For=20 The
AMTECH =
ELEVATOR=20
SERVICES COMPANY, Appellant CSFB =
1998-P1 BUFFALO=20
SPEEDWAY OFFICE LTD. PARTNERSHIP, LNR PARTNERS, INC., AND MRIO, =
INC. D/B/A=20
MOODY RAMBIN OFFICE SERVICES F/K/A MOODY RAMBIN INTERESTS, INC.,=20
Appellees
On =
Appeal from the=20
270th District Court Harris =
County,=20
Texas Trial =
Court Cause=20
No. 2006-39331
O P I N =
I O=20
N In this =
insurance=20
dispute, appellant/counter-defendant, Amtech Elevator Services =
Company=20
("Amtech"), challenges a summary judgment rendered in favor of=20
appellees/counter-plaintiffs, CSFB 1998-P1 Buffalo Speedway Office =
Ltd.=20
Partnership, LNR Partners, Inc., and MRIO, Inc. d/b/a Moody Rambin =
Office=20
Services f/k/a Moody Rambin Interests, Inc. (collectively referred =
to as=20
"CSFB"). In two issues on appeal, Amtech argues that the trial =
court erred=20
(1) by enforcing the indemnity provisions in a service contract =
and (2) by=20
finding that Amtech failed to obtain adequate insurance=20
coverage. We affirm.
In 2003, VTM Elevator Company =
entered=20
into a service contract with CSFB whereby VTM would service =
elevators at=20
3700 Buffalo Speedway, a property owned by CSFB. CSFB moved for summary =
judgment, arguing=20
that the service contract and indemnity agreement were valid and=20
enforceable. CSFB also moved for summary judgment on the ground =
that=20
Amtech had "failed to perform its contractual duty to provide CGL =
coverage=20
to [CSFB] for the claims made by [Bridwell] in the underlying =
suit."=20
Amtech responded that the indemnity clause was unenforceable as a =
matter=20
of law because the indemnity language was not conspicuous, as =
required by=20
state statutes. Amtech filed a motion for =
rehearing=20
arguing that the risk-shifting language itself must be conspicuous =
in=20
order for an indemnification provision to be enforceable. Amtech =
agreed=20
with CSFB that the "fronting" insurance policy it had procured did =
have a=20
large "self-insured retention," but it contended that, in any =
event, it=20
had complied with the service contract's requirements. On May 4, =
2007, the=20
trial court implicitly denied the motion for rehearing because it =
granted=20
CSFB's motion for summary judgment again. On the same day, it =
signed an=20
order allowing an interlocutory appeal of its order granting =
summary=20
judgment.
Because summary judgment is a =
question of=20
law, we review a trial court's summary judgment decision de novo.=20
Bendigo v. City of Houston, 178 S.W.3d 112, 113 (Tex.=20
App.--Houston [1st Dist.] 2005, no pet.). The standard of review =
for a=20
traditional summary judgment motion is threefold: (1) the movant =
must show=20
that there is no genuine issue of material fact and that he is =
entitled to=20
judgment as a matter of law; (2) in deciding whether there is a =
disputed=20
material fact issue precluding summary judgment, the court must =
take=20
evidence favorable to the nonmovant as true; and (3) the court =
must=20
indulge every reasonable inference in favor of the nonmovant and =
resolve=20
any doubts in the nonmovant's favor. Nixon v. Mr. Prop. Mgmt.=20
Co., 690 S.W.2d 546, 548-49 (Tex. 1985); see Tex. R. =
Civ. P.=20
166a(c). A defendant seeking summary judgment must as a matter of =
law=20
negate at least one element of each of the plaintiff's theories of =
recovery or plead and prove each element of an affirmative =
defense.=20
EPGT Texas Pipeline, L.P. v. Harris County Flood Control =
Dist.,=20
176 S.W.3d 330, 335 (Tex. App.--Houston [1st Dist.] 2004, no =
pet.). If a=20
trial court's order granting summary judgment does not specify the =
basis=20
for the court's ruling, as is the case here, the summary judgment =
will be=20
affirmed if any of the theories advanced by the movant is =
meritorious.=20
Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. =
1989).
