# LM Insurance Corporation v. The Cincinnati Insurance Company

> District Court, N.D. Texas · January 30, 2024

URL: https://www.frixlaw.com/law-library/cases/10671577

## Case

- **Court:** District Court, N.D. Texas
- **Decided:** January 30, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

LM INSURANCE COMPANY, §
§
Plaintiff, §
§
v. § Civil No. 3:22-CV-0917-K
§
CINCINNATI INSURANCE §
COMPANY, §
§
Defendant. §
§
MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiff LM Insurance Company’s (“Plaintiff”) Motion for
Partial Summary Judgment on Duty to Defend (the “Motion”) (Doc. No. 22).
Defendant Cincinnati Insurance Company (“Defendant”) filed a Response to
Plaintiff’s Motion for Partial Summary Judgment on Duty to Defend (Doc. No. 29),
brief in support (Doc. No. 30), and appendix (Doc. No. 31) (together, the “Response”).
Plaintiff filed a Reply Brief in Support of its Motion for Partial Summary Judgment
(the “Reply”) (Doc. No. 32). The Court has carefully considered the Motion, the
Response, the Reply, the applicable law, and the relevant portions of the record. The
Court finds that Plaintiff shows Rogers-O’Brien Construction Company, Ltd.
(“Rogers”) is an “additional insured” under the insurance policy issued by Defendant
and, applying Texas’ eight-corners rule, Defendant’s duty to defend Rogers as an
“additional insured” is triggered by the allegations in the underlying state court petition
when compared with the terms of the insurance policy. Further, even if the Court
assumed without deciding that the limited exception to the eight-corners rule applies

here, Defendant’s extrinsic evidence cannot be considered because it does not
conclusively establish the coverage fact to be proved, that is whether Rogers was an
additional insured under this insurance policy at the time of the underlying accident.
The Court also finds that Plaintiff is entitled to recover its costs and fees incurred in
defending Rogers in the underlying action and in filing this federal action. For these

reasons, the Court GRANTS Plaintiff’s Motion. The Court dismisses without
prejudice Plaintiff’s claim for declaratory relief on Defendant’s duty to indemnify as
this issue is not justiciable.
I. Factual and Procedural Background

(All page citations to filings in this case are to the CM/ECF page number.)
Plaintiff filed this declaratory action against Defendant in federal court on the basis of
diversity jurisdiction. Doc. No. 1 at 2; see also Doc. No. 5 at 2. Plaintiff asks the Court
declare the parties’ rights and duties under a commercial general liability policy

Defendant issued to Red Steel Company (“Red Steel”) and under which Rogers is an
additional insured, as those rights and duties relate to an underlying state court action.
Doc. No. 5 at 2.
Esteban S. Alvarez (“Mr. Alvarez”) filed a lawsuit in state court (the “State
Action”) for severe injuries he allegedly sustained when a dumpster gate fell on him

while he was working as a security guard at The Plaza at Preston Center on January 23,
2019. Doc. No. 5 at 3. In his Second Amended Petition (the “Petition”), Mr. Alvarez
named additional defendants, including Rogers and Red Steel, Defendant’s insured.

See generally id. at 36-46. Mr. Alvarez alleges that Rogers, along with Red Steel and
other named defendants, “owned, installed, maintained, designed, manufactured
and/or managed the dumpster gate which failed and injured” him. Id. at 39.
Specifically as to Rogers, Mr. Alvarez alleges that “Defendant Rogers was the general
contractor in charge of the construction site at the Plaza at Preston Center which

included the installation of the dumpster gate which failed and severely injured [him].”
Id. at 41. Mr. Alvarez alleges the following actions or omissions of Rogers constitute
negligence and gross negligence and, therefore, establish its liability for Mr. Alvarez’s
claims for negligence and premises liability:

