IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 94-20789 _____________________
BITUMINOUS CASUALTY CORPORATION,
Plaintiff-Appellant, Cross-Appellee,
versus
VACUUM TANKS, INC.,
Defendant-Appellee, Cross-Appellant.
_______________________________________________________
Appeals from the United States District Court for the Southern District of Texas _______________________________________________________
February 28, 1996
Before REAVLEY, HIGGINBOTHAM and BARKSDALE, Circuit Judges.
REAVLEY, Circuit Judge:
In this lost policy case, Bituminous Casualty Corporation
(“Bituminous”) appeals a judgment entered in favor of its
insured, Vacuum Tanks, Inc. (“VTI”). We modify the judgment so
as to deny the award of attorney’s fees to VTI, and otherwise
affirm.
BACKGROUND
VTI is in the business of transporting liquid waste
materials from industrial sites to disposal sites. It became the
subject of several pollution damage and cleanup claims relating
to dumping activities from 1959 through 1965. These claims (the “underlying claims”), were asserted in three separate lawsuits.
VTI incurred expenses in defending and settling these claims.
Bituminous, VTI’s insurer, initiated this Texas law
diversity suit, seeking a declaratory judgment that it had no
duty to defend or insure against the underlying claims. VTI
counterclaimed, seeking a declaratory judgment that Bituminous
had a duty to defend, recovery of its costs in defending the
underlying claims, and punitive damages for bad faith denial of
coverage. Neither party could find a copy of the annual
policies, although Bituminous found a copy of a “specimen policy”
for this period.
In 1991 the case was tried to the court and it ruled in
favor of VTI on the coverage issue, although it found no breach
of the duty of good faith and fair dealing. We reversed and
remanded for further proceedings in a prior appeal. Bituminous
Casualty Corp. v. Vacuum Tanks, Inc., 975 F.2d 1130 (5th Cir.
1992). We found that “VTI produced sufficient evidence to prove
that insurance policies had existed during the relevant time
period,” id. at 1131, but that there was insufficient proof of
the actual terms of the policy, or whether the waste disposal
claims were covered by the policies, id. at 1132-33. We also
addressed attorney's fees, as discussed further below.
After remand the district court conducted further trial
proceedings. The court again found that Bituminous had issued
comprehensive general liability (CGL) policies to VTI which
covered the underlying claims. The court awarded VTI certain
2 costs incurred in defending the underlying claims, prejudgment
interest and attorney's fees.
In the second appeal, Bituminous does not dispute the
conclusion of our prior panel that it had issued policies during
the period in question, but again argues that VTI failed to carry
its burden of proving “the terms of the insurance contract
between the parties in order to establish coverage under the
policy.” Id. at 1132.
DISCUSSION
A. Proof of Terms of Coverage
As in the first trial, the district court concluded that the
claims asserted in the underlying actions were covered by the
Bituminous policies. The court found that the policies actually
issued to VTI had the same terms as those in the specimen policy
found in Bituminous’ VTI file. This finding by the district
court is a finding of fact, which we will not disturb unless
clearly erroneous. Fiberlok, Inc. v. LMS Enters., Inc., 976 F.2d
958, 962 (5th Cir. 1992).
The district court did not clearly err in finding that the
terms of the policies matched those of the specimen policy.
VTI’s evidence in support of this finding included the following.
VTI again offered the specimen policy, which was written for use
in Texas. Unlike at the first trial, VTI offered the policy for
all purposes, rather than limiting its offer to the issue of good
faith. See Bituminous, 975 F.2d at 1132-33.
3 An assistant director from the Texas Department of
Insurance, Charles DuPertuis, testified that the Texas Board of
Insurance mandated particular forms for insurance policies for
the period in question, and that as a licensed insurer Bituminous
was required to conform to the mandatory forms. The Board issued
bulletins setting out the required forms. DuPertuis further
testified that there were two types of comprehensive policies
allowed: a comprehensive general auto liability policy and a
comprehensive general liability policy. The only difference
between the two concerns automobile coverage not relevant here.
DuPertuis testified that the specimen policy produced from
Bituminous's files conformed exactly to the mandatory
requirements of the bulletins, which were also introduced at the
second trial. He testified that a licensed insurer could deviate
from the mandatory terms of the approved forms and endorsements
only by obtaining Board approval of its own endorsement for a
particular named insured.
