Maryland Casualty Company, National Standard Insurance Company, and Maryland Lloyds v. South Texas Medical Clinics, P.A.

• Court: Court of Appeals of Texas
• Decided: January 10, 2008
• Docket: 13-06-00089-CV
• Status: Published

Opinion

                                                     NUMBER 13-06-089-CV

                                        COURT OF APPEALS                        

                     THIRTEENTH DISTRICT OF TEXAS

                         CORPUS CHRISTI - EDINBURG

MARYLAND CASUALTY COMPANY,

NATIONAL STANDARD INSURANCE COMPANY,

AND MARYLAND LLOYDS,                                               Appellants,

v.

SOUTH TEXAS MEDICAL CLINICS, P.A.,                                      Appellee.

                             On appeal from the 23rd District Court

of Wharton County, Texas.

                               MEMORANDUM OPINION

                       Before Justices Yañez, Rodriguez, and Garza

                            Memorandum Opinion by Justice Garza                      

This is a summary judgment case in which appellants, Maryland Casualty Company, National Standard Insurance Company, and Maryland Lloyds (collectively AMaryland@), dispute their duty to defend appellee, South Texas Medical Clinics, P.A. (ASTMC@), in an underlying lawsuit against STMC for sexual discrimination, negligence, intentional infliction of emotional distress, and invasion of privacy.^[1]  STMC, as cross-appellant, disputes the trial court=s allocation of its defense costs.  The trial court granted, in part, STMC=s motion for partial summary judgment and denied Maryland=s cross-motion for summary judgment and its supplemental cross-motion for summary judgment.  By three issues, taken out of order, Maryland contends that the judgment rendered by the trial court should be reversed because:  (1) the underlying lawsuit does not allege facts which state a claim for false imprisonment, thus rendering the trial court=s granting of STMC=s motion for partial summary judgment improper; (2) the underlying lawsuit does not allege facts which state a claim for invasion of privacy, thus rendering the trial court=s granting of STMC=s motion for partial summary judgment improper; and (3) the fortuity doctrine precludes any duty to defend STMC in the underlying lawsuit brought by three former STMC employees and a third party.  By one cross-issue, STMC complains of the trial court=s allocation of defense costs.  We affirm the judgment of the trial court in STMC=s favor as it pertains to Maryland=s duty to defend; we reverse the judgment of the trial court as it pertains to the allocation of defense costs and render judgment for STMC for all costs expended in defending the Bollom lawsuit.

I. Factual & Procedural Background

On June 8, 2000, STMC filed suit against Maryland and Trinity Universal Company (ATrinity@) for breach of contract.^[2]  This suit arose from an underlying lawsuit (the ABollom lawsuit@) brought against STMC for sexual discrimination, negligence, intentional infliction of emotional distress, and invasion of privacy.^[3]  Maryland answered STMC=s suit, asserting that the plaintiffs in the Bollom lawsuit did not allege sufficient facts to trigger coverage under the policies issued to STMC by Maryland.

On February 20, 2001, STMC filed a motion for partial summary judgment.  STMC alleged that the facts of the underlying suit triggered coverage under ACoverage B-Personal Injury,@ a clause contained in the policy issued to STMC by Maryland, for false imprisonment and a violation of the right to privacy.

On March 23, 2001, Maryland filed a response to STMC=s motion for partial summary judgment and a cross-motion for summary judgment, asserting that the Bollom lawsuit did not allege sufficient facts to trigger coverage, thereby eliminating Maryland=s duty to defend STMC in the Bollom lawsuit.  In conjunction with its response, Maryland filed a supplemental cross-motion for summary judgment based upon the fortuity doctrine, in which it asserted that the fortuity doctrine precludes coverage to STMC for the underlying suit because the damages sustained by the plaintiffs in the underlying suit were a known loss or a loss in progress.  Therefore, Maryland contended that it does not have a duty to defend STMC in the Bollom lawsuit as a matter of law.

On June 3, 2002, the trial court granted STMC=s motion for partial summary judgment with respect to coverage for the false imprisonment claim.^[4]  The trial court denied STMC=s motion for partial summary judgment with respect to all other issues, including its claim for coverage regarding the Bollom plaintiffs= invasion of privacy claim.  The trial court also denied Maryland=s cross-motion for summary judgment and its supplemental cross-motion for summary judgment based upon the fortuity doctrine.

On November 23, 2005, Maryland filed a motion to allocate defense costs with the trial court.^[5]  The trial court granted Maryland=s motion to allocate defense costs on December 20, 2005, and established the following defense cost allocation:  Maryland is responsible for paying two-thirds of the defense costs sustained by STMC; STMC shoulders the burden of one-third of the defense costs.  The amounts were to be calculated after the total defense costs were reduced by the amount of the settlement between STMC and Trinity.

