Crum & Forster Specialty Insurance Company v. Creekstone Builders, Inc., Nashville Creekstone, LLC Stephen Keller, Everett Jackson, and Creekstone SC I, LLC

Opinion

ACCEPTED 01-14-00907-CV FIRST COURT OF APPEALS HOUSTON, TEXAS 11/30/2015 5:17:47 PM CHRISTOPHER PRINE CLERK IN THE COURT OF APPEALS FOR THE FIRST DISTRICT OF TEXAS AT HOUSTON FILED IN _______________________________ 1st COURT OF APPEALS HOUSTON, TEXAS 11/30/2015 5:17:47 PM NO. 01-14-00907-CV CHRISTOPHER A. PRINE _______________________________ Clerk

CRUM & FORSTER SPECIALTY INSURANCE COMPANY, Appellant

v.

CREEKSTONE BUILDERS, INC., et al., Appellees

________________________________________

On Appeal from the 215th Judicial District Court Harris County, Texas Cause No. 2014-29616 ________________________________________

APPELLANT CRUM & FORSTER SPECIALTY INSURANCE COMPANY’S MOTION FOR REHEARING AND MOTION FOR EN BANC RECONSIDERATION ________________________________________

BRIAN S. MARTIN Texas State Bar No. 13055350 RODRIGO “DIEGO” GARCIA, JR. Texas State Bar No. 00793778 CHRISTOPER H. AVERY Texas State Bar No. 24069321 THOMPSON, COE, COUSINS & IRONS, L.L.P. One Riverway, Suite 1400 Houston, Texas 77056-1988 (713) 403-8210 Telephone (713) 403-8299 Facsimile

2315842v4 05060.795 TABLE OF CONTENTS

TABLE OF CONTENTS ............................................................................................i

TABLE OF AUTHORITIES .................................................................................... ii

ISSUES PRESENTED ON REHEARING...............................................................iv

RELEVANT BACKGROUND ................................................................................. 2

ARGUMENT ............................................................................................................. 3

A. The Panel Did Not Apply the Correct Factors in Its Analysis .................. 4

B. Appellees Failed to Meet Their Burden of Proof ...................................... 6

1. Private Interest Factors ..................................................................... 8

2. Public Interest Factors .................................................................... 14

CONCLUSION AND PRAYER ............................................................................. 17

i 2315842v4 05060.795 INDEX OF AUTHORITIES

Baker v. Bell Helicopter Textron, Inc., 985 S.W.2d 272 (Tex. App.—Fort Worth 1999, pet. denied) .................................. 5

Brenham Oil & Gas, Inc. v. TGS-NOPEC Geophysical Co., __ S.W.3d __, 01-13-00349-CV, 2015 WL 4591788 (Tex. App.—Houston [1st Dist.] July 30, 2015, no pet.) ..................................................................................... 4

Bosch v. Frost Nat’l Bank, __ S.W.3d __, 01-14-00191-CV, 2015 WL 4463666 (Tex. App.—Houston [1st Dist.] July 21, 2015, no pet.) ................................................................................... 11

CCC Group, Inc. v. S. Cent. Cement, Ltd., 450 S.W.3d 191 (Tex. App.—Houston [1st Dist.] 2014, no pet.) ............................ 6

Crum & Forster Specialty Ins. Co. v. Creekstone Builders, Inc., __ S.W.3d __, 01-14-00907-CV, 2015 WL 6488276 (Tex. App.—Houston [1st Dist.] Oct. 27, 2015, no. pet. h.)................................................................................ 1

Davis v. Nat’l Lloyds Ins. Co., __ S.W.3d __, 01-14-00278-CV, 2015 WL 6081411 (Tex. App.—Houston [1st Dist.] Oct. 13, 2015, no. pet. h.).............................................................................. 11

Exxon Corp. v. Choo, 881 S.W.2d 301 (Tex. 1994) ..................................................................................... 3

In re Doe 10, 78 S.W.3d 338 (Tex. 2002) ....................................................................................... 6

In re Pirelli Tire, L.L.C., 247 S.W.3d 670 (Tex. 2007) ................................................................................... 10

Lenoir v. Marino, 469 S.W.3d 669 ....................................................................................................... 11

