                                                                                    ACCEPTED
                                                                                03-15-00219-CV
                                                                                        5650209
                                                                     THIRD COURT OF APPEALS
                                                                                AUSTIN, TEXAS
                                                                           6/12/2015 9:28:01 AM
                                                                              JEFFREY D. KYLE
                                                                                         CLERK




                     CAUSE NO. 03-15-00219-CV               FILED IN
                                                     3rd COURT OF APPEALS
                                                         AUSTIN, TEXAS
                                                     6/12/2015 9:28:01 AM
               IN THE THIRD COURT OF          APPEALS JEFFREY D. KYLE
                                                             Clerk
                        AUSTIN, TEXAS


       HALLMARK SPECIALTY UNDERWRITERS, INC. and
    HALLMARK SPECIALTY INSURANCE COMPANY, Appellants
                         v.
       TEXAS MUTUAL INSURANCE COMPANY, Appellee

       From the 98th Judicial District Court, Travis County, Texas


BRIEF OF APPELLANTS HALLMARK SPECIALTY UNDERWRITERS, INC.
        and HALLMARK SPECIALTY INSURANCE COMPANY


                                       Wm. David Farmer
                                       State Bar No. 06826470
                                       Chad W. Schreiber
                                       State Bar No. 24085732
                                       CURNEY, FARMER, HOUSE &
                                       OSUNA, P.C.
                                       411 Heimer Road
                                       San Antonio, Texas 78232-4854
                                       Telephone: (210) 377-1990
                                       Facsimile: (210) 377-1065
                                       Email: wdfarmer@cfholaw.com
                                       Email: cschreiber@cfholaw.com

                                       ATTORNEYS FOR APPELLANTS


                                    ORAL ARGUMENT IS REQUESTED
                           IDENTITIES OF PARTIES AND COUNSEL
        Pursuant to Rule 38.1(a), Tex. R. App. P., Appellants Hallmark Specialty

Underwriters and Hallmark Specialty Insurance Company certify that the

following is a complete list of all parties and counsel:

        (A)     Appellants:                       Hallmark Specialty Underwriters,
                (Defendants in Trial Court)       Inc. and Hallmark Specialty
                                                  Insurance Company

                Trial and Appellate Counsel:      Wm. David Farmer
                                                  State Bar No. 06826470
                                                  Chad W. Schreiber
                                                  State Bar No. 24085732
                                                  CURNEY, FARMER, HOUSE,
                                                  & OSUNA, P.C.
                                                  411 Heimer Road
                                                  San Antonio, Texas 78232
                                                  Telephone: (210) 377-1990
                                                  Facsimile: (210) 377-1065

        (B)     Appellee:                         Texas Mutual Insurance Company
                (Plaintiff in the Trial Court)

                Trial Counsel:                    R. Scott Placek
                                                  State Bar No. 00784769
                                                  Scott Arnold
                                                  State Bar No. 00785669
                                                  Jonathan Chaltain
                                                  State Bar No. 24079787
                                                  Arnold & Placek, PC
                                                  203 East Main Street, Suite 201
                                                  Round Rock, Texas 78664
        Telephone:                                (512) 341-7044
        Facsimile:                                (512) 341-7921




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                     Page 2 of 40
                                        TABLE OF CONTENTS
IDENTITIES OF PARTIES AND COUNSEL ..................................................... 2
TABLE OF CONTENTS ........................................................................................ 3
INDEX OF AUTHORITIES ................................................................................... 5
STATEMENT OF THE CASE ............................................................................... 8
STATEMENT REQUESTING ORAL ARGUMENT ......................................... 9
RECORD REFERENCES……………………………………………………….. 9
ISSUE PRESENTED ............................................................................................. 10
STATEMENT OF FACTS .................................................................................... 11
STANDARD OF REVIEW ................................................................................... 13
SUMMARY OF THE ARGUMENT ................................................................... 14
ARGUMENT .......................................................................................................... 15
1.       The Duty of Defense in Texas ..................................................................... 15

2.       Appellants' Cross-Motion For Summary Judgment Established that
         Appellee's Duty of Defense Was Triggered ............................................... 17

             A. The Underlying Petition explicitly plead that Guzman was an
                employee of Absolute. ....................................................................... 18

             B. The Underlying Petition contained factual allegations sufficient to
                establish that Guzman’s injury potentially arose out of and in the
                course of Guzman’s employment with Absolute. ........................... 19

3.       Appellee's Arguments Concerning the Duty of Defense Misapply and
         Misinterpret Texas Law .............................................................................. 26

             A. The Underlying Petition’s failure to explicitly allege an injury in
                the course of employment does not negate Appellee’s duty to
                defend.................................................................................................. 27




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                                                       Page 3 of 40
             B. The inference that Guzman was injured in the course of his
                employment is reasonable as it flows logically from the factual
                allegations contained within the Underlying Petition. ................... 32

CONCLUSION AND PRAYER FOR RELIEF.................................................. 37
CERTIFICATE OF SERVICE ............................................................................ 39
CERTIFICATE OF COMPLIANCE .................................................................. 39
APPENDIX ............................................................................................................. 40




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                                                     Page 4 of 40
                                        INDEX OF AUTHORITIES

Cases
Allstate Ins. Co. v. Hallman,
  159 S.W.3d 640 (Tex. 2005) ......................................................................... 22, 32
Argonaut Sw. Ins. Co. v. Maupin,
  500 S,W.2d 633 (Tex. 1973) ................................................................................18
Canal Ins. Co. v. XMEXTransp., LLC,
  No. EP-13-CV-156-KC, 2014 WL 4385941 (W.D. Tex. Sept. 4, 2014) ...... 29, 30
Centennial Ins. Co. v. Bailey,
  No. 05-98-00007-CV, 2000 WL 1515158 (Tex. App.—Dallas Oct. 12, 2000, no
  pet.) ................................................................................................................ 29, 30
City of Dallas v. Csaszar,
  1999 WL 1268076 (Tex. App.—Dallas Dec. 30, 1999, pet. denied)...... 23, 24, 30
D.R. Horton-Tex., Ltd. v. Markel Int'l Ins. Co.,
  300 S.W.3d 740 (Tex. 2009) ................................................................................15
Deatherage v. Int'l Ins. Co.,
  615 S.W.2d 181 (Tex. 1981) ................................................................................20
Emp'rs Mut. Cas. Co. v. Northern Ins. Co.,
  No. 3:08-CV-1498-G, 2010 WL 850243 (N,D. Tex. Mar. 11, 2010) ........... 25, 31
Essex Ins. Co. v. Hines,
  358 Fed. Appx. 596 (5th Cir. 2010) .............................................................. 31, 32
Fidelity & Guar. Ins. Inc. v. McManus,
  633 S.W.2d 787 (Tex. 1982) ................................................................... 16, 29, 36
FM Props. Operating Co. v. City of Austin,
  22 S.W.3d 868 (Tex. 2000) ..................................................................................13
Gehan Homes, Ltd. v. Emp'rs Mut. Cas. Ins. Co.,
  146 S.W.3d 833 (Tex. App.—Dallas 2004, pet. denied) ........................ 19, 22, 31
GEICO Gen. Ins. Co. v. Austin Power, Inc.,
  357 S.W.3d 821 ....................................................................................... 22, 28, 31
Gen. Star Indent. Co. v. Gulf Coast Marine Assocs., Inc.,
  252 S.W.3d 250 (Tex. App.—Houston [14th Dist.] 2008, pet. denied) ....... 26, 31
Gilbane Guilding Co. v. Admiral Ins. Co.,
  664 F.3d 589 (5th Cir. 2011) ......................................................................... 33, 34
Gomez v. Allstate Tex. Lloyds,
  241 S.W.3d 196 (Tex. App—Fort Worth 2007, no pet.) .....................................26
Gore Design Completions, Ltd. v. Hartford Fire Ins. Co.,
  538 F.3d 365 (5th Cir. 2008) ......................................................................... 17, 29




