
In The

 
Court of Appeals


Ninth District of Texas at Beaumont

 
____________________


NO. 09-02-072 CV

____________________


ATOFINA PETROCHEMICALS, INC., Appellant


V.


EVANSTON INSURANCE COMPANY, Appellee




On Appeal from the 60th District Court
Jefferson County, Texas

Trial Cause No. B-163,124-A




OPINION
	A Triple S Industrial Corporation employee was working at the FINA Oil and
Chemical Company (now ATOFINA Petrochemicals, Inc.) (1) Port Arthur refinery when he
drowned in a tank filled with fuel oil.  His relatives sued ATOFINA.  Admiral Insurance
Company, the general liability carrier under the contract between ATOFINA and Triple
S, tendered its policy limits of $1,000,000.  ATOFINA also claimed insurance coverage
as an additional insured under a commercial umbrella liability policy issued to Triple S by
Evanston Insurance Company (the "excess insurance policy").  Evanston denied
ATOFINA's claim.  ATOFINA settled the wrongful death litigation for $6.75 million, and
has sued Evanston to recover $5.75 million  from the excess insurance policy.  The trial
court granted summary judgment in favor of Evanston and denied a motion for summary
judgment filed by ATOFINA.  ATOFINA appeals, asking this court to hold Evanston
liable for the cost of the settlement of the wrongful death litigation. 
	When both sides move for final summary judgment and the trial court grants one
motion and denies the other, as occurred here, the losing party may appeal both rulings. 
The appellate court then considers both motions for final summary judgment.  See
Commissioners Court of Titus County v. Agan, 940 S.W.2d 77, 81 (Tex. 1997).  The
appellate court determines the judgment that should have been entered by the trial court. 
See id.  Here the two motions essentially involve opposing views of the terms of the
Evanston insurance policy and of the contract between Triple S and ATOFINA.  We
consider both parties' motions in determining the judgment that should be entered.  
	The Evanston insurance policy issued to Triple S defines an insured as including the
following:

	A person or organization for whom you have agreed to provide
insurance as is afforded by the policy; but that person or organization
is an insured only with respect to operations performed by you or on
your behalf, or facilities owned or used by you. 

We first note Evanston's argument that the death did not occur "with respect to operations
performed" by Triple S, and that ATOFINA therefore is not an insured because of the
second clause of the quoted definition.  We reject this argument.  The death occurred while
the Triple S employee was performing work for Triple S on a project for ATOFINA, and
so occurred "with respect to operations performed by" Triple S.  See Highland Park
Shopping Village v. Trinity Universal Ins. Co., 36 S.W.3d 916, 918 (Tex. App.--Dallas
2001, no pet.). 
	Evanston also argues that, pursuant to the contract between ATOFINA and Triple
S, ATOFINA is not entitled to insurance coverage beyond the scope of the indemnification
provision.  Evanston argues that Triple S agreed to indemnify or "hold [ATOFINA] . . .
harmless . . . , except to the extent that any such loss is attributable to the concurrent or
sole negligence, misconduct, or strict liability of [ATOFINA]."
	ATOFINA is not claiming under the indemnity provision, but instead relies on a
provision in the Triple S / ATOFINA contract requiring Triple S to list ATOFINA as an
additional insured on Triple S's insurance policies.  Specifically, a contract exhibit (2)
requires that (a) Triple S obtain comprehensive general liability insurance and excess
liability insurance, among other policies, (b) the comprehensive policy include coverage
for Triple S's indemnity obligations, and (c) a certificate be furnished to ATOFINA listing
ATOFINA as an additional insured on Triple S's insurance policies. (3) 
	As we interpret the Triple S / ATOFINA contract, Triple S agreed to obtain
insurance for ATOFINA, but the agreement to purchase insurance was not limited to
insuring only the indemnity obligation.  If a party agrees to provide liability insurance
coverage for another solely to support an indemnity obligation, the insurance requirement
is limited to the indemnity liability.  See generally Emery Air Freight Corp. v. General
Transp. Sys., Inc., 933 S.W.2d 312, 315 (Tex. App.--Houston [14th Dist.] 1996, no writ.). 
But where the additional insured provision stands separately from the indemnity provision,
and is essentially a free-standing insurance purchasing requirement, the scope of the
insurance requirement is not limited by the indemnity clause.  See Getty Oil Co. v.
Insurance Co. of N. Am., 845 S.W.2d 794, 804 (Tex. 1992); see also Certain
Underwriters at Lloyd's  London v. Oryx Energy Co., 142 F.3d 255, 260 (5th Cir. 1998). 
	The contractual requirement that the insurance to be obtained by Triple S include
insurance coverage for the indemnity obligation does not exclude other excess insurance
coverage.  See St. Paul Mercury Ins. Co. v. Lexington Ins. Co., 78 F.3d 202, 206-07 (5th
Cir. 1996) (applying Texas law); El Paso Elec. Co. v. Safeway Stores, Inc., 257 S.W.2d
502, 506 (Tex. Civ. App.--El Paso 1953, writ ref'd n.r.e.).  In this context the word
"including" means "as a part of," or "in addition to." Here, "include" is a term of
enlargement.  See Black's Law Dictionary 763 (6th Ed. 1990).    
	We conclude the insurance purchasing requirement clause in the Triple S /
ATOFINA contract was not merely in support of the indemnity provision, but rather
required Triple S to provide insurance for ATOFINA to the extent Triple S had insurance
coverage; the indemnity insurance requirement was in addition to, not exclusive of, other
coverage under the excess policy.  Because ATOFINA required by contract that Triple S
name ATOFINA as an additional insured on Triple S's comprehensive liability and excess
liability policies, and because Evanston's policy defines an insured as including a person
or organization for whom Triple S agreed to provide insurance, ATOFINA is an insured
under the Evanston policy, and the scope of the policy is not limited by the indemnity
agreement in the Triple S / ATOFINA contract.    