VTI’s independent insurance agent told Bituminous that the
policies issued to VTI “were the standard comprehensive general
policies with the normal standard endorsements.” Kemp Martin, an
agent who worked for the successor to the agency employing VTI’s
original agent, testified to the same effect. Martin also
testified that none of the standard approved endorsements at the
time, such as endorsements for dog liability and professional
services, would have been applicable to this case. VTI offered
as exhibits what it claimed were all the approved endorsements
4 for this period. They deal with coverage issues not relevant
here such as endorsements for engineers, architects, etc. None
of the endorsements would preclude coverage here. A Bituminous
internal memorandum concedes that during the period in question
policies “had no pollution exclusion wordage.”
Evidence was offered that Bituminous knew the nature of
VTI's business and that all operations of the insured were
covered by the policies. VTI produced Railroad Commission
records and other records showing that VTI had comprehensive
general liability insurance during the period in question. Jacque
DeCoux, the president of VTI and a lawyer, testified that in his
opinion, based on his knowledge of the company and the documents
he had reviewed, VTI had comprehensive liability coverage with
only one endorsement -- a $250 deductible per claim against
property damage.
We noted in the prior panel opinion that in lost policy
cases the terms of the policy can be established by secondary
evidence. Bituminous, 975 F.2d at 1132. Based on the evidence
presented, the district court did not clearly err in concluding
that during the time period in issue Texas was a "standard
policy" state, and that all CGL policies were required to contain
the terms and provisions in the state bulletins introduced by
VTI, as mirrored by the specimen policy.
Bituminous complains that the district court erred in
allowing the testimony of Mr. DeCoux because he was not an
insurance expert and for other reasons. DeCoux had served as the
5 president of VTI for many years. To the extent that he testified
that VTI maintained continuous liability coverage with a certain
deductible, his testimony was based on his knowledge of the
company and his review of relevant records. To the extent that
he testified that the terms of the missing policies matched those
of the specimen policy, his testimony was cumulative of other
evidence supporting the same conclusion. “Under [FED. R. EVID.]
103(a), appellate courts should reverse on the basis of erroneous
evidentiary rulings only if a party's substantial rights are
affected. Moreover, the party asserting error based on erroneous
rulings bears the burden of proving that the error was harmful."
Carroll v. Morgan, 17 F.3d 787, 790 (5th Cir. 1994) (citation
omitted). Bituminous fails to carry its burden of showing that
the testimony affected its substantial rights, even if it was
erroneously admitted.
B. Coverage Under the Specimen Policy
Bituminous argues in the alternative that even if the terms
of the policies issued to VTI matched those found in the specimen
policy, Bituminous had no duty to defend.
The specimen policy covers “all sums which the insured shall
become legally obligated to pay as damages because of bodily
injury, sickness or disease . . . sustained by any person and
caused by accident.” It also covers “all sums which the insured
shall become legally obligated to pay as damages because of
injury to or destruction of property, including the loss of use
thereof, caused by accident.”
6 1. Injury to Property
Bituminous first argues that the underlying claims do not
constitute “injury to or destruction of property.” In
particular, it argues that the “CERCLA claims” do not fall within
the policy coverage for property damage.
Under Texas law, the duty to defend is determined by the
terms of the policy and the allegations of the underlying suit
without regard to their truth of falsity. Gulf Chem. &
Metallurgical Corp. v. Associated Metals & Minerals Corp., 1 F.3d
365, 369 (5th Cir. 1993). The duty to defend “is owed by each and
every insurer whose policy is potentially implicated” and
“remains absolute until the insurer proves that its policy covers
no remaining claims.” Id. at 372. In construing the allegations
of the underlying suit, “courts liberally interpret the meaning
of those allegations in the insured’s favor.” Pro-Tech Coatings,
Inc. v. Union Standard Ins. Co., 897 S.W.2d 885, 887 (Tex. App.--
Dallas 1995, no writ). “Any doubt as to whether the complaint
states a covered cause of action is resolved in the insured’s
favor.” Cullen/Frost Bank of Dallas v. Commonwealth Lloyd’s Ins.
Co., 852 S.W.2d 252, 255 (Tex. App.--Dallas 1993), writ denied,
889 S.W.2d 266 (Tex. 1994). Likewise, in construing the language
of the policy, “when the language chosen is susceptible of more
than one construction, such policies should be construed strictly
against the insurer and liberally in favor of the insured.”
Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 666 (Tex. 1987).
7 Complaints in the three underlying suits -- the Alston,
Cummins, and Motco suits -- are a part of the record. Applying
the Texas rules set out above, we can without hesitation conclude
that the policy imposed a duty to defend VTI in the Alston1 and
Cummins2 proceedings.
