Insurance Coverage Litigation: Panel disagrees on duty to defend

General Star Indemnity Co. v. Gulf Coast Marine Ass'n,
No. 14-06--662-CV (Tex. App. - Houston [14th Dist.] Feb. 14, 2008) (Guzman) (insurance law, duty to defend, indemnify, coverage, eight corners rule)

Before Justices Brock Yates, Fowler and Guzman
General Star Indemnity Co. v. Gulf Coast Marine Associates, Inc.
Appeal from 152nd District Court of Harris County (Judge Kenneth Price Wise)

Disposition: Trial Court judgment affirmed

FROM THE OPINION BY JUSTICE EVA GUZMAN:

In this dispute regarding an insurer's duty to indemnify, we must determine whether the insurer, General Star Indemnity Co. ("General Star"), owed its insured, Gulf Coast Marine Associates, Inc. ("Gulf Coast"), a duty to defend in a suit involving a drill moving operation. In three issues, General Star contends the trial court erred in determining that it owed Gulf Coast a duty to defend because the insurance policy clearly and unambiguously excluded the damages alleged in the underlying petition. Because we conclude General Star owed Gulf Coast a duty to defend, we affirm.

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In sum, we must strictly construe the exclusionary clause against General Star and in favor of Gulf Coast. See Hudson Energy Co., Inc., 811 S.W.2d at 555. Furthermore, any doubts regarding the duty to defend must be resolved in favor of Gulf Coast. See King, 85 S.W.3d at 187; Merchs. Fast Motor Lines, Inc., 939 S.W.2d at 141. Resolving any doubts in favor of the duty to defend and strictly construing this exclusionary clause against General Star, we conclude that the facts alleged in Juniper's petition indicate a potential claim for damages to the well stub or net protector, which falls within the coverage of Gulf Coast's policy. See Merchs. Fast Motor Lines, Inc., 939 S.W.2d at 141; Huffhines, 167 S.W.3d at 497. We therefore conclude that General Star owed Gulf Coast a duty to defend, and we overrule General Star's first and second issues

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We hold that the underlying petition alleged facts from which damage to the "well stub" and "net protector" may be logically inferred. Without regard to Gulf Coast's expert affidavit, we therefore determine that General Star had a duty to defend Gulf Coast in the underlying dispute because these items are not clearly excluded from the policy's coverage. Accordingly, we overrule General Star's issues and affirm the judgment of the trial court.

Dissenting Opinion by Justice Brock Yates

D I S S E N T I N G O P I N I O N

I respectfully disagree with the majority's conclusion that General Star owed Gulf Coast a duty to defend.

Specifically, I disagree with the majority's conclusion that the petition in the underlying lawsuit alleges facts within the scope of coverage of the insurance policy.

The majority is correct that in reviewing a petition under an eight‑corners analysis, we resolve any doubt regarding coverage in favor of the insured. See Nat'l Union Fire Ins., Inc. v. Merchs. Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997). However, this does not mean that we presume coverage in the absence of statements in the petition creating or disavowing coverage. To the contrary, if a pleading does not allege facts that would create coverage under the policy, an insurer is not legally required to defend the suit against its insured. Id. at 141. Stated conversely, when a pleading only alleges facts excluded by the policy, the insurer has no duty to defend. Fid. & Guar. Ins. Underwriters, Inc. v. McManus, 633 S.W.2d 787, 788 (Tex. 1982). We will not read facts into the pleadings or imagine factual scenarios in order to find covered claims. Merchs. Fast Motor Lines, Inc., 939 S.W.2d at 142.

A fair reading of the Juniper petition reveals that no claim is made for any asserted damage to the well stub or net protector. All references to damages in the petition occur in context of damage to the well itself. The facts section repeatedly alleges damage to the well: "the mat of the jackup rig . . . bent the well," Aremedial operations were required, including installation of a caisson on the well," Athe Gulf Coast mover was warned of potential damage to the well," Athe well stub appeared to be leaning plus or minus 5_ to the southwest, which was later confirmed to be the damage to the well described above," and Adamage to Plaintiff's well was already sustained" (emphasis added). The causes of action section twice claims damage to the well - "the PRIDE ARKANSAS striking Plaintiff's well" and "Plaintiff's well required repairs, restoration and remediation" - but makes no mention of the well stub or net protector.

The damages section details restoration expenses that were asserted earlier in the petition in connection with damage to the well. In reviewing the underlying pleadings, the court must focus on the factual allegations that show the origin of the damages rather than the legal theories alleged. Merchs. Fast Motor Lines, Inc., 939 S.W.2d at 141. Because I do not read Juniper's petition as factually alleging a claim for damage to the well stub, I would reverse the trial court's judgment and render judgment in favor of General Star.

/s/ Leslie B. Yates
Justice

Judgment Affirmed and Majority and Dissenting Opinions filed February 14, 2008.
Panel consists of Justices Yates, Fowler, and Guzman (Guzman, J., majority).