	Evanston also contends summary judgment was proper because (1) the amount of
the settlement in the relatives' suit against ATOFINA was greater than the case would have
been worth at trial, and (2) the settlement included punitive damages, for which Evanston
is not liable under the policy.  Evanston declined coverage and refused to defend
ATOFINA in the wrongful death litigation.  Generally, when an insurer denies a defense
to its insured and the insured has a verdict rendered against it or enters into a settlement
agreement, the insurer may not contest the liability of the insured or the amount of the
verdict or settlement.  See Western Alliance Ins. Co. v. Northern Ins. Co. of New York,
176 F.3d 825, 830 (5th Cir. 1999); see also Enserch Corp. v. Shand Morahan & Co., 952
F.2d 1485, 1493, 1495-96 (5th Cir. 1992). (Both of these cases cite Employers Casualty
Co. v. Block, 744 S.W.2d 940,  943 (Tex. 1988), overruled on other grounds by State
Farm Fire and Cas. Co. v. Gandy, 925 S.W.2d 696, 714 (Tex. 1996)).   We hold the
insurer may not contest the amount of the settlement under these circumstances, absent
fraud or other illegality not asserted here.  The insurer may, however, argue preserved
defenses to coverage, i.e. that punitive damages are not covered by the policy.  See
generally Western Alliance Ins. Co., 176 F.3d at 830; Quorum Health Resources, L.L.C.
v. Maverick County Hosp. Dist., 308 F.3d 451, 468-69 (5th Cir. 2002)("Even if an insurer
wrongfully refuses to defend, it still has the right to assert the policy defense of
noncoverage and will only be liable to indemnify the insured up to the policy limits.").
	Evanston argues public policy would be offended by insurance coverage protecting
a wrongdoer from an obligation to pay punitive damages.  See Hartford Cas. Ins. Co. v.
Powell, 19 F.Supp.2d 678, 694 - 95 (N.D. Tex. 1998)(citing Texas cases).  The settlement
agreements here, however, specifically exclude settlement of the punitive damage claims. 
One agreement provides as follows:  
	All sums paid pursuant to this Release and Indemnity constitute damages on
account of personal injuries or sickness arising from physical injuries that
resulted from the allegations made in the above-referenced lawsuit and no
portion of the proceeds paid under this Release and Indemnity represent
exemplary or punitive damages nor pre-judgment interest.

