                                                                         United States Court of Appeals
                                                                                  Fifth Circuit
                                                                               F I L E D
                                                                             September 25, 2006
                      In the United States Court of Appeals
                              For the Fifth Circuit                        Charles R. Fulbruge III
                                                                                   Clerk



                                       No. 04-20895


ROYAL INSURANCE COMPANY OF AMERICA,

                       Plaintiff - Appellant,

                        v.

CALIBER ONE INDEMNITY CO.; HARTFORD UNDERWRITERS INSURANCE CO.,

                       Defendants - Appellees.


                       Appeal from the United States District Court
                           for the Southern District of Texas
                                  No. 4:03-CV-00852


Before JONES, Chief Judge, and DEMOSS and OWEN, Circuit Judges.

PRISCILLA R. OWEN, Circuit Judge:

       An excess carrier sued two primary insurance carriers to recover $1,000,000 the

excess carrier paid on behalf of the parties’ common insured to settle wrongful death and

survival claims arising out of the care of a nursing home resident. We hold that (1) the

excess carrier was entitled to pursue a cause of action based on equitable subrogation,

(2) there was an occurrence within each of the primary policies’ definition of that term,

(3) the excess carrier’s policy period did not overlap with the first primary carrier’s, and

(4) the second, consecutive primary carrier was required to exhaust its $1,000,000 limits.
We affirm the summary judgment in favor of the first primary carrier, Hartford Underwriters

Insurance Company, reverse the summary judgment in favor of the second primary carrier,

Caliber One Indemnity Company, and remand this case to the district court for further

proceedings.

                                               I

       Pietra Nieto Treviño was 83 years old when she was admitted on July 1, 1997 to

Turner Geriatric Center, a nursing home operated by Methodist Retirement Communities.

She was not ambulatory, was in fragile condition, and suffered from a number of illnesses

and conditions including degenerative joint disease, Parkinson’s Disease, and dementia. She

remained at the nursing home for almost three years, except for brief hospitalizations, until

she was hospitalized on April 10, 2000. She died eleven days later, on April 21, 2000, from

a Stage IV pressure ulcer, overwhelming sepsis, and pneumonia.

       Treviño’s survivors brought a wrongful death and survival action in state court against

MRC Edgewater (doing business as Turner Geriatric Center) and five nurses who attended

Treviño at Turner. Methodist Retirement Communities maintained primary and excess

insurance coverage for general and professional liability that covered Turner Geriatric Center

and its employees. Hartford Underwriters Insurance Company provided primary coverage

of up to $1,000,000 for each “medical incident” under a professional liability policy or

“occurrence” under a general liability policy from April 1, 1997 to April 1, 1998. That

policy was renewed for April 1, 1998 through April 1, 1999, and the limit of liability for that

twelve-month period was also $1,000,000. Caliber One Indemnity Company provided the

                                              2
same type of primary coverage for April 1, 1999 to July 1, 2000. Royal Insurance Company

of America provided excess coverage for April 1, 1999 through July 1, 2000. While

reserving their respective rights to deny coverage, Hartford and Caliber One agreed to share

the cost of defending Methodist in the state court action brought by Treviño’s survivors.

       In the wrongful death and survival suit, Treviño’s family offered to settle for

$3,000,000, and Methodist sent a “Stowers”1 demand letter to Hartford, Caliber One, and

Royal requesting them to accept the offer. Correspondence from Methodist indicates that

it thought it had only $1,000,000 in primary coverage, although Royal took the position that

the policy limits of both the Hartford and Caliber One policies were available because there

was more than one occurrence. After further negotiations, the Treviño family’s suit was

settled for $2,000,000. Caliber One contributed $800,000, Hartford contributed $200,000,

and Royal contributed $1,000,000 under protest, asserting that it would attempt to recover

that amount from the primary carriers.

       Royal then sued Hartford and Caliber One in state court to recoup the $1,000,000 it

had paid, and that suit was removed to federal district court on the basis of diversity

jurisdiction. The parties consented to conduct all proceedings before a United States

magistrate judge, including trial and entry of final judgment. They filed cross-motions for

summary judgment, and the magistrate granted judgment in favor of the primary carriers.

