Brown, Denise and Greg v. American Western Home Insurance Company

• Court: Court of Appeals of Texas
• Decided: January 3, 2013
• Docket: 05-11-00561-CV
• Status: Published

Opinion

Affirm; Opinion Filed Jaiiuary 3, 2013.

In ‘Ihe (!tiiirt uf 54ipimh iftIi Jiitrirt nf ias at OaI1a No. 05-1 I-00561-CV

l)KNISE BROWN AND GREG BROWN, Appellant

V.

AMERICAN WESTERN HOME INSURANCE COMPANY, Appellee

On Appeal from the County Court at Law No. 3 Dallas County, Texas Trial Court Cause No. CC-10-02584-C-A

MEMORANDUM OPINION Before Justices Moseley, Fillmore, and Myers Opinion By Justice Myers

Appellants Denise and Greg Brown appeal from a summary judgment granted in favor of

appellee American Western Home Insurance Company. In only a single issue, the Browns contend

the trial court erred by granting summary judgment. We affirm.

cKGRouND ANE) PRocEDURAl HIsToRY 1 B

Denise and Greg Brown own a condominium unit located at 4439 Travis, Dallas, Texas.

Like the other condominium unit owners, the Browns are members of the “Forty-Four Hundred

Condominium Residents’ Association,” and subject to its bylaws. Under the association’s bylaws,

its elected board of directors is responsible for administering the condominium property, maintaining

the common elements, approving the annual budget, and establishing or collecting all authorized assessments.

On June 5. 2009. American Western I lome Insurance Company issued a commercial property

insurance policy to the “4400 Residents Association. co Knobler Property Management’’ [‘or the

premises at 4439 lravn.’The named insured tinder the policy, which covered the period of’ May I 5.

200Q through Max 15. 201 0. was the “4400 Residents Association.’’ On April 19, 2010, the Browns

filed suit against the residents’ association, contending they purchased the property located at 4439

Travis, Unit 101 A, I)allas, Texas, that the 4400 residents’ association was required to maintain

“certain portions of the same,” and that the association “failed to timely or properly maintain the

property,” thereby causing damage to the Browns.

On November 4, 2010, the residents’ association eounterclaimed for the Browns’ alleged

violations of the associations declarations, bylaws, and regulations. Specifically, the association

alleged:

Plainti ITs have made structural improvements to their residence without prior written consent. lurther, Plaintiffs have made significant alterations to the exterior condition of the building as to color, appearance and structural integrity, including removal of tiles, terrace flashing, stucco, exterior door moldings and window elements, all without prior written consent, While some of these items have been replaced, they have not kept with the harmony of the external design of the building and have been poorly replaced and may lead to damage and deterioration of the building.

The association’s pleading indicated it was based on the Browns’ breach of the restrictive covenants

pertaining to the property, and the counterclaim was for this alleged breach. The association alleged

no tort claims against the F3rowns. The Browns later added Kathy Puckitt and Nancy 1-lathorn Sheets

as defendants based on their roles as association board members, alleging they failed to maintain the

condominium property, failed to exercise valid business judgment to matters of managing the

association and the common areas of the condominium property, and failed to take legal action

against American Western for its alleged failure and refusal to honor the insurance policy issued to the residents’ association.

The Browns joined American Western to their suit against the association on September 2 1,

2010 alleging c iuscs of action against it fot (I) nLgligLncc and ncgligcnt misi cprcscntation, (2)

violations of the Texas Insurance Code and Texas Deceptive Trade Practices Act, and (3) breach of

contract. These actions were premised on the association’s purchase of an American Western policy

of insurance coverage for the association and American Western’s alleged failure and refusal, as an

insurer for the association, to honor that policy. The Browns’ most recent pleading, their seventh

amended petition, alleged the following causes of action against American Western: (1) negligence

and negligent misrepresentation; (2) breach of contract; (3) violations of the Texas Insurance Code

and the Texas Deceptive Trade Practices Act; (4) breach of the duty of good faith and fair dealing;

(5) ‘ambiguity’cstoppel (6) ‘waivei/estoppel’ and (7) knowmg and intentional conduct in

violation of the insurance code and the DTPA. All of these claims were pleaded as direct causes of

action by the Browns against American Western.

American Western filed a traditional motion for summary judgment on February 22, 2011.

