Mesa Underwriters Specialty Insurance Company v. West Dallas Investments LP

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

MESA UNDERWRITERS SPECIALTY §

INSURANCE COMPANY, §

§

Plaintiff, §

§

v. § Civil Action No. 3:24-CV-332-N

§

WEST DALLAS INVESTMENTS, §

L.P., et al., §

§

Defendants. §

MEMORANDUM OPINION AND ORDER

This Order addresses Defendant West Dallas Investments, L.P.’s (“WDI”) motion

to alter or amend the judgment [25]. As an initial matter, the Court grants WDI’s motion

to the extent that it seeks vacatur and hereby vacates the Court’s Memorandum Opinion

and Order of April 22, 2025 [23] and the ensuing Final Judgment [24]. Then, on

reconsideration of Plaintiff Mesa Underwriters Specialty Insurance Company’s (“Mesa”)

motion for summary judgment [12], considering WDI’s supplemental summary judgment

response [22] and the second amended petition in the underlying case, the Court again finds

that Mesa has no duty to defend or indemnify the underlying state court action, and the

Court again grants Mesa’s motion for summary judgment and denies WDI’s motion to alter

or amend the judgment.

I. ORIGINS OF THE MOTION

This suit arises out of a dispute regarding Mesa’s duty to defend and duty to

indemnify Defendant West Dallas Investments, L.P. (“WDI”) in an underlying wrongful

death action. In the underlying suit, the plaintiff brought an action against WDI for the

wrongful death of her son, Alvarez. Second Am. Pet. ¶ 2, Def’s App. 023 [26]. The

petition alleges that several unknown, inebriated patrons at a rave on WDI property fired

gunshots into the air, creating “chaos and confusion” in the “darkened warehouse,” and a

bullet struck and killed Raul Alvarez. Id. ¶ 11. The plaintiff alleges that WDI had a duty

to provide adequate protection from a known dangerous condition, as the property is

regularly open to the public and promoted to hold raves where inebriation and weapons are

not uncommon. Id.¶¶ 12–18.

Prior to the incident, Mesa issued a commercial general liability insurance policy to

WDI that provides coverage for bodily injury and property damage. Pl.’s Br. 5 [13]. The

policy contains an Assault or Battery Exclusion, which provides, in pertinent part:

I. This insurance does not apply . . . for “bodily injury” . . . caused by,

arising out of, resulting from, or in any way related to an “assault” or

“battery” when that “assault” or “battery” is caused by, arising out of,

or results from, in whole or in part from:

. . .

b. The failure to provide a safe environment including but not limited

to the failure to provide adequate security, or to warn of the dangers

of the environment, or

. . .

d. Negligent, reckless or wanton conduct by you, your employees,

patrons or any person, or

. . .

Pl.’s App. 29 [14]. The exclusion further defines assault and battery:

A. “Assault” means any intentional act, or attempted act or threat to inflict

injury to another including any conduct that would reasonably place another

in apprehension of injury, including but not limited to physical injury . . . or

offensive contact . . .

B. “Battery” means the intentional or reckless use of force . . . resulting in

injury whether or not the actual injury inflicted is intended or expected. The

use of force includes, but is not limited to the use of a weapon.

Id. at 30.

Mesa filed this declaratory judgment action seeking a declaration that it owes no

duty to defend or indemnify WDI in the underlying state suit. Pl.’s Compl. ¶ 1 [1]. Mesa

argues that the action in the underlying suit can only be construed such that it is barred by

the insurance policy’s assault or battery exclusion. Pl.’s Br. 10–13.

II. LEGAL STANDARD

Legal Standard for Summary Judgment

Courts “shall grant summary judgment if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.”

FED. R. CIV. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). In

making this determination, courts must view all evidence and draw all reasonable

inferences in the light most favorable to the party opposing the motion. United States v.

Diebold, Inc., 369 U.S. 654, 655 (1962). The moving party bears the initial burden of

informing the court of the basis for its belief that there is no genuine issue for trial. Celotex

Corp. v. Catrett, 477 U.S. 317, 323 (1986).

When a party bears the burden of proof on an issue, that party “must establish

beyond peradventure all of the essential elements of the claim or defense to warrant

judgment in his favor.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)

(emphasis omitted). When the nonmovant bears the burden of proof, the movant may

demonstrate entitlement to judgment by either (1) submitting evidence that negates the

existence of an essential element of the nonmovant’s claim or affirmative defense or (2)

arguing that there is no evidence to support an essential element of the nonmovant’s claim

or affirmative defense. Celotex, 477 U.S. at 322–25.