The magistrate concluded that under Texas law, which governs this action, an excess carrier


       1
        G.A. Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544 (Tex. Comm’n App. 1929,
holding approved).

                                             3
has an equitable subrogation claim against a primary insurer “only when it is predicated on

the violation of a tort duty owed to the insured”2 and that the only tort theory under which

such an insured may proceed is negligence. The magistrate concluded that neither of the

primary carriers had been negligent. The judge reasoned that because Methodist had

indicated that it had only $1,000,000 in primary coverage when it demanded that its insurers

settle, this was an admission by the insured that was binding on Royal. The primary insurers

had done all that Methodist asked, the magistrate concluded. The magistrate further

concluded that even if Royal could assert an equitable subrogation claim based on breach of

the contractual duties the primary carriers owed to Methodist, there was only one occurrence

or medical incident within the meaning of the primary insurance policies because Treviño’s

death stemmed from an ongoing course of care and treatment. Under such circumstances,

the magistrate concluded, Texas law does not allow an insured to “stack” coverage. Rather,

the highest limits under any one policy apply, even if the negligence spanned multiple policy

periods, and Hartford and Caliber One therefore had tendered the full limits, $1,000,000.

The magistrate also rejected Royal’s contention that the general commercial liability policies

applied. Royal has pursued this appeal.

                                             II

       As an initial matter, we disagree with the magistrate’s characterization of Texas law

regarding the nature of an excess carrier’s causes of action against a primary carrier. More



       2
        Memorandum and Order, 11.

                                              4
than thirty-five years ago, the Supreme Court of Texas recognized that a carrier had both a

right of “‘conventional subrogation, which arises from the express insurance contract,’”

against another carrier, and that if there were no contractual rights “authoriz[ing] recovery

of a pro rata share of the sum paid, . . . equitable subrogation does.”3 In support of the

proposition that there was a right of “conventional subrogation,” that court quoted the

Seventh Circuit, which had held in a suit by an excess carrier against the primary insurer that

“‘[t]his is an action governed by contractual subrogation in favor of an excess insurer against

the primary insurer.’”4

       The magistrate misconstrued statements in a subsequent Texas Supreme Court

decision, American Centennial Insurance Co. v. Canal Insurance Co., in which the question

was whether an excess carrier had causes of action against a primary carrier and trial counsel

for mishandling a claim.5 The Supreme Court of Texas held that the excess carrier had a

remedy against both based on equitable subrogation.6 The issue was not whether an excess

carrier had subrogation rights to recover amounts that a primary insurer should have paid

under its policy terms and limits. The Texas court had previously recognized such a right


       3
        Employers Cas. Co. v. Transp. Ins. Co., 444 S.W.2d 606, 608, 610 (Tex. 1969) (citations
omitted) (quoting Commercial Standard Ins. Co. v. Am. Employers Ins. Co., 209 F.2d 60, 65 (6th
Cir. 1954)).
       4
        Id. at 609 (quoting Cont’l Cas. Co. v. Am. Fid. & Cas. Co., 275 F.2d 381, 385 (7th Cir.
1960) (holding that an excess carrier was entitled to recover amounts it had paid to settle the
underlying suit against its insured from the primary insurer based on contractual subrogation)).
       5
        843 S.W.2d 480, 481 (Tex. 1992).
       6
        Id. at 483.

                                               5
in Employers Casualty Co. v. Transport Insurance Co., and Canal cited Employers Casualty

for the proposition that “[e]quitable subrogation has already been recognized in Texas.”7 In

Canal, the only question was whether rights beyond such contractually based rights and

beyond the duty recognized in Stowers should be enforceable by excess carriers. The

concurring opinion in Canal, joined by five members of that court and therefore constituting

binding precedent, made clear that the court was holding that when a primary carrier