In connection with the final judgment of the trial court, STMC and Maryland stipulated that STMC had incurred $245,370 in reasonable and necessary legal fees and expenses in defending the underlying suit.^[6]  On February 8, 2006, the trial court filed its final judgment.^[7]  On February 28, 2006, Maryland filed its initial notice of appeal, which it later amended on March 2, 2006.^[8]  STMC filed a notice of cross-appeal on March 7, 2006.^[9]

II. Standard of Review

The function of summary judgment is to eliminate patently unmeritorious claims and defenses, not to deprive litigants of the right to a trial by jury.  Tex. Dep=t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 228 (Tex. 2004) (citing Casso v. Brand, 776 S.W.2d 551, 556 (Tex. 1989)); Alaniz v. Hoyt, 105 S.W.3d 330, 344 (Tex. App.BCorpus Christi 2003, no pet.).  We review de novo a trial court=s grant or denial of a traditional motion for summary judgment.  Creditwatch, Inc. v. Jackson, 157 S.W.3d 814, 816 n.7 (Tex. 2005) (citing Schneider Nat=l Carriers, Inc. v. Bates, 147 S.W.3d 264, 290 n.137 (Tex. 2004)); Alaniz, 105 S.W.3d at 345.

Under a traditional motion for summary judgment, the movant must establish that no material fact issue exists and that it is entitled to judgment as a matter of law.  Tex. R. Civ. P. 166a(c); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002); Alaniz, 105 S.W.3d at 345; Mowbray v. Avery, 76 S.W.3d 663, 690 (Tex. App.BCorpus Christi 2002, pet. denied).  After the movant produces evidence sufficient to show it is entitled to summary judgment, the nonmovant must then present evidence raising a fact issue.  See Walker v. Harris, 924 S.W.2d 375, 377 (Tex. 1996).  In deciding whether there is a disputed material fact that precludes summary judgment, evidence favorable to the non-movant will be taken as true.  Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985).  Moreover, every reasonable inference must be indulged in favor of the non-movant and any doubts must also be resolved in its favor.  Id. at 549.  When both parties move for summary judgment and the trial court grants one motion and denies the other, the reviewing court should review both parties= summary judgment evidence and determine all questions presented.  See FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000); see also Warrantech Corp. v. Steadfast Ins. Co., 210 S.W.3d 760, 765 (Tex. App.BFort Worth 2006, no pet.).  The reviewing court should render the judgment that the trial court should have rendered.  See FM Props., 22 S.W.3d at 872; see also Warrantech, at 765.

III. Analysis

In its first and second issues, Maryland contends that the Bollom petition does not allege facts which state a claim for either false imprisonment or invasion of privacy.^[10]  As such, Maryland contends that it does not owe STMC a duty to defend the Bollom lawsuit as a matter of law.  The trial court=s judgment specifically found a duty to defend based on the allegation of false imprisonment, not invasion of privacy.

An insurer has the following four options when faced with the dilemma of whether

to defend or refuse to defend a proffered claim:  A(1) completely decline to assume the insured=s defense; (2) seek a declaratory judgment as to its obligations and rights; (3) defend under a reservation of rights or a non-waiver agreement; [or] (4) assume the insured=s unqualified defense.@  E & L Chipping Co. v. Hanover Ins. Co., 962 S.W.2d 272,  274 (Tex. App.BBeaumont 1998, no pet.) (citing Katerndahl v. State Farm Fire & Cas. Co., 961 S.W.2d 518, 521 (Tex. App.BSan Antonio 1997, no pet.); Farmers Tex. County Mut. Ins. Co. v. Wilkinson, 601 S.W.2d 520, 522 (Tex. Civ. App.BAustin 1980, writ ref=d n.r.e.)).  An insurer=s duty to defend and duty to indemnify are distinct and separate duties.  Id. (citing Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 821-22 (Tex. 1997)).  An insurer may have a duty to defend, but no duty to indemnify.  See Farmers Tex. County Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 82 (Tex. 1997) (per curiam).  Therefore, the duty to defend is much broader than the duty to indemnify.  See id.

