                        COURT OF APPEALS
                        SECOND DISTRICT OF TEXAS
                             FORT WORTH


                              NO. 2-08-383-CV


RSI INTERNATIONAL, INC.                                          APPELLANTS
AND ESSEX INSURANCE
COMPANY

                                       V.

CTC TRANSPORTATION, INC.                                            APPELLEE

                                   ------------

        FROM THE 236TH DISTRICT COURT OF TARRANT COUNTY

                                   ------------

                                  OPINION

                                   ------------

                               I. INTRODUCTION

      Appellants RSI International, Inc. and Essex Insurance Company appeal

the judgment entered after a bench trial ordering them to pay Appellee CTC

Transportation, Inc. $54,604.91 plus interest and attorney’s fees. The primary

issue that we address is whether a coinsurance provision in a motor truck cargo

liability policy issued by Essex to CTC is ambiguous. Because we hold that, as
a matter of law, the coinsurance provision is not ambiguous, we will reverse the

trial court’s judgment and render judgment that CTC recover only $36,739.49

from Appellants.

                                II. B ACKGROUND

      CTC specializes in hauling heavy-duty equipment. CTC wanted to insure

the equipment it hauled and spoke to Charles Lindamood, an agent with RSI,

about obtaining insurance. Lindamood obtained a motor truck cargo liability

policy for CTC with Essex. Essex issued identical policies to CTC each year

from 2001 through 2005; each policy contained the same coinsurance

provision. The policy CTC obtained for coverage from April 28, 2005 to April

28, 2006 (hereinafter this policy is referred to as “the policy” because it is the

one at issue) provided for a 1% deductible, a $500,000 limit of loss, and the

same coinsurance provision as CTC’s prior motor cargo liability policies. The

coinsurance provision—which will be set forth in its entirety later in this

opinion—generally provided that Essex would not be liable for a greater

percentage of CTC’s liability for loss than the limit of the policy to the total

value of the cargo at the time of the loss.

      On November 10, 2005, one of CTC’s tractors was transporting a large

crane. The value of the crane being transported was $700,000. During the

transport, the crane hit a bridge as the tractor passed under the bridge. The

                                        2
cost to repair the crane was stipulated to be $61,604.91. CTC submitted a

claim to Essex under the policy.

     Joel Voelkner of York Claims Services, Inc. produced a report for Essex

calculating CTC’s settlement under the policy as follows:

     In review of the load, its value was $700,000. In review of the
     policy, it maintained a $500,000 limit for cargo. As such, this
     would indicate a 71% co-insurance penalty, which reduces the
     amount payable from $61,604.91 to $43,739.49 (a difference of
     $17,865.42).      This amount i[s] further reduced by the 1%
     deductible, which in this case would be $7,000. This provides us
     with a final settlement figure of $36,739.49.

After CTC learned of the proposed settlement amount, CTC’s attorney wrote

a letter to Lindamood and Voelkner stating that the “co-insurance penalty” of

$17,865.42 was “totally unacceptable” to CTC. CTC indicated that it would

agree to a reduction of Essex’s payment for the $61,604.91 loss only by the

$7,000 deductible; CTC claimed that Essex was required to pay the remaining

$54,604.91.    Because the parties could not reach an agreement on the

settlement amount required under the policy, CTC filed suit, alleging that

Appellants had materially breached the terms and conditions of the insuring

agreement.

     After a bench trial, the trial court entered findings of fact and conclusions

of law and signed a final judgment. Among its findings, the trial court found

(1) that the 100% coinsurance provision provides in sum or substance that

                                       3
Essex would not be liable for loss or damage to cargo on any noninsured vehicle

because the word “vehicle” was not in bold face type and (2) that Essex’s

proposed interpretation of the exclusion would essentially void the provision

providing for the limit of loss.      In its conclusions of law, the trial court

concluded that the “100% Co-Insurance” provision of the policy “is

unintelligible as written, is vague, confusing and ambiguous”; that Essex failed

to provide CTC with the insurance coverage CTC had purchased; that Essex

was liable for CTC’s damage of $61,604.91, less the applicable deductible of

$7,000 (1% of the value of the cargo), for a total award to CTC of

$54,604.91;1 and that CTC was entitled to recover its reasonable and

necessary attorneys’ fees in the total sum of $40,000. This appeal followed.

                 III. T HE C OINSURANCE P ROVISION IS N OT A MBIGUOUS

        In their first issue, Appellants argue that the trial court erred by finding

the coinsurance provision ambiguous as a matter of law. In their other three

issues, Appellants challenge the legal and factual sufficiency of several findings

of fact and conclusions of law. Because Appellants’ first issue is dispositive,

and in substance encompasses the remainder of their issues, we will address

it first.