“negligently investigat[ed], prepar[ed] to defend, tr[ied] or settl[ed] the third party action”8

and the amount of the judgment or cost to settle was thereby increased, an excess carrier

could recover the extra amounts it had to pay an insured as a result. The Texas court

explained that in such an action for negligence, “an excess carrier may recover only the

difference between what it was required to pay and what it would have paid but for the

primary carrier’s negligent handling of the action.”9 The concurring opinion stated that “I

assume from its reliance on the Stowers and Ranger County cases, and would so hold, that

the excess carriers’ only cause of action is for negligence.”10 The context in which this

statement appears should make clear that the court was emphasizing its conclusion that an

excess carrier “is not entitled to damages in its own right, or statutory or punitive damages,”

and that an excess carrier could not proceed on theories of “breach of a duty of good faith


       7
        Id. at 482 (citing Employers Cas. Co., 444 S.W.2d at 610).
       8
        Id. at 485 (Hecht, J., concurring).
       9
        Id. (Hecht, J., concurring).
       10
            Id. at 486 (Hecht, J., concurring).

                                                  6
and fair dealing, . . . violations of the Texas Deceptive Trade Practices–Consumer Protection

Act,” or “article 21.21 of the Texas Insurance Code,” all of which provided extra-contractual

remedies to insureds.11 In saying that an excess carrier’s “only cause of action is for

negligence,” the court was not saying that contractually based rights were foreclosed. The

court was simply placing limits on the availability of tort and extra-contractual remedies.

       It is well-recognized by the Supreme Court of Texas that when more than one policy

covers an occurrence, “all insurers whose policies are triggered must allocate funding of the

indemnity limit among themselves according to their subrogation rights.”12 A Texas court

of appeals had no difficulty concluding that when an excess carrier sued to recover a primary

carrier’s policy limits after the excess carrier had paid an agreed judgment, the excess carrier

had stated a cause of action for subrogation.13 That court reasoned that “[s]ubrogation may

be contractual (conventional) or equitable” and “the doctrine of subrogation is given a liberal

application and is broad enough to include every instance in which one person, not acting

voluntarily, has paid a debt for which another was primarily liable and which in equity and




       11
            Id. at 485–86 (Hecht, J., concurring).
       12
          Am. Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 855 (Tex. 1994); see also CNA
Lloyds of Texas v. St. Paul Ins. Co., 902 S.W.2d 657, 661 (Tex. App. - Austin 1995, writ dism’d by
agr.) (holding that when continuous acts of malpractice resulted in one injury that triggered coverage
under two insurance policies, one carrier “was entitled to equitable subrogation against” the other)
(citing Employers Cas. Co. v. Transp. Ins. Co., 444 S.W.2d at 609–10).
       13
        Argonaut Ins. Co. v. Allstate Ins. Co., 869 S.W.2d 537, 543 (Tex. App. - Corpus Christi
1993, writ denied).

                                                     7
good conscience should have been discharged by the latter.”14 Under the doctrine of

equitable subrogation, “an excess insurer, paying a loss under a policy, ‘stands in the shoes’

of its insured with regard to any cause of action its insured may have against a primary

insurer responsible for the loss.”15 An insurer has a duty to indemnify an insured for losses

covered by the insurance policy.16

       Caliber One and Hartford point to this circuit’s decision applying Texas law in St.

Paul Mercury Insurance Co. v. Lexington Insurance Co., in which two excess carriers

asserted, among other claims, that two primary carriers were “negligen[t] in the handling of

[the insured’s] defense.”17 This court made the unremarkable statement in this context that

an “equitable subrogation argument fails from the start if [the excess carriers] are unable to

establish [the insured] would have a cause of action against [the primary insurers] for

negligence.”18 This court concluded that there was no evidence that “the defense provided

       14
            See id. at 541-42.
       15
         Gen. Star Indem. Co. v. Vesta Fire Ins. Corp., 173 F.3d 946, 949 (5th Cir. 1999) (quoting
Westchester Fire Ins. v. Heddington Ins., 883 F. Supp. 158, 162 (S.D. Tex. 1995)); see also Am.
Centennial Ins. Co. v. Canal Ins. Co., 843 S.W.2d 480, 482 (Tex. 1992) (“Under th[e] theory [of
equitable subrogation], the insurer paying a loss under a policy becomes equitably subrogated to any
cause of action the insured may have against a third party responsible for the loss.”).
       16
         See, e.g., Employers Cas. Co. v. Block, 744 S.W.2d 940, 944 (Tex. 1988) (holding that an
insured can recover for damages if it proves the damages are covered by the policy), overruled on
other grounds by State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 714 (Tex. 1996); Great
Am. Lloyds Ins. Co. v. Mittlestadt, 109 S.W.3d 784, 786 (Tex. App. - Fort Worth 2003, no pet.)
(explaining that the duty to indemnify arises if “the underlying litigation establishes liability for
damages covered by the insuring agreement of the policy”) (emphasis omitted).
       17
            78 F.3d 202, 208 (5th Cir. 1996).
       18
            Id.

