                            Fourth Court of Appeals
                                   San Antonio, Texas
                                 DISSENTING OPINION
                                      No. 04-16-00773-CV

           FARMERS TEXAS COUNTY MUTUAL INSURANCE COMPANY,
                               Appellant

                                                v.

                   Jennifer L. ZUNIGA and Janet Northrup as Trustee for the
                          Bankruptcy Estate of Christopher J. Medina,
                                          Appellees

                   From the 73rd Judicial District Court, Bexar County, Texas
                                Trial Court No. 2014-CI-11445
                       Honorable Cathleen M. Stryker, Judge Presiding

                     OPINION DISSENTING TO THE DENIAL OF APPELLEES’
                         MOTION FOR EN BANC RECONSIDERATION

Dissenting Opinion by: Luz Elena D. Chapa, Justice, joined by Rebeca C. Martinez, Justice and
                     Irene Rios, Justice
Sitting en banc:     Sandee Bryan Marion, Chief Justice
                     Karen Angelini, Justice
                     Marialyn Barnard, Justice
                     Rebeca C. Martinez, Justice
                     Patricia O. Alvarez, Justice
                     Luz Elena D. Chapa, Justice
                     Irene Rios, Justice

Delivered and Filed: March 14, 2018

       Because appellees’ construction of the auto insurance policy is reasonable, we must accept

it. Moreover, this case presents extraordinary circumstances justifying en banc reconsideration. I

therefore respectfully dissent to the denial of appellees’ motion without requesting a response.
Dissenting Opinion                                                                    04-16-00773-CV


          WE MUST ADOPT APPELLEES’ CONSTRUCTION BECAUSE IT IS REASONABLE

        The parties in this case dispute whether an auto insurance policy covers exemplary

damages. The disputed coverage provision states: “We will pay damages for bodily injury or

property damage for which any covered person becomes legally responsible because of an auto

accident.” Appellees argue the phrase “We will pay damages for bodily injury” includes coverage

for exemplary damages, which are a type of damages that may be awarded in cases involving

bodily injury. Appellees contend their interpretation is reasonable, and is either the only reasonable

construction (i.e. the policy is unambiguous in their favor), or one of many reasonable

constructions (i.e. the policy is ambiguous), in which case they would prevail.

A. If an insured’s construction of an insurance policy is reasonable, we must accept it.

        Generally, courts must apply general rules of contract interpretation to construe insurance

policies. Nassar v. Liberty Mut. Fire Ins. Co., 508 S.W.3d 254, 257 (Tex. 2017) (per curiam). If

an insurance policy is subject to only one reasonable construction, then the policy is unambiguous

and a court must adopt that construction. Id. at 258. But if an insurance policy is subject to more

than one reasonable construction, then the policy is ambiguous. Id. In that event, the policy must

be “construed liberally in favor of the insured and strictly against the insurer, and especially so

when dealing with exceptions and words of limitation.” Ramsay v. Md. Am. Gen. Ins. Co., 533

S.W.2d 344, 349 (Tex. 1976).

        When construing an insurance policy, we must therefore adopt the insured’s construction

when either: (1) the insured’s construction is reasonable and the insurer’s construction is

unreasonable (in which case the policy would be unambiguous in the insured’s favor); or (2) the

insured’s construction is reasonable and the insurer’s construction is also reasonable (in which

case the policy is ambiguous and must be strictly construed against the insurer). See Nassar, 508



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Dissenting Opinion                                                                                     04-16-00773-CV


S.W.3d at 257-58. In other words, we must adopt the insured’s construction if it is reasonable,

regardless of whether the insurer’s construction is reasonable or unreasonable (i.e. regardless of

whether the policy is ultimately ambiguous or unambiguous). See id.

           The supreme court has repeatedly framed the analysis for construing insurance policies in

this way. Our inquiry is “whether the [insureds]’ interpretation is reasonable. If it is, then the

[insureds]’ interpretation must be adopted even if [the insurer]’s interpretation is also, or more,

reasonable.” Id. at 258 (internal citation omitted); see RSUI Indem. Co. v. The Lynd Co., 466

S.W.3d 113, 119 (Tex. 2015) (“Our task in this case is to determine whether Lynd’s construction

of the RSUI policy is reasonable. If it is, we must enforce that construction, even if RSUI’s

construction is also reasonable.”). Conversely, if the insured’s construction is unreasonable, then

the insurer prevails. See Nassar, 508 S.W.3d at 257; RSUI Indem. Co., 466 S.W.3d at 119. This

case therefore turns on whether appellees’ construction is reasonable or unreasonable. See Nassar,

508 S.W.3d at 257; RSUI Indem. Co., 466 S.W.3d at 119.

B. The absence of “all sums” language does not make appellees’ construction unreasonable.

           Appellant argues appellees’ construction is unreasonable solely because the coverage

provision does not say the insurer will pay “all sums” of damages, similar to language found in

some other auto insurance policies. But the absence of the “all sums” language is simply not

dispositive here.