Whether an insurer owes its insured a duty to defend is determined by the pleadings in the underlying lawsuit and the insurance policy, which is otherwise known as the Aeight corners@ rule.  Scottsdale Ins. Co. v. Travis, 68 S.W.3d 72, 75 (Tex. App.BDallas 2001, pet. denied) (citing Nat=l Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997)).  In accordance with the Aeight corners@ rule, we must examine the factual allegations in the underlying petition and the terms of the insurance policy to determine if any portion of the suit states a cause of action potentially covered by the policy, without regard to the truth or falsity of such allegations.  GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305, 308 (Tex. 2006); Folsom Invs., Inc. v. Am. Motorists Ins. Co., 26 S.W.3d 556, 558-59 (Tex. App.BDallas 2000, no pet.).  If coverage is found for any portion of the underlying suit, the insurer must defend the entire suit.  Scottsdale Ins. Co., 68 S.W.3d at 75 (citing St. Paul Ins. Co. v. Tex. Dep=t of Transp., 999 S.W.2d 881, 884 (Tex. App.BAustin 1999, pet. denied)).  The insurer does not have a duty to defend if an insured, in its petition, alleges only facts not covered or excluded by the policy.  Fid. & Guar. Ins. Underwriters, Inc. v. McManus, 633 S.W.2d 787, 788 (Tex. 1982); Folsom, 26 S.W.3d at 559.  We view the factual allegations in the petition liberally, resolving any doubt in favor of the insured.  Scottsdale Ins. Co., 68 S.W.3d at 75 (citing McCarthy Bros. Co. v. Cont=l Lloyds Ins. Co., 7 S.W.3d 725, 728 (Tex. App.BAustin 1999, no pet.)).

The elements of false imprisonment are:  (1) a willful detention; (2) performed without consent; and (3) without the authority of law.  See Randall=s Food Markets, Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995); Wal-Mart Stores, Inc. v. Cockrell, 61 S.W.3d 774, 777 (Tex. App.BCorpus Christi 2001, no pet.); see also Cuellar v. Walgreens Co., No. 13-00-594-CV, 2002 Tex. App. LEXIS 2293, at **6-7 (Tex. App.BCorpus Christi Mar. 28, 2002, no pet.).  A willful detention may be accomplished by violence, by threats, or by any other means restraining a person from moving from one place to another.  See Randall=s, 891 S.W.2d at 644-45; see also Cuellar, 2002 Tex. App. LEXIS 2293, at *7.  If the alleged detention was performed with the authority of law, then no false imprisonment occurred.  See Cockrell, 61 S.W.3d at 777 (citing Wal-Mart Stores, Inc. v. Resendez, 962 S.W.2d 539, 540 (Tex. 1998)).  The plaintiff must prove the absence of authority in order to establish the third element of a false imprisonment cause of action.  Id.  An employer has a common-law privilege to investigate reasonably credible allegations regarding the dishonesty of its employees.  Randall=s, 891 S.W.2d at 644.

Where it is alleged that a detention is effected by a threat, the plaintiff must demonstrate that the threat was such as would inspire in the threatened person a just fear of injury to her person, reputation, or property.  Fojtik v. Charter Med. Corp., 985 S.W.2d 625, 629 (Tex. App.BCorpus Christi 1999, pet. denied).  Threats to call the police are not usually enough to effect an unlawful imprisonment.  Id. (citing Morales v. Lee, 668 S.W.2d 867, 869 (Tex. App.BSan Antonio 1984, no writ); W. Prosser, Torts ' 11 (4th ed. 1971)).  Moreover, a reviewing court may consider such factors as relative age, size, sex, and the physical demeanor of the participants in determining whether such threats are enough to overcome the plaintiff=s free will.  See Fojtik, 985  S.W.2d at 629; see also Cuellar, 2002 Tex. App. LEXIS 2293, at *8.

In reviewing the false imprisonment claims contained in the Bollom petition, we must

look solely at the insurance policies issued to STMC by Maryland and the pleadings in the Bollom lawsuit.  See Scottsdale Ins. Co., 68 S.W.3d at 75 (citing Nat=l Union Fire Ins. Co., 939 S.W.2d at 141).  In reviewing the plaintiff=s pleadings in light of the policy provisions, we must focus on the facts alleged, not on the legal theories.  Nat=l Union Fire Ins. Co., 939 S.W.2d at 142; Saint Paul Surplus Lines Ins. Co. v. Geo Pipe Co., 25 S.W.3d 900, 903 (Tex. App.BHouston [1st Dist.] 2000, no pet.) (op. on reh=g).  AIt is not the cause of action alleged that determines coverage, but the facts giving rise to the alleged actionable conduct.@  Nat=l Union Fire Ins. Co., 939 S.W.2d at 141 (emphasis in original).^[11]  If the plaintiff=s petition does not allege facts within the scope of the policy=s coverage, an insurer is not legally required to provide a defense.  Cowan, 945 S.W.2d at 821; Nat=l Union Fire Ins. Co., 939 S.W.2d at 141; McManus, 633 S.W.2d at 788.  Based upon the allegations in the Bollom petition, the elements for a claim of false imprisonment are satisfied. 

