Opinion filed August 29, 2014




                                           In The


          Eleventh Court of Appeals
                                        __________

                                 No. 11-12-00029-CV
                                     __________

          PLANTATION PIPE LINE COMPANY, Appellant
                                               V.
                 HIGHLANDS INSURANCE COMPANY,
                     IN RECEIVERSHIP, Appellee

                      On Appeal from the 261st District Court
                             Travis County, Texas
                          Cause No. D-1-GN-10-004057

                                        OPINION
      This appeal involves the meaning and application of certain terms of an
excess insurance policy issued by Highlands Insurance Company to its insured,
Plantation Pipe Line Company. 1 The trial court granted Highlands’s motion for
summary judgment and held that Highlands was not obligated to pay Plantation

      1
       Highlands was placed in receivership in Texas on November 6, 2003.
under the terms of the excess policy that it had issued to Plantation because the
underlying insurers had not actually paid the full limits of their policies. The trial
court also denied Plantation’s motion for partial summary judgment for the same
reason. We reverse and remand.
      Plantation operates pipelines that carry petroleum products from Louisiana
to Mississippi, Alabama, Georgia, South Carolina, North Carolina, and Virginia.
The pipelines do not extend into Texas. One of the properties through which
Plantation’s pipeline passed was known as the Stifford Ferry Site in Mecklenberg
County, North Carolina.
      On March 19, 1975, it was discovered that there was a leak in one of
Plantation’s underground pipelines that was located across the Stifford Ferry Site.
Plantation repaired the leak immediately after it was discovered, informed the
North Carolina Department of Environmental Health and Natural Resources (North
Carolina DEHNR) of the leak, collected 2,000 barrels of oil in remediation and
recovery operations over nine years, and spent approximately $18,663 in recovery
costs, including a payment to the property owner, Finch. See Lumbermens Mut.
Cas. Co. v. Plantation Pipeline Co., 447 S.E.2d 89, 90 (Ga. App. 1994). Fourteen
years later, in 1989, a North Carolina partnership, Stifford Ferry Road Properties
contracted to acquire the property. Stifford Ferry Road Properties complained
about residual gasoline contamination. At that time, further investigation by the
North Carolina DEHNR revealed that Plantation’s efforts had not resulted in
complete remediation of the leak site.        In 1990, the State of North Carolina
directed Plantation to further remediate the leak site.       Thereafter, Plantation
recovered over 200,000 more gallons of leaked petroleum materials. Plantation
spent close to $12 million on remediation as a result of the leak.
      Before the leak was discovered, Johnson and Higgins of Georgia, Inc., an
insurance broker in Atlanta, Georgia, assisted Plantation in the procurement of
                                          2
multiple layers of liability insurance. With the assistance of its broker, Plantation
purchased a general liability insurance policy from American Reinsurance
Company. The policy was for $900,000 in excess of the $100,000 self-insured
retention by Plantation.      Plantation also purchased excess insurance from
California Union Insurance Company. Cal Union’s policy had a $2 million ceiling
on top of American’s $1 million coverage. Additionally, Plantation purchased a
“Comprehensive Catastrophe Liability Policy” of excess insurance from
Lumbermens Mutual Casualty Insurance Company. This policy coverage began at
$3 million and covered up to $8 million. Finally, Plantation also purchased a
three-year “Special Risk Policy” from Highlands. This policy was in excess of the
“underlying coverage.” In summary, at times relevant to this lawsuit, Plantation’s
liability coverage was layered as follows:
      1.     $0 to $100,000                          Self-Insured
      2.     $100,000 to $1 million                  American
      3.     $1 million to $3 million                Cal Union
      4.     $3 million to $8 million                Lumbermens
      5.     $8 million to $18 million               Highlands
      Less than a month after the State of North Carolina notified Plantation of the
need for further remediation, Plantation notified its insurance carriers that the State
of North Carolina was requiring it to perform further remedial action under North
Carolina pollution control laws and that it faced potential liability to third parties.
Plantation requested that the insurers defend and indemnify it.
      American, Cal Union, and Lumbermens all disputed coverage.                  The
companies claimed that notice was untimely and that the loss was subject to
pollution exclusions in their policies. Ultimately, Plantation sued American, Cal
Union, and Lumbermens for breach of contract, among other things, in state court
in Georgia. Plantation did not sue Highlands at that time because it did not then
                                          3
know whether the loss would be in an amount that would trigger the Highlands
policy.
      The end result of the Georgia lawsuit was that, in settlement of the claims,
American agreed to pay Plantation $750,000. Cal Union agreed to pay $1 million
to Plantation.   And Lumbermens agreed to pay Plantation $2.8 million but
expressly stated that, by that payment, Lumbermens did not acknowledge existence
of coverage under its policy. Plantation paid the balance of the loss.
      On September 15, 2003, Plantation notified Highlands that Plantation had
incurred losses in connection with the leak that exceeded $8 million; it demanded
indemnity and reimbursement from Highlands for the excess over that amount.
Plantation and Highlands were in contact periodically after that, but in 2003,
before the Highlands claim was resolved, a district court in Travis County, Texas,
placed Highlands into receivership.      Plantation filed a proof of claim in the
receivership proceeding and argued that Highlands was responsible for all the
remediation costs that had been incurred that exceeded $8 million. In response,
Highlands claimed, among other things, that it did not owe Plantation anything