Once the movant has made the required showing, the burden shifts to the nonmovant

to establish that there is a genuine issue of material fact such that a reasonable jury might

return a verdict in its favor. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.

574, 586–87 (1986). Factual controversies are resolved in favor of the nonmoving party

“only when an actual controversy exists, that is, when both parties have submitted evidence

of contradictory facts.” Olabisiomotosho v. City of Houston, 185 F.3d 521, 525 (5th Cir.

1999) (citing McCallum Highlands, Ltd. v. Washington Capital Dus, Inc., 66 F.3d 89, 92

(5th Cir. 1995)).

Legal Standard for an Insurer’s Duty to Defend

When determining whether an insurer has a duty to defend under Texas law, courts

follow the “eight-corners rule.” Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487, 491

(Tex. 2008). “The eight-corners rule provides that when an insured is sued by a third party,

the liability insurer is to determine its duty to defend solely from terms of the policy and

the pleadings of the third-party claimant.” GuideOne Elite Ins. Co. v. Fielder Rd. Baptist

Church, 197 S.W.3d 305, 307 (Tex. 2006). “Resort to evidence outside the four corners

of these two documents is generally prohibited.” Id. “The duty to defend does not depend

upon the truth or falsity of the allegations.” Gore Designs Completions, Ltd. v. Hartford

Fire Ins. Co., 538 F.3d 365, 368 (5th Cir. 2008). An insurer’s duty to defend is usually

invoked with a plaintiff’s factual allegations that potentially support a covered claim. Id.

Courts are to construe allegations in the pleadings liberally and resolve all doubts in favor

of the insured. Nat’l Union Fire Ins. Co. v. Merchs. Fast Motor Lines, Inc., 939 S.W.2d

139, 141 (Tex. 1997); see also Gore Designs, 538 F.2d at 369 (“When in doubt, defend.”).

The insured has the burden to establish coverage under the policy. JAW The Pointe,

L.L.C. v. Lexington Ins. Co., 460 S.W.3d 597, 603 (Tex. 2015). But if the insured

establishes coverage, then to avoid liability, the insurer has the burden to prove that the

loss falls within an exclusion under the policy. Id. When “the plaintiff’s petition makes

allegations which, if proved, would place the plaintiff’s claim within an exclusion from

coverage, there is no duty to defend.” Gore Design, 538 F.3d at 370 (internal quotations

and citations omitted). But the burden of proving that the exclusion applies rests with the

insurance company. TEX. INS. CODE § 554.002.

Legal Standard for an Insurer’s Duty to Indemnify

The duty to indemnify is based on the actual facts developed in the underlying suit,

rather than the factual allegations in the pleadings. Farmers Tex. Cty. Mut. Ins. Co. v.

Griffin, 955 S.W.2d 81, 84 (Tex. 1997). While “the duty to indemnify is generally not

ascertainable until after the insured has been held liable, it is justiciable prior to a finding

of liability when the same reasons negating the duty to defend also negate any duty to

indemnify.” Lincoln Gen. Ins. Co. v. Aisha’s Learning Ctr., 468 F.3d 857, 858–59 (5th

Cir. 2006).

III. THE COURT GRANTS MESA’S MOTION

The Court holds that Mesa has met its burden to establish that the alleged incident

falls under the policy’s assault or battery exclusion. The Court finds that Mesa does not

have a duty to defend or indemnify.

The Court Finds the Assault or Battery Exclusion Applies

The parties agree that the policy includes coverage for bodily injury, such as alleged

in the underlying suit, but disagree on whether the policy’s assault or battery exclusion

applies.

WDI argues that Mesa has not established that the facts alleged qualify as an assault

or battery under the policy. Def.’s Resp. Br. at 16 [19]. First WDI analyzes whether the

action alleged constitutes an “assault” under the policy. WDI argues that the definition of

“intentional act” in the policy’s definition of “assault” can be construed to require the

allegation to prove that the shooter intended not only to shoot the weapon but to cause the

injury. Id. at 17–19. However, because the policy is not limited to an assault, and because

the Court finds that the action alleged clearly constitutes a “battery” under the policy, the

Court need not determine whether this is a reasonable construction of the policy.

