                                                             United States Court of Appeals
                                                                      Fifth Circuit
                                                                    F I L E D
                     UNITED STATES COURT OF APPEALS
                          For the Fifth Circuit                       April 9, 2003

                                No. 01-21228                     Charles R. Fulbruge III
                                                                         Clerk


                  NATIONAL AMERICAN INSURANCE COMPANY,

                          Plaintiff - Counter Defendant - Appellant,



                                   VERSUS


                       H.E. BUTT GROCERY COMPANY,

                            Defendant - Counter Claimant - Appellee.




             Appeal from the United States District Court
         For the Southern District of Texas, Houston Division

                                (H-01-0797)

Before JOLLY, DUHÉ, and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:*

     In    this   declaratory   judgment    action,   plaintiff-appellant

National    American   Insurance    Company    (“NAICO”)   and    defendant-

appellee H.E. Butt Grocery Company (“HEB”) dispute whether an

insurance policy issued by NAICO to Edmond’s Refrigeration, Inc.

(“Edmond’s”) requires NAICO to defend and indemnify HEB in a suit


     *
      Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.



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brought by an Edmond’s employee.                The district court found that it

did.       Because the underlying agreement between HEB and Edmond’s

does       not   unambiguously        require   Edmond’s       to   provide   HEB   with

insurance coverage for this type of suit, we REVERSE the grant of

summary judgment          by    the    district       court,   VACATE   the   award    of

attorney’s fees to HEB, and REMAND this case to the district court.

                                      I. Background

       On January 9, 1997, HEB entered into a Maintenance Agreement

(“Agreement”) with Edmond’s. Under the contract, Edmond’s provided

maintenance for the heating, ventilation, air conditioning, and

refrigeration equipment in a number of HEB’s stores.                     In addition,

Paragraph 15 of the Agreement required Edmond’s to furnish HEB

“with a liability [hold]1 harmless insurance policy or a reasonable

facsimile thereof on personnel working in [HEB’s] stores.” The

Agreement was later renewed through November 31, 2001.

       On April 1, 1998, pursuant to the Agreement, NAICO issued

Edmond’s a Texas Commercial Package Liability Policy, policy number

CMP379142D, effective from April 1, 1998 to April 1, 1999.                     Section

II.5       of    the   policy    contains       the    following     endorsement      for

“Additional Insureds” (“Additional Insured Endorsement”):

                 5.    Any entity you are required in a written
                       contract (hereafter called Additional Insured)

       1
          Paragraph 15 contained the word “whole.” But HEB and
NAICO agree that the parties to the Agreement intended to use the
word “hold.”



                                            2
                  to name as an insured is an insured but only
                  with respect to liability arising out of your
                  premises, “your work” for the Additional
                  Insured,   or  acts   or  omissions   of  the
                  Additional Insured in connection with the
                  general supervision of “your work” to the
                  extent set forth below

                  . . .

           e.     Except when required otherwise by contract,
                  this insurance does not apply to:

                  . . .

                  (2)     “Bodily injury” or “property damage”
                          arising out of any act or omission
                          of the Additional Insured(s) or any
                          of their employees, other than the
                          general    supervision    of    work
                          performed    for   the    Additional
                          Insured(s) by you.


      On April 14, 1999, Robert Admire, an Edmond’s employee, filed

a   premises    liability    suit   against   HEB   in   Texas   state   court,

alleging he was injured after falling headfirst from the roof

access of an HEB store while performing maintenance work there.

Admire claimed that a defective security gate was responsible for

his injury, which occurred on August 3, 1998.

      NAICO agreed to provide HEB with a defense to the Admire suit

under a reservation of rights declaration.                On March 8, 2001,

however, it filed this action seeking a declaratory judgment that

it had no duty to defend or indemnify HEB in that suit.                   Both

parties moved for summary judgment.            On September 24, 2001, the

district court granted summary judgment in favor of HEB, holding



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that NAICO was required to defend and indemnify HEB in the Admire

suit.   On November 19, 2001, the court denied NAICO’s motion for

reconsideration and the next day ordered it to pay HEB $8,750 in

attorney’s fees.   NAICO timely appealed.

                           II.   Analysis

     The parties agree that if HEB is an “additional insured” under

Edmond’s liability policy for purposes of the Admire suit, then

NAICO is required to defend and indemnify HEB. "The interpretation

of an insurance contract ... is a legal determination meriting de

novo review." Nat’l Union Fire Ins. Co. v. Kasler, 906 F.2d 196,

197 (5th Cir. 1990); see also Mid-Continent Cas. Co. v. Swift

Energy Co., 206 F.3d 487, 491 (5th Cir. 2000).        Therefore, we

review de novo the district court's determination that HEB was

covered as an "additional insured" under the NAICO policy.

     Under Texas law, which we apply in this diversity action,

insurance policies are contracts and are therefore governed by the

general rules of construction applicable to contracts.   State Farm

Life Ins. Co. v. Beaston, 907 S.W.2d 430 (Tex. 1995).          When

interpreting a contract, the court’s main duty is to give effect to

the written expression of the parties’ intent.   See Forbau v. Aetna

Life Ins. Co., 876 S.W.2d 132, 134 (Tex. 1994).      When the terms

used in an insurance policy are unambiguous, they are to be given

their plain, ordinary, and generally accepted meaning unless the




                                  4
instrument    itself    shows     that   the   terms    have   been   used    in   a

technical or different sense.            Sec. Mut. Cas. Co. v. Johnson, 584

S.W.2d 703, 704 (Tex. 1979).         But if the provision is susceptible

to more than one fair and reasonable interpretation, then the

provision is ambiguous.           See Ohio Cas. Group of Ins. Cos. v.

