Someone in Dallas, Fort Worth, Grand Prairie, Keller, Colleyville, Roanoke, Springtown, Azle, Weatherford, or anywhere else in Texas who has a commercial liability policy would assume they have coverge if someone gets hurt. Well, depending on the policy and the exclusions contained in the policy, there may not be any coverage.
On October 5, 2010, the United States District Court, Northern District of Texas, Dallas Division, decided a case styled, Essex Insurance Company v. Michael Clark, d/b/a Ace Construction Company and Augustin Delrazo.
Here is some background: Essex Insurance Company (Essex) had issued a policy of insurance to Michael Clark (Clark), d/b/a Ace Construction Company (ACC). While the policy of insurance was in force, Delrazo cut his left hand on a table saw while doing work for ACC. Delrazo’s lawsuit alleged atleast eleven things ACC did to cause or contribute to his injuries.
The Essex policy states that Essex “will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ … to which this insurance applies.” The policy is subject to several exclusionary endorsements and exclusions.
Relevant portions of the policy read:
This insurance does not apply to liability for “Bodily Injury” to:
(A) an “employee” of any insured arising out of and in the course of employment or while performing duties related to the conduct of an insured’s business … Wherever the word “employee” appears above, it shall also mean any member, associate, co-employee, leased worker, temporary worker, union worker, volunteer, or any person or persons loaned to or volunteering services to you.”
It also said:
This insurance does not apply to “bodily injury”, “property damage”, “personal injury”, “advertising injury” or any injury, loss, or damages, arising out of, caused by or contributed to: as a result of alleged negligence or other wrongdoing in the hiring, training, placement, supervision, or monitoring of others by insured.
And it said:
Further, there is no coverage under this policy for “bodily injury”, “personal injury”, or “property damage” sustained by any contractor, selfemployed contractor, and/or sub-contractor, or any employee, leased worker, temporary worker, or volunteer help of same.
Of the eleven allegations in the lawsuit, none are pointed to saying which trigger coverge under the policy at issue. Instead, it is Essex saying that the lawsuit triggers the exclusions posted above. Per the United States 5th Circuit opinion in Guaranty National Insurance Company v. Vic Manufacturing Co., the burden is on Essex to prove that a policy exclusion applies. If Essex successfully proves a policy exclusion applies, the burden then shifts to Delrazo to establish an exception to the exclusion in the case.
Essex merely points to the language in the policy cited above.
In this case Delrazo was left with argueing that the policy was confusing. They also said that when parts of the policy were read separately that they were confusing and thus coverge must be extended. The court pointed out that there is no language in the policy suggesting its parts ought to be read separately from one another. Reading one paragraph to the exclusion of others will sometimes render them meaningless and runs contrary to contract interpretation principles under Texas law.
This was a case where the insurance company prevailed in the way it wanted the policy of insurance to be interpreted. However, anytime the interpretation of an insurance contract can be interpreted in more than one way, the insurance company usually loses. And of course this is when an experienced Insurance Law Attorney should be consulted.
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