Love v. State Bar of Texas, 982 S.W.2d 939 (Tex. App.—Houston [1st Dist.] 1998, no pet.) .......................... 14

ii 2315842v4 05060.795 Lumenta v. Bell Helicopter Textron, Inc., 01-14-00207-CV, 2015 WL 5076299 (Tex. App.—Houston [1st Dist.] Aug. 27, 2015, no. pet. h.) ....................................................................................................... 7

Mercer v. Daoran Corp., 676 S.W.2d 580 (Tex. 1984) ................................................................................... 13

Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co., 279 S.W.3d 650 (Tex. 2009) ................................................................................... 12

Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981) ............................................................................................ 4, 10

Quixtar Inc. v. Signature Management Team, LLC, 315 S.W.3d 28 (Tex. 2010) ....................................................................................... 4

RSR Corp. v. Siegmund, 309 S.W.3d 686 (Tex. App.—Dallas 2010, no pet.) .............................................. 10

State Farm Fire & Casualty Co. v. Gandy, 925 S.W.2d 696 (Tex. 1996) ..................................................................................... 2

Truong v. Vuong, 105 S.W.3d 312 (Tex. App.—Houston [14th Dist.] 2003, no pet.)........................ 17

iii 2315842v4 05060.795 ISSUES PRESENTED ON REHEARING

1. This case involves an insurance coverage dispute regarding whether the subject policies provide the insureds coverage relative to a construction- defects suit in South Carolina. The policies were issued in Texas, through a Texas broker, delivered to the insured in Texas, and specifically exclude coverage for operations in South Carolina. In making its forum non conveniens analysis, the Panel gave primary emphasis to facts relating to the underlying construction-defects suit rather than the facts relating to the issuance of the policies. For purposes of this coverage dispute, Appellees did not meet their burden of showing that Texas is an inconvenient forum for litigation.

2. The Panel incorrectly considered conclusory and unsupported allegations in granting Defendants’ motion to dismiss under the doctrine of forum non conveniens, including conclusory statements, allegations in pleadings, and unsupported legal opinions.

3. By placing the focus of the forum non conveniens analysis on the underlying tort action (to which Appellant Crum & Forster was not a party) rather than on the insurance coverage dispute between the parties, and by basing its decision on items that are not properly considered under the forum non conveniens doctrine, the Panel has substantially rewritten forum non conveniens law. Because the decision of the Panel will affect a substantial number of future cases involving forum non conveniens, this case presents an extraordinary circumstance that should be reviewed by the Court en banc to either maintain the uniformity of the Court’s decisions or explain why such a fundamental change in forum non conveniens law is being made.

iv 2315842v4 05060.795 TO THE HONORABLE JUDGES OF THE COURT OF APPEALS:

Pursuant to Tex R. App. P. 49, Appellant Crum & Forster Specialty

Insurance Company files this Motion for Rehearing and Motion for En Banc

Reconsideration. In this lawsuit, insurer Crum & Forster seeks declaratory relief

regarding whether it owes insurance coverage for a $55 million judgment

(“Underlying Judgment”) entered against Appellee Creekstone SC I in state court

in South Carolina. The trial court dismissed this case for lack of a convenient

forum, and the Panel affirmed. Crum & Forster Specialty Ins. Co. v. Creekstone

Builders, Inc., __ S.W.3d __, 01-14-00907-CV, 2015 WL 6488276 (Tex. App.—

Houston [1st Dist.] Oct. 27, 2015, no. pet. h.).

The Panel’s opinion improperly deprives Crum & Forster of its choice of a

Texas venue. The Panel accomplished this by giving controlling weight to the

forum non conveniens factors applicable to the underlying construction-defect

lawsuit against Creekstone. That suit has been tried and has resulted in the

Underlying Judgment. The present case is a contractual coverage dispute

involving insurance policies issued in Texas that exclude South Carolina coverage.

The Panel erred by not recognizing the difference between the present contract

action and the prior tort action and basing its forum non conveniens analysis on

factors irrelevant to a contract dispute.