Next, WDI claims that the facts alleged do not constitute a “battery” under the

policy. The policy defines “battery” as “the intentional or reckless use of force . . . resulting

in injury whether or not the actual injury is intended or expected.” Pl.’s App. 30. WDI

first argues that it is a reasonable construction of “intentional” to require not only the

intention to use force but “that an actor intend to cause injury.” Def.’s Resp. Br. 19 n.3.

However, the policy includes specific language to exclude this as a reasonable

interpretation of the policy. See Pl.’s App. 30 (defining battery as an intentional or reckless

use of force “whether or not the actual injury is intended or expected.”). Such direct

language makes unreasonable WDI’s interpretation that battery requires the injury to be

intended or expected.

Firing weapons into the air at a crowded rave is a reckless use of force. Under Texas

law, a person’s conduct is reckless if he or she “consciously disregards a substantial and

unjustifiable risk” of the results of his or her actions where such risk “constitutes a gross

deviation from the standard of care that an ordinary person would exercise” under the same

circumstances. TEX. PEN. CODE ANN. § 6.03(c). Texas courts have found that shooting a

weapon into the air in a place where bystanders are nearby and likely to be injured is

sufficient to constitute reckless conduct. See, e.g., State v. Rodriguez, 339 S.W.3d 680,

683–84 (Tex. Crim. App. 2011) (listing “shooting a gun in the air in a residential district”

as an example of an action that would “entail a known and unjustifiable risk of harm or

injury to others . . . that the ordinary person . . . probably would not take”); Herrera v.

State, 2004 WL 2361921, at *2 (Tex. App. — Dallas 2004, pet. ref’d) (finding the

appellant’s “conduct was reckless when he “was intoxicated and repeatedly fired his gun

into the air in a residential area”). Therefore, the intoxicated men firing weapons in the air

at a crowded property during a rave were committing a battery under the assault and battery

exclusion.

WDI argues that Mesa has not met its burden to show “reckless use of force”

because the petition is unclear whether the bullet that struck Alvarez was from the persons

shooting bullets in a crowded venue or if he was hit by another “random bullet.” Def.’s

Resp. Br. 19–20. The Court finds no such lack of clarity in the petition.

WDI argues that the petition in the underlying suit makes “no allegation . . . from

which it can be ascertained whether [the plaintiff] asserts that her son was shot by persons

who were allegedly ‘firing weapons into the air’ . . . or by other ‘random bullets.’” Def.’s

Resp. Br. 18. This mischaracterizes the allegations in the underlying petition as different

allegations rather than as referring to the same alleged act. The underlying petition states

that:

Among the partygoers at the rave that night were several inebriated young

men with firearms. . . . [S]ome of these inebriated young men began firing

their weapons into the air. In the chaos and confusion, those in the crowd

began running out of the darkened warehouse. Tragically, Raul . . . [was]

struck by [one of the] stray bullets and . . . died as a result of his wounds.

Second Am. Pet. ¶ 11, Def.’s App. 026. The use of the term “stray bullets” refers to the

bullets fired by the “inebriated young men” and cannot be convincingly read to refer to

bullets from another source. Even so, the assault and battery exclusion extends to injuries

“caused by, arising out of, resulting from, or in any way related to an ‘assault’ or ‘battery.’”

Pl.’s App. 29. In its supplemental briefing, WDI argues that the petition “does not

summarily foreclose the possibility of Raul having been struck by a bullet accidentally

discharged during the ‘chaos and confusion’ by another of the several inebriated young

men.’” Def.’s Mot. Supp. Ex.1, at 3 [22]. Even if the Court accepts this possibility, the

theorized accidental discharge is premised upon the chaos and confusion created by the

intentional gunshots. Therefore, a gunshot discharged in the chaos caused by the shots

fired into the air would still be caused by, resulting from, and arising out of the battery of

the shots fired into the air. Thus, this alternative theory would still meet the standard to

show battery under the exclusion.

The Court finds that the allegations in the petition allege facts squarely within the

scope of the plain language of the assault or battery exclusion. Because the petition does

not allege facts that fall outside of the exclusion and within the scope of coverage, the Court

applies the eight corners rule and holds that Mesa has no duty to defend WDI in the

underlying suit.

