     Case: 17-20640       Document: 00514692409         Page: 1     Date Filed: 10/22/2018




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT

                                                                      United States Court of Appeals

                                       No. 17-20640
                                                                               Fifth Circuit

                                                                             FILED
                                                                      October 22, 2018

2200 West Alabama, Incorporated,                                        Lyle W. Cayce
                                                                             Clerk
                                                  Plaintiff - Appellee
v.

Western World Insurance Company,

                                                  Defendant - Appellant




                 Appeal from the United States District Court for
                          the Southern District of Texas
                               USDC 4:16-CV-2244


Before JONES, BARKSDALE, and WILLETT, Circuit Judges.
PER CURIAM:*
       At issue is whether Western World Insurance Company’s policy’s
providing a duty to defend for “wrongful eviction from, wrongful entry into, or
invasion of the right of private occupancy of a . . . premises that a person
occupies” requires physical presence on, or possession of, the premises.
Western World challenges the district court’s, on cross-motions for summary
judgment, denying it to Western World and granting it to 2200 West Alabama,
Incorporated. VACATED AND RENDERED.


       * Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5th Cir.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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                                  No. 17-20640
                                       I.
      Western World issued a commercial-general-lines policy to 2200 West
Alabama covering damages, and any suits, related to “personal and advertising
injuries”, effective 15 December 2013.      Dubrow Partners sued 2200 West
Alabama in state court the following year (during the policy period) for
damages arising from negotiations for, and a claimed breach of, a lease
agreement (third-party action).
      Concerning the third-party action, 2200 West Alabama, as landlord, had
previously executed a written lease agreement with Soray LLC for the
premises. Four years into the lease, Soray liquidated its assets, including its
rights under the lease with 2200 West Alabama. Soray sold its lease rights in
September 2014. The purchaser assigned its leasehold interest to Dubrow (a
partnership formed for the purpose of opening and operating a restaurant on
the premises).
      Dubrow alleges in the third-party action:            2200 West Alabama’s
representatives consented to the lease assignment, and negotiations of its
terms began with 2200 West Alabama; during those negotiations, Dubrow took
steps towards opening a restaurant on the premises, including “ordering
equipment, hiring employees, building a website, acquiring and transferring
permits such as the liquor license, and working with professional architects to
finalize space plans”, as well as “undertaking a marketing campaign in an
effort to publicize its anticipated opening”; 2200 West Alabama repudiated the
lease agreement and any previous consent to the lease assignment by Soray;
the parties had essentially agreed to all terms of the lease except those related
to valet parking; and Dubrow was, therefore, the “rightful tenant”. The third-
party action is ongoing.
      2200 West Alabama tendered defense of the third-party action to
Western World, claiming it owed 2200 West Alabama a duty to defend under
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                                 No. 17-20640
the terms of the policy. In response, Western World disclaimed any duty to
defend, asserting the policy did not cover the third-party action because
Dubrow never occupied the premises.
      In response, 2200 West Alabama filed this action in state court against
Western World, seeking, inter alia, a declaratory judgment. Western World
removed the action to district court based on diversity jurisdiction.
      Both parties moved for summary judgment. The district court granted
it to 2200 West Alabama, and denied Western World’s cross-motion. In doing
so, the court agreed with 2200 West Alabama’s policy construction: coverage
exists for a right to occupancy, with physical presence not being required.
Therefore, under the eight-corners rule, discussed infra, the court concluded
the complaint in the third-party action triggered the duty-to-defend provision
in the policy.
                                       II.
      In challenging the summary judgment awarded 2200 West Alabama,
Western World claims the policy requires physical presence, as opposed to a
mere right to occupy, to trigger the duty-to-defend provision. Along that line,
the policy language at issue provides coverage for “[t]he wrongful eviction from,
wrongful entry into, or invasion of the right of private occupancy of a . . .
premises that a person occupies”. (It is undisputed that Dubrow is a “person”
for policy purposes.)
      Western World contends: the policy language “that a person occupies”
creates a secondary requirement beyond “the right of occupancy”; and such a
construction is most consistent with the plain language of the policy without
rendering any language superfluous. Therefore, Western World asserts: the
third-party action falls outside the policy coverage because Dubrow never
occupied the premises; and, therefore, there is no duty to defend the third-party


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                                  No. 17-20640
action. (Because judgment is rendered for Western World on this basis, we
need not address its alternative positions.)
      The policy states it will “pay those sums that the insured becomes legally
obligated to pay as damages because of ‘personal and advertising injury’”. The
operative questions in this appeal are: how to define a “personal and
advertising injury”; and whether Dubrow’s claim in its third-party action
constitutes such an injury. The policy defines a “personal and advertising
injury”, in part, as:
      14. “Personal and advertising injury” means injury, including
      consequential “bodily injury”, arising out of one or more of the
      following offenses:
             ...
      c. The wrongful eviction from, wrongful entry into, or invasion of
      the right of private occupancy of a room, dwelling or premises that
      a person occupies, committed by or on behalf of its owner, landlord
      or lessor[.]

