Roy HERNANDEZ, Individually and d/b/a Hernandez Roofing, Appellant and Appellee, v. Philip LAUTENSACK, Appellee and Appellant.
No. 2-05-085-CV.
Decided: April 13, 2006
Panel A: CAYCE, C.J.; HOLMAN and GARDNER, JJ.
OPINION
I. Introduction
Roy Hernandez, individually and d/b/a/ Hernandez Roofing and Philip Lautensack filed cross appeals from a judgment in favor of Lautensack concerning the roof Hernandez put on Lautensack’s house. In three issues, Hernandez argues that Lautensack’s presuit notice under the Residential Construction Liability Act was untimely, that there was no evidence that Lautensack’s alleged damages were reasonable, and that the trial court erred in awarding attorney’s fees to Lautensack because his presuit demand was excessive. In two issues, Lautensack argues that the evidence conclusively proved his attorney’s fees in an amount double what the jury awarded to him and that the trial court erred by refusing to reopen testimony so that Lautensack’s counsel could testify about appellate attorney’s fees. We modify the trial court’s judgment and affirm it as modified.
II. Factual and Procedural Background
In 1999, Lautensack hired Hernandez to replace the slate tile roof on Lautensack’s residence at a cost of $20,000. The new roof had many leaks that Hernandez was unable to stop. In 2002, Hernandez told Lautensack that the leaks were the result of hail damage and offered to replace the roof for $9,100 in labor charges if Lautensack provided new slate tiles at a cost of $25,000. Unhappy with Hernandez’s prior work, Lautensack hired another roofer, Kip Petty, to install a new cement tile roof for $32,300. Petty documented several defects in Hernandez’s previous roofing job, including lack of proper underlayment, lack of metal flashing, and improper tile spacing. Petty replaced the roof in September 2002.
Lautensack sent Hernandez a claim notice letter on February 12, 2003, by certified and regular mail. The letter described various problems with the roof, alleged breaches of express warranties and DTPA violations, and threatened litigation unless Hernandez paid Lautensack $41,880. The certified letter was returned unclaimed; the regular letter was not returned. Hernandez did not reply.
Lautensack sued Hernandez on April 17, 2003, for breach of contract, misrepresentation, fraud, and deceptive trade practices and sought actual damages, attorney’s fees, and exemplary damages. Hernandez responded with a plea in abatement claiming that Lautensack had failed to serve the requisite presuit notice under the Residential Construction Liability Act (“RCLA”). See Tex. Prop.Code Ann. §§ 27.001-.003 (Vernon Supp.2005), .0031 (Vernon 2000), .004 (Vernon Supp.2005), .0041 (Vernon 2000), .0042 (Vernon Supp.2005, .005-.006 (Vernon 2003), .007 (Vernon Supp.2005). Though Lautensack contended that his first letter was sufficient notice under the RCLA, he eventually sent a second notice letter in response to Hernandez’s plea in abatement.
The case was ultimately tried to a jury. The jury returned a verdict in favor of Lautensack on all causes of action and awarded him $24,750 in actual damages plus $10,680 in attorney’s fees. The jury also found that Lautensack’s RCLA notice was untimely because it did not give Hernandez the opportunity to inspect the alleged roof defects and offer to repair them. For reasons not relevant to this appeal, the trial court disregarded the jury’s answers to the breach of warranty and DTPA issues. The trial court then signed a judgment in favor of Lautensack for the amounts awarded by the jury. Both parties appealed.
III. Discussion
A. Hernandez’s Issues 1. Timeliness of RCLA notice
In his first issue, Hernandez argues that the trial court erred by rendering judgment for Lautensack because the jury found that Lautensack’s presuit notice failed to meet the requirements of the RCLA. We disagree.
Section 27.004 of the RCLA provides that a claimant seeking damages arising from a contractor’s construction defect must give the contractor written notice of the alleged defect more than sixty days before filing suit. Tex. Prop.Code Ann. § 27.004(a). After receiving notice, the contractor has thirty-five days to inspect the property and forty-five days to make a written offer of settlement. Id. § 27.004(a)-(b). Under the RCLA as amended in 2003, failure of the claimant to give the requisite presuit notice results in dismissal of the suit. Id. § 27.004(d). But as Hernandez concedes in his brief, the prior version of the RCLA applicable to this suit contained no dismissal provision; instead, it provided for abatement of a suit where the claimant failed to provide the requisite presuit notice. See Act of May 17, 1995, 74th Leg., R.S., ch. 414, § 10, 1995 Tex. Gen. Laws 2988, 2996 (amended 2003) (current version at Tex. Prop.Code Ann. § 27.004(d)).
The trial court submitted the following question to the jury as part of the charge:
Do you find that, 60 days preceding the filing of this suit by Philip Lautensack against Roy Hernandez, Philip Lautensack gave written notice by Certified Mail/Return Receipt Requested to Roy Hernandez specifying, in reasonable detail, the construction defects that are the subject of the complaint at a time when Roy Hernandez could have performed any of the following:
a. Within 35 days of receipt of the written notice, Roy Hernandez had a reasonable opportunity to inspect the property, to determine the nature and cause of the construction defect and the nature and extent of repairs necessary to remedy the construction defect?
․
b. Within 45 days of receipt of the written notice, make an offer to repair, or to have repaired by an independent contractor at Roy Hernandez’s expense, the construction defect described in the notice?
The jury answered “no” to both parts of the question.
Hernandez argues that the jury’s answers to this question compel a judgment in his favor. Hernandez does not argue that the content of Lautensack’s notice was deficient; rather, he argues that by replacing the roof before he sent his notice letter, Lautensack deprived Hernandez of the opportunity to inspect the property and offer to repair the alleged defects under RCLA section 27.004.
We reject Hernandez’s argument for several reasons. First, the practical effect of Hernandez’s argument is to engraft the dismissal provision of the current RCLA onto the prior version that controls this case. This we cannot do. We must apply the law as the legislature wrote it. Reese v. Duncan, 80 S.W.3d 650, 658 (Tex.App.-Dallas 2002, pet. denied). Second, the RCLA’s intent to give a contractor a reasonable opportunity to inspect the property upon request was effectuated under the facts of this case. The undisputed evidence at trial proved that Hernandez did in fact inspect the roof many times when he attempted to repair leaks before it was replaced and submitted a bid to replace the roof in September 2002. Lautensack rejected Hernandez’s bid and chose to have his roof replaced by another contractor. Third, the RCLA expressly provides that a contractor may make a monetary settlement offer, not just an offer to repair the defects. Tex. Prop.Code Ann. § 27.004(b), (n). The fact that Lautensack had the defective roof replaced before he sent his notice letter did not deprive Hernandez of the opportunity to inspect the roof, make an offer to repair or replace the roof, or make a timely, monetary settlement offer.
The version of the RCLA that governs this suit simply does not provide for the result that Hernandez seeks. We overrule his first issue.
2. No evidence of reasonable cost of repair
In his second issue, Hernandez argues that there was no evidence that Lautensack’s repair costs were reasonable. We disagree.