        1
      … The trial court concluded that CTC’s policy provided “insurance
coverage for the first $500,000 of any damage, less the applicable deductible.”

                                          4
      A.    Standard of Review

      A contract is ambiguous only if, after the application of established rules

of construction, an agreement is still susceptible to more than one reasonable

meaning. Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d

587, 589 (Tex. 1996).       If a contract is unambiguous, its terms can be

interpreted as a matter of law by the court. Coker v. Coker, 650 S.W.2d 391,

393 (Tex. 1983). When an issue turns on a question of law, we do not give

any particular deference to legal conclusions of the trial court and apply a de

novo standard of review. Trinity Indus., Inc. v. Ashland, Inc., 53 S.W.3d 852,

868 (Tex. App.—Austin 2001, pet. denied).

      When an appellate court concludes that contract language can be given

a certain or definite meaning, then the language is not ambiguous, and the

appellate court is obligated to interpret the contract as a matter of law. DeWitt

County Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 100 (Tex. 1999); Loaiza v.

Loaiza, 130 S.W.3d 894, 905 (Tex. App.—Fort Worth 2004, no pet.). Thus,

here, we review de novo the trial court’s conclusion of law that the “100% Co-

Insurance” provision of the policy “is unintelligible as written, is vague,

confusing and ambiguous.” And if we conclude that it is not ambiguous, we

are obligated to interpret the contract as a matter of law. Loaiza, 130 S.W.3d

at 905; see also Upshaw v. Trinity Cos., 842 S.W.2d 631, 633 (Tex. 1992).

                                       5
      B.    Rules of Construction

      We construe insurance policies according to the same rules of

construction that apply to contracts generally. Nat’l Union Fire Ins. Co. of

Pittsburgh, PA v. Crocker, 246 S.W.3d 603, 606 (Tex. 2008). Enforcing the

parties’ expressed intent is our primary concern. See Forbau v. Aetna Life Ins.

Co., 876 S.W.2d 132, 133 (Tex. 1994). Policy terms are given their ordinary

and commonly understood meaning unless the policy itself shows that the

parties intended a different, technical meaning. Gonzalez v. Mission Am. Ins.

Co., 795 S.W.2d 734, 736 (Tex. 1990). “No one phrase, sentence, or section

[of the policy] should be isolated from its setting and considered apart from the

other provisions.” Forbau, 876 S.W.2d at 134.

      Not every difference in the interpretation of a contract creates an

ambiguity. See id. The mere disagreement over the meaning of a particular

provision in a contract does not make it ambiguous. GTE Mobilnet of S. Tex.

Ltd. P’ship v. Telecell Cellular, Inc., 955 S.W.2d 286, 289 n.1 (Tex.

App.—Houston [1st Dist.] 1997, writ denied). In order for an ambiguity to exist

when the parties advance conflicting interpretations, both interpretations must

be reasonable. See Columbia Gas Transmission Corp., 940 S.W.2d at 589.

      C.    The Policy’s Provisions




                                       6
      The insurance policy that Essex issued to CTC contained the following

provisions:

      IV.     LIMIT OF LOSS $500,000.00 (As defined in Insuring
              Agreement)
      V.      Deductible (per paragraph 5) $1% of value of load but not
              less than $1,000.00 any one occurrence. Refrigeration
              Breakdown Deductible $N/A

              ....

                           INSURING AGREEMENTS

              ....

            Limit of Loss. This Company will be liable for the least of the
      following:
                   Actual cash value of cargo at the point of shipment on
                   the date of loss;
                   The Insured’s legal liability under the bill of lading or
                   shipping receipt;
                   The cost to repair;
                   but in no event for more than the indicated Limit of
                   Liability shown in the Declarations for each vehicle or
                   terminal and not to exceed the Limit of Loss shown in
                   the Declarations for any claims arising out of any one
                   loss involving (1) two or more vehicles; (2) one or more
                   terminals and one or more vehicles; (3) any other
                   combination or circumstance.
            100% Coinsurance. The Company shall in no event be liable
      under the policy with respect to the insured’s liability for loss or
      damage to cargo on any vehicle or at any terminal described in the
      Declarations for a greater percentage of any loss or damage than
      the respective limit(s) applicable under this Policy bears to the total
      value of the cargo on the vehicle or at the terminal at the time of
      the loss or damage, whether damaged or not.