(Emphasis added.)
      A judgment on cross-motions for summary judgment is reviewed de novo.
Cedyco Corp. v. PetroQuest Energy, LLC, 497 F.3d 485, 488 (5th Cir. 2007)
(citation omitted). “On [such] review, the motions are reviewed independently,
with evidence and inferences taken in the light most favorable to the
nonmoving party.” White Buffalo Ventures, LLC v. Univ. of Tex. at Austin, 420
F.3d 366, 370 (5th Cir. 2005) (citation omitted). The judgment is “affirm[ed]
only if there is no genuine [dispute] of material fact and one party is entitled
to prevail as a matter of law”. Cedyco Corp., 497 F.3d at 488 (citing Shaw
Constructors v. ICF Kaiser Eng’rs, Inc., 395 F.3d 533, 539 (5th Cir. 2004)); see
Fed. R. Civ. P. 56(a).
      Texas substantive law applies to this diversity-jurisdiction case. Erie
R.R. Co. v. Tompkins, 304 U.S. 64, 78–79 (1938). And, in deciding whether
there is a duty to defend, Texas recognizes the eight-corners rule: courts
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                                  No. 17-20640
cannot look beyond the complaint in the third-party action and the language
of the insurance policy. See Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487,
491 (Tex. 2008) (“[A]n insurer’s duty to defend is determined by the third-party
plaintiff’s pleadings, considered in light of the policy provisions, without regard
to the truth or falsity of those allegations”.) (internal quotation marks omitted).
“The insured bears the initial burden of establishing that a claim against it is
potentially within the policy’s coverage”; “[i]f the petition only alleges facts
excluded by the policy . . . the insurer is not required to defend”. Northfield
Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523, 528 (5th Cir. 2004) (emphasis
in original). If there is “doubt as to whether . . . the allegations of a complaint
against the insured state a cause of action within the coverage of a liability
policy sufficient to compel the insurer to defend the action, such doubt will be
resolved in [the] insured’s favor”. Id. (internal quotations omitted).
      Considering, under the eight-corners rule, only the facts alleged in the
complaint in the third-party action, and the policy provisions, there is no doubt
to be resolved in favor of 2200 West Alabama regarding whether the claim is
“potentially within the policy’s coverage”. Id. It is not. As discussed infra,
because Texas law has determined the word “occupy” in a commercial-general-
lines policy to be unambiguous, and to require more than a mere right to
occupancy, 2200 West Alabama fails to meet its burden under the eight-corners
rule. In other words, because the complaint in the third-party action does not
“allege[] at least one cause of action potentially within the policy’s coverage”,
Western World has no duty to defend 2200 West Alabama. Id.
                                        A.
      Texas law requires courts to “interpret insurance policies in Texas
according to the rules of contract interpretation”. Kelley-Coppedge, Inc. v.
Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex. 1998) (citations omitted). This
includes not only construing unambiguous terms according to their plain
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                                  No. 17-20640
meaning, Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Crocker, 246 S.W.3d
603, 606 (Tex. 2008), but also attempting to “‘give effect to all provisions so that
none will be meaningless’”, Nassar v. Liberty Mut. Fire Ins. Co., 508 S.W.3d
254, 258 (Tex. 2017) (quoting Gilbert Tex. Constr., L.P. v. Underwriters at
Lloyd’s London, 327 S.W.3d 118, 126 (Tex. 2010)). “Whether a contract is
ambiguous is a question of law for the court to decide by looking at the policy
as a whole in light of the circumstances present when the contract was
entered.” In re Deepwater Horizon, 470 S.W.3d 452, 464 (Tex. 2015) (citing
Kelley-Coppedge, 980 S.W.2d at 464).
      As noted, Texas cases have held the word “occupy” in an insurance policy
to be unambiguous. See Kelley-Coppedge, 980 S.W.2d at 467 (holding the policy
language “unambiguously does not apply to exclude coverage”). Importantly,
the insurance language in Kelley-Coppedge was not the identical “that a person
occupies” language at issue here. Id. In instances where the State’s highest
court has not spoken to the direct question, federal courts are required to make
an “‘Erie guess and determine, in [their] best judgment how [that highest court]
would resolve the issue if presented with the same case’”. Temple v. McCall,
720 F.3d 301, 307 (5th Cir. 2013) (first alteration in original) (quoting Six
