the Burlington Norther and Santa Fe Railway Company F/K/A the Atchison, Topeka and Santa Fe Railway Company v. National Union Fire Insurance Company , 394 S.W.3d 228 ( 2012 )

COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
THE BURLINGTON NORTHERN AND §
SANTA FE RAILWAY COMPANY
F/K/A/ THE ATCHISON, TOPEKA AND § No. 08-06-00022-CV
SANTA FE RAILWAY COMPANY,
§ Appeal from the
Appellant,
§ 41st Judicial District Court
v.
§ of El Paso County, Texas
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA, § (TC# 2000-1286)
Appellee. §
OPINION
This appeal arises from a take-nothing summary judgment granted in favor of National
Union Fire Insurance Company of Pittsburgh, Pennsylvania (“National Union”) on claims that
National Union breached its duty to defend and indemnify the Burlington Northern and Santa Fe
Railway Company (“BNSF”) for damages related to a 1995 collision at one of BNSF’s railway
crossings. In this Court’s original opinion, we affirmed the trial court’s summary judgment on
the basis that National Union established, as a matter of law, that BNSF was not entitled to
coverage. Burlington N. & Santa Fe Ry. Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 334
S.W.3d 235, 245 (Tex.App.--El Paso 2009, pet. granted), rev’d, 334 S.W.3d 217 (Tex. 2011)(per
curiam). The Texas Supreme Court granted BNSF’s petition for review and reversed on the
question of National Union’s duty to indemnify. Burlington N. & Santa Fe Ry. Co., 334 S.W.3d
at 220. In accordance with the Supreme Court’s opinion, we now reconsider the question of
National Union’s duty to indemnify in light of the extrinsic evidence presented by the parties.1
Burlington N. & Santa Fe Ry. Co., 334 S.W.3d at 220.
As set out in the Supreme Court’s opinion, in February of 1994, BNSF entered into a
three-year contract with SSI Mobley for vegetation control along the railroad’s right-of-ways in
Texas. As part of the contract, SSI Mobley agreed to purchase a comprehensive general liability
policy and a contractual liability policy insuring itself for one million dollars per occurrence, or
three million dollars aggregate.2 SSI Mobley also agreed that BNSF would be named as an
“additional insured” on the policies, with coverage to extend to incidents occurring within fifty
feet of a railroad track. SSI Mobley purchased the required insurance from National Union.
BNSF filed this lawsuit against National Union following the insurance company’s
decision to deny the railroad’s claims for defense and indemnity for liability arising out of a
railroad crossing accident near Shallowater, Texas. On August 25, 1995, two people were killed
1
In its Supplemental Brief on the Issue of Extrinsic Evidence, BNSF urges this Court to also reconsider our prior
holding that National Union had no duty to defend. National Union adamantly opposes BNSF’s request noting that
the Supreme Court did not address this issue. See Burlington N. & Santa Fe Ry. Co., 334 S.W.3d at 220. As noted
above, the Supreme Court determined that we erred by not considering extrinsic evidence relative to National
Union’s duty to indemnify. This Court ordered the parties to submit supplemental briefs on the issue of National
Union’s duty to defend, if any. See Garrett v. State, 749 S.W.2d 784, 786 (Tex.Crim.App. 1986), overruled on
other grounds by Malik v. State, 953 S.W.2d 234 (Tex.Crim.App. 1997)(holding that “[o]nce jurisdiction of an
appellate court is invoked, exercise of its reviewing functions is limited only by its own discretion or a valid
restrictive statute.”). The parties provided supplemental briefing in accordance with the Court’s order. We
conclude that the Supreme Court’s holding was sufficiently ambiguous, particularly in light of BNSF’s arguments to
the Supreme Court that we erred in our application of the “eight-corners rule,” such that we should reconsider the
duty to defend issue in addition to the indemnity issue.
2
In relevant part, the contract’s “Insurance Provision” provided as follows:
Contractor shall, at its sole cost and expense, provide:
. . .
