     Case: 19-10385      Document: 00515314414         Page: 1    Date Filed: 02/19/2020




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                         United States Court of Appeals
                                                                                  Fifth Circuit


                                      No. 19-10385
                                                                                FILED
                                                                         February 19, 2020
                                                                           Lyle W. Cayce
LANDMARK AMERICAN INSURANCE COMPANY,                                            Clerk

              Plaintiff - Appellee

v.

LONERGAN LAW FIRM, P.L.L.C.; ET AL

              Defendants

CHRISTOPHER DILLON SNELL; BRIAN LOCKHART; IMPROMPTU
COMMUNICATIONS, L.L.C.; TODD CRAIN; JAMES L. SPRINGER, JR.,

              Intervenor Defendants - Appellants




                   Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 4:17-CV-278


Before JOLLY, SMITH, and STEWART, Circuit Judges.
PER CURIAM:*
       This appeal follows the district court’s grant of summary judgment in
favor of Landmark American Insurance Company (“Landmark”). For the
following reasons, we REVERSE and REMAND.


       * 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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. 19-10385


                                   I. Background
      Gaylene Lonergan is a Texas lawyer. In 2015, a group of Investors 1 hired
her to help close a real estate deal. After the deal turned out to be a scam, the
Investors sought to recoup their losses by suing Lonergan in Texas state court
for attorney malpractice. 2 At the time, Lonergan held a professional liability
insurance policy with Landmark. 3 Under the “claims-made and reported”
policy (“Policy”), Landmark agreed to defend and indemnify Lonergan provided
that a “Claim” was made against her during the “Policy Period.” 4 The parties
agree that the Policy Period applicable here is May 8, 2015 to May 8, 2016. The
Investors’ state court suit against Lonergan, which was filed in July 2015, was
a Claim made against her during the Policy Period. Landmark refused to
defend Lonergan in the suit, which in 2017 proceeded to a bench trial. The
state trial court ruled in the Investors’ favor, awarding them a money
judgment against Lonergan.
      This suit was filed by Landmark in March 2017—while the state court
suit was pending—in federal district court. Landmark sought a declaration
that it did not have a duty to defend Lonergan under the Policy because, among
other things, she failed to “report” the Claim to it during the Policy Period, as



      1    The “Investors” include Christopher Snell; Brian Lockhart; Impromptu
Communications, L.L.C.; Todd Crain; and James L. Springer, Jr. The district court referred
to the collective as “Intervenor Defendants.” They are now the appellants.

      2  Also named as a defendant in the state suit was Lonergan Law Firm, P.L.L.C. The
firm also is a defendant in this suit.

      3Landmark has no actual employees. It is a subsidiary of RSUI Group, Inc. RSUI’s
employees serve as Landmark’s workforce.

      4   The Policy defines a “Claim” as “a written demand for monetary or non-monetary
relief received by the Insured during the Policy Period . . . .”

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                                  No. 19-10385
she was obligated to do by the Policy. The Investors argued that Lonergan in
fact reported the Claim in April 2016 as part of her application to renew her
insurance policy with Landmark. In support, they point to a “Claim
Supplement” attached to the application. The relevant portion of the Claim
Supplement reads as follows:
            September 2015 – Suit filed against Firm (as title
            agent), Title Company, Borrower(s), and Guarantor by
            Lender to the transaction – Regarding non-payment of
            loan by Borrower; alleged fraud and negligence –
            Discovery proceeding with Gaylene Rogers Lonergan’s
            deposition being taken; Settlement talks are in process
            and Borrower is in process of paying outstanding
            amounts due Lender which will result in full release of
            all parties with no further liability.
Landmark does not contest the district court’s finding that this note contained
“a concise synopsis of the underlying dispute” between the Investors and
Lonergan, i.e., the “Claim” that Lonergan was required to report to trigger
Landmark’s obligation to defend and indemnify her under the Policy.
Nevertheless, Landmark argues that the Claim Supplement was insufficient
to satisfy Lonergan’s obligation to “report” the Claim to Landmark. The district
court agreed and awarded summary judgment to Landmark. This appeal by
the Investors followed.