1. In failing to do that which a reasonable and prudent general
contractor would have done under the same or similar
circumstances;
2. in failing to exercise ordinary care;
3. in failing to follow the architects and engineers specifications for
the correct type of dumpster gate to use on the premises;
4. in failing to properly specify the safe type of dumpster gate to use
on the premises;
5. in failing to install a safe dumpster gate on the premises;
6. in creating a dangerous and hazardous condition by installing a
dumpster gate that was not structurally strong enough to withstand
normal wear and tear;
7. Defendant knew or should have known that improperly ordering
and utilizing a two hinged metal dumpster gate instead of a three
hinged metal dumpster gate, as specified, presented an unreasonable
risk of harm to third parties;
8. Plaintiff was not aware nor could have been aware of this risk;
9. Defendant failed to take reasonable steps to discover and correct
the dangerous condition and failed to warn Plaintiff of the existence
of the danger;
10. in failing to follow proper plans, specifications, city ordinances
and building codes in the manufacturer and installation of the
dumpster gates; and
11. In failing to hire competent subcontractors to perform work
related to the dumpster gates which injured Plaintiff.

Id.
Mr. Alvarez also alleges in his Petition that “Rogers, as the general contractor in
control of the installation of the dumpster gate, contracted with . . . Red Steel . . . to
perform work related to the dumpster gates at issue in this lawsuit.” Id. at 42. Mr.
Alvarez further alleges that, “[a]t the instruction of Defendant Rogers,” Red Steel
“provided labor materials and equipment to manufacture and install the dumpster gates
which failed and injured [Mr. Alvarez].” Id. As alleged in the Petition, the following
actions or omissions of Red Steel constitute negligence and gross negligence and,
therefore, demonstrate its liability for Mr. Alvarez’s claims for negligence and premises
liability:
1. In failing to do that which a reasonable and prudent subcontractor
would have done under the same or similar circumstances;
2. in failing to exercise ordinary care;
3. in failing to follow the architects and engineers specifications for
the correct type of dumpster gate to use on the premises;
4. in failing to properly specify the safe type of dumpster gate to use
on the premises;
5. in failing to install the safe type of dumpster gate on the premises;
6. in creating a dangerous and hazardous condition by installing a
dumpster gate that was not structurally strong enough to withstand
normal wear and tear;
7. Defendants knew or should have known that improperly ordering
and utilizing a two hinged metal dumpster gate instead of a three
hinged metal dumpster gate, as specified, presented an unreasonable
risk of harm to third parties;
8. Plaintiff was not aware nor could have been aware of this risk;
9. Defendants failed to take reasonable steps to discover and correct
the dangerous condition and failed to warn Plaintiff of the existence
of the danger; [and]
10. in failing to follow proper plans, specifications, city ordinances
and building codes in the manufacturer and installation of the
dumpster gates.

Id. at 42-43.
It is undisputed that Defendant issued to Red Steel a commercial general
liability policy (the “Red Steel Policy”) with a coverage period of July 1, 2018, to July
1, 2019. See Doc. No. 22 at 42; Doc. No. 31 at 187; see also Doc. No. 30 at 8. It is
also undisputed that the Red Steel Policy includes an endorsement providing coverage
for additional insureds. Doc. No. 22 at 4; Doc. No. 30 at 8. This endorsement,
“Contractors’ Commercial General Liability Broadened Endorsement”, provides in
relevant part:
C. Coverages: . . .

9. Automatic Additional Insured—Specified Relationships

a. The following is hereby added to SECTION II—WHO IS
AN INSURED:

(1) Any person or organization described in
Paragraph 9.a.(2) below (hereinafter referred to as
additional insured) whom you are required to add
as an additional insured under this Coverage Part
by reason of:
(a) A written contract or agreement;
. . .
Is an insured[.]

(2) Only the following persons or organizations
are additional insureds under this endorsement,
and insurance coverage provided to such additional
insureds is limited as provided herein:
. . .

(f) Any person or organization with which
you have agreed per Paragraph 9.a.(1) above
to provide insurance, but only with respect
to liability arising out of “your work”
performed for that additional insured by
you or on your behalf. A person or
organization’s status as an insured under
this provision of this endorsement continues
for only the period of time required by the
written contract or agreement, but in no
event beyond the expiration date of this
Coverage Part. If there is no written
contract or agreement, or if no period of
time is required by the written contract or
agreement, a person or organization’s status
as an insured under this endorsement ends
when your operations for that insured are
completed.

c. SECTION IV – COMMERCIAL GENERAL LIABILITY
CONDITIONS is hereby amended as follows:

(1) Condition 5. Other Insurance is amended to
include:

(a) When required by a written contract or
agreement, this insurance is primary and/or
noncontributory as respects any other
insurance policy issued to the additional
insured, and such other insurance policy
shall be excess and/or noncontributing,
whichever applies, with this insurance.

