                         COURT OF APPEALS
                          SECOND DISTRICT OF TEXAS
                               FORT WORTH


                               NO. 2-08-279-CV


GARRY JENKINS                                                         APPELLANT

                                         V.

STATE AND COUNTY MUTUAL FIRE                                             APPELLEE
INSURANCE COMPANY

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        FROM THE 153RD DISTRICT COURT OF TARRANT COUNTY

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                                    OPINION

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      This is a suit by a judgment creditor to collect a default judgment under

an automobile liability policy. It is undisputed that the additional insured against

whom the default judgment was rendered failed to notify the insurer of the

lawsuit filed against him. It is further undisputed that the insurer had actual

knowledge of the suit. The question is whether the insurer is liable for the
default judgment rendered against the additional insured. We answer “no” and

affirm the trial court’s grant of summary judgment in favor of the insurer.

                                 Background

      Except as noted below, the facts of this case are undisputed. Appellant

Garry Jenkins’s foot was crushed in 1997 when a tank skid fell off a truck

driven by Mark Lemmon. The accident happened when Mark allegedly applied

the brakes of the truck too quickly, causing the skid to break free and fall on

Garry’s foot. Both Garry and Mark were working as independent contractors

for L & G Pipe, which was owned by Deborah Grisamer and Richard Lemmon;

Richard is Mark’s brother. The parties dispute who owned the truck Mark was

driving.

      At the time of the accident, Appellee State and County Mutual Fire

Insurance Company had issued a business auto policy to Deborah as named

insured, and the policy was in effect on the day of the accident. The policy

listed the truck as a “covered auto.” The policy’s “loss conditions” provide as

follows:

      2.    DUTIES IN THE EVENT OF ACCIDENT, CLAIM, SUIT OR
            LOSS

            ....

            b.     . . . you and any other involved insured must . . .
                   [i]mmediately send us copies of any demand, notice,

                                      2
                  summons or legal paper received concerning the claim
                  or suit [and] [c]ooperate with us in the investigation,
                  settlement or defense of the claim or suit.

      3.    LEGAL ACTION AGAINST US

           No one may bring a legal action against us under this
      Coverage Form until:

            a.    There has been full compliance with all the terms of
                  this Coverage Form; and

            b.    Under Liability Coverage, we agree in writing that the
                  insured has an obligation to pay or until the amount of
                  that obligation has been finally determined by judgment
                  after trial.

Mark was listed as a “driver” on a policy renewal application Debra executed

before the accident.1 The truck he was driving at the time of the accident was

listed on the policy as a “covered auto.”

      Garry sued Mark, Deborah, Richard, and L & G Pipe for negligence. Garry

obtained service on Deborah, Richard, and L & G Pipe.        Those defendants

forwarded the suit papers to State and County, and State and County defended

them under the policy.




      1
        … Garry repeatedly refers to Mark as a “named insured” in his brief, but
he never identifies where in the policy Mark is so named. Our own review of
the relevant documents finds Mark’s name only on the renewal application, not
in the policy itself. The policy’s declaration page lists only Deborah as a
“named insured.”

                                       3
      When Garry was unable to effect personal service of process on Mark, he

obtained an order authorizing service on Mark by publication. Mark did not file

an answer. Garry’s counsel informed State and County’s adjuster that Mark

had been served by publication and sent him copies of the suit papers. State

and County’s counsel denied that Mark was entitled to coverage under the

policy and asserted that even if Mark was covered, he had failed to comply

with the policy’s notice-of-suit condition. The trial court later rendered a default

judgment against Mark for $650,000 in actual damages and $260,000 in

prejudgment interest. 2

      The suit proceeded to trial against the remaining defendants.          A jury

found that Mark was 100% at fault for the accident, and the trial court

rendered a take-nothing judgment against the other defendants.

      Garry then sued State and County, seeking to collect the judgment he had

obtained against Mark. The trial court granted summary judgment for State and

County on the theory that Mark was not insured under L & G Pipe’s business

auto policy because Mark, not Deborah, owned the truck. See Jenkins v. State

& County Mut. Fire Ins. Co., No. 02-06-00067-CV, 2007 WL 1168470, at *1




      2
      … The trial court did not appoint an attorney ad litem to defend the suit
on Mark’s behalf as required by rule of civil procedure 244 in cases where the
defendant is served by publication. See Tex. R. Civ. P. 244.