                                                 8
[by the primary carriers] gave rise to a negligence cause of action.”19 Admittedly, there is

language in that decision suggesting that all equitable subrogation claims must be based on

negligence in the insurance context.20 Nevertheless, this court’s actual holding was that,

based on contractual provisions in the insurers’ respective policies, the excess carriers were

entitled to recover the primary carriers’ full policy limits.21 This court did not discuss the

nature of the cause of action that led to this result or the fact that Texas law has not

recognized a direct cause of action by an excess carrier against a primary carrier, but instead,

pins liability on subrogation.22

        This circuit had previously examined Texas subrogation law in Vesta Insurance Co.

v. Amoco Production Co. and concluded that “what Texas courts term ‘conventional

subrogation,’ (subrogation that arises by contract) as distinguished from ‘legal subrogation’

        19
             Id. at 209.
        20
         See id. at 208 n.21 (citing and quoting Employers Nat’l Ins. Co. v. Gen. Accident Ins. Co.,
857 F. Supp. 549, 552 (S.D. Tex. 1994) for the proposition “that before an excess carrier can recover
under a theory of equitable subrogation, ‘the excess carrier has to prove that the primary carrier was
negligent in fulfilling its duties to the insured under the primary policy’s terms’”); id. (“Thus, the fact
that Centennial and St. Paul brokered a settlement within their combined policy limits supports our
conclusion that [the excess carriers] may not rely on the theory of equitable subrogation.”).
        21
             Id. at 210.
        22
          See Am. Centennial Ins. Co. v. Canal Ins. Co., 843 S.W.2d 480, 483 (Tex. 1992) (“[W]e
hold that an excess carrier may bring an equitable subrogation action against the primary carrier. . . .
[W]e decline at this time to permit a direct action.”); see also Employers Cas. Co. v. Transp. Ins. Co.,
444 S.W.2d 606, 610 (Tex. 1969) (“[I]f the subrogation provision in its policy does not authorize
recovery by [a primary insurer] from [another primary insurer] of a pro rata part of the sum paid as
an attorney’s fee in defense of [a suit against the insured], equitable subrogation does.”); cf. Gen. Star
Indem. Co. v. Vesta Fire Ins. Corp., 173 F.3d 946, 950 (5th Cir. 1999) (“[W]e declined to extend
directly to co-insurers the duty owed by an insurer to its insured under Stowers.”) (citing Foremost
County Mut. Ins. Co. v. Home Indem. Co., 897 F.2d 754 (5th Cir. 1990)).

                                                    9
(subrogation that arises by operation of law) . . . is an equitable concept and thus is governed

by the principles of equity.”23 This court concluded that the distinction between the two is

that “Texas courts ‘generally allow a subrogee claiming against a third party under

conventional subrogation to recover without regard to the relative equities of the parties.’”24

This court recognized that the right to subrogation based on contract rights is broader, not

narrower, than equitable subrogation: “Texas law further recognizes that an underwriter is

entitled to the benefits of subrogation as a matter of law (as distinguished from equity) even

if its insured’s right of recovery is contractual.”25

       In its motion for summary judgment, Royal characterized its claim against Hartford

and Caliber One as one for equitable subrogation. Royal has maintained throughout the

district court proceedings and this appeal that the primary carriers were required to exhaust

their policy limits before Royal’s excess policy was triggered based on a provision in Royal’s

policy with Methodist. Royal made plain that it was seeking subrogation under Texas law.26

No allegation or proof of negligence was required.