           First, cases in which Texas courts have construed similar policies that use the “all sums”

language have not turned on that language. One court concluded exemplary damages were covered

based on the weight of persuasive authority. Dairyland Cty. Mut. Ins. Co. v. Wallgren, 477 S.W.2d

341, 343 (Tex. Civ. App.—Fort Worth 1972, writ ref’d n.r.e.). 1 Another court summarily



1
    The Dairyland court relied on a law journal article and a Sixth Circuit case. 477 S.W.2d at 343.

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Dissenting Opinion                                                                    04-16-00773-CV


concluded the provision includes coverage for exemplary damages. Home Indem. Co. v. Tyler, 522

S.W.2d 594, 596-97 (Tex. Civ. App.—Houston [14th Dist.] 1975, writ ref’d n.r.e.). Another court

“conclude[d] that [the provision], at best, may be termed ‘ambiguous,’ and should therefore be

interpreted in favor of coverage.” Am. Home Assurance Co. v. Safway Steel Prods. Co., 743

S.W.2d 693, 701-02 (Tex. App.—Austin 1987, writ denied).

        Second, other courts have considered whether the “all sums” language is dispositive and,

despite reaching opposite results, they have agreed the phrase “all sums” is not dispositive.

Compare Manriquez v. Mid-Century Ins. Co. of Tex., 779 S.W.2d 482, 484 (Tex. App.—El Paso

1989, writ denied) (holding exemplary damages covered despite absence of “all sums”),

disapproved of on other grounds by Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819 (Tex.

1997), with Schnuck Markets, Inc. v. Transam. Ins. Co., 652 S.W.2d 206, 212 (Mo. Ct. App. 1983)

(holding, even with “all sums,” policy excluded punitive damages). Appellant has cited no

authority that “all sums” is dispositive; there appears to be authority only to the contrary.

        Third, courts throughout the country have generally construed similar policies as either

unambiguously covering exemplary damages or concluded the language was ambiguous, and the

insureds prevailed because their interpretation was reasonable. See Valley Forge Ins. Co. v.

Jefferson, 628 F. Supp. 502, 505 (D. Del. 1986) (holding, “We will pay damages for bodily injury

or property damage” is ambiguous as to whether exemplary damages are included, and citing

authorities forming a three-way split). In the cases holding otherwise, either the courts “did not

indulge in any particular presumption in favor of the insured,” Am. Home Assurance, 743 S.W.2d

at 698 (citing Schnuck Markets), or construed similar language in uninsured motorist policies

based not on the plain meaning, but on Insurance Code provisions and public policy concerns that

apply only to uninsured motorist policies. See Milligan v. State Farm Mut. Auto. Ins. Co., 940



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Dissenting Opinion                                                                                       04-16-00773-CV


S.W.2d 228, 230-31 (Tex. App.—Houston [14th Dist.] 1997, writ denied) (citing authorities). 2 The

coverage provision here does not pertain to uninsured motorists, 3 and Texas courts must indulge

in a presumption that favors the insured. See Ramsay, 533 S.W.2d at 349.

         Fourth, including the “all sums” language in the policy here would not change its meaning.

Again, the disputed coverage provision states:

         We will pay damages for bodily injury or property damage for which any covered
         person becomes legally responsible because of an auto accident.

The parties have argued that only two phrases in this policy contextually define what damages are

covered: (1) “We will pay damages”; and (2) “for bodily injury or property damage.” Including

the “all sums” language in this provision would not change the meaning of either phrase or the

provision as a whole.

         In the phrase “We will pay damages,” the damages covered are not limited or qualified

whatsoever. We must therefore construe the phrase, at least initially, as including coverage for all

damages, including exemplary damages. See id. 4 If the policy provided, “We agree to pay all sums

of damages,” the phrase would still include coverage for all damages, including exemplary




