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Affirmed in Part and Reversed and = Remanded, and=20 Opinion filed July 31, 2007.

 

 

In The

 

Fourteenth=20 Court of Appeals

____________

 

NO. 14-06-00075-CV

____________

 

WILLIAMS=20 CONSOLIDATED I, LTD. / BSI HOLDINGS, INC., D/B/A WILLIAMS = INSULATION=20 COMPANY OF HOUSTON, INC., = Appellant

 

V.

 

TIG=20 INSURANCE COMPANY, = Appellee

 

 

On Appeal from the = 113th District Court

Harris County, = Texas

Trial Court Cause = No. 04-26752

 

 

O P I N I=20 O N

This case=20 arises out of an insurance-coverage dispute under a commercial = general=20 liability policy.  The insurer and the insured filed = cross-motions=20 for summary judgment as to the insurer=3Ds duty to=20 defend and indemnify the insured against claims of a third party = seeking=20 to recover for damages allegedly suffered as a result of work = performed by=20 the insured.  The trial court granted the insurer=3Ds motion=20 for summary judgment and denied the insured=3Ds motion=20 for summary judgment.  We conclude that the trial court erred = in=20 granting the insurer=3Ds motion=20 and in denying the insured=3Ds motion=20 as to the duty-to-defend issue, but did not err in denying the = remainder=20 of the insured=3Ds motion.=20

           = ;            = =20 I.  Factual and = Procedural=20 Background

Appellant/plaintiff =20 Williams Consolidated I, Ltd. / BSI Holdings, Inc., d/b/a Williams = Insulation Company of Houston, Inc. (hereinafter AWilliams@) obtained=20 general commercial liability insurance from appellee/defendant TIG = Insurance Company (hereinafter ATIG@) in=20 connection with work performed in Williams=3Ds=20 business.  TIG issued a commercial general liability policy = that had=20 a coverage period beginning on August 1, 1999 and ending on May 1, = 2001=20 (hereinafter ACGL=20 Policy@). =20 Subsequently, on June 5, 2002, Mark and Carol Mokry filed suit = against=20 Williams asserting claims related to its performance of work as a=20 subcontractor on the 1991 construction of their home.  =

The=20 Mokrys, who also sued the home builder, alleged, among other = things, that=20 during the construction of their home, the vapor barrier was = wrongly=20 installed on the interior face of the exterior wood-framed = wall. =20 They claimed that this improper installation caused moisture to = condense=20 on and within the cavity, leading to the growth of mold and = mildew. =20 The Mokrys alleged that the design, construction, and installation = of the=20 vapor barrier was not in accordance with the plans and = specifications and=20 was not performed in a good and workmanlike manner.  As a = result, the=20 Mokrys asserted, mold grew in their home.  They became aware = of mold=20 in 2000, and on September 8, 2000, the Mokry family moved out of = their=20 home because of health concerns relating to the presence of = mold. =20 The Mokrys claimed that the mold contamination caused them illness = and=20 forced them to leave the dwelling.  They also sought damages = for=20 alleged losses resulting from the destruction of certain = possessions and=20 the remediation of their home.

Williams=20 requested that TIG provide a defense and indemnification relative = to the=20 Mokrys=3D = claims.  TIG denied that it had a duty to defend Williams or = to=20 indemnify Williams.  TIG based this denial on the = APrior=20 Incident(s) and Prior Construction Defects Exclusion@ = in the=20 CGL Policy (hereinafter the AExclusion@). =20 Williams then filed suit, contending the following in its live=20 pleading:

!      =20 TIG issued the CGL Policy in Texas.

!      =20 On June 4, 2003, TIG denied Williams=3Ds demand for = defense and=20 indemnity as to the Mokrys=3D claims.

!      =20 The Mokrys=3D claims have been = settled,=20 and Williams was forced to pay $47,500 of its own money to settle = the=20 claims, as a result of TIG=3Ds refusal to = provide=20 indemnity. 

!      =20 Williams seeks a declaratory judgment that (1) TIG had a duty = under the=20 CGL Policy to defend Williams as to the Mokrys=3D claims and (2) TIG = has a=20 duty to indemnify Williams as to the Mokrys=3D claims.

!      =20 Williams seeks $47,500 in damages for breach of the CGL = Policy.

!      =20 Williams seeks its reasonable attorney=3Ds fees=20 under Chapter 37, or in the alternative, Chapter 38 of the Texas = Civil=20 Practice and Remedies Code.[1]

Williams=20 moved for summary judgment, contending, among other things, the=20 following:

!      =20 As a matter of law, TIG breached its duty to defend Williams = against the=20 Mokrys=3D claims.

