IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 95-20541 _____________________
ASSICURAZIONI GENERALI
Plaintiff - Appellee
v.
CROWN CENTRAL PETROLEUM CORPORATION
Defendant - Appellant
and
CECIL A BUFFALO; DONALD RAY HARRISON; ROBERT KEITH SUITS, JR
Defendants
_________________________________________________________________
Appeal from the United States District Court for the Southern District of Texas (CA-H-95-3240) _________________________________________________________________ May 23, 1996 Before KING, WIENER and BENAVIDES, Circuit Judges.
PER CURIAM:*
Assicurazioni Generali SpA (“Generali”) brought an action
* Pursuant to Local Rule 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in Local Rule 47.5.4. against Crown Central Petroleum Corporation (“Crown”), among
others, seeking a declaratory judgment that it was not obligated to
provide insurance coverage to Crown as an additional insured under
an insurance policy issued to Reactor Services International
(“RSI”). Crown appeals the district court’s granting of summary
judgment in favor of Generali. We reverse.
I. BACKGROUND
Generali issued a comprehensive general liability insurance
policy to RSI for the period November 1, 1991, through November 1,
1992 (the “Generali/RSI Policy”). The policy contained a blanket
additional insured endorsement that provided:
Coverage includes additional assured as required by contract but only in respect of work performed by or on behalf of the assured.
For the purpose of preparing certificates of insurance to evidence
this endorsement, RSI presented its insurance agent, Gow and Hanna
Insurance, with a list of RSI’s regular customers, including Crown.
On April 23, 1992, a tail gas recovery unit malfunctioned at
Crown’s refinery in Pasadena, Texas. That afternoon, Ronnie
Reynolds, Crown’s maintenance manager, phoned a salesperson at RSI
about servicing the recovery unit.1 Reynolds arranged for RSI to
1 Presumably, the salesperson was Mike Elmore. Neither Reynolds or Elmore was certain that Elmore was the person contacted on this occasion. However, John Shank, executive vice president of RSI, testified as to how RSI ordinarily would come to send a work crew to Crown: “The most logical way is that Crown would call Mike Elmore, their sales rep, and indicate they had a job . . . .”
2 come to the refinery the next morning, April 24, 1992. Reynolds
and the RSI salesperson discussed the basics of the job and
Reynolds obtained a price estimate. Reynolds then contacted Ed
Lofland in Crown’s purchasing department to obtain a purchase order
number for the job. Lofland telephoned RSI and left a message for
salesperson Mike Elmore, notifying him that RSI needed to sign
Crown’s indemnification agreement. Reynolds also called to inform
RSI of the purchase order number and the need to sign the
paperwork; he did not discuss on the phone the specifics of Crown’s
insurance requirements.
Lofland prepared a written, computer-generated contract to be
executed by Crown and RSI (the “Crown/RSI Contract”). The contract
specified that its effective date was April 23, 1992. Paragraph
1.5 of the Crown/RSI Contract required RSI to make Crown an
additional insured on RSI’s Policy (the “Additional Insured
Requirement”):
. . . CONTRACTOR shall at all times during the progress of the Work, and at CONTRACTOR’s own expense, on forms and with insurers acceptable to CROWN, carry and maintain the minimum insurance coverage which is described in Exhibit “A,” which Exhibit is attached to this AGREEMENT and made a part of this contract. CONTRACTOR shall furnish to CROWN the original or copies of the insurance certificates which evidence such insurance coverage. CROWN shall be added as an additional named insured in all such certificates, except insurance providing protection against worker’s or workmen’s compensation claims.
On the afternoon of April 23, 1992, RSI’s salesperson told
Leon Bryce, a superintendent for RSI, to go to the refinery the
3 next morning to sign Crown’s paperwork. On the morning of April
24, 1992, purchasing manager James Davis signed the Crown/RSI
Contract on behalf of Crown. Shortly before noon, Bryce arrived at
Crown’s offices to sign the Crown/RSI Contract as he had been
instructed. However, because the Crown representative with whom
Bryce was to meet had stepped out of the office, Bryce proceeded to
the RSI job site without signing the contract.