The Motco suit was brought by the federal government against
VTI and other defendants, exclusively under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980
(CERCLA), 42 U.S.C. § 9607(a).3 It sought recovery of costs
incurred by the government in responding to the releases or
threatened releases of hazardous substances at the “Motco”
facility or site. Bituminous argues that the cleanup costs
The Alston complaint alleged that VTI was one of numerous defendants that disposed of hazardous wastes at the “Sikes” and “French Limited” sites. In the complaint the plaintiffs allege that: defendants have “caused injury to the property of the Plaintiffs, and to the persons of those living on the property” (¶ 15); “Defendants caused various harmful substances . . . to come in contact with the persons of Plaintiffs. Said contact was offensive and caused physical harm, including pain.” (¶ 30); “The Defendants are liable for personal injury, wrongful death, and injury, damage or loss to real estate caused by the defective and unsafe condition of the real property of the sites . . . .” (¶ 34); “As a result of the acts of the Defendants, the Plaintiffs herein have suffered injuries to both their persons and property,” and the damages include cancer, birth defects, and other ailments (¶ 40).
The complaint in Cummins alleges that VTI dumped hazardous substances on the “Bailey” and “Cummins” tracts. The plaintiffs’ alleged that damages include permanent diminution in the value of their property in the amount of $30 million, and that “additional damages will include further contamination of Plaintiffs’ property and continued exposure of the public to the harmful, even fatal, effects of the hazardous substances stored and disposed at the Bailey Waste Disposal Site.”
The Cummins suit also asserted claims under CERCLA.
8 incurred by the government, recovery of which was sought against
the Motco defendants under CERCLA, are not for physical injury to
or destruction of property, but are economic injury. The policy
covers “all sums which the insured shall become legally obligated
to pay as damages because of injury to or destruction of property
. . . .” Under the Texas rule that uncertainties as to insurance
coverage set out in the policy should be decided in favor of the
insured, we conclude that government cleanup costs, incurred in
responding to the dumping of hazardous wastes on property, and
imposed on the insured by CERCLA, are covered by this language in
the policy. We find that such a reading is a reasonable and
straightforward interpretation of the clause in issue. Most, but
not all, federal courts construing the law of various states
agree. See Aetna Casualty and Sur. Co. v. Pintlar Corp., 948
F.2d 1507, 1511-15 (9th Cir. 1991); Independent Petrochemical
Corp. v. Aetna Casualty and Sur. Co., 944 F.2d 940, 946-47 (D.C.
Cir. 1991), cert. denied, 503 U.S. 1011 (1992); New Castle County
v. Hartford Accident and Indem. Co., 933 F.2d 1162, 1184-1191 (3d
Cir. 1991); Avondale Indus., Inc. v. Travelers Indem. Co., 887
F.2d 1200, 1206-07 (2d Cir. 1989), cert. denied, 496 U.S. 906
(1990); Dayton Indep. School Dist. v. National Gypsum Co., 682 F.
Supp. 1403, 1411 n.24(E.D. Tex. 1988) (“Even in cases involving
coverage for cleanup costs incurred by a policyholder in
complying with governmental directives in environmental matters,
the weight of authority and better reasoned decisions hold that
those costs are ‘damages.’”), reversed on other grounds, 896 F.2d
9 865 (5th Cir. 1990); Intel Corp. v. Hartford Accident and Indem.
Co., 692 F. Supp. 1171,1188 (N.D. Cal. 1988) (“The clear bulk of
authority has held that cleanup costs are damages within the
scope of CGL policy coverage.”), reversed in part on other
grounds, 952 F.2d 1551 (9th Cir. 1991); but see Continental Ins.
Cos. v. Northeastern Pharmaceutical & Chemical Co., 842 F.2d 977,
987 (8th Cir.) (en banc), cert. denied, 488 U.S. 821 (1988);
Maryland Cas. Co. v. Armco, Inc., 822 F.2d 1348, 1352 (4th Cir.
1987), cert. denied, 484 U.S. 1008 (1988).