under its policy because the policy limits of the other insurance policies had not
been fully exhausted as was required under the excess policy that it had issued to
Plantation. Highlands, therefore, denied Plantation’s claim.
      After Highlands denied Plantation’s claim, Plantation sued Highlands for,
among other things, breach of contract. Highlands moved for summary judgment
on the exhaustion question. Plantation moved for partial summary judgment on the
same issue. The trial court agreed with Highlands that Highlands was not liable
because the other insurers settled their claims with Plantation for less than their
various full policy limits and because they had neither paid, nor had they been held
liable to pay, the full limits on their individual policies. Accordingly, the trial
court granted summary judgment in favor of Highlands, denied Plantation’s motion
                                          4
for partial summary judgment, and ordered that Plantation take nothing on its claim
against Highlands. That judgment forms the basis of Plantation’s complaints in
this appeal.
      Plantation presents us with one issue on appeal. That issue is: “[w]hether
the trial court erred in ruling that Plantation, as a matter of law, forfeited all of its
coverage under the excess policy it purchased from Highlands by settling its
coverage claims against its lower-level insurers for less than the full limits of those
policies, even though Plantation agreed to pay the difference between the
underlying settlement amounts and the underlying policy limits.”
      The standard of review of a summary judgment is well-settled. Nixon v. Mr.
Prop. Mgmt. Co., 690 S.W.2d 546 (Tex. 1985); City of Houston v. Clear Creek
Basin Auth., 589 S.W.2d 671 (Tex. 1979). We review a summary judgment de
novo. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). The
movant for traditional summary judgment must show there is no genuine issue of
material fact and that it is entitled to judgment as a matter of law.                See
TEX. R. CIV. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding,
289 S.W.3d 844, 848 (Tex. 2009).           A defendant who moves for traditional
summary judgment must either negate at least one essential element of the
nonmovant’s cause of action or prove all essential elements of an affirmative
defense. See Randall’s Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex.
1995). When summary judgment is granted on traditional grounds, we take the
evidence adduced in favor of the nonmovant as “true” and draw every reasonable
inference and resolve all doubts in its favor. Id. at 644 (citing El Chico Corp. v.
Poole, 732 S.W.2d 306, 315 (Tex. 1987)). If the trial court’s order on summary
judgment does not specify the grounds on which it is based, the appellant must
negate all grounds on appeal. See Star-Telegram, Inc. v. Doe, 915 S.W.2d 471,
473 (Tex. 1995).
                                           5
      General rules of contract interpretation and construction govern a court’s
review of an insurance policy. Utica Nat’l Ins. Co. of Tex. v. Am. Indem. Co., 141
S.W.3d 198, 202 (Tex. 2004).       Our primary concern is to give effect to the
intentions of the parties as expressed in the policy. Balandran v. Safeco Ins. Co. of
Am., 972 S.W.2d 738, 741 (Tex. 1998).
       Policy terms are to be given the normal and usual meanings ascribed to
them by an ordinary person. Am. Home Assur. Co. v. Safway Steel Prods. Co., A
Div. of Figgie Int’l, Inc., 743 S.W.2d 693, 702 (Tex. App.—Austin 1987, writ
denied).   When policy terms are not ambiguous, they are given their “plain,
ordinary and generally accepted meaning unless the instrument itself shows that
the terms have been used in a technical or different sense.” Ramsay v. Maryland
Am. Gen. Ins. Co., 533 S.W.2d 344, 346 (Tex. 1976) (citing Guardian Life Ins. Co.
of Am. v. Scott, 405 S.W.2d 64 (Tex. 1966); W. Reserve Life Ins. Co. v. Meadows,
261 S.W.2d 554 (Tex. 1953)).
      Texas courts will enforce an insurance policy, as written, if the language
used is free from any ambiguity and has only one reasonable interpretation.
Fiess v. State Farm Lloyds, 202 S.W.3d 744, 746 (Tex. 2006); Glover v. Nat’l Ins.
Underwriters, 545 S.W.2d 755 (Tex. 1977). In addition, we construe insurance
policies and their endorsements together unless they are so much in conflict they
cannot be reconciled. See Mesa Operating Co. v. Cal. Union Ins. Co., 986 S.W.2d
749, 754 (Tex. App.—Dallas 1999, pet. denied). If the contract is subject to more
than one reasonable interpretation, the agreement is ambiguous and courts will
apply the interpretation that most favors the existence of coverage. Grain Dealers
Mut. Ins. Co. v. McKee, 943 S.W.2d 455, 458 (Tex. 1997). An ambiguity does not
exist just because the parties take differing and conflicting positions regarding the
proper interpretation of the agreement.       Id.   However, if the language is
ambiguous, the construction that is more favorable to the insured and affords
                                         6
coverage will be adopted. Id. This principle of construction against the insurer
and in favor of the insured is especially strong when the court considers exceptions
and words of limitation. Blaylock v. Am. Guarantee Bank Liability Ins. Co., 632
S.W.2d 719, 721 (Tex. 1982).
      In this court, Highlands takes the position that the policy it issued to
Plantation is not ambiguous and should be enforced as written. As the foundation
for its argument, Highlands refers to what it calls the “exhaustion clause” in the
policy that it issued to Plantation. It argues that “[t]he Exhaustion Clause in the
Highlands Policy states that liability shall attach only after the underlying umbrella
insurers ‘have paid or have [been] held liable to pay’ their full policy limits.” But
“full policy limits” is not what the policy before us actually says—it does not use
the term “full policy limits.” The actual language in the Highlands policy appears
in the policy under the heading: “Limit of Liability—Underlying Limits.” That
section provides, in relevant part, as follows:
              It is expressly agreed that liability shall attach to the Company
      only after the Underlying Umbrella Insurers have paid or have been
      held liable to pay the full amount of their respective ultimate net loss
      liability as follows:

