Paul Robertson v. Home State County Mutual Insurance Company ( 2011 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-08-00280-CV
PAUL ROBERTSON APPELLANT
V.
HOME STATE COUNTY MUTUAL APPELLEE
INSURANCE COMPANY
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FROM THE 48TH DISTRICT COURT OF TARRANT COUNTY
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OPINION ON EN BANC RECONSIDERATION
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A majority of the court ordered en banc reconsideration of the court‘s
opinion on rehearing. See Tex. R. App. P. 49.7. We withdraw our opinion and
judgment of July 15, 2010, and substitute the following in their place.
I. INTRODUCTION
Appellant Paul Robertson obtained a judgment against his employer, Ray
Redi-Mix, Inc., for damages for personal injuries that he sustained while on the
job. Appellee Home State County Mutual Insurance Company, Redi-Mix‘s
transportation insurer, denied coverage under several exclusions contained in
Redi-Mix‘s policy of insurance for Robertson‘s claims against Redi-Mix and
obtained a summary judgment against Robertson based on those exclusions.
Robertson argues that the trial court erred by granting Home State‘s motion for
summary judgment. We will affirm.
II. FACTUAL AND PROCEDURAL BACKGROUND
According to Robertson‘s first amended original petition, Redi-Mix
employed him as a truck driver. On November 3, 2005, Robertson informed
Redi-Mix that the truck that he had been assigned to drive had a defective tarp,
but Redi-Mix instructed him to make do with the tarp that he had. The next day,
the tarp malfunctioned, causing Robertson to sustain bodily injuries.
Redi-Mix did not provide workers‘ compensation insurance coverage to its
employees. It did, however, have a commercial automobile liability insurance
policy issued by Home State (the Policy) that provided coverage for ―all sums an
insured legally must pay as damages because of bodily injury or property
damage to which [the] insurance applies, caused by an accident and resulting
from the ownership, maintenance or use of a covered auto.‖ The Policy
contained the following relevant exclusions to which coverage did not apply:
3. WORKERS COMPENSATION
Any obligation for which the insured or the insured‘s insurer
may be held liable under any workers compensation, disability
benefits or unemployment compensation law or any similar
law.
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4. EMPLOYEE INDEMNIFICATION AND EMPLOYER’S
LIABILITY
Bodily injury to:
a. An employee of the insured arising out of and in the
course of employment by the insured; or
b. The spouse, child, parent, brother or sister of that
employee as a consequence of paragraph a. above.
This exclusion applies:
(1) Whether the insured may be liable as an
employer or in any other capacity; and
(2) To any obligation to share damages with or repay
someone else who must pay damages because
of the injury.
But this exclusion does not apply to bodily injury to domestic
employees not entitled to workers compensation benefits or to
liability assumed by the insured under an insured contract.
[Emphasis added.]
Robertson sued Redi-Mix for the injuries that he sustained on November 4,
2005, and he sought a declaratory judgment that Home State had a duty to
defend, to indemnify, or to both defend and indemnify Redi-Mix for his claims
against Redi-Mix. Home State filed a counterclaim seeking a declaratory
judgment that it had neither a duty to defend nor a duty to indemnify Redi-Mix for
the claims made by Robertson against Redi-Mix because the workers‘
compensation and employee exclusions contained in the Policy applied to
exclude coverage under the Policy. Robertson obtained a final judgment against
Redi-Mix for, among other things, damages in the amount of $967,631.52, and
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the trial court severed Robertson‘s suit against Redi-Mix from his remaining claim
against Home State.
Home State moved for summary judgment on the grounds (1) that
coverage under the Policy for Robertson‘s claims against Redi-Mix is excluded
under the workers‘ compensation exclusion, (2) that coverage under the Policy
for Robertson‘s claims against Redi-Mix is excluded under the employee
exclusion and did not fall within the ―domestic employees‖ exception, and (3) that
the truck to which Robertson was assigned when he sustained injuries is not a
listed vehicle under the Policy. The trial court granted Home State‘s motion for
summary judgment on two grounds: that Robertson‘s claims against Redi-Mix
are excluded under both the workers‘ compensation and employee exclusions.