A legal sufficiency challenge may only be sustained when: (1) the record discloses a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence establishes conclusively the opposite of a vital fact. Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex.1998), cert. denied, 526 U.S. 1040, 119 S.Ct. 1336, 143 L.Ed.2d 500 (1999); Robert W. Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 TEX. L. REV. 361, 362-63 (1960). In determining whether there is legally sufficient evidence to support the finding under review, we must consider evidence favorable to the finding if a reasonable factfinder could, and disregard evidence contrary to the finding unless a reasonable factfinder could not. City of Keller v. Wilson, 168 S.W.3d 802, 828 (Tex.2005).
A party seeking recovery for the cost of repairs must prove their reasonable value. Ebby Halliday Real Estate, Inc. v. Murnan, 916 S.W.2d 585, 589 (Tex.App.-Fort Worth 1996, writ denied). To establish the right to recover costs of repair, it is not necessary for a claimant to use the words “reasonable” and “necessary”; a claimant need only present sufficient evidence to justify a jury’s finding that the costs were reasonable and the repairs necessary. Id.; Ron Craft Chevrolet, Inc. v. Davis, 836 S.W.2d 672, 677 (Tex.App.-El Paso 1992, writ denied).
Kip Petty, the roofer who replaced the roof installed by Hernandez, testified without objection as an expert in residential roof installation generally and slate tile roofs specifically. Petty testified that Hernandez failed to install adequate metal flashing, failed to space the slate tiles far enough apart, and improperly installed the roof underlayment. He testified that because of these defects, the roof Hernandez installed “never had a chance” to be watertight. Petty determined after his first inspection that the roof could not be repaired and needed to be replaced. He testified that he bid $32,330 to replace the roof, and his invoice reflects that Lautensack paid the full amount.
Don Gove testified that he performed structural carpentry work on Lautensack’s house in conjunction with Petty’s roof replacement. Gove testified that Lautensack’s house was designed to carry a cedar shingle roof, which would weigh about a third as much as a slate tile roof. Gove replaced several rafters that had sagged or broken under the weight of Hernandez’s roof. He performed this work according to the recommendations of a structural engineer. Gove charged $2,400 for the structural work, plus another $1,500 for altering three dormer windows to accept appropriate flashing. Gove specifically testified that those repairs were necessary.
Other evidence showed that the Hernandez charged $20,000 for the roof he installed on Lautensack’s house and that Hernandez offered to replace his first roof for $9,100 plus $25,000 in slate to be provided by Lautensack. Hernandez himself offered the estimate of another roofer to replace just 419 out of the 14,000 to 15,000 slate tiles on Lautensack’s roof for $22,015. We conclude that this is some evidence to support the $24,750 in actual damages awarded by the jury as the reasonable cost of replacing Lautensack’s roof. We overrule Hernandez’s second issue.
3. Excessive demand
In his final issue, Hernandez argues that the trial court erred by awarding attorney’s fees to Lautensack because the jury found that Lautensack’s settlement demand was excessive. Once again, we disagree.
In Findlay v. Cave, the supreme court held that a creditor who makes an excessive demand on a debtor is not entitled to attorney’s fees under Tex.Rev.Civ. Stats. Ann.. art. 2226 (now chapter 38 of the civil practice and remedies code) for subsequent litigation required to recover the debt. 611 S.W.2d 57, 58 (Tex.1981); see Tex. Civ. Prac. & Rem.Code Ann. § 38.001-.002 (Vernon 1997). A demand is not excessive simply because it is greater than what the jury later determines is actually due. Pratt v. Trinity Projects, Inc., 26 S.W.3d 767, 769 (Tex.App.-Beaumont 2000, pet. denied). The dispositive inquiry for determining whether a demand is excessive is whether the claimant acted unreasonably or in bad faith. Id.; Allstate Ins. Co. v. Lincoln, 976 S.W.2d 873, 876 (Tex.App.-Waco 1998, no pet.). Application of this rule is limited to situations where the creditor refuses a tender of the amount actually due or indicates clearly to the debtor that such a tender would be refused. Findlay, 611 S.W.2d at 58.
In this case, the record contains no evidence that Hernandez ever tendered the amount actually due, that Lautensack refused any such tender, or that Lautensack indicated to Hernandez that such a tender would be refused. We hold, therefore, that there was legally insufficient evidence to support the jury’s finding that Lautensack’s demand was excessive and that the trial court did not err by disregarding that finding and awarding attorney’s fees to Lautensack. See Tex.R. Civ. P. 301 (providing that trial court may disregard any jury finding that has no support in the evidence). We overrule Hernandez’s third issue.
B. Lautensack’s Issues
1. Attorney’s fees
In his first issue, Lautensack argues that he conclusively proved reasonable and necessary attorney’s fees of $21,360 through the end of trial and that the trial court erred by awarding him only the $10,680 in attorney’s fees-exactly half the amount he claimed-that the jury found were reasonable and necessary.
The amount of reasonable attorney’s fees is usually a question for the fact finder. Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 882 (Tex.1990). The testimony of an interested witness on attorney’s fees generally does no more than raise a fact issue. Id. But testimony from an interested witness may prove attorney’s fees as a matter of law when the testimony is not contradicted by any other witness or attendant circumstances and is free from contradiction, inaccuracies, and circumstances tending to cast suspicion on the evidence, especially when the opposing party had the means and opportunity of disproving the testimony and failed to do so. Id.; see also Welch v. Hrabar, 110 S.W.3d 601, 610-11 (Tex.App.-Houston [14th Dist.] 2003, pet. denied); Elias v. Mr. Yamaha, Inc., 33 S.W.3d 54, 62-63 (Tex.App.-El Paso 2000, no pet.); Gulf Shores Council of Co-Owners, Inc. v. Raul Cantu No. 3 Family Ltd. P’ship, 985 S.W.2d 667, 677 (Tex.App.-Corpus Christi 1999, pet. denied).
In this case, Lautensack’s attorney, Mr. Holland, testified that Lautensack had incurred reasonable and necessary attorney’s fees through the end of trial of $21,360. He introduced as exhibits his monthly invoices, which reflected the work he performed, how long it took, and how much he charged for it. Hernandez cross-examined Holland extensively, but the focus of the cross-examination was whether Lautensack had complied with the RCLA’s notice requirements. The closest Hernandez came to controverting Lautensack’s attorney’s fees was when he asked whether the work Holland performed before sending the second demand letter was “premature,” to which Holland answered “no.” Because Holland answered the question in the negative, his fees remained uncontroverted.
No other witness contradicted Holland’s testimony; indeed, no other witness testified about attorney’s fees. Holland’s testimony and exhibits were free from contradiction, inaccuracy, and circumstances tending to cast suspicion on them. Hernandez had the opportunity to contradict Holland’s testimony but failed to do so.
We hold that Lautensack proved reasonable and necessary attorney’s fees of $21,360 as a matter of law and sustain his first issue.
2. Refusal to permit additional testimony
In his second issue, Lautensack argues that the trial court erred by refusing to reopen testimony so that he could offer evidence of his anticipated attorney’s fees in the court of appeals and supreme court.