2. Accident
Bituminous also argues that there was no coverage because
there was no “accident,” since VTI’s transportation of hazardous
materials was voluntary and intentional. We disagree, since we
have held that under Texas law the focus is not on whether the
insured’s conduct or actions were intentional, but on whether the
insured intended the damages or injuries which are the subject of
the underlying claims. As we explained in Meridian Oil
Production Co. v. Hartford Accident and Indem. Co., 27 F.3d 150
(5th Cir. 1994):
Texas courts afford coverage for fortuitous damages but deny coverage when damages are the natural and probable consequence of intentional conduct. Regardless of whether the policies involved are worded to cover “accidents” or “occurrences,” all offer minor variations of the same essential concept; coverage does not exist for inevitable results which predictably and necessarily emanate from deliberate actions.
Id. at 152 (footnote omitted, emphasis added). We held that
there was no coverage in Meridian because “the damages to the
Marshalls’ land were not unexpected from the standpoint of the
10 insured.” Id. (emphasis added). See also Gulf Chemical, 1 F.3d
at 370 (holding that relevant question in applying “expected or
intended” exclusion is whether the injury which forms the basis
of the claim is expected or intended by the insured); Hartford
Casualty Co. v. Cruse, 938 F.2d 601, 604-05 (5th Cir. 1991)
(although insured’s performance of its services might not be
considered an accident, CGL policy covered claims for defective
work, since “an occurrence takes place where the resulting injury
or damage was unexpected, regardless of whether the
policyholder’s acts were intentional.”) (citation omitted,
emphasis added). The three underlying suits in our case were not
based on allegations that VTI intended or expected the alleged
personal injuries, diminution in property values, migration of
contaminants, cleanup costs, and other alleged injuries and
damages.
Union Pac. Resources Co. v. Aetna Casualty & Sur. Co., 894
S.W.2d 401 (Tex. App.--Fort Worth 1994, writ denied), is also
instructive. There, the plaintiff-insured had a CGL policy with
the defendant-insurer. The insurer claimed that the policy did
not cover the insured’s costs of settling a CERCLA cleanup
action. It argued that the insured’s “liability for cleanup
under CERCLA was its dumping of wastes at the landfill, and
because that dumping was intentional, it was not an accident.”
Id. at 403. The court rejected this argument, reasoning that
“[t]he pertinent ‘occurrence’ is the migration or emanation of
wastes from the point of deposit that results in property damage.
11 The relevant inquiry . . . is whether the policy holder expected
the landfill to discharge the waste into the surrounding
environment.” Id. at 404. By a similar analysis, the three
underlying suits in our case were based at least in part on the
migration of pollutants to the surrounding environment. For
example, the Alston complaint alleges that the dumped hazardous
wastes had seeped into ground water, washed out of the dump site
onto the property of plaintiffs, and vaporized into the air, and
that plaintiffs had consumed the chemicals through absorption by
the skin, ingestion, and breathing contaminated air. The Cummins
complaint alleged that defendants dumped toxic chemicals at the
Bailey site, and that these chemicals had migrated to the Cummins
tract which is owned by plaintiffs. In the Motco complaint the
government alleged that its cleanup response was undertaken based
on the release or substantial threat of release of hazardous
substances into the environment, and that “hazardous substances
and other pollutants and contaminants have migrated out of the
[Motco site] and into the environment by overflowing the dikes,
inundation of floodwater, and by migrating through the soil.”
3. Policy Period
Bituminous next contends that VTI failed to prove that the
claims occurred during the 1959-1965 period of coverage. It
contends that under Texas law an accident occurs not when the
wrongful act was committed but when the complaining party was
damaged. Assuming that Bituminous is right on the law, and
construing the allegations of the underlying complaints liberally
12 in favor of the insured, as we must, all of the underlying suits
stated potential claims within the period of coverage, thus
imposing on Bituminous its duty to defend.4
4. Notice
Bituminous argues that it had no duty to defend because VTI
failed to comply with the notice provisions of the policy. The
policy provides that “[i]f claim is made or suit is brought
against the insured, the insured shall immediately forward to the
company every demand, notice, summons or other process received
by him or his representative,” and that “[n]o action shall lie
against the company unless, as a condition precedent thereto, the
insured shall have fully complied with all the terms of this
policy . . . .” Not only must we construe any ambiguity in
these provisions in favor of VTI, but because they involve “an
The Motco complaint alleges that the Motco site was operated as a recycling or waste disposal facility from 1959 to 1968, that VTI disposed of hazardous substances at the site “at relevant times,” that hazardous substances had migrated off the site “at various times,” and that there have been and continue to be releases of such substances into the environment. The Cummins suit alleges that defendants used the Bailey tract as a dump during the 1950's and 1960's, and also dumped wastes on the Cummins tract “in such a manner as to produce hazardous substances which are damaging to the property owned by Plaintiffs.” The complaint makes no further attempt to specify the dates that the dumped chemicals migrated from the Bailey tract to the Cummins tract and otherwise diminished the value of plaintiffs’ property or caused the other alleged damages. The Alston complaint alleges that the plaintiffs were subjected to hazardous chemicals and carcinogens dumped by defendants between the late 1950's and the mid 1970's. Plaintiffs allege that floods at one of the sites between the 1960's and mid 1980's caused chemicals to come in contact with plaintiffs’ persons and property, and that flooding at both sites contaminated the property of plaintiffs “on many occasions” since the sites began to be used for hazardous waste disposal. Plaintiffs allege injuries to person and property “over a period of time.”