Thirty to forty-five minutes later, a fire occurred at the RSI
job site on Crown’s premises. Two members of the RSI crew were
injured (the “Accident”). Approximately three hours after the
Accident, Bryce returned to Crown’s offices and signed the
Crown/RSI Contract. Four months later, the two injured RSI
employees sued Crown in the 189th District Court of Harris County,
Texas. The lawsuit, styled Donald Ray Harrison and Robert Keith
Suits, Jr. v. Crown Central Petroleum Corp. And Cecil A. Buffalo,
Civil Action No. 92-035808, resulted in monetary loss to Crown.
Generali brought a declaratory action in the United States
District Court for the Southern District of Texas to determine the
legal rights of certain parties under the Generali/RSI Policy.
Crown filed a third-party complaint against Gow and Hanna Insurance
and others. Cigna intervened. Generali moved for summary judgment
against Crown,2 arguing that (1) RSI was not contractually bound to
2 This was an amended motion for summary judgment; Generali earlier filed a motion for summary judgment that was withdrawn and is not at issue in this appeal.
4 include Crown as an additional insured at the time of the Accident,
(2) the known-loss rule under Texas law precluded making insurance
coverage retroactive when the insured had knowledge of the incident
at the time coverage was created, and (3) the Accident was not an
“occurrence” as defined by the Generali/RSI Policy. The district
court entered a memorandum and order granting Generali’s motion for
summary judgment on April 4, 1995. The order was not appealable
because it did not dispose of Generali’s claims against the other
defendants, Crown’s third-party claims, or Cigna’s claims.
Therefore, Crown filed an unopposed motion for severance. On May
17, 1995, the district court signed an order severing Generali’s
claims against Crown into a new case and subsequently the district
court amended the order to renumber the severed case. Crown filed
a notice of appeal eight days after the severance. On September
25, 1995, the district court entered a Rule 58 separate-document
judgment; that same day, Crown filed a notice of appeal from the
Rule 58 judgment.3
II. ANALYSIS
We review the granting of summary judgment de novo, applying
the same criteria used by the district court in the first instance.
3 There was a question as to whether the severance order of May 19, 1995, could be treated as a Rule 58 judgment and, thus, whether Crown’s first notice of appeal was timely filed. Fed. R. Civ. P. 58. This question became moot after the district court entered the Rule 58 judgment on September 25, 1995, and Crown timely filed a second notice of appeal.
5 Norman v. Apache Corp., 19 F.3d 1017, 1021 (5th Cir. 1994);
Conkling v. Turner, 18 F.3d 1285, 1295 (5th Cir. 1994). First, we
consult the applicable law to ascertain the material factual
issues. King v. Chide, 974 F.2d 653, 655-56 (5th Cir. 1992). We
then review the evidence bearing on those issues, viewing the facts
and inferences to be drawn therefrom in the light most favorable to
the nonmoving party. Lemelle v. Universal Mfg. Corp., 18 F.3d
1268, 1272 (5th Cir. 1994); FDIC v. Dawson, 4 F.3d 1303, 1306 (5th
Cir. 1993), cert. denied, 114 S. Ct. 2673 (1994). Summary judgment
is proper "if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as
a matter of law." Fed. R. Civ. P. 56(c). Where the evidence is
such that a reasonable jury could return a verdict for the
nonmoving party, a dispute about a material fact is “genuine.”
Meadowbriar Home for Children, Inc. v. Gunn, 81 F.3d 521, 533 (5th
Cir. 1996)(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986); Amburgey v. Corhart Refractories Corp., Inc., 936 F.2d
805, 809 (5th Cir. 1991).
In the instant case, the district court concluded that, under
Texas law,4 the known-loss doctrine precluded coverage for Crown
under the Additional Insured Requirement of the Crown/RSI
4 The parties agree that Texas substantive law governs this dispute.
6 Contract.5 According to the known-loss doctrine, an attempt to
create insurance coverage retroactively for an accident that
predates the policy’s coverage is legally ineffective if either the
insurer or the insured knew of the accident at the time the
coverage is created. Burch v. Commonwealth County Mut. Ins. Co.,
450 S.W.2d 838, 840-41 (Tex. 1970). Because it is undisputed that
Bryce did not sign the Crown/RSI Contract on behalf of RSI until
after the Accident and because the Additional Insured Requirement
was not discussed explicitly before Bryce signed the contract, the
district court found that Crown did not become an additional
insured under the Generali/RSI Policy until after the Accident.