The petition provides that Bollom, among others, was willfully detained by William C. Yankowsky, M.D.,  to engage in unwanted Aclosed door@ hypnosis sessions while on the job.^[12]  Moreover, Dr. Yankowsky=s use of an alyce clamp prevented Bollom from leaving the room and subsequently terminating the hypnosis session.  In addition, the use of the alyce clamp left a permanent scar on Bollom=s right arm.^[13]  Bollom alleged that she consented to the hypnosis sessions solely because she feared Dr. Yankowsky and feared losing her job.^[14]  According to the Bollom petition, Dr. Yankowsky routinely intimidated and belittled Bollom when she refused to participate in these sessions.  As a result of the bullying and the hypnosis sessions, Bollom alleged she sustained a deterioration in her mental health.  It is clear that Dr. Yankowsky=s actions engendered Bollom=s justified fear of injury to her person, reputation, or property.  See Fojtik, 985 S.W.2d at 629. 

Furthermore, Dr. Yankowsky was Bollom=s Adirect boss.@  The hierarchical positioning of the participants and Dr. Yankowsky=s alleged intimidating acts set out in the petition support a determination that Bollom=s free will was overcome.  See id.; see also Cuellar, 2002 Tex. App. LEXIS 2293, at *8.  Nothing in the petition reflects that Dr. Yankowsky was authorized to detain Bollom to investigate dishonesty or for any other justification authorized by law.  See Randall=s, 891 S.W.2d at 644; Fojtik, 985 S.W.2d at 629.  We, therefore, find that the Bollom petition alleges facts giving rise to a false imprisonment claim. 

It is undisputed that claims for false imprisonment were within the scope of coverage afforded by the Maryland-issued insurance policies.  Because a claim for false imprisonment was properly alleged, Maryland was required to provide STMC with a full defense for the entire Bollom lawsuit.  See Scottsdale Ins. Co., 68 S.W.3d at 75; St. Paul Ins. Co., 999 S.W.2d at 884.  Therefore, having found Maryland was required to defend the entire Bollum lawsuit based upon the false imprisonment claim, we need not address Maryland=s second issue pertaining to invasion of privacy.  See Tex. R. App. P. 47.1.  Accordingly, we overrule Maryland=s first and second issues.   

IV. The Fortuity Doctrine

In its third issue, Maryland contends that the trial court erred in holding that it had a duty to defend because coverage for the alleged offenses is precluded pursuant to the fortuity doctrine.  STMC counters by arguing that Maryland has failed to establish, as a matter of law, that prior to 1986, STMC actually knew or should have known of an ongoing loss.  As such, STMC argues that the fortuity doctrine precludes neither coverage nor Maryland=s duty to defend the underlying Bollom lawsuit.

Generally, fortuity is an inherent requirement of all risk insurance policies.  Two Pesos v. Gulf Ins. Co., 901 S.W.2d 495, 501 (Tex. App.BHouston [14th Dist.] 1995, no writ); Miles v. Royal Indem. Co., 589 S.W.2d 725, 729 (Tex. Civ. App.BCorpus Christi 1979, writ ref'd n.r.e.); Brownsville Fabrics, Inc. v. Gulf Ins. Co., 550 S.W.2d 332, 336‑37 (Tex. Civ. App.BCorpus Christi 1977, writ ref'd n.r.e.).  As the Fourteenth Court of Appeals has noted, "[t]he concept of insurance is that the parties, in effect, wager against the occurrence or non‑occurrence of a specified event; the carrier insures against a risk, not a certainty."  Two Pesos, 901 S.W.2d at 501 (quoting Bartholomew v. Appalachian Ins. Co., 655 F.2d 27, 29 (1st Cir. 1981)). 