In its first issue, Amtech =
argues that=20
the indemnity provision in the service contract is unenforceable =
because=20
it does not satisfy both fair notice requirements of (1) the =
express=20
negligence doctrine and (2) conspicuousness. Express Negligence=20
Doctrine Because =
indemnity=20
provisions seek to shift the risk of one party's future negligence =
to the=20
other party, Texas imposes a fair notice requirement before =
enforcing such=20
agreements. Dresser Indus., Inc. v. Page Petroleum, Inc., =
853=20
S.W.2d 505, 508-09 (Tex. 1993). The fair notice requirements are =
the=20
express negligence doctrine and the conspicuousness requirement.=20
Storage & Processors, Inc. v. Reyes, 134 S.W.3d 190, =
192=20
(Tex. 2004). Under the express negligence doctrine, an intent to =
indemnify=20
one of the parties from the consequences of its own negligence, =
"must be=20
specifically stated in the four corners of the document." =
Reyes,=20
134 S.W.3d at 192 (quoting Ethyl Corp. v. Daniel Constr. =
Co., 725=20
S.W.2d 705, 707 (Tex. 1987)). CSFB contends that Amtech made =
no=20
argument to the trial court regarding the express negligence =
doctrine and=20
thus cannot assert it for the first time on appeal. See =
Tex. R.=20
App. P. 33.1. Based on the record before us, we agree. In its =
response to=20
CSFB's motion for summary judgment, Amtech argued that the =
indemnity=20
provision was not conspicuous and was thus unenforceable. It did =
not=20
assert that the indemnity provision failed to meet the express =
negligence=20
doctrine. Thus, the application of the express negligence doctrine =
is=20
waived, and we will confine our analysis to Amtech's argument on=20
conspicuousness. The conspicuousness requirement =
mandates=20
that "something must appear on the face of the [contract] to =
attract the=20
attention of a reasonable person when he looks at it." =
Reyes, 134=20
S.W.3d at 192 (quoting Dresser, 853 S.W.2d at 508). =
Language is=20
conspicuous if it appears in larger type, contrasting colors, or =
otherwise=20
calls attention to itself. Dresser, 853 S.W.2d at 511; =
see=20
also Tex. Bus. & Com. Code Ann. =A7 1.201(b)(10) (listing =
ways to=20
make a term conspicuous). Whether an agreement meets the =
conspicuous=20
requirement is a question of law for the court. Dresser, =
853=20
S.W.2d at 509. An agreement that does not "satisfy either of the =
fair=20
notice requirements when they are imposed is unenforceable as a =
matter of=20
law." Reyes, 134 S.W.3d at 192. A term is conspicuous when it =
is written,=20
displayed, or presented such that a reasonable person against =
which it is=20
to operate ought to have noticed it. Tex. Bus. & Com. Code =
Ann. =A7=20
1.201(10). Conspicuous terms include the following: (A) a heading =
in=20
capitals equal to or greater in size than the surrounding text, or =
in=20
contrasting type, font, or color to the surrounding text of the =
same or=20
lesser size, and (B) language in the body of a record or display =
in larger=20
type than the surrounding text, or in contrasting type, font, or =
color to=20
the surrounding text of the same size, or set off from surrounding =
text of=20
the same size by symbols or other marks that call attention to the =
language. Id. =A7 1.201(10)(A), (B). The indemnification clause in =
the service=20
contract provides: 5. On the next page of the service =
contract,=20
the indemnification clause continues: 1. Any claim of worker's =
compensation=20
benefits, salaries, employment taxes, benefits, pensions, or =
assessments=20
by or injury to or death of any employee of Contractor and any=20
subcontractor and/or independent contractor of Contractor (and any =
employees of any such subcontractor and/or independent =
contractor), or any=20
third party whether caused by the Contractor, the concurrent =
negligence of=20
any Indemnitee, the sole negligence of any Indemnitee or by any =
cause=20
whatsoever. The indemnification clause =
includes a=20
capitalized heading, alerting the reader to the indemnification =
clause,=20
followed by language in all capitalized letters. The capitalized =
language=20
states, inter alia: "CONTRACTOR HEREBY AGREES TO DEFEND,=20
INDEMNIFY, AND HOLD . . . OWNER [CSFB] . . . HARMLESS FROM ALL . . =
.=20
SUITS, . . . PROCEEDINGS, CLAIMS, DEMAND[S], ACTIONS, OR CAUSES OF =
ACTION,=20
OF ANY KIND AND OF WHATSOEVER NATURE." Moreover, the end of the =
paragraph=20
states, "INCLUDING BUT NOT LIMITED TO," which alerts the reader =
that=20
additional language regarding indemnification occurs on the =
following=20
page. The additional language further specifies what had already =
been=20
conspicuously stated in general terms--that Amtech agreed to =
indemnify=20
CSFB for any action related in any way to "the SERVICES" covered =
by the=20
services contract. We hold that the capitalized heading, followed =