      D.      The Parties’ Arguments

                                        7
      Appellants argue that the coinsurance clause was not ambiguous as a

matter of law.     Specifically, Appellants argue that the trial court totally

disregarded and “wrote out of the [p]olicy the coinsurance language” instead

of construing it in light of the policy’s limit of loss section. Appellants state

that in looking at the “Insuring Agreement” for the definition of “Limit of Loss,”

there is nothing ambiguous about how to determine the limit of loss; it is simply

the least of the three possible amounts, which in this case was the $61,604.91

cost to repair the crane. Then, because under the coinsurance provision Essex

is not responsible “for a greater percentage of any loss or damage than the

respective limit(s) applicable under this [p]olicy bears to the total value of the

cargo,” the $500,000 applicable limit is divided by the $700,000 total value of

the cargo (the crane) that CTC was carrying at the time of the accident to

obtain Essex’s liability for the loss, which comes to 71%. After adjusting the

$61,604.91 by 71%, then the $7,000 deductible is subtracted because the

policy states that Essex “shall have no obligation under this form until the claim

exceeds the deductible” and provides that one must apply the deductible to

“each adjusted claim.” Appellants’ calculation produces a figure of $36,739.49

and tracks with the calculation that Voelkner used.

      CTC, on the other hand, argues that ambiguity exists on the face of the

policy not only because the parties disagree on its interpretation but because,

                                        8
according to CTC, the policy is not susceptible to any reasonable interpretation.

CTC asserts two arguments in support of the position that the policy,

specifically the coinsurance provision, is not susceptible to any reasonable

interpretation.

      First, CTC claims no reasonable interpretation is possible because the

coinsurance provision uses the term “vehicle” and the term “vehicle.” CTC

argues that “vehicle” necessarily refers to an uninsured vehicle because

“vehicle” is a defined term in the policy.2       “Vehicle” is defined in the

“DEFINITIONS” section of the policy as “[a] power unit specifically scheduled

on the Declarations and any trailer while physically attached to the power unit,

or a detached trailer specifically scheduled on the Declarations.     If blanket

coverage is provided, vehicle shall include all power units and trailers attached

or otherwise operated by the insured.”     CTC argues that because the term

“vehicle” is a defined term, it cannot be used interchangeably with “vehicle.”

And, according to CTC, construing the term “vehicle” in the coinsurance

provision to mean an uninsured vehicle and giving the term “vehicle” in the




      2
       … As set forth above in the coinsurance provision, when that provision
uses the unbolded term “vehicle,” it is modified by “described in the
Declarations,” indicating that at least the coinsurance provision’s use of the
unbolded term”vehicle” referred to a vehicle identified on the declarations page
as a covered vehicle not, as CTC argues, an uninsured vehicle.

                                       9
coinsurance provision its defined meaning, the coinsurance provision is

unintelligible, vague, confusing, and ambiguous, as determined by the trial

court.

         Second, CTC points to two alleged conflicts between the application for

insurance completed by Lindamood and the policy issued. Specifically, CTC

contends that the “maximum exposure per vehicle” of $500,000 Lindamood

wrote on the application is synonymous with the $500,000 limit of loss in the

policy but is “diametrically opposed to the ‘max value’ of the commodity from

the application and its inclusion in the 100% coinsurance provision.” Thus, in

arguing that the policy is subject to no reasonable interpretation, CTC points to

alleged disparities between its application for insurance and the actual insurance

policy.

         E.    Analysis

         The starting point of our analysis is the instrument itself. See Coker, 650

S.W.2d at 393 (“If the written instrument is so worded that it can be given a

certain or definite legal meaning or interpretation, then it is not ambiguous and

the court will construe the contract as a matter of law.”). Applying the rules

of construction to the instrument itself, we must construe the insurance policy

to give effect to all of the policy’s terms so that none will be rendered

meaningless.      Id. at 393.   CTC’s construction of the policy to distinguish

                                          10
between the terms “vehicle” and “vehicle” in the coinsurance provision is

unreasonable because it renders the entire coinsurance provision meaningless;

CTC essentially concedes this point by claiming that the coinsurance provision

(as interpreted by CTC) is unintelligible as written, vague, confusing, and

ambiguous. See Fisher v. N. Am. Life & Cas. Co., No. 05-93-01723-CV, 1995

WL 45640, at *4 (Tex. App.—Dallas Jan. 31, 1995, no writ) (not designated

for publication) (holding that “[t]o adopt [insured’s] interpretation would be to

render this general limitation provision meaningless”).       Moreover, CTC’s

construction is not supported by the plain language of the coinsurance provision

itself because that provision provides that it applies to “any vehicle . . .

described in the Declarations” 3 when the total value of the cargo exceeds the

$500,000 policy limit.