Robertson appeals.
III. STANDARD OF REVIEW
In a summary judgment case, the issue on appeal is whether the movant
met the summary judgment burden by establishing that no genuine issue of
material fact exists and that the movant is entitled to judgment as a matter of law.
Tex. R. Civ. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding,
289 S.W.3d 844, 848 (Tex. 2009). We review a summary judgment de novo.
Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). We take as
true all evidence favorable to the nonmovant, and we indulge every reasonable
inference and resolve any doubts in the nonmovant‘s favor. 20801, Inc. v.
Parker, 249 S.W.3d 392, 399 (Tex. 2008); Provident Life & Accident Ins. Co. v.
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Knott, 128 S.W.3d 211, 215 (Tex. 2003). We consider the evidence presented in
the light most favorable to the nonmovant, crediting evidence favorable to the
nonmovant if reasonable jurors could and disregarding evidence contrary to the
nonmovant unless reasonable jurors could not. Mann Frankfort, 289 S.W.3d at
848. We must consider whether reasonable and fair-minded jurors could differ in
their conclusions in light of all of the evidence presented. See Wal-Mart Stores,
Inc. v. Spates, 186 S.W.3d 566, 568 (Tex. 2006); City of Keller v. Wilson, 168
S.W.3d 802, 822–24 (Tex. 2005).
IV. EMPLOYEE EXCLUSION AND DOMESTIC EMPLOYEES EXCEPTION
In his second issue, Robertson argues that the trial court erred by granting
Home State‘s motion for summary judgment on the ground that coverage under
the Policy for Robertson‘s claims against Redi-Mix is excluded under the
employee exclusion. Robertson contends that the ―domestic employees‖
exception to the employee exclusion applies to extend coverage to him under the
Policy because he was ―employed in the United States‖ and because he was not
entitled to workers‘ compensation benefits as an employee of Redi-Mix, a
nonsubscriber. Robertson thus advocates interpreting ―domestic employees‖ to
mean persons who work in the United States as opposed to persons who
perform certain duties at a personal residence. Alternatively, he argues that the
term ―domestic employees‖ is, at the very least, ambiguous and, therefore, that
we must adopt his interpretation of the provision.
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In an insurance coverage case, the insured has the burden of establishing
coverage under the terms of the policy. Gilbert Tex. Constr., L.P. v. Underwriters
at Lloyd’s London, 327 S.W.3d 118, 124 (Tex. 2010). If the insured proves
coverage, then to avoid liability the insurer must prove that the loss is within an
exclusion. Id. If the insurer proves that an exclusion applies, the burden shifts
back to the insured to show that an exception to the exclusion brings the claim
back within coverage. Id. In this case, there is no dispute that Robertson was an
employee of Redi-Mix. Our analysis therefore focuses on the applicability of the
―domestic employees‖ exception to the employee exclusion.
Generally, courts construe insurance policies according to the same rules
of construction that apply to contracts. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa.
v. Crocker, 246 S.W.3d 603, 606 (Tex. 2008). Enforcing the parties‘ expressed
intent is our primary concern. Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132,
133 (Tex. 1994). The policy‘s terms are given their ordinary and generally
accepted meaning unless the policy shows that the words were meant in a
technical or different sense. Gilbert Tex. Constr., L.P., 327 S.W.3d at 126. If
terms in the contract can be given a definite or certain legal meaning, they are
not ambiguous, and the court will construe the contract as a matter of law. Nat’l
Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI Indus., Inc., 907 S.W.2d 517, 520
(Tex. 1995). However, if a contract of insurance is susceptible to more than one
reasonable interpretation and is, thus, ambiguous, we must resolve the
uncertainty by adopting the construction that most favors the insured. Nat’l
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Union Fire Ins. Co. of Pittsburgh, Pa. v. Hudson Energy Co., Inc., 811 S.W.2d
552, 555 (Tex. 1991). An ambiguity does not exist simply because the parties
interpret a policy differently. See Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124
S.W.3d 154, 157 (Tex. 2003).
Generally, the term ―domestic‖ has several accepted meanings. It is
defined as both ―relating to the household or the family‖ and ―relating and limited
to one‘s own country.‖ Webster‘s Third New Int‘l Dictionary 671 (3d ed. 2002).