!      =20 TIG breached its duty to indemnify Williams against the = Mokrys=3D claims causing = Williams=20 $47,500 in damages.

!      =20 TIG cannot dispute coverage based on the Exclusion because TIG has = not=20 received the necessary permission from the Texas Department of = Insurance=20 to use the Exclusion, as required by former article 5.13-2, = section 8 of=20 the Texas Insurance Code.

!      =20 As a matter of law, TIG must pay Williams=3Ds=20 reasonable and necessary attorney=3Ds fees=20 under Chapter 37 or Chapter 38.

TIG also=20 moved for summary judgment, contending, among other things, the=20 following:

!      =20 Based on the Exclusion, TIG does not have a duty to indemnify = Williams=20 against the Mokrys=3D claims as a matter = of=20 law. 

!      =20 Williams has offered no evidence that the alleged damaging process = did not=20 begin at the Mokry residence before the CGL Policy first took=20 effect.

!      =20 As a matter of law, TIG does not have a duty to indemnify Williams = against=20 the Mokrys=3D claims because of=20 uncontroverted evidence that mold formed in the Mokrys=3D home within two = years after=20 the Mokrys=3D 1991 = move-in.

!      =20 Because the CGL Policy was not delivered or issued for delivery in = Texas,=20 TIG was not required to obtain permission from the Texas = Department of=20 Insurance to use the Exclusion.

!      =20 TIG is not liable to pay Williams=3Ds=20 reasonable and necessary attorney=3Ds fees=20 under Chapter 37 or Chapter 38 because it owes no duty to=20 indemnify.

The trial=20 court granted TIG=3Ds motion=20 for summary judgment without specifying the grounds and denied=20 Williams=3Ds=20 motion.   Challenging the trial court=3Ds rulings,=20 Williams asserts the following issues on appeal:

!      =20 As a matter of law, TIG breached its duty to defend Williams = against the=20 Mokrys=3D claims, and even = though=20 Williams=3Ds defense costs = were paid by=20 another insurer, this issue is not moot because it is relevant to = whether=20 Williams is entitled to attorney=3Ds fees under = Chapter=20 37.

!      =20 As a matter of law, TIG breached its duty to indemnify Williams = against=20 the Mokrys=3D claims causing = Williams=20 $47,500 in damages.

!      =20 The Exclusion is invalid because TIG has not received the = necessary=20 permission from the Texas Department of Insurance to use the = Exclusion, as=20 required by former article 5.13-2, section 8 of the Texas = Insurance=20 Code.

!      =20 Even if the Exclusion were valid and did apply, the proper inquiry = under=20 that Exclusion would not be when mold first formed in the=20 Mokrys=3D home but rather = when=20 Aproperty = damage@ first occurred or=20 began.  Because TIG produced no such evidence, the trial = court erred=20 in granting its motion for summary judgment.

!      =20 As a matter of law, TIG must pay Williams=3Ds reasonable and = necessary=20 attorney=3Ds fees under = Chapter 37 or=20 Chapter 38.

 

           = ;            =             &= nbsp;   =20 II.  Standards = of=20 Review

In=20 reviewing a traditional motion for summary judgment, we take as = true all=20 evidence favorable to the nonmovant, and we make all reasonable = inferences=20 in the nonmovant=3Ds=20 favor.  Dolcefino v. Randolph, 19 S.W.3d 906, 916 = (Tex.=20 App.CHouston=20 [14th Dist.] 2000, pet. denied).  If the movant=3Ds motion=20 and summary-judgment evidence facially establish its right to = judgment as=20 a matter of law, the burden shifts to the nonmovant to raise a = genuine,=20 material fact issue sufficient to defeat summary judgment. =20 Id.  When, as in this case, the order granting summary = judgment does not specify the grounds upon which the trial court = relied,=20 we must affirm the summary judgment if any of the independent=20 summary-judgment grounds is meritorious.  FM Props. = Operating Co.=20 v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). =20

