                                             NO. 07-08-0253-CV

                                      IN THE COURT OF APPEALS

                              FOR THE SEVENTH DISTRICT OF TEXAS

                                                AT AMARILLO

                                                   PANEL A

                                                 JULY 8, 2009

                                  ______________________________


                 REPUBLIC-VANGUARD INSURANCE COMPANY, APPELLANT

                                                        V.

    CHARLIE MIZE d/b/a QUALITY FRAMING and DOUG SETTLER, APPELLEES

                                _________________________________

                   FROM THE 99TH DISTRICT COURT OF LUBBOCK COUNTY;

                NO. 2007-539,656; HONORABLE WILLIAM C. SOWDER, JUDGE1

                                 _______________________________


Before CAMPBELL and HANCOCK and PIRTLE, JJ.


                                                   OPINION

         “and/or. A legal and business expression dating from the m id-19th century, and/or has been
         vilified for m ost of its life–and rightly so. To avoid am biguity, don’t use it.”

                                                                              Bryan Garner 2



         1
             Honorable Blair Cherry, (Ret.), sitting by assignm ent. Tex. Gov’t Code Ann. §75.002(a)(3) (Vernon
2005).

         2
             Bryan A. Garner, Garner’s Modern American Usage, 2003.
       This case involves an insurance law coverage issue arising out of the use of the

phrase “and/or” in a paragraph pertaining to exclusions. Appellant, Republic-Vanguard

Insurance Company, appeals from a summary judgment entered in favor of Appellees,

Charlie Mize d/b/a Quality Framing and Doug Settler, in Republic’s declaratory judgment

action seeking a determination whether it owed a duty to defend or obligation to indemnify

Mize in connection with a tort lawsuit filed by Settler. In its single issue, Republic contends

the trial court erred in finding that such a duty existed because coverage was precluded

by an amendment to the insuring agreement entitled “WORKERS COMPENSATION

EXCLUSION.” We affirm.


                                                 Background


       On May 10, 2007, Settler filed the underlying litigation against Mize and Salyer

Homes, LLC, wherein he alleged that he was injured as a result of Mize’s negligence in

connection with a construction project in Lubbock County.3 In the underlying litigation,

Settler alleged that Salyer was the general contractor for the project, Mize was a

subcontractor as to Salyer, and Settler was a subcontractor as to Mize. Settler alleged that

while Mize was raising a metal frame at the construction site, the frame fell on Settler

proximately causing him injuries.




       3
           Settler also asserted claim s of negligence and prem ises liability against Salyer.

                                                        2
        Mize requested that Republic provide it a defense under the terms of a Commercial

General Liability Policy (hereinafter the “policy”) issued by Republic. The policy insured

Mize against bodily injury claims and agreed to provide Mize with a defense against

covered claims. This dispute involves a determination of whether Settler’s claims against

Mize fall within the contractual definition of a covered claim. More specifically, the dispute

concerns whether Settler’s claims are excluded from coverage.


        The policy in question contains an endorsement entitled “WORKERS

COMPENSATION EXCLUSION,”4 which states, in pertinent part, as follows:


        SECTION 1. COVERAGES, COVERAGE A, 2.e. Exclusions is hereby

        deleted and replaced by the following:

        [2. Exclusions.]5

                 e. Employer’s Liability

                       “Bodily Injury” to:

                 (1)       An “employee” of the “insured” and/or any
                           “subcontractor” arising out of and in the course
                           of:

                           (a) Employment by any “insured”; or




        4
         Texas C om m ercial General Liability Form –Endorsem ent RLGL-100 (09/05) of the Policy.
Hereinafter, for convenience we will refer to this Policy provision sim ply as the “Exclusion.”

        5
           Although the endorsem ent did not carry forward the paragraph 2 designation itself, the endorsem ent
clearly m odifies paragraph 2 of Coverage A of the Com m ercial General Liability Policy in question. Therefore,
for clarity and convenience, we will refer to this paragraph and the relevant subpart as paragraph 2.e.(1).

                                                       3
                        (b) Performing duties related to the conduct of the
                        business of any “insured” or any “subcontractor.”

                 (2)    The spouse, child, parent, brother or sister of
                        that “employee” as a consequence of paragraph
                        (1) above.

                                           *   *    *

          SECTION V - DEFINITIONS: The following definitions are amended or added:

          5. “Employee” includes, but is not limited to:

                        (a) a “leased worker,” and/or

                        (b) a “temporary worker,” and/or

                        (c) an employee, “temporary worker” and/or a “leased
                        worker” of a “subcontractor” under the supervision of
                        the “insured.”