-1- 2315842v4 05060.795 Declaratory judgment actions to resolve insurance coverage disputes are an

important tool under Texas law and have been recommended by the Texas

Supreme Court. See State Farm Fire & Casualty Co. v. Gandy, 925 S.W.2d 696,

714 (Tex. 1996) (noting that when a coverage dispute arises, “it is not unusual” for

an insured or an insurer to file a declaratory judgment action because such disputes

“can often be expeditiously resolved in an action for declaratory judgment”). The

Panel’s decision has the potential to greatly undercut the efficacy of declaratory

judgment actions in Texas by denying Texas as a venue solely because some of the

underlying facts that gave rise to the coverage dispute occurred outside of Texas.

Such a fundamental change in declaratory judgment law should not happen without

careful consideration of the ramifications of the Panel’s decision both by the Panel

and the Court en banc.

RELEVANT BACKGROUND

Crum & Forster issued general liability policies to five related entities,

including Appellees1 Creekstone Builders, Inc., Creekstone SC I, LLC, and

Nashville Creekstone, LLC. CR 120–122, 139, 215, 286. The policies were issued

through a Texas broker and delivered in Texas. CR 120–122, 139, 215, 286.

The policies contained a State Operations Exclusion (“SOE”) that

specifically excluded coverage for any claim arising out of the insureds’ operations

1 Appellees are Creekstone Builders, Inc., Creekstone SC I, LLC, Nashville Creekstone, LLC, and Creekstone Builders’ president Everett Jackson and vice president Stephen Keller. For simplicity, the collective term “Appellees” is used herein, unless it is necessary to refer to the Appellees individually

-2- 2315842v4 05060.795 in South Carolina. CR 280, 350. In 2010, Appellees were sued in South Carolina

for construction defects in an apartment-to-condominium construction project in

South Carolina. CR 45–46. Crum & Forster denied coverage for the claim

because of the SOE. A judgment for more than $55 million was entered against

Creekstone SC I in June 2014. CR 46.

In May 2014, Crum & Forster filed this suit (“Lawsuit”) against Appellees

seeking declaratory relief on whether the judgment was covered under the policies

in light of the SOE precluding coverage for South Carolina. CR 5. Appellees

answered and filed a motion to dismiss on grounds of forum non conveniens and

the failure to join the plaintiff in the underlying suit an indispensable party. The

trial court granted Appellees’ motion on both grounds. CR 407. The Panel

affirmed the trial court’s judgment on the forum non conveniens ground and

expressly did not consider the indispensable party ground. See Panel Op., 2015

WL 6488276, at *9 & n.3.2

ARGUMENT

Forum non conveniens is an equitable doctrine exercised by courts to

prevent the imposition of an inconvenient jurisdiction on a litigant. Exxon Corp. v.

Choo, 881 S.W.2d 301, 302 (Tex. 1994). The “central focus of the forum non

2 Several weeks after Crum & Forster filed this Lawsuit, Creekstone SC I and other parties filed an action in federal court in South Carolina seeking a declaration that Crum & Forster is obligated to pay the judgment entered in the underlying case and additional relief. That action remains pending at this time. -3- 2315842v4 05060.795 conveniens inquiry is convenience.” Quixtar Inc. v. Signature Management Team,

LLC, 315 S.W.3d 28, 33 (Tex. 2010) (quoting Piper Aircraft Co. v. Reyno, 454

U.S. 235, 249 (1981)). Appellees as movants bore the burden to prove entitlement

to dismissal on forum non conveniens grounds. See Brenham Oil & Gas, Inc. v.

TGS-NOPEC Geophysical Co., __ S.W.3d __, 01-13-00349-CV, 2015 WL

4591788, at *15 (Tex. App.—Houston [1st Dist.] July 30, 2015, no pet.).

A. The Panel Did Not Apply the Correct Factors in Its Analysis

A forum non conveniens analysis requires that the court balance public and

private interest factors to decide if dismissal is appropriate. See id. at *16. In its

opinion, the Panel improperly focused more on the public and private factors as

they relate to the underlying tort action than to the present coverage dispute. While

South Carolina may have a connection to the construction-defect case, South

Carolina was a stranger to the issuance and interpretation of the insurance policies.