by the=20
language in all capitals, attracts the attention of a reasonable =
person,=20
and thus, the indemnity provision is conspicuous. See Dresser=20
Indus., 853 S.W.2d at 511 (stating that language in capital =
headings=20
is conspicuous); Tesoro Petroleum Corp. v. Nabors Drilling =
USA,=20
Inc., 106 S.W.3d 118, 132 (Tex. App.--Houston [1st Dist.] =
2002, pet.=20
denied) (finding that two paragraphs were conspicuous because =
headings=20
were in all capitals and party relied on provisions in delineating =
reservation of rights letter). We overrule Amtech's first =
issue on=20
appeal. Contract=20
Interpretation In its second issue, Amtech =
argues that=20
summary judgment was improper because Amtech complied with its =
contractual=20
agreement to name CSFB as an additional insured on a CGL policy.=20
The service contract required =
Amtech to=20
carry insurance. Specifically, the contract specified: B. Notwithstanding any =
provision of the=20
Service Contract to the contrary Contractor, at its sole cost and =
expense=20
shall at all times during the term of the Contract, carry and =
maintain the=20
following insurance coverage with insurance companies authorized =
to do=20
business within the State of Texas. All such insurance policies =
shall=20
waive all rights of subrogation against the Indemnitee. Contractor =
shall=20
promptly furnish Manager with certificates of said insurance =
policy or=20
policies and shall assume responsibility for placement and renewal =
of all=20
such policies; C. Comprehensive liability =
insurance, on=20
an occurrence form, adequate to protect the interest of the =
parties=20
hereto, which policy or policies shall be so written as to protect =
Manager, and Owner in the same manner and to the same extent they =
protect=20
Contractor and shall name Manager, and Owner as additional =
insureds.=20
General liability risks and key exposures to be covered shall =
include, but=20
not be limited to, the premises and Contractor's operations in =
connection=20
with the Property, blanket contractual, personal injury, and use =
of owned,=20
non-owned, or hired automobiles. The limits of each policy shall =
be not=20
less than $1,000,000 per occurrence for bodily injury, personal =
injury and=20
property damage and shall name Manager and Owner as additional=20
insured; Absent ambiguity, we interpret =
a contract=20
as a matter of law. DeWitt County Elec. Co-op., Inc. v. =
Parks, 1=20
S.W.3d 96, 100 (Tex. 1999). "Whether a contract is ambiguous is a =
question=20
of law that must be decided by examining the contract as a whole =
in light=20
of the circumstances present when the contract was entered." =
Columbia=20
Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, =
589=20
(Tex. 1996). "If the written instrument is so worded that it can =
be given=20
a certain or definite legal meaning or interpretation, then it is =
not=20
ambiguous and the court will construe the contract as a matter of =
law."=20
Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). "An =
ambiguity=20
exists only if the contract language is susceptible to two or more =
reasonable interpretations." Am. Mfrs. Mut. Ins. Co. v. =
Schaefer,=20
124 S.W.3d 154, 157 (Tex. 2003). The language in a contract is to =
be given=20
its plain grammatical meaning unless doing so would defeat the =
parties'=20
intent. Parks, 1 S.W.3d at 101. We presume that the =
parties=20
intended every clause to have an effect. Heritage Res., Inc. =
v.=20
NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). The evidence shows that Amtech =
obtained a=20
CGL policy which named CSFB as an additional insured. CSFB asserts =
that=20
Amtech breached the service contract because the CGL policy it =
obtained=20
had a deductible equal to the amount of the policy limits. This =
type of=20
policy is known as a "fronting" policy. See Phillips Petroleum =
Co. v.=20
St. Paul Fire & Marine Ins. Co., 113 S.W.3d 37, 43-44 =
(Tex.=20
App.--Houston [1st Dist.] 2003, pet. denied) (noting that policy =
is=20
"fronting policy" when amount of deductible payable by insured =
equaled=20
amount of liability limits). One of the endorsements to Amtech's =
policy=20
states, "THIS IS A FRONTED POLICY WHEREIN THE DEDUCTIBLE MATCHES =
AND=20
EXHAUSTS THE LIMITS OF LIABILITY. IF WE PAY ANY SUMS UNDER THIS =
POLICY,=20
WHETHER DAMAGES OR 'CLAIM EXPENSES,' YOU ARE OBLIGATED TO PROMPTLY =
REIMBURSE US." Because the insurance policy has a deductible equal =
to the=20
policy limits, CSFB argues that the insurance policy is illusory. =
Amtech=20
argues that, in accordance with Phillips Petroleum Company v. =
St. Paul=20
Fire & Marine Insurance Company, it complied with the =
service=20
contract when it obtained insurance naming CSFB as an additional =
insured.=20
113 S.W.3d at 43-44. In Phillips Petroleum, =