(b) Comprehensive General Liability and Contractual Liability Policy insuring the Contractor for one million
each occurrence/three million dollars aggregate ($1,000,000/$3,000,000). The Company will be named as an
additional insured. The insurance must provide for coverage of incidents occurring within fifty (50) feet of a
railroad track, and any provision to the contrary in the insurance policy must be specifically deleted and the
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and a third was injured when a BNSF train collided with an automobile. The decedents’
families (“Lara” and “Rosales”) sued the railroad alleging, in part, that the collision was caused
by the railroad’s failure to properly maintain the vegetation at the crossing. BNSF settled one of
the cases, and the second proceeded to a multi-million dollar jury verdict.
BNSF and National Union filed competing summary judgment motions in early 2002.
The trial court denied National Union’s motion on May 30, 2002. On June 5, 2003, the trial
court granted partial summary judgment in the railroad’s favor on the insurance company’s duty
to defend and BNSF’s indemnity claim. The order provided that damages would be determined
at a later date.
On July 8, 2003, National Union filed a motion to reconsider the partial summary
judgment order. There is no record that the trial court ruled on this motion expressly. On
June 17, 2005, BNSF filed a motion for entry of final summary judgment on the damages issues
remaining from the court’s June 2003 partial summary judgment. On October 5, 2005 National
Union filed a second motion for summary judgment, raising both traditional and no-evidence
grounds. The trial court entered a final, take-nothing judgment in National Union’s favor on
December 27, 2005. The court withdrew its June 5, 2003, partial summary judgment order and
denied the railroad’s motion for entry of summary judgment on the damages issue. The trial
court also granted National Union’s October 5 motion for summary judgment “in all things.”
BNSF filed its notice of appeal on January 26, 2006. This Court held that because the language
in the plaintiff’s pleadings referenced SSI Mobley’s actions as having happened in the past, the
policy’s “completed operations” exclusion precluded a duty to defend. Burlington N. & Santa
insurance certificate must so state.
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Fe Ry. Co., 334 S.W.3d at 244; Burlington N. & Santa Fe. Ry. Co., 334 S.W.3d at 220. We also
held that because BNSF’s arguments relative to the duty to indemnify were based entirely on its
duty to defend arguments, the trial court did not err in granting summary judgment regarding
indemnity. Burlington N. & Santa Fe Ry. Co., 334 S.W.3d at 245. The Supreme Court
reversed, holding that we erred by not considering all of the evidence presented by the parties in
determining whether National Union had a duty to indemnify. Burlington N. & Santa Fe. Ry.
Co., 334 S.W.3d at 220.
When both sides move for summary judgment, and the trial court grants one motion and
denies the other, the reviewing court considers both sides’ summary judgment evidence and
determines all issues presented. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.
2005). The reviewing court must consider all the grounds presented in both motions, and render
the judgment the trial court should have rendered. Id. The cross motions in this case presented
both traditional and no-evidence grounds for summary judgment. See TEX.R.CIV.P. 166a(c) and
166a(i). However, given the procedural posture of the case to date, in this opinion we
reconsider only the traditional and no-evidence motions for summary judgment filed by National
Union on the issue of whether it owed a duty to defend and indemnify BNSF.
An appellate court reviews summary judgment de novo. Provident Life & Accident Ins.
Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003).
We first reexamine National Union’s traditional motion under Rule 166a(c). The
standards for reviewing traditional summary judgments are well established. In a traditional
summary judgment proceeding, the standard of review on appeal asks whether the successful
movant carried the burden to show that there is no genuine issue of material fact, and that the
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judgment was properly granted as a matter of law. See TEX.R.CIV.P.166a(c); Fertic v. Spencer,
247 S.W.3d 242, 248 (Tex.App.--El Paso 2007, pet. denied). Thus, the question before the
reviewing court is limited to whether the summary judgment proof establishes as a matter of law
that there is no genuine issue of material fact as to one or more elements of the underlying claim.