                                         4
(Tex. App.—Fort Worth Apr. 19, 2007, pet. denied) (mem. op.) (“Jenkins I”).

We reversed and remanded, holding that a genuine issue of material fact as to

who owned the truck precluded summary judgment. Id. at *3.

      On remand, Garry filed a traditional motion for summary judgment,

arguing that Mark was a covered driver under the policy. State and County

filed a combined traditional and no-evidence motion for summary judgment,

arguing that it had no duty to indemnify Mark or pay the judgment on his behalf

because Mark had not notified State and County of the suit against him. Garry

argued that State and County had waived Mark’s compliance with the policy’s

notice-of-suit condition because it had actual knowledge of Garry’s suit against

Mark but refused to defend him. The trial court granted State and County’s

summary judgment motion and denied Garry’s. Garry filed this appeal.

                             Standard of Review

      In a summary judgment case, the issue on appeal is whether the movant

met the summary judgment burden by establishing that no genuine issue of

material fact exists and that the movant is entitled to judgment as a matter of

law. Tex. R. Civ. P. 166a(c); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211,

215 (Tex. 2002); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671,

678 (Tex. 1979). When both parties move for summary judgment and the trial

court grants one motion and denies the other, the reviewing court should

                                       5
review both parties’ summary judgment evidence and determine all questions

presented. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.

2005). The reviewing court should render the judgment that the trial court

should have rendered. Id.

      When a party moves for summary judgment on both traditional and no

evidence grounds and the trial court did not specify the grounds on which it

was granted, we will uphold the summary judgment if any one of the grounds

advanced in the motion is meritorious. Joe v. Two Thirty Nine Joint Venture,

145 S.W.3d 150, 157 (Tex. 2004).

                                  Discussion

1.    Mark’s failure to forward suit papers and demand a defense

      In his second issue, Garry argues that the trial court erred by granting

State and County’s traditional motion for summary judgment. State and County

contends that Mark’s failure to comply with the notice-of-suit condition

precludes coverage for Garry’s claims against Mark. Garry argues that State

and County cannot rely on the condition because it had actual knowledge of his

suit against Mark. For the purposes of this discussion, we will assume without

deciding that Mark was an insured under the policy at the time of the accident.

      Our supreme court has consistently held that an insurer has no duty to

defend or indemnify an insured unless the insured forwards suit papers and

                                      6
requests a defense in compliance with the policy’s notice-of-suit conditions.

See Nat’l Union Fire Ins. Co. v. Crocker, 246 S.W.3d 603, 610 (Tex. 2008);

Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170, 174–75 (Tex.

1995); Weaver v. Hartford Accident & Indem. Co., 570 S.W.2d 367, 370 (Tex.

1978).

      Weaver is the first of three supreme court decisions that guide our

analysis. Weaver was involved in a car wreck with Busch, who worked for

Thomas Enterprises. 570 S.W.2d at 368. Thomas was the named insured on

a comprehensive automobile liability policy issued by Hartford. Id. Weaver

sued and served Busch, but Busch did not forward the suit papers to Hartford.

Id. Weaver sued and served Thomas in the same action; Thomas promptly

forwarded the suit papers to Hartford, and Hartford defended Thomas. Id.

Weaver later nonsuited Thomas, and the trial court rendered a default judgment

against Busch. Id. Weaver then sued Hartford to collect the judgment. Id.

      The supreme court noted that a policy’s condition that the insured

immediately forward suit papers to the insurer serves several purposes. Id. at

369. One purpose is to enable the insurer to control the litigation and interpose

a defense. Id. But “a more basic purpose is to advise the insurer that the

insured has been served with process and that the insurer is expected to timely

file an answer.” Id. The court held that because Busch had never forwarded

                                       7
the suit papers to Hartford or requested a defense, Hartford had no duty to

defend him, and it affirmed the court of appeals’ take-nothing judgment in favor

of Hartford. Id. at 370.

      Seventeen years later, the supreme court reached a similar result in

Harwell. Hubbard and Leatherman were in a car wreck; Hubbard died, and

Leatherman was seriously injured. 896 S.W.2d at 172. Hubbard was insured

by a State Farm automobile liability policy. Id. Leatherman sued Hubbard’s

estate.   Leatherman’s attorney caused the probate court to appoint the

attorney’s secretary, Harwell, as the estate’s temporary administrator and

served her with citation. Id. Leatherman’s attorney notified State Farm of the

suit in writing and discussed the case with State Farm’s attorney, but Harwell

never forwarded any suit papers to State Farm nor demanded a defense. Id.