The Court’s reference to facts relevant to the underlying suit may have been

made because Appellees, who bore the burden of showing that the balance of

factors favors dismissal, made no effort to address the factors that relate to the

coverage case brought in Texas.3 The facts surrounding the construction work

done by Creekstone and the resulting defects in construction have already been

litigated and reduced to judgment. There will be no reason in this case to inquire

3 The deficiencies in Appellees’ proof will be discussed in more detail in the next section. -4- 2315842v4 05060.795 into the details of the construction work, the damages allegedly suffered by the

purchasers of the condominium units, or anything else that happened on the ground

in South Carolina. That story has ended.

The appropriate forum non conveniens analysis in this case should be on the

public and private factors that relate to negotiation and issuance of the contract and

application of the contract terms to the written judgment. See Baker v. Bell

Helicopter Textron, Inc., 985 S.W.2d 272, 277 (Tex. App.—Fort Worth 1999, pet.

denied) (explaining forum non conveniens decisions are made pursuant to “the

facts or circumstances of the particular case” (emphasis added)). Nonetheless,

Appellees did not present facts relevant to the contract-interpretation issues present

in this Lawsuit, but instead focused on the fact that the underlying tort case

occurred in another state. Appellees simply provided no evidence proving that it

would be inconvenient for them to litigate this declaratory judgment action in

Texas.

The Panel took the sparse facts supplied by Appellees and conducted its

forum non conveniens analysis without asking the basic question of whether Texas

is a substantially inconvenient forum for a coverage case involving policies issued

in Texas to a group of insureds who have their principal place of business in Texas

and that exclude coverage for South Carolina operations.

-5- 2315842v4 05060.795 The Panel also gave undue influence to the fact that Creekstone SC I was a

South Carolina limited liability company without explaining why that is an

important fact in this litigation. There is no evidence that any document related to

Creekstone SC I is maintained by the company in South Carolina or that any of its

officers or employees who might be witnesses in this case are located in South

Carolina.

In short, the Panel’s analysis improperly puts its focus on evidence relating

to the underlying construction project, but that is not an issue in this case. The

inquiry that must be made is whether the public and private interest factors as

applied to the present coverage dispute support dismissal of the suit in Texas.

B. Appellees Failed to Meet Their Burden of Proof

Appellees bore the burden to prove entitlement to dismissal on forum non

conveniens grounds. Brenham Oil, 2015 WL 4591788, *15. The Panel

determined that Appellants did not need to present evidence at the hearing on its

motion to dismiss, but instead could rely on evidence attached to their motion.

Panel Op., 2015 WL 6488276, *5–6. The Panel recognized that Appellants were

required to present “some evidence” in support of their motion. Id.

The term “some evidence” does not include speculation or unsupported,

conclusory allegations or statements. See In re Doe 10, 78 S.W.3d 338, 342 (Tex.

2002); CCC Group, Inc. v. S. Cent. Cement, Ltd., 450 S.W.3d 191, 202 (Tex.

-6- 2315842v4 05060.795 App.—Houston [1st Dist.] 2014, no pet.). This Court recently reiterated that a trial

court’s implicit findings supporting a forum non conveniens decision cannot be

arbitrary and will be affirmed only “so long as they are also supported by the

evidence.” Lumenta v. Bell Helicopter Textron, Inc., 01-14-00207-CV, 2015 WL

5076299, at *4 (Tex. App.—Houston [1st Dist.] Aug. 27, 2015, no. pet. h.) (mem.

op.) (emphasis added).

As the Panel noted, the only evidence Appellees presented was attached to

their motion to dismiss. The evidence generally consisted of an affidavit from the

corporate entity that is the judgment creditor of Creekstone SC I for the underlying

suit,4 corporate documents relating to “Creekstone Management, LLC” (showing it

is a Texas corporation), and the underlying judgment. Appellees did not offer any

evidence discussing where the contract formation and issuance occurred, whether

Creekstone SC I still has any physical presence in Texas, where any witnesses are

located, or whether Texas is an inconvenient forum for any witness other than the

judgment creditor (who is not a party to the suit and may not even be a witness in

this case).

It is against this record that the propriety of dismissal must be evaluated.