       The magistrate also erred in concluding that Royal could not pursue a claim against



       23
        986 F.2d 981, 988 (5th Cir. 1993) (quoting Lexington Ins. Co. v. Gray, 775 S.W.2d 679,
683 (Tex. App. - Austin 1989, writ denied)).
       24
            Id. (quoting Lexington Ins. Co., 775 S.W.2d at 683).
       25
            Id.
       26
          Cf. Gen. Star Indem. Co., 173 F.3d at 951 (rejecting a “hyper-technical reading” of
pleadings asserting an equitable subrogation claim that had framed the breach of duty as one owed
to a co-insurer rather than the insured).

                                                  10
the primary carriers because Methodist indicated in a letter that its primary insurance

coverage under the Hartford and Caliber One policies was limited to $1,000,000, and

Methodist never demanded that Hartford or Caliber One pay more than they did. The

Supreme Court of Texas recognized equitable subrogation as a remedy for excess carriers

precisely because an insured who has excess insurance coverage may not have any incentive

to press its primary carrier for the full limits of its policy. In Canal, the Texas court said:

       Stowers27 and Ranger County28 imposed clear duties on the primary carrier to
       protect the interests of the insured. The primary carrier should not be relieved
       of these obligations simply because the insured has separately contracted for
       excess coverage. In this situation, where the insured has little incentive to
       enforce the primary carrier’s duties, the excess carrier should be permitted to
       do so through equitable subrogation.29

An insured cannot reduce its primary policy limits to the detriment of its excess carrier any

more than it can expand those limits. To allow Methodist to estop its excess carrier would

give Methodist the unilateral right to determine when primary policy limits were exhausted

within the meaning of its excess policy. The limits of the primary policies are questions to

be determined by the policies themselves, not the insured, just as the question of whether



       27
         G.A. Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544 (Tex. Comm’n App. 1929,
holding approved).
       28
            Ranger County Mut. Ins. Co. v. Guin, 723 S.W.2d 656 (Tex. 1987).
       29
          Am. Centennial Ins. v. Canal Ins. Co., 843 S.W.2d 480, 483 (Tex. 1992); see also Gen. Star
Indem. Co., 173 F.3d at 950 n.18 (“In recognizing the availability of [equitable subrogation], the
Texas Supreme Court reasoned that, if excess carriers were not subrogated to the claims of their
insureds, primary insurers would have less incentive to settle within their policy limits and might be
tempted to ‘gamble’ with excess carriers’ money when potential judgments approach the primary
insurers’ limits.”) (citing Canal, 843 S.W.2d at 483) (internal citations ommitted).

                                                 11
those limits have been exhausted is determined by the policies.

                                                 III

       The remaining issue is whether the primary coverage available to Methodist was

$1,000,000, as Hartford and Caliber One contend, or $2,000,000 or $3,000,000 as Royal

contends. The Hartford policy had a $1,000,000 limit for each year it was in effect, as did

the Caliber One policy. The magistrate judge correctly concluded that under Texas law,

there may be coverage under more than one policy “for a single claim involving indivisible

injury,”30 and in such circumstances, the Texas Supreme Court has held that “[i]f a single

occurrence triggers more than one policy, covering different policy periods, . . . the insured’s

indemnity limit should be whatever limit applied at the single point in time during the

coverage periods of the triggered policies when the insured’s limit was highest.”31 This

precludes “stacking” coverage under policies.32 Conversely, if there were more than one

occurrence and the injury were divisible, then the limits for each occurrence would be

$1,000,000.33

       Whether there was one occurrence or more is determined by the policies’ respective

terms. The magistrate held that the general commercial liability provisions in Hartford’s and


       30
            Am. Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 853 (Tex. 1994).
       31
            Id. at 855.
       32
         Id. at 853 (“The consecutive policies, covering distinct policyperiods, could not be ‘stacked’
to multiply coverage for a singe claim involving indivisible injury.”).
       33
        Id. at 854 n.22 (“Policy language such as ‘occurrence’ or ‘Per Claim Occurrence’ generally
measures policy deductibles or self-insured retentions as well as policy limits.”).