Doc. No. 22 at 101-104; Doc. No. 31 at 246-249. It is further undisputed that the
underlying contract between Red Steel (the sub-contractor) and Rogers (the
contractor) (the “Contract”) required Red Steel to maintain a commercial general
liability insurance policy including Rogers as an additional insured. Doc. No. 22 at 5-
6; Doc. No. 30 at 6. The parties likewise do not dispute that the Contract also expressly

provides, under section “9.1(C) Continuing Completed Operations Liability
Insurance”, that coverage for Rogers “shall” be maintained “for at least 2 years
following substantial completion of the work.” Doc. No. 22 at 6 (quoting Ex. D at
139-140); Doc. No. 30 at 6.
Plaintiff had issued an insurance policy to Rogers and, under that policy, agreed

to defend Rogers in the State Action. Doc. No. 22 at 6. On June 12, 2020, Plaintiff
tendered Mr. Alvarez’s Second Amended Petition to Defendant and made a demand
on behalf of Rogers that Defendant defend and indemnify Rogers in the State Action.
Id.; see id.at 148-49. Defendant, however, refused to defend Rogers, stating that Rogers

“ceased to be an additional insured in 2016 and is not entitled to a defense from
[Defendant].” Id. at 153.
Plaintiff, as subrogee of Rogers, filed this action against Defendant asserting
breach of contract and seeking a declaratory judgment that Defendant has the primary

duty to defend Rogers in the State Action, that this duty to defend began when first
tender was made to Defendant, and that Defendant breached this duty. Doc. No. 5 at
9; see Doc. No. 22 at 10. Plaintiff seeks reimbursement of costs it has incurred in
defending Rogers in the State Action, as well as Plaintiff’s own attorneys’ fees and costs
for bringing this federal declaratory action. Doc. No. 5 at 2, 9; see Doc. No. 22 at 10.

Plaintiff filed the Motion for Partial Summary Judgment which is now before the Court.
II. Legal Standards and Applicable Law
A. Summary Judgment

“Summary judgment is required when ‘the movant shows that there is no dispute
as to any material fact and the movant is entitled to judgment as a matter of law.’”
Trent v. Wade, 776 F.3d 368, 376 (5th Cir. 2015) (quoting FED.R.CIV.P. 56(a)). A
dispute of a material fact is “genuine” if the evidence is such that a reasonable jury

could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). If the moving party will have the burden of proof on a
claim, “the party ‘must establish beyond peradventure all of the essential elements of
the claim.’” Eguchi v. Kelly, Civ. Action No. 3:16-CV-1286-D, 2017 WL 2902667, at
*1 (N.D. Tex. July 7, 2017)(Fitzwater, J.) (citing Fontenot v. Upjohn Co., 780 F.2d 1190,

1194 (5th 1986)). “This means that the moving party must demonstrate that there
are no genuine and material fact disputes and that the moving party is entitled to
summary judgment as a matter of law.” Id. (citing Martin v. Alamo Cmty. Coll. Dist.,
353 F.3d 409, 412 (5th Cir. 2003)). “[T]he ‘beyond peradventure’ standard is

‘heavy.’” Id. (internal citations omitted).
Once the movant satisfies his burden, the nonmovant may not rest on the
pleadings but must present competent summary judgment evidence showing a genuine
fact issue for trial exists. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)(en banc). “The party opposing

summary judgment is required to identify specific evidence in the record and to
articulate the precise manner in which that evidence supports his or her claim.” Ragas
v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998); see also Douglass v. United

Servs. Auto. Ass’n, 79 F.3d 1415, 1429 (5th Cir. 1996)(en banc) (nonmovant may
satisfy this burden by providing depositions, affidavits, and other competent evidence;
not with “conclusory allegations, speculation, and unsubstantiated assertions.”). If the
nonmovant fails to meet this burden, summary judgment must be granted. Celotex, 477
U.S. at 322.