                                           *    *   *


          20. A “subcontractor” includes persons or entities hired by any “insured” to
          perform any or all duties of the “insured.”


          On August 16, 2007, Republic filed a declaratory judgment action requesting a

determination whether it owed Mize a duty of defense against Settler’s tort action under the

policy.     Specifically, Republic asserted that paragraph 2.e.(1) of the above-quoted

exclusion precluded coverage for bodily injury to any subcontractor, thereby excluding any

claim by Settler. Settler and Mize, however, construed paragraph 2.e.(1) as precluding

coverage for bodily injury to employees of the insured and employees of any subcontractor,




                                               4
but not as to subcontractors themselves. Based upon their respective positions, Settler,

Mize, and Republic each filed motions and cross-motions for summary judgment.


       On May 16, 2008, the trial court entered judgment in favor of Settler and Mize on

their motions for summary judgment and denied the remainder of the motions. This appeal

followed.


                                       Discussion


       Republic asserts that the Exclusion unambiguously precludes coverage for Settler’s

injuries as a subcontractor for Mize. Specifically, Republic asserts that the “and/or”

language in paragraph 2.e.(1) of the Exclusion separates the terms “insured” and

“subcontractor” rather than the terms “employee” and “subcontractor.” In support of its

interpretation, Republic contends that the phrase “employee of the insured” in paragraph

2.e.(1) already includes “employees of a subcontractor” by virtue of the definition of

“employees” in Section V.5.(c). Accordingly, Republic contends that, because employees

of any subcontractor are already included in the phrase “employee of the insured,”

inclusion of the term subcontractor would have been redundant unless it was intended to

separately exclude subcontractors as defined by Section V.20. As a result, Republic

interprets paragraph 2.e(1) as excluding claims for bodily injury to either (1) an employee

of the insured, (2) any subcontractor, or (3) an employee of any subcontractor.




                                            5
       Mize and Settler counter that, because the phrase “and/or” necessarily assigns the

same grammatical rank to the terms “insured” and “subcontractor,” the phrase, “employees

of,” must modify both “insured” and “subcontractor.” Accordingly, they interpret paragraph

2.e.(1) as excluding claims for bodily injury to either (1) an employee of the insured, or (2)

an employee of any subcontractor. As a corollary, they also interpret paragraph 2.e.(1) as

not excluding claims for bodily injury to any subcontractor. Furthermore, they assert that

Republic’s reading of the definition of employees under Section V.5.(c) as including an

employee of a subcontractor, ignores the ending phrase in paragraph (c)–“under the

supervision of the insured.” As such, they assert this definition does not refer to all

subcontractor employees, but refers only to those employees of the subcontractor over

which the insured asserts supervisory control. In other words, inclusion of the term “any

subcontractor” was not redundant if the intent of paragraph 2.e.(1) was to encompass all

the subcontractor’s employees regardless of whether the insured asserts supervisory

control over them or not.


       I.     Standard of Review


       We review the trial court’s summary judgment de novo. FM Props. Operating Co.

v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). The party with the burden of proof must

prove that 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. Id. When, as here, all parties move for summary judgment and the trial


                                              6
court grants one motion and denies another, we may determine all questions presented,

including the propriety of overruling the losing party’s motion, provided each party has fully

met its burden and sought final judgment relief. CU Lloyd’s v. Feldman, 977 S.W.2d 568,

569 (Tex. 1998). Moreover, because the trial court’s order granting summary judgment

does not specify the grounds on which it relied for its ruling, summary judgment will be

affirmed on appeal if any of the theories advanced are meritorious. Carr v. Brasher, 776

S.W.2d 567, 569 (Tex. 1989); Allstate Ins. Co. v. Hicks, 134 S.W.3d 304, 307

(Tex.App.–Amarillo 2003, no pet.).


       II.    Duty To Defend


       In determining an insurer’s duty to defend an insured against third-party claims, we

apply the “eight corners rule;” Nat’l Union Fire Ins. Co. of Pittsburgh v. Merchants Fast

Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997); which provides that “an insurer’s duty

to defend is determined by the third-party plaintiff’s pleadings, considered in light of the

policy provisions, without regard to the truth or falsity of those allegations.” GuideOne Elite

Ins. Co. v. Fielder Road Baptist Church, 197 S.W.3d 305, 308 (Tex. 2006). See Hettler

v. Travelers Lloyds Ins. Co., 190 S.W.3d 52, 57 (Tex.App.–Amarillo 2005, no pet.). If the

factual allegations against the insured, fairly and reasonably construed, state a cause of

action potentially covered by the policy, the duty to defend arises. Id. “Facts outside the

pleadings, even those easily ascertained, are ordinarily not material to the determination;”

GuideOne, 197 S.W.3d at 308; Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 643 (Tex.