      Giving the terms of the coinsurance provision their plain meanings,

construing the coinsurance provision so as to harmonize it with the entire motor

truck cargo liability policy, and giving effect to each clause of the policy, the

coinsurance provision is subject to only one reasonable interpretation and that



      3
        … And though not clearly readable on the “Automobile Loss Notice,” it
appears that the vehicle involved in the accident was a 2001 Kenworth tractor
with an identification number that looks remarkably similar to “057031.” This
would match the one and only 2001 Kenworth tractor shown on the
Declarations page of the policy, which lists the “vehicles” covered by the
policy.

                                       11
is the interpretation urged by Appellants.      Accordingly we hold that the

coinsurance provision is not ambiguous as a matter of law. See Loaiza, 130

S.W.3d at 905 (“A contract is ambiguous only if, after the application of

established rules of construction, an agreement is still susceptible to more than

one reasonable meaning”) (citing DeWitt County Elec. Coop., Inc., 1 S.W.3d at

100; Columbia Gas Transmission Corp., 940 S.W.2d at 589); Yancey v. Floyd

W. & Co., 755 S.W.2d 914, 920 (Tex. App.—Fort Worth 1988, writ denied)

(holding that because there was only one reasonable construction of the

language in the policies, no ambiguity existed within the policies at issue).

Accordingly, we construe the policy as a matter of law; the policy mandates the

calculations propounded by Appellants.

      Based on this holding, we cannot agree with CTC’s contention that we

may rely on testimony of the contracting parties’ intent in construing the policy

or that the language in the application for insurance may conflict with, and

create ambiguity in, the policy. Cf. Rutherford v. Randal, 593 S.W.2d 949,

953 (Tex. 1980) (“The absence of an ambiguity in the deed negates all

justification for the consideration of extrinsic evidence concerning the original

intent of the grantor . . . . Under these circumstances, this court will limit its

search for the grantor’s intent to that intent which was expressed within the

four corners of the deed.”). CTC’s subjective belief as to what the contracting

                                       12
parties intended to be covered under the policy limits is immaterial, insofar as

such intentions are not found in, and in fact add to, the plain language of the

policy itself. See Koelsch v. Indus. Gas Supply Corp., 132 S.W.3d 494, 498

(Tex. App.—Houston [1st Dist.] 2004, pet. denied); see also Gary E. Patterson

& Assocs., P.C. v. Holub, No. 01-04-00108-CV, 2008 WL 100233, at *11

(Tex. App.—Houston [1st Dist.] Jan. 10, 2008, pet. denied) (providing that

“‘[u]nder the parol evidence rule, . . . all prior negotiations and agreements with

regard to the same subject matter are excluded from consideration’“ and that

“‘a written instrument presumes that all prior agreements relating to the

transaction have been merged into it and will be enforced as written and cannot

be added to, varied, or contradicted by parol testimony’”).           We sustain

Appellants’ first issue.

      Because we have sustained Appellants’ first issue claiming that the

coinsurance provision is unambiguous as a matter of law, we likewise sustain

Appellants’ third and fourth issues 4 challenging the trial court’s contrary

conclusions of law, including conclusion of law number 7 that awarded

attorney’s fees to CTC for breach of contract. See Newton v. Meade, 143



      4
        … We need not reach Appellants’ second issue because the challenged
finding of fact relates to the ambiguity of the insurance provision and has no
legal significance in light of our holding that the provision is unambiguous as a
matter of law.

                                        13
S.W.3d 571, 575 (Tex. App.—Dallas 2004, no pet.) (holding that when no

breach of contract claim is established, party may not recover attorney’s fees

under Texas Civil Practice and Remedies Code section 38.001(8)). We reverse

the trial court’s judgment and render judgment pursuant to the unambiguous

provisions of the policy that CTC recover only $36,739.49 from Appellants and

that CTC take nothing on its claim for attorneys’ fees.

                               IV. C ONCLUSION

      Having sustained Appellants’ issues that are necessary for disposition of

the appeal, we reverse the trial court’s judgment and render judgment that CTC

recover only $36,739.49 from Appellants and that CTC take nothing on its

claim for attorneys’ fees.




                                                 SUE WALKER
                                                 JUSTICE

PANEL: LIVINGSTON, WALKER, and MEIER, JJ.

DELIVERED: June 18, 2009




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