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                                                           Page 5 of 40
GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church,
  197 S.W.3d 305 (Tex. 2006) ........................................................................ passim
Gulf Coast Marine Assocs., Inc.,
  252 S.W.3d 450 ............................................................................................. 25, 31
Heyden Newport Chem. Corp. v. Southern Gen. Ins. Co.,
  387 S.W.2d 22 (Tex. 1965) .......................................................................... passim
Hochheim Prairie Cas. Ins. Co. v. Appleby,
  255 S.W.3d 146 (Tex. App.—San Antonio 2008, pet. dism'd)............................26
Indian Harbor Ins. Co. v. KB Lone Star, Inc.,
  No. H-ll-CV-1846, 2012 WL 3866858 (S.D. Tex. Sept. 5, 2012) .......................31
Jones v. Strauss,
  745 S.W.2d 898 (Tex. 1988) ................................................................................13
King v. Dallas Fire Ins. Co.,
  85 S.W.3d 185 (Tex. 2002) ..................................................................... 15, 16, 36
Liberty Mut. Ins. Co. v. Graham,
  473 F.3d 596 (5th Cir. 2006) ................................................................................25
Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Merchants Fast Motor Lines,
  939 S.W.2d 139 (Tex 1997) .................................................................................17
Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Nat'l Convenience Stores, Inc.,
  891 S.W.2d 20 (Tex. App.—San Antonio 1994, no writ)....................................24
Nautilus Ins. Co. v. Nevco Waterproofing, Inc.,
  Civ. A. H-04-2986, 2005 WL 3088608 (S.D. Tex. Jul. 11, 2005) ................ 27, 28
Provident Life & Accident Ins. Co. v. Knott,
  128 S.W.3d 211 (Tex. 2003) ................................................................................13
St. Paul Fire & Marine Ins. Co. v. Green Tree Financial Corp.-Tex.,
  249 F.3d 389 (5th Cir. 2001) ................................................................................27
St. Paul Ins. Co. v. Tex. Dep't of Transp.,
  999 S.W.2d 881 (Tex. App.—Austin 1999, pet. denied) .............................. 16, 28
Stumph v. Dallas Fire Ins. Co.,
  34 S.W.3d 722 (Tex. App.—Austin 2000, no pet.)..............................................19
Texas Workers' Compensation Ins. Fund v. Rodriguez,
  953 S.W.2d 765 ............................................................................................. 20, 33
Texas Emp. Ins. Ass'n v. Andrews,
  110 S.W.2d 49 (Tex. Comm'n App. 1937).................................................... 20, 22
Tri-Coastal Contractors, Inc. v. Hartford Underwriters, Ins. Co.,
  981 S.W.2d 861 ....................................................................................................16
Trinity Univ. Ins. Co. v. Cowan,
  945 S.W.2d 819 (Tex. 1997) ......................................................................... 16, 36
Union Fire Ins. Co. of Pittsburgh, Pa. v. Merchants Fast Motor Lines, Inc.,
  939 S.W.2d 139 (Tex, 1997) ......................................................................... 16, 27


W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                                                    Page 6 of 40
Westport Ins. Corp. v. Atchley, Russell, Waldrop & Hlavinka, L.L.P,
 267 F. Supp. 2d 601 (E.D. Tex. 2003) .................................................................28

Rules
Tex. R. App. P. 38.1...............................................................................................2, 7
Tex. R. App. P. 39.1...................................................................................................8
Tex. R. App. P. 9.4 ...................................................................................................38
Tex. R. Civ. P. 166(a) ..............................................................................................13
Tex. R. Civ. P. 65 .....................................................................................................16




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                                                      Page 7 of 40
                                 STATEMENT OF THE CASE

        Pursuant to Rule 38.1(d) Tex. R. App. P., Appellants submit this Statement

of the Case. This case arises out of an action for declaratory judgment filed by

Appellee Texas Mutual Insurance Company, which sought a determination

regarding whether Appellee’s duty of defense under Policy No. SBP-0001227402

20130809, issued to Absolute Oil Field Services, LLC for the policy period of

08/09/13 to 08/09/14, was triggered as it relates to the following lawsuit: Cause

No. DC-14-149; Jose Guzman v. Romaine Llewelyn, et al.; in the 381st District

Court of Starr County, Texas (the “Underlying Lawsuit”). (CR at 3). Appellee and

Appellants subsequently filed cross motions for summary judgment concerning

whether Appellee’s duty of defense was triggered. (CR at 31, 92)

        On or about February 23, 2015, the Honorable Amy Clark Meachum signed

an Order under Cause No. D-1-GN-14-003789 granting summary judgment in

favor of Appellee and denying Appellants’ Cross-Motion for Summary Judgment.

(CR. at 178). Appellants filed their Notice of Appeal on April 6, 2015.




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                    Page 8 of 40
                                REQUEST FOR ORAL ARGUMENT

        Appellants make and file this Request for Oral Argument pursuant to

Rule 39.1, Tex. R. App. P. Oral argument would aid the decisional process in

allowing the parties to emphasize critical points in their arguments as well as to

provide clarification or elaboration on any issue of which the Court may request.

                                         RECORD REFERENCES

        The “Clerk’s Record” will be cited herein as follows:

        (CR at [pg.]).

        There is no Reporter’s Record that will be referenced in this appeal.