                                              7
2005), and any doubt as to whether the insurer has a duty to defend is resolved in favor

of the insured. King v. Dallas Fire Ins. Co., 85 S.W.3d 185, 186 (Tex. 2002).


       Republic’s Policy covers: (1) “bodily injury,” (2) caused by an “occurrence,”6 (3) that

takes place in the “coverage territory,”7 (4) during the policy period.8 Settler’s suit alleges

that, on December 1, 2006, Mize’s negligence caused a metal frame to fall on him at a

building site in Lubbock County, Texas, proximately causing him serious injuries.

Accordingly, we find as a matter of law, that Republic has a duty to defend Settler’s suit

against Mize unless Settler’s suit is subject to the Exclusion.


       II.        Workers Compensation Exclusion


       We construe insurance policies in accordance with the rules governing contract

construction; Texas Farm Bureau Mut. Ins. Co. v. Sturrock, 146 S.W.3d 123, 126 (Tex.

2004), and read all policy provisions together interpreting the policy as a whole. Provident

Life and Acc. Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003). If the policy language

can be given a certain or definite legal meaning or interpretation, then it is not ambiguous

and we construe it as a matter of law. American Mfrs. Mut. Ins. Co. v. Schaefer, 124

S.W.3d 154, 157 (Tex. 2003).




       6
           Pursuant to Endorsem ent OCC-01 (07/04), ‘“occurrence’ m eans an accident . . . .”

       7
           Pursuant to Section V.4., “[c]overage territory m eans [t]he United States . . . .”

       8
           Novem ber 3, 2006 to Novem ber 3, 2007.

                                                         8
        Whether a contract is ambiguous is also a question of law. Id. at 157. An ambiguity

does not arise simply because the parties offer conflicting interpretations of the policy

language; Kelly-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 465 (Tex. 1998),

but exists if a contract is susceptible to two or more reasonable interpretations. Schaefer,

124 S.W.3d at 157. If an ambiguity exists, we must adopt the construction most favorable

to the insured so long as that construction is reasonable; Feiss v. State Farm Lloyds, 202

S.W.3d 744, 746 (Tex. 2006); Lundstrom v. United Services Auto. Ass’n-CIC, 192 S.W.3d

78, 91 (Tex.App.–Houston [14th Dist.] 2006, pet. denied) and, in the event we are

construing an exclusionary provision as we are here, the insured’s reasonable construction

prevails even if the insurer’s construction “appears to be more reasonable or a more

accurate reflection of the parties’ intent.” Balandran v. Safeco Ins. Co. of America, 972

S.W.2d 738, 741 (Tex. 1998) (quoting Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v.

Hudson Energy Co., 811 S.W.2d 552, 555 (Tex. 1991).


        Here, we find the exclusion contained in paragraph 2.e.(1) to be unambiguous. A

plain reading of that paragraph points to the term “employee” as the subject of the

sentence.9 The term “of” is a preposition. A preposition is a word that usually indicates a

temporal, spatial or logical relationship between the object of the preposition and the

subject of the sentence. Most often, prepositions come before their object. A conjunction

joins together sentences, clauses, phrases or words; therefore, use of the phrase “and/or”

        9
          This conclusion is further supported by a reading of paragraph 2.e.(2), which excludes bodily injuries
to the “spouse, child, parent, brother, or sister of that ‘employee’ as a consequence of paragraph (1) above.”
(em phasis added).

                                                       9
following a preposition, creates a prepositional phrase with a compound object. Therefore,

“of the ‘insured’ and/or any ‘subcontractor’” is a prepositional phrase with a compound

object, modifying the subject of the sentence, “employee,” by both “the insured” and “any

subcontractor.”


        This interpretation is buttressed by subparagraphs (a) and (b) of paragraph 2.e.(1).

These subparagraphs are not coterminous. Subparagraph (a) clearly modifies the phrase

“‘employee’ of the ‘insured’” because the duties of an “‘employee’ of the ‘insured’” logically

arise out of and are performed in the course of “[e]mployment by any ‘insured.’”