Rule of procedure 270 provides that a trial court may permit additional evidence to be offered at any time when it clearly appears necessary to the administration of justice. Tex.R. Civ. P. 270. Rule 270 allows, but does not require, the court to permit additional evidence. Lopez v. Lopez, 55 S.W.3d 194, 201 (Tex.App.-Corpus Christi 2001, no pet.). In determining whether to grant a motion to reopen, the trial court considers whether: (1) the moving party showed due diligence in obtaining the evidence, (2) the proffered evidence is decisive, (3) reception of such evidence will cause undue delay, and (4) granting the motion will cause an injustice. Word of Faith World Outreach Ctr. Church v. Oechsner, 669 S.W.2d 364, 366-67 (Tex.App.-Dallas 1984, no writ). The decision to reopen is within the trial court’s sound discretion. Estrello v. Elboar, 965 S.W.2d 754, 759 (Tex.App.-Fort Worth 1998, no pet.). A trial court does not abuse its discretion by refusing to reopen a case after evidence is closed if the party seeking to reopen has not shown diligence in attempting to produce the evidence in a timely fashion. See id. The trial court should exercise its discretion liberally “in the interest of permitting both sides to fully develop the case in the interest of justice.” Word of Faith, 669 S.W.2d at 366-67.
Lautensack had every opportunity to put on evidence of his appellate attorney’s fees before the trial court closed the evidentiary phase of the trial. His attorney testified at length about his fees. Nothing in the record shows that Lautensack was diligent in attempting to produce evidence of his appellate attorney’s fees in a timely fashion, nor does he address the question of diligence in his brief. Under these circumstances, “the interests of justice do not warrant a second bite at the apple.” Estrello, 965 S.W.2d at 759. We hold that the trial court did not abuse its discretion by denying Lautensack’s motion to reopen the evidence. We overrule his second issue.
3. Motion for judicial notice
Lautensack has filed a motion requesting that we take judicial notice of his attorney’s affidavit and other documents filed in the trial court and attached to his brief in this court. Lautensack represents that those documents reflect what he would have claimed as appellate attorney’s fees if the trial court had allowed him to reopen the evidence. Because we hold that the trial court did not abuse its discretion by refusing to reopen the evidence, we deny Lautensack’s motion for judicial notice as moot.
IV. Conclusion
We overrule Hernandez’s issues and Lautensack’s second issue. We sustain Lautensack’s first issue and modify paragraph 2 of the trial court’s judgment to state, “Plaintiff is entitled to recover from Defendant reasonable and necessary attorney’s fees in the amount of $21,360.” We affirm the judgment as modified. See Tex.R.App. P. 43.2(b).
ANNE GARDNER, Justice.
– See more at: http://caselaw.findlaw.com/tx-court-of-appeals/1446994.html#sthash.Y7Xiy6yM.dpuf
Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.
Texas state Representative Kenneth Sheets filed legislation that would establishes a voluntary roofing contractor registration program with the Texas Department of Insurance (TDI).
Sheets said House Bill 1488, known as the Roofing Contractor Consumer Protection Act, would help protect consumers from unscrupulous roofing contractors. Under the bill, roofing contractors installing replacement roofs in Texas would have the option to register with TDI, placing them in a state-wide database maintained by the TDI.
“Texas property owners face some of the highest homeowners insurance rates in the nation, in large part because of the unique weather risks faced by the state,” Rep. Sheets said in a statement announcing the bill. “Sadly, the problem of severe weather is made worse by the influx of contractors to an affected area that are either unable or unwilling to perform quality work. Poor work causes more severe and frequent property claims for homeowners, which then leads to higher insurance rates.”
In addition to the creation of the state-wide database, HB 1488 tightens existing law by prohibiting all roofing contractors, regardless of their participation in the statewide registration, from rebating consumer insurance deductibles and requires disclosure to consumers the status of their liability insurance coverage.
“More often than not, the bad actors in the industry are not bonded or insured, leaving the homeowner without any recourse for work that is incomplete or improperly installed,” Rep. Sheets said. “A common sense disclosure requirement coupled with a voluntary registration database will provide consumers more tools to protect their properties from those who seek to take advantage of a catastrophe.”
Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.
TITLE 3. INSOLVENCY, FRAUDULENT TRANSFERS, AND FRAUD
CHAPTER 27. FRAUD
Sec. 27.02. CERTAIN INSURANCE CLAIMS FOR EXCESSIVE CHARGES. (a) A person who sells goods or services commits an offense if:
(1) the person advertises or promises to provide the good or service and to pay:
(A) all or part of any applicable insurance deductible; or
(B) a rebate in an amount equal to all or part of any applicable insurance deductible;
(2) the good or service is paid for by the consumer from proceeds of a property or casualty insurance policy; and
(3) the person knowingly charges an amount for the good or service that exceeds the usual and customary charge by the person for the good or service by an amount equal to or greater than all or part of the applicable insurance deductible paid by the person to an insurer on behalf of an insured or remitted to an insured by the person as a rebate.
(b) A person who is insured under a property or casualty insurance policy commits an offense if the person:
(1) submits a claim under the policy based on charges that are in violation of Subsection (a) of this section; or
(2) knowingly allows a claim in violation of Subsection (a) of this section to be submitted, unless the person promptly notifies the insurer of the excessive charges.
(c) An offense under this section is a Class A misdemeanor.
Added by Acts 1989, 71st Leg., ch. 898, Sec. 1, eff. Sept. 1,
Sec. 35.02. INSURANCE FRAUD. (a) A person commits an offense if, with intent to defraud or deceive an insurer, the person, in support of a claim for payment under an insurance policy:
(1) prepares or causes to be prepared a statement that:
(A) the person knows contains false or misleading material information; and
(B) is presented to an insurer; or
(2) presents or causes to be presented to an insurer a statement that the person knows contains false or misleading material information.
(a-1) A person commits an offense if the person, with intent to defraud or deceive an insurer and in support of an application for an insurance policy:
(1) prepares or causes to be prepared a statement that:
(A) the person knows contains false or misleading material information; and
(B) is presented to an insurer; or
(2) presents or causes to be presented to an insurer a statement that the person knows contains false or misleading material information.
(b) A person commits an offense if, with intent to defraud or deceive an insurer, the person solicits, offers, pays, or receives a benefit in connection with the furnishing of goods or services for which a claim for payment is submitted under an insurance policy.
(c) An offense under Subsection (a) or (b) is:
(1) a Class C misdemeanor if the value of the claim is less than $50;
(2) a Class B misdemeanor if the value of the claim is $50 or more but less than $500;
(3) a Class A misdemeanor if the value of the claim is $500 or more but less than $1,500;
(4) a state jail felony if the value of the claim is $1,500 or more but less than $20,000;
(5) a felony of the third degree if the value of the claim is $20,000 or more but less than $100,000;
(6) a felony of the second degree if the value of the claim is $100,000 or more but less than $200,000; or
(7) a felony of the first degree if:
(A) the value of the claim is $200,000 or more
Amended by:
Acts 2005, 79th Leg., Ch. 1162, Sec. 4, eff. September 1, 2005.
Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.
Evanston Insurance Company v. Gene by Gene, Ltd., — F.Supp.3d —- (2016)
2016 WL 102294
United States District Court,
S.D. Texas, Houston Division.
Evanston Insurance Company, Plaintiff,
v.
Gene by Gene, Ltd., Defendant.
Civil Action No. H–14–1842
|
Signed January 6, 2016
Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.
Federal and State Laws prohibit unfair debt collection practices. Many consumers do not realize that there is a statute of limitations on collecting these old debts. The debt collectors are disregarding these statutes of limitations and are harassing consumers in order to make them pay when the consumers no longer owe the debt.