Crown argues, however, that RSI accepted Crown’s offer,
including the Additional Insured Requirement, on April 23, 1992,
when RSI agreed to sign Crown’s paperwork, or at the latest, when
RSI began servicing Crown’s tail gas recovery unit on April 24,
1992. Accordingly, Crown maintains that, because the complete
Crown/RSI Contract was formed and became effective before the
Accident, the known-loss doctrine is not implicated in the case at
bar. Based on the summary judgment evidence and Texas law, we find
that there is a fact question as to whether the Additional Insured
Requirement was in effect at the time the Accident occurred.
5 In its amended motion for summary judgment, Generali argued, inter alia, that the Accident did not meet the definition of “occurrence” under the terms of the Generali/RSI Policy because it was “expected or intended.” Although the district court acknowledged but did not address this argument, Generali reurges it on appeal.
7 A binding contract between two parties requires an offer and
acceptance. Nickerson v. E.I.L. Instruments, Inc., 874 S.W.2d 936,
939 (Tex. App.--Houston [1st Dist.] 1994, writ denied); see also
Crest Ridge Constr. Group, Inc. v. Newcourt Inc., 78 F.3d 146, 152
(5th Cir. 1996)(Benavides, J., specially concurring). There must
be a meeting of the minds as to all of the contract’s essential
terms. Smith v. Renz, 840 S.W.2d 702, 704 (Tex. App.-Corpus
Christi 1992, writ denied); Calvin V. Koltermann v. Underream
Piling Co., 563 S.W.2d 950, 956 (Tex. Civ. App.--San Antonio 1977,
writ ref’d n.r.e.); see also Mesa Petroleum Co. v. Coniglio, 629
F.2d 1022, 1026 (5th Cir. 1980). In order to accept the offer,
however, it is not necessary that a party know all of the terms.
Lone Star Steel Co. v. Scott, 759 S.W.2d 144, 152 (Tex. App.--
Texarkana 1988, writ denied) (citing Restatement (Second) of
Contracts § 23 cmt. e). A contract may be formed as long as the
parties know the substance, if not all the details, of the
agreement. Karl Rove & Co. v. Thornburgh, 39 F.3d 1273, 1293 n.87
(5th Cir. 1994).
The district court did not explicitly reject, and Generali
does not necessarily dispute, Crown’s contention that a contract
between Crown and RSI existed at the time of the Accident.6
6 In Generali’s reply to Crown and Cigna’s responses to its amended motion for summary judgment, Generali stated that it “does not necessarily disagree that RSI and Crown Central may have reached some agreement prior to the execution of the written Agreement by RSI.”
8 Generali’s primary argument appears to be that the Additional
Insured Requirement was an essential term of the Crown/RSI Contract
and, because this term was not specifically discussed or agreed
to--as all essential terms must be, the Crown/RSI Contract was not
effective until Bryce actually signed the instrument containing the
Additional Insured Requirement. Generali appears to argue
alternatively that, while a contract may have existed at the time
of the Accident, the Additional Insured Requirement was not a part
of that contract.7
According to Texas law, acceptance of an offer need not be in
writing. “[P]arties may enter into an oral contract even though
they are contemplating a formal writing.” Cothron Aviation, Inc.
v. Avco Corp., 843 S.W.2d 260, 263 (Tex. App.--Fort Worth 1992,
writ denied). Moreover, performance of the act which the offeree
was requested to promise to perform may constitute valid
acceptance. Thomas v. Reliance Ins. Co., 617 F.2d 122, 128 (5th
Cir. 1980); United Concrete Pipe Corp. v. Spin-Line Co., 430 S.W.2d
360, 364 (Tex. 1968); see also Restatement (Second) of Contracts §§
31-32. “The rule in Texas is that a contract in writing signed by
one party and expressly accepted orally by the other, o[r] the
terms thereof performed and the benefits thereof accepted, is in
law the written contract of the parties and binding on both.”