The fortuity doctrine incorporates the "known loss" and "loss in progress" principles.  Id.  These aspects of the fortuity doctrine focus on the proposition that insurance coverage is precluded where the insured is, or should be, aware of an ongoing progressive loss or known loss at the time the policy is purchased.  Id. (citing Inland Waters Pollution Control, Inc. v. Nat'l Union Fire Ins. Co., 997 F.2d 172, 175‑77 (6th Cir. 1993)); see Certain Underwriters at Lloyd=s v. KKM Inc., 215 S.W.3d 486, 495 (Tex. App.BCorpus Christi 2006, no pet.).  A "known loss" is a loss the insured knew had occurred prior to making the insurance contract.  See Burch v. Commonwealth Mut. Ins. Co., 450 S.W.2d 838, 840‑41 (Tex. 1970); Scottsdale Ins. Co., 68 S.W.3d at 75.  A "loss in progress" occurs when the insured is, or should be, aware of an ongoing progressive loss at the time the policy is purchased.  Scottsdale Ins. Co., 68 S.W.3d at 75.  AThe [fortuity] doctrine has its roots in the prevention of fraud; because insurance policies are designed to insure against fortuities, fraud occurs when a policy is misused to insure a certainty.@  Id.  In reviewing the applicability of the fortuity doctrine, we are bound by the Aeight corners@ rule.  Warrantech, 210 S.W.3d at 767-68; Burlington Ins. Co. v. Tex. Krishnas, Inc., 143 S.W.3d 226, 230-31 (Tex. App.BEastland 2004, no pet.); E & L Chipping Co., 962 S.W.2d at 276.  Therefore, we must review solely the Bollom petition and the insurance policies issued to STMC by Maryland.  See Scottsdale Ins. Co., 68 S.W.3d at 75 (citing Nat=l Union Fire Ins. Co., 939 S.W.2d at 141).  According to the first amended petition in the Bollom lawsuit, Dr. Yankowsky began forcing Bollom and others to participate in the Aclosed door@ hypnosis sessions in 1985.  However, the petition does not conclusively establish that STMC was aware of Dr. Yankowsky=s alleged wrongful conduct in 1986, when STMC first purchased an insurance policy from Maryland.  It is unclear as to Dr. Yankowsky=s role in purchasing  the insurance policies from Maryland.  In addition, we are not provided with a date reflecting when Bollum first began complaining about the alleged wrongful conduct of Dr. Yankowsky, thus putting STMC on notice of the alleged wrongful conduct.  Therefore, Maryland cannot conclusively establish, based solely on the Bollum petition, that STMC sought to insure a known or ongoing loss as a matter of law.  See Burch, 450 S.W.2d at 840‑41; Scottsdale Ins. Co., 68 S.W.3d at 75; see also Warrantech, 210 S.W.3d at 768 (AApplication of the fortuity doctrine does not hinge on whether the insured knew a particular act was wrongful.  Rather, it hinges on whether the insured knew before the inception of the coverage that an actBknowingly wrongful or otherwiseBresulted in a loss.@).^[15] 

In looking at the Aeight corners@ of the insurance policy and the underlying pleadings, it is apparent that the facts pleaded are within the scope of the policy period.  See E & L Chipping Co., 962 S.W.2d at 275; see also GuideOne Elite Ins. Co., 197 S.W.3d at 307, 310-11 (concluding that an insurer has a duty to defend even though alleged sexual misconduct by a church employee occurred from 1992 to 1994 and the insurance policy had an effective date of March 31, 1993).  We, therefore, conclude that the fortuity doctrine does not preclude STMC=s entitlement to a full defense from Maryland.  Accordingly, we overrule Maryland=s third issue.

V. Allocation of Defense Costs

In its response to Maryland=s motion to allocate defense costs and on appeal, STMC argues that because Maryland has a duty to defend the underlying Bollom lawsuit, Maryland must pay for a full defense, not a pro rata or partial defense.  STMC further argues that the language of the policies does not provide a basis for a prorated allocation of defense costs.  Conversely, Maryland asserts that there is a distinction between the duty to defend and the duty to pay defense costs, which, in combination with notions of fairness and the insurance policy language itself, permits the insurance company to pay defense costs for solely Atime on the risk.@^[16]  Maryland contends that the allocation of defense costs between an insurer and its insured is a matter of first impression in Texas and that we should follow the reasoning in  Ins. Co. of N. Am. v. Forty-Eight Insulations, Inc., 451 F. Supp. 1230, 1243 (E.D. Mich. 1978), aff=d, 633 F.2d 1212 (6th Cir. 1980), aff=d on reh=g, 657 F.2d 814 (6th Cir.) (holding that defense costs must be borne proportionally among the insurers according to the period of time that they insured against the risk, thus favoring pro rata liability for defense costs over joint and several liability for a full defense).

This issue is not a matter of first impression in Texas.  In fact, the Austin Court of Appeals has held that Aunder Texas law, an insurer=s duty to defend its insured on a claim occurring partially within and partially outside of the policy period is not reduced pro rata by the insurer=s >time on the risk= or by any other formula.@  Tex. Prop. & Cas. Ins. Guar. Ass=n v. Sw. Aggregates, Inc., 982 S.W.2d 600, 607 (Tex. App.BAustin 1998, no pet.).  The court noted that Athe insurer=s duty is to provide its insured with a complete defense . . . not to provide a pro rata defense.@  Id. (citing CNA Lloyds of Tex. v. St. Paul Ins. Co., 902 S.W.2d 657, 661 (Tex. App.BAustin 1995, writ dism=d by agr.)). 