All evidence and reasonable inferences must be viewed in the light most
favorable to the nonmovant, and all disputed facts resolved in favor of the nonmovant.
See United States v. Diebold, Inc., 369 U.S. 654, 655 (1962); Boudreaux v. Swift Transp.
Co., Inc., 402 F.3d 536, 540 (5th Cir. 2005).

B. Applicable Law on Duty to Defend
The parties do not dispute that Texas law governs the issues in this case. See
Penn-Am. Ins. Co. v. Tarango Trucking, L.L.C., 30 F.4th 440, 444 (5th Cir. 2022); ACE
Am. Ins. Co. v. Freeport Welding & Fabricating, Inc., 699 F.3d 832, 839 (5th Cir. 2012).

“Under Texas law, an insurer may have two responsibilities relating to coverage—the
duty to defend and the duty to indemnify.” ACE Am. Ins., 699 F.3d at 839 (quoting
Gilbane Bldg. Co. v. Admiral Ins. Co., 664 F.3d 589, 594 (5th Cir. 2011)). These are
two “distinct and separate duties” and “one duty may exist without the other.” D.R.
Horton-Tex., Ltd. v. Markel Int’l Ins. Co., Ltd., 300 S.W.3d 740, 743 (Tex. 2009) (internal
quotations and citations omitted). Plaintiff moves for summary judgment only on the
duty to defend.

Where a policy contains a duty to defend—as the Red Steel Policy does here—
the party seeking coverage bears the burden of showing that it is an additional insured
under the terms of the policy. ACE Am. Ins., 699 F.3d at 839; see Gilbert Tex. Const.,
L.P. v. Underwriters at Lloyd’s London, 372 S.W.3d 118, 124 (Tex. 2010). If the party
meets its initial burden, the court then applies Texas’ “eight-corners rule” to determine

whether “the facts alleged in the underlying state court proceedings are sufficient to
trigger the duty to defend under the policy.” ACE Am. Ins., 699 F.3d at 839.
Applying Texas’ eight-corners rule, “the insurer’s duty to defend is determined
by comparing the allegations in the plaintiff’s petition to the policy provisions, without

regard to the truth or falsity of those allegations and without reference to facts
otherwise known or ultimately proven.” Monroe Guar. Ins. Co. v. BITCO Gen. Ins. Corp.,
640 S.W.3d 195, 199 (Tex. 2022) (citing GuideOne Elite Ins. Co. v. Fielder Rd. Baptist
Church, 197 S.W.3d 305, 308 (Tex. 2006)). Indeed, the eight-corners rule “derives [its

name] from the fact that only two documents are ordinarily relevant to the
determination of the duty to defend: the policy and the plaintiff’s pleadings.” Monroe,
640 S.W.3d at 199 (citing GuideOne, 197 S.W.3d at 308). Significantly, “[a] plaintiff’s
factual allegations that potentially support a covered claim is all that is needed to
invoke the insurer’s duty to defend[.]” GuideOne, 197 S.W.3d at 310.
“While the eight-corners rule is a settled feature of Texas law,” the Texas
Supreme Court recently recognized that “it is not absolute.” Monroe, 640 S.W.3d at

199. In Monroe, the Texas Supreme Court expressly approved of the use of extrinsic
evidence to determine an insured’s duty to defend in the following limited
circumstances:
[I]f the underlying petition states a claim that could trigger the duty
to defend, and the application of the eight-corners rule, due to a gap
in the plaintiff’s pleading, is not determinative of whether coverage
exists, Texas law permits consideration of extrinsic evidence
provided the evidence (1) goes solely to an issue of coverage and
does not overlap with the merits of liability, (2) does not contradict
facts alleged in the pleading, and (3) conclusively establishes the
coverage fact to be proved.