13 exception or limitation on . . . liability under the policy, an
even more stringent construction is required.” Barnett, 723
S.W.2d at 666. “[W]e must adopt the construction of an
exclusionary clause urged by the insured as long as that
construction is not itself unreasonable, even if the construction
urged by the insurer appears to be more reasonable or a more
accurate reflection of the parties’ intent.” Glover v. National
Ins. Underwriters, 545 S.W.2d 755, 761 (Tex. 1977).
Bituminous argues in its brief that “VTI never sent
Bituminous any suit papers for any of the lawsuits identified in
Plaintiff’s Exhibits 1 and 7.” The suits identified in Exhibits
1 and 7 are the Motco and Cummins suits.5 Exhibit 1 is an August
1, 1986 letter from Mr. DeCoux to Bituminous and other insurers
requesting a defense of the two suits. It pointed out that on
June 30, 1986, Bituminous had been served in the Cummins suit,
and that it had been sued but not yet served in the Motco suit.
As to each suit, the letter identified the cause number, court,
parties, waste disposal site in issue, alleged time periods of
dumping, alleged damages, and other matters pleaded. In
responding to the letter, Bituminous did not request copies of
the suit papers, but instead wrote DeCoux that it could not find
copies of the policies.
Exhibit 7, a March 31, 1987 letter from Mr. DeCoux to Bituminous, discusses the Sikes pit, but VTI was not sued in connection with that site until it was joined in the Alston suit in 1991.
14 Texas courts have held that a failure to forward suit papers
as required by an insurance policy relieves the insurer of its
obligations under the policy.6 However, in analogous situations,
this court and Texas courts have held that substantial compliance
with an insurance policy notice requirement will suffice,7 and
that the insurer can waive the notice requirement through its
action8 or inaction.9 We hold that VTI substantially complied
with the notice requirement by apprising Bituminous in writing of
the essential allegations of the underlying suits, and that
Bituminous waived further compliance with the notice requirement
by failing to request that the suit papers themselves be
Weaver v. Hartford Accident and Indem. Co., 570 S.W.2d 367 (Tex. 1978); Members Mut. Ins. Co. v. Cutaia, 476 S.W.2d 278 (Tex. 1972). We note that effective May 1, 1973, the Texas State Board of Insurance requires that for general liability policies, the insurer must be prejudiced by the insured’s failure to forward suit papers before such failure will bar the insurer’s liability under the policy. American States Ins. Co. v. Hanson Indus., 873 F. Supp. 17, 27 (S.D. Tex. 1995); Chiles v. Chubb Lloyds Ins. Co., 858 S.W.2d 633, 635 (Tex. App.--Houston [1st Dist.] 1993, writ denied). However, we apply the law in effect at the time the policy was issued. American States, 873 F. Supp. at 28; Trevino v. Allstate Ins. Co., 651 S.W.2d 8, 11 n.1 (Tex. App.--Dallas 1983, writ ref’d n.r.e.).
For example, courts have held that substantial compliance with policy requirements that an insured provide proof of loss to the insured is all that is required. First Nat’l Bank of Bowie v. Fidelity & Casualty Co. of New York, 634 F.2d 1000, 1005 (5th Cir. 1981) (applying Texas law); Henry v. Aetna Casualty and Sur. Co., 633 S.W.2d 583, 584 (Tex. App.--Texarkana 1982, writ ref’d n.r.e.); Dairyland County Mut. Ins. Co. v. Keys, 568 S.W.2d 457, 459 (Tex. Civ. App.--Tyler 1978, writ ref’d n.r.e.).
Womack v. Allstate Ins. Co., 296 S.W.2d 233, 237 (Tex. 1956) (holding that insurer waived policy provisions requiring notice of suit and forwarding of process).