See Fertic, 247 S.W.3d at 248. To resolve this question, the reviewing court will take all
evidence favorable to the non-movant as true; and all reasonable inferences, including any
doubts, must be resolved in the non-movant’s favor. Id., citing Nixon v. Mr. Property Mgmt.
Co., Inc., 690 S.W.2d 546, 548-49 (Tex. 1985).
BNSF contends the trial court erred in granting summary judgment on its duty to defend
claim by misapplying the “eight corners rule.” National Union responds by arguing that the trial
court was correct in concluding that the petitions in the underlying personal injury lawsuits fail to
allege any fact that could potentially place the claims within coverage provisions.
Whether a duty to defend exists is a question of law, reviewed de novo. KLN Steel Prod.
Co., Ltd. v. CNA Ins. Cos., 278 S.W.3d 429, 434 (Tex.App.--San Antonio 2008, pet. denied).
The insured bears the initial burden to establish that its claim falls within the scope of coverage
provided by the policy. CNA Ins. Cos., 278 S.W.3d at 434. Should the insured establish a right
to coverage, the burden then shifts to the insurer to demonstrate that the claim is subject to a
policy exclusion. Venture Encoding Serv., Inc. v. Atl. Mut. Ins. Co., 107 S.W.3d 729, 733
(Tex.App.--Fort Worth 2003, pet. denied). If the insurer is able to establish that an exclusion
applies, the burden shifts back to the insured to show that an exception to the exclusion brings
the claim back within the terms of the policy. Venture Encoding Serv., Inc., 107 S.W.3d at 733.
Generally, the duty to defend is dependent on the type and scope of coverage provided by
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the policy agreement. See King v. Dallas Fire Ins. Co., 85 S.W.3d 185, 187 (Tex. 2002). An
insurer’s duty to defend is determined according to the “eight corners,” or “complaint
allegations” rule. See id. at 187; Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 821
(Tex. 1997). The insurer’s duty to defend is determined entirely by the allegations in the
pleadings and the language of the insurance policy. King, 85 S.W.3d at 187. All that is needed
to invoke the duty are factual allegations that support a claim potentially covered by the policy.
See GuideOne Elite Ins. Co. v. Fielder Road Baptist Church, 197 S.W.3d 305, 310 (Tex. 2006).
Any doubt that the facts alleged give rise to the duty are resolved in favor of the insured. See
National Union Fire Ins. Co. of Pittsburgh, PA v. Merchants Fast Motor Lines, Inc., 939 S.W.2d
139, 141 (Tex. 1997). Facts outside the pleadings, regardless of how easily they can be found or
validated, are not ordinarily considered. GuideOne Elite Ins. Co., 197 S.W.3d at 308; see also
Argonaut Sw. Ins. Co. v. Maupin, 500 S.W.2d 633, 636 (Tex. 1973)(“The duty to defend does
not depend on what the facts are, or what might be determined finally by the trier of the facts. It
depends only on what the facts are alleged to be.”).
National Union’s summary judgment argument was two-fold: first, that BNSF was
barred from coverage because it could not qualify as an additional insured according to the terms
of the policy; second, to the extent BNSF was an additional insured, National Union argued that
one or more policy exclusions excused it from providing a defense. In its own motion, BNSF
argued it was entitled to coverage as an additional insured by the terms of the policy. The
railroad further argued that the petitions in the underlying case established its right to a defense,
and that the policy exclusions are not applicable or not established as a matter of law.
Once again, we must determine whether BNSF qualifies as an “additional insured” under
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the terms of the CGL policy. The policy provides coverage for bodily injury and property
damage, and obligates National Union to defend any suit seeking damages for such injuries.
Section II of the CGL policy defines “WHO IS AN INSURED” as those individuals,
partnerships, or organizations listed in the policy declaration.2 Who is an insured is amended by
an “Additional Insured” endorsement page attached to the policy. The endorsement states,
“(Section II) is amended to include as an insured the person or organization shown in the
Schedule, but only with respect to liability arising out of ‘your work’ for that insured by or for
you.” The endorsement provides further:
BLANKET - AS REQUIRED BY WRITTEN CONTRACT, BUT ONLY WITH
RESPECT TO LIABILITIES ARISING OUT OF THEIR OPERATIONS
PERFORMED BY OR FOR THE NAMED INSURED, BUT EXCLUDING
ANY NEGLIGENT ACTS COMMITTED BY SUCH ADDITIONAL INSURED.