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                          Page 9 of 40
                                         ISSUE PRESENTED

    1. Did the Trial Court Err in Denying Appellant’s Cross-Motion for Summary
       Judgment and Granting Appellee’s Motion for Summary Judgment?




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                Page 10 of 40
                                    STATEMENT OF FACTS

          This appeal arises from a duty of defense insurance coverage lawsuit

concerning an event that occurred on or about November 30, 2013, at 285 Private

Road 7615, Devine, Medina County, Texas (the “property”) when Jose Guzman,

an alleged employee of Absolute Oil Field Services, LLC (“Absolute”), was shot

while present on the property. (CR at 3). Following this incident, Guzman filed

suit seeking damages for personal injury under Cause No. DC-14-149, styled Jose

Guzman v. Romaine Llewelyn, Rocky Hernandez, Absolute Oil Field Services,

LLC, and filed in the 381st Judicial District Court, Starr County, Texas (the

“Underlying Lawsuit”). (CR at 12). Guzman’s Original Petition (the “Underlying

Petition”) alleged that, at the time of the accident in question, Absolute maintained

its day-to-day operations on the property. (CR at 13). Moreover, the Underlying

Petition asserted that Romaine Llewelyn, Guzman’s direct supervisor, was present

on the property and was in charge of the activities being conducted on the property.

(CR at 13–14). The Underlying Pleading provided that Guzman was on Absolute’s

premises when Rocky Hernandez fired a shotgun at Guzman, striking him and

causing serious bodily injury. (CR at 14). At the time of Guzman’s injury, Guzman

plead that Llewelyn and Hernandez were both employees of Absolute and were

acting in the course and scope of their respective employment with Absolute. (CR

at 14).




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                    Page 11 of 40
        Hallmark insured Absolute under a commercial liability insurance policy

featuring Policy No. TXE300190-02 for the policy period of 08/08/13 to 08/08/14.

After the Underlying Lawsuit was filed and tendered to Hallmark, Hallmark

assumed the defense of Absolute under reservation of rights and continues to

defend Absolute at this time. Additionally, TMIC also insured Absolute under a

workers’ compensation/employer’s liability insurance policy featuring Policy No.

SBP-0001227402 20130809 for the policy period of 08/09/13 to 08/09/14 (the

“TMIC Policy”). (CR at 52).

        On or about September 12, 2014, Hallmark forwarded correspondence to

TMIC demanding that TMIC share in the defense of the mutual insured in the

Underlying Lawsuit and contribute those defense costs owed under the TMIC

Policy. Subsequently, TMIC filed its declaratory action seeking a determination

from the trial court that TMIC owed no duty of defense to Absolute under the

TMIC policy for those allegations made in the Underlying Lawsuit. (CR at 3).

TMIC then moved for Summary Judgment as to its duty of defense, and Hallmark

filed a Cross-Motion for Summary Judgment asserting that TMIC’s duty of

defense was triggered.            (CR at 31, 92). On or about February 23, 2015, the

Honorable Amy Clark Meachum granted TMIC’s Motion for Summary Judgment

and denied Hallmark’s Cross-Motion, leading to this appeal. (CR. at 178).




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                     Page 12 of 40
                                         STANDARD OF REVIEW

        An appellate court reviews a grant of summary judgment de novo, applying

the same standard as the district court. Provident Life & Accident Ins. Co. v. Knott,

128 S.W.3d 211, 215 (Tex. 2003). Summary judgment is appropriate only if no

genuine issue of material fact exists, and the moving party is entitled to judgment

as a matter of law. Id. The party with the burden of proof must prove it is entitled

to judgment by establishing each element of its claim or defense as a matter of law,

or by negating an element of a claim or defense of the opposing party as a matter

of law. Tex. R. Civ. P. 166(a). When, as is the case at present, both parties moved

for summary judgment and the trial court grants one motion and denies the other,

the appellate court may determine all questions presented. Jones v. Strauss, 745

S.W.2d 898, 900 (Tex. 1988). “The reviewing court should render the judgment

that the trial court should have rendered.” FM Props. Operating Co. v. City of

Austin, 22 S.W.3d 868, 872 (Tex. 2000).




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                    Page 13 of 40
                                 SUMMARY OF THE ARGUMENT

        The trial court erred in granting Appellee’s Motion for Summary Judgment

and denying Appellants’ Cross-Motion for Summary Judgment regarding whether

Appellee’s duty of defense under the TMIC Policy was triggered by those

allegations made in the Underlying Lawsuit because the Underlying Petition

alleged specifically that Guzman was an employee of Absolute and contained

sufficient factual allegations for the trial court to conclude that Guzman's injury

potentially arose out of and in the course of Guzman’s employment with Absolute

under the eight corners doctrine. In addition, in arguing that the duty of defense

under the TMIC Policy was not triggered, Appellee’s contentions misapplied

and/or misinterpreted Texas law as it relates to both the eight corners doctrine and

the duty of defense.




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                    Page 14 of 40
                                         ARGUMENT

        Appellant’s position in this case is that the trial court erred in granting

Appellee’s Motion for Summary Judgment as to Appellee’s duty of defense under

the TMIC Policy for those allegations made in the Underlying Lawsuit and in

denying Appellants’ Cross-Motion for Summary Judgment as to same. The critical

issue in this case concerns whether the Underlying Petition contained sufficient

factual allegations for the trial court to conclude under the eight corner’s doctrine

that the injury sustained by Guzman, at least potentially, arose out of and in the

course of his employment with Absolute as required under the TMIC Policy. D.R.

Horton-Tex., Ltd. v. Markel Int’l Ins. Co., 300 S.W.3d 740, 743 (Tex. 2009)

(requiring an insurer to defend in any lawsuit that “alleges and seeks damages for

an event potentially covered by the policy”) (emphasis added).

        1.      The Duty of Defense in Texas.

        Under Texas law, an insurer has two distinct and separate duties under a

liability insurance policy; (1) the duty to defend its insured in a lawsuit against

allegations that potentially state a claim within the policy coverage; and (2) the

duty to indemnify the insured as a result of any claim, judgment or settlement that

is actually covered by the policy. King v. Dallas Fire Ins. Co., 85 S.W.3d 185, 187

(Tex. 2002). The sole issue on appeal concerns whether Appellee owes a duty of

defense under the TMIC Policy for those allegations contained in the Underlying




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                    Page 15 of 40
Lawsuit and whether the trial court’s actions in denying Appellants’ Cross-Motion

for Summary Judgment and granting Appellee’s Motion for Summary Judgment

were in error.