In light of these two definitions, Robertson argues that a ―domestic employee‖—
as used in the Policy‘s employee exclusion—is a person who works in the United
States or, alternatively, that the term is ambiguous because there is more than
one accepted meaning. However, Robertson‘s arguments disregard a
fundamental rule of contract construction: the requirement that we examine the
entire writing in an effort to harmonize and give effect to all provisions of the
contract so that none are rendered meaningless. See Coker v. Coker, 650
S.W.2d 391, 393 (Tex. 1983). Indeed, ―‗[n]o one phrase, sentence, or section [of
the policy] should be isolated from its setting and considered apart from the other
provisions.‘‖ Don’s Bldg. Supply, Inc. v. OneBeacon Ins. Co., 267 S.W.3d 20, 23
(Tex. 2008). But this is exactly what Robertson does—he isolates ―domestic
employees‖ from the ―not entitled to workers compensation benefits‖ part of the
exception. As demonstrated below, the ―not entitled to workers compensation
benefits‖ language plays a pivotal role in determining who qualifies as a
―domestic employee‖ not because the language refers to employees of a
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nonsubscriber, as Robertson reads the provision, but because when read
together with ―domestic employees,‖ it becomes clear that the parties intended to
except from the employee exclusion a particular type of employee that is
specifically identified in the Texas Workers‘ Compensation Act (TWCA) and
referenced in the Texas Motor Vehicle Safety Responsibility Act (TMVSRA).
The TWCA was adopted to provide prompt remuneration to employees
who sustain injuries in the course and scope of their employment. Hughes Wood
Prods., Inc. v. Wagner, 18 S.W.3d 202, 206 (Tex. 2000). An employer has the
option of providing workers‘ compensation insurance for employees and thereby
becoming a subscriber under the TWCA or not providing workers‘ compensation
insurance and thereby remaining a nonsubscriber. Lawrence v. CDB Servs.,
Inc., 16 S.W.3d 35, 41 (Tex. App.—Amarillo 2000), aff’d, 44 S.W.3d 544 (Tex.
2001); see Tex. Lab. Code Ann. § 406.002(a) (West 2006) (providing that except
for public employers and as otherwise provided by law, an employer may elect to
obtain workers‘ compensation insurance coverage). If an employer provides
workers‘ compensation insurance to its employees, section 406.091(a)(1)
mandates that the TWCA is inapplicable to ―a person employed as a domestic
worker . . . engaged in employment incidental to a personal residence.‖ Tex.
Lab. Code Ann. § 406.091(a)(1) (West 2006). However, this exemption is not
without its own exception. Section 406.091(b) provides that ―[a]n employer may
elect to obtain workers‘ compensation insurance coverage for an employee or
classification of employees exempted from coverage under Subsection (a)(1) or
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(a)(3).‖ Id. § 406.091(b) (emphasis added). Therefore, although domestic
employees engaged in employment incidental to a personal residence are
exempted from the TWCA, an employer may elect to obtain workers‘
compensation coverage for such employees.
The TMVSRA provides in part that ―[a] person may not operate a motor
vehicle in this state unless financial responsibility is established for that vehicle
through,‖ among other things, ―a motor vehicle liability insurance policy that
complies with Subchapter D.‖ Tex. Transp. Code Ann. § 601.051(1) (West
2011). In subchapter D, section 601.075 provides in relevant part as follows:
A motor vehicle liability insurance policy may not insure
against liability:
....
(2) for bodily injury to or death of an employee of the insured
while engaged in the employment, other than domestic, of the
insured, or in domestic employment if benefits for the injury are
payable or required to be provided under a workers’ compensation
law.
Id. § 601.075(2) (West 2011) (emphasis added). Stated otherwise, a motor
vehicle liability insurance policy may not insure against liability for injury to an
employee of the insured while that employee is engaged (1) in the employment
of the insured or (2) in the domestic employment of the insured if benefits for the
injury are payable or required to be provided under workers‘ compensation
insurance, but a liability policy may insure against liability for injury to an
employee while that employee is engaged in domestic employment. Id.