                                                  12
Caliber One’s policies are not implicated by the Treviño family’s allegations, and Royal has

failed to brief that issue in this court. Accordingly, we consider only the professional

liability provisions.34

       Hartford’s policy, which was in effect from April 1, 1997 until April 1, 1999, stated

in the “coverages” section:

       SECTION I – COVERAGES
       COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE
       LIABILITY
       1.   Insuring Agreement.
            a.     We will pay those sums that the insured becomes legally obligated to
                   pay as damages because of “bodily injury” or “property damage” to
                   which this insurance applies. . . .
            b.     This insurance applies to “bodily injury” and “property damage” only
                   if:
            (1)    The “bodily injury” or “property damage” is caused by an
                   “occurrence” . . . ; and
            (2)    The “bodily injury” or “property damage” occurs during the policy
                   period.
                                           ***
       SECTION V – DEFINITIONS
                                           ***
       12.  “Occurrence” means an accident, including continuous or repeated
            exposure to substantially the same general harmful conditions.

       The professional liability form provided coverage for a “medical incident,” which is

defined as:

       any act or omission in the furnishing of professional health care services to
       any person, including:


       34
          See Dardar v. Lafourche Realty Co., 985 F.2d 824, 831 (5th Cir. 1993) (“Questions posed
for appellate review but inadequately briefed are considered abandoned.”); FED. R. APP. P.
28(a)(9)(A) (requiring argument to contain “appellant’s contentions and the reasons for them, with
citations to the authorities and parts of the record on which the appellant relies”).

                                               13
       (a)    the furnishing of food, beverages, medications or appliances in
              connection with such services;
                                            ***
       Any such act or omission together with all related acts or omissions in the
       furnishing of such services shall be considered one “medical incident.”

       Caliber One’s policy was in effect from April 1, 1999 through July 1, 2000. In the

general “COVERAGES” section that applies to both the commercial general liability and the

professional liability insurance, the policy provides, “This insurance applies to ‘bodily

injury’ . . . only if: (1) The ‘bodily injury’ . . . is caused by an ‘occurrence’ . . . ; and (2) The

‘bodily injury’ . . . occurs during the policy period.” “Occurrence” is defined as “an

accident, including continuous or repeated exposure to substantially the same general

harmful conditions.” The section of the policy dealing more specifically with professional

liability provides:

       COVERAGE P. PROFESSIONAL
       1.  Insuring Agreement
           A.     We will pay those sums that the insured becomes legally
                  obligated to pay as “damages” because of any act, error or
                  omission in the rendering or failure to render “professional
                  services” by an insured or by any person for whose acts, errors
                  or omissions an insured is legally responsible.

“Professional services” means nursing home services. The declarations page reflects that the

“Professional Each Claim Limit” is $1,000,000, and the section addressing policy limits says

that “the Each Claim Limit is the most we will pay under Coverage P [professional liability]

for the sum of ‘damages’ . . . arising out of any one claim” regardless of the number of

insureds.

       Royal’s excess insurance policy was in effect from April 1, 1999 through July 1,

                                                 14
2000, and provides:

       I. Insuring Agreement
              1.    We will pay on behalf of the Insured those sums in excess of the
                    “Retained Limit” which the Insured becomes legally obligated
                    to pay as damages to which this insurance applies because of:
                    (a)    “Bodily injury” . . . which occurs during the policy
                           period and is caused by an “Occurrence”;

Royal’s policy defines “Retained Limit” as “the total of the applicable limits of the

‘Underlying Insurance’ shown on the declaration page plus the applicable limits of any other

insurance collectible by the Insured.” It defines “Occurrence” as “[a]n accident, including

continuous or repeated exposure to substantially the same general harmful conditions.”

Another pertinent provision provides:

       9.         Loss Payments
                  (a)   We will have liability for any one “Occurrence” . . . only when
                        the amount of the “Retained Limit” with respect to such
                        “Occurrence” has been paid by:
                        (i)   the Insured;
                        (ii)  us on behalf of the Insured (other than under this policy);
                              or
                        (iii) the Insured’s underlying insurer.