        In determining whether the facts of any given case obligate the carrier to

provide a defense, Texas courts follow the “eight corners” rule (also known as the

“complaint allegation” rule), which requires the examining court to look strictly to

the factual allegations in the underlying pleading and the language of the policy

when determining whether a defense is owed. King, 85 S.W.3d at 187; Trinity

Univ. Ins. Co. v. Cowan, 945 S.W.2d 819, 821 (Tex. 1997); Fid & Guar. Ins. Inc.

v. McManus, 633 S.W.2d 787, 788 (Tex. 1982). The defense obligation is

determined by construing the latest amended pleading. St. Paul Ins. Co. v. Tex.

Dep't of Transp., 999 S.W.2d 881, 883 (Tex. App.—Austin 1999, pet. denied)

(citing Tex. R. Civ. P. 65) (stating that the amended pleading takes the place of the

original).

        In assessing the factual allegations within an underlying pleading, the

allegations are considered without regard to their truth or falsity and without

reference to extraneous facts. GuideOne Elite Ins. Co. v. Fielder Rd. Baptist

Church, 197 S.W.3d 305, 308 (Tex. 2006). Extrinsic evidence cannot be

considered when evaluating whether a defense obligation is triggered. GuideOne,

197 S.W.3d at 308; see generally Tri-Coastal Contractors, Inc. v. Hartford




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                    Page 16 of 40
Underwriters, Ins. Co., 981 S.W.2d 861 (Tex. App.—Houston [1st Dist.] 1998,

pet. denied). The Texas Supreme Court has continually reaffirmed this well-

established rule, hinting that only a limited and narrow exception applies, which is

not present in this case, GuideOne, 197 S.W.3d at 308.

        The Supreme Court of Texas has explained the eight corners rule as it relates

to the duty of defense in the following way:

        Where the petition does not state facts sufficient to clearly bring the
        case within or without the coverage, the general rule is that the insurer
        is obligated to defend if there is, potentially, a case under the
        complaint within the coverage of the policy. Stated differently, in case
        of doubt as to whether or not 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. Nat'I Union Fire Ins. Co. of
        Pittsburgh, Pa. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139,
        141 (Tex, 1997) (quoting Heyden Newport Chem. Corp. v. Southern
        Gen. Ins. Co., 387 S.W.2d 22, 26 (Tex. 1965)).

        In other words, Texas courts must interpret the allegations in an underlying

petition liberally and resolve in the insured's favor any doubts regarding whether

the allegations trigger a defense by the insurer. Id. To put it plainly, “[w]hen in

doubt, defend.” Gore Design Completions, Ltd. v. Hartford Fire Ins. Co., 538 F.3d

365, 369 (5th Cir. 2008).

        2.      Appellants’ Cross-Motion For Summary Judgment Established
                that TMIC's Duty of Defense Was Triggered

    Initially, Appellants’ seek to establish that Appellants were entitled to summary

judgment under Texas law regarding whether Appellee’s duty of defense was


W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                       Page 17 of 40
triggered under the TMIC Policy. As was set forth in Appellants’ Cross-Motion for

Summary Judgment, Appellants were entitled to summary judgment because: (1)

the Underlying Petition alleges specifically that Guzman was an employee of

Absolute; and (2) the Underlying Petition contains sufficient factual allegations to

allow the Court to infer Guzman's injury potentially arose out of and in the course

of employment under the eight corners doctrine.

            A. The Underlying Petition explicitly plead that Guzman was an
               employee of Absolute.

        Under the TMIC Policy, in order for Appellee’s duty of defense to be

triggered, the Underlying Petition was required to contain factual allegations that

established Guzman's status as an employee of Absolute. (CR at 66, 67). In the

present case, the factual allegations contained within the Underlying Petition

explicitly plead in the alternative that Guzman was an employee of Absolute. (CR

at 13). Under the eight corners doctrine, the trial court was required to take this

allegation as true for the purposes of assessing Appellee’s duty of defense. See

GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305, 308

(“[A]n insurer's duty to defend is determined by the third-party plaintiffs pleadings,

considered in light of the policy provisions, without regard to the truth or falsity of

those allegations.”)(emphasis added); Argonaut Sw. Ins. Co. v. Maupin, 500

S,W.2d 633, 636 (Tex. 1973) ("The duty to defend does not depend on what the




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                      Page 18 of 40
facts are; or what might be determined finally by the trier of the facts. It depends

only on what the facts are alleged to be.”).

        Although the Underlying Pleading also asserts multiple alternative theories

regarding Guzman's status on the property (i.e., that Guzman was present as an

employee, independent contractor, or invitee), Texas law is clear that “[a]lternative

allegations . . . will not defeat the duty to defend if combined with allegations that

would trigger coverage." (CR at 13); see Gehan Homes, Ltd. v. Emp'rs Mut. Cas.

Ins. Co., 146 S.W.3d 833, 843 (Tex. App.—Dallas 2004, pet. denied); Stumph v.

Dallas Fire Ins. Co., 34 S.W.3d 722, 729 (Tex. App.—Austin 2000, no pet.).

Therefore, for purposes of assessing the duty of defense under the TMIC Policy,

this initial burden was met regarding Guzman’s status as an employee.

            B. The Underlying Petition contains factual allegations sufficient to
               establish that Guzman’s injury potentially arose out of and in the
               course of Guzman’s employment with Absolute.

        In addition to the above, in order for a duty of defense to be triggered under

the TMIC Policy, the factual allegations within the Underlying Pleading must have

established that Guzman’s bodily injury potentially "[arose] out of and in the

course of the injured employee's employment." (CR at 66, 67). Under Texas law,

the phrase “arise out of and in the course of employment” is fulfilled where it is

“apparent to the rational mind, upon consideration of all of the circumstances, a

causal connection between the conditions under which the work is required to be




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                     Page 19 of 40
performed and the resulting injury” exists. Texas Emp. Ins. Ass'n v. Andrews, 110

S.W.2d 49, 51 (Tex. Comm'n App. 1937). Further, even where an injury originates

“outside the sphere of his employer's control,” the injury may still arise out of and

in the course of employment where “the conditions under which the work is

necessarily performed cause exposure to the risk.” Id. “Course and scope of

employment is not limited to the exact moment when the employee reports to

work, the moment when the employee's labors are completed, or the place where

work is done.” See Tex. Workers' Compensation Ins. Fund v. Rodriguez, 953

S.W.2d 765, 768 (Tex. App.—Corpus Christi 1997, pet. denied) (citing

Deatherage v. Int'l Ins. Co., 615 S.W.2d 181, 183 (Tex. 1981)).

