In Re: Arch Insurance Company v. the State of Texas

CourtCourt of Appeals of Texas
DecidedOctober 31, 2023
Docket08-23-00223-CV
StatusPublished

This text of In Re: Arch Insurance Company v. the State of Texas (In Re: Arch Insurance Company v. the State of Texas) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re: Arch Insurance Company v. the State of Texas, (Tex. Ct. App. 2023).

Opinion

COURT OF APPEALS EIGHTH DISTRICT OF TEXAS EL PASO, TEXAS

§

IN RE § No. 08-23-00223-CV

ARCH INSURANCE COMPANY, § AN ORIGINAL PROCEEDING

Relator. § IN MANDAMUS

MEMORANDUM OPINION

Relator Arch Insurance Company (Arch) sought to intervene in a proceeding in which its

insured Anadarko Petroleum Corporation (Anadarko) is being sued by a plaintiff for bodily injuries

she suffered in an explosion at Anadarko’s natural gas processing plant in Reeves County. After

the trial court granted Anadarko’s motion to strike the intervention, Arch filed a petition for

mandamus with this Court, challenging the trial court’s decision. For the reasons set forth below,

we deny the petition.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Underlying Lawsuit in Reeves County

The plaintiffs in the underlying lawsuit, Rita Candelario (Candelario) and her now-

deceased husband, Cristobal Candelario, filed a lawsuit in the Reeves County district court on

October 23, 2017, alleging she was injured in an explosion at Anadarko’s natural gas processing plant 1 in December of 2015. According to the petition, at the time of the explosion, she Candelario

was an employee of a temporary security staffing company—Guard 1 Services, LLC (Guard 1),

which provides staffing to the energy industry. The petition named Western Gas, Anadarko, Guard

1, and John Doe (an employee of either Anadarko or Western Gas who allegedly caused the

explosion) as defendants.

Prior to the explosion, Arch had issued a commercial general liability (CGL) policy to

Guard 1—with Anadarko as an additional insured—and pursuant to the CGL policy’s “duty to

defend” provisions, Arch agreed to represent both parties in the lawsuit “subject to a full and

complete reservation of rights.”

On March 23, 2018, Guard 1 moved for summary judgment, seeking dismissal of the

claims against it under the exclusive-remedy provision in the Workers’ Compensation Act. The

exclusive-remedy provision provides that “[r]ecovery of workers’ compensation benefits is the

exclusive remedy of an employee covered by workers' compensation insurance

coverage . . . against the employer . . . for the death of or a work-related injury sustained by the

employee.” See TEX. LAB. CODE ANN § 408.001(a). Guard 1 had a workers’ compensation

insurance policy for its employees under which Candelario was admittedly receiving benefits, and

Guard 1 argued that the exclusive-remedy provision therefore prohibited Candelario from bringing

her claims against it. See Mo-Vac Serv. Co., Inc. v. Escobedo, 603 S.W.3d 119, 124 (Tex. 2020)

(recognizing that the Workers’ Compensation Act “prohibits employees from seeking common-

law remedies from their employers by making workers’ compensation benefits an injured

1 According to the Candelarios’ petition, the plant was “under the operational direction, control, and supervision of Defendant Western Gas Partners LP. d/b/a Delaware Basin Midstream, LLC. [(Western Gas)],” and “Anadarko Petroleum Corporation was in contractual and actual control of the [plant].” The parties refer to the plant as “Anadarko’s plant.”

2 employee's exclusive remedy”). Shortly thereafter, Candelario voluntarily dismissed Guard 1 from

its lawsuit.

Thereafter, by a letter dated October 30, 2019, Arch sought to compel Anadarko to file a

similar motion for summary judgment, asserting that Candelario was Anadarko’s employee under

a borrowed-servant theory and that her claims against Anadarko should therefore be dismissed

under the Workers’ Compensation Act’s exclusive-remedy provision. On January 7, 2020,

Anadarko’s attorney informed Arch that it would not file the motion, as it believed Candelario was

not its employee, at least for purposes of the Workers’ Compensation Act. 2

B. Arch’s Declaratory-Judgment Actions in Two Other Courts

Soon after, Arch filed a lawsuit in the United States District Court for the Western District

of Texas, Pecos Division (PE:20-CV-00036-DC-DF), naming the Candelarios as defendants and

asking the court for a declaratory judgment that Candelario was Anadarko’s employee under the

borrowed-servant theory and that her claims were barred by the Workers’ Compensation Act’s

exclusive-remedy provision. However, in February of 2021, the district court dismissed the lawsuit

for lack of a justiciable controversy, recognizing that although it could determine insurance policy

coverage questions, as those present an actual controversy between a plaintiff injured by an insured

and an insurance company attempting to deny coverage, it had no authority to determine “liability”

issues, such as whether a plaintiff was an employee of an insured for purposes of applying the

Workers’ Compensation Act. Arch Ins. Co. v. Candelario, No. P:20-CV-00036-DC, 2021 WL

2193983, at *3–4 (W.D. Tex.), reconsideration denied, No. P:20-CV-00036-DC, 2021 WL

8053524 (W.D. Tex. Sept. 10, 2021) and appeal dismissed, No. 21-50955, 2021 WL 8013947 (5th

2 The parties do not dispute that Guard 1 and Anadarko had a master service agreement in which both parties agreed to maintain workers’ compensation insurance for all their employees, to include a borrowed-servant endorsement. However, Anadarko claimed that Candelario did not fit within the meaning of that term.

3 Cir. Dec. 22, 2021) (citing Maryland Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 274 (1941)

(holding that the insurer established a case and controversy between itself and the state court

plaintiff, who sued the insured in state court, where the insurer asked the court to interpret the

policy it issued to the insured)).

Arch then filed a lawsuit in a Harris County district court, seeking an administrative

remedy, naming Anadarko, Western Gas, and Rita Candelario as defendants and seeking the same

relief, i.e., a judicial declaration that Anadarko was Candelario’s employer under a borrowed-

servant theory and that the Workers’ Compensation Act’s exclusive-remedy provision prohibited

Candelario from bringing her lawsuit against Anadarko. In the meantime, the Reeves County

district court stayed the underlying proceedings in its court, while the Harris County lawsuit was

pending.

At an October 2022 hearing in the Harris County court, Arch’s attorney argued that seeking

an administrative remedy was its only avenue for obtaining a ruling on the exclusive-remedy bar,

acknowledging that Arch could not be considered a party to the underlying lawsuit in Reeves

County as an insurer, and that Arch had no right to direct Anadarko to raise an affirmative defense

it did not wish to raise. 3 She then argued that if the exclusive-remedy provision barred

Candelario’s lawsuit as a matter of law—due to her status as a borrowed employee—then Arch

had no duty to defend or indemnify Anadarko. And in turn, she argued that Arch should not be

required to continue to incur costs to defend a lawsuit that should be dismissed. After the court

expressed concern that Arch was asking it to resolve a fact issue in the underlying lawsuit—i.e.,

3 As Arch’s attorney recognized at the hearing, the Rules of Civil Procedure prohibit the joinder of an insurance company as a party in a tort case, except in limited circumstances not at issue here. TEX. R. CIV. P. 51(b) (see In re Essex Ins. Co., 450 S.W.3d 524, 525 (Tex.

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In Re: Arch Insurance Company v. the State of Texas, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-arch-insurance-company-v-the-state-of-texas-texapp-2023.