Kelley-Coppedge, Inc. v. Highlands Insurance Co.

GONZALEZ, Justice,

joined by HECHT, OWEN and BAKER, Justices, dissenting.

The Court concludes that an insured did not “occupy” the work site where it caused an oil spill, and therefore the pollution exclusion provision in the insured’s commercial general liability insurance policy did not pre-*468elude coverage. I disagree and would affirm the judgment of the court of appeals.

Natural Gas Pipeline Company of America (“NGP”) contracted Kelley-Coppedge, Inc. (“KCI”) to construct pipelines for NGP. Their contract expressly obliged NGP to “furnish right-of-way” as appropriate to KCI and specifically granted KCI “the right to conduct operations for the construction of pipelines (gas, water, drain and sewage) over a strip of ground fifty feet (50’) in width.” For a period of no fewer than nineteen days, KCI placed workers and equipment on NGP’s easement in Wise County. In the course of laying pipeline along this easement, KCI’s workers punched a hole in a crude oil pipeline, causing the discharge of 1,600 barrels of crude oil at the location KCI was working.

Section f.(l)(a) of KCI’s insurance policy excluded coverage for pollution-related losses, damage or injuries “[a]t or from any premises, site or location which is or was at any time owned or occupied, by, or rented or loaned to, any insured.” Section f.(l)(d) excluded coverage of the same at any place “on which any insured or any contractors or subcontractors working directly or indirectly on any insured’s behalf are performing operations ... if the pollutants are brought on or to the premises, site or location in connection with such operations by such insured, contractor or subcontractor.”

The Court concludes that to “occupy” means “to hold or keep for use,” citing Gregory v. Tennessee Gas Pipeline Co., 948 F.2d 203, 207 (5th Cir.1991), in support of this definition. In Gregory, the court concluded that the City of Natchitoches “occupied” the lake it created, even if it did not “own” the lake, because it regulated the lake levels and used the lake to supply the city’s drinking water. Id. Gregory held that one who “holds or maintains [property] for use” also “occupies” it. Id. It does not follow, however, that one who does not hold or maintain property for use does not “occupy” it. Nevertheless, the Gregory court’s construction of the term “occupy” actually supports Highland’s position. In Gregory, the city did not have exclusive control over and use of the lake, but others also used it for recreational purposes. See id. at 204-05. Gregory supports the proposition that one may “occupy” a premises without owning or having exclusive use of it.

This Court also misreads Hernandez v. Heldenfels, 374 S.W.2d 196 (Tex.1963), to suggest that in order for a contractor to be an “occupier” of a premises, it must have an exclusive right of possession to the premises. First, our interpretation of the term “occupier” in Heldenfels applied only to premises liability actions, not to insurance coverage. Second, not even in the context of premises liability law must an “occupier” of land actually “possess” the land. One who “is entitled to exclusive control” of a premises, even if not an owner, may be an “occupier” of the land. See id. at 198. Third, just because one who has an exclusive right of possession or control of a property may be deemed an “occupier” of the property does not mean that the converse is true — that one who does not have a right to exclusive possession or control of a property is not an occupier. Even so, while it performed its pipe-laying operations, KCI had what is tantamount to exclusive control through a contractual “right of way” on NGP’s easement.

The Court’s reliance on C.O. Falter, Inc. v. Crum & Forster Insurance Cos., 79 Misc.2d 981, 361 N.Y.S.2d 968 (Sup.Ct.1974), and United States Fidelity & Guaranty Co. v. B & B Oil Well Service, Inc., 910 F.Supp. 1172 (S.D.Miss.1995), is also misplaced. The C.O. Falter court construed the word “occupy” to mean “continued physical presence,” not “occasional trips to the [premises] to make minor improvements.” 361 N.Y.S.2d at 974. Similarly, the B & B Oil court concluded that “occasional, limited work performed by a subcontractor, such as B & B, at a well site operated and controlled by another” did not amount to occupancy. 910 F.Supp. at 1178. The B &B Oil court compared the occasional workover operations B & B performed on wells to the work of a plumber or telephone repairman. Id. at 1178 n. 7. KCI’s physical presence on the easement, by contrast, was not occasional, limited, or brief; nor was it merely engaged in routine maintenance operations. Rather, KCI placed a crew and *469heavy machinery at the job site over a period of several days.

Based on any of the preceding definitions, KCI clearly “occupied” the easement. The various constructions placed on the term “occupancy” in the preceding cases, however, are not controlling. Because the term “occupied” is not ambiguous, “it is the court’s duty to give the words used their plain meaning.” See Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (Tex.1984).

Based on the plain, ordinary, and generally accepted meaning of occupied, a person or thing occupies a space if it is there. One may occupy a vehicle, a hotel room, or even an airplane seat or bathroom for a short period of time without ever possessing or controlling it. The term occupy and its cognates are routinely defined as indicating physical presence or proximity in the automobile insurance context. See, e.g., Genthner v. Progressive Cas. Ins. Co., 681 A.2d 479, 482 n. 1 (Me.1996) (citing cases deciding who could be covered as an “occupant” under general automobile insurance policies). KCI unambiguously occupied NGP’s easement by being there and using it to construct a pipeline.

KCI argues that if mere presence and use of a premises constitutes occupancy under section f.(l)(a) of the policy, then section f.(l)(d) is rendered meaningless. However, as Highland contends, the two sections have independent, non-overlapping meanings because section f.(l)(a), unlike section f.(l)(d), does not exclude pollution damages on a third party’s premises occupied by an insured’s subcontractor rather than the insured. The policy indemnified KCI for any vicarious liability it might incur for pollution-related damages caused by a KCI subcontractor who did not bring the pollutants to the site, but excluded it for any damages for which KCI was directly responsible. Stated another way, the insurance policy provided coverage for pollution-related damages in only a narrow set of circumstances — circumstances over which KCI had minimal control and for damages arising only out of vicarious liability.1

Finally, we should not hold that some redundancy or overlapping application in multiple policy provisions renders any of the provisions meaningless. It is not uncommon for contracts to have redundant terms, expressions and provisions, especially when specific provisions require regulatory pre-approval or when standard-form contracts are crafted to accommodate a wide variety of clients and circumstances. See Grain Dealers Mut. Ins. Co. v. McKee, 943 S.W.2d 465, 458 (Tex.1997). The use of several terms and overlapping provisions is usually intended to clarify the scope and intent of the instrument and insulate it from any misunderstanding.

Because I disagree with the Court’s definition of “occupy,” I dissent.

. In general, an employer is not vicariously liable for the negligence of its subcontractor. See Baptist Memorial Hosp. Sys. v. Sampson, 969 S.W.2d 945, 947 (Tex.1998). However, an employer may be liable for the negligence of its subcontractor if the employer retains the right or power to control the manner in which the subcontractor performs its work but fails to exercise reasonable care in supervising the contractor. See Hoechst-Celanese Corp. v. Mendez, 967 S.W.2d 354, 356 (Tex.1998).