4 Creekstone SC I’s judgment creditor is East Bridge Lofts Property Owners Association, Inc. (“POA”).

-7- 2315842v4 05060.795 1. Private Interest Factors Appellees presented very limited evidence on the private interest factors in

support of their motion to dismiss. Moreover, it is the evidence Appellees did not

present that most glaringly demonstrates why the trial court erred by dismissing

this Lawsuit. Appellees did not present any evidence indicating (1) where the

sources of proof potentially relevant to this Lawsuit are located, (2) where

Appellees’ own corporate representatives and employees are located, (3) where the

subject insurance policies were negotiated, (4) where witnesses Appellees will

possibly use to litigate this Lawsuit are located, or (5) why it is inconvenient,

financially or otherwise, for Appellees to participate in this Lawsuit. In the

absence of this evidence, Appellees cannot meet their burden.

Instead of providing relevant information, Appellees presented a single

affidavit from a representative of the judgment creditor in the underlying suit,

Amanda Graham. CR 45–48. The Panel noted that Graham made the following

assertions in her affidavit:

Graham averred that the condominiums that were the subject of the construction-defects suit are located in South Carolina, that the POA obtained a judgment in South Carolina against Creekstone SC I, that the “dispute turns on South Carolina witnesses,” that South Carolina is the only state that can exercise jurisdiction over all parties interested in the outcome of the insurance coverage dispute, and that a suit concerning insurance coverage is also pending in South Carolina federal court and involves the POA, Creekstone SC I, Creekstone Builders, and Crum & Forster.

-8- 2315842v4 05060.795 Panel Op., 2015 WL 6488276, at *7. From these assertions, the Panel concluded,

“It is clear from the record that at least some of Creekstone’s sources of proof and

witnesses are located in South Carolina.” Id. For several reasons, the Panel’s

reliance on Graham’s assertions was misplaced.

First, Graham’s assertions that “condominiums that were the subject of the

construction-defects suit are located in South Carolina” and “POA obtained a

judgment in South Carolina against Creekstone SC I” are wholly irrelevant.

Appellees and the Panel provided no explanation for why the location of the

condominiums or where the Underlying Judgment was rendered have any bearing

on whether this declaratory judgment action is convenient in Texas.

Second, Graham’s assertion that the “dispute turns on South Carolina

witnesses” is wholly conclusory and thus no evidence. Citing to Supreme Court of

Texas precedent, the Panel explained, “Creekstone was not required to submit

detailed lists of the witnesses that it plans to call or the evidence that it plans to

introduce at trial.” Panel Op., 2015 WL 6488276, at *7 (citing Quixtar, 315

S.W.3d at 34). However, the Panel improperly interpreted this precedent to mean

that Appellees did not have to present any evidence regarding the witnesses they

plan to call.

The Quixtar court, while explaining that the movant need not conduct an

“extensive investigation” and provide the substance of all its potential witnesses’

-9- 2315842v4 05060.795 testimony, held, “Obviously, there needs to be enough information ‘to enable the

District Court to balance the parties’ interests.’” Quixtar, 315 S.W.3d at 34

(quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981)); see also RSR Corp. v.

Siegmund, 309 S.W.3d 686, 713 (Tex. App.—Dallas 2010, no pet.) (holding that

forum non conveniens movant failed to meet burden of proof by presenting “a

conclusory statement that it would be ‘hardship’ to litigate in Dallas and presenting

an affidavit explaining [movant’s] lack of presence in Texas”). In prior appeals in

which this Court affirmed dismissal based on forum non conveniens, the movant

provided at least some explanation regarding why witnesses located in the sought-

after forum had a connection to the issues in dispute.5 Neither in the Graham

affidavit nor anywhere else have Appellees identified a single witness who can

provide relevant testimony to this case who lives or works in South Carolina.

5 See, e.g., Lumenta, 2015 WL 5076299, at *2 (“Moreover, all the ‘key witnesses’ are in Indonesia, including the INTSC representatives, who conducted the official investigation of the crash and recovery of the wreckage; the Manado Airport employees, who tracked and communicated with the helicopter; the mechanics, who serviced the helicopter; and all the employees of the companies that owned, chartered, maintained, and operated the helicopter.”); Brenham Oil, 2015 WL 4591788, at *18 (“[T]here are other material witnesses who are located in Togo and Israel. The Togolese government was assisted at the negotiations with Brenham Oil by Yair Green, an Israeli lawyer, and Raphael Edery, an Israeli economic adviser. It is undisputed that Siah and his superior Dammipi Noupokou, the Togolese Minister of Energy and Mines, are located in Togo. TGS asserts that it is unable to obtain vital defense testimony in a Texas court because the Togolese witnesses refused to participate in discovery in Texas, and their testimony could not be secured through the Texas court because Togo is not a party to the Hague Convention on the Taking of Evidence Abroad.”); see also In re Pirelli Tire, L.L.C., 247 S.W.3d 670, 678 (Tex. 2007) (“First, key evidence and witnesses concerning damages are in Mexico. Benitez, the only witness to the accident, together with the accident investigators and all medical personnel are in Mexico. The witnesses most likely to be familiar with the condition and maintenance of the truck and the tire, the truck’s owner and its importer, are in Mexico.”).

