Case: 21-10010 Document: 00516062288 Page: 1 Date Filed: 10/20/2021
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
October 20, 2021
No. 21-10010 Lyle W. Cayce
Clerk
Covington Specialty Insurance Company,
Plaintiff—Appellant,
versus
USAI LP; Lara Briggs-Tafel, JD,
Defendants—Appellees.
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:18-CV-3271
Before Stewart, Ho, and Engelhardt, Circuit Judges.
Per Curiam:*
This case arises from the tragic death of Calvin Marcus McCullers, Jr.
Because McCullers perished while working as a security guard at a property
allegedly owned by Defendants-Appellees USAI and Lara Briggs-Tafel (the
“USAI Defendants”), McCullers’ survivors sued them in state court (the
*
Pursuant to 5th Circuit Rule 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opinion should not be published and is not precedent except under the limited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 Circuit Rule 47.5.4.
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No. 21-10010
“McCullers Suit”). 1 But we do not have that suit before us. Instead, we must
decide whether USAI Defendants or Plaintiff-Appellant Covington Specialty
Insurance Company (“Covington”), with whom USAI Defendants have a
policy, must defend the McCullers Suit. For the reasons stated by the district
court below in denying summary judgment to Covington and granting
summary judgment to USAI Defendants, 2 we hold that Covington is bound
by the terms of its policy with USAI Defendants to defend the McCullers
Suit. Accordingly, we AFFIRM.
A. Standard of Review
We review a grant of summary judgment de novo, apply the same
standard as the district court, and view the evidence in the light most
favorable to the nonmovant. First Am. Title Ins. v. Cont’l Cas. Co., 709 F.3d
1170, 1173 (5th Cir. 2013). The interpretation of an insurance contract is also
reviewed de novo. Nat’l Cas. Co. v. W. World Ins., 669 F.3d 608, 612 (5th
Cir. 2012). Summary judgment is appropriate where “there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a).
1
The underlying case is Tiffany Renee McCullers, individually and on behalf of the
Estate and Heirs-at-Law of Calvin Marcus McCullers, Jr., deceased v. USAI, LP f/k/a Porky
Realty Investments, LP, et al., case no. DC-18-08709, filed in the District Court of Dallas
County, Texas on July 5, 2018.
2
The district court’s May 4, 2020 opinion and order denied Covington’s motion
for summary judgment. Covington Specialty Ins. v. USAI LP, No. 18-CV-3271-N, 2020 WL
2132598, at *1 (N.D. Tex. May 4, 2020) [hereinafter Covington I]. Its December 9, 2020
opinion and order granted summary judgment for USAI Defendants sua sponte. Covington
Specialty Ins. v. USAI LP, No. 18-CV-3271-N, 2020 WL 7245073, at *1 (N.D. Tex. Dec. 9,
2020) [hereinafter Covington II].
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B. Applicable Law
Because this is a diversity case, Texas substantive law applies. Erie
R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); see ACE Am. Ins. v. Freeport
Welding & Fabricating, Inc., 699 F.3d 832, 839 (5th Cir. 2012). The parties
agree.
Under Texas law, the insured bears the burden of establishing
coverage under the policy. JAW The Pointe, L.L.C. v. Lexington Ins., 460
S.W.3d 597, 603 (Tex. 2015). If the insured carries its burden, the insurer
must “plead and prove” that the insured’s loss falls within an exclusion to
coverage. Id. If the insurer succeeds, the pendulum swings and the insured
must show that there is an applicable exception to the exclusion that renews
coverage. Id.
Texas courts resolve duty-to-defend disputes like this one using the
“eight corners” rule, looking only to the terms of the policy and the pleadings
in the underlying suit to determine if the suit implicates the policy and, if so,
an exclusion to that policy. Zurich Am. Ins. v. Nokia, Inc., 268 S.W.3d 487,
491 (Tex. 2008). The truth of the allegations is irrelevant. Gore Design
Completions, Ltd. v. Hartford Fire Ins., 538 F.3d 365, 368 (5th Cir. 2008).
Allegations must be liberally construed, and all doubts are resolved in favor
of the insured. Nat’l Union Fire Ins. v. Merchs. Fast Motor Lines, Inc., 939
S.W.2d 139, 141 (Tex. 1997) (per curiam).