Flags, Inc. v. Westchester Surplus Lines Ins. Co., 565 F.3d 948, 954 (5th Cir.
2009)). In doing so, our court “defer[s] to intermediate state appellate court
decisions, ‘unless convinced by other persuasive data that the highest court of
the state would decide otherwise’”. Mem’l Hermann Healthcare Sys., Inc. v.
Eurocopter Deutschland, GMBH, 524 F.3d 676, 678 (5th Cir. 2008) (quoting
Hermann Holdings, Ltd. v. Lucent Tech., Inc., 302 F.3d 552, 558 (5th Cir.
2002)).
      Policy language is not ambiguous simply because the parties disagree,
Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003), but rather
when the “language of a policy is susceptible to more than one construction”,
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                                 No. 17-20640
Mid-Continent Cas. Co. v. JHP Dev., Inc., 557 F.3d 207, 212 (5th Cir. 2009)
(citing Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 666 (Tex. 1987)). Texas
intermediate appellate courts have previously held the term “occupy” as used
in a commercial-general-lines insurance policy to be “unambiguous”. Liberty
Mut. Fire Ins. Co. v. Lexington Ins. Co., 446 S.W.3d 835, 844 (Tex. App. 2014)
(citing Kelley-Coppedge, 980 S.W.2d at 467).
      For our Erie review, the reliance by 2200 West Alabama on non-Texas
case law concluding the language is ambiguous is not applicable. See, e.g., Sell
v. Nationwide Mut. Ins. Co., 492 F. App’x 740, 743 (9th Cir. 2012) (applying
California law); Hobbs Realty & Constr. Co. v. Scottsdale Ins. Co., 593 S.E.2d
103, 108 (N.C. App. 2004) (applying North Carolina law). Moreover, the Texas
Supreme Court has ruled an insurance policy is not ambiguous “merely
because . . . other courts differ over its interpretation”. U.S. Metals, Inc. v.
Liberty Mut. Grp., Inc., 490 S.W.3d 20, 24 (Tex. 2015) (citing Grain Dealers
Mut. Ins. Co. v. McKee, 943 S.W.2d 455, 459 (Tex. 1997)).
      Accordingly, as further discussed infra, the policy language “that a
person occupies” is unambiguous, based on Texas intermediate court
application of the Texas Supreme Court’s holding in Kelley-Coppedge; and, the
plain meaning of the word “occupies” requires physical presence or possession,
see Liberty Mut. Fire Ins. Co., 446 S.W.3d at 844 (citing Kelley-Coppedge, 980
S.W.2d at 467).
                                       B.
      In Kelley-Coppedge, the Texas Supreme Court addressed whether a
policy provision excluded coverage for plaintiff’s cleanup costs after a
contractor inadvertently struck an oil pipeline while temporarily on an
easement, damaging the surrounding property by the release of crude oil. 980
S.W.2d at 463–64.     The question turned on whether a subcontractor was
“occup[ying]” the easement when he used it only temporarily and transitorily.
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                                  No. 17-20640
Id. at 467. The Texas Supreme Court held: the exclusion applied only if the
subcontractor was occupying the easement; and even transient use could not
satisfy that provision’s “occupied by” requirement, because any other
interpretation conflicted with the plain meaning of “occupy”. Id.
      “Under Kelley-Coppedge, the term ‘occupy’—in an ‘own, rent, or occupy’
exclusion in a commercial general liability policy that does not otherwise define
occupy—means ‘to hold or keep for use.’” Liberty Mut. Fire Ins. Co., 446 S.W.3d
at 846.   In Liberty, the court addressed the “physical presence” aspect of
occupancy: “[w]e hold that ‘occupy’ comprises (1) a continued physical presence
and (2) control of the premises for the insured’s own benefit”. Id.
       “To determine the ordinary meaning of a term not defined in the
[policy], courts typically begin with the dictionary definition.” Cooper Indus.,
Ltd. v. Nat’l Union Fire Ins. Co. of Pittsburg, Pa., 876 F.3d 119, 128 (5th Cir.
2017) (citing Epps v. Fowler, 351 S.W.3d 862, 866 (Tex. 2011) (collecting
cases)). The 10th edition of Black’s Law Dictionary defines “occupy” as:
      occupy vb. 1. To seize or take possession of; esp., to enter and take
      control of (a place) <the Iraqis briefly occupied Kuwait>. 2. To take
      up the extent, space, room, or time of <the company’s headquarters
      occupy 20 acres>. 3. To hold possession of; to be in actual possession
      of <Queen Elizabeth II occupies the throne>. 4. To employ; to possess
      or use the time or capacity of <the computer industry occupies
      millions of workers>. 5. To use (money) in commerce; to invest; to
      employ for profit <to occupy $10 million in the venture>. 6. To live or
      stay in (a place) <he occupies the apartment without paying rent>.