The motion argued, among other things, that American Western was entitled to summary judgment

because the “[p]laintiffs are not an insured under the policy and the Association’s counterclaim does

not qualify as an occurrence” under the policy, On March 25th of that same year, the trial court

signed an order granting American Western’s motion for summaryjudgment. American Western

moved to sever the adjudicated claims, so the summary judgment would become final. On April 11,

2011, the trial court granted the motion, severing the Browns’ claims against American Western into

a separate suit. The Browns subsequently filed this appeal.

The cou’s docket sheet contains an entry from April 7.2011. stating that the trial court granted American Westem’s motion for traditional summary judgment.

—3— I) isc u ss i O

The univ questions before us are whether the Browns vv crc “named insureds” tinder the policy

and whether American Western had a duty to detend them. In their only issue, the Browns contend

the trial court erred by granting summary judgment because they were “named insureds” under the

policy and American Western failed to prove, as a matter of law, that it did not have a duty to defend

the Browns against the association’s counterclaim. American Western responds that, even if the

Browns were insureds under the policy, the duty to defend was not triggered because the

association’s counterclaim did not qualify as an “occurrence” under the terms of the policy. We

agree.

We review de novo the trial court’s summary judgment. Mid—Cejiluri’ ins. Co. of Tex. v.

Adeinaj, 243 S.W.3d 618, 621 (Tex. 2007): Bees/cr v. Hydrocarbon Separation, Inc., 358 S.W.3d

415, 418 (Tex. App. - Dallas 2012. no pet.). When reviewing a traditional suinmaiy judgment

granted in fhvor of the delendant, we determine whether the defendant conclusively disproved at

least one element of the plaintiffs claim or conclusively proved every element of an affirmative

defense. Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997). A matter is conclusively

established if ordinary minds cannot differ as to the conclusion to be drawn from the evidence.

Beesley, 358 S.W.3d at 418. The movant must show there is no genuine issue of material fact and

that it is entitled to judgment as a matter of law. TEX. R. Civ. P. 166a(c); Svsco Food Servs., Inc.

v. Trapnell. 890 S.W.2d 796, 800 (Tex. 1994). In deciding whether a disputed material fact issue

exists precluding summary judgment, we must take evidence favorable to the non-movant as true,

and we must indulge every reasonable inference and resolve any doubts in favor of the non-movant.

Svsco Food Servs., 890 S.W.2d at 800. When, as in this case, the court’s order granting summary

judgment does not specify the basis for the ruling, we will affirm the summary judgment if any of the theories presented to the trial court are meritonous. Pro rident Life & Accident Ins. Co. v, Knott,

128 S.W.3d 211, 216 (Tex. 2003).

An insurer’s duty to defend arises when a third party sues the insured on allegations that

potentially state a cause of action within the terms of the policy, without regard to the truth or falsity

of the allegations. Zurich Am. Ins, Co. v. Nokia, inc., 268 S.W.3d 487, 491 (Tex. 2008); Gehan

Homes, Ltd. v. Employers Mat. Cas. Co., 146 S.W.3d 833, 838 (Tex. App.—Dallas 2004, pet.

denied). The duty to defend is determined under the “eight corners rule,” that is, by examining the

allegations in the underlying pleadings and the language of the insurance policy. Nokia, 268 S.W.3d

at 491; Ge/ian Homes, 146 S.W.3d at 838. We consider the allegations in light of the policy

provisions, giving the allegations in the petition a liberal interpretation in favor of the insured and

resolving all doubts in favor of the insured. Nokia, 268 S.W.3d at 491; Gehan Homes, 146 S.W.3d

at 838. If the pleadings do not allege facts within the scope of the policy’s coverage, an insurer does

not have a duty to defend. Am. Physicians Ins. Evch. v. Garcia, 876 S.W.2d 842, 848 (Tex. 1994).

If the pleadings do not state facts sufficient to show that the cause of action is clearly covered or not

covered, “the general rule is that the insurer is obligated to defend if there is, potentially, a case under

the complaint within the coverage of the policy.” Nokia, 268 S.W.3d at 491 (quoting Heyden

Newport Chem. Coip. v. S. Geti. Ins. C’o.. 387 S.W.2d 22, 26 (Tex. 1965)); Gehan homes, 146

S.W.3d at 838.