C. Relevant Facts
We first look to the allegations in the operative pleading, the Third
Amended Petition in the McCullers Suit. McCullers was working as a private
security guard, “sitting post” inside his vehicle. A thunderstorm passed
through, causing a nearby stream to rise and flood. After his vehicle became
“inundated,” McCullers called for help but could not safely move to higher
ground. “Immediately thereafter,” his vehicle was “engulfed” in
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floodwater. “As [McCullers] escaped the vehicle, floodwaters swept it and
[him] over [an] embankment and into Turtle Creek.” Rescue workers found
the vehicle that day but did not find McCullers’ body until almost two
months later.
At the time, USAI Defendants were covered by an insurance policy
(the “Policy”) issued by Covington. The Policy covers bodily injury and
property damage, but not when such injuries “aris[e] out of or result[] from
. . . use [of an] ‘auto’. . . .” The parties do not dispute that the Policy’s
definition of “auto” includes the vehicle discussed in the McCullers Suit.
D. Analysis
Covington does not dispute that the Policy is implicated by the
underlying suit. Thus, it bears the burden of establishing that the auto
exclusion applies. JAW The Pointe, 460 S.W.3d at 603. Covington argues that
the district court erred in holding that it failed to show that the injuries to
McCullers resulted from the “use” of his vehicle, which would bring the
injuries within the auto exclusion. We agree with the district court’s
reasoning, hold that Covington failed to show that the injuries resulted from
use of the vehicle, and therefore affirm the district court’s grant of summary
judgment to USAI Defendants on the duty-to-defend issue.
As the district court found, under Texas law an injury arises out of
the use of a vehicle for insurance purposes when it 1) arises “out of the
inherent nature of the automobile,”2) arises “within the natural territorial
limits of an automobile” before the actual use has terminated, and 3) the
automobile does not “merely contribute to cause the condition which
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produces the injury, but . . . itself produce[s] the injury.” Covington I at *3
(quoting Mid-Century Ins. v. Lindsey, 997 S.W.2d 153, 156 (Tex. 1999)). 3
Applying that law to these allegations, the district court correctly
concluded that Covington failed as a matter of law to establish either that the
incident occurred within the territorial limits of the vehicle or that the vehicle
was a producing cause of McCullers’ death. Id. at *3–4. On the territorial
limit prong, it is not clear from the allegations whether McCullers died in the
vehicle before being swept away or was swept away and then died. Id. at *3.
Thus, the district court was correct to find that Covington failed to meet its
burden on the territorial limit factor. The court was likewise correct to hold
that because the allegations state that the floodwaters caused McCullers’
death, not the vehicle, Covington had failed to establish that the vehicle was
the producing cause of the injury. Id. at *4.
Covington’s arguments to the contrary were properly rejected below
and are rejected here as well. Covington argues that the relevant “accident”
was McCullers’ “sitting post” in the vehicle, which “render[ed]
[McCullers] unable to seek refuge.” But the underlying allegations do not
state that McCullers was restricted from exiting the vehicle. Instead, they
state that McCullers was swept away while escaping it, and that McCullers’
body was found miles away from the vehicle nearly two months after the
vehicle was found. Further, the court below properly found that Lindsey and
its progeny, when ascertaining the relevant event to analyze, “looked to the
event that caused the injury.” Covington II at *3. Here, the event that caused
the injury was the flood, not sitting in a vehicle. This argument fails.
3
To the extent Covington argues that Lindsey does not apply, that argument was
not presented to the district court and is waived. See Patterson v. Dean Morris, L.L.P., 448
F.3d 736, 741 n.5 (5th Cir. 2006).
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Covington also argues that the district court erred in not applying a
“but for” causation analysis, asserting that this was the proper standard and
that McCullers “sitting post” in the vehicle was a but-for cause of his death.
If McCullers had been sitting post in a different location, Covington opines,
he would have been protected from the elements or, at least, would have
noticed the rising floodwaters. This argument is tenuous at best. The
allegations provide no basis to conclude that the vehicle prevented McCullers
from noticing the flooding (which occurred in the dead of night), or that the
vehicle had any causal significance whatsoever. The district court both
correctly applied the producing cause standard and correctly reasoned that,
even under but-for causation, Covington failed to carry its burden to show
that the vehicle played any causative role in McCullers’ death. Id. at *3–4.
E. Conclusion
The court below correctly found that Covington failed to carry its
burden to show that the auto exclusion applies to the facts as alleged in the
underlying suit. Thus, Covington must defend the McCullers Suit and
summary judgment for USAI Defendants was proper. For the reasons stated
above, we AFFIRM. 4
4
Because Covington has a duty to defend, we also affirm the district court’s
determination that the question of a duty to indemnify is not ripe until the underlying suit
is resolved. Covington I at *4.
6