we=20
interpreted a contract between Zachry, a contractor, and Phillips, =
an=20
owner, that required Zachry to purchase insurance and to name =
Phillips as=20
an additional insured. Id. at 40-44. St. Paul moved for summary =
judgment and=20
argued that St. Paul owed no further obligation to Phillips once =
St. Paul=20
expended $1 million in defending Phillips in the underlying =
lawsuits.=20
Id. The trial court granted summary judgment and Phillips =
appealed. Id. On appeal, Phillips argued that Zachry was=20
contractually obligated by a plain reading of the terms of the =
contract to=20
obtain "traditional" CGL coverage. Id. at 43. This Court=20
disagreed with Phillips' arguments because the Zachry-Phillips =
contract=20
d[id]not expressly specify the =
type of=20
commercial general liability coverage that Zachry was required to=20
purchase. Phillips's argument that the terms of the [contract] =
obligated=20
Zachry to purchase a 'traditional' commercial general liability=20
policy--one with an unlimited duty to defend until liability =
limits are=20
exhausted by settlements or judgments--requires the insertion of =
terms=20
into the policy which are not contained in the [contract] itself. =
This we=20
may not do. Id. at 43-44. In sum, =
because=20
the Zachry-Phillips contract did not require Zachry to purchase a=20
traditional policy, this Court refused to write such a =
requirement.=20
Id. We disagree with Amtech that =
Phillips=20
controls the disposition of this issue in this case. Like the =
St.=20
Paul fronting policy considered in Phillips, the Hartford =
Fire=20
Insurance Company CGL policy that Amtech purchased to fulfill its=20
contractual obligations to CSFB was a fronting policy that =
required=20
Hartford to defend insureds against claims covered by the policy, =
to=20
settle suits against them, and to pay on behalf of the insured the =
sums=20
the insured was legally obligated to pay as damages. Amtech, like =
Zachry,=20
was obligated to reimburse Hartford "[U]pon notification of the =
action=20
taken . . . , up to the amount of the applicable deductible set =
forth in=20
the Deductible Endorsement for 100% of the limits that have been =
paid by=20
us." In other words, the policy shifted the risk from the =
insurance=20
company back to the Named Insured, Amtech. In Phillips, =
Zachry=20
reimbursed St. Paul up to the limits of the policy after St. Paul =
provided=20
the defense to Phillips. Therefore, it fulfilled its duty to =
insure=20
Phillips, and nothing in the Zachry-Phillips contract required =
Zachry to=20
do more. Here, by contrast, there is nothing in the record to =
indicate=20
that Hartford fulfilled its duty to provide a defense to CSFB up =
to policy=20
limits or that Amtech was able and did repay Hartford up to the =
limits of=20
the Hartford policy. Rather, the evidence indicates that Amtech =
attempted=20
to shift the burden of repayment to CSFB as an additional named =
insured.=20
The question in this case, =
therefore, in=20
contrast to Phillips, is not whether Amtech's contract =
with CSFB=20
required it to purchase a CGL policy that would provide an =
unlimited=20
defense, as opposed to the $1 million defense it received, but =
whether=20
Amtech complied with the express provisions in the service =
contract that=20
required Amtech to obtain "[c]omprehensive liability insurance . . =
.=20
adequate to protect the interest of the parties=20
hereto."=20
(Emphasis added). The trial court apparently recognized =
the=20
service contract's language because its order granting summary =
judgment in=20
favor of CSFB stated that Amtech breached its contractual =
obligations in=20
that the service contract "obligated Amtech to defend and =
indemnify, hold=20
[CSFB] harmless against all claims and to name [CSFB] as =
additional=20
insureds on an appropriate We overrule Amtech's second =
issue on=20
appeal.
We affirm the judgment of the =
trial=20
court. Evelyn V. Keyes Justice Panel consists of Justices =
Nuchia,=20
Jennings, and Keyes. 1. The parties to=20
the original contract were VTM and CSFB. Amtech and VTM were later =
acquired by the same parent organization and Amtech assumed VTM's=20
obligations under the service contract at issue here.=20
2. Amtech and VTM were responsible for =
maintenance of=20
the elevators at the property.=20
3. Moody Rambin and MRIO were responsible =
for=20
management of the property.=20
4. Bridwell alleged that LNR either was the =
owner of=20
the property at the time in question or was the general partner of =
CSFB.=20
5. See Tex. Bus. & Com. Code =
Ann. =A7=20
1.201(b)(10) (Vernon Supp. 2007).=20
6. A trial court may issue an order for =
interlocutory=20
appeal of a controlling issue of law if certain requirements are =
met.=20
See Tex. Civ. Prac. & Rem. Code Ann. =A7 51.014(d) =
(Vernon=20
Supp. 2007).