Fair Debt Collection Practices Act
The debt collection harassment has gotten to be such a bad problem that the federal government passed a law to protect consumers from these collectors. We have seen cases come in the office where the debt collector, who is usually on a commission, has threatened the consumer with being arrested, has contacted the consumer’s neighbors and relatives, has called the consumer’s work and made bad comments to the consumer’s supervisors or coworkers, and has used threatening or foul language and repeated phone calls at odd hours to harass the consumer (a violation under the Texas Penal Code).
If you have a debt collector harassing you, it is possible to pursue the debt collector under the Fair Debt Collection Practices Act.
Texas State Law
Texas state law also provides common law and statutory protections against unfair debt collection. Texas statutory law provides for recovery of attorney fees and penalties to be paid by the debt collector as damages. Texas common law allows you to recover additional damages caused by the debt collector’s harassment. We use the combination of the state and federal law to protect you from the collection harassment. We also see debt collectors who do not have the required bond and licensing in Texas to even engage in debt collection in the state.
Prohibited Practices
Debt collectors are not allowed to use threats of violence or harm, publish a list of names of people who refuse to pay the debt, use obscene or profane language, or repeatedly use the phone to annoy you.
Debt collectors are not allowed to lie when they are trying to collect the debt. They are not allowed to:
falsely claim that they are attorneys or government representatives,
falsely claim that you have committed a crime,
falsely represent that they operate or work for a credit reporting company,
misrepresent the amount that you owe,
indicate that papers they send you are legal forms when they are not, or
indicate that papers they send you are not legal forms when they are.
Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.
Disgruntled law graduates began suing their alma maters in 2011, accusing law schools of misleading recruits about their chances of finding a job. But to date, none of those cases have succeeded, and just last week another suit filed in Florida was dismissed. Of the 15 similar lawsuits filed, only a handful remain, and none of have been certified as a class action. The lawsuits challenged the accuracy of employment statistics and salary data the schools reported to attract new students. A U.S. district court judge in Florida wrote that prospective students of Florida Coastal School of Law were “a sophisticated subset of education consumers, capable of sifting through data and weighing alternatives.”
Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.
Likens v. Hartford Life and Acc. Ins. Co., — F.Supp.2d —- (2011)
United States District Court,
S.D. Texas,
Houston Division.
Cheryl LIKENS, Plaintiff,
v.
HARTFORD LIFE AND ACCIDENT
INSURANCE COMPANY, Defendant.
Civil Action No. H–10–155. June 29, 2011.
Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas insurance defense and contract law attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.
Appellants, MEMC Electronic Materials and MEMC Pasadena (collectively MEMC), appeal the trial court’s order that granted a motion for partial summary judgment urged by appellees, Albemarle Corporation and its insurers, Lexington Insurance and Travelers Property Casualty Group, and that denied MEMC’s cross-motion for partial summary judgment.FN1 After Albemarle indemnified Ethyl Corporation for claims paid by Ethyl to three people who were injured in a fire at a manufacturing plant, Albemarle sought indemnification from MEMC for Albemarle’s payment to Ethyl. MEMC refused to indemnify Albemarle, contending that the Asset Purchase Agreement between MEMC and Albemarle does not require the indemnification. In a single issue on appeal that challenges the trial court’s rendition of summary judgment in favor of Albemarle, MEMC asserts three reasons that the trial court should have rendered judgment in its favor. First, MEMC contends that Albemarle’s right to obtain indemnification from MEMC under the Asset Purchase Agreement was not triggered by the claims against Ethyl because every claim for which Ethyl was held liable arose out of Ethyl’s design and operation of the plant prior to the closing date of the Asset Purchase Agreement. Second, MEMC asserts that the Ethyl Indemnity Agreement was not an obligation that it assumed under the terms of the Asset Purchase Agreement. Third, MEMC states that Albemarle’s claim for indemnity is unenforceable under Texas and Virginia law. Albemarle replies by asserting that its indemnification of Ethyl was required under Virginia law, that the indemnification provision of the Asset Purchase Agreement is not modified by any other part of the agreement, and that the indemnification’s before-and-after nature provides for the indemnification that it seeks here.FN2
FN1. The trial court granted the parties’ Joint Motion to Sever and Abate the damages portion of the case, rendering the grant of partial summary judgment a final, appealable judgment.
FN2. Both parties filed post-submission supplemental briefs with this Court. We allow this supplementation in accordance with Rule 38 .7 of the Texas Rules of Appellate Procedure. See Tex.R.App. P. 38.7 (“A brief may be amended or supplemented whenever justice requires, on whatever reasonable terms the court may prescribe.”)
Considering the entire agreement and all individual provisions in the context of the whole instrument, we conclude that the Asset Purchase Agreement does not obligate MEMC to indemnify Albemarle for its payment to Ethyl for Ethyl’s liability for injuries caused by a fire at the plant. We do not reach the issue of whether the laws of Texas and Virginia make the indemnity agreement unenforceable as matter of law. We reverse and render judgment in favor of MEMC.
Background
Ethyl designed and built a polysilicon manufacturing plant located in Pasadena, Texas. In 1994, Ethyl created Albemarle as a separate company and transferred various of its businesses, including the plant, to Albemarle’s ownership and control. The transfer was under a “Reorganization and Distribution Agreement.” Ethyl and Albemarle also entered into an “Indemnification Agreement,” under which Albemarle agreed to “indemnify, defend and hold harmless Ethyl … from and against any and all Indemnifiable Losses of the Ethyl Indemnitees arising out of or due to the failure or alleged failure of Albemarle or any of its Affiliates to pay, perform, or otherwise discharge in due course any of the Albemarle Liabilities.” The agreements between Ethyl and Albemarle are governed by the laws of the state of Virginia.
In 1995, Albemarle sold the plant to MEMC pursuant to an “Asset Purchase Agreement” that is governed by Texas law. The closing date for the agreement was July 31, 1995. Under a separate agreement, MEMC and Albemarle agreed that Albemarle would continue to operate the plant.
The Asset Purchase Agreement describes the transfer of the plant and other assets and liabilities in Sections 3.3 and 3.4. Some assets and liabilities were specifically excluded from the transfer, and only certain liabilities were assumed by MEMC. Section 3.4(b) specifies that MEMC “shall not assume any other Liabilities of Seller whatsoever” except “those Liabilities specifically assumed” in Section 3.4(a). Section 3.4(a) does not mention the agreement between Ethyl and Albemarle, nor was that agreement a contract that was assumed by MEMC in the accompanying Schedule 3.4(a)(i). The agreement further specified that MEMC did not assume any liability that results or arises from the operation of the plant prior to the closing date.
Albemarle made certain representations and warranties to MEMC. Under Section 4.16, labeled “Contracts and Commitments,” Albemarle represented that, except as set forth in Schedule 4.16, it was “not a party to” and the transferred assets “are not bound by” and the Assumed Obligations “shall not include, any written or oral, formal or informal … agreements between or among Seller and any Affiliate of Seller ….“ Schedule 4.16 did not mention the indemnity agreement between Ethyl and Albemarle.