Whether BNSF can be considered an “additional insured” requires us to construe the
meaning of these contract terms. Insurance contracts are interpreted according to the general
rules of contract construction. American Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157
(Tex. 2003). The primary concern in interpreting a contract is to determine the true intent of the
parties. Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., Inc., 907 S.W.2d 517, 520
(Tex. 1995). When a policy permits only one interpretation, we construe it as a matter of law
and enforce it as written. Upshaw v. Trinity Cos., 842 S.W.2d 631, 633 (Tex. 1992).3 When
the term to be construed is unambiguous, we will construe the language according to the plain
meaning of the words. Archon Investments, Inc. v. Great Am. Lloyds Ins. Co., 174 S.W.3d 334,
2
SSI Mobley is the “named insured” under the policy.
3
Neither party argues that the “Who is insured provision” or the “additional insured” endorsement is ambiguous or
creates an ambiguity in the meaning of the policy.
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338 (Tex.App.--Houston [1st Dist.] 2005, pet. denied).
According to the plain meaning of the language used in the endorsement, BNSF is
entitled to coverage for liability arising from bodily injury or property damage caused by SSI
Mobley’s operations, and is not covered for claims alleging the railroad’s own negligence.
Therefore, BNSF qualifies as an “additional insured” if the plaintiffs in the underlying lawsuits
sought recovery based on SSI Mobley’s negligence and not the railroad’s. For this inquiry, we
must apply the “eight corners rule,” and compare the policy provisions as stated above, to the
allegations in the underlying petitions. See King, 85 S.W.3d at 187.
When applying the eight-corners rule, a reviewing court interprets the allegations in the
petition liberally, and resolves any doubts in favor of the duty to defend. KLN Steel Prod. Co.,
Ltd., 278 S.W.3d at 435. The insured need only show that a reasonable reading of the
allegations would allow evidence of a claim that is covered by the policy, not that the claim itself
be clearly demonstrated by the language of the pleadings. Id. In addition, the reviewing court
must read the underlying petitions in light of the insurance policy’s provisions, and focus the
analysis on the “origin of the damages rather than on the legal theories alleged.” Nat’l Union
Fire Ins., Co., 939 S.W.2d at 141; see also Adamo v. State Farm Lloyds Co., 853 S.W.2d 673,
676 (Tex.App.--Houston [14th Dist.] 1993), writ denied, 864 S.W.2d 491 (Tex. 1993), cert
denied, 511 U.S. 1053, 114 S. Ct. 1613, 128 L. Ed. 2d 340 (1994)(“It is not the cause of action
alleged which determines coverage but the facts giving rise to the alleged actionable
conduct.”)[Emphasis in orig.].
BNSF relies on the following passage from the Rosales’s third amended and Lara’s sixth
amended petitions to establish the underlying suits fall within coverage under the policies:
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4. The Railroad has two (2) methods it uses to control vegetation. One is
mechanical weed control, that is using shredders on tractors to mow
weeds. The second method is chemical weed control. Even though this
duty is a non-delegable duty, the Railroad contracts out both methods of
weed control. The Railroad had a contract with SS Mobley Company to
carry out chemical weed control. SS Mobley failed to use reasonable care
to carry out its chemical weed control, and because of its improper timing
and application of chemical weed control, there was excessive vegetation
at the crossing at the time of the collision, which proximately caused the
collision.
As a preliminary matter, National Union attempts to demonstrate that BNSF failed to
establish its right to coverage by referring to several pieces of extrinsic evidence. We cannot
consider such evidence under the eight-corners rule. See King, 85 S.W.3d at 187. The Texas
Supreme Court has continually declined to create an exception to the eight-corners rule that
would allow consideration of extrinsic evidence in determining whether an insurer owes a duty to
defend. See Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co., 279 S.W.3d 650, 654 (Tex.