The relevant provision of the policy’s commercial general liability coverage provided that

“[t]his insurance applies to ‘bodily injury’ and ‘property damage’ only if” it “is caused by an

‘occurrence’ that takes place in the ‘coverage territory,” and “[t]he ‘bodily injury’ or ‘property

damage’ occurs during the policy period.” The policy defined an “occurrence” as “an accident,

including continuous or repeated exposure to substantially the same general harmful conditions.” ( overage did not apply to “‘bodily injury’ or propertv damage expecied or intended tmm the

standpoint of the insured.” [The policy also did not apply to “property damage’ to property that the

insured owns, rents, or occupies, or the part of any property that must be restored, repaired, or

replaced because the insured’s work on it was incorrectly performed. Each individual condominium

unit owner was defined as an insured under the policy, “but only with respect to liability arismu out

ofthe ownership. maintenance or repair ut that portion ot the premises, which is not reserved for that

unit owner’s exclusive use or occupancy.”

Although the term “accident” was not defined in the policy, it should be given its generally

accepted or commonly understood meaning. See Lamar flumes. Inc. i. Mid—Continent Cas. Co., 242

S.W.3d 1, 6 (Tex. 2007). “An accident is generally understood to he a fortuitous, unexpected, and

unintended event.” Id. Furthermore, where acts are voluntary and intentional and the injuries are

the natural result of the act, the result was not caused by an accident even though it may have been

unexpected. unforeseen, and unintended. See Wessinger v. Fire his. Exeh., 949 S.W.2d 834, 838

(Tex. App.- Dallas 1997, no writ); see also Lamar f lames. 242 S.W.3d at $ (“We have further said

that an intentional tort is not an accident and thus not an occurrence regardless of whether the effect

was unintended or unexpected”).

American Western argues the Browns were not insureds under the policy for purposes of the

condominium residents’ association’s counterclaim because the counterclaim was not based on any

damage to the condominium property’s “common elements.” The counterclaim arose, according to

American Western, from that portion of the premises reserved for the Browns’ “exclusive use or

occupancy”—their own patio and residence. The Browns insist they were charged with liability as

to the common elements, thereby triggering the duty to defend. We need not resolve this issue.

Assuming, without deciding, that the Browns were insureds under the policy, American Western did not have a duty to defend them because the associations counterclaim did not qualil’v as an

“occurrence under the terms of the policy.

The l3rowns filed their lawsuit against the association in 20 I 0, contending it failed to timely

or properly maintain the property. The association’s counterclaim against the Browns alleged they

made certain alterations, repairs. and improvements to their residence without prior written consent.

in violation of the association’s declarations, bylaws, and regulations. The counterclaim was

premised on the Browns’ intentional violation of the association’s declarations, bylaws, and

regulations. But the insurance policy applied only to property damage caused by an “occurrence,”

and under the tei-ms of the policy, an “occurrence” is defined as “an accident, includinLi continuous

or repeated exposure to substantially the same general harmful conditions.” “An accident is

generally understood to he a fortuitous, unexpected, and unintended event.” Lamar Homes, 242

S.W.3d at 8. The policy excludes intentional acts. Even when construed liberally in favor of the

F3rowns, the association’s counterclaim did not allege an “occurrence” under the terms of the policy.

American Western therefore established, as a matter of law, that it was entitled to summary

judgment. We overrule the Browns’ issue.

We affirm the trial court’s judgment.

LANA MERS JUSTICE

1 l0561F.P05 0 (!tiitrt ni ;\p.irt1 .*tttl! Dtttirt nf xai at Ja11a

JUDGMENT DENISE BROWN AND GREG BROWN, Appeal from the County Court at Law No. 3 Appellant of Dallas County. Texas. (Tr.Ct.No. CC—I 0— 025 84-C -A). No. 05- 11-00561 -CV V. Opinion delivered by Justice Myers, Justices Mosclcy and Fillmore participating. AMERICAN WESTERN HOME INSURANCE COMPANY, Appellee

In accordance with this Court’s opinion of this date, the judgment of the trial court is AFFIRMED. It is ORDERED that appellee AMERICAN WESTERN HOME INSURANCE COMPANY recover its costs of this appeal ftom appellants DENISE BRO\VN AND GREG I3RC)WN.

Judgment entered January 3, 2013.

LANA MYERS U J U ST ICE