The Sw. Aggregates court further noted a split in the federal courts regarding the pro rata allocation of defense costs.  Id.; see Forty-Eight Insulations, 633 F.2d at 1224-25; Keene Corp. v. Ins. Co. of N. Am., 667 F.2d 1034, 1048-50 (D.C. Cir. 1981) (holding that once coverage under an insurance policy is triggered, an insurer is liable up to the policy limits, subject to Aother insurance@ clauses, and, therefore, each insurer is fully liable for all defense costs).  The Texas Supreme Court has adopted the Keene approach regarding the allocation of defense costs.  Sw. Aggregates, 982 S.W.2d at 605 (citing Am. Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 854-55 (Tex. 1994)).^[17]  Therefore, Texas law does not require a pro rata allocation of defense costs.  See id. 

Despite the Texas Supreme Court=s implicit rejection of the Forty-Eight Insulations standard, Maryland contends that the interests of fairness and the factual scenario in the instant case necessitates the imposition of the Forty-Eight Insulations standard.  In particular, Maryland argues that STMC should be treated as an insurer for the time in which it was uninsured, like the appellee, Forty-Eight Insulations, Inc., was treated in Forty-Eight Insulations.  As such, Maryland attempts to categorize both STMC and itself as insurers, thus aiding in the apportionment of defense costs.  However, Maryland=s argument fails because it is premised on the reasoning advanced in Forty-Eight Insulations, which the Texas Supreme Court has declined to follow.  See Garcia, 876 S.W.2d at 854-55; see also Sw. Aggregates, 982 S.W.2d at 605.

Maryland further contends that it is only required to pay defense costs Ato which this insurance applies,@ Ato which this coverage part applies,@ or Aduring the policy period.@  Therefore, Maryland asserts that it is only liable for its prorated share of the defense costs because some of the claims allegedly arose outside of the coverage period.  Essentially, Maryland argues that it should only be liable for its Atime on the risk.@  However, Maryland is required to provide a full defense to STMC in the event that insurance policy provisions are triggered, as we have already determined, regardless of whether the claim occurs partially outside of the policy.  See Sw. Aggregates, 982 S.W.2d at 607; see also CNA Lloyds, 902 S.W.2d at 661.  In addition, several Texas courts have rejected the Atime on the risk@ approach advanced by Maryland.  See Sw. Aggregates, 982 S.W.2d at 607; see also CNA Lloyds, 902 S.W.2d at 661.  The key inquiry is whether a claim arose during the policy period, which this Court and the trial court have confirmed.  See Sw. Aggregates, 982 S.W.2d at 607.  Moreover, we are unable to find, nor has Maryland directed us to, language in the insurance policies that specifically refers to a pro rata allocation of the defense costs.  The insurance policies do not provide textual support for Maryland=s assertion that it should only be liable for a prorated share of the defense costs.  As such, we conclude that STMC is entitled to a full defense; therefore, Maryland should be responsible for all defense costs incurred in defending the Bollom lawsuit.  Accordingly, STMC=s sole issue in its cross-appeal is sustained. 

VI. Conclusion

Based on the foregoing, we affirm the judgment of the trial court as it pertains to Maryland=s duty to defend.  However, we reverse the judgment of the trial court as it pertains to the allocation of defense costs and render judgment for STMC for all costs expended in defending the Bollom lawsuit.

                                                                                                                                                                                      __________________________    

DORI CONTRERAS GARZA,

Justice

Memorandum Opinion delivered and

filed this the 10th day of January, 2008.

---

¹ South Texas Medical Clinics, P.A. (ASTMC@) is a multi-specialty clinic with five satellite locations for patients in Wharton, Matagorda, Fort Bend, Jackson, Colorado, and Brazoria counties.  This appeal involves the STMC clinic in Wharton, Texas, which presently employs forty-three doctors.  The record does not reflect the number of doctors STMC employed at any given time from 1985 to 1994, the pertinent time frame in this appeal.

² Trinity Universal Company (ATrinity@) insured STMC from November 14, 1993 to November 14, 1994.  The record reflects that Trinity also refused to defend STMC in the underlying suit.  However, on December 27, 2005, STMC announced a settlement with Trinity and moved to dismiss all causes of action against Trinity with prejudice.  On January 6, 2006, the trial court granted STMC=s motion to dismiss all causes of action against Trinity with prejudice.  Accordingly, Trinity is not a party to this appeal. 

³ The underlying suit was brought by Jeanette Bollom, Nancy Ondrias, Donna Henderson, former STMC employees, and Jeanette Bollom=s husband, Charles Bollom, a non-STMC employee, against Dr. William C. Yankowsky, President and Chief Surgeon at STMC, involving alleged forced Aclosed door@ hypnosis sessions that transpired for a period of nine years.  The record reflects that STMC expended its own resources to defend the lawsuit and eventually settled with the plaintiffs in the Bollom lawsuit for $163,700.

