Altivia Corporation v. Greenwich Insurance Company

Affirmed in part, Reversed and Remanded in part, and Majority and Concurring Opinions filed August 26, 2004 Affirmed in part, Reversed and Remanded in part, and Majority and Concurring Opinions filed August 26, 2004. In The Fourteenth Court of Appeals _______________ NO. 14-03-00740-CV _______________ ALTIVIA CORPORATION, Appellant V. GREENWICH INSURANCE COMPANY, Appellee ___________________________________________________________________ On Appeal from the 270th District Court Harris County, Texas Trial Court Cause No. 02‑05067 ___________________________________________________________________ M A J O R I T Y   O P I N I O N In this liability insurance coverage dispute, Altivia Corporation (AAltivia@) appeals a summary judgment entered in favor of Greenwich Insurance Company (AGreenwich@) on the grounds that Greenwich had a duty to defend under Altivia=s Commercial General Liability policy (ACGL@) and its Employee Benefit Liability endorsement (AEBL@) to the CGL. We affirm in part and reverse and remand in part. Background Altivia was sued by a former employee, Hidrogo, who alleged that he was: (1) wrongfully terminated in retaliation for filing a workers= compensation claim; and (2) defamed by Altivia employees to other prospective employers. Altivia sued Greenwich for coverage under the CGL and EBL, Greenwich moved for summary judgment against those claims, and the trial court granted a take-nothing summary judgment against Altivia. Standard of Review A traditional summary judgment may be granted if the motion and summary judgment evidence show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law on the issues expressly set out in the motion or response. Tex. R. Civ. P. 166a(c). We review a summary judgment de novo, taking all evidence favorable to the nonmovant as true and resolving every doubt, and indulging every reasonable inference, in the nonmovant=s favor. Provident Life and Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). A liability insurer is obligated to defend a suit if the facts alleged in the pleadings would give rise to any claim within the coverage of the policy. Utica Nat=l Ins. Co. v. Am. Indem. Co., __ S.W.3d __, __ (Tex. 2004). An insurer=s duty to defend is determined solely by the allegations in the pleadings and the language of the insurance policy. King v. Dallas Fire Ins. Co., 85 S.W.3d 185, 187 (Tex. 2002). The insurer bears the burden to show that a policy exclusion applies, and courts adopt the insured=s construction of an exclusion whenever it is reasonable, even where the construction urged by the insurer appears to be more reasonable. Utica, __ S.W.3d at __, __. CGL Altivia=s first issue contends that Greenwich had a duty to defend against Hidrogo=s allegations of libel and slander under the CGL. The thrust of those allegations was that: [Altivia], by and through its authorized agents, has slandered and defamed [Hidrogo] to other trucking companies which has prevented him from obtaining other employment. [Altivia] published and caused to be published statements substantially to the effect that [Hidrogo] had two accidents while employed with [Altivia]. These words reflected upon the business and personal integrity of [Hidrogo]. . . . These statements, expressly and by implication, constituted slander and slander per se. . . . They adversely affected his reputation, both personally and professionally. . . . These statements were false and malicious. The relevant portions of the CGL policy: (1) generally provide coverage for sums the insured becomes legally obligated to pay as damages because of Apersonal injury,@ including oral or written publication of material that slanders or libels a person; but exclude coverage for: (2) such a personal injury if done by the insured with knowledge of its falsity; and (3) personal injury arising out of any termination of a person=s employment or Aemployment related@ acts or omissions, such as defamation (the AERP exclusion@). Hidrogo=s petition does not specify the context of the alleged statements or the persons by whom, time frame in which, or purpose for which the statements were allegedly made. To the extent they were alleged to be made in response to routine employment inquiries to Altivia by other prospective employers, they would be employment related acts subject to the ERP exclusion.[1] Conversely, to the extent the statements were otherwise alleged to be made by Altivia=s authorized agents, such as to subject Altivia to liability, and were false and malicious, as Hidrogo=s petition alleges, they would have allegedly been made by Altivia with knowledge of their falsity and thus also outside the scope of coverage. Therefore, based on the allegations in Hidrogo=s pleadings and the language of the CGL, Altivia has not shown how Hidrogo=s libel and slander allegations could give rise to any claim that would be within the coverage of the CGL.[2] Accordingly, its first issue is overruled. EBL Altivia=s second issue argues that Greenwich=s duty to defend against Hidrogo=s claim of wrongful termination under the EBL was not limited to negligent acts, as Greenwich=s motion for summary judgment had asserted. The relevant portions of the EBL provide: 1. Insuring Agreement a. [Greenwich] will pay those sums that the insured becomes legally obligated to pay as damages because of acts, errors or omissions arising out of the administration of [Altivia=s] employee benefit program. * * * * c. This insurance applies to damages because of a negligent act, error or omission in the administration of [Altivia=s] employee benefit program only if: . . . . We agree with Altivia that subsection 1c does not limit the entire scope of the EBL coverage to negligent acts, but merely limits the extent of coverage for negligent acts thereunder. Because this was Greenwich=s only basis for asserting that the EBL did not provide a duty to defend against the wrongful termination claim, we sustain Altivia=s second issue.[3] Accordingly, the judgment of the trial court is reversed and remanded with regard to Altivia=s claim under the EBL for Hidrogo=s wrongful termination claim and affirmed as to the remainder. /s/ Richard H. Edelman Justice Judgment rendered and Majority and Concurring Opinions filed August 26, 2004. Panel consists of Justices Fowler, Edelman, and Seymore. (Seymore, J., concurring.) [1] See Waffle House, Inc. v. Travelers Indem., 114 S.W.3d 601, 609 (Tex. App.CFort Worth 2003, pet. denied) (distinguishing Penn. Nat=l Mut. Cas. Ins. Co. v. Kitty Hawk Airways, Inc., 964 F.2d 478, 481 (5th Cir. 1992) as having involved such an inquiry). [2] We thus conclude that Altivia=s reliance on Waffle House to support its first issue is misplaced. The basis for the holding in that opinion was that the defamatory statements were made out of Waffle House=s attempt to prevent its employees from leaving rather than being related to the plaintiff=s termination. See Waffle House, 114 S.W.3d at 608-09. No such ulterior motive was alleged in this case. Moreover, even statements made for the purpose of preventing employees from leaving are employment related acts. We further disagree with the apparent reasoning of that opinion that an ERP exclusion can apply only where the alleged misconduct arises out of the plaintiff=s termination, rather than another employment-related act. [3] We express no opinion on any other aspect of the applicability, if any, of the EBL to Hidrogo=s claim.