                           II. Standard of Review
      We review a district court’s grant of a motion for summary judgment de
novo. Jackson Women’s Health Org. v. Dobbs, 945 F.3d 265, 270 (5th Cir. 2019).
“The court shall grant summary judgment if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” FED. R. CIV. P. 56(a).



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                                        No. 19-10385
                                        III. Analysis
      Under Texas law, 5 “courts are to construe insurance policies ‘using
ordinary rules of contract interpretation.’” Nassar v. Liberty Mut. Fire Ins. Co.,
508 S.W.3d 254, 257 (Tex. 2017) (quoting Tanner v. Nationwide Mut. Fire Ins.
Co., 289 S.W.3d 828, 831 (Tex. 2009)). “Unless the policy dictates otherwise,
[courts] give words and phrases their ordinary and generally accepted
meaning, reading them in context and in light of the rules of grammar and
common usage.” Id. at 258 (quoting RSUI Indem. Co. v. The Lynd Co., 466
S.W.3d 113, 118 (Tex. 2015)). The parties agree that the Policy does not define
“reported.” Therefore, the plain meaning controls.
      The Investors argue that the plain meaning of “reported” is to have
provided information. They further argue that the Claim Supplement provided
the relevant information here—facts of the Claim by the Investors against
Lonergan—and therefore the district court erred by holding that Lonergan
failed to report the Claim as required by the Policy. Landmark counters that
the plain meaning of “reported” must be informed by the Policy’s “Notice of
Claim” provision, which obligates policyholders to “immediately send copies”
of “demands, notices, summonses or legal papers” to its claims department.
Because the Claim Supplement was sent to the underwriting department, not
the claims department, Landmark argues that she could not have “reported”
the Claim as required by the Policy.
      We agree with the Investors. Landmark does not dispute that it received
the Claim Supplement during the Policy Period. Lonergan therefore
“reported”—provided information of—the Claim to Landmark as required by
the Policy.




      5   The parties agree that Texas law applies in this diversity case.
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                                  No. 19-10385
      Although the Policy does include certain “Notice of Claim” conditions,
the Supreme Court of Texas has distinguished an insured’s material obligation
to report a claim from an insured’s immaterial obligation to comply with such
notice conditions. Prodigy Commc’ns Corp. v. Agric. Excess & Surplus Ins. Co.,
288 S.W.3d 374, 382 (Tex. 2009). While an insured’s breach of a material
reporting obligation relieves an insurer of its duty to defend and indemnify the
insurer, the same is not necessarily true when an insured breaches an
immaterial notice condition. See id. Instead, an insurer may be relieved of its
duty to defend and indemnify an insured who breaches an immaterial notice
condition only when the insurer shows that it was prejudiced by the breach.
See id.; E. Tex. Med. Ctr. Reg’l Healthcare Sys. v. Lexington Ins. Co., 575 F.3d
520, 529–30 (5th Cir. 2009) (“[N]otice of suit is an obligation that is subject to
the need to show prejudice.”) (discussing Prodigy, 288 S.W.3d at 381).
      Here, the district court never reached the question of whether Landmark
was prejudiced by Lonergan’s alleged failure to comply with the Policy’s notice
provisions because the court held that Lonergan failed to satisfy her reporting
obligation. Even though we hold that Lonergan reported her claim under the
Policy, we decline to reach the issue of whether she breached the Policy’s notice
conditions or whether any such breach may have prejudiced Landmark.


                                IV. Conclusion
      For the foregoing reasons, we REVERSE the judgment of the district
court granting summary judgment to Landmark and REMAND for
proceedings consistent with this opinion. We express no view or limitation on
the actions the district court should take on remand.




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