We may=20 review the trial court=3Ds denial=20 of Williams=3Ds motion=20 because in it Williams sought a final summary judgment.  = See CU=20 Lloyd=3Ds of Texas=20 v. Feldman, 977=20 S.W.2d 568, 569 (Tex. 1998).  A movant seeking a traditional = summary=20 judgment must establish its right to that relief by conclusively = proving=20 all elements of the movant=3Ds claim or=20 defense as a matter of law.  See Tex. R. Civ. P. = 166a(c);=20 Havlen v. McDougall, 22 S.W.3d 343, 345 (Tex. 2000).  = When=20 both parties move for summary judgment, each party must carry its = own=20 burden, and neither can prevail because of the failure of the = other to=20 discharge its burden.  INAC Corp. v. Underwriters at=20 Lloyd=3Ds, 56=20 S.W.3d 242, 247 (Tex. App.CHouston=20 [14th Dist.] 2001, no pet.).  Because each party was a = movant, the=20 burden for each was the same: to establish entitlement to a = summary=20 judgment by conclusively proving all the elements of the claim or = defense=20 as a matter of law.  Id.  In reviewing the trial=20 court=3Ds rulings=20 on these cross-motions, we must consider all summary-judgment = evidence,=20 determine all issues presented, and render the judgment that the = trial=20 court should have rendered.  FM Props. Operating Co., = 22=20 S.W.3d at 872. 

           = ;            =             &= nbsp;           &n= bsp;   =20 III. =20 Analysis

A.     =20 Is the duty-to-defend issue moot?

TIG=20 asserts the duty-to-defend issue is moot because the = Mokrys=3D = claims=20 against  Williams have been settled and another insurer has = paid for=20 Williams=3Ds=20 defense.  While acknowledging these facts, Williams = nonetheless=20 argues that the issue of TIG=3Ds duty to=20 defend is not moot because Williams seeks Chapter 37 = attorney=3Ds fees.=20

The Texas=20 Supreme Court addressed this issue in Allstate Insurance Co. v. = Hallman, in a somewhat different context, but its reasoning in = that=20 case dictates the answer to the mootness question in this = case. =20 See 159 S.W.3d 640 (Tex. 2005).  In Hallman, an = insurer=20 asserted a declaratory-judgment action against its insured, = seeking a=20 declaration that it owed no duty to defend or indemnify the = insured=20 against a lawsuit involving third-party claims.  See = id. at=20 641.  The insured counterclaimed, seeking a declaratory = judgment that=20 the insurer did have a duty to defend and indemnify, and both = parties=20 sought attorney=3Ds=20 fees.  See id.  The third-party lawsuit = subsequently=20 concluded with a jury verdict that the insured had no = liability. =20 See id.  Furthermore, the insurer had provided a = defense to=20 the insured under reservation of rights, and the insurer did not = intend to=20 seek reimbursement for the costs of this defense.  See=20 id.  On appeal, the Texas Supreme Court held that the = issues=20 regarding the insurer=3Ds duty to=20 defend and indemnify were not moot because the insured continued = to seek=20 attorney=3Ds fees=20 under Chapter 37 and continued to appeal the trial = court=3Ds denial=20 of these fees after the trial court concluded the insurer had no = duty to=20 defend or indemnify as a matter of law.  See id. at=20 642B43. =20 The Texas Supreme Court held that these issues regarding the=20 insurer=3Ds duty to=20 defend or indemnify would determine whether the Texas Supreme = Court would=20 affirm the trial court=3Ds denial=20 of attorney=3Ds fees or=20 would reverse the trial court=3Ds judgment=20 and remand for reconsideration of the attorney=3Ds fees=20 issue in light of the different determination of the defense and = indemnity=20 issues on appeal.  See id.  Therefore, the = Hallman=20 court held that the appeal was not moot.  See = id. =20 Accordingly, in the case under review, the duty-to-defend issue is = not=20 moot because Williams is appealing the trial court=3Ds denial=20 of its request for Chapter 37 attorney=3Ds=20 fees.  See id. 

B.     =20 What is the plain meaning of the Exclusion?       =20

To=20 adjudicate the defense and indemnity issues, this court must = determine the=20 meaning of the Exclusion, which states:

No insurance = coverage is=20 provided under this policy to defend or indemnify any insured for=20 Abodily = injury,@ Aproperty = damage,@ Apersonal = injury,@ or Aadvertising=20 injury@ which has first = occurred=20 or begun prior to the effective date of this policy, = regardless of=20 whether repeated or continued exposure to conditions which were a = cause of=20 such for [sic] Abodily = injury,@ Aproperty = damage,@ Apersonal = injury@ or Aadvertising=20 injury@ occurs during the = period of=20 this policy and cause [sic] additional, progressive or further=20 Abodily = injury,@ Aproperty = damage,@ Apersonal = injury,@ or Aadvertising=20 injury@ all of which is = excluded=20 from coverage.