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When section 601.075(2) is considered in light of labor code section
406.091, the legislature‘s framework becomes readily apparent: motor vehicle
liability insurance may insure against liability for a domestic employee‘s injuries
only to fill the gap in insurance coverage created by the TWCA‘s exemption of
―domestic employees‖ engaged in employment incidental to a personal residence
who are not entitled to workers‘ compensation insurance via an election to
provide coverage by the employer. Compare Tex. Lab. Code Ann.
§ 406.091(a)(1), (b), with Tex. Transp. Code Ann. § 601.075(2). Thus, the
―domestic‖ employee contemplated by transportation code section 601.075(2) is
the ―domestic worker‖ identified by labor code section 406.091(a)(1)—a person
engaged in employment incidental to a personal residence. To the extent that an
employee is not a domestic employee, or that an employee is a domestic
employee and benefits for his injury are payable or required by workers‘
compensation insurance, as labor code section 406.091(b) specifically
contemplates, a motor vehicle liability insurance policy may not insure against
liability for that employee‘s injuries that occur on the job. The legislature‘s
decision in the TMVSRA to prohibit a motor vehicle liability insurance policy from
insuring against liability for injuries to employees, but not to domestic employees
not entitled to workers‘ compensation benefits, furthers the legislature‘s attempts
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in the TWCA to ―encourage employers to obtain workers‘ compensation
insurance.‖1 See Kroger Co. v. Keng, 23 S.W.3d 347, 349 (Tex. 2000).
The Policy in this case is a commercial automobile general liability
insurance policy. The language used in the employee exclusion and ―domestic
employees‖ exception unmistakably reveals an attempt by the drafters to
incorporate provisions into the Policy that are consistent with and adhere to the
requirements of both transportation code section 601.075(2) and labor code
section 406.091(a). Just as the transportation code prohibits a motor vehicle
liability insurance policy from insuring against liability for injuries to employees,
but not to domestic employees not entitled to workers‘ compensation benefits,
the Policy excludes coverage for bodily injury to employees occurring during
employment, but the exclusion ―does not apply to domestic employees not
entitled to workers compensation benefits.‖ [Emphasis added.] Reading the
―domestic employees‖ exception in context, as we must, and considering the
statutory framework implemented by the legislature in the TWCA and the
TMVSRA—that the ―domestic‖ employee contemplated by transportation code
section 601.075(2) is the ―domestic worker‖ identified by labor code section
406.091(a)(1), a person engaged in employment incidental to a personal
1
For example, the TWCA penalizes nonsubscribers by prohibiting them
from asserting certain common law defenses in their employees‘ personal injury
actions. See Tex. Lab. Code Ann. § 406.033(a) (West 2006); see also Figueroa
v. Healthmark Partners, L.L.C., 125 F. Supp. 2d 209, 210 (S.D. Tex. 2000)
(―[E]mployers making the decision on whether to subscribe must face a Texas
statutory scheme that wields both a stick and a carrot.‖).
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residence—we cannot agree with Robertson‘s argument that the parties to the
Policy intended ―domestic employees‖ to mean persons who work in the United
States.
Relying on Carroll v. Castillo, Robertson argues that the ―domestic
employee‖ exception is at least ambiguous. See No. 13-99-00006-CV, 2000 WL
34592617, at *5 (Tex. App.—Corpus Christi Apr. 6, 2000, no pet.) (not
designated for publication). In Carroll, the court of appeals considered a
―domestic employees‖ exception to an employee exclusion contained in an
insurance policy. Id. Like the ―domestic employees‖ exception in this case, the
exception stated that the employee exclusion ―does not apply to bodily injury to
domestic employees not entitled to workers compensation benefits.‖ Id.
Interpreting the exception, the court concluded,
By its terms, this exclusion does not apply to bodily injury to
domestic employees not entitled to workers compensation
benefits. . . . [T]he term ―domestic employee‖ is ambiguous and
incapable of precise determination for summary judgment purposes.
―Domestic employee‖ could mean an employee of Carroll Water Well
Service who works in a home, such as a cook, maid, or
housekeeper; or it could mean an employee who works in the United
States as contrasted with one who works abroad in a foreign
country.