             A.     $5,000,000.                   ultimate net loss in all in
                                                  respect of each occurrence . . .

      and the Company shall then be liable to pay only the excess thereof up
      to a further

             B.     $10,000,000.                  ultimate net loss in all in
                                                  respect of each occurrence . . .
                                                  (emphasis added).
      The phrase “full policy limits” might be unambiguous, as Highlands argues,
but Highlands did not include those words in the policy it issued to Plantation;
those words appear only in Highlands’s brief. The words actually used in the

                                           7
policy, “ultimate net loss liability” and “ultimate net loss,” are not defined in the
Highlands policy.      However, the term “ultimate net loss” is defined in the
Lumbermens policy. And, the Highlands policy provides:
             This Policy is subject to the same terms, definitions, exclusions
      and conditions (except as regards the premium, the amount and limits
      of liability and except as otherwise provided herein) as are contained
      in or as may be added to the Underlying Umbrella Policies prior to the
      happening of an occurrence for which claim is made hereunder.

      Therefore, the Highlands policy directs us to look to the Lumbermens policy
to determine what “ultimate net loss” means.          There, we find the following
definition:
             “Ultimate net loss” means the total of the following sums
      arising out of any one occurrence to which this policy applies:
              (a) all sums which the insured or any organization as his
              insurer, or both, become legally obligated to pay as damages,
              whether by reason of adjudication or settlement, because of
              personal injury, property damage or advertising liability; and

              (b) all expenses incurred by the insured or any organization as
              his insurer, or both, in the investigation, negotiation, settlement
              and defense of any claim or suit seeking such damages,
              excluding only (1) the salaries of the insured’s or insurer’s
              regular employees, (2) office expenses of the insured or any
              insurer, and (3) all expenses included in other valid and
              collectible insurance (emphasis added).