This exclusion = shall apply=20 whether or not the Insured=3Ds legal obligation = to pay=20 damages has been established as of the inception date of this=20 policy.

(emphasis=20 added).  The CGL Policy defines Aproperty=20 damage@ = in=20 pertinent part as A[p]hysical=20 injury to tangible property, including all resulting loss of use = of that=20 property.@  The=20 CGL Policy states that Aall such=20 loss of use shall be deemed to occur at the time of the physical = injury=20 that caused it.@  The=20 CGL Policy also defines Abodily=20 injury@ = as=20 Abodily=20 injury, sickness or disease sustained by a person, including death = resulting from any of these at any time.@ =20

We apply=20 the ordinary rules of contract construction to insurance = policies. =20 See Kelley‑Coppedge, Inc. v. Highlands Ins. Co., 980 = S.W.2d 462,=20 464 (Tex. 1998).  In applying these rules, our primary concern is to = ascertain=20 the parties=3D intent as expressed = in the=20 language of the policy.  See id.  In determining = the=20 intention of the parties, we look only within the four corners of = the=20 insurance agreement to see what is actually stated, not what was = allegedly=20 meant.  See Esquivel v. Murray Guard, Inc., 992 S.W.2d = 536,=20 544 (Tex. App.CHouston [14th Dist.] = 1999, pet.=20 denied).  We must consider all of the provisions with = reference to=20 the entire contract; no single provision will be = controlling. =20 Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983).  If a = written=20 contract is so worded that it can be given a definite or certain = legal=20 meaning, then it is unambiguous, and we may not accept parol = evidence as=20 to the parties=3D intent. =20 Kelley‑Coppedge, 980 S.W.2d at 464.  Whether a = contract is=20 ambiguous is a question of law.  Id.

In their=20 pleadings the Mokrys did not allege Apersonal=20 injury@ = or=20 Aadvertising=20 injury@ = as=20 defined in the CGL Policy.  Under the unambiguous language of = the=20 Exclusion, there is no coverage under the CGL Policy for physical = injury=20 to tangible property or for bodily injury if the physical injury = or bodily=20 injury first occurred or began before August 1, 1999Cthe=20 effective date of the CGL Policy.  TIG asserts that the = Exclusion=20 unambiguously states that there is no coverage if any process = leading to=20 the ultimate damage claimed began before the effective date.  = TIG=20 cites no cases supporting this interpretation of the above-cited=20 policy  language and, under the applicable rules of contract=20 construction, we can not embrace that argument.  Contrary to=20 TIG=3Ds=20 assertion, the Exclusion is not based on the beginning of the = process=20 leading to the ultimate injury or damage; rather, the Exclusion is = based=20 on the beginning of the actual injury or damage. =20

Williams=20 asserts that the Exclusion does not apply to the alleged property = damage=20 or bodily injury in question unless, before the effective date, = Williams=20 became aware of the physical injury to tangible property or bodily = injury.  However, Williams does not cite any cases in which = any court=20 interprets policy language stating there is no coverage for injury = that=20 has occurred or begun before the effective date of the insurance=20 policy.  Though Williams cites cases interpreting the = definition of=20 Aoccurrence@ = or the=20 policy requirement of an injury or damage that Aoccurs=20 during the policy period,@ = the=20 insurance policies at issue in those cases did not contain = language=20 similar to the language of the Exclusion. See, e.g.,=20 Cullen/Frost Bank of Dallas, N.A. v. Commonwealth=20 Lloyd=3Ds Ins.=20 Co., 852=20 S.W.2d 252, 257B58 (Tex.=20 App.CDallas=20 1993, no writ) (dealing with the definition of Aoccurrence@ = and=20 stating that there is no coverage unless an identifiable damage or = injury,=20 beyond merely causative negligence, occurs during the policy = period);=20 Dorchester Dev. Corp. v. Safeco Ins. Co., 737 S.W.2d 380,=20 381B83 (Tex.=20 App.CDallas=20 1987, no writ) (deciding whether there was an Aoccurrence@ = under the=20 policy and stating that there is an occurrence if property damage=20 manifests itself or becomes apparent).  Williams relies on = the line=20 of cases in which courts, adopting a Amanifestation=20 rule,@ = have=20 concluded that damage occurs when it  manifests itself or = becomes=20 apparent; however, none of these cases involved insurance policies = that=20 excluded coverage for injury or damage which began before the = effective=20 date of the policy.  The cases that Williams cites are not on = point.[2] =20 The CGL Policy excludes coverage as to injury or damage that first = began=20 before the policy=3Ds=20 effective date (August 1, 1999).  To hold that this exclusion = does=20 not apply to injury or damage that has begun but has not = manifested itself=20 or become apparent would be contrary to the plain meaning of the=20 Exclusion.