Id. We decline to follow Carroll because its analysis begins and ends with the
dictionary definition of ―domestic,‖ rendering meaningless the ―not entitled to
workers compensation benefits‖ portion of the exception and failing to consider
the clear relevance of the transportation and labor code provisions.
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A federal district court recently considered whether a ―domestic
employment‖ exception to an employee exclusion contained in an insurance
policy meant employment within a home or domicile. See Canal Ins. Co. v.
Flores, No. 3:06-CV-84-KC, 2009 WL 1033770, at *8–10 (W.D. Tex. Apr. 14,
2009). The court reasoned that ―[i]n the context of insurance contracts, courts
almost unanimously recognize the term ‗domestic employment‘ as meaning
employment within the home.‖ Id. at *8 (citing United Fire & Cas. Co. v.
Gravette, 182 F.3d 649, 655 (8th Cir. 1999) (―A ‗domestic employee‘ is commonly
understood to be a household servant.‖). The court declined to follow Carroll and
addressed the relevance of labor code section 406.091, reasoning that ―[t]he
comparison of a domestic employee to one who is employed in a personal
residence clearly indicates that the Texas Labor Code views a domestic
employee as one who works in the home and not generally within the United
States.‖ Id. at *8 n.14, *9. The court ultimately held that ―the case law
interpreting ‗domestic employment‘ clearly favors a meaning of the term related
to home employment, particularly when the term is directly tied to workers‘
compensation laws in the Texas Labor Code.‖ Id. at *9.
Even more recently, the Fifth Circuit considered a ―domestic employees‖
exception in an insurance policy, addressing whether the exception, which was
worded identically to the ―domestic employees‖ exception at issue in this case,
referred to ―butlers and chambermaids‖ or to employees who work in the United
States as opposed to those who work abroad. See Amerisure Ins. Co. v.
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Navigators Ins. Co., 611 F.3d 299, 310–11 (5th Cir. 2010). Acknowledging that
no Texas court had resolved the issue in a published opinion, the court examined
cases from other jurisdictions and concluded that interpreting ―domestic
employees‖ to mean employees who work in the United States was
―unreasonable‖ and did ―not defeat the otherwise applicable exclusion.‖ Id. at
311.
Although both federal courts failed to recognize the framework
implemented by the legislature in both the TWCA and the TMVSRA and its
relevance to the domestic employee exceptions contained in the policies at issue
in their respective cases, the courts ultimately reached the same conclusion that
we do.
Accordingly, we hold that as used in the Policy, Robertson‘s interpretation
of ―domestic employees‖ is unreasonable. In light of the labor code and the
transportation code, ―domestic employees‖ is not susceptible to more than one
reasonable interpretation and, therefore, is not ambiguous. Rather, ―domestic
employees‖ can be given a definite and certain legal meaning: persons engaged
in employment incidental to a personal residence.
Lastly, Robertson argues ―assuming arguendo that the definition of
‗domestic employee‘ that is urged by Home State is correct, there is evidence
that Robertson actually performed the duties of a ‗domestic employee.‘‖ He
points out that his duties included ―cleaning the office, cleaning the vehicles and
the yard.‖ But this is not evidence that Robertson was a ―domestic employee‖
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because there is no evidence that these activities took place incidental to a
personal residence. See Tex. Lab. Code Ann. § 406.091(a)(1).
We conclude and hold that the employee exclusion applied to exclude
coverage under the Policy for Robertson‘s claims against Redi-Mix. Therefore,
the trial court did not err by granting Home State‘s motion for summary judgment
on the basis of the employee exclusion. We overrule Robertson‘s second issue.
Having determined that summary judgment was proper on this ground, we need
not reach Robertson‘s first issue complaining that the trial court erred by granting
Home State‘s motion for summary judgment on the basis of the workers‘
compensation exclusion contained in the Policy. See Tex. R. App. P. 47.1.
V. CONCLUSION
Having overruled Robertson‘s second, dispositive issue, we affirm the trial
court‘s judgment.
BILL MEIER
JUSTICE
EN BANC
DAUPHINOT, J. concurs without opinion.
DELIVERED: June 2, 2011
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