        Turning to the four corners of the Underlying Petition, the Petition contains

a number of factual allegations that relate to whether Guzman’s injuries arise out

of and in the course of Guzman’s employment with Absolute, which Appellants

contend triggered Appellee’s duty of defense under the TMIC Policy. Specifically,

the Underlying Petition provides:

     On or about November 30, 2013, Guzman was an employee of Absolute
      (CR at 13);

     Guzman was on his employer's premises when he sustained injury (CR at
      14);

     Absolute provided housing accommodations for employees at the premises
      and used the premises as its headquarters (CR at 13);




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                     Page 20 of 40
     Guzman was injured where Absolute “maintained its day to day oilfield
      business activities” (CR at 13, 14);

     “Activities [were] being conducted” on the premises and Romaine Llewelyn,
      as supervisor for Absolute, was in charge of those activities when the
      accident occurred (CR at 14);

     Guzman was on the company's premises when suddenly and without
      warning, Rocky Hernandez fired a shotgun at Guzman, striking him and
      causing him serious bodily injury (CR at 14);

     Romaine Llewelyn and Rocky Hernandez were employees of Absolute,
      acting within the course and scope of their respective employment with
      Absolute at the time of the injury (CR at 14);

     Romaine Llewelyn was Guzman's direct supervisor (CR at 13–14);

     Romaine Llewelyn was required to “provide a safe workplace” for Guzman
      and "adequately supervise the employees under his charge” (CR at 16–17);

     Absolute “failed to provide place of employment” to Guzman and failed to
      make the workplace safe (CR at 16–17); and

     Guzman's injury was proximately caused by the failure to provide a safe
      workplace to Guzman and the failure to adequately supervise the employees
      on the premises, including Guzman. (CR at 16–17).

        When applying the cannon of liberal construction to the above-cited facts,

Appellants contend that Appellee’s duty of defense under the TMIC Policy is

triggered by those allegations contained within the Underlying Petition. The facts

cited above clearly establish that an employee of Absolute (Guzman) was injured

on company premises while operations were being performed on those premises.

(CR at 13–14). Further, the factual allegations note that Absolute and Guzman's

direct supervisor, Romaine Llewelyn, did not provide Guzman a safe workplace


W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                  Page 21 of 40
and/or adequately supervise their employees, which Guzman claimed proximately

caused his injuries. (CR at 16, 17). Despite the fact that the Underlying Pleading

is silent as to what Guzman was doing on the premises at the time of his injury, the

above-cited factual allegations are sufficient for the Court to determine that

Guzman's injury potentially arose out of and in the course of his employment. In

other words, based on the above factual allegations, “the conditions under which

[Guzman’s] work [was] necessarily performed [potentially] cause[d] exposure to

the risk.” Andrews, 110 S.W.2d at 51.

        Appellants acknowledge that a court may not “imagine factual scenarios

which might trigger coverage” but stress that the eight corners doctrine does not

require it to “ignore those inferences logically flowing from the facts alleged in the

petition." GEICO Gen. Ins. Co. v. Austin Power, Inc., 357 S.W.3d 821 (Tex.

App.—Houston [14th Dist] 2012, pet. denied) (citing Allstate Ins. Co. v. Hallman,

159 S.W.3d 640, 645 (Tex. 2005)). Moreover, "[i]n construing the allegations of

the underlying suit, the pleadings are strictly construed against the insurer, and

any doubt is resolved in favor of coverage." Gehan Homes, 146 S.W.3d at 846

(emphasis added). Therefore, based on the above, the factual allegations contained

in the Underlying Petition, at the very least, potentially state a covered claim

within the TMIC Policy. As such, under Texas law, Appellee’s duty of defense

was triggered by the factual allegations contained within the Underlying Petition.




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                     Page 22 of 40
        In addition to the above, despite Appellee’s arguments to the contrary, a

pleading that does not specifically allege that an injury arose out of the course and

scope of employment may nevertheless trigger the duty of defense where sufficient

factual allegations exist that allow a trial court to make that inference. For

example, in City of Dallas v. Csaszar, two police officers were sued for verbally

abusing and physically assaulting a third party in violation of federal law. No. 05-

99-00208-CV, 1999 WL 1268076, at *2 (Tex. App.—Dallas Dec. 30, 1999, pet.

denied). The officers in turn requested a defense from the City of Dallas, which

declined to defend the officers because the underlying complaint failed to “directly

and factually allege any basis to assume the officers were acting within the course

and scope of their employment.” Id. at *3. The insuring agreement at issue was

very similar to the TMIC Policy’s insuring agreement in the present case, which

required the City of Dallas to “indemnify and defend a plan member ... against a

loss ... resulting from an act or omission of the plan member during the discharge

of his duties and within the scope of his office, employment, or assigned volunteer

work with the city.” Id. at *4. In concluding the City owed a defense to the

officers, the court noted that “[a]dmittedly, the complaint does not expressly allege

that [the officers] were acting in within the scope of their employment when the

incident occurred.” Id. However, the court nevertheless held that because it was

required to liberally construe the pleadings in favor of coverage and resolve all




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                    Page 23 of 40
doubt in favor of the insured, the "complaint was sufficient to allege that the

officers were acting within the course and scope of employment." Id.; see also

Heyden Newport Chem. Corp. v. Southern Gen. Ins. Co., 387 S.W.2d 22, 23 (Tex.

1965) ("While we have said above that the court is limited to a consideration of the

allegations and the insurance policy in determining an insurer's duty to defend, we

wish to point out that in considering such allegations a liberal interpretation of their

meaning should be indulged.").

        Further, in National Union Fire Ins. Co. of Pittsburgh, Pa. v. Nat’l

Convenience Stores, Inc., the Fourth Court of Appeals considered a situation

wherein an insured’s employee alleged that her supervisor “took advantage of his

supervisory role and used physical superiority to grab or embrace [the employee]

during working hours on company premises against her will.” 891 S.W.2d 20, 21

(Tex. App.—San Antonio 1994, no writ). Also, during a Christmas party on the

insured’s property, the employee was physically assaulted by her supervisor. Id.

The issue before the court was whether the allegations contained within the

underlying pleading concerning these events triggered a defense under the

insured’s commercial liability policy, which excluded injuries “arising out of and

in the course of [a claimant’s] employment.”1 Id. In determining that no duty of


1
    The exclusion at issue in National Union is essentially the counterpart to the insuring
    agreement contained within TMIC’s Policy and is intended to preclude coverage under a
    commercial liability policy for risks that fall more squarely under employment liability



W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                           Page 24 of 40
defense was owed, the court recognized that “all of the acts alleged that arguably

resulted in bodily injury occurred on the defendant company’s premises and during

office hours or during an office party” and, as such, arose out of and in the course

of the claimant’s employment with the insured. Id.