The Asset Purchase Agreement between Albemarle and MEMC included an indemnity provision. Generally speaking, depending on whether the damages arose out of the operation of the plant “prior to the closing date” or “on or after the closing date,” MEMC would indemnify Albemarle for the damages, or Albemarle would indemnify MEMC for the damages. In Section 7.3, Albemarle agreed to indemnify MEMC from and against all damages incurred by MEMC directly or indirectly by reason of or resulting from liabilities, obligations or claims, with respect to the plant arising out of operations of the plant prior to the Closing Date. Similarly, Section 7.4 provided that MEMC would indemnify Albemarle from and against all damages asserted against, resulting to, imposed upon or incurred by Albemarle, directly or indirectly by reason of or resulting from liabilities, obligations or claims with respect to the plant arising out of the operations of the plant on or after the Closing Date.
In 1996, three Albemarle employees were injured when a fire broke out at the plant. The employees, collectively referred to as the the Damewood plaintiffs, filed a lawsuit against a number of parties, including Ethyl and MEMC.FN3 Albemarle, which carried worker’s compensation coverage, was not subject to suit. MEMC settled with the Damewood plaintiffs. Of the parties relevant to the present case, only Ethyl went to trial in the underlying litigation. Pursuant to the agreement between Ethyl and Albemarle, Albemarle defended Ethyl in the Damewood litigation. At the close of the trial, Ethyl was the only remaining defendant, and a jury rendered a verdict in excess of six-and-a-half million dollars against Ethyl. Ethyl appealed, and while the appeal was pending, it settled with the Damewood plaintiffs for approximately five million dollars. Ethyl sought indemnification from Albemarle under the terms of their agreement. Albemarle indemnified Ethyl for its losses, which is the amount that Albemarle now seeks from MEMC in this lawsuit.
FN3. Larry Damewood, Gary Woodard, and Roy Moss v. Ethyl Corporation, Cause No. 96-38521, in the 189th District Court of Harris County, Texas.
MEMC filed for summary judgment, which was denied. Albemarle then filed a motion for partial summary judgment on the issue of whether MEMC was obligated to indemnify Albemarle, and MEMC re-urged its motion as a cross-motion for partial summary judgment. The trial court ruled in Albemarle’s favor. The trial court severed the summary judgment order and abated the question of damages so the parties could bring the present appeal.
Standard of Review
When reviewing cross-motions for summary judgment, we consider both motions and render the judgment that the trial court should have entered. Coastal Liquids Transp., L.P. v. Harris County Appraisal Dist., 46 S.W.3d 880, 884 (Tex.2001). Further, in a contract action where, as here, neither party contends that a contract is ambiguous, a court should construe the contract as a matter of law, and, on appeal, the court’s ruling is subject to de novo review. See J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex.2003) (citing Coker v. Coker, 650 S.W.2d 391, 394 (Tex.1983)) (applying rule to arbitration agreement); C.M. Asfahl Agency v. Tensor, Inc., 135 S.W.3d 768, 780 (Tex.App.-Houston [1st Dist.] 2004, no pet.) (interpreting asset purchase agreement); Tesoro Petroleum Corp. v. Nabors Drilling USA, Inc., 106 S.W.3d 118, 125 (Tex.App.-Houston [1st Dist.] 2002, pet. denied) (interpreting indemnity agreement); Webb v. Lawson-Avila Constr., Inc., 911 S.W.2d 457, 459-60 (Tex.App.-San Antonio 1995, writ dism’d w.o.j.).
“An indemnity agreement is a promise to safeguard or hold the indemnitee harmless against either existing and/or future loss liability.” Dresser Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 508 (Tex.1993). Indemnity provisions are to be strictly construed, pursuant to the usual principles of contract interpretation, in order to give effect to the parties’ intent as expressed in the agreement. See Ideal Lease Serv., Inc. v. Amoco Prod. Co., 662 S.W.2d 951, 953 (Tex.1984). In construing a written contract, the court’s primary concern is to ascertain the true intent of the parties as expressed in the instrument. J.M. Davidson, Inc., 128 S.W.3d at 229; see C.M. Asfahl Agency, 135 S.W.3d at 780. Accordingly, the court must examine and consider the entire writing in an effort to harmonize and give effect to all provisions so that none is rendered meaningless. J.M. Davidson, Inc., 128 S.W.3d at 229. The court may not consider any single provision, taken in isolation, as controlling, but must consider all provisions in the context of the entire instrument. Id.
Obligations Assumed by MEMC Under the Agreement
MEMC contends that, in its Asset Purchase Agreement with Albemarle, it did not assume an obligation for the indemnity agreement between Ethyl and Albermarle. MEMC contends that Sections 3.4, 4.16 and 3.3(b) exclude the agreement between Albemarle and Ethyl from the agreement between Albemarle and MEMC. Albemarle does not dispute that the agreement between Ethyl and Albemarle is never mentioned specifically in the agreement between Albemarle and MEMC. Albemarle, however, asserts that it is entitled to indemnification from MEMC under Section 7.4, the section of the agreement that pertains to indemnification.
MEMC Does Not Assume Obligation for Ethyl-Albemarle Agreement
MEMC points to Section 3.4 of the Asset Purchase Agreement to show that it did not assume any obligation for the indemnity agreement between Ethyl and Albermarle. As noted above, Albemarle does not dispute that Section 3.4 does not mention the agreement between Ethyl and Albemarle.
Section 3.4(a)
The Asset Purchase Agreement describes the transferred business and transferred assets. Section 3.4(a) specifically describes “Assumed Obligations.” These are obligations, assumed by MEMC, of liabilities that belong to Albemarle. The only obligations that are assumed by MEMC are those that are listed in Schedule 3.4(a)(i), the “Assumed Contracts[.]” FN4 The agreement between Ethyl and Albemarle was not listed in Schedule 3.4(a)(i) as a contract that was assumed by MEMC. Moreover, the agreement between Albemarle and MEMC specifically provided that MEMC would “assume no liabilities relating to the Assumed Contracts which result or arise from operation of the Transferred Business or the Transferred Assets prior to the Closing Date.” MEMC thus correctly points out that Section 3.4(a) provides that MEMC is assuming an obligation for only the liabilities of Albemarle that “are listed in Schedule 3.4(a)(i) [,]” and that the agreement between Ethyl and Albermarle is not listed in that Schedule. We agree with MEMC’s representation that under Section 3.4(a), it has not assumed liability for the agreement between Ethyl and Albemarle.
FN4. The Asset Purchase Agreement states,
Section 3.4 Assumptions by MEMC Pasadena
(a) Liabilities Being Assumed. Except as otherwise expressly provided herein and subject to the terms and conditions of the Agreement, simultaneously with the sale, transfer, conveyance and assignment to MEMC Pasadena of the Transferred Assets, MEMC Pasadena shall assume and agree and undertake in writing to pay, perform, and discharge as and when due … the following Liabilities of Seller (collectively, “Assumed Obligations” ):
(i) those Liabilities of Seller under all contracts, leases, subleases, commitments, supply contracts, agreements and orders relating primarily to the operation of the Transferred Business or the Transferred Assets, but in all such cases only to the extent the same are listed in Schedule 3.4(a)(i) attached hereto (the “Assumed Contracts” ) provided, however, that MEMC Pasadena shall assume no liabilities relating to the Assumed Contracts which result or arise from operation of the Transferred Business or the Transferred Assets prior to the Closing Date ….