       In the Treviño family’s suit against Methodist and the five nurses employed at the

nursing home, the live pleading at the time the case was settled focused on the last several

months of Treviño’s life and the injuries and conditions leading to her death, all of which

occurred during Caliber One’s policy period.35 However, considerable discovery was


       35
            The Treviño plaintiffs’ petition alleged:

               Because of her condition on admission [to the nursing home] and at all times
       thereafter, Mrs. Treviño was known to be at risk for problems such as dehydration,

                                                    15
conducted in that case, and several experts presented reports. At least one expert opined that

Methodist employees were negligent at different times during the period the Hartford policy

was in effect and that this negligence caused discrete, although relatively minor, injuries to

Treviño. An expert concluded that the failure to clean Treviño properly and to apply

appropriate medication led to rashes. Other breaches of the standard of care allegedly led

to a urinary tract infection. The alleged failure to supervise Treviño and properly secure her

in her wheelchair caused bruises on her hands. Treviño suffered severe stomach pain that

was ignored and could have been avoided or relieved. Nurses massaged damaged tissue,

which was allegedly contrary to the standard of care, and caused Treviño to suffer skin

tearing and pain. These breaches of the standard of care and the resulting injuries are

divisible from the alleged acts of negligence that occurred a year later that caused

pneumonia, and a massive, infected Stage IV pressure sore and resulting sepsis, leading to

Treviño’s death. If Treviño’s injuries prior to those she sustained in the months preceding

her death had been more severe, such as a broken arm on one occasion and a skull fracture

a few months later, we would have no difficulty in concluding that these discrete injuries and



       malnutrition and skin breakdown. Unfortunately, during the last several months of
       her stay at Turner Geriatric Center, the facility and its staff failed to take adequate
       measures to guard against these problems. Mrs. Treviño’s health deteriorated to the
       point of requiring hospitalization on several occasions, including instances on October
       1, 1999; November 2, 1999; and December 21, 1999, for treatment of problems such
       as urinary tract infections and severe dehydration.

        Other allegations chronicled events that occurred from December 1999 through Treviño’s
death in April 2000, emphasizing the acts or omissions that allegedly led to the development of the
Stage IV and other pressure sores, pneumonia, and a bacterial infection.

                                                 16
their causes were divisible from the acts or omission that later caused the Stage IV pressure

sore and other ailments occurring more than a year later.36 The fact that Treviño instead

suffered rashes, bruises, pain, and infections in the year before she developed a severe

pressure sore and other conditions does not alter the analysis.

       We note that the Hartford policy does not treat the acts and omissions leading to

discrete injuries to Treviño that occurred when its policy was in effect as separate

occurrences. Hartford’s policy provides that “any act or omission in the furnishing of

professional health care services to any person . . . together with all related acts or omissions

in the furnishing of such services shall be considered one ‘medical incident.’”

       Caliber One’s policy provisions differ from Hartford’s. Caliber One’s policy defines

an “occurrence” as “an accident, including continuous or repeated exposure to substantially

the same general harmful conditions,” and Caliber One contends that the injuries Treviño

sustained during its policy period were the result of “continuous or repeated exposure to

substantially the same general harmful conditions” to which Treviño was exposed during

Hartford’s policy period. In another context, which was employees’ sexual molestation of

minors,37 this circuit expressed its agreement with the Seventh Circuit’s conclusion that

       36
          See H. E. Butt Grocery Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 150 F.3d 526,
533 (5th Cir. 1998) (applying Texas law and holding that “multiple acts of sexual abuse . . . of the
same child was one occurrence per policy period) (citing Soc’y of the Roman Catholic Church of the
Diocese of Lafayette and Lake Charles, Inc. v. Interstate Fire & Cas. Co., 26 F.3d 1359, 1365–66
(5th Cir. 1994) (applying Louisiana law and holding that “[w]hen the priest molested the same child
during the succeeding policy year, again there was both bodily injury and an occurrence. Thus, each
child suffered an ‘occurrence’ in each policy period in which he was molested.”)).
       37
            H. E. Butt Grocery Co., 150 F.3d at 531.