        In the present case, because the four corners of the Underlying Petition

clearly state that Guzman was: (1) an employee of Absolute, (2) injured on

Absolute's premises while operations were being performed and (3) under the

supervision of Romaine Llewelyn when the injury occurred, and alleges that the

injury in question occurred because Absolute and/or Llewelyn failed to provide a

safe workplace for Guzman, the trial court had more than ample information to

conclude that the potential exists that Guzman’s injuries arose out of and in the

course of his employment with Absolute. As such, because the factual allegations

in the Underlying Petition create the potential for coverage to exist, the trial court

should have properly resolved all doubts in favor of coverage to conclude that the

duty of defense was triggered. See Liberty Mut. Ins. Co. v. Graham, 473 F.3d 596

(5th Cir. 2006) (noting that Texas law required the court to consider the factual

allegations along with any “reasonable inference that flow from the facts alleged”);

Emp'rs Mut. Cas. Co. v. Northern Ins. Co., No. 3:08-CV-1498-G, 2010 WL


    coverage like that at issue in this case. The Hallmark policy at issue in this case also contains
    such an exclusion but, because of the alternative allegations plead by Guzman, Hallmark
    nevertheless assumed the defense of the insured under reservation of rights.



W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                                  Page 25 of 40
850243 (N,D. Tex. Mar. 11, 2010) (noting that the subject allegations “are

admittedly not a model of clarity” but noting that Texas law requires a defense if

allegations potentially support a covered claim); see also Gen. Star Indent. Co. v.

Gulf Coast Marine Assocs., Inc., 252 S.W.3d 450 (Tex. App—Houston [14th Dist]

2008, pet. denied); Hochheim Prairie Cas. Ins. Co. v. Appleby, 255 S.W.3d 146,

150 (Tex. App.—San Antonio 2008, pet. dism'd); Gomez v. Allstate Tex. Lloyds,

241 S.W.3d 196, 204 (Tex. App—Fort Worth 2007, no pet.).

        3.      Appellee’s Arguments Concerning the Duty of Defense Misapply
                and Misinterpret Texas Law

        Within Appellee’s Motion for Summary Judgment regarding the duty of

defense, Appellee argued that defense under the TMIC Policy was not triggered as

a result of Guzman’s failure to plead that Guzman sustained injury in the course of

his employment with Absolute. (CR at 98). Appellee further contended that “the

nature of [Guzman’s] injury—a shotgun wound— is not one which ‘logically

flows from’ his employment as a[n] oilfield worker” and that no logical inference

exists that would support Appellants’ position. (CR at 99). However, for the

reasons set forth below, Appellee’s arguments in this regard read facts into the

pleadings and/or misapply or misinterpret Texas law with respect to the duty of

defense.




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                   Page 26 of 40
            A. The Underlying Petition’s failure to explicitly allege an injury in
               the course of employment does not negate Appellee’s duty to
               defend.

        Appellee has asserted that the allegations in the Underlying Petition are

insufficient to trigger its duty of defense because the pleading fails to allege

specifically that Guzman was acting in the course and scope of his employment or

that he was engaged in any employment-related activities or furthering his

employer’s business at the time of the accident. In doing so, Appellee essentially

asks that these omissions be treated as affirmative representations in regard to

course of employment and ignores the logical inferences created from the

remaining facts that were asserted within the Underlying Pleading.          Such an

argument not only requires the Court to read facts into the pleading, which is

prohibited under Texas law, but also presents an overly narrow and incorrect

interpretation of the duty of defense.

        Contrary to Appellee’s contentions, the failure of the Underlying Petition to

allege specifically that Guzman was acting in the course and scope of his

employment when he sustained injury does not permit Appellee to escape its duty

of defense. See generally Nautilus Ins. Co. v. Nevco Waterproofing, Inc., Civ. A.

H-04-2986, 2005 WL 3088608, at *8 (S.D. Tex. Jul. 11, 2005). Rather, Texas

courts have frequently held that “[w]here the complaint does not state facts

sufficient to clearly bring the cases within or without coverage, the general rule is




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                     Page 27 of 40
that the insured is obligated to defend if there is potentially, a case under the

complaint within the coverage of the policy.” St. Paul Fire & Marine Ins. Co. v.

Green Tree Financial Corp.-Tex., 249 F.3d 389, 391-92 (5th Cir. 2001) (quoting

Merchants Fast Motor Lines, 939 S.W.2d at 141). More specifically, “a third

party’s pleadings need not allege a specific offense to evoke an insurer's duty to

defend.” Id. (citing St. Paul Ins. Co. v. Tex. Dept. of Tramp., 999 S.W,2d 881,

886 (Tex. App.—Austin 1999)).

        Therefore, contrary to Appellee’s position, the omission of any facts

explicitly alleging Guzman sustained injury in the course of his employment could

nevertheless trigger a duty of defense if the Court finds that, under the facts pled,

Guzman could have been injured during the course of his employment with

Absolute. See Westport Ins. Corp. v. Atchley, Russell, Waldrop & Hlavinka, L.L.P,

267 F. Supp. 2d 601, 612 (E.D. Tex. 2003) (“[I]f the allegations in the underlying

pleadings could even potentially trigger coverage, and the allegations do not on

their face conclusively activate an exclusion, then the insurer must defend its

insured against the claim.”) (emphasis added).

        Texas      courts      have      repeatedly rejected   Appellee’s   overly narrow

interpretation of the duty of defense as an improper interpretation of the eight

corners doctrine. See e.g., Austin Power Inc., 357 S.W.3d at 824 (holding that a

failure to allege a specific date of injury does not preclude a court from




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                          Page 28 of 40
determining that a covered loss potentially occurred during the policy period); see

also e.g., Nautilus Ins. Co. v. Nevco Waterproofing, Inc., No. Civ. A, H-04-2986,

2005 WL 3088608, at *8 (S.D. Tex. Jul. 11, 2005) (noting that “longstanding

Texas authorities, as interpreted by the Fifth Circuit, mandate the conclusion that

[an omission relating to when property damage occurs] is not fatal to [a carrier's]

duty to defend.”). Indeed, the interpretation presented by Appellee in its Motion

for Summary Judgment is in direction opposition to Texas law. Specifically,

where a petition does not allege facts that would affirmatively exclude coverage,

and where the possibility exists that an injury is covered, a defense is triggered.

See Fidelity & Guar. Ins. Underwriters, Inc. v. McManus, 633 S.W.2d 787, 788

(Tex.1982) (“If the petition only alleges facts excluded by the policy, the insurer is

not required to defend.”) (emphasis added); Centennial Ins. Co. v. Bailey, No. 05-

98-00007-CV, 2000 WL 1515158 (Tex. App.—Dallas Oct. 12, 2000, no pet.) (not

designated for publication) (same). In other words, “when there is doubt, there is a

duty to defend.” Gore Designs, 538 F.3d at 369.