We=20 conclude, under the unambiguous language of the CGL Policy, that = there is=20 no coverage for alleged property damage or bodily injury that = first=20 occurred or began before the effective date of the CGL = Policy. =20 However, if the alleged property damage or bodily injury did not = occur or=20 begin before the effective date but the alleged process leading to = the=20 ultimate injury or damage began before that date, coverage is not = excluded=20 for this reason.

C.     =20 Did the trial court err in concluding that, as a matter of law, = the=20 insurer does not have a duty to indemnify the insured based on the = Exclusion?

Williams=20 asserts that the trial court erred in impliedly ruling that, based = on the=20 Exclusion, as a matter of law, TIG has no duty to indemnify = Williams=20 against the Mokrys=3D = claims.  To prove this traditional summary-judgment ground, = TIG=20 relied on two letters from engineer Jim D. Wiethorn.  = However, these=20 letters do not address when the Mokrys=3D = alleged=20 property damage or bodily injury first occurred or began.  = The=20 specific language from the letters on which TIG relies is=20 Wiethorn=3Ds=20 statement that, in his opinion, Asome=20 degree of mold growth began at least within the first two years = following=20 occupancy and has continued until the time the [vapor] barrier was = removed.@  In=20 response to TIG=3Ds motion=20 for summary judgment, Williams attached excerpts from = Wiethorn=3Ds=20 deposition, in which Wiethorn testifies as follows:

!      =20 He is not a microbiologist, and he could not identify mold if he = saw=20 it.

!      =20 He does not know when condensation formed in the wall of the=20 Mokrys=3D home as a result = of the=20 presence and location of the vapor barrier. 

!      =20 He does not know when mold first appeared in the wall cavity of = the=20 Mokry=3Ds=20 home.

 Even=20 presuming that there was some degree of mold growth beginning = within the=20 first two years of occupancy and continuing until the vapor = barrier was=20 removed, the summary-judgment evidence does not address when the=20 Mokrys=3D = alleged=20 property damage or bodily injury first occurred or began.  = Evidence=20 that some mold grew in the first two years of occupancy does not = prove=20 that the mold caused property damage or bodily injury in the first = two=20 years of occupancy.  The summary-judgment evidence did not=20 conclusively prove that the Mokrys=3D = alleged=20 property damage or bodily injury first occurred or began before = August 1,=20 1999.  Therefore, the trial court erred in granting = TIG=3Ds motion=20 for summary judgment as to TIG=3Ds duty to=20 indemnify.[3] =20 See Roman Catholic Diocese of Dallas v. Interstate Fire & = Cas.=20 Co., 133 S.W.3d 887, 897 (Tex. App.CDallas=20 2004, pet. denied) (holding trial court erred in granting=20 insurer=3Ds motion=20 for summary judgment because insurer did not negate duty to = indemnify as a=20 matter of law).

D.     =20 Did either party prove as a matter of law whether the CGL Policy = was=20 Adelivered or issued = for=20 delivery@ in = Texas?

In the=20 trial court and on appeal, Williams has asserted that TIG cannot = rely on=20 the Exclusion because it is an endorsement on a form not approved = by the=20 Texas Insurance Commissioner.  Williams relies on the = following=20 statute for this argument:

An insurance policy = or=20 printed endorsement form for use in writing the types of insurance = subject=20 to this article may not be delivered or issued for delivery in = this=20 state unless the form has been filed with and approved by the=20 commissioner.

Texas=20 Ins. Code = Ann. art. 5.13-2 = ' = 8(a)=20 (emphasis added), repealed by Act of May 24, 2005, 79th = Leg., R.S.,=20 ch. 727, '18(d),=20 2005 Tex. Gen. Laws 1752, 2187.  In its motion for summary = judgment,=20 Williams asserted that this statute applies because the = declarations page=20 of the CGL Policy states: AIssued by=20 the insurance company indicated: TIG Insurance Company, = Administrative=20 Office, Irving, Texas 75039.@ =

TIG does=20 not assert that the Texas Insurance Commissioner approved the = endorsement=20 containing the Exclusion; rather, in its motion for summary = judgment, TIG=20 asserted that this statute does not apply as a matter of law = because the=20 CGL Policy was not Adelivered=20 or issued for delivery@ = in=20 Texas.  TIG relied on the following summary-judgment=20 evidence:

!      =20 the declarations page of the CGL Policy which lists ABSI Holdings,=20 Inc.@ as the named = insured, with=20 an address in Carmel, California.