                                                 17
“‘continuous or repeated exposure to conditions’ sounds like language designed to deal with

asbestos fibers in the air, or lead-based paint on the walls, rather than with priests and

choirboys.”38 In the case before us, most if not all of the alleged negligence involved acts

or omissions of caregivers, not the conditions of the nursing home’s facilities or the ambient

air. The Supreme Court of Texas contrasted the typical “occurrence” language that includes

“continuous or repeated exposure to substantially the same general conditions” with language

tailored to fit circumstances health care providers face:

       The APIE policy language that defines the scope of “Each Claim Occurrence”
       to include “[a] series of acts or occurrences,” is apparently intended to have
       a coverage effect similar to the “continuous or repeated exposure” unifying
       directive in commercial liability policies – but in a manner that is meaningful
       in the medical context. For example, medical malpractice frequently involves
       an operation or an extended course of treatment. A malpractice event may
       involve numerous independent grounds of negligence that cannot be unified
       as “repeated exposure to substantially the same conditions,” but that
       nevertheless constitute “a series of acts or occurrences” that are related and
       form a single malpractice claim.39

       The “numerous independent grounds of negligence” that were alleged to have

occurred throughout Treviño’s stay at the nursing home “cannot be unified as ‘repeated

exposure to substantially the same conditions.’”40 The acts and omissions that caused

Treviño’s Stage IV pressure sore, pneumonia, and other injuries that allegedly resulted in her

death are divisible from the acts and omissions and Treviño’s resulting injuries during


       38
            Lee v. Interstate Fire & Cas. Co., 86 F.3d 101, 104 (7th Cir. 1996).
       39
            Am. Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 853–54 n.21 (Tex. 1994).
       40
            Id.

                                                  18
Hartford’s policy period.

       Within Caliber One’s policy period, however, its policy limit is nevertheless

$1,000,000 for the various acts of negligence and the corresponding injuries because its

insured, Methodist, had only one claim for indemnity for the damages Treviño’s family

sought.        The Caliber One policy provided that “regardless of the number

of . . . Insureds . . . the Each Claim Limit is the most we will pay under Coverage P

[professional liability] for the sum of ‘damages’ . . . arising out of any one claim.” The

reference to “any one claim” is to a claim by the insured, not the number of the underlying

claims against the insured.

       The claims asserted in the Treviño family’s lawsuit against Methodist were not “a

single claim involving indivisible injury,” and the rule set forth in the Supreme Court of

Texas’s decision in American Physicians Insurance Exchange prohibiting “stacking” does

not apply.41 This does not mean, however, that Royal is entitled to “stack” the limits in both

primary policies before it is obligated to indemnify Methodist. Royal’s policy period did not

overlap with Hartford’s. Coverage under the Hartford policy applied only to occurrences

from April 1, 1997 through April 1, 1999. Hartford’s policy did not apply to the acts and

omissions that occurred after April 1, 1999. Royal’s excess policy covered occurrences from

April 1, 1999 through July 1, 2000. Royal’s policy provided that the “retained limit” that

must be paid before Royal’s excess coverage became available was the “applicable limits of



       41
            Id. at 853 (emphasis added).

                                             19
any other insurance collectible by the insured.” As we have seen, Hartford’s limits were not

applicable to acts or omissions occurring after April 1, 1999. Royal’s express policy

provisions do not permit Royal to look to Hartford for payment. This court has held that

“[e]ach carrier is responsible, up to its occurrence limits, for all damages emanating from

[occurrences] that occur during the insurer’s policy period. All [occurrences] occurring

outside a carrier’s policy are covered by the insurer on the risk at the time of the

[occurrence].”42 This court recognized that such an “approach maximizes coverage for the

insured and allocates the loss according to the policy language.”43

                                          *****

       Caliber One was required to exhaust its policy limits of $1,000,000 before Royal was

obligated to indemnify Methodist. Accordingly, the magistrate erred in granting Caliber

One’s motion for summary judgment. We AFFIRM the summary judgment in favor of

Hartford, REVERSE the summary judgment in favor of Caliber One, and REMAND this

case to the district court for further proceedings.




       42
          Soc’y of the Roman Catholic Church of the Diocese of Lafayette and Lake Charles, Inc.
v. Interstate Fire & Cas. Co., 26 F.3d 1359, 1366 (5th Cir. 1994).
       43
            Id.

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