Id. at 201-02. Although it recognized this limited exception to the eight-corners rule,
the Texas Supreme Court was careful to emphasize that “the eight-corners rule remains
the initial inquiry to be used to determine whether a duty to defend exists.” Id. at 203.
III. Analysis
In moving for summary judgment on the duty to defend. Plaintiff argues that
Rogers is an additional insured under the Red Steel Policy and, under the eight-corners
rule, Defendant’s duty to defend Rogers is triggered by the facts alleged in State Action
Petition when considered in light of the Red Steel Policy provisions. Doc. No. 22 at
6-7. Plaintiff further argues that Defendant denied coverage based on extrinsic
evidence which was “unnecessary and improper” even under the limited Monroe
exception. Id.at 8-9. Because the Red Steel Policy explicitly provides that Defendant
is the primary insurer for Rogers as an additional insured, Plaintiff also contends that,
as subrogee of Rogers, it is entitled to recover its fees and costs for bringing this suit as
well as the costs it incurred in defending Rogers in the State Action. Id. at 9-10.

In its Response, Defendant does not put forth an argument related to the
existence of a duty to defend Rogers under the initial inquiry of the eight-corners rule.
Instead, the crux of Defendant’s responsive argument is that, based on extrinsic
evidence permitted under Monroe, “any status that Rogers [] had as an additional
insured under [the Red Steel Policy] ceased at the latest in December of 2015 and

Rogers [] was not an additional insured under the policy in 2019 entitled to a defense
or indemnification.” Doc. No. 30 at 6. Defendant does not address Plaintiff’s
argument that, as the subrogee of Rogers, it is entitled to recover damages arising from
Defendant’s refusal to defend Rogers.

In its Reply, Plaintiff contends that the eight-corners rule is determinative of
Defendant’s duty to defend Rogers as an additional insured under the Red Steel Policy.
Doc. No. 32 at 2-3. Plaintiff further asserts that, even so, Defendant’s extrinsic
evidence cannot be considered because it fails to satisfy the third Monroe criteria, that

the evidence “conclusively establishes the coverage fact to be proved.” Id. (quoting
Monroe, 640 S.W.3d at 201-202).
A. Duty to Defend
1. Texas’ Eight-Corners Rule
In determining whether there is a duty to defend, the Court must make the

initial inquiry under the eight-corners rule. See Monroe, 640 S.W.3d at 203. “Under
Texas law, the interpretation of an unambiguous contract is a question of law for the
court to decide by ‘looking at the contract as a whole in light of the circumstances

present when the contract was entered.’” ACE Am. Ins., 699 F.3d at 842 (citation
omitted). “The terms used in the contract are given their plain, ordinary meaning
unless the contract itself shows that the parties intended the terms to have a different,
technical meaning.” Id. (citation omitted) (cleaned up). “If a written contract is so
worded that it can be given a definite or certain legal meaning, then it is not

ambiguous.” Id. (citation omitted). Neither party argues ambiguity or that any term
should be given anything other than its plain and ordinary meaning.
Having viewed the evidence and taken all reasonable inferences in the light most
favorable to Defendant, see Diebold, 389 U.S. at 655, the Court finds that the summary

judgment record establishes Rogers qualifies an additional insured under the Red Steel
Policy, see ACE Am. Ins., 699 F.3d at 839. It is undisputed that the Red Steel Policy
includes an endorsement providing coverage for additional insureds. Doc. No. 22 at 4;
Doc. No. 30 at 8; see also Doc. No. 22 at 101-104 (relevant Red Steel Policy

endorsement); Doc. No. 31 at 246-249 (same). It is further undisputed that the
Contract between Red Steel and Rogers required that Red Steel maintain a commercial
general liability insurance policy which includes Rogers as an additional insured for a
period of “at least 2 years following substantial completion of the work.” Doc. No. 22
at 5-6 (quoting Ex. D at 139-140) (emphasis added); Doc. No. 30 at 6. The Court
finds that Plaintiff has shown Rogers qualifies an additional insured under the Red
Steel Policy. See ACE Am. Ins., 699 F.3d at 839.