- 10 - 2315842v4 05060.795 A conclusory statement in an affidavit never constitutes “some evidence.”

See Lenoir v. Marino, 469 S.W.3d 669, 686 (Tex. App.—Houston [1st Dist.] 2015,

pet. filed) (“Conclusory statements in affidavits are insufficient to establish the

existence of a fact.”). Conclusory statements are so fundamentally flawed, that

objections to such statements cannot be waived. See Bosch v. Frost Nat’l Bank, __

S.W.3d __, 01-14-00191-CV, 2015 WL 4463666, at *4 (Tex. App.—Houston [1st

Dist.] July 21, 2015, no pet.). The Panel’s reliance on conclusory affidavit

testimony was erroneous and in contradiction of this Court’s precedent.

It is also notable that Appellees did not provide any statement, conclusory or

otherwise, regarding whether they plan to use witnesses or evidence from South

Carolina in the Lawsuit. Instead, Appellees submitted their judgment creditor’s

conclusory statement on the issue—a non-party to this Lawsuit. Clearly, a non-

party’s conclusory statement about witnesses is not evidence that Appellees will be

inconvenienced if they try this Lawsuit in Texas.

Furthermore, neither Creekstone nor the Panel explained why any witnesses

are needed. Again, this is a contract interpretation case, not a fact-intensive tort

case. As this Court frequently recognizes, extrinsic evidence and testimony

generally have no role in a contract interpretation case. See, e.g., Davis v. Nat’l

Lloyds Ins. Co., __ S.W.3d __, 01-14-00278-CV, 2015 WL 6081411, at *6 (Tex.

App.—Houston [1st Dist.] Oct. 13, 2015, no. pet. h.); Dupree v. Boniuk Interests,

- 11 - 2315842v4 05060.795 Ltd., __ S.W.3d __, 01-14-00864-CV, 2015 WL 4624117, at *9 (Tex. App.—

Houston [1st Dist.] Aug. 4, 2015, no pet.).

In its Original Petition, Crum & Forster contends it does not owe coverage

because one of the policies does not apply to any of the Creekstone defendants in

the underlying suit, and the other policies contain the unambiguous SOE. CR 9–

10. These issues will be decided by a court’s review of the policies. See Pine Oak

Builders, Inc. v. Great Am. Lloyds Ins. Co., 279 S.W.3d 650, 655 (Tex. 2009)

(“The duty to defend depends on the language of the policy setting out the

contractual agreement between insurer and insured.”). Indeed, even in the

declaratory judgment action filed in South Carolina federal court, Creekstone

asserts legal arguments—not evidentiary grounds—as for why the exclusion does

not apply. CR 64 at ¶ 30. Appellees do not even suggest, let alone provide

evidence to show, that it would be more inconvenient to make this argument in

Texas.

Third, Graham’s assertion “that South Carolina is the only state that can

exercise jurisdiction over all parties interested in the outcome of the insurance

coverage dispute” is clearly not a statement of fact but a conclusory legal

opinion—a legal opinion Graham is not qualified to make. A conclusory opinion

on a matter of law reserved for the court’s determination is not evidentiary. See

Tex. R. Civ. P. 39 (providing trial court determines whether a party is

- 12 - 2315842v4 05060.795 indispensable); Mercer v. Daoran Corp., 676 S.W.2d 580, 583 (Tex. 1984).

Additionally, the Panel does not explain why this statement is important. In its

first appellate issue, Appellees argued that the judgment creditor is an

indispensable party to this Lawsuit. However, the Panel expressly did not address

this issue. Panel Op., 2015 WL 6488276, at *9 n.3.