      If we take the Highlands clause regarding limitation of liability and insert
part (a) of the definition of “ultimate net loss” in place of the words “ultimate net
loss,” we would read the provision as follows:
             It is expressly agreed that liability shall attach to the Company
      only after the Underlying Umbrella Insurers have paid or have been
      held liable to pay the full amount of all sums which the insured or any
      organization as his insurer, or both, become legally obligated to pay
      as damages, whether by reason of adjudication or settlement, because

                                           8
      of personal injury, property damage or advertising liability (emphasis
      added).
      Highlands has not disputed that Plantation and the other carriers altogether
have paid a sum in excess of the attachment point ($8 million) of the Highlands
policy. We believe that the language in the Highlands policy is unambiguous, and
we see nothing that requires payment of losses solely by the insurers up to the
attachment amount in the Highlands policy.
      If it were otherwise, then the Limits of Liability provision would directly
conflict with the so-called “Maintenance Clause.” The “Maintenance Clause” in
the Highlands policy reads as follows:
             It is a condition of this Policy that the Underlying Umbrella
      Policies shall be maintained in full effect during the currency hereof
      except for any reduction of the aggregate limits contained therein
      solely by payment of claims in respect of accidents and/or occurrences
      occurring during the period of this Policy. Failure of the Named
      Insured to comply with the foregoing shall not invalidate this policy
      but in the event of such failures, the Company shall only be liable to
      the same extent as they would have been had the Named Insured
      complied with the said condition.

      Under this provision, it would not matter whether the underlying policies
were even effective—much less the source of the payment for the loss—the
Highlands policy would still attach, but not until its attachment point of $8 million
was reached. To read the Limits of Liability clause and the Maintenance clause in
any other way would result in a conflict between the two provisions. We are to
harmonize and give effect to all the contractual provisions so that none are
rendered meaningless. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 230 (Tex.
2003). Accordingly, we perceive the import of the Maintenance clause to be
unrelated to the Limits of Liability clause; the clear purpose of the Maintenance
Clause is to provide that Highlands is not required to “drop down” and pay


                                          9
anything under its attachment point of $8 million. Plantation has made no claim
that Highlands “drop down” below its attachment point of $8 million.
      Highlands relies on Citigroup, Inc. v. Federal Insurance Co., 649 F.3d 367,
370–73 (5th Cir. 2011), in support of its position. Citigroup was the successor-in-
interest to Associates First Capital Corporation.      Associates had purchased a
primary insurance policy from Lloyd’s with a limit of $50 million. Id. There were
two other layers of insurance above the primary policy. Id. The secondary layer
was composed of National Union Fire Insurance Company of Pittsburgh
($25 million excess coverage) and Starr Excess Liability Insurance International,
Ltd. ($25 million excess coverage). Id. The third layer was known as the “Quota
Share Layer” and provided an additional $100 million in excess coverage. Id. That
amount was shared at varying levels by seven additional insurers. Id. Claims were
made against the insurers. Id. Citigroup settled its claims against Lloyd’s for
$15 million of its $50 million policy limits.       Some of the excess insurance
companies settled, and some of the other claims became the subject of arbitration.
Id. Ultimately, there were five excess insurers that remained involved in the
lawsuit made the subject of the Citigroup appeal: Federal Insurance Company,
Steadfast Insurance Company, St. Paul Mercury Insurance Company, SR
International Business Insurance Company, and Twin City Insurance Company.
Id.
      The district court granted summary judgment in favor of the excess carriers
because Citigroup settled with its primary carrier, Lloyd’s, for less than its
$50 million limit; therefore, in accordance with the terms of the excess policies, the
excess carriers’ liability limits did not attach. Id. The Fifth Circuit agreed. Id.
Citigroup argued that the Zeig doctrine applied and that the policies were
ambiguous and should, therefore, be construed in favor of the insured. See Zeig v.
Mass. Bonding & Ins. Co., 23 F.2d 665 (2d Circuit 1928). As the court stated in
                                         10
Citigroup, “Zeig stands for the proposition that, if an excess insurance policy
ambiguously defines ‘exhaustion,’ settlement with an underlying insurer
constitutes exhaustion of the underlying policy, for purposes of determining when
the excess coverage attaches.”         Citigroup, 649 F.3d at 371 (citing TOD I.
ZUCKERMAN, SETTLEMENT WITH PRIMARY INSURER FOR LESS THAN POLICY LIMITS
§ 10:22 (2010)). The court declined to apply Zeig because the policy provisions in
the Citigroup appeal were not ambiguous.
      The court in Citigroup pointed out that the language in the Federal policy
provided that coverage attached only after “(a) all Underlying Insurance carriers
have paid in cash the full amount of their respective liabilities, (b) the full amount
of the Underlying Insurance policies have been collected by the plaintiffs, the
Insureds or the Insureds’ counsel, and (c) all Underlying Insurance has been
exhausted.” Citigroup, 649 F.3d at 372. The court held that the language of the
policy clearly provided for payment, in cash, of the full amount of the liability of
the underlying insurer’s limits. Id.
      The St. Paul policy provided that St. Paul’s coverage did not attach until the
underlying policy’s “total” limit had been paid in “legal currency.” According to
the court in Citigroup, “[t]hus, the plain language of the St. Paul policy dictates
that payment by an underlying insurer for less than $50 million will not trigger
St. Paul’s excess coverage.” Id.
      The court noted that coverage under the SR policy attached “only after any
Insurer subscribing to any Underlying Policy shall have agreed to pay or have been
held liable to pay the full amount of its respective limits of liability as set forth in
. . . the Declarations” ($50 million). Id. The plain language of the policy issued by
SR required payment of the “full amount” before SR was obligated to provide
coverage to Citigroup.


