
IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,

AT AUSTIN


 



NO. 3-91-037-CV



UNITED STATES FIDELITY AND GUARANTY COMPANY,

	APPELLANT

vs.



TRAVIS ECKERT AGENCY, INC. AND JANICE BARNES,

	APPELLEES


 


FROM THE DISTRICT COURT OF TRAVIS COUNTY, 126TH JUDICIAL DISTRICT

NO. 475,340, HONORABLE PAUL R. DAVIS, JR., JUDGE PRESIDING

 


	Appellant, United States Fidelity and Guaranty Company ("USF&G"), sued one
of its local recording agents, Janice Barnes, and the insurance agency by whom she was
employed, Travis Eckert  Agency, Inc. (collectively the "Agency"), for attaching to one of the
USF&G's liability insurance policies an unauthorized "additional insured" endorsement form
which allegedly resulted in monetary liability to USF&G.  The Agency filed a motion for
summary judgment and USF&G filed a motion for partial summary judgment.  The district court
granted Agency's motion and denied USF&G's motion.  This appeal followed.


THE CONTROVERSY
	This case involves the provisions of a comprehensive automobile liability policy
together with an endorsement that provided for an "additional insured."  For many years before
the accident that gives rise to the facts of this lawsuit, USF&G had continuously insured Calhoun-Smith Distributing Co., Inc. ("Calhoun-Smith") for a variety of insurance needs, specifically
including comprehensive automobile liability.  On August 6, 1985, Calhoun-Smith leased a tanker
truck from Ryder Truck Rental, Inc. ("Ryder").  In August and October of 1985, the Agency
requested that USF&G add Ryder as an additional insured with respect to the liability insurance
coverage on the tanker truck covered under Calhoun-Smith's comprehensive auto liability policy
issued by USF&G.  Apparently as a result of USF&G's failure to append such an endorsement,
on February 7, 1987, Janice Barnes, the Agency's local recording agent for USF&G, executed
Ryder's own "additional insured" endorsement form, which became a part of the comprehensive
auto liability insurance policy of Calhoun-Smith for that year.  USF&G alleges in the present
lawsuit that Barnes should have attached the standard endorsement form TX 10-89B entitled
"additional insured-lessor" to the Calhoun-Smith comprehensive automobile liability policy. 
Janice Barnes' use of the Ryder "additional insured endorsement form," rather than the "standard
form TX 10-89B," constitutes the crux of the present lawsuit.  


The Ingram Lawsuit
	Calhoun-Smith leased a gasoline tanker truck from Ryder.  This tanker truck
exploded on November 10, 1987, and Mr. Lester Ingram, an employee of Calhoun-Smith, was
killed.  This explosion and Mr. Ingram's death were the subject of a previous lawsuit.
	Evidence in that lawsuit established that sometime before the accident date a
subcontractor hired by Ryder modified the gasoline pump on the Ryder tanker truck to reverse
the flow of gasoline through the pump, but negligently failed to change the position of the
pressure relief valve.  As a result, the pressure relief valve was improperly positioned for the
direction of the flow through the gasoline pump on November 10, 1987, the date of the explosion
and was, therefore, inoperable.  The evidence also established that at the time of the explosion
in question, Mr. Ingram, acting in the course and scope of his employment for Calhoun-Smith,
was attempting to pump gasoline from the Ryder tanker truck into above ground storage tanks at
a Texaco station when the explosion occurred.  
	In the present lawsuit, the parties stipulated in the district court that the explosion
resulted from:  (1) Ingram's negligence in failing to open the valves on the above-ground storage
tanks before attempting to pump gasoline from the tanker into those tanks; and (2) the tanker's
pressure relief valve being inoperable and, therefore, unable to shut off the flow of gasoline from
the tanker when back-pressure occurred, resulting ultimately in the explosion and fire which
caused Mr. Ingram's tragic death.
	The Ingram lawsuit was a wrongful death and survivor action filed by the widow
and other heirs of Lester Ingram alleging liability claims against several defendants, including
Ryder, arising from Ryder's own acts or omissions with respect to the modification of the
pressure relief valve on the gasoline pump on Ryder's tanker truck.  Ryder demanded that
USF&G assume its defense and provide coverage in the Ingram lawsuit under the provisions of
the Ryder "additional insured endorsement" form, which Janice Barnes attached to the policy in
the course and scope of her employment for the Travis Eckert Agency.
	Since Janice Barnes was acting as a local recording agent for USF&G, the Ryder
form endorsement attached to the comprehensive auto liability policy of Calhoun-Smith was
binding on USF&G even though, as USF&G alleges in the instant lawsuit, such actions by Janice
Barnes were unauthorized.  Upon a determination by USF&G that the Ryder "additional insured
endorsement" form did afford coverage for Ryder's own acts and omissions, USF&G provided
a defense to Ryder in the Ingram lawsuit and ultimately settled and paid one million dollars on
behalf of Ryder.