Fourth, Graham’s assertion that “a suit concerning insurance coverage is

also pending in South Carolina federal court and involves the POA, Creekstone SC

I, Creekstone Builders, and Crum & Forster” is again not evidence showing that

South Carolina would be a more convenient forum for the parties. Merely because

a party files a suit in a chosen venue does not mean that venue is more convenient

than any other venue. Hence, the Panel erred by deciding this statement is

evidence supporting the trial court’s dismissal.

Finally, the Panel apparently determined that allegations in a pleading

establish that Creekstone SC I lacks a Texas connection:

Although Crum & Forster alleged in its original petition in the underlying action that Creekstone SC I was organized under the laws of South Carolina but had a principal place of business in Texas, Creekstone alleged in the federal action, which it attached as evidence to its motion to dismiss, that Creekstone SC I “is a South Carolina limited liability company.”

Id. at *7 (emphasis added). Based on this allegation, the Panel determined that

Texas is a poor choice for venue because “the one defendant in the underlying

- 13 - 2315842v4 05060.795 action that is a party to the judgment in the construction-defects suit, Creekstone

SC I, is a South Carolina entity.” Id.

The Panel’s determination is erroneous because an allegation in a pleading is

not evidence. See Love v. State Bar of Texas, 982 S.W.2d 939, 943 (Tex. App.—

Houston [1st Dist.] 1998, no pet.). More importantly, whether Creekstone SC I is a

South Carolina limited liability company is irrelevant to this contract-interpretation

action (and also does not disprove that Creekstone SC I has a principal place of

business in Texas). The Panel did not explain why the place of Creekstone SC I’s

incorporation is material to this Lawsuit and its place of business is not.

Accordingly, the Panel improperly considered the private interest factors by

focusing on the location of the underlying tort claims instead on how the factors

apply to this declaratory judgment action.

2. Public Interest Factors The Panel next analyzed the public interest factors. Panel Op., 2015 WL

6488276, at *8–9. The Panel began by acknowledging that Texas is a proper

forum for this declaratory judgment action: “Crum & Forster is correct that

Creekstone Builders is a Texas entity and that Crum & Forster’s broker involved in

issuing the policies is located in Houston. As a result, Texas does have an interest

in adjudicating this dispute, and there is at least some justification for retaining the

case in Texas.” Id. at *8.

- 14 - 2315842v4 05060.795 Nonetheless, the Panel then once again focused on the irrelevant facts that

Creekstone SC I is a South Carolina entity and the underlying tort case occurred in

South Carolina:

However, one of the defendants in this case, Creekstone SC I, the only defendant in the underlying action that is also a party to the judgment rendered in the construction-defects suit, is a South Carolina entity, and the insurance coverage dispute that is the focus of the underlying action arose solely because of the defective condominium construction that occurred in South Carolina. Creekstone Builders, the Texas entity, is not a party to the construction-defects judgment and therefore is not liable for that judgment. Thus, although this case does involve a connection to Texas, it is more appropriately characterized as a South Carolina controversy.

Id. at *8. Hence, the Panel concluded that South Carolina has more of a stake in

this contract-interpretation claim than Texas merely because the underlying tort

claim occurred in South Carolina. As stated above, this improperly emphasizes the

location of a separate and distinct tort lawsuit, with different issues and burdens,

and ignores the actual Texas connection to this Lawsuit, which include:

 The service-of-process documents show that Appellees Creekstone Builders, Nashville Creekstone, Everett Jackson, Creekstone SC I were served with this Lawsuit in Texas and have all answered. CR 14–27.

 The subject policies were procured by a broker located in Houston, Texas and delivered to insureds located in Houston, Texas. RR 17–18; CR 120– 122, 139, 215, 286.

 The policies expressly exclude coverage for South Carolina operations. CR 280, 350. The people of South Carolina have no reason to be jurors in a case involving a policy issued in Texas that excludes South Carolina coverage. It is more proper for the people of Texas to serve as jurors in this Lawsuit (if

- 15 - 2315842v4 05060.795 fact-issues exist that require jury resolution, which Appellees have not demonstrated).

Accordingly, this declaratory judgment action is not “more appropriately

characterized as a South Carolina controversy,” but is a contract-interpretation

dispute involving insurance policies issued in Texas through a Texas broker to a

Texas entity.