7 Generali concedes that RSI accepted an offer from Crown before the Accident. However, the contract so created cannot be the Crown/RSI Contract if the Additional Insured Requirement was an essential term of the Crown/RSI Contract as Generali suggests.
9 Turner, Collie & Braden v. Brookhollow, Inc., 624 S.W.2d 203, 213
(Tex. Civ. App.--Houston [1st Dist.] 1981), aff’d in part and rev’d
in part on other grounds, 642 S.W.2d 160 (Tex. 1982); Rubin v.
Polunsky, 366 S.W.2d 234, 236 (Tex. Civ. App.--San Antonio 1963,
writ ref’d n.r.e.).
Whether RSI accepted the entire Crown/RSI Contract before the
Accident is a jury question. Because “[p]arties rarely express a
direct intention as to the moment when they conceive themselves to
be bound by a contract[,] . . . intention is usually an inference
to be drawn by the fact finder from other facts and circumstances
in evidence.” Cothron 843 S.W.2d at 263-64. Crown maintains that
RSI was required to assent to all of the terms and conditions
contained in the Crown paperwork in order to secure the job
servicing Crown’s malfunctioning tail gas recovery unit. According
to Crown, therefore, as of April 23, 1992, the Additional Insured
Requirement was a part of its offer to RSI--a term without which
Crown would not have contracted with RSI. Stated differently, the
Additional Insured Requirement was a condition precedent to the
formation of the contract. Under Texas law, whether parties
intended to form a contract is a question for the jury. Crest
Ridge, 78 F.3d at 151. Thus, “to the extent that the [condition
precedent] concern[s] contract formation, it present[s] a jury
question.” Id. at 151 n.4; see Calvin, 563 S.W.2d at 956.
Reynolds testified that Crown and RSI “discussed the
particulars of the job” by phone on April 23, 1992. He stated that
10 Crown and RSI agreed to the location of the job, the specific work
to be done, the time the work was to start, the materials RSI
needed to bring with them, and a price estimate. We believe that
a reasonable jury could find that Crown and RSI did not consider
the Additional Insured Requirement an essential term of the
Crown/RSI Contract, but that Crown and RSI intended to be bound,
before the Accident occurred, by the entire Crown/RSI Contract,
including the Additional Insured Requirement. We believe a
reasonable jury could determine that RSI accepted Crown’s offer, on
April 23, 1992, orally--or, on April 24, 1992, by performance.
Lofland testified that he called Elmore at RSI and told the
receptionist “to have somebody come by to sign our indemnification
agreement.” Shank, executive vice president at RSI, testified that
customers of RSI routinely included insurance requirements and
hold-harmless clauses in their contracts. He indicated that the
Crown/RSI Contract was “a very typical agreement between RSI and
one of its customers.” RSI superintendent Bryce testified that it
was his understanding that RSI had agreed to undertake the job at
the Crown refinery. He stated that an RSI salesperson told him, on
April 23, 1992, that RSI was sending a crew to begin a job at Crown
the next day. There is no dispute that RSI sent a crew to the
Crown refinery and began performing the servicing required under
the Crown/RSI Contract before the Accident occurred.
From the evidence presented to the district court, a
reasonable fact finder could conclude that RSI routinely entered
11 into contracts with regular customers without knowing more about
their respective hold-harmless and insurance requirements than that
RSI must accept them. Testifying that, in order to work for a
customer, RSI typically was required to agree to the customer’s
terms, Shank added: “We agree to their terms and conditions, as
long as they fall within our guidelines.” He stated that he knew
of nothing in the Crown/RSI Contract that would have prevented RSI
from agreeing to it.
In its Memorandum and Order, the district court did not
address the issue of whether the Additional Insured Requirement was
an essential term of the Crown/RSI Contract or expressly resolve
the issue of whether RSI’s assent by phone to Crown’s offer, the
beginning of performance, or both, constituted acceptance. The
district court focused instead on one aspect of the parties’ course
of dealing. The court found that Crown’s prior course of dealing
was insufficient to establish that the Additional Insured
Requirement was a term of the Crown/RSI Contract before the
Accident:
The summary judgment evidence precludes Crown Central’s argument that because of its past course of dealing with RSI, RSI as a matter of law agreed to make Crown Central an additional insured even before RSI signed the agreement.