⁴ The trial court=s order granting STMC=s motion for partial summary judgment with respect to coverage for the Bollom plaintiffs= false imprisonment claim was incorporated into the trial court=s final judgment.

⁵ In its motion to allocate defense costs, Maryland asserted that the trial court should only award STMC two-thirds of its costs sustained in defending the underlying suit based on a reduction of the total defense costs by the amount of the settlement between STMC and Trinity, considering Maryland only insured STMC for six of the nine years at issue in the underlying suit.  The record contains the following chart, which illustrates the insurance policies and the corresponding coverage periods at issue on appeal:

Carrier Name	Policy Number	Coverage Period
Maryland Casualty	TMP 49190955	11/14/1986-11/14/1987
	EPA 03640787	11/14/1988-11/14/1989
National Standard	EPA 07958326	11/14/1990-11/14/1991
Maryland Lloyds		11/14/1991-11/14/1992
		11/14/1992-11/14/1993
		11/14/1993-11/14/1994

⁶ In its final judgment, the trial court explicitly referred to its December 20, 2005 order allocating one-third of the defense costs to STMC and the remaining two-thirds of the defense costs to Maryland.  The trial court=s final judgment also specifically referred to the parties= stipulation that STMC incurred $245,370 in defense costs Ain the underlying Bollom lawsuit less the Trinity settlement credit.@

⁷ In its final judgment, the trial court awarded $283,564.50 in damages to STMC from Maryland, which was broken down as follows:

A.         $163,580.00 for defense costs incurred by STMC in the underlying Bollom lawsuit;

B.         $44,984.50 in prejudgment interest on that sum at the annual rate of 5.0% for 5.5 years;

C.         $75,000.00 in attorneys [sic] fees incurred by STMC in connection with the prosecution of this suit for duty to defend.

. . . .

IT IS FURTHER ORDERED THAT the Maryland Casualty Defendants shall pay STMC the following appellate costs if and only if STMC prevails on appeal:

$15,000 for an appeal to the Court of Appeals; and

$15,000 for an appeal to the Texas Supreme Court.

⁸ In its amended notice of appeal, Maryland appeals the trial court=s denial of its motion for summary judgment and its supplemental cross-motion for summary judgment entered on June 3, 2002, and the trial court=s final judgment entered on February 8, 2006.  We note that under the final judgment rule, there is no appeal from a judgment denying a motion for summary judgment.  Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625 (Tex. 1996) (citing Novak v. Stevens, 596 S.W.2d 848, 849 (Tex. 1980)); Baylor Coll. of Med. v. Tate, 77 S.W.3d 467, 469 (Tex. App.BHouston [1st Dist.] 2002, no pet.). 

The trial court, in its final judgment, notes ASTMC has non-suited with prejudice its claims against the Maryland Casualty Defendants for breach of the duty to indemnify.@  The trial court further notes, in its final judgment, that AThe Court considering the Stipulation, the Summary Judgment Order, the Allocation Order, and all pleadings on file, enters this Final Judgment which fully resolves all claims and causes of action in this suit.@  Therefore, this action is final and appealable.  See In re Burlington Coat Factory, 167 S.W.3d 827, 830 (Tex. 2005) (holding that when the trial court resolves some claims by summary disposition, leaving other claims unresolved, the judgment is final if it unequivocally states it finally disposes of all claims); Ritzell v. Espeche, 87 S.W.3d 536, 538 (Tex. 2002) (same); Lehmann v. Har-Con Corp., 39 S.W.3d 191, 200 (Tex. 2001) (same). 

Because both parties filed motions for summary judgment, we will determine all questions presented.  Dow Chem. Co. v. Bright, 89 S.W.3d 602, 605 (Tex. 2002); Novak, 596 S.W.2d at 849 (ABut when . . . both parties file motions for summary judgment and one such motion is granted, then the trial court=s judgment becomes final and appealable, and on appeal the Court of Civil Appeals should determine all questions presented.@).

⁹ In its notice of cross-appeal, STMC takes issue with the trial court=s order to allocate defense costs entered on December 21, 2005, which is incorporated into the trial court=s final judgment entered on February 8, 2006.

^[10] The trial court denied STMC=s motion for summary judgment as it pertained to its claim for invasion of privacy.  This claim is appealable because the trial court, in its final judgment, noted that AThe Court considering the Stipulation, the Summary Judgment Order, the Allocation Order, and all pleadings on file, enters this Final Judgment which fully resolves all claims and causes of action in this suit.@  See In re Burlington Coat Factory, 167 S.W.3d at 830; Ritzell, 87 S.W.3d at 538; Lehmann, 39 S.W.3d at 200.  Moreover, the parties do not dispute this issue. 