Section 3.4(b)
The Asset Purchase Agreement specifies under Section 3.4(b) that liabilities of Albermarle are not being assumed by MEMC. The only exception is that MEMC is assuming liability for items listed in Schedule 3.4(a)(i), which is the schedule included within 3.4(a). Section 3.4(b) states that MEMC “shall not assume any other Liabilities” of Albemarle, unless the liability is “specifically assumed in writing” under Section 3.4(a). The agreement between Albemarle and Ethyl is not listed in Schedule 3.4(a)(i) and is therefore excluded from the obligations assumed by MEMC. MEMC thus accurately represents that under Section 3.4(b), it has not assumed liability for the agreement between Ethyl and Albemarle.FN5
FN5. Section 3.4(b) of the Asset Purchase Agreement states,
(b) Liabilities Not Being Assumed. Except for those Liabilities specifically assumed in writing by MEMC Pasadena pursuant to Section 3.4(a) hereof, MEMC Pasadena shall not assume any other Liabilities of Seller whatsoever such as (by way of example and without limitation of the scope of the preceding portion of this sentence), the following (collectively, “Excluded Obligations” ).
(i) any Liabilities of Seller (other than Assumed Obligations) of any nature whatsoever (regardless of whether the existence of such Liability (A) is or was at any time known or unknown to MEMC Pasadena, MEMC or Seller or (B) constitutes or does not constitute a breach of any representation or warranty of Seller to MEMC or MEMC Pasadena) to the extent arising or incurred or which arose or were incurred on or before the Closing, or which are based on (1) events occurring on or before the Closing, or (2) the operation of the Transferred Business on or before the Closing, notwithstanding that the date on which the claim, demand or Liability arose is after the Closing …
In summary, Sections 3.4(a) and (b) provide that MEMC is not assuming obligation for liabilities of Albemarle that are not specifically set forth in Schedule 3.4(a). The agreement between Ethyl and Albemarle is not mentioned in Schedule 3.4(a). We conclude that Section 3.4 of the agreement does not provide for MEMC to assume obligation for the indemnity agreement between Ethyl and Albermarle. Our task, however, is not merely to examine a single provision of the agreement, but to look at all the provisions in the context of the entire instrument in an effort to harmonize and give effect to all provisions so that none is rendered meaningless. See J.M. Davidson, Inc., 128 S.W.3d at 229.
Albemarle Did Not Disclose Ethyl-Albermarle Agreement
MEMC contends that the failure of Albemarle to disclose the existence of the indemnity agreement between Ethyl and Albemarle shows that there was never any obligation by MEMC for that agreement. Albemarle makes representations and warranties to MEMC in the Asset Purchase Agreement. Under Section 4.16(a)(x) of the Asset Purchase Agreement, Albemarle represents that it is not “a party to” and is “not bound by” any “agreements between or among” Albemarle and any “Affiliate.” The indemnification agreement between Ethyl and Albemarle showed that Albemarle was Ethyl’s “wholly-owned subsidiary[,]” which meets the definition of affiliate in the agreement between Albemarle and MEMC.FN6 Further, Section 4.16(xiii) includes Albemarle’s representation that it is not “a party to” and is “not bound by … any other agreement, contract, commitment, arrangement or instrument that relate[s] to or may affect the plant.” FN7 The only exception to these provisions concerns agreements listed in schedules accompanying the Asset Purchase Agreement. As noted above, the indemnity agreement between Ethyl and Albemarle was never disclosed in any schedule, nor was it ever mentioned in the Asset Purchase Agreement. We conclude that Section 4.16 called for Albemarle to disclose contract and commitments that “relate to or may affect” the plant, but Albemarle did not disclose its indemnity agreement with Ethyl. We also conclude that Albemarle failed to disclose in Section 4.16 the indemnity agreement it had with its affiliate, Ethyl. Albemarle’s failure to disclose its indemnity agreement with Ethyl suggests that MEMC was not aware of that agreement and did not obligate itself to cover any liability imposed under that agreement. We conclude that terms of Section 4.16 support MEMC’s position that it is not obligated for the indemnity agreement between Albemarle and Ethyl.
FN6. “Affiliate” is defined in the agreement as “in the case of an entity, any person who or which, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, any specified Person (the term “control” for these purposes means the ability, whether by ownership of shares or other equity interest, by contract or otherwise, to elect a majority of the directors of a corporation … or have the power to remove and then select, a majority of those Persons exercising governing authority over an entity).”
FN7. The Asset Purchase Agreement states,
Section 4.16 Contracts and Commitments
(a) Except as set forth in Schedule 4.16 or in other Schedules to this Agreement hereof, to Seller’s knowledge, Seller is not, with respect to the Transferred Business or the Transferred Assets, a party to, and the Transferred Assets and the Transferred Business are not bound by, and the Assumed Obligations shall not include, any written or oral, formal or informal …
[the section lists a number of possible contractual obligations]
(x) agreements between or among Seller and any Affiliate of Seller;
…
(xiii)any other agreement, contract, commitment, arrangement or instrument that relate to or may affect the Transferred Business, except for the Assumed Contracts.
In view of Sections 3.4 and 4.16 of the Asset Purchase Agreement, we conclude that those sections suggest that MEMC was not obligated to indemnify Albemarle for the payment that it made to Ethyl.FN8
FN8. We disagree with MEMC that Section 3.3(b) supports its position that it is not obligated to Albemarle here, because we conclude that the section is inapplicable. Section 3.3(b) states that Albemarle continues to have responsibility for certain assets, including “(v) all indemnification rights against and indemnification agreements with other parties arising out of the Transferred Business or the Transferred Assets prior to the Closing Date.” The indemnity agreement between Ethyl and Albemarle is not an asset of Albemarle’s, but is rather a liability, and that Section, therefore, does not aid in our analysis of the issues here.
The Indemnification Portion of the Agreement
Albemarle contends that the indemnification terms specified by Section 7.4 of the agreement require MEMC to indemnify Albemarle, and that under the rules of contract construction, we must favor an interpretation that affords some consequence to each part of the instrument so that none of its provisions will be rendered meaningless. Albemarle contends Section 7.4(a) requires MEMC to indemnify it for its obligation to Ethyl so long as that obligation FN9 (1) is with respect to the transferred business,FN10 and (2) arose out of the operation of the transferred business, (3) on or after the closing date.
FN9. MEMC does not challenge Albemarle’s assertion that it met the term “Liabilities, Obligations or Claims” because the lawsuit arising out of the January 1996 fire would qualify as an obligation, claim, or liability. The Asset Purchase Agreement defines Liabilities as: “any and all debts, claims, liabilities and obligations of any kind, regardless of whether disclosure thereof would be required to be made in accordance with [Generally Accepted Accounting Principles], whether accrued or fixed, absolute or contingent or determined or determinable.”
FN10. Albemarle contends that it is undisputed that the Damewood plaintiffs were injured while performing polysilicon manufacturing operations for the Pasadena business, and thus the injuries were “with respect to the Transferred Business.” The agreement between Albemarle and MEMC defines “Transferred Business” as “all of the business of Seller related to the manufacture of granular polysilicon, silane, sodium aluminum fluoride, and sodium ethyl silicate at the manufacturing facilities of Seller located in Pasadena, Texas, but specifically excluding Seller’s sodium aluminum hydride business[.]”