However, in order to defeat Generali’s motion for summary judgment,
it was not necessary for Crown to show that RSI, as a matter of
law, agreed to the Additional Insured Requirement before the
Accident. Rather, Crown was required to show only that a
12 reasonable jury could find that RSI agreed to the Additional
Insured Requirement before the Accident. Meadowbriar, 81 F.3d at
533.
Reiterating verbatim the language of Generali’s amended motion
for summary judgment, the district court noted that, of the jobs
performed by RSI in the dozen years preceding the Crown/RSI
Contract, “[o]nly four of the jobs involved agreements that
required RSI to make Crown Central an additional insured on its
[Generali] policy” while, “on at least four occasions[,]” the jobs
did not involve such a requirement. In light of the totality of
the summary judgment evidence, we do not find this evidence
determinative.
More telling, we believe, was the course of dealing with
regard to RSI’s acceptance of the terms and conditions included in
Crown’s written contracts. Crown produced summary judgment
evidence that RSI regularly agreed to Crown’s terms, sight unseen,
and signed Crown’s contracts without reading them. Shank testified
that, in the case of routine customers, RSI considered itself bound
by the terms and conditions of purchase orders received after the
commencement of work. He was asked whether RSI had a policy of
reviewing “the language contained in a purchase order before
agreeing to do work for the customer[:]”
A. Yes, we reviewed the language in a contract before we’d do work with them on a first-time basis.
Q. Then after that you would not typically say, “Well,
13 wait a minute, I have to read” --
A. I don’t read every purchase order on routine customers, no.
Q. Is there anything unusual, to your understanding, back in April of 1992 for a salesperson of RSI to agree to sign a customer’s paperwork in order to do the work?
A. For routine customers, it was not.
Davis testified that there was no misunderstanding or confusion
between Crown and RSI as to the nature of their contractual
relationship.8 Bryce testified that, on June 23, 1992, he was
instructed to go to Crown for a specific purpose--“[t]o sign a work
order for the work.”
Generali directs our attention to a number of contract cases
in support of its contention that Crown and RSI had not agreed to
the terms of the Crown/RSI Contract at the time of the Accident.
8 In a deposition taken on September 15, 1994, Davis was asked if RSI and Crown entered into a master service agreement in May 1992 to “avoid any confusion or misunderstandings in the future.”
A. There never was any confusion between us and RSI about a contract. The confusion is when there’s an incident and attorneys get involved. . . . .
Q. At the time you signed the blanket agreement with RSI in May of 1992, did you form an opinion at that particular time that there had been some misunderstandings or confusion about what legal obligations Crown had or that third-party contractors had?
A. Absolutely none between Crown and RSI. They had absolutely no problem with signing our agreement because I felt like it was their understanding. This was nothing more than what they had been doing all along.
14 In each of these cases, however, the existence of a contract, or
the existence or meaning of one or more of its terms, was disputed
by one of the purported parties to the contested contract. The
case sub judice involves nothing of the sort. In this case,
neither Crown or RSI contests the existence of the Crown/RSI
Contract; neither party disputes the meaning or the validity of any
of its terms, the Additional Insured Requirement included.
“[Texas] courts rightfully assume that the parties to a contract
are in the best position to know what was intended by the language
they employed, by their subsequent acts relative to it.” Droemer
v. Transit Mix Concrete, 457 S.W.2d 332, 335 (Tex. Civ. App.--
Corpus Christi 1970, no writ) (citation omitted).
We find that there was sufficient summary judgment evidence as
to when there was a meeting of the minds on the various terms of
the Crown/RSI Contract, essential and otherwise, to carry these
issues to the jury. Thus, summary judgment was improper on the
issue of whether Crown was an additional insured under the
Generali/RSI Policy when the Accident occurred. Because this issue
must be left to the jury, there is no need to consider the known-
loss issue or the “occurrence” issue raised by Generali.
III. CONCLUSION
For the foregoing reasons, the judgment of the district court
is REVERSED and the case is remanded for further proceedings
15 consistent with this opinion.