The other settlement agreement also expressly excludes punitive damages, with the
following language:  
	   THE TOTAL SETTLEMENT OF $2,700,000 TO THE ESTATE OF
MARY JULIA JONES PAID BY DEFENDANT DOES NOT INCLUDE
ANY PUNITIVE DAMAGES AND IS INTENDED TO REPRESENT
PERSONAL INJURY DAMAGES WITHIN THE MEANING OF IRC §
104(A)(2) RESULTING FROM THE ALLEGED WRONGFUL DEATH OF
MATTHEW TODD JONES.  IN FACT, THIS CLAIM IS LIMITED TO
THE WRONGFUL DEATH CLAIM OF A PARENT FOR AN ADULT
CHILD.  

A settlement agreement is a contract.  Old Republic Ins. Co. v. Fuller, 919 S.W.2d 726,
728 (Tex. App.--Texarkana 1996, writ denied).  The settlements agreements at issue are
unambiguous.   See DeWitt County Elec. Co-op., Inc. v. Parks, 1 S.W.3d 96, 100 (Tex.
1999) (footnote omitted) ("When a court concludes that contract language can be given a
certain or definite meaning, then the language is not ambiguous, and the court is obligated
to interpret the contract as a matter of law.").  The settlements did not include any
payment for a release of punitive damages.  
	We hold ATOFINA is an insured under the excess insurance policy issued by
Evanston, and was entitled to insurance coverage from Evanston in the wrongful death
litigation.  The judgment of the trial court is reversed.  We grant judgment in favor of
ATOFINA for recovery of the remaining $5.75 million cost of its settlement of the
wrongful death litigation from Evanston.  
	In addition, ATOFINA seeks recovery of penalties, authorized by Tex. Ins. Code
Ann. art. 21.55, §§ 3(f), 6 (Vernon Supp. 2003), and attorney's fees.  Under article
21.55, if the insurer delays payment for more than sixty days from the date it received all
the information reasonably requested and required, the insurer must pay the claim along
with  the statutory penalty.  Evanston does not argue that it met the statutory deadline, but
contends that its defenses were raised in good faith and such penalties are not applicable. 
An insurer's failure to comply with the requirements of article 21.55 will result in
imposition of the statutory penalties, even if the delay in payment is in "good faith."  See
Cater v. United Servs. Auto. Ass'n, 27 S.W.3d 81, 84 (Tex. App.--San Antonio 2000, pet.
denied) (citing Higginbotham v. State Farm Mut. Auto. Ass'n, 103 F.3d 456 (5th Cir. 1997)
and Oram v. State Farm Lloyds, 977 S.W.2d 163 (Tex.App.-Austin 1998 no pet.)).  See
also Republic Underwriters Ins. Co. v. Mex-Tex, Inc., No 07-01-00396-CV, 2003
Tex.App. LEXIS 2396 at *21 n.7 (Tex. App.--Amarillo Mar. 19, 2003, no pet. h).
Regarding attorney's fees, the trial court had before it competing affidavits regarding the
reasonableness of ATOFINA's attorney's fees, and ATOFINA objected to Evanston's
affidavit.  Because it ruled for Evanston, the trial court had no reason to rule on either
ATOFINA's objection or the reasonableness of attorney's fees.  
	We remand the case to the trial court  for entry of judgment in favor of ATOFINA,
for determination of the amount of the statutory penalties and attorney's fees, and for
further proceedings consistent with this opinion.  
	REVERSED AND REMANDED.  
								PER CURIAM

Submitted on February 4, 2003
Opinion Delivered April 10, 2003

Before McKeithen, C.J., Burgess and Gaultney, JJ.  
1. Throughout this opinion we refer to FINA, ATOFINA's predecessor, and
ATOFINA, without distinction, as ATOFINA.
2. The contract provides that "[t]o the extent that there is any conflict between the
provisions of this Contract and the Exhibits, the provisions of the Exhibits shall prevail." 
3. The exhibit excepts the workers' compensation policy.  The exhibit provides
further that the extension of coverage to ATOFINA as an additional insured would not
apply to an obligation for which ATOFINA agreed to indemnify Triple S.  Evanston does
not argue that ATOFINA agreed to indemnify Triple S for any obligation at issue here.  