Next, applying the eight-corners rule, the Court finds the facts alleged in the
State Action Petition are sufficient to trigger Defendant’s duty to defend Rogers as an
additional insured under the provisions of the Red Steel Policy. “In performing its
eight-corners review, a court may not read facts into the pleadings, look outside the
pleadings, or speculate as to factual scenarios that might trigger coverage or create an

ambiguity.” Gilbane, 664 F.3d at 596-597 (citing Nat’l Fire Ins. Co. v. Merchants Fast
Motor Lines, Inc., 939 S.W.2d 139, 142 (Tex. 1997)). Here, the Red Steel Policy
provides that insurance coverage for Rogers, as an additional insured, is limited “to
liability arising out of ‘ [Red Steel’s] work’ performed for [Rogers] by [Red Steel] or on

[Red Steel’s] behalf.” Doc. No. 122 at 103; Doc. No. 31 at 249. The Red Steel Policy
directs that an “organization’s status as an insured under this provision of this
endorsement continues for only the period of time required by the written contract or
agreement, but in no event beyond the expiration date of this Coverage Part.” Doc.

No. 22 at 103; Doc. No. 31 at 248. The coverage period of the Red Steel Policy is July
1, 2018, to July 1, 2019. See Doc. No. 22 at 42; Doc. No. 31 at 187. The parties do
not dispute the Contract expressly provides that coverage for Rogers “shall” be
maintained “for at least 2 years following substantial completion of the work.” Doc.
No. 22 at 6 (citing Ex. D at 139-140) (emphasis added); Doc. No. 30 at 6. Finally,

the Red Steel Policy specifies that, “[w]hen required by a written contract or agreement,
this insurance is primary and/or noncontributory as respects any other insurance policy
issued to the additional insured,” which “shall be excess and/or noncontributing . . .

with this insurance.” Doc. No. 22 at 104; Doc. No. 31 at 249.
Turning to the State Action Petition, those allegations assert that Rogers, the
general contractor on the dumpster gate installation project, contracted with Red Steel,
a subcontractor, to perform work related to the dumpster gate installation. Doc. No.
5 at 42. The State Action Petition further alleges that Red Steel “[a]t the instruction

of Defendant Rogers, . . . provided labor [sic] materials and equipment to manufacture
and install the dumpster gates which failed and injured [Mr. Alvarez].” Id. The State
Action Petition alleges Rogers is liable for Mr. Alvarez’s injuries and damages which
arise, in part or in whole, from Red Steel’s work as a sub-contractor for Rogers, the

contractor, “related to the dumpster gates at issue in this lawsuit.” Doc. No. 5 at 41-
42. Defendant does not dispute in its Response that the State Action Petition alleges
Rogers’s liability arose from Red Steel’s work. Further, Mr. Alvarez alleges he was
injured on January 23, 2019, see Doc. No. 5 at 39, which is during the effective coverage

period of the Red Steel Policy, see Doc. No. 22 at 42; Doc. No. 31 at 187.
In making the initial inquiry under Texas’ eight-corners rule, the Court
concludes that Defendant’s duty to defend Rogers as an additional insured is clearly
triggered upon comparing the allegations in the State Action Petition to the Red Steel
Policy provisions, without the need to consider extrinsic evidence. See Monroe, 640

S.W.3d at 199; see also GuideOne, 197 S.W.3d at 310 (“A plaintiff’s factual allegations
that potentially support a covered claim is all that is needed to invoke the insurer’s
duty to defend[.]”). The Court also concludes that Defendant’s duty to defend Rogers

is primary and noncontributory, and this duty to defend existed on June 12, 2020, the
date on which first tender was made to Defendant on Rogers’s behalf. See Doc. No. 22
at 148-49.
2. Monroe Exception

Defendant’s argument rests entirely on its contention that, when applied here,
the eight-corners rule is not determinative of whether Rogers is an additional insured
under the Red Steel Policy at the time Mr. Alvarez was injured. Specifically, Defendant
argues that there is a gap in the State Action Petition because it is devoid of any
allegations regarding the completion date of “the fabrication of the grates [sic]”, and

this fact goes to whether the Red Steel Policy covers Rogers as an additional insured.
Doc. No. 30 at 8. Defendant asserts that the Court should, therefore, go outside the
“eight corners” and, under the Monroe exception, consider extrinsic evidence in
determining whether Defendant has a duty to defend Rogers. Id. at 6-8. Based on the

foregoing analysis, the Court does not agree with Defendant’s argument and concludes
the duty to defend can be determined under the ”eight corners” rule. However, even
if the Court were to assume without deciding that a gap in the State Action Petition
does exist, Defendant’s argument would nevertheless fail.
The only extrinsic evidence Defendant submits is the deposition testimony of