                                          11
      As far as the Steadfast policy was concerned, it provided that coverage
attached “[i]n the event of the exhaustion of all of the limit(s) of liability of such
‘Underlying Insurance’ solely as a result of payment of loss thereunder.” Id. at
373. The court held that the policy required that “all” of the underlying carrier’s
limits had to be exhausted before coverage attached. “Furthermore, the use of the
phrase ‘payment of loss’ establishes that the underlying insurer must make actual
payment to the insured in order to exhaust the underlying policy.” Id.
      The Highlands policy in this case did not contain language like the parties
agreed to in the policies in Citigroup. We have set forth the language from the
policy in this case, and after comparing the provisions here with the provisions in
Citigroup, we remain convinced that the language in the Highlands policy is not
ambiguous. As a result, we need not decide, as a matter of first impression,
whether the Zeig doctrine applies in the State of Texas.
      Even if we are wrong in our assessment that the policy terms involved in this
appeal are unambiguous, the result of this appeal would be no different. If an
insurance contract is subject to more than one reasonable interpretation, the
agreement is ambiguous and courts will apply the interpretation that most favors
the existence of coverage. Grain Dealers Mut. Ins. Co., 943 S.W.2d at 458. We
must assume that Plantation’s interpretation of the policy is reasonable because of
our earlier holding. For purposes of argument only, we assume that Highlands
presents a reasonable interpretation of the policy. If the language of an insurance
policy is ambiguous, the construction that is more favorable to the insured and
affords coverage will be adopted. Id. This principle of construction against the




                                         12
insurer and in favor of the insured is especially strong when the court considers
exceptions and words of limitation. Blaylock, 632 S.W.2d at 721. 2
        Therefore, based upon these common principles, were we required to apply
them, we would still find under either Texas or Georgia law that the trial court
erred when it held that the settlement with the other insurers for less than their
policy limits failed to trigger the Highlands policy.
        We hold that, under the terms actually contained in the Highlands excess
policy, coverage was triggered regardless of the settlement between Plantation and
all of its other insurers. The trial court erred to hold otherwise. Plantation’s sole
issue on appeal is sustained. 3
        We reverse the judgment of the trial court, and we remand this cause to the
trial court for further proceedings consistent with this opinion. 4




                                                                MIKE WILLSON
                                                                JUSTICE

August 29, 2014
Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.


        2
         Because there is no conflict between Georgia law and Texas law on these principles, there are no
conflict of laws issues that we need to address on the point of contract construction. See Claussen v.
Aetna Cas. & Sur. Co., 380 S.E.2d 686, 687–88 (Ga. 1989).
        3
         We have not addressed any issues regarding conflict of laws arguments because we do not find
them relevant to the limited issue presented to this court in this appeal.
        4
        When cross-motions for summary judgment are filed and the trial court grants one and denies the
other, we review all issues presented and enter the judgment that the trial court should have entered.
Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Moon Royalty, LLC v. Boldrick
Partners, 244 S.W.3d 391, 394 (Tex. App.—Eastland 2007, no pet.). However, here, Plantation has
asked only that we reverse the judgment of the trial court and remand this case to that court for further
proceedings consistent with our decision.

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