The trial court rendered a default judgment in favor of Leatherman. Id. Harwell

did not notify State Farm of the judgment, but Leatherman’s attorney sent

State Farm a copy of the judgment one day after the deadline for filing a motion

for new trial or perfecting appeal. Id. When Leatherman attempted to enforce

the judgment against Hubbard’s policy, State Farm filed a declaratory judgment

action against Harwell and Leatherman, seeking a declaration that it was not

responsible for the judgment against Hubbard.      Id. at 173.   The trial court




                                       8
granted State Farm’s motion for summary judgment, and the court of appeals

affirmed. Id.

      On appeal to the supreme court, Harwell argued that State Farm could not

rely on her failure to forward suit papers because it had actual knowledge of

Leatherman’s suit against Hubbard; that State Farm was not prejudiced by her

failure to provide notice; and that State Farm’s refusal to defend the suit

estopped it from claiming that Harwell’s breach of the notice-of-suit provision

relieved it of liability. Id. The supreme court held that until State Farm received

notice of suit, it had no duty to undertake Hubbard’s defense. Id. at 174.

Leatherman’s attorney’s correspondence to State Farm and his discussions with

State Farm’s attorney did not constitute “notice.”         Id.   Further, “it was

Harwell’s duty to notify State Farm of the suit against its insured when she

received service of process; it was not State Farm’s duty to determine when

or if Harwell had been served.” Id. The court also held that “[t]he failure to

notify an insurer of a default judgment against its insured until after the

judgment has become final and nonappealable prejudices the insurer as a matter

of law.” Id. Finally, noting that estoppel can only arise when a party refuses

to do that which he has a duty to do, the court held that State Farm was not

estopped from asserting Harwell’s breach of the policy as a bar to its liability

because State Farm was never under a duty to defend Harwell. Id. at 175.

                                        9
      The third and final controlling case is Crocker.      246 S.W.3d at 603.

There,    a    n ursing   h om e    resident— C rocker— sued        the   hom e’s

owner—Emeritus—and its employee—Morris— for injuries Crocker sustained

when she was hit by a door swung open by Morris. Id. at 604. Crocker’s

claims against Emeritus and Morris were covered by a commercial general

liability policy issued by National Union; Emeritus was the named insured, and

Morris was an additional insured. Id. at 605. Morris was served with process,

but he did not forward the suit papers to National Union or request a defense.

Id. National Union defended Emeritus, but it did not defend Morris even though

it knew he was an additional insured and a named defendant who had been

served. Id. The trial court eventually rendered a $1 million default judgment

against Morris. Id.

      Crocker sued National Union to collect the judgment, and National Union

removed the case to federal court.       Id.   The federal district court granted

summary judgment in favor of Crocker and awarded her $1 million. Id. at 606.

On appeal, the fifth circuit certified the following question to the supreme court:

      Where an additional insured does not and cannot be presumed to
      know of coverage under an insurer’s liability policy, does an insurer
      that has knowledge that a suit implicating policy coverage has been
      filed against its insured have a duty to inform the additional insured
      of the available coverage?




                                        10
Id.   The supreme court answered “no,” noting that its decision in Weaver

governed the case: “Put simply, there is no duty to provide a defense absent

a request for coverage.” Id. at 606, 608.

       The court explained that notice and delivery-of-suit-papers provisions in

insurance policies serve two essential purposes: (1) they facilitate a timely and

effective defense of a the claim against the insured and, more fundamentally,

(2) they trigger the insurer’s duty to defend by notifying the insurer that a

defense is expected. Id. at 608 (citing Harwell, 896 S.W.2d at 172; Weaver,

570 S.W.2d at 369). Mere awareness of a claim or suit does not impose a

duty on the insurer to defend under the policy; there is no unilateral duty to act

unless and until the additional insured first requests a defense—a threshold duty

that the insured fulfills under the policy by notifying the insurer that the insured

has been served with process and the insurer is expected to answer on its

behalf. Id. An insurer cannot necessarily assume that an additional insured

who has been served but has not given notice to the insurer is looking to the

insurer to provide a defense. Id. at 609. If there is no duty to defend, there is

no duty to indemnify: “Absent a threshold duty to defend, there can be no

liability to [the additional insured], or to [the claimant] derivatively.” Id. at 609.