!      =20 evidence showing that the producer or agent who placed the CGL = Policy is=20 located in Pasadena, California. 

!      =20 a letter showing that, on February 27, 2002, this same agent in = Pasadena,=20 California mailed a copy of the CGL Policy to a claims management=20 company.

Neither=20 party has cited, nor has this court found, any Texas cases = construing the=20 Adelivered=20 or issued for delivery in this state@ = language=20 in this statute or in any other statute.  The interpretation = of this=20 statutory language appears to be an issue of first impression in=20 Texas.  We conclude that it applies only to insurance = policies or=20 endorsement forms that are delivered in Texas or issued for = delivery in=20 Texas.  See McDermott Int=3Dl, Inc. v.=20 Lloyds Underwriters of London, 120 F.3d=20 583, 586B87 (5th=20 Cir. 1997) (interpreting same language in Louisiana insurance = statute);=20 Cook v. Herring, 521 So. 2d 807, 809B10 (La.=20 Ct. App. 1988) (interpreting substantially similar language in = Louisiana=20 insurance statute).  Williams appears to argue that, if TIG = issued=20 the CGL Policy in Texas, then the policy is subject to this = statute. =20 This notion is incorrect under the unambiguous language of the=20 statute.  The statute applies only if TIG delivered the CGL = Policy in=20 Texas or if TIG issued the CGL Policy for delivery in Texas.  = Even=20 presuming that Williams proved TIG issued the CGL Policy in Texas, = that=20 does not prove that TIG delivered the CGL Policy in Texas or = issued it for=20 delivery in Texas.  In addition, though the evidence cited by = TIG=20 might suggest that the CGL Policy was delivered in California, it = does not=20 prove as a matter of law that the CGL Policy was delivered in = California=20 or issued for delivery in California.  The agent=3Ds mailing=20 of a copy of the policy to a third party in 2002 does not prove = the state=20 in which the CGL Policy was delivered in 1999.  After = reviewing the=20 summary-judgment evidence under the applicable standard of review, = we come=20 to the twofold conclusion that Williams did not prove as a matter = of law=20 that this statute applies to the CGL Policy and that TIG did not = prove as=20 a matter of law that the statute does not apply.  Therefore, = the=20 trial court did not err in denying Williams=3Ds motion=20 for summary judgement as to this statute but did err to the extent = it=20 granted its summary judgment based on the ground that the statute = is=20 inapplicable as a matter of law.[4]

E.     =20 Did the trial court err in denying the insured=3Ds motion for = summary judgment=20 asserting that the insurer had a duty to indemnify the insured as = a matter=20 of law?

 Williams=20 sought summary judgment that TIG has a duty to indemnify against = the=20 Mokrys=3D = claims as=20 a matter of law.  Attempting to avoid the effect of the = Exclusion,=20 Williams first argued that, even under the Exclusion, the CGL = Policy=20 provides coverage as long as the injury or damage does not = manifest itself=20 to the insured before the effective date of the policy, and = secondly, that=20 the Exclusion is void because TIG did not obtain the approval = required by=20 former article 5.13-2, section 8 of the Texas Insurance = Code.  The=20 summary-judgment evidence upon which Williams relies for the first = argument addresses only when the Mokrys first became aware of the = alleged=20 injury or damage.  We already have determined that=20 Williams=3Ds=20 interpretation of the Exclusion to contain the manifestation rule = is=20 incorrect as a matter of law.  Further, as stated above, = Williams did=20 not prove as a matter of law that former article 5.13-2, section 8 = of the=20 Texas Insurance Code applies.  Therefore, under the = unambiguous=20 language of the CGL Policy and former article 5.13-2, section 8, = the trial=20 court did not err in denying Williams=3Ds motion=20 for summary judgment as to the duty to indemnify.[5]