Chavez, 942 S.W.2d 654, 658 (Tex. App. 1997). Whether an insurance

provision is ambiguous is a question of law.               Id. at 657.

     Under a general liability policy, like that at issue in this

case,   an   insurer    has   a   duty    to   defend    its   insured   if    the

allegations in a suit allege facts that are potentially covered by

the policy.    Fid. & Guar. Ins. Underwriters, Inc. v. McManus, 633

S.W.2d 787 (Tex. 1982).            A duty to indemnify arises when the

underlying litigation establishes liability for damages covered by

the insuring agreement of the policy.             Malone v. Scottsdale Ins.

Co., 147 F. Supp. 2d 623 (S.D. Tex. 2001).

     As we noted above, the Additional Insured Endorsement states:

“Any entity you are required in a written contract ... to name as

an insured is an insured but only with respect to any liability

arising out of ... ‘your work’ for the Additional Insured.” Both

parties recognize that this general provision is limited by Section

II.5.e.2,    which     states:    “Except      when    required   otherwise        by

contract, this insurance does not apply to: ...’Bodily injury’ ...

arising out of any act or omission of the Additional Insured(s)




                                         5
..., other than the general supervision of work performed for the

Additional Insured(s) by you.”             HEB contends that the opening

phrase of Section II.5.e.2, which makes the limitation inapplicable

“when otherwise provided by contract,” controls the outcome because

Edmond’s was required by Paragraph 15 of the Agreement to furnish

HEB with insurance coverage for HEB’s own negligence. Paragraph 15

requires Edmond’s to furnish HEB “with a liability [hold] harmless

insurance policy or a reasonable facsimile thereof on personnel

working in [HEB’s] stores.”       HEB thus argues that NAICO’s coverage

of   HEB   is   required   by   the   “otherwise   provided   by   contract”

language, such that NAICO must defend and indemnify HEB for all

acts involving Edmond’s personnel.           In response, NAICO maintains

that Paragraph 15 only requires Edmond’s to provide HEB with

coverage for acts in which Edmond’s employees cause injury while

performing work for HEB, not for acts in which Edmond’s employees

are injured by HEB’s own negligent acts.

      To resolve this coverage dispute, therefore, it must be

determined whether Paragraph 15 of the Agreement requires Edmond’s

to furnish coverage for HEB’s negligence that causes injury to

Edmond’s personnel or merely requires Edmond’s to provide HEB with

insurance against damage caused by Edmond’s personnel. The wording

of Paragraph 15 is, however, ambiguous.         In particular, the phrase

“on personnel” is susceptible to multiple meanings.           Under NAICO’s




                                       6
interpretation, the phrase means “on acts of personnel,” thereby

only requiring coverage of negligent acts caused by Edmond’s

employees.    HEB maintains that it means “involving personnel,”

which would cover both negligent acts caused by Edmond’s employees

and negligent acts that injure Edmond’s employees.            We conclude

that this phrase is sufficiently vague to reasonably encompass both

interpretations.     Because both interpretations are reasonable,

neither is controlling.        Consequently, the intent of the parties

cannot be ascertained from the written expressions in the contract,

and the contract is ambiguous.2

     Generally,    when   an   insurance   contract   is   ambiguous,   the

contract is construed in favor of coverage.       Balandran, 972 S.W.2d

at 741.   This rule is based on the more general rule that ambiguous

contracts are construed against its author.            Id. at 741 n.1;

Temple-Eastex Inc. v. Addison Bank, 672 S.W.2d 793, 798 (Tex.

1984).    But here, it is not the insurance agreement that is

ambiguous. Rather, it is the Agreement, which NAICO did not draft.


     2
          Because Paragraph 15 is an independent insurance-shifting
provision, the express negligence doctrine is not applicable. The
express negligence doctrine only applies to indemnity agreements
and insurance-shifting provisions that support an indemnity
provision. See Getty Oil Co. v. Ins. Co. of N. Am., 845 S.W.2d
794, 806 (Tex. 1992); Emery Air Freight Corp. v. General Transport
Sys., Inc., 933 S.W.2d 312, 314 (Tex. App. 1996).        Here, both
parties agree that the Agreement does not contain an indemnity
agreement. Therefore, because Paragraph 15 is not an indemnity
provision and not an insurance-shifting provision supporting one,
the express negligence doctrine does not apply.



                                     7
Therefore, we cannot automatically find coverage based on ambiguity

in the insurance agreement.      In addition, because Edmond’s, which

is not a party to this suit, drafted the Agreement, we will refuse

to construe the ambiguity against HEB.

     Because we cannot resolve this coverage dispute based on any

available rules of contract interpretation, the parties must resort

to parol evidence to determine whether the contracting parties

intended for the Agreement to require insurance coverage for

negligent acts to Edmond’s personnel.      Thus, there is a disputed

issue of material fact that precludes summary judgment. Therefore,

we REVERSE the grant of summary judgment and REMAND to the district

court for determination of this issue.         In addition, because

summary judgment was not proper, we VACATE the award of attorneys’

fees granted to HEB.   Finally, given our holding, we need not reach

the issue of whether HEB introduced sufficient evidence to support

a finding of a duty to indemnify.

                          III.    Conclusion

     Because the Agreement is ambiguous, we cannot determine

whether NAICO has a duty to defend and indemnify HEB for the

Admire lawsuit.   Therefore, we REVERSE the grant of summary

judgment, REMAND the case to the district court, and VACATE the

district court’s award of attorney’s fees to HEB.




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