Occupy, Black’s Law Dictionary (10th ed. 2014). On the other hand, 2200 West
Alabama urges the Sixth Edition of Black’s Law Dictionary is applicable; it
included “to tenant” (i.e., “renting land”) within the definition of “occupy”.
Occupy, Black’s Law Dictionary (6th ed. 1991).
      This earlier definition of “occupy” is unpersuasive, because the
applicable Black’s Law Dictionary is the tenth edition, given the policy covered
the years 2013-2014. E.g., Motor Vehicle Cas. Co. v. Atlantic Nat’l Ins. Co., 374
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                                  No. 17-20640
F.2d 601, 605 (5th Cir. 1967) (internal citation omitted) (under principles of
contract construction, the meaning and application of plain words are to be
judged in the light of the situation of parties at time of making agreement); cf.
Wis. Cent. Ltd. v. United States, --- U.S. ---, 138 S. Ct. 2067, 2074 (2018) (citing
Perrin v. United States, 444 U.S. 37, 42 (1979)). The majority of the above-
stated current definitions of “occupy” support a plain meaning requiring
physical presence or possession. Occupy, Black’s Law Dictionary (10th ed. 2014).
      Additionally, and although addressing the definition of “hospital” in an
insurance policy, not “occupy”, the Texas Supreme Court’s analysis in
Guardian Life Ins. Co. of Am. v. Scott, 405 S.W.2d 64 (Tex. 1966), is instructive.
There, the court addressed whether an institution met the definition of
“hospital” (i.e., whether it “has organized facilities for the care and treatment”
of patients like X-ray or laboratory equipment). Id. at 65 (emphasis added).
The court concluded it was not a hospital for the purposes of coverage because
it merely “had access” to the requisite facilities required by the policy at other
local hospitals with which it was affiliated. Id. (emphasis added). Because
terms must be given their “ordinary and generally accepted meaning”, and
“has” is the present tense of the verb “to have”, which was defined as, inter
alia, “possession or control”, the policy’s requiring an institution “have” certain
facilities meant it needed “possession or control” of such facilities on the
premises themselves, and mere access alone was insufficient to trigger
coverage. Id. We are persuaded by the Texas Supreme Court’s analysis that
an insurance policy excludes coverage when policy language requires
“possession”, but a party can allege only “access”.
      We are left with the conclusion “occupies” requires physical presence or
possession, particularly given its use in the present-tense verb form.           As
Western World notes in its brief, the word “occupies” appears in the present-
tense form, and indicates a concurrent condition. And, as in Guardian Life
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                                  No. 17-20640
Ins., the policy language “occupies” is also the present-tense form of the verb
“to occupy”, which is similarly-defined as requiring an element of possession
above and beyond mere access. Occupy, Black’s Law Dictionary (10th ed.
2014). In its present-tense form, this demonstrates the nature of the occupancy
must be ongoing to satisfy the policy requirement.
       Read in the context of the provision as a whole, it makes sense to require
physical presence or possession to satisfy “occupies”: one cannot be “evicted”
from a premises where he or she has never taken physical possession or
maintained a presence. Along that line, Black’s Law Dictionary defines a
“wrongful-eviction action” as “a lawsuit brought by a former tenant or
possessor of real property against one who has put the plaintiff out of
possession”. Wrongful-eviction action, Black’s Law Dictionary (10th ed. 2014).
In turn, “possession” is defined as, inter alia, “[t]he fact of having or holding
property in one’s power; the exercise of dominion over property”. Possession,
Black’s Law Dictionary (10th ed. 2014).
      The parties do not dispute Dubrow never took physical possession of the
“premises” from 2200 West Alabama. Without any physical possession of the
premises, Dubrow never “occupied” it.
                                        C.
       Finally, 2200 West Alabama’s interpretation would require eliminating
the language “that a person occupies”. As discussed infra, the policy language
in issue includes, inter alia, the “invasion of the right of private occupancy”; to
define “that a person occupies” as nothing more than the “right of occupancy”
creates redundancy and renders the language superfluous. Texas law does not
condone such an outcome. See, e.g., Ewing Constr. Co., Inc. v. Amerisure Ins.
Co., 420 S.W.3d 30, 37 (Tex. 2014) (“[I]nterpretations of contracts as a whole are
favored so that none of the language in them is rendered surplusage”.); see also