2009); Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487, 497 (Tex. 2008); GuideOne Elite Ins.
Co., 197 S.W.3d at 310-11. Therefore, our analysis will focus exclusively on the language of
the policy and the allegations in the petitions.
Relying on the additional insured endorsement, National Union argues it has no duty to
defend BNSF because the Lara and Rosales petitions include allegations that BNSF was at fault
for the collision. The Texas Supreme Court rejected this argument in Evanston Ins. Co. v.
ATOFINA Petrochemicals, Inc., 256 S.W.3d 660, 665-66 (Tex. 2008). The facts in Evanston
are parallel to those presented here: Atofina hired a contractor, Triple S, to perform
maintenance at its oil refinery. Atofina was an additional insured on Triple S’s indemnity policy
with Evanston Insurance Company. A Triple S employee was killed while servicing equipment
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at the refinery, and the employee’s family sued Atofina along with Triple S. Triple S was later
dismissed from the suit. Atofina asserted its status as an additional insured and requested
coverage related to the remaining litigation. Evanston denied the request, arguing that Atofina
was not an additional insured because the policy language did not cover an additional insured for
its own negligence. Evanston, 256 S.W.3d at 663-64. The additional insured endorsement at
issue in Evanston provided coverage for:
A person or organization for whom [Triple S] [has] agreed to provide insurance as
is afforded by this policy; but that person or organization is an insured only with
respect to operations performed by [Triple S] or on [Triple S’s] behalf, or
facilities owned or used by [Triple S].
Id. at 664.
Atofina, much like BNSF, claimed it was covered by the endorsement because it was an
entity for whom Triple S had agreed to provide insurance. Id. Evanston, much like National
Union, countered by arguing that Atofina was not an additional insured because the endorsement
did not cover an additional insured for the additional insured’s own negligence. Id.
Although the focus of the Evanston decision was indemnity coverage, the Court reiterated
that the insurer must “determine its duty to defend solely from terms of the policy and the
pleadings of the third-party claimant.” Id. at 665 [Internal quotations omitted]. The Court then
rejected the fault-based interpretation of the additional insured endorsement. Id. at 666. In
determining the effect of the policy’s limitation of coverage based on allegations that the
additional insured itself was negligent, the Court held “[t]he particular attribution of fault
between insured and additional insured does not change the outcome.” Evanston, 256 S.W.3d at
666. The Court also noted that had the parties intended to insure Atofina only for vicarious
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liability, such language was available. Evanston, 256 S.W.3d at 666.
In accordance with Evanston, we again conclude that BNSF qualifies as an additional
insured under SSI Mobley’s CGL policy. There is no dispute that the injuries at the heart of the
underlying lawsuit constitute “bodily injuries” as defined by the policy. The Lara and Rosales
families alleged, in part, that SSI Mobley did not carry out its chemical weed control with
reasonable care and that SSI Mobley’s negligence resulted in the overgrowth of vegetation which
obstructed the view of the crossing and led to the collision. The fact that the petitions also
contain factual allegations that BNSF was at fault for the collision – either because of its
delegation of weed control to SSI Mobley or because of its failure to properly supervise and
manage SSI Mobley’s work – does not change the insurer’s duty to defend the entire suit. See
Evanston, 256 S.W.3d at 665-66; Zurich Am. Ins. Co., 268 S.W.3d at 495-96.
Having determined BNSF established its right to coverage as an additional insured, we
must next determine whether the “PRODUCTS- COMPLETED OPERATIONS HAZARD”
exclusion negates National Union’s duty to defend. The exclusion states, “[t]his insurance does
not apply to ‘bodily injury’ or ‘property damage’ arising out of the ‘products-completed
operations hazard.’” The CGL defines “products-completed operations hazard” as follows:
11.a ‘Products-completed operations hazard’ includes all ‘bodily injury’ . . .
occurring away from premises [SSI Mobley] [owns] or [rents] and arising
out of ‘[SSI Mobley’s] product’ or ‘[SSI Mobley’s] work’ except
. . .