        For example, in Canal Insurance Co. v. XMEX Transport, LLC, the Western

District of Texas recently considered a business auto policy that provided liability

coverage only for autos that were “specifically listed” on the policy or that would

qualify as a “temporary substitute” auto under the policy. Canal Ins. Co. v.

XMEXTransp., LLC, No. EP-13-CV-156-KC, 2014 WL 4385941, at *4 (W.D. Tex.




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                     Page 29 of 40
Sept. 4, 2014). Though the underlying pleadings in that case indicated that the

vehicle was not specifically described in the policy, the pleading was silent as to

whether the vehicle would qualify as a temporary substitute auto. Id. at *4–6.

Despite the pleading’s affirmative indication that the vehicle was not described in

the policy, the court still found that the insurance carrier had a duty to defend

under the policy. In reaching this conclusion the court stated that, “[w]hile it is

true that none of the three Defendants expressly pleaded that the Truck was being

used as a temporary substitute auto, [w]hen the complaint does not state facts

sufficient to clearly bring the case within or without the coverage, the general rule

is that the insurer is obligated to defend if there is, potentially, a case under the

complaint within the coverage of the policy.’”        Id. at *19 (internal citations

omitted). In case of doubt as to whether the allegations state a cause of action

sufficient to compel the insurer to defend the action, such doubt will be resolved in

the insured's favor. Id.; see also Csaszar, 1999 WL 1268076, at *4.       As further

support of its conclusion that the duty of defense had been triggered, the court cited

a “highly instructive” Fifth Circuit decision that held that the duty of defense had

been triggered under a business auto policy "based solely on the possibility, not

even hinted to in the pleadings, that the truck was a replacement auto.” (emphasis

added) Id. at 17.




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                     Page 30 of 40
        Numerous other courts confronted with situations in which a pleading does

not contain specific factual allegations that explicitly trigger coverage have

nevertheless found that, where the factual allegations raise the possibility that a

covered loss is plead, a defense is owed. See Indian Harbor Ins. Co. v. KB Lone

Star, Inc., No. H-ll-CV-1846, 2012 WL 3866858, at *14 (S.D. Tex. Sept. 5, 2012)

(citing Gehan Homes, 146 S.W.3d at 845–46) (holding “Texas courts have held

that a carrier is obligated to defend when the underlying petitions are silent about

the time of the damage” so long as coverage is potentially triggered)); see also

Austin Power Inc., 357 S.W.3d at 824-25 (same). The Northern District of Texas,

in Employers Mutual Casualty Co. v. Northern Insurance Co., found that "[e]ven

where the allegations of the underlying complaint are not just unclear but

seemingly inconsistent, if there is a possible reading of those allegations on which

they fall within the scope of the policy, the insurer has a duty to defend.” Emp'rs

Mut. Cas. Co., 2010 WL 850243 at *5 (N.D. Tex. Mar. 11, 2010); see also Essex

Ins. Co. v. Hines, 358 Fed. Appx. 596, 598 (5th Cir. 2010) (“So long as it is not

unreasonable, an interpretation favoring coverage will be adopted even if an

interpretation militating against coverage is more reasonable.”). In other words,

even where a petition does not contain specific allegations explicitly triggering

coverage, with respect to the duty to defend, Texas courts are allowed to “draw

inferences from the petition that may lead to a finding of coverage.” Gen. Star




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                    Page 31 of 40
Indem. Co. v. Gulf Coast Marine Assocs., Inc., 252 S.W.3d 450, 456 (Tex. App.—

Houston [14th Dist] 2008, pet, denied).

            B. The inference that Guzman was injured in the course of his
               employment is reasonable as it flows logically from the factual
               allegations contained within the Underlying Petition.

        As discussed above, in determining whether the duty of defense has been

triggered, Texas law requires courts to consider not only the specific allegations

contained within a pleading, but also any reasonable inferences that may flow from

those specific allegations.              Hallman, 159 S.W.3d at 645.   The inference that

Guzman’s injuries arose out of and in the course of his employment is supported

by those multiple factual allegations cited above contained within the Underlying

Petition and is therefore clearly not unreasonable as Appellee contends. (CR at 13–

14, 16–17).

        Appellee argued at length in its Motion for Summary Judgment that it would

be unreasonable to infer that Guzman was in the course of his employment at the

time he was shot because a wound from a gunshot is not the typical injury one

might imagine an oilfield service worker incurring on the job. (CR at 157).

Notwithstanding this assertion, as it pertains to the duty of defense, “[s]o long as it

is not unreasonable, an interpretation favoring coverage will be adopted even if an

interpretation militating against coverage is more reasonable.” Hines, 358 Fed.

Appx. at 598. Further, Texas case law demonstrates that an injury suffered from a




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                         Page 32 of 40
completely unexpected cause unrelated to an employee’s typical job duties can still

arise out of and in the course of employment. For example, in Texas Workers’

Compensation Insurance Fund v. Rodriguez, an employee for an offshore safety

equipment company, was injured while jogging to catch a football during one of

his breaks. 953 S.W.2d 765, 767 (Tex. App.—Corpus Christi 1997, pet. denied).

His job duties were grinding fiberglass and helping in assembly; tasks wholly

unrelated to jogging to catch a football. Id. at 766. Still, the Court of Appeals held

that his injury was sustained within the course and scope of his employment. Id. at

769.

        In addition, relying heavily from an opinion issued by the Fifth Circuit,

Appellees have also claimed that to find Guzman was within the course of his

employment when he was injured would deviate from the eight-corners rule in

such a way as to shift the burden of proof onto the party disputing coverage to

establish that the pleadings affirmatively negate coverage. (CR at 173). However,

the case on which Appellees rely, Gilbane Building Co. v. Admiral Insurance Co.,

is clearly distinguishable from the one at hand. 664 F.3d 589 (5th Cir. 2011). In

Gilbane, a general contractor was sued by a construction site worker who was

injured after falling from a ladder. Id. at 592. The general contractor sought

coverage under the employer’s commercial general liability policy, but that

coverage would only be triggered if the allegations pled that the worker’s injuries




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                     Page 33 of 40
were at least partially caused by the employer. Id. at 593. Although there was no

mention in the pleadings of any sort of negligence on behalf of the employer, the

trial court found that coverage was triggered because the possibility existed that

negligence on behalf of Parr, the injured employee, acting on behalf of the

employer in the course of his job, could have contributed to the worker’s injuries.

Id. at 599. The Fifth Circuit went on to reject this argument on the basis that

nothing existed in the pleadings to support such an assumption. Id. “Simply put,

the petition does not allege any facts suggesting that Parr’s own negligence could

have caused his injuries.” Id. (emphasis added).