The Court Determines that the Duty to Indemnify is Justiciable

Because the same reasons negating the duty to defend also negate any duty to

indemnify, the Court finds that the duty to indemnify is ascertainable at this stage and finds

that Mesa has no duty to indemnify WDI.

The Texas Supreme Court established in Griffin that, while the “duty to defend and

duty to indemnify are distinct and separate duties,” the duty to indemnify can be justiciable

prior to judgment where “the same reasons that negate the duty to defend” also negate the

possibility of indemnification because no “facts can be developed in the underlying tort

suit that can transform” the allegations into acts that are within the scope of coverage. 955

S.W.2d at 82, 84. The Fifth Circuit has cautioned that Griffin should be narrowly construed

to cases where no “conceivable set of facts” could give rise to coverage. Liberty Mut. Fire

Ins. Co. v. Copart of Conn., Inc., 75 F.4th 522, 537 (5th Cir. 2023). However, this case

more closely mirrors Griffin than Liberty. In Griffin, the court found that no set of facts

could “be developed in the underlying tort suit that can transform a drive-by shooting into

an ‘auto accident,’” which was the extent of coverage under the policy. 955 S.W.2d at 84.

In Liberty, the court found that there were foreseeable facts that could develop during the

litigation that would give rise to a duty to indemnify. 75 F.4th at 537.

Here, the underlying petition alleges negligence and premises liability under a

theory that because inebriated young men with firearms is a “well-known occurrence in

urban rave subculture” and “[r]aves . . . have been held at the [property] on numerous

occasions,” WDI knew or should have known of the risk. Second Am. Pet. ¶¶ 7, 11, 13,

Def.’s App. 025–26. If WDI is held liable in the underlying suit, it will be for bodily injury

arising out of WDI’s failure to provide a safe environment. As established above, the

bodily injury alleged — death from bullets shot into the air at a crowded rave — arose out

of assault or battery. The exclusion applies to “bodily injury . . . caused by, arising out of,

resulting from, or in any way related to an ‘assault’ or ‘battery.’” Pl.’s App. 29. “The

words ‘arising out of’ are not words of narrow and specific limitation, but are broad,

general, and comprehensive terms.” Canutillo Indep. Sch. Dist. v. Nat’l Union Fire Ins.

Co., 99 F.3d 695, 705 n.6 (5th Cir. 1996). The Texas Supreme Court has described “arising

out of” in the insurance context “as connoting ‘a causal connection or relation,’ concluding

but-for causation is sufficient, even without direct or proximate causation.” Pinto Tech.

Ventures, L.P. v. Sheldon, 526 S.W.3d 428, 437–38 (Tex. 2017). Because “arising under”

is construed broadly as but-for causation in this context, the Court finds there is no set of

facts that could develop in the underlying suit that would transform a shooting into

something other than an action arising out of assault or battery under the policy.

WDI argues that facts may develop to show either (1) “the person who shot Alvarez

acted negligently rather than intentionally or recklessly,” or (2) “that the alleged incident

occurred off of WDI’s premises.” Def.’s Resp. Br. 21–22. Because the Court has

addressed WDI’s “intentional” and “reckless” arguments above, the Court declines to

repeat the analysis of those terms here. However, the Court points to the language of the

exclusion to show that “assault or battery arising out of negligent, reckless or wanton

conduct by . . . patrons or any person” is explicitly covered by the exclusion. Pl.’s App.

29. Second, there is no indication in the policy that the exclusion is limited to action on

WDI’s premises. See id. Even if the underlying lawsuit develops facts to show that the

assault or battery occurred off WDI property, there is no set of facts under which WDI

would be held liable for such an incident that would fall outside of the exclusion in the

policy between Mesa and WDI.

CONCLUSION

Because Mesa has established that the incident alleged in the underlying lawsuit

falls squarely under the policy’s assault or battery exclusion, the Court finds that Mesa

does not have a duty to defend or indemnify. The Court thus again grants Mesa’s motion

for summary judgment and denies WDI’s motion to alter or amend the judgment. Then,

because Defendants’ counterclaims for declaratory judgment and breach of contract are

based on a duty to defend or indemnify, the Court also dismisses all counterclaims and

dismisses this case with prejudice.

Signed July 22, 2025.

David 4 C □□

Chief United States District Judgé

MEMORANDUM OPINION & ORDER — PAGE 12