The Present Lawsuit
	USF&G brought this present action to recover from Janice Barnes and the Travis
Eckert Agency the cost of Ryder's defense and indemnity payments which USF&G made under
its comprehensive auto liability insurance policy and the Ryder endorsement.  After written
discovery had been initiated and three depositions had been taken, the parties entered into extensive factual stipulations in order to eliminate any potential factual controversies and to reduce
the case to a central question of law. (1)
	Following entry of the stipulations, the Agency filed a motion for summary
judgment claiming that the standard additional insured endorsement TX 10-89B would have
provided coverage to Ryder under the Calhoun-Smith policy for Ryder's own acts and omissions
and, therefore, USF&G suffered no damage due to Janice Barnes appending Ryder's own
endorsement form to the Calhoun-Smith policy.  USF&G filed a motion for partial summary
judgment requesting the court to rule that the legal effect of the TX 10-89B endorsement "creates
no additional insurance rights in favor of Ryder Truck Rental but rather simply establishes that
Ryder is entitled to notification in the event that the policy is canceled or amended."  USF&G
further requested the court to rule that, had the standard endorsement form TX 10-89B  been
attached to the Calhoun-Smith comprehensive auto liability policy issued by USF&G, it would not
have provided coverage to Ryder for the claims made in the Ingram lawsuit.
	The district court granted the Agency's motion for summary judgment and denied
USF&G's motion for partial summary judgment.  The district court ordered that USF&G take
nothing against the Agency and that the Agency recover its costs of court from USF&G.  The
district court also denied USF&G's motion for new trial.  Following this action, USF&G brings
this appeal.


DISCUSSION AND HOLDING
	The standards for reviewing a motion for summary judgment are well established: 
(1) the movant for summary judgment has the burden of showing that no genuine issue of material
fact exists and that movant is entitled to judgment as a matter of law; (2) in deciding whether there
is a disputed material fact issue precluding summary judgment, evidence favorable to the
nonmovant will be taken as true; and (3) every reasonable inference must be indulged in favor of
the nonmovant and any doubts resolved in its favor.  Nixon v. Mr. Property Management Co., 690
S.W.2d 546, 548-49 (Tex. 1985).
	By the factual stipulations and cross motions for summary judgment, the parties
attempted to reduce their controversy to a single, central issue of law which the district court
could answer dispositively.  The crux of this case as stated in USF&G's brief is:


The sole issue presented by this appeal is whether the Calhoun-Smith policy, had
it been properly endorsed with form TX 10-89B, would have provided coverage
to Ryder, the owner of the gasoline tanker truck which had been leased to
Calhoun-Smith.  If, as appellees [the Agency] contend, Form TX 10-89B would
have provided coverage to Ryder under the Calhoun-Smith policy for Ryder's acts
or omissions, USF&G suffered no damages proximately caused by appellees' [the
Agency's] conduct, since the policy would have provided coverage anyway. 