        That statement by the court clearly distinguishes Gilbane from the case at

hand as ample support can be found in the Underlying Petition for the logical

inference that Guzman was shot in the course of his employment. The Underlying

Petition states that Guzman was an employee of Absolute who was injured on

Absolute’s premises while business operations were being performed. (CR at 13–

14). Further, he was injured by a fellow employee who was acting within the

course of his employment at the time and was under the supervision of the

workers’ shared supervisor who was also acting within the course of his

employment at the time of the incident. (CR at 13–14).

        Moreover, Appellee has asserted that it would be difficult to imagine a

situation in which Guzman could have received a gunshot wound while in the




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                   Page 34 of 40
course of his employment. (CR at 157). However, in reaching that conclusion,

Appellee incorrectly places all focus on the nature of the injury, which is of little

relevance under Texas law, and ignores all other factual allegations put forth in the

Underlying Pleadings and the logical inferences that flow therefrom. When taking

the correct approach under Texas law and considering all factual allegations put

forth, the more difficult situation to imagine is one in which Guzman himself

was not in the course of his employment when he was (1) injured on the premises

of his employer; (2) by another employee acting within the course of his

employment; (3) who was under the supervision of the same person who also

supervised Guzman himself who was also acting within the course of his

employment at the time of the incident. (CR at 13–14).

        Thus, in order to arrive at the conclusion that it is unreasonable to infer

Guzman was injured in the course of his employment, Appellee must make a

complete departure from established Texas law. Appellee has argued that “oilfield

service workers do not suffer shotgun wounds as a logical result of their

employment.”          (CR at 157). Therefore, Appellee contends it is unreasonable to

infer Guzman was injured in the course of his employment. However, in its very

next point of contention, Appellee acknowledges and even uses as support the fact

that Guzman’s assailant, Rocky Hernandez, was alleged to be within the course

and scope of his employment. (CR at 157). Just as oilfield services workers are




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                     Page 35 of 40
unlikely to receive gunshot wounds in the course of employment, they are similarly

unlikely to inflict them upon their coworkers. Appellee’s contention in this regard

is neither reasonable nor logical and demonstrates why Appellee’s arguments

regarding this issue are incorrect under Texas law. Indeed, determining whether an

injury was a logical result of employment is not a standard used to determine

whether a duty to defend exists under Texas law. Instead the Court is to take into

consideration all factual allegations in the pleadings, taken as true, as well as the

reasonable inferences flowing therefrom in determining whether the duty has been

triggered. King, 85 S.W.3d at 187; Trinity Univ. Ins. Co. v. Cowan, 945 S.W.2d

819, 821 (Tex. 1997); Fid & Guar. Ins. Inc. v. McManus, 633 S.W.2d 787, 788

(Tex. 1982).

         Here, when considering all factual allegations in the Underlying Pleadings,

the inference that Guzman was in the course of his employment at the time of his

injury flows logically from multiple specific allegations and is thus not

unreasonable, triggering Appellee’s duty of defend in the Underlying Lawsuit. As

such, the trial court erred in Granting Appellee’s Motion for Summary Judgment

and denying Appellants’ Cross-Motion for Summary Judgment and Appellants ask

that this Court reverse the decision of the trial court and render judgment in favor

of Appellants’ with respect to those grounds contained within Appellants’ Cross-

Motion for Summary Judgment.




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                    Page 36 of 40
                      CONCLUSION AND PRAYER FOR RELIEF

        The trial court erred in granting Appellee’s Motion for Summary Judgment

and denying Appellant’s Cross-Motion for Summary Judgment regarding

Appellee’s duty to defend in the Underlying Lawsuit. The duty to defend was

triggered under Appellee’s policy because the Underlying Petition shows that Jose

Guzman was an employee of Absolute Oilfield who was injured, or at the very

least potentially injured, while in the course of his employment.

        For these reasons, Appellants Hallmark Specialty Underwriters, Inc. and

Hallmark Specialty Insurance Company, pray that the Court reverse the decision of

the trial court granting Appellee’s Motion for Summary Judgment and denying

Appellants’ Cross-Motion for Summary Judgment and render judgment that

Appellee has a duty to defend in the Underlying Lawsuit. Appellants further pray

for attorneys’ fees and costs of appeal, together with such other and further relief to

which Appellants may be justly entitled.




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                      Page 37 of 40
                                         Respectfully submitted,

                                         CURNEY, FARMER,
                                         HOUSE, & OSUNA, P.C.
                                         411 Heimer Road
                                         San Antonio, Texas 78232-4854
                                         (210) 377-1990 (telephone)
                                         (210) 377-1065 (facsimile)

                                         By: /s/ Wm. David Farmer
                                             Wm. David Farmer
                                             State Bar No. 06826470
                                             Email: wdfarmer@cfholaw.com
                                             Chad W. Schreiber
                                             State Bar No. 24085732
                                             Email: cschreiber@cfholaw.com

                                               Attorneys for Appellants
                                               Hallmark Mutual Insurance
                                               Company and Hallmark
                                               Specialty Insurance Company




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                             Page 38 of 40
                                 CERTIFICATE OF SERVICE
      I certify that a true and correct copy of the foregoing has been served on the
following by Electronic Filing Service Provider (EFSP), email, hand delivery,
facsimile, and/or certified mail, return receipt requested, on the 11th day of June,
2015:

                                                            /s/ Wm. David Farmer
Via E-mail: splacek@arnoldplacek.com
             sarnold@arnoldplacek.com
            jchaltain@arnoldplacek.com
R. Scott Placek
Scott Arnold
Jonathan Chaltain
Arnold & Placek, PC
203 East Main Street, Suite 201
Round Rock, Texas 78664
Telephone: (512) 341-7044
Facsimile: (512) 341-7921

Trial Attorneys for Appellee Texas
Mutual Insurance Company


                             CERTIFICATE OF COMPLIANCE
      Pursuant to Tex. R. App. P. 9.4(i)(3), I hereby certify that Appellents’ Brief
contains 6,325 words.

                                              /s/ Wm. David Farmer




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                   Page 39 of 40
                                         APPENDIX
Tab 1:      Order granting Appellee’s Motion for Summary Judgment and denying
            Appellants’ Cross-Motion for Summary Judgment

Tab 2:      Order granting Appellee’s Request for Payment of Attorney’s Fees and
            disposing of all issues between the parties

Tab 3:      Policy No. SBP-0001227402 20130809 issued by Texas Mutual
            Insurance Company for the policy period 08/09/13 to 08/09/14.




W:\WDOX\CLIENTS\1532\0676\00565749.DOC                                Page 40 of 40