(2) Work that has not yet been completed or abandoned.
11.b ‘[SSI Mobley’s] work’ will be deemed completed at the earliest of the
following times:
(1) When all of the work called for in [SSI Mobley’s] contract
has been completed.
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(2) When all of the work to be done at the site has been
completed if [SSI Mobley’s] contract calls for work at more
than one site.
(3) When that part of the work done at a job site has been put
to its intended use by any person or organization other than
another contractor or sub-contractor working on the same
project.
Work that may need service, maintenance, correction, repair or replacement, but
which is otherwise complete, will be treated as completed.
We begin with the premise that the policy covers bodily injuries. The
“products-completed operations hazard” endorsement provides an exclusion from that coverage.
The exclusion bars coverage that arises out of SSI Mobley’s work or product, and occurs away
from SSI Mobley’s premises. According to the petitions, the underlying bodily injuries occurred
at a BNSF crossing, away from SSI Mobley’s premises, and SSI Mobley’s negligent weed
control operations contributed to the collision. Therefore, pursuant to paragraph “a” the facts
before us fall within the exclusion. The controlling issue is whether SSI Mobley’s work at the
crossing was completed at the time of the collision. The point of contention is how to
characterize the language in paragraphs “a(2)” and “b” of the exclusion. BNSF characterizes
these provisions as additional elements of the exclusion, and argues it was National Union’s
burden to establish that SSI Mobley’s work was complete at the time of the collision in order to
demonstrate that the exclusion applies. In response, National Union characterizes the provisions
as exceptions to the exclusion and concludes it was BNSF’s burden to demonstrate that SSI
Mobley’s work at the crossing was not complete. To settle this dispute, we again turn to
principles of contract interpretation.
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As in our discussion of the “additional insured” provision above, we are faced with an
unambiguous contract provision and must construe the definition of this exclusion according to
the plain meaning of the words chosen by the parties. See Archon Investments, Inc., 174 S.W.3d
at 338. In this instance, the presence of the word “except” following the primary definition of
the exclusion is determinative. The first clause in paragraph “a.” provides the requirements for
the exclusion. The exclusion applies to bodily and property injuries: (1) that occur away from
SSI Mobley’s premises; and (2) that arise out of SSI Mobley’s work or product. See Houston
Building Serv., Inc. v. Am Gen. Fire & Cas. Co., 799 S.W.2d 308, 309-10 (Tex.App.--Houston
[1st Dist.] 1990, writ denied)(noting an identical products - completed operations hazard
definition contained two elements: (1) damage arising out of the insured’s work; and (2)
damage occurring on premises the insured does not own or lease).
The definition then provides an exception to the exclusion which brings a case back
within the policy’s coverage if SSI Mobley’s work “has not yet been completed or abandoned.”
Had the parties intended to make proof that the named insured’s work was completed as an
element of the exclusion, they could have done so. Instead, the provision is worded as an
exception to the exclusion. Therefore, in response to the products - completed operations hazard
exclusion, it was BNSF’s burden to establish SSI Mobley’s work was “not complete” at the time
of the collision. See Atl. Mut. Ins. Co., 107 S.W.3d at 733 (once the insurer establishes the
application of a policy exclusion, the burden shifts back to the insured to demonstrate an
exception to the exclusion). In determining whether BNSF met its burden, we again note that
we are prohibited from considering extrinsic evidence. See Pine Oak Builders, Inc. v. Great Am.
Lloyds Ins. Co., 279 S.W.3d 650, 653-56 (Tex. 2009).
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To determine whether SSI Mobley’s work was “not completed” at the time of the
collision, we look to sub-paragraph (2). In sub-paragraph (2), we find three definitions of
“completed.” First, SSI Mobley’s work is completed when all of the work called for in its
contract with the railroad is complete. The second definition provides that work is completed on
a site by site basis, regardless of the status of the work at other locations. Third, work is
completed when the site has been put to its intended use. The policy further specifies that the
need for ongoing maintenance or service does not prevent the work from being completed for the
purposes of the exclusion. The definition providing the earliest date for completion controls.