Subparagraph (b) clearly modifies the phrase “‘employee’ of . . . any ‘subcontractor’”

because the duties of an “‘employee’ of any ‘subcontractor’” logically arise out of and are

performed in the course of “duties related to the conduct of the business of any ‘insured’

or any ‘subcontractor.’”          This interpretation is also consistent with the definition of

“subcontractor” included in Section V.20. of the Exclusion, i.e., “persons or entities hired

by any ‘insured’ to perform any or all duties of the ‘insured.’” Accordingly, we find that the

exclusion contained in paragraph 2.e.(1) unambiguously applies to both employees of the

insured and employees of any subcontractor, but not as to subcontractors individually.10


        10
          This interpretation does not m ake the phrase “any subcontractor” in paragraph 2.e.(1) of the
Exclusion redundant as Republic suggests. If we apply the definition of “[e]m ployee” in Section V.5.(c), to
paragraph 2.e.(1), then “‘em ployee’ of the ‘insured’” encom passes “an em ployee . . . of a ‘subcontractor’ under
the supervision of the ‘insured’” as well as em ployees of the “insured.” The “and” portion of the “and/or” term .
The phrase “‘em ployee’ of . . . ’any subcontractor’” in paragraph 2.e.(1), encom passes any em ployee of the
subcontractor not under the supervision of the insured. The “or” portion of the “and/or” term . As such, the
Exclusion covers all em ployees of the “insured” and all em ployees of “any subcontractor” whether the
em ployee is under the supervision of the “insured,” or not. That the two term s “[e]m ployee” and
“subcontractor” are defined separately within the Exclusion supports an intent to treat the term s differently
under the Exclusion.

                                                       10
       That the Exclusion is entitled “Workers Compensation Exclusion” also supports this

interpretation. Typically, words used in insurance policies are given their ordinary and

generally accepted meaning unless they are defined in the policy or the policy otherwise

shows they were meant to have a technical or different meaning. See Prudential Ins. Co.

of America v. Uribe, 595 S.W.2d 554, 563 (Tex.Civ.App.–San Antonio 1979, writ ref’d

n.r.e.) (citing Guardian Life Ins. Co. of America v. Scott, 405 S.W.2d 64, 65 (Tex. 1966).

Given the lack of a policy definition and the wording of the Exclusion, the phase “workers

compensation” should receive a technical definition in interpreting the Exclusion. See

generally St. Paul Mercury Ins. Co. v. Tri-State Cattle Feeders, Inc., 628 S.W.2d 844, 847

(Tex.App.–Amarillo 1982, writ ref’d n.r.e.) (citing Hudiburg Chevrolet, Inc. v. Globe

Indemnity Co., 394 S.W.2d 792, 795 (Tex. 1965) (the word “theft” in an insurance policy

given the same meaning it has under Texas criminal law). “Workers’ compensation” is

defined as a “system of providing benefits to an employee for injuries occurring in the

scope of employment.” Black’s Law Dictionary 1637 (8th ed. 2004) (emphasis added).

Moreover, workers’ compensation laws are defined as “statute[s] by which employers are

made responsible for bodily harm to their workers arising out of and in the course of their

employment, regardless of the fault of either the employee or the employer.” Id. at 1638

(emphasis added). Thus, the Exclusion’s title also indicates that the Exclusion is intended

to exclude from coverage injuries to employees rather than injuries suffered by their

employers.




                                            11
        Applying the “eight corners” rule and liberally construing both the pleadings and

Republic’s policy, we conclude, based upon a plain reading of the entire policy including

the Exclusion, that Settler’s pleadings allege a claim potentially within the scope of

coverage. Thus, we find, as a matter of law, Republic owes a duty to defend Mize against

Settler’s claims. Moreover, even if we were to construe paragraph 2.e.(1) as being

ambiguous, we are still required to adopt the construction most favorable to the insured so

long as that construction is reasonable. Based on the above and foregoing, we also find

Settler’s interpretation to be reasonable. Accordingly, we overrule Republic’s single

issue.11


                                              CONCLUSION


        The trial court’s judgment is affirmed.




                                                            Patrick A. Pirtle
                                                                Justice


Campbell, J., concurs in the result.




        11
          In reaching our decision, we found it unnecessary to rely upon the deposition testim ony of Don
Lundy or Mize’s Traditional Motion for Sum m ary Judgm ent (Motion) filed in the trial court. Accordingly, issues
raised by Republic related to Mize relying on the Lundy deposition on appeal or Mize’s incorporation of its
Traditional Motion for Sum m ary Judgm ent in its appellate brief are preterm itted.

                                                       12