MEMC’s challenge on appeal focuses on the term “arising out of the operations of the Transferred Business … on or after the Closing Date.” MEMC contends that the undisputed evidence shows that Albemarle’s payment to Ethyl was due to the agreement between them, which occurred prior to the Closing Date of the Asset Purchase Agreement between Albemarle and Ethyl, and that the payment did not arise out of the operations of the plant on or after the Closing Date. In short, the tort claims by the Damewood plaintiffs are not the legal basis for Albemarle’s indemnity claim here. MEMC also asserts that the undisputed summary judgment record indicates that every claim for which Ethyl was held liable arose out of Ethyl’s design and operation of the plant prior to the closing date of the Asset Purchase Agreement.
Albemarle responds that we should rely on the specific indemnity provision in Section 7.4(a) of the Asset Purchase Agreement, despite the fact that the Asset Purchase Agreement fails to mention the indemnity agreement between Ethyl and Albemarle. Albemarle contends that “Resolution of the meaning of the term ‘arising out of’ is, perhaps, the central and controlling issue presented to this Court.” Albemarle asserts that it is asking this Court to give “arising out of” the “normal inclusive” reading that “reasonable mutual indemnitors would have accorded the phrase.”
Under Section 7.4(a) of the Asset Purchase Agreement, MEMC must indemnify Albemarle for all damages asserted against, resulting to, imposed upon or incurred by Albemarle directly or indirectly by reason of or resulting from liabilities, obligations or claims with respect to the plant arising out of the operations of the plant on or after the Closing Date.FN11 The Damewood plaintiffs were injured after the Closing Date of the Asset Purchase Agreement and there is no dispute that those injuries arose out of the operations of the plant. The damages at issue here, however, consist of the payment made by Albemarle to Ethyl pursuant to their indemnity agreement, which was an agreement in existence before the Closing Date of the Asset Purchase Agreement. We conclude that the payment made to indemnify Ethyl was not a liability, obligation or claim arising out of the operations of the plant, but rather a payment that arose out of the prior contractual relationship between Albemarle and Ethyl.
FN11. Section 7.4 of the Asset Purchase Agreement provides that MEMC will indemnify Albemarle under certain circumstances. The agreement states,
Section 7.4 MEMC’s and MEMC Pasadena’s Agreement to Indemnify. Subject to the terms and conditions of this Article 7, MEMC and MEMC Pasadena jointly and severally agree to indemnify, defend and hold harmless Seller from and against all Damages asserted against, resulting to, imposed upon or incurred by Seller, directly or indirectly (collectively, “Seller Claims” ), by reason of or resulting from:
(a) without prejudice to any obligations of Seller under the Operating Agreement or the Utilities and Services Agreement, liabilities, obligations or claims with respect to the Transferred Business or the Transferred Assets (whether absolute, accrued, contingent or otherwise) arising out of the operations of the Transferred Business or the Transferred Assets (including the Facility and the Facility Site) on or after the Closing Date;
(b) liabilities with respect to the Assumed Obligations and the Assumed Contracts;
(c) a breach of any representation, warranty or agreement of MEMC or MEMC Pasadena contained in or made pursuant to this Agreement ….
We disagree with the assertion by Albemarle that we will render Section 7.4(a) meaningless if we interpret the Asset Purchase Agreement to deny recovery here. The Asset Purchase Agreement plainly provides for MEMC to indemnify for damages arising out of the operations of the plant on or after the Closing Date. That indemnity agreement remains in place for any liabilities, obligations or claims that arise out of the operations of the plant on or after the closing date. Our holding merely denies recovery for any Albemarle liabilities, obligations or claims that arise out of unidentified, contractual obligations in existence prior to the Closing Date that were not specifically mentioned by the Asset Purchase Agreement with MEMC.FN12
FN12. In its most recent supplemental brief, Albemarle contends that the language in Section 7.4. which states that the section is “[s]ubject to the terms and conditions of this Article 7 ” requires us to read Section 7.4 independently of Articles 3 and 4. To the contrary, we note that the term “subject to the terms and conditions” appears throughout the agreement, and nowhere requires any section to be read in isolation. We also note that Section 7.1 expressly incorporates all other agreements between the parties into Article 7:
All representations, warranties and agreements made by any party to this Agreement or pursuant hereto shall be true, complete, and correct as of the date hereof and at and as of the Closing Date as though such representations, warranties, covenants and agreements were made at and as of the closing date.
Viewing the indemnity provision in context with the agreement as a whole, our conclusion is consistent with the other sections of the agreement. As we noted above, Section 3.4 of the agreement does not provide for MEMC to assume an obligation for the indemnity agreement between Albemarle and Ethyl. Additionally, Albemarle’s failure to disclose the agreement under Section 4.16, suggests that MEMC was not aware of the agreement. We further noted that Section 4.16(a)(x) suggests that MEMC is not obligated to Albemarle for its payment to Ethyl because it is a “wholly-owned subsidiary” of Ethyl, which would qualify as an “Affiliate of Seller” under the Asset Purchase Agreement.
Albemarle refers us to decisions that interpret “arising out of” language to require only a causal nexus between the action and the result. For its broad interpretation, Albemarle calls this court’s attention to a number of cases construing insurance contracts. See Mid-Century Ins. Co. of Tex. v. Lindsey, 997 S.W .2d 153, 156 (Tex.1999); Utica Nat’l Ins. Co. v. Am. Indem. Co., 141 S.W.3d 198, 203 (Tex.2004); McCarthy Bros. Co. v. Cont’l Lloyds Ins. Co., 7 S.W.3d 725, 730 (Tex.App.-Austin 1999, no pet.); Gen. Agents Ins. Co. v. Arredondo, 52. S.W.3d 762, 767 (Tex.App.-San Antonio 2001, pet. denied); Sport Supply Group, Inc. v. Columbia Cas. Co., 335 F.3d 453, 458 (5th Cir.2003). In interpreting an insurance policy, when that policy “is subject to more than one reasonable interpretation, we must adopt the construction most favorable to the insured when we resolve the uncertainty.” State Farm Fire & Cas. Co. v. Vaughan, 968 S.W.2d 931, 933 (Tex.1998). Albemarle presents no authority that requires us to interpret the terms of contractual indemnity in a commercial setting-terms which neither party contends are subject to multiple reasonable interpretations-to favor the indemnitee.
MEMC relies on an unpublished decision from this Court in Union Tex. Petroleum Energy Corp. v. Kelly Operating Co., No. 01-96-00346-CV, 1997 WL 476322 (Tex.App.-Houston [1st Dist.] Aug. 21, 1997, no pet.) (not designated for publication). In August 1990, four men were injured by a well and sued Union Texas for negligent dredging of an oil well extension canal that occurred in 1975. Id. at *1. Kelly refused to indemnify Union Texas under their May 1990 agreement that provided that Kelly would discharge all obligations arising out of the purchased property with respect to all occurrences on or after the Effective Date of the agreement. Id. This Court held that the agreement that provided for indemnity after May 1990 did not apply because the negligent conduct-the 1975 dredging of the oil well-occurred prior to the effective date of the agreement. Id. at *3. Here, similarly, the liability, obligation or claim arises from the contractual relationship between Albemarle and Ethyl, which occurred before the Closing Date of the Asset Purchase Agreement. See id.