Lee Owen, the corporate representative of Red Steel. See generally Doc. No. 31, Ex. 2.
Defendant asserts that Mr. Owen’s testimony establishes Red Steel completed its work
for Rogers “no later than 2013.” Doc. No. 30 at 6. Defendant goes on to argue that,

because the completion date was 2013, “pursuant to the policy terms, any status that
Rogers O’Brien had as an additional insured under [the Red Steel Policy] ceased at the
latest in December of 2015 and Rogers O’Brien was not an additional insured under
the policy in 2019 entitled to a defense or indemnification.” Id. Citing a single page
of Mr. Owen’s deposition testimony, Defendant asserts that “Red Steel did not perform

any work on the gates that were delivered on October 31, 2012.” Doc. No. 30 at 8.
The following is the only reference to the date of October 31, 2012:
Q (attorney): Do you know how long it was after this delivery on
October 31, 2012, before the support posts had been placed in the
ground and the concrete had cured sufficiently for Compass Steel to
perform the actual erection?

A (Mr. Owen): I do not.

Doc. No. 31 at 112. On that single page Defendant cites, there is no testimony to the
effect that Red Steel did not perform any work on the gates after that date.
The Court may consider only extrinsic evidence satisfies three criteria: “the
evidence (1) goes solely to an issue of coverage and does not overlap with the merits of
liability, (2) does not contradict facts alleged in the pleading, and (3) conclusively
establishes the coverage fact to be proved.” Monroe, 640 S.W.3d at 202. Here, the
proposed extrinsic evidence clearly fails on the third element. This testimony merely
refers to the date a specific delivery of materials was made; it does not in any way
“conclusively establish” the date the work was completed or even substantially
completed. See also, e.g., Am. Reliable Ins. Co. v. Weisinger, Civ. Action No. 4:22-CV-
3289, 2023 WL 5185147, at * 3 (S.D. Tex. Aug. 11, 2023) (“The deposition testimony

merely provides an address for [the defendant’s] property . . . which does not
conclusively establish where the incident occurred.”); but see Doc. No. 32 at 3-4
(Plaintiff identifying deposition excerpts in which Mr. Owen was explicitly asked,
“when substantial completion was, and do you know when that was?” to which he
answered, “I don’t recall exactly.”). This testimony most certainly does not

“conclusively establish” the coverage fact to be proved which is whether Rogers was an
additional insured under the Red Steel Policy and, therefore, entitled to a defense in
the State Action. The Court will not infer, assume, or otherwise read anything into
this testimony, which is the only way this extrinsic evidence could conclusively

establish whether Rogers was covered as an additional insured.
Aside from that, Defendant does not explain how it reads a two-year expiration
on Rogers’s coverage under the Red Steel Policy when the Contract specifies that Red
Steel must cover Rogers as an additional insured “for at least 2 years following

substantial completion of the work.”) Doc. No. 22 at 5-6 (emphasis added). Further,
the Court is unclear how Defendant reconciles this reference to October 31, 2012, as
evidence that Rogers’s status as an additional insured “ceased at the latest in December
of 2015”. Doc. No. 30 at 6.
In the end, the Court cannot consider this extrinsic evidence as it fails to

conclusively establish the coverage fact to be proved. The Court finds that Plaintiff
demonstrated it is entitled to summary judgment as a matter of law. See Eguchi, 2017
WL 2902667, at *1.