Again, we turn to the allegations in the Lara’s and Rosales’s petitions. See Pine Oak
Builders, Inc., 279 S.W.3d at 653-54. Previously, we held that because the factual allegations
regarding SSI Mobley’s work at the site of the collision were written in the past tense, the
completed operations exclusion precluded a duty to defend.3 However, use of the past tense in
drafting allegations for a petition is not particularly unusual given that a petition is rarely, if ever,
drafted contemporaneously with the events described in the petition. As such, use of the past
tense in this circumstance cannot be determinative.
The first “work completed” definition makes the completion date dependent on the length
of SSI Mobley’s contract. The other two definitions would also require us to refer to the
contract between BNSF and SSI Mobley. Given that we are not permitted to refer to extrinsic
evidence in determining the duty to defend, we have no way of knowing the length of SSI
Mobley’s contract. See Pine Oak Builders, Inc., 279 S.W.3d at 654. In light of that restriction,
3
The allegations refer to SSI Mobley having failed to use reasonable care in its work, and that because of its
improper timing and application of chemical weed control, excessive vegetation was permitted to grow. The
petitions further allege that there was excessive vegetation at the crossing. All of the allegations related to SSI
Mobley’s work at the site indicate the company sprayed prior to the collision.
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we do not know whether work was completed on a site by site basis, regardless of the status of
the work at other locations or whether work was completed when the site was put to its intended
use.
However, we are to interpret the allegations in the petition liberally and resolve any
doubts in favor of the duty to defend. KLN Steel Prod. Co., Ltd., 278 S.W.3d at 435. BNSF
need only demonstrate that a reasonable reading of the allegations would permit evidence of a
claim that is potentially covered by the policy, and not that the claim itself is clearly
demonstrated by the language of the petition. National Union Fire Insurance Co., 939 S.W.3d
at 141. All that is needed to invoke the duty are factual allegations that support a claim
potentially covered by the policy. See GuideOne Elite Ins. Co., 197 S.W.3d at 310.
The Lara’s and Rosales’s petitions allege that BNSF had a contract with SSI Mobley at
the time of the collision and that the contract was for chemical weed control. They allege that
SSI Mobley failed to use reasonable care to carry out its chemical weed control, and that the
improper timing and application of chemical weed control was such that excessive vegetation
existed at the site at the time of the collision proximately causing the collision.4 A reasonable
reading of these and the other allegations in the petitions, and liberally interpreting them as we
are required to do, would permit evidence of a claim that is potentially covered by the policy.
See Adamo, 853 S.W.2d at 676 (“It is not the cause of action alleged which determines coverage
but the facts giving rise to the alleged actionable conduct.”)[Emphasis in orig.]. In other words,
BNSF met its burden to establish an exception to the exclusion. See Pine Oak Builders, Inc.,
279 S.W.3d at 653-56.
4
Essentially, the Lara and Rosales families alleged that the application of chemical weed control by SSI Mobley was
insufficient or not properly completed such that excessive vegetation at the site at the time of the collision was a
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Given that BNSF met the requirements to qualify as an additional insured under the
policy and inasmuch as National Union’s coverage exclusion does not apply, we conclude that
National Union owed a duty to defend. Accordingly, the trial court erred by granting summary
judgment on this issue.
Next, BNSF contends the trial court erred by granting National Union’s traditional and
no-evidence motion for summary judgment on the insurer’s duty to indemnify.
The duty to indemnify is separate and distinct from the duty to defend. See Utica Nat’l
Ins. Co. of Texas v. Am. Indem. Co., 141 S.W.3d 198, 203 (Tex. 2004). One duty may exist
without the other. Farmers Texas County Mutual Ins. Co. v. Griffin, 955 S.W.2d 81, 82 (Tex.