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                                  No. 17-20640
Tesoro Ref. & Mktg. Co., L.L.C. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 833
F.3d 470, 474 (5th Cir. 2016) (citing Am. Mfrs. Mut. Ins. Co., 124 S.W.3d at 157).
      The language “wrongful eviction from, wrongful entry into, or invasion
of the right of private occupancy” contains phrases separated by “or”.
(Emphasis added.) This creates alternative factual scenarios satisfying policy
coverage. See, e.g., Capps v. Am. Mut. Liab. Ins. Co., 601 S.W.2d 816, 817 (Tex.
Civ. App. 1980) (where context of insurance policy so demands, courts must
read the word “or” as disjunctive to give policy provision proper effect and
meaning). The next phrase, “of a room, dwelling or premises” narrows the
range of locations where such factual scenarios could occur to trigger coverage.
And, as noted, the final phrase, “that a person occupies” creates a secondary
condition-precedent modifying the preceding phrase “of a room, dwelling or
premises”. Read as a whole, there are three possible factual circumstances
that could trigger coverage, but only if they take place in a room, dwelling, or
premises occupied by “a person”.
      A factual scenario can be envisioned where one has either a right to
occupy, or is physically occupying, a premises, but not both. Possession and
use are, after all, defined as separate “sticks” within a greater “bundle” of
property rights. Property, Black’s Law Dictionary (10th ed. 2014). A violation
of the lease—a contractual interest—manifests itself as a breach-of-contract
action.   It would be inimical to the common understanding of leasehold
interests to describe a lease repudiation as an eviction. See, e.g., Wade v.
Madison, 206 S.W. 118, 119 (Tex. Civ. App. 1918) (“It seems settled, however,
that ordinarily breaches of express covenants . . . do not forfeit the right of
possession or confer the right of re-entry”); Farmers & Bankers Life Ins. Co. v.
St. Regis Paper Co., 456 F.2d 347, 349–51 (5th Cir. 1972) (deciding a lease
repudiation on a solely contractual basis).        Compare Evict, Black’s Law
Dictionary (10th ed. 2014) (“To expel (a person, esp. a tenant) from real
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                                  No. 17-20640
property”), with Repudiate, Black’s Law Dictionary (10th ed. 2014) (“To reject
or renounce (a duty or obligation); esp. to indicate an intention not to perform”).
On the other hand, a person with both rights (i.e., right to occupancy and
possession) could also claim wrongful eviction, rather than purely contract
breach.
      Constructed in this way, each phrase is given its own distinct meaning
within the greater provision as a whole. If read as 2200 West Alabama urges,
“the right of private occupancy” and “that a person occupies” would be
functionally synonymous. Again, if read as 2200 West Alabama urges, “the
right of private occupancy” would control, and “that a person occupies” would
be rendered superfluous.
      The basis of the third-party action is that Dubrow had a contractual right
to occupancy as the “rightful tenant”, but it was denied its rights under the
leasehold contract by 2200 West Alabama. It concedes as much in its briefing
here: it contends the complaint in the third-party action established facts
sufficient to trigger the duty to defend under the eight-corners rule because the
complaint alleged Dubrow was the “rightful tenant[] of the space”, and 2200
West Alabama “wrongfully deprived Dubrow of its alleged right to access and
use the premises”. A contractual right to the premises alone is insufficient to
satisfy the policy language triggering the duty to defend. That claim, although
it arguably satisfies one factual scenario of the policy coverage—invasion of the
right of private occupancy—fails to trigger a duty to defend: the third-party
action does not satisfy the condition-precedent of actual occupancy, because,
by its nature, its claim is that Dubrow was denied possession.
                                       III.
      For the foregoing reasons, the judgment for 2200 West Alabama is
VACATED; judgment is RENDERED for Western World.


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