Dallas COA Holds Arbitral Record Sufficient to Support Summary Judgment in Insurance Dispute

The Dallas Court of Appeals has granted partial summary judgment in an insurance dispute that arose following arbitration.  In Mid-Continent Casualty Co. v. Castagna, No. 05-12-00383-CV, (Tex. App.—Dallas, August 20, 2013), Vanessa Castagna purchased a home from McClure Brothers Custom Homes, LP.  She later sued McClure Brothers Custom Homes, LP and McClure Brothers Homes, LLC over alleged structural issues related to the home.  The dispute was submitted to binding arbitration and Mid–Continent Casualty Company (“Mid–Continent”) defended the companies under a reservation of rights.   After an arbitrator issued an award in favor of Castagna and against the companies jointly and severally, a trial court judge confirmed the arbitral award.

Following confirmation of the arbitration award, Castagna sued both sued insurers Mid–Continent and Great American seeking indemnity for the final judgment.  At the trial court level, Castagna filed a nonsuit with regard to Great American and sought summary judgment against Mid–Continent.  Additionally, Mid–Continent filed a motion for summary judgment.  The lower court granted Castagna’s motion for the full amount of the arbitral award as well as pre-judgment interest and attorney’s fees.  Mid–Continent filed an appeal with Texas’ Fifth District.

On appeal, the court stated,

The summary judgment evidence established that “property damage,” meaning injury to tangible property, occurred in 2001 and progressed through early 2007. Mid–Continent’s argument on appeal that the record contained no evidence that the cracks that occurred in 2001, 2002, or 2003 were “property damage” caused by an “occurrence,” as opposed to normal shrinkage or settling associated with a new home, is unpersuasive. There was more than a scintilla of summary judgment evidence admitted in the arbitration proceeding which supported the arbitrator’s fact findings that “property damage” “occurred,” as those terms are defined under the CGL policies at issue, during the 2001 to 2002, 2002 to 2003, and 2006 to 2007 policy periods. We conclude the trial court did not err in denying Mid–Continent’s no-evidence motion for summary judgment on these asserted grounds.

To recover under the 2001 to 2002 or 2002 to 2003 policies, Castagna was required to establish that a judgment was rendered based upon an occurrence that caused property damage during the policy period of the 2001 to 2002 policy or the policy period of the 2002 to 2003 policies. As discussed above, the evidence supported the arbitrator’s findings that the cracks that occurred in 2001, 2002, or 2003 were “property damage” caused by an “occurrence” as those terms are defined under the 2001 to 2002 policy and the 2002 to 2003 policies. We conclude that coverage was “triggered” in accordance with the terms of the CGL policies covering 2001 to 2002, 2002 to 2003, and 2006 to 2007. See OneBeacon Ins. Co., 267 S.W.3d at 24 (“Considering these [policy] provisions together and reading them for their plain meaning, we hold that property damage under this policy occurred when actual physical damage to the property occurred. The policy says as much”); see also Union Ins. Co. v. Don’s Bldg. Supply, Inc., 266 S.W.3d 592, 594–95 (Tex.App.-Dallas 2008, pet. denied) (quoting OneBeacon Ins. Co., 267 S.W.3d at 24) (analyzing issue of duty to defend).

The Fifth District Continued,

Because McClure Brothers Homes LLC, the named insured under the 2006 to 2007 policy, was not insured for the liability of McClure Brothers Custom Homes, LP, an entity not listed as an insured under that policy, we conclude the 2006 to 2007 policy provided no coverage for the damages awarded by the arbitrator and included in the final judgment, and Mid–Continent did not owe indemnity to Castagna under the 2006 to 2007 policy. See River Entm’t, 998 F.2d at 315 (no duty to indemnify if the policy at issue does not provide coverage). The trial court erred in failing to grant Mid–Continent’s motion for summary judgment that it did not owe a duty to indemnify Castagna under CGL policy number 04–GL–000641650, the 2006 to 2007 policy. Accordingly, we reverse, in part, the final judgment and render judgment that Mid–Continent has no duty to indemnify Castagna under CGL policy number 04–GL–000641650 for the damages awarded Castagna.

Because there was sufficient evidence in the arbitral record to support Castagna’s claim, the Dallas Appeals Court upheld the lower court’s grant of summary judgment with regard to the Mid–Continent insurance policies that named McClure Brothers Custom Homes, LP and reversed the lower court’s decision related to the policy period that did not.