<= SPAN=20 style=3D"FONT-SIZE: 13pt; LINE-HEIGHT: 150%; FONT-FAMILY: = Shruti">

F.      =20 Did the insurer have a duty to defend?      =20

In its=20 motion for summary judgment, TIG did not assert that it owed no = duty to=20 defend; however, it did urge that, for the reasons stated therein, = the=20 trial court should grant summary judgment against all of=20 Williams=3Ds=20 claims.  In its motion, Williams asserted that, as a matter = of law,=20 TIG breached its duty to defend Williams against the = Mokrys=3D = claims.  In=20 analyzing this issue, we look first to the policy and then to the = pleading=20 to determine if coverage exists.  If a pleading does not = allege facts=20 within the scope of coverage, an insurer is not legally required = to defend=20 a suit against its insured.  Nat=3Dl Union Fire Ins. Co. = v.=20 Merchs. Fast Motor Lines, Inc., 939 S.W.2d 139, 141 = (Tex.=20 1997).  We determine TIG=3Ds duty to defend = based on the=20 Mokrys=3D allegations and the = language=20 of the CGL Policy.  See id.  This standard for=20 determining coverage from the four corners of the pleading and the = four=20 corners of the insurance policy is referred to as the Aeight = corners@ rule.  See=20 id.  Applying the eight-corners rule, we give the=20 Mokrys=3D allegations a = liberal=20 interpretation.  See id.  If these allegations do = not=20 state facts sufficient to bring the case clearly within or without = the=20 coverage, the general rule is that the insurer is obligated to = defend if=20 potentially there is a case under the Mokrys=3D pleading within the = coverage=20 of the policy.  See id.  In making this = determination, we=20 must focus on the Mokrys=3D factual allegations = that show=20 the origin of the alleged damages rather than on the legal = theories=20 alleged.  See id.  We will not read facts into = the=20 Mokrys=3D pleading, nor will = we look=20 outside of their pleading, or imagine factual scenarios which = might=20 trigger coverage.[6] =20 See id. at 142.

In their=20 pleadings, the Mokrys alleged that the design, construction, and=20 installation of the vapor barrier was not in accordance with the = plans and=20 specifications and that this work was not performed in a good and=20 workmanlike manner.  As a result, the Mokrys asserted, mold = grew in=20 their home causing them illness and destroying some of their=20 possessions.  The Mokrys claimed that, as a result of the = mold=20 contamination, they were  forced to leave their home and to = remediate=20 the damage to their dwelling.  The Mokrys alleged that they = entered=20 into their construction contract on or about June 9, 1991, and = took=20 possession of their home on August 29, 1991.  In their = pleadings, the=20 Mokrys  do not specify any other dates.  The Mokrys = sought=20 recovery against Williams for bodily injury and physical injury to = tangible property (which constitutes Aproperty=20 damage@ = under the=20 CGL Policy), but they did not allege that their property damage or = bodily=20 injury first occurred or began before the effective date of the = policy=20 (August 1, 1999).  Based on the Mokrys=3D = allegations, it is possible that the alleged mold growth did not = begin to=20 cause any bodily injury or physical injury to tangible property = until=20 after the effective date.  After reviewing the = Mokrys=3D = claims=20 and the terms of the CGL Policy, we conclude that the = Mokrys=3D allegations do not = state facts=20 sufficient to bring the Mokrys=3D claims clearly = within or=20 without coverage.  Because potentially the Mokrys=3D claims were within = the=20 coverage of the CGL Policy, we conclude that, as a matter of law, = TIG had=20 a duty to defend Williams against the Mokrys=3D claims.  See = Gehan=20 Homes, Ltd. v. Employers Mut. Cas. Co., 146 S.W.3d 833,=20 839B46 (Tex. = App.CDallas 2004, pet. = filed)=20 (concluding insurer had duty to defend and that construing the = pleadings=20 liberally in favor of the insured, the court could not conclude = that no=20 claims were  alleged during the policy period).

           &= nbsp;           &n= bsp;           &nb= sp;           &nbs= p;            = ;=20 IV.=20 Conclusion

Under the=20 plain meaning of the Exclusion, there is no coverage under the CGL = Policy=20 as to any alleged property damage or bodily injury that first = occurred or=20 began before the effective date of the policy; however, if the = alleged=20 property damage or bodily injury did not occur or begin before = that date,=20 but the alleged process leading to the ultimate injury or damage = began=20 before that date, coverage is not excluded for this reason.  = The=20 trial court erred in granting TIG=3Ds motion=20 for summary judgment as to the duty to indemnify, but the trial = court did=20 not err in denying Williams=3Ds motion=20 for summary judgment as to the duty to indemnify.  Neither = party=20 proved as a matter of law where the CGL Policy was delivered or = where the=20 CGL Policy was intended to be delivered when issued.  = Therefore, the=20 trial court erred in impliedly ruling that, as a matter of law, = former=20 article 5.13-2, section 8 does not apply to the CGL Policy.  = However,=20 the trial court did not err in denying summary judgment as to=20 Williams=3Ds argument=20 that this statute applies as a matter of law. 