Examining the entire writing in order to give effect to the intent of the parties as expressed in the agreement, and in order to render no clause meaningless, we conclude that the Asset Purchase Agreement does not obligate MEMC to indemnify Albemarle for the payment to Ethyl under the agreement between Albemarle and Ethyl. The trial court therefore erred by granting partial summary judgment for Albmarle, and also erred by failing to grant partial summary judgment in favor of MEMC.
Conclusion
We reverse and render judgment for MEMC.
Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.
United States District Court,
N.D. Texas,
Dallas Division.
CENTEX HOMES, a Nevada
General Partnership, Plaintiff,
v.
LEXINGTON INSURANCE COMPANY, Defendant.
No. 3:13–cv–719–BN. | Signed
March 24, 2014. | Filed March 25, 2014.
Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.
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On November 15, 2013, the Secretary filed two objections in the Ormet Corporation Chapter 11 bankruptcy proceeding. Ormet was an Ohio corporation with four affiliated companies. It had approximately 14 employee benefit plans, some of which were subject to ERISA. The Secretary’s first objection involved the debtors’ motion for the approval of the sale of all of its assets relating to one of its facilities, including the transfer of employee benefit plans. The Secretary objected to the motion because the debtors’ filings failed to include sufficient information for the Secretary to determine whether the sale would violate any provisions of ERISA, including its COBRA provisions, or to determine whether the buyer would incur any successor liability. The Secretary also objected based on the debtors’ attempt to disclaim all ERISA liability with respect to the buyer and non-debtor third parties. In addition, the Secretary also objected to the debtors’ second emergency motion, which sought relief from its current obligations to several ERISA-covered plans and attempted to disclaim all COBRA obligations and some of its plan payment obligations. Chicago Office
In re Robert Plan Corp. (Bankr. E.D.N.Y.)
This case involves an ongoing dispute with a Chapter 7 trustee over a bankruptcy court’s jurisdiction to approve payments to the trustee and his retained professionals for work performed in terminating the debtor’s 401(k) plan. On October 26, 2010, the bankruptcy court held that it had core jurisdiction to rule on the fee requests, but avoided ruling on whether it had jurisdiction to determine the amount of the fees to be paid using plan assets. On March 1, 2011, the bankruptcy court issued a first interim fee award to the trustee and his professionals in amounts greater than the Secretary believed appropriate, but consistent with the October 2010 Order, and refused the trustee’s request to rule on what amounts were payable by the plan. On December 11, 2011, the Secretary filed an objection to the second interim fee request by the trustee and his law firm and a final fee application by the auditor and pension consultant assisting the trustee. On August 20, 2012, the bankruptcy court overruled the Secretary’s objections and granted the fee applications. Departing from the terms of the 2010 Order, which had stated that “[a]ny order awarding fees would contain no determination of whether Plan funds could be used to satisfy the award,” the bankruptcy court expressly provided in the August 2012 decision that the trustee could use plan funds to pay the professionals, thereby effectively asserting jurisdiction over the ERISA plan and its assets. The interim fee award to the trustee of $132,378.24 resulted in an effective hourly rate of approximately $2,000 per hour. As a portion of the relief granted in the 2012 decision was interlocutory, on September 4, 2012, the Secretary filed a motion for leave to appeal to the district court. On September 14, 2012, the trustee filed an opposition to the Secretary’s motion. On September 27, 2012, the Secretary filed a motion for leave to file a reply brief, to which the trustee filed an opposition on October 4, 2012. On April 9, 2013, rather than rule on the Secretary’s request to file a reply brief, the district court granted the Secretary’s request to appeal solely that portion of the August 2012 decision that asserted the bankruptcy court’s jurisdiction to order the payment of fees from plan assets; it determined that the issues regarding the amount of the compensation of the trustee and his law firm would be appealable at a later date when final orders of compensation were issued in the bankruptcy case. The Secretary filed its appeal brief on April 30, 2013, and the trustee filed an opposition on May 15, 2013. The district court has not yet issued an opinion. Plan Benefits Security Division
In re Saetveit (Bankr. D. Colo.)
The Secretary filed a joint stipulation as to non-dischargeability of debt in December 2013 in the bankruptcy case of William Roger Saetveit, a fiduciary responsible, along with others, for committing a series of ERISA violations in the course of investing plan assets and allowing plan participants to direct their plan account assets into a hedge fund that later was revealed to be a Ponzi scheme. Saetveit, the fiduciary debtor, was grossly negligent with regard to his responsibilities as a plan fiduciary and thus committed defalcation. Denver Office
Schoenfeld v. Perez (9th Cir.)
This is an appeal from a case brought by the Secretary in which the Secretary successfully argued that fiduciaries breached their duties to an ESOP by allowing the corporate sponsor to withdraw funds from the ESOP to pay corporate expenses and that the debt is non-dischargeable under the bankruptcy code because of defalcation. The appellants filed their brief on August 20, 2013, and the Secretary filed a response brief on extension on October 25, 2013. San Francisco Office and Plan Benefits Security Division
In re Thelen LLP (Bankr. S.D.N.Y.)
Thelen LLP, a major national law firm and Chapter 7 debtor, was the sponsor and plan administrator for three ERISA-covered plans: a 401(k) plan, a defined benefit plan, and a cash balance plan. Pursuant to section 704(a)(11) of the Bankruptcy Code, Thelen’s Chapter 7 trustee became obligated to fulfill the plan administrator role. On or about July 13, 2010, the trustee filed a motion seeking payment from the plans for legal services provided by Fox Rothschild LLP (“Fox”), the trustee’s law firm. The trustee filed motions on January 13, 2011, and October 13, 2011, seeking: (i) authorization to terminate the plans; (ii) authorization for the plans to pay for services provided by professionals retained by the trustee; (iii) the retention of an independent fiduciary to terminate the plans and pay retained professionals from plan assets; and (iv) to quash an administrative subpoena issued by the Secretary to the trustee. On March 17, 2011, and February 10, 2012, the Secretary objected to the jurisdiction of the bankruptcy court to approve the payment of the fees and expenses of Fox and the other professionals, the appointment of the independent fiduciary, and the quashing of the subpoena. On October 20, 2011, the PBGC filed an objection to the appointment of an independent fiduciary and the failure of the trustee to sign a trusteeship agreement for the transfer of the defined benefit plan to the PBGC for termination. On May 17, 2012 a consensual order was entered by the district court providing for, among other things: (i) a withdrawal of the reference of the motions from the bankruptcy court to the district court; (ii) the appointment of an independent fiduciary for the cash balance and the 401(k) plans to terminate those plans and to pay the plan professionals (including Fox); (iii) fixing Fox’s fees at $125,000, less than half of what Fox would have claimed; (iv) the assignment of the defined benefit plan to the PBGC; and (v) the Secretary’s release of her prohibited transaction claims and certain other claims against the trustee and Fox. The independent fiduciary is now in the process of terminating the cash balance and 401(k) plans; termination of the 401(k) plan is near completion. Plan Benefits Security Division
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