(Emphasis added).  The district court concluded that, based upon the factual stipulations, this
question was determined as a matter of law favorable to the Agency.  Because we conclude that
such a finding was in error due to the existence of material factual disputes, we find it necessary
to reverse the action of the district court and remand this cause for a trial on the merits.
	The conclusion that we reach turns on a comparison of the two endorsements in
question, the first being the Ryder endorsement that Janice Barnes attached to the Calhoun-Smith
comprehensive auto liability policy, and the second being the standard form endorsement TX 10-89B that both parties agree should have been attached to the liability policy. (2)

 
   1.  Ryder Endorsement Form
	The "additional insured endorsement" form suggested by Ryder and attached to the
policy by Janice Barnes provided as follows:


In consideration of the premium at which this policy is written it is agreed that the
unqualified word "Insured" as used in this policy shall include Ryder Truck Rental,
Inc., and all its subsidiary companies, its agents and employees, but only with
respect to any vehicle leased, rented, or supplied as a substitute or as an additional
vehicle to the named insured by Ryder Truck Rental, Inc.


Thus, under the Ryder endorsement form, USF&G would be required to provided coverage under
its policy for Ryder's own acts or omissions, including those of Ryder's agents or employees.


   2.  Standard Form TX 10-89B
	On the other hand, the standard endorsement form TX 10-89B which USF&G
contends should have been attached to the comprehensive auto liability policy of Calhoun-Smith
reads as follows:


It is agreed that the insurance afforded by the policy as indicated above with
respect to a leased automobile applies to the lessor named in this endorsement, as
an additional insured, subject to the following additional provisions:

1.	The Lessor is insured only for such bodily injury or property damage which
arises out of the acts or omissions of:

	(a)	The named insured;

	(b)	any employee or agent of the named insured;

	(c)	any person, except the lessor or any employee or agent of the lessor,
operating a leased automobile with the permission of any of the
above.  


(Emphasis added).

	Under the express language of form TX 10-89B, Ryder is an "additional insured"
only for the acts or omissions of the named insured, in this case Calhoun-Smith, and the
employees of the named insured, in this case Lester Ingram.  Contrasting the basic difference
between the Ryder endorsement and the standard form endorsement TX 10-89B, the Ryder
endorsement provides for liability insurance coverage for Ryder's own acts and omissions, while
the standard form endorsement TX 10-89B does not.  Therefore, the Ryder endorsement form is
broader in scope and coverage than the standard form endorsement, and a material fact dispute
arises as to whether USF&G was in fact harmed by the attachment of a broader endorsement form
to the comprehensive auto liability insurance policy issued to Calhoun-Smith.  This material fact
issue precludes the district court from rendering a final summary judgment for the Agency on the
basis that USF&G had suffered no harm as a matter of law.  See MMP, LTD. v. Jones, 710
S.W.2d 59, 60 (Tex. 1986).
	The Agency contends that we should affirm the trial court's judgment because
USF&G has changed its legal position on this appeal.  The Agency argues that at the time of the
summary judgment hearing the position of USF&G was that the standard form endorsement for
an "additional insured," TX 10-89B provided no coverage to Ryder, whereas, on appeal, USF&G
now contends that although the standard form endorsement would provide coverage to Ryder, it
would not provide coverage for Ryder's own acts or omissions.  After a review of the summary
judgment record, we agree that USF&G has changed its position on appeal.  However, because
this cause is presented to us upon stipulated facts in the context of a summary judgment, we are
required to review the record under the premise that unless the Agency has established that it is
entitled to a summary judgment as a matter of law, we are bound to reverse.  This cause presents
yet another instance where the parties have attempted to conclude the cause on cross motions for
summary judgment and because of the existence of a material factual dispute, this Court is
required to reverse and remand the cause for a trial on the merits.
	Because we conclude that the Agency has not been able to demonstrate
conclusively, as a matter of law, that USF&G suffered no harm as a result of the broader Ryder
endorsement form being attached to the policy in question, we are forced to reverse the final
summary judgment rendered by the district court and remand this case back to that court for a full
trial on the merits.


  
					Mack Kidd, Justice
[Before Chief Justice Carroll, Justices Aboussie and Kidd]
Reversed and Remanded
Filed:  December 11, 1991
[Publish]
1.  1  The stipulations were drafted to bind the parties only for purposes of pre-trial motions
for summary judgment.
2.  2  The parties disagree as to who was responsible for the failure to attach the TX 10-89B
endorsement form.  USF&G places the sole responsibility on Janice Barnes while the Agency
contends that USF&G, after being requested to do so, should have endorsed the policy.