Even=20 though Williams has suffered no damages as a result of any breach = by TIG=20 of its duty to defend Williams against the Mokrys=3D = claims,=20 this issue is not moot because Williams is appealing the trial=20 court=3Ds denial=20 of its request for Chapter 37 attorney=3Ds=20 fees.   Under the eight-corners rule, TIG had a duty to = defend=20 Williams against the Mokrys=3D = claims.  Because the trial court erred in granting summary = judgment=20 as to duty-to-indemnify issues, it also erred in granting summary = judgment=20 as to Williams=3Ds request=20 for attorney=3Ds fees on=20 the ground that Williams=3Ds=20 indemnity claim fails as a matter of law.  However, the trial = court=20 did not err in denying Williams=3Ds motion=20 for summary judgment seeking attorney=3Ds fees as=20 a matter of law.  On remand, the trial court can assess=20 Williams=3Ds request=20 for attorney=3Ds fees=20 under Chapters 37 and 38 after Williams=3Ds claims=20 regarding the duty to indemnify are resolved.  Accordingly, = we=20 reverse the trial court=3Ds denial=20 of Williams=3Ds motion=20 for summary judgment as to the duty to defend, affirm the trial=20 court=3Ds denial=20 of the remainder of that summary-judgment motion, reverse the = trial=20 court=3Ds order=20 granting TIG=3Ds motion=20 for summary judgment, and remand for further proceedings = consistent with=20 this opinion.

 

 

/s/         =20 Kem Thompson Frost

Justice

 

 

Judgment=20 rendered and Opinion filed July 31, 2007.

Panel=20 consists of Justices Frost, Seymore, and Guzman.


[1]  Any reference in this opinion to = a chapter=20 is a reference to a chapter of the Texas Civil Practice and = Remedies=20 Code.

[2]  If the CGL Policy did not contain = the=20 Exclusion, then these cases might be on point.  However, if = this were=20 the case, we still would reject Williams=3Ds argument based on this = court=3Ds decision in Pine Oak Builders, Inc. = v. Great=20 American Lloyds Ins. Co., CS.W.3d C, C, No. 14-05-00487-CV, 2006 WL 1892669 at = *6B8 (Tex. App.CHouston [14th Dist.] July 6, 2007, pet. = filed)=20 (rejecting the Amanifestation rule@ and adopting Aexposure rule@ as to CGL policies with substantially = the same=20 language as TIG=3Ds CGL Policy, except that these policies = did not=20 contain the language in the Exclusion).

[3]  In its motion for summary = judgment, TIG=20 asserted that Williams had offered no evidence that the alleged = damaging=20 process did not begin at the Mokry residence before the CGL Policy = first=20 took effect. Presuming, without deciding, that this would = otherwise=20 constitute a valid no-evidence summary-judgment ground, the trial = court=20 still erred in impliedly granting summary judgment on this = basis.  As=20 discussed above,  under the Exclusion, if the alleged = property damage=20 or bodily injury did not occur or begin before August 1,1999, but = the=20 alleged process leading to the ultimate injury or damage began = before that=20 date, coverage is not excluded.

[4]  The summary-judgment motions and = appellate=20 briefs have not addressed the effect, if any, of the Texas=20 Legislature=3Ds repeal of this statute as of April 1, = 2007, and=20 we do not address this issue either.  See Act of May = 24, 2005,=20 79th Leg., R.S., ch. 727, 2005 Tex. Gen. Laws 1752, 2187.=20

[5]  TIG also stated in its motion for = summary=20 judgment that A[Williams] has come forward with no = evidence in=20 its [motion for] summary judgment nor discovery relative to this = [the=20 bodily injury] aspect of the [indemnity] claim, if any, so summary = judgment is improper relative to any Abodily injury@ claims that might be advanced under the = policy.@  This argument, although contained = in=20 TIG=3Ds cross-motion, is a response to=20 Williams=3Ds motion for summary judgment rather = than a ground=20 asserted in support of a summary judgment in TIG=3Ds favor.

[6]  No party to this appeal has = asserted that=20 any alleged exception to the eight-corners rule applies to this = case;=20 therefore, we need not and do not address whether any such = exception=20 exists or, if so, whether it applies to this case.  See = Collier v.=20 Allstate Cty. Mut. Ins. Co., 64 S.W.3d 54, 59 n.3 (Tex.=20 App.CFort Worth 2001, no=20 = pet.).

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