2
  The Milligan court noted in one of those cases, “the First Court determined that the phrase ‘because of bodily injury’
is ambiguous because it could be interpreted to mean the insured is entitled to recover any damages that arise because
of bodily injury, or it could mean the insured is only entitled to recover damages that are derived from the bodily
injury.” 940 S.W.2d at 231 (emphasis added) (citing State Farm Mut. Auto. Ins. Co. v. Shaffer, 888 S.W.2d 146, 148-
49 (Tex. App.—Houston [1st Dist.] 1994, writ denied)).
3
  The majority and concurring opinions in Fairfield Insurance Co. v. Stephens Martin Paving, LP., noted four times
that Texas courts have “uniformly” rejected coverage of exemplary damages in uninsured motorist policies on public
policy grounds—not solely because of the plain meaning of the insurance policy. 246 S.W.3d 653, 668 (Tex. 2008)
(“Texas appellate courts have uniformly rejected as against public policy coverage under uninsured or underinsured
motorist policies . . . .”) (emphasis added); id. at 683 (Hecht, J., concurring) (which the concurrence in this case cites);
id. at 685 (“Texas courts have uniformly rejected such recovery as against public policy”) (emphasis added); id. at
688 (“Texas courts have uniformly held that uninsured or underinsured motorist coverage of punitive damages is
against public policy.”) (emphasis added); id. at 683, 685 nn.63, 67 (citing Milligan and other uninsured motorist
cases). I therefore believe the concurrence in this case quotes Chief Justice Hecht’s concurrence out of context.
4
  Black’s Law Dictionary defines “damages” as suggesting all damages are compensatory in nature. But under Texas
law, compensatory damages and exemplary damages are both categories of “damages.” TEX. CIV. PRAC. & REM. CODE
ANN. § 41.001(5), (8) (West Supp. 2017).

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Dissenting Opinion                                                                   04-16-00773-CV


damages. Thus, adding “all sums” for the purpose of including coverage for exemplary damages

would be unnecessary. If the absence of exclusionary language cannot impliedly create coverage,

then the absence of unnecessary inclusionary language cannot impliedly limit coverage. Cf. Am.

Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 160 (Tex. 2003).

        Appellant argues the phrase “for bodily injury or property damage” limits the damages

covered to only compensatory damages. Appellant thus construes the policy as meaning, “We

agree to pay damages [that are compensatory].” Under appellant’s construction, if the “all sums”

language were added, the policy would read, “We agree to pay all sums of damages [that are

compensatory].” With or without the “all sums” language, appellant’s construction would include

coverage for only compensatory damages. Either way, the inclusion of the “all sums” language in

the policy would not change its meaning. Thus, the absence of the “all sums” language does not

make appellees’ construction unreasonable.

C. Considered as a whole, the phrase “We will pay damages for bodily injury or property
damage” can reasonably be construed as including coverage for exemplary damages.

        The only language in the policy that might limit or qualify the damages covered is the

phrase “for bodily injury or property damage.” Because exemplary damages may be awarded in

some cases involving bodily injury or property damage, this case turns on how “for” is defined.

Some definitions of the word “for,” such as “because of” or “on account of,” are broad and would

include exemplary damages. See, e.g., WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 886

(Philip Babcock Gove, et al. eds., 1981) (defining “for” as “in connection with,” (3d); and “because

of,” or “on account of,” (8a)). Consequently, “for bodily injury or property damage” could

reasonably be construed as limiting damages to those arising from incidents that involve bodily

injury or property damage. Shaffer, 888 S.W.2d at 148-49; see Dairyland, 477 S.W.2d at 343




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Dissenting Opinion                                                                                      04-16-00773-CV


(holding policy covering damages “because of” bodily injury included exemplary damages). 5 In

other words, the phrase “for bodily injury or property damage” could be reasonably construed as

limiting the types of claims that trigger coverage, rather than the types of damages covered.

         Other definitions of “for,” such as an “exchange” or “in order to remedy,” are narrower

and would exclude exemplary damages. See, e.g., WEBSTER’S THIRD NEW INTERNATIONAL

DICTIONARY 886 (defining “for” as “with the purpose or object of,” (2e); “in order to remedy,”

(2h); “in exchange as the equivalent of,” (5a)). Even if it is reasonable to define “for” narrowly as

limiting the types of damages covered, appellees’ construction is nevertheless reasonable when

considering the policy as a whole. We must therefore construe the phrase “for bodily injury,”

which are “words of limitation,” strictly against appellant and in appellees’ favor. See Ramsay,

533 S.W.2d at 349; accord Nassar, 508 S.W.3d at 258; RSUI Indem. Co., 466 S.W.3d at 118-19.

         In conclusion, appellant’s sole “all sums” argument lacks merit, and a broader definition

of “for” that includes coverage for exemplary damages is reasonable. We must therefore adopt

appellees’ construction even if appellant’s construction is also reasonable or more reasonable, and

regardless of whether appellant’s construction is unreasonable. See Nassar, 508 S.W.3d at 258;