¹¹ The Bollom petition does not contain a claim for false imprisonment.  However, we must determine if the facts alleged in the Bollom petition give rise to any claim triggering Maryland=s duty to defend under the corresponding Maryland-issued insurance policies without regard to the legal theories proposed.  See Nat=l Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 142 (Tex. 1997); Saint Paul Surplus Lines Ins. Co. v. Geo Pipe Co., 25 S.W.3d 900, 903 (Tex. App.BHouston [1st Dist.] 2000, no pet.) (op. on reh=g).

¹² Maryland contends that there are no factual allegations in the Bollom petition demonstrating that Dr. Yankowsky willfully detained Bollom or any of the other plaintiffs in the underlying lawsuit as a matter of law.  However, the use of the alyce clamp, Dr. Yankowsky=s intimidating acts, and the fact that the sessions were conducted with the door closed is enough to demonstrate that Dr. Yankowsky intentionally detained Bollom and the other plaintiffs in the underlying lawsuit to engage in hypnosis sessions.  See Randall=s Food Markets, Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995); see also Cuellar v. Walgreens Co., No. 13-00-594-CV, 2002 Tex. App. LEXIS 2293, at *7 (Tex. App.BCorpus Christi Mar. 28, 2002, no pet.).

¹³ We are unable to retrieve a precise definition for the alyce clamp used by Dr. Yankowsky.  However, a clamp is defined as Aany of various instruments or appliances having parts brought together for holding or compressing something . . . .@  Merriam-Webster: Medline Plus Online Medical Dictionary, available at http://www2.merriam‑webster.com/cgi‑bin/mwmednlm?book=Medical&va=clamp (last visited Nov. 19, 2007).

¹⁴ We only address the false imprisonment claims pertaining to Jeanette Bollom because the petition lacks specificity as to the other plaintiffs in the lawsuit.

¹⁵ In support of its fortuity doctrine argument, Maryland relies heavily on the holdings in Two Pesos, Inc. v. Gulf Insurance Co., 901 S.W.2d 498, 501-02 (Tex. App.BHouston [14th Dist.] 1995, no writ) and Scottsdale Insurance Co. v. Travis, 68 S.W.3d 72, 76-77 (Tex. App.BDallas 2001, pet. denied).  Both cases are readily distinguishable from the instant case. 

In Two Pesos, the appellate court held that Taco Cabana=s motion for supplemental damages Adid not allege an offense occurring during Gulf=s [the insurance company] policy period, and that coverage for Two Pesos= continued trade dress infringement is precluded because the claim constitutes a known loss or loss in progress.@  See 901 S.W.2d at 498, 502.  Moreover, the Two Pesos court noted that Athe risk of liability was no longer unknown because the injuries resulted when Two Pesos first copied Taco Cabana=s trade dress.  The risk of injury from continued infringement was readily apparent, or should have been.@  Id.  Clearly, the actors in Two Pesos engaged in intentional behaviorCinfringing on Taco Cabana=s trade dressCeven after the trial court issued a judgment against Two Pesos for trade dress infringement.  Moreover, Two Pesos, based on the knowledge that its actions subjected it to liability (loss), actively sought to insure the known loss.  Id.  Here, the Bollom petition does not conclusively establish that STMC was aware of intentional conduct giving rise to liability and actively sought to insure a known loss.

In Scottsdale Insurance Co., the appellate court applied the fortuity doctrine to preclude coverage on the basis that all of the allegations alleged in the underlying petition arose before the inception of the insurance policy, and even before the named insured was formed as a corporation.  68 S.W.3d at 76-77.  Clearly, there was no possibility of coverage because none of the allegations in the underlying petition fell within the coverage period.  Id.  In the instant case, the majority of the wrongful conduct occurred within the coverage period, and, as previously stated, the Bollom petition does not conclusively establish that STMC actively sought to insure a known loss.

¹⁶ ATime on the risk@ has been defined as an insurer=s Ashare of the total time period over which injury is claimed.@  See Tex. Prop. & Cas. Ins. Guar. Ass=n v. Sw. Aggregates, Inc., 982 S.W.2d 600, 607 (Tex. App.BAustin 1998, no pet.).  In the instant case, Maryland contends that it should pay only two-thirds of the defense costs because its  Atime on the risk@ is six years of the nine years of wrongful conduct alleged in the Bollom petition.  See id.

¹⁷ By adopting the Keene approach to allocating defense costs, the Texas Supreme Court implicitly rejected the approach advanced in Forty-Eight Insulations.  See Am. Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 854-55 (Tex. 1994).