       The rule from Weaver, Harwell, and Crocker is clear: an insurer has no

duty to defend and no liability under a policy unless and until the insured in

                                         11
question complies with the notice-of-suit conditions and demands a defense.

This is true even when the insurer knows that the insured has been sued and

served and when the insurer actually defends other insureds in the same

litigation, as happened in both Weaver and Crocker.

      In the case before us, State and County knew that Garry had sued Mark

and knew that Mark had been served by publication. But unless and until Mark

notified State and County of the suit and forwarded the suit papers in

accordance with the policy’s conditions, State and County had no duty to

defend Mark and has no liability under the policy for the judgment against Mark.

      Garry’s attempts to distinguish Crocker, Weaver, and Harwell are

unavailing.   Garry relies on a single sentence in Weaver—“The question

presented here is not controlled by the Court’s holding in Employers Casualty

Co. v. Glens Falls Insurance Co.”—and argues that Employers Casualty does

control the case before us. In Employers Casualty, the supreme court held that

when a named insured notified the insurer of a covered accident, the omnibus

insured was not also required to notify the insurer of the accident. 484 S.W.2d

570, 576 (Tex. 1972). The word “accident” is the key. Employers Casualty

dealt with a condition requiring insureds to notify the insurer of an accident, not

the condition requiring insureds to notify the insurer of a lawsuit and forward




                                        12
suit papers. For that reason, Employers Casualty did not control the outcome

in Weaver, and it does not control the outcome in this case.

      Garry attempts to distinguish Harwell because in that case, State Farm

“did not learn about the suit, service[,] and default judgment until after it was

final.” This is a genuine distinction between our case and Harwell, but it does

not compel a different outcome. In both Weaver and Crocker, the insurers

knew about the suits, the service on the insureds, and the default judgments

before the judgments were final—yet the results in those cases were the same

as in Harwell. Indeed, Crocker specifically rejected the argument Garry makes:

“Mere awareness of a claim or suit does not impose a duty on the insurer to

defend under the policy.” Crocker, 246 S.W.3d at 608. Thus, while Garry has

identified a distinction between this case and Harwell, it is a distinction without

a difference.

      Next, Garry repeatedly identifies Mark as a “named insured”—though, as

we have noted, this contention has no support in the record—in an apparent

effort to distinguish this case from Weaver, Harwell, and Crocker, all of which

concerned omnibus or additional insureds. Even assuming Mark was a named

insured, the result would be the same. In Crocker, the supreme court held that

even an additional insured who does not know he is an additional insured and

has no knowledge of the policy’s terms and conditions is not entitled to

                                        13
coverage until he requests a defense. Id. at 605, 610. If an additional insured

who has no knowledge of the policy must comply with its conditions in order

to invoke coverage, then certainly compliance will be required of a named

insured, who is assumed to have read the policy and is charged by law with

knowledge of its contents. See Roland v. Transamerica Life Ins. Co., 570 F.

Supp. 2d 871, 880 (N.D. Tex. 2008) (“In Texas an insured has a duty to read

the insurance policy and is charged with knowledge of its provisions.”).

2.    Prejudice

      Finally, Garry argues that State and County cannot show that it was

prejudiced by Mark’s failure to notify it of Garry’s suit because it had actual

knowledge of the suit.3 An insured’s failure to timely notify its insurer of a

claim or suit does not defeat coverage if the insurer was not prejudiced by the

delay. PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630, 636–37 (Tex. 2008);

see also Prodigy Commc’ns. Corp. v. Agric. Excess & Surplus Ins. Co., No. 06-

0598, 2009 WL 795530, at *7 (Tex. Mar. 27, 2009) (extending rule to claims-

made policy where prompt-notice condition was not an essential part of the

bargained-for exchange under the policy).




      3
       … State and County did not directly address prejudice in its motion for
summary judgment in the trial court or in its brief in this court. Garry’s
appellate argument regarding prejudice consists of a single sentence.

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      An insurer’s actual knowledge of a claim or suit does not preclude a

showing of prejudice as a matter of law. In Liberty Mutual Insurance Co. v.

