Ann. §

30.02 (Vernon 2008)). There can be no question that the thieves who destroyed the air

conditioning units intruded parts of their bodies and/or objects connected with their

bodies—their hands, arms, and/or tools—into the air conditioning units. It would have otherwise

been physically impossible for the thieves to gain access to the copper parts that they intended to

and did steal. In sum, far from counseling against the insured’s construction of the policy, Texas

law strongly supports that construction.

At its core, the court’s opinion reflects the majority’s conclusory assertion that the thieves

“never became ‘burglars’ vis a vis the building qua building.” Id. In turn, this assertion rests on

the majority’s insistence that “ ‘breaking in’ to a building unambiguously contemplates nothing

more expansive than an attempt to enter bodily into the interior space of the building as bounded

by the walls, floors and ceilings.” Id. at 12. But nothing in the policy demands such a cramped

understanding of intrusion to apply only to a building’s “interior space.” That should be the end

of the matter, because the majority’s narrowing construction works to exclude coverage.

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Nevertheless, Texas law offers additional support. It endorses a substantially more expansive

view of entry. Texas cases involving the burglary of vehicles aptly illustrate the point. And it is

wise to look to these cases “because ‘enter’ is defined exactly the same for burglary of a building

or habitation as it is for burglary of a vehicle[;] the element of intrusion into a building or

habitation under § 30.02 should be of the same nature as intrusion into a vehicle under § 30.04.”

Griffin v. Texas, 815 S.W.2d 576, 579 (Tex. Crim. App. 1991). For example, in Hopkins v.

Texas, 864 S.W.2d 119, 120 (Tex. App. 1993, pet ref’d), the court concluded that the defendant

committed burglary when he stole a ladder off of “a ladder rack . . . attached to the back of [a]

truck.” The court explained that the defendant “could not have loosened the bungee cords [that

affixed the ladder to the rack] without placing his hand through [a] railing and into the plane

created between the dome of the ladder rack and the side of the truck.” Id. “Consequently,” the

court concluded, the defendant “penetrated the interior of the truck.” Id.; see also Coleman v.

State, 608 S.W.2d 923, 924 (Tex. Crim. App. 1980) (concluding that the defendant broke in “by

intruding . . . into [a pickup] truck bed” and that “it was not incumbent upon the State to prove . .

. that entry must have been into the cab portion of the vehicle”); Smith v. State, 781 S.W.2d 675

(Tex.App. 1989, pet. ref’d) (reaching into bed of pickup truck to remove flares and tires

constituted entry). More compelling, at least one Texas court has found “entry” into a vehicle

when, as here, the burglar broke into a fixture. Soto v. State, 782 S.W.2d 17, 19 (Tex.App. 1989,

pet. ref’d) (removal of tools from a toolbox attached to a pickup truck constituted entry into the

vehicle). These cases cannot be reconciled with the majority’s view that a burglar can enter only

the “interior space” of a building.

Lastly, the majority construes the policy to exclude coverage in order to avoid what it

perceives to be two “varied and illogical outcomes.” Ante at 18. First, the majority assumes that

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“[h]ad the same units been inside the building,” the plaintiff’s claim necessarily would have

failed because it would have been caused by “burglars already inside” the building. Id. at 17.

Based on this assumption, the majority faults the insured’s construction of the policy because it

“turns artificially on the location of the fixtures, either inside or outside the building proper.” Id.

Second, the majority is unwilling to “permit coverage to turn on the discrete burglary

methodology employed by the thieves,” stressing that “[h]ad the thieves taken a crane and lifted

the units intact off the building’s roof, there obviously would have been no ‘entry.’ ” Id. I

disagree with the assumption underlying the first “outcome” and the implications the majority

draws from both.

I find nothing in the policy to support the majority’s assumption that coverage extends

only to damage caused in the very first penetration into the building’s outermost perimeter. And

I think this assumption would yield “varied and illogical outcomes.” Id. at 18. For example,

imagine that an insured property contains an outer entryway into an interior courtyard or hall and

that a locked door leads from the courtyard or hall farther into the building. The majority finds it

obvious that the policy would cover only damage to the outer entryway, not the interior door. It

asserts that each hypothetical must be understood to describe “multiple entries with each

intrusion by burglars further into the interior of the building,” id. at 17, n.28, presumably into the

“interior space of the building as bounded by the walls, floors and ceilings,” id. at 12. I am not

convinced. And how substantial must a courtyard’s “ceilin[g]” be in order to exclude coverage

for damage caused to its interior doorway? What if it lacks a ceiling altogether? Similarly,

imagine that valuable devices or appliances are sealed within a building’s interior walls. Under

the majority’s view, damage caused by tearing into these walls could not be covered. I am not

certain this assumption holds true. And what if the walls were exterior walls? Would tearing out

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an appliance amount to entry into the “interior space of the building as bounded by the walls,

floors and ceilings?” These are issues we need not reach today, as “[n]either scenario applies

here.” Id. at 13, n.22. Nevertheless, these scenarios illustrate that the majority’s reasoning rests

on assumptions that are in my view unwarranted.

At a more fundamental level, the majority’s requirement that coverage vary neither with

the location of a fixture nor the method of its theft betrays our obligation to “strictly constru[e]”

the policy “in favor of the insured in order to avoid exclusion of coverage.” Puckett, 678 S.W.2d

at 938. We are to ask whether it is reasonable to construe the policy in favor of recovery in this

case given the location of these units and the method of their destruction. Damage to units

differently situated or more elaborately stolen might or might not reasonably give rise to liability.

Cf. ante at 13, n.22 (assuming that “coverage would apply to damage caused during a Mission:

Impossible-style entry through an air-conditioning duct”). But this is no reason to construe the

policy against the insured before the court today.

The air conditioning units at issue were destroyed when thieves “broke into the units . . .

to steal their copper condenser coils.” Ante at 2 (emphasis added). Liberally construing the

policy in the insured’s favor, these units were part of the building, and they consequently fall

within the policy’s building damage exception to its theft exclusion. I would thus affirm the

judgment of the District Court.

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