Finally, the Panel stated:

Moreover, we note that an insurance coverage dispute is also pending in South Carolina federal court, that the POA is a party to that action, and that Crum & Forster, the defendant in that action, has not contested jurisdiction in the South Carolina federal court. Thus, the trial court’s decision to dismiss the underlying action promotes judicial economy by reducing the multiplicity of suits related to the same controversy.

Panel Op., 2015 WL 6488276, at *9. As already explained, the Panel provided no

analysis regarding why the judgment creditor’s absence from this Texas suit is

significant. Moreover, according to the Panel’s reasoning, a defendant can create a

situation favoring forum non conveniens dismissal simply by filing its own suit in

another state. The Panel’s analysis actually encourages multiplicity of suits and

gamesmanship by defendants seeking to inconvenience plaintiffs who have already

chosen Texas as a forum.

If Appellees really believed that Texas is an inconvenient forum, they would

have come forward with evidence that names witnesses located in South Carolina,

or identified documents that existed only in South Carolina, or identified the

- 16 - 2315842v4 05060.795 physical presence Creekstone SC I has in South Carolina that makes Texas a

difficult forum in which to resolve the contract dispute. Appellees did none of this

because Texas is not an inconvenient forum, and the Panel erred in affirming the

dismissal.

CONCLUSION AND PRAYER

In sum, the trial court abused its discretion in granting dismissal based on

forum non conveniens. In a concurrence from the Fourteenth Court of Appeals,

Justice Frost explained why a trial court cannot grant dismissal for forum non

conveniens when the movant does not present actual evidence favoring dismissal:

Forum non conveniens considerations allow the trial court to engage in a discretionary balancing of factors in order to determine the most appropriate forum for the litigation. A trial court’s balancing of the factors must not be based on speculation or conjecture, but on evidence in the record. Absent proof of inconvenience or additional costs, there is no basis to conclude that maintenance of the action in Texas would work a substantial injustice to the Vuongs or that the balance of private interests of the parties and public interests of the state tilts strongly in favor of a Georgia forum. The Vuongs have not adduced evidence demonstrating that the Texas forum chosen by the Truongs is so completely inappropriate and inconvenient that it would be better to shut down the Texas litigation so that the parties can litigate this dispute exclusively in the Georgia court.

Truong v. Vuong, 105 S.W.3d 312, 321 (Tex. App.—Houston [14th Dist.] 2003, no

pet.) (Frost, J., concurring). The same rationale applies here.

Accordingly, Crum & Forster respectfully requests that the Panel grant this

motion for rehearing, or alternatively the Court en banc grant this motion for

- 17 - 2315842v4 05060.795 reconsideration, withdraw the Panel opinion and judgment, and render judgment

reversing the trial court’s judgment dismissing this Lawsuit, and for any other

relief to which Crum & Forster is entitled, included costs of this appeal.

Respectfully submitted,

THOMPSON COE COUSINS & IRONS, LLP

By: /s/ Brian S. Martin BRIAN S. MARTIN Texas State Bar No. 13055350 E-Mail: bmartin@thompsoncoe.com RODRIGO “DIEGO” GARCIA, JR. Texas State Bar No. 00793778 E-Mail: dgarcia@thompsoncoe.com CHRISTOPER H. AVERY Texas State Bar No. 24069321 E-Mail: cavery@thompsoncoe.com One Riverway, Suite 1400 Houston, Texas 77056-1988 (713) 403-8210 Telephone (713) 403-8299 Facsimile

ATTORNEYS FOR APPELLANT CRUM & FORSTER SPECIALTY INSURANCE COMPANY

- 18 - 2315842v4 05060.795 CERTIFICATE OF COMPLIANCE

I certify that this Motion for Rehearing and Motion for En Banc Reconsideration contains approximately 4,357 words, not including the parts excluded by Tex. R. App. P. 9.4(i)(1). Accordingly, it complies with Rule 9.4(i)(2)(D).

/s/ Brian S. Martin BRIAN S. MARTIN

CERTIFICATE OF SERVICE I certify that on November 30, 2015, an electronic copy of this brief was served on all counsel of record.

/s/ Brian S. Martin BRIAN S. MARTIN

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