Cruz, the supreme court held that “failure to comply with the insurance policy

notice provision by not providing notice of suit until after a default judgment is

final, when the insurer does not otherwise have actual knowledge of the suit,

prejudices the insurer as a matter of law and relieves the insurer of liability

under the policy.” 883 S.W.2d 164, 165 (Tex. 1993) (emphasis added); see

also Harwell, 896 S.W.2d at 174 (holding Harwell’s failure to notify State Farm

of the suit against Hubbard’s estate prejudiced State Farm as a matter of law).

But in Crocker—without mentioning Cruz—the supreme court indicated that

even if an insurer has actual knowledge of a suit against its insured, the insurer

is not precluded from showing prejudice as a matter of law: “The question . . .

is . . . whether National Union . . . should be estopped to deny coverage

because it was aware that Morris had been sued and served and had ample

time to defend him. The answer must be ‘no.’” 246 S.W.3d at 609; see also

Md. Cas. Co. v. Am. Home Assur. Co., 277 S.W.3d 107, 117 n.19 (Tex.

App.—Houston [1st Dist.] 2009, pet. filed) (recognizing Crocker’s implicit

overruling of the “actual knowledge of suit” language in Cruz). Thus, under

Crocker, the fact that State and Country had actual knowledge of Garry’s suit

against Mark does not preclude proof of prejudice as a matter of law.

                                       15
      The question, then, is whether State and County proved prejudice as a

matter of law. For the answer, we turn again to Crocker. The supreme court

distinguished between late notice, as in PAJ, and no notice, as in Crocker and

the case before us: “In the pending case, however, the additional insured’s

notice was not merely late; it was wholly lacking. PAJ’s notice was tardy;

Morris’s was nonexistent.” Crocker, 246 S.W.3d at 609. The court further

stated that National Union was “obviously prejudiced in the sense that it was

exposed to a $1 million judgment.” Id. After receiving the supreme court’s

answers to its certified questions, the fifth circuit reversed and remanded with

instructions to render a take-nothing judgment in favor of National Union,

holding,

      It is clear from the opinion of the Texas Supreme Court that,
      because Morris never gave National Union any notice of the suit,
      never complied with the National Union policy’s relevant notice
      provisions, never furnished it copies of any relevant papers as
      required by the policy, and never in any manner requested a
      defense from National Union, that National Union owed no duty to
      defend Morris, or to sua sponte notify him that its policy covered
      him, and was entitled to rely on its policy provisions precluding
      coverage on the basis of such noncompliance.

Crocker v. Nat’l Union Fire Ins. Co., 526 F.3d 240, 241 (5th Cir. 2008) (per

curiam).

      In the pending case, as in Crocker, Mark’s notice is not merely late; it is

wholly lacking. Just as National Union’s actual knowledge of the suit against

                                      16
Morris did not preclude proof of prejudice, State and County’s actual knowledge

of the suit against Mark does not preclude proof of prejudice. And just as

National Union was “obviously” prejudiced by the rendition of a $1 million

judgment against Morris, State and County was prejudiced by the $650,000

judgment rendered against Mark. We hold that Mark’s failure to comply with

the policy’s notice-of-suit provision prejudiced State and County as a matter of

law.

       Because Mark never gave State and County any notice of the suit, never

complied with the State and County’s policy’s relevant notice provisions, never

furnished it copies of any relevant papers as required by the policy, and never

in any manner requested a defense from State and County, State and County

owed no duty to defend Mark, was prejudiced by the default judgment Garry

took against Mark, and was entitled to rely on its policy provisions precluding

coverage on the basis of such noncompliance. We therefore hold that the trial

court did not err by granting a traditional summary judgment in State and

County’s favor, and we overrule Garry’s second issue.

                                   Conclusion

       Having overruled Garry’s second issue, we do not reach his first issue, in

which he argues that the trial court erred by denying his own motion for

summary judgment, nor his third issue, in which he argues that the trial court

                                       17
erred by granting State and County’s no-evidence motion. See Tex. R. App. P.

47.1. We affirm the trial court’s judgment.




                                          ANNE GARDNER
                                          JUSTICE

PANEL: GARDNER, WALKER, and MEIER, JJ.

DELIVERED: June 11, 2009




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