1997). To that extent, the duties enjoy a degree of independence. See Trinity Universal Ins. Co.
v. Cowan, 945 S.W.2d 819, 821-22 (Tex. 1997). While the duty to defend is limited by the
“eight corners doctrine,” the duty to indemnify is under no such restriction and is dependent on
the facts established in the underlying suit. Pine Oak Builders, Inc., 279 S.W.3d at 656. The
insurer’s duty to indemnify depends on the facts proven and whether the damages caused by the
actions or omissions proven are covered by the terms of the policy. D.R. Horton – Texas, Ltd. v.
Markel International Insurance Co., Ltd., 300 S.W.3d 740, 744 (Tex. 2009). In other words, a
reviewing court is obligated to consider evidence extrinsic to the pleadings and the insurance
policy in determining whether an insurer owes a duty to indemnify. Id.; see also Burlington
Northern and Santa Fe Railway Co., 334 S.W.3d at 220.
In its motions for summary judgment, National Union essentially argued that: (1) SSI
Mobley’s contractual scope of work did not extend to the vegetation; (2) SSI Mobley was not
proximate cause of the collision.
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working at the railroad crossing at issue when the accident occurred; (3) neither the CGL nor the
umbrella policy provide coverage for the bodily injuries at issue in this case inasmuch as the
policies exclude coverage for bodily injuries that occur away from SSI Mobley’s premises and
arise out of SSI Mobley’s work unless SSI Mobley’s work was not completed; (4) BNSF did not
settle losses covered by the policies; and (5) BNSF’s own negligent acts were the sole source of
its settlement liabilities. In other words, to defeat National Union’s motions for summary
judgment on the issue of indemnity, BNSF was obligated to present evidence that BNSF
qualified as an additional insured under the policy and that SSI Mobley’s work was not complete
at the time of the accident. We have already determined that BNSF was an additional insured
under the policies. The only question then is whether SSI Mobley’s work at the accident site
was complete at the time the accident occurred.
We are obligated to take all evidence favorable to BNSF, the non-movant, as true, and all
reasonable inferences, including any doubts, must be resolved in BNSF’s favor. See Nixon, 690
S.W.2d at 548-49. However, where the trial court’s summary judgment order does not state the
basis for its decision, we must uphold the order if any of the theories advanced in the motion are
meritorious. Provident Life & Accident Ins. Co. v. Knott, 128 S .W.3d 211, 216 (Tex. 2003).
BNSF and/or National Union presented evidence that showed: (1) SSI Mobley’s CGL
Contractual Liability policies named BNSF as an additional insured; (2) the policies provided
coverage for incidents occurring within 50 feet of a railroad track; (3) SSI Mobley had a
vegetation control contract with BNSF covering the years 1994 – 1996 and the contract had not
expired or terminated at the time of the accident; (4) SSI Mobley was obligated under the terms
of the contract to perform vegetation control so as to meet the satisfaction of BNSF’s chief
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engineer; (5) SSI Mobley’s contract with BNSF called for SSI Mobley to control vegetation for
30 feet on each side of the centerline of the railroad track; (6) SSI Mobley anticipated, expected,
and compensated for a “drift” of between two and twelve feet of the herbicide it sprayed as a
result of the spraying itself and/or other factors; and (7) the vegetation at issue was located some
35-40 feet from the centerline of the railroad track, according to BNSF’s accident investigator.
This evidence raises fact questions that defeat National Union’s traditional motion for
summary judgment on the duty to indemnify claim. Because BNSF has raised a genuine issue of
material fact sufficient to defeat National Union’s traditional motion for summary judgment, we
need not address National Union’s no-evidence motion for summary judgment. Accordingly,
we find that the trial court erred by granting National Union’s motion for summary judgment as
to BNSF’s indemnity claim.
In light of the foregoing, we reverse the judgment of the trial court on the duty to defend
and the duty to indemnify, and remand the case to the trial court for proceedings consistent with
this opinion.
August 29, 2012
CHRISTOPHER ANTCLIFF, Justice
Before McClure, C.J., Rivera, and Antcliff, JJ.
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