RSUI Indem. Co., 466 S.W.3d at 119. 6




5
 See also Valley Forge, 628 F. Supp. at 505 (citing authorities); Lafauci v. Jenkins, 844 So.2d 19, 26-28 (La. App.—
1st Cir. 2003, writ denied) (noting inherent conflict between a policy stating, “We will pay damages, other than
punitive or exemplary, for ‘bodily injury’ or ‘property damage’ for which any ‘insured’ becomes legally responsible
because of an auto accident,” and a policy stating, “We will pay damages for ‘bodily injury’ or ‘property damage’ for
which any ‘insured’ becomes legally responsible because of an auto accident.”)
6
 I disagree with the concurring opinion’s statement that considering the plain meaning of individual words and phrases
“violates a settled rule of contract interpretation.” Every time a court consults a dictionary for a word’s plain meaning,
the court is, technically speaking, considering the word in isolation. See, e.g., Farmers Tex. Cty. Mut. Ins. Co. v.
Zuniga, No. 04-16-00773-CV, 2017 WL 5471887, at *4-5 (Tex. App.—San Antonio Nov. 15, 2017, no pet. h.)
(defining “bodily injury,” “damages,” and “for,” first in isolation, and then considering the provisions together).
Certainly, construing an entire contract based on only one word or phrase without reference to others would violate a
settled rule of contract interpretation. But that is simply not an accurate characterization of the foregoing analysis.

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Dissenting Opinion                                                                               04-16-00773-CV


                       EN BANC RECONSIDERATION IS JUSTIFIED IN THIS CASE

        Extraordinary circumstances justify en banc reconsideration in this case for three reasons.

First, in order to satisfy Texas’s requirement to establish financial responsibility for vehicles they

drive, many Texas residents have purchased an auto insurance policy substantially similar to the

one here. See TEX. TRANSP. CODE ANN. § 601.051 (West 2001); David A. Fischer & Robert H.

Jerry, II, Teaching Torts Without Insurance: A Second-Best Solution, 45 ST. LOUIS U.L.J. 857, 872

(2001) (noting this policy is a “standardized form in widespread use in the United States”). 7 Thus,

how we construe this form language affects the contractual rights of Texas residents who have

paid for insurance policies that can be reasonably construed as providing coverage for exemplary

damages. It will also affect the construction of other types of insurance policies, “such as the

Homeowners Policy and the Commercial General Liability Policy, [that] have substantially similar

language in the insuring agreement.” See Fischer & Jerry, 45 ST. LOUIS L.J. at 872.

        Second, rejecting appellees’ construction would be not only contrary to the vast majority

of decisions of courts throughout the country, but also in conflict with a decision of another Texas

court of appeals. Manriquez, 779 S.W.2d at 484-85; accord Grace M. Giesel, The Knowledge of

Insurers and the Posture of the Parties in the Determination of the Insurability of Punitive

Damages, 39 U. KAN. L. REV. 355, 383-90 (1991) (citing cases from courts throughout the

country). Such a conflict means insureds’ contractual rights might be determined by the location

in Texas where an auto accident happens to occur.

        Third, construing “for bodily injury” as limiting “damages” to those that redress only

physical damage to a human body creates further uncertainty about this form policy’s coverage.

Appellant’s position requires construing “for bodily injury or property damage” as limiting


7
 This form language appears in “[m]ost standard commercial and individual liability policies.” Ellen S. Pryor, The
Tort Liability Regime and the Duty to Defend, 58 MD. L. REV. 1, 21 (1999).

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Dissenting Opinion                                                                                 04-16-00773-CV


damages elements, as opposed to limiting the types of claims that trigger coverage. Accepting

appellant’s position would raise serious questions about what damages elements other than

exemplary damages would not be covered. Under Texas law, some elements of compensatory

damages redress physical damage to a human being’s body (such as disfigurement, physical

impairment, and physical pain and suffering), but other elements, such as mental anguish, are not

strictly compensatory for the bodily injury itself. See TEX. CIV. PRAC. & REM. CODE ANN.

§ 41.001(12). 8 Thus, accepting appellant’s construction could likely create further disputes about

the scope of coverage of this form language that appears in auto, homeowners, and commercial

general liability policies.

        Based on the foregoing, I dissent to the denial of appellees’ motion for en banc

reconsideration without having requested a response.

                                                     Luz Elena D. Chapa, Justice




8
  See also Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 763 (Tex. 2003) (explaining compensatory
damages elements in personal injury cases can “compensate an injured party for lost wages, lost earning capacity, and
medical expenses, “for pain, suffering, mental anguish, and disfigurement” and “for loss of enjoyment of life”)
(emphasis added).

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