Henry, 633 S.W.2d at 584; Dairyland, 568 S.W.2d at 459.
15 forwarded or otherwise objecting to the adequacy of the notice
provided by VTI.
Bituminous separately argues that VTI did not give timely
notice of the Motco “claim,” because “VTI knew about [the Motco
claim] as early as 1982.” The evidence indicates that for years
the government was careful, in the words of DeCoux, “not to
accuse anybody of anything,” and instead sought only information,
but that VTI eventually knew that it faced a potential liability
with respect to the Motco site. However, there was no actual
claim made until the government filed suit in 1986, shortly
before the August 1, 1986 notice letter discussed above. In any
event, construing the notice provision in the policy strictly in
favor of the insured, there was no “demand, notice, summons or
other process received” on the claim that VTI could “forward to
the company” until it was served with the Motco suit in 1986.
5. Voluntary Payment
The policy provides that “[t]he insured shall not, except at
his own cost, voluntarily make any payment. . . .” Bituminous
argues that VTI incurred substantial attorney’s fees and had
arranged for settling the Motco claim before giving notice to
Bituminous. VTI points out, and Bituminous does not dispute,
that the district court did not award these amounts, and only
awarded costs incurred by VTI after it sent the notice letter.
We see no merit to this argument.
16 C. Attorney’s Fees
Bituminous contends that the district court erred in
awarding attorney’s fees to VTI. We agree. We held in the prior
appeal that if, on remand, Bituminous could establish “that it
falls within the provisions of [Tex. Civ. Prac. & Rem. Code]
section 38.006, it is exempt from the payment of attorney's
fees." Bituminous, 975 F.2d at 1133-34. Section 38.006 exempts
contracts issued by an insurer subject to the Unfair Claim
Settlement Practices Act. That Act covers stock and casualty
companies. Tex. Ins. Code art. 21.21-2 §7. At the second trial
Bituminous proved that it was a stock property casualty company.
VTI argues that Texas law allows an insured to recover
attorney’s fees in this case; in effect VTI argues that we should
not follow our prior panel opinion. However, the prior panel
decision operates not only as the law of the case in this second
appeal, but, as we recently held in Lafarge Corp. v. Hartford
Casualty Ins. Co., 61 F.3d 389, 403 (5th Cir. 1995), it must be
followed by this court absent a subsequent state decision or
statutory amendment which makes the prior decision clearly wrong.
VTI cites us to a dissenting opinion in Union Bankers Ins. Co. v.
Shelton, 889 S.W.2d 278 (Tex. 1994), which states that attorney's
fees are generally available against insurers who are sued for
failing to pay claims. This statement, however, is dicta in a
dissenting opinion in which only three judges joined. The
opinion cites as authority numerous lower court decisions,
including five which we cited in our prior opinion as not
17 following the prevailing view in Texas. Shelton, 889 S.W.2d at
286 (Cornyn, J., dissenting); Bituminous, 975 F.2d at 1133 n. 4.
Correct or not, we are bound by our prior panel decision.
D. Prejudgment Interest
Bituminous argues that there is no federal or state statute
which allowed the district court to award prejudgment interest in
this case. In this diversity case state law governs the award of
prejudgment interest. FSLIC v. Texas Real Estate Counselors,
Inc., 955 F.2d 261, 270 (5th Cir. 1992). In the absence of a
statutory right to prejudgment interest, Texas law allows for an
award of equitable prejudgment interest under Cavnar v. Quality
Control Parking, Inc., 696 S.W.2d 549 (Tex. 1985). As we have
previously explained, equitable prejudgment interest is awarded
“as a matter of course when the trier of fact finds that damages
accrued before the time of judgment," Concorde Limousines, Inc.
v. Maloney Coachbuilders, Inc., 835 F.2d 541, 549 (5th Cir.1987),
and such an award "is not generally a matter for the trial
court's discretion," Executone Information Sys., Inc. v. Davis,
26 F.3d 1314, 1330 (5th Cir. 1994). “[U]nder Texas law an
equitable award of prejudgment interest should be granted to a
prevailing plaintiff in all but exceptional circumstances.”
American Int’l Trading Corp. v. Petroleos Mexicanos, 835 F.2d
536, 541 (5th Cir. 1987). The district court awarded prejudgment
interest under the rules for its calculation set out in Cavnar.
We see no error here.
18 The judgment is modified to exclude the award of attorney’s
fees. Otherwise the judgment is affirmed.
AFFIRMED as MODIFIED.