3. Conclusion
Plaintiff has demonstrated it is entitled to summary judgment on the duty to
defend as a matter of law. See Eguchi, 2017 WL 2902667, at *1. The Court finds that,
applying the eight-corners rule, Defendant owes a duty to defend Rogers in the State

Action under the Red Steel Policy. Defendant’s duty to defend Rogers is primary and
noncontributory, and is retroactive to June 12, 2020, the date on which first tender
was made to Defendant on Rogers’s behalf. The Court further finds that, even
assuming the limited Monroe exception applies, the proffered extrinsic evidence cannot
be considered because it wholly fails to conclusively establish the coverage fact to be

proved. Plaintiff is entitled to summary judgment on its claim for declaratory relief on
Defendant’s duty to defend.
B. Recovery of Costs
In its Motion, Plaintiff also seeks to recover from Defendant, as the primary

insurer, all costs it has incurred defending Rogers in the State Action as well as the
costs and attorneys’ fees it has incurred in filing this case because of Defendant’s breach
of contract. Doc. No. 22 at 9. Defendant fails to respond to or otherwise contest
Plaintiff’s summary judgment argument; therefore, the Court must grant summary
judgment for Plaintiff that it is entitled to recover its costs and fees. Celotex, 477 U.S.

at 322 (summary judgment must be granted if the nonmovant fails to meet its burden
opposing summary judgment). Although Plaintiff is entitled to this award, it must file
the appropriate motion under the applicable law and with the required supporting

documentation for the Court to award these costs and fees. Accordingly, said motion
shall be filed within 45 days of the date of this Memorandum Opinion and Order.
C. Duty to Indemnify
Plaintiff does not move for summary judgment on its request for a judgment

declaring Defendant has a duty to indemnify Rogers in the State Action. “While the
duty to defend depends on the allegations in the pleadings, the duty to indemnify is
triggered by the actual facts that establish liability in the underlying suit.” State Farm
Lloyds v. Richards, 966 F.3d 389, 396 (5th Cir. 2020) (quoting Ooida Risk Retention Grp.,
Inc. v. Williams, 579 F.3d 469, 472 (5th Cir. 2009)). “Generally, Texas law only

considers the duty-to-indemnify question justiciable after the underlying suit is
concluded, unless ‘the same reasons that negate the duty to defend likewise negate any
possibility the insurer will ever have a duty to indemnify.’” Richards, 966 F.3d at 396-
97 (quoting Northfield, 363 F.3d at 529). If “the exception to non-justiciability does

not apply” and the underlying action has not yet been adjudicated, the duty to defend
issue is not justiciable. Richards, 966 F.3d at 397. Here, the Court concludes that the
issue of a duty to indemnify is not justiciable—the Court found Defendant has a duty
to defend Rogers and the record reflects that the State Action has not been decided.
See Doc. No. 43 at 2 (“The underlying case in this dispute is currently specially set for

trial on February 20, 2024.”). Accordingly, the Court dismisses without prejudice
Plaintiff’s claim for declaratory relief on Defendant’s duty to indemnify as non-
justiciable.

IV. Conclusion
The Court determines that Rogers qualifies an additional insured under the Red
Steel Policy at issue and, applying Texas’ eight-corners rule, Defendant owes a duty to
defend Rogers as an additional insured in the state court case, Esteban S. Alvarez v.
Venture Commercial Management, LLC, Cause No. CC-19-00837-C. The Court further

concludes that, even if the limited Monroe exception applies, the extrinsic evidence
presented by Defendant cannot be considered in determining the duty to defend as it
fails to conclusively establish the coverage fact to be proved. The Court finds that
Defendant’s duty to defend is primary and non-contributory, and Defendant’s duty to

defend is retroactive to June 12, 2020, the date on which first tender was made to
Defendant on Rogers’s behalf. The Court also finds that Plaintiff is entitled to recover
the costs and fees incurred in defending Rogers in the State Action and in filing this
federal matter from Defendant, the primary insurer, resulting from its breach of

contract. Plaintiff must file the appropriate motion for an award of these costs and
fees. For these reasons, the Court GRANTS Plaintiff’s Motion for Partial Summary
Judgment on Duty to Defend.
Finally, the Court dismisses without prejudice Plaintiff's claim for declaratory
relief on Defendant’s duty to indemnify as non-justiciable.
SO ORDERED.
Signed January 30", 2024.

ED KINKEADE
UNITED STATES DISTRICT JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10671577. Public record. Not legal advice.