Filed: Dec. 01, 1999
Latest Update: Mar. 02, 2020
Summary: IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _ No. 98-10904 _ FEDERATED MUTUAL INSURANCE COMPANY, Plaintiff, versus GRAPEVINE EXCAVATION INC.; ET AL, Defendants, GRAPEVINE EXCAVATION INC., Defendant - Third Party Plaintiff - Appellant, versus MARYLAND LLOYDS, a Lloyds Insurance Company, Third Party Defendant - Appellee. _ Appeal from the United States District Court for the Northern District of Texas _ December 1, 1999 Before JONES and WIENER, Circuit Judges, and WALTER, District
Summary: IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _ No. 98-10904 _ FEDERATED MUTUAL INSURANCE COMPANY, Plaintiff, versus GRAPEVINE EXCAVATION INC.; ET AL, Defendants, GRAPEVINE EXCAVATION INC., Defendant - Third Party Plaintiff - Appellant, versus MARYLAND LLOYDS, a Lloyds Insurance Company, Third Party Defendant - Appellee. _ Appeal from the United States District Court for the Northern District of Texas _ December 1, 1999 Before JONES and WIENER, Circuit Judges, and WALTER, District J..
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________________________________
No. 98-10904
_______________________________________
FEDERATED MUTUAL INSURANCE COMPANY,
Plaintiff,
versus
GRAPEVINE EXCAVATION INC.; ET AL,
Defendants,
GRAPEVINE EXCAVATION INC.,
Defendant - Third Party Plaintiff - Appellant,
versus
MARYLAND LLOYDS, a Lloyds Insurance Company,
Third Party Defendant - Appellee.
_________________________________________________________________
Appeal from the United States District Court
for the Northern District of Texas
_________________________________________________________________
December 1, 1999
Before JONES and WIENER, Circuit Judges, and WALTER, District
Judge.*
PER CURIAM:
CERTIFICATE FROM THE UNITED STATES COURT OF APPEALS FOR THE FIFTH
CIRCUIT TO THE SUPREME COURT OF TEXAS, PURSUANT TO THE TEXAS
CONSTITUTION, ART. 5, § 3-C AND RULE 58 OF THE TEXAS RULES OF
APPELLATE PROCEDURE
*
District Judge of the Western District of Louisiana, sitting
by designation.
TO THE SUPREME COURT OF TEXAS AND THE HONORABLE JUSTICES THEREOF:
I. STYLE OF THE CASE
The style of the case in which certification is made is
Grapevine Excavation, Inc., Defendant-Third Party Plaintiff-
Appellant versus Maryland Lloyds, Third Party Defendant-Appellee,
Case No. 98-10904, in the United States Court of Appeals for the
Fifth Circuit, on appeal from the United States District Court for
the Northern District of Texas. This case involves a determinative
question of state law, and jurisdiction of the case in the federal
courts is based solely on diversity of citizenship.
II. STATEMENT OF THE CASE
Maryland Lloyds (“Maryland”) issued a commercial general
liability insurance policy to Grapevine Excavation, Inc. (“GEI”).
Under the policy, Maryland had a duty to defend GEI from
proceedings instituted to recover damages covered by the insurance
policy. We have now held that Maryland breached this duty and have
rendered judgment in favor of GEI. We have retained jurisdiction,
however, for the limited purpose of deciding if GEI is entitled to
recover attorney’s fees that it incurred in obtaining this
favorable judgment against Maryland for breach of contract, i.e.,
failure to provide a legal defense.
Chapter 38 of the Texas Civil Practice and Remedies Code first
sets forth the general rule that litigants can recover reasonable
attorney’s fees incurred in a valid claim on, inter alia, a written
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contract.1 It then lists five exceptions:
This chapter does not apply to a contract issued by an
insurer that is subject to the provision of:
(1) Article 3.62, Insurance Code [this Article
was repealed in 1991];
(2) Section 1, Chapter 387, Acts of the 55th
Legislature, Regular Session, 1957 (Article
3.62-1, Vernon’s Texas Insurance Code) [this
Article was repealed in 1991];
(3) Chapter 9, Insurance Code;
(4) Article 21.21, Insurance Code; or
(5) the Unfair Claims Settlement Practices Act
(Article 21.21-2, Insurance Code).2
In Dairyland Mutual Ins. Co. v. Childress, an insurance
company was held liable for its policyholder’s attorney’s fees by
a state appellate court because the policyholder had successfully
pursued an action for breach of an insurance contract.3 On appeal
to the Supreme Court of Texas, the insurance company argued that it
was not liable for attorney’s fees under the predecessor to Chapter
38 of the Texas Civil Practice and Remedies code because, as an
insurance company, it was shielded from liability for attorney’s
fees by the predecessor to § 38.006. The Texas Supreme Court held
that:
Dairyland is a county mutual insurance company and as
such is not one of the insurors exempt from the
provisions of Art. 2226 [the predecessor to Chapter 38 of
the Civil Practice and Remedies Code]. See Tex. Ins.
Code Ann. Art. 7.22. Therefore, it is not exempt from a
1
See Tex. Civ. Prac. & Rem. Code § 38.001(8).
2
See id. § 38.006.
3
See 636 S.W.2d 282, 284 (Tex. App. —— Eastland, 1982).
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claim for attorney’s fees pursuant to Art. 2226.4
Texas appellate courts and this court have disagreed as to the
significance of this statement. We have interpreted the statement
to imply that “an insurer who falls within the provisions of
section 38.006 is exempt from the payment of attorney’s fees and
that only those insurers who do not qualify for the exemption are
subject to the payment of attorney’s fees.”5 By contrast, Texas
appellate courts have held that no such implication was intended,
and that, consistent with the decision of the court in Prudential
Ins. Co. v. Burke,6 the purpose of the exceptions now codified at
§ 38.006 is “to exclude only those claims against insurance
companies where attorney’s fees [are] already available by virtue
of other specific statutes.”7
III. QUESTION CERTIFIED
In a policyholder’s successful suit for breach of contract
against an insurance company that is subject to one or more of the
provisions listed in § 38.006, is the insurance company liable to
4
See Dairyland County Mutual Ins. Co. v. Childress, 650 S.W.2d
770, 774 (Tex. 1983).
5
Bituminous Cas. Corp. v. Vacuum Tanks, Inc., 975 F.2d 1130,
1133 (5th Cir. 1992); see also Lafarge Corp. v. Hartford Cas. Ins.
Co.,
61 F.3d 389, 402-03 (5th Cir. 1995).
6
614 S.W.2d 847 (Tex. App. —— Texarkana), writ ref’d n.r.e.,
621 S.W.2d 596 (1981).
7
Id. at 850.
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its policyholder for reasonable attorney’s fees incurred in
pursuing the breach-of-contract action, either under an Insurance
Code provision listed in § 38.006, or under § 36.001 if application
of one or more of those sections does not result in the award of
attorney’s fees?
IV. CONCLUSION
We disclaim any intention or desire that the Supreme Court of
Texas confine its reply to the precise form or scope of the
question certified. The answer provided by the Supreme Court of
Texas will determine the remaining issue in this case.
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