Case: 10-20726     Document: 00511628898         Page: 1     Date Filed: 10/11/2011




            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                                            FILED
                                                                         October 11, 2011

                                       No. 10-20726                        Lyle W. Cayce
                                                                                Clerk

MID-CONTINENT CASUALTY COMPANY,

                                                   Plaintiff - Appellee

v.

LEIGH ANNE BROCK,

                                                  Defendant - Appellant



                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:09-CV-3002


Before WIENER, CLEMENT, and ELROD, Circuit Judges.
PER CURIAM:*
        This is an insurance coverage dispute stemming from restoration work
performed by Plaintiff-Appellee Mid-Continent Casualty Company’s (“Mid-
Continent”) insured, non-party John Ashley Strickling, after a fire at Defendant-
Appellant Leigh Anne Brock’s Texas home. Brock appeals the district court’s
declaratory judgment that Mid-Continent had no duty to indemnify Strickling
for a judgment obtained by Brock in an underlying Texas state court lawsuit.


        *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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Based solely upon the jury’s findings in the underlying lawsuit, the district court
held that Strickling’s conduct was intentional and that the damages suffered by
Brock did not arise from an “occurrence” as defined by the policy, thereby
precluding any duty to indemnify. We disagree and REVERSE and REMAND
this case for further proceedings.
                            FACTS AND PROCEEDINGS
      The determined facts are remarkably simple. Brock’s home was
significantly damaged in a fire. Strickling, the owner of Restoration Services of
Houston and Fire Restoration Services of Houston, approached Brock and
offered to restore and remediate her home, and a deal was reached. The job went
poorly. Brock brought suit against Strickling in Texas state court,1 alleging
causes of action sounding in negligence, breach of contract, conversion and
unjust enrichment, and the Texas Deceptive Trade Practices-Consumer
Protection Act (the “DTPA”).2 The jury rendered a verdict in favor of Brock.
      Specifically, the jury answered the following relevant questions
affirmatively:
      (1) Did John Ashley Strickling engage in any false, misleading, or
      deceptive act or practice that Leigh Anne Brock relied on to her
      detriment and that was a “producing cause” of damages to Leigh
      Anne Brock?

      ...

      (2) Did John Ashley Strickling engage in any unconscionable action
      or course of action that was a producing cause of damages to Leigh
      Anne Brock?

      ...

      1
          Brock also sued ASI Lloyds, Inc., her insurer.
      2
          Mid-Continent defended Strickling at trial.

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      (4) Did John Ashley Strickling engage in any such conduct
      knowingly and/or intentionally?

      The commercial general liability policy issued by Mid-Continent to
Strickling covers damages that Strickling is legally obligated to pay for “bodily
injury” or “property damage” caused by an “occurrence.” As defined in the policy,
“‘[o]ccurrence’ means an accident, including continuous or repeated exposure to
substantially the same general harmful conditions.” Before the state court
entered final judgment in the underlying lawsuit, Mid-Continent filed this
lawsuit in federal court, seeking a declaratory judgment that it did not have a
duty to indemnify Strickling for damages awarded in the underlying lawsuit.
Mid-Continent moved for summary judgment, arguing that the verdict in the
underlying lawsuit established that the damages did not arise out of an
“occurrence,” thus precluding any duty to indemnify. The district court referred
Mid-Continent’s motion to a magistrate judge for resolution. The magistrate
judge issued a report and recommendation (“R&R”) recommending that Mid-
Continent’s motion be granted. After reviewing Brock’s objections, the district
court accepted the R&R and entered final judgment in favor of Mid-Continent.
Brock timely appealed.
                          STANDARD OF REVIEW
      “The grant or denial of a motion for summary judgment is reviewed de
novo.” Smith v. Am. Family Life Assurance Co. of Columbus, 

, 215
(5th Cir. 2009). Summary judgment is proper only if there are no genuine issues
of material fact and the moving party is entitled to judgment as a matter of law.
FED. R. CIV. P. 56(a). We review all evidence in the light most favorable to the
nonmoving party.


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                                 DISCUSSION
      The parties agree that Texas law governs this dispute. “In Texas, the
insured carries the burden to establish the insurer’s duty to indemnify by
presenting facts sufficient to demonstrate coverage.” Nat’l Union Fire Ins. Co.
of Pittsburgh, Pa. v. Puget Plastics Corp., 

, 401 (5th Cir. 2008)
(citations omitted). Under the Mid-Continent policy, Strickling is entitled to
indemnification for damages that he becomes legally obligated to pay because of
“property damage” or “bodily injury” that is “caused by an occurrence.” Strickling
is legally obligated to pay Brock the sums awarded in the underlying lawsuit.
The district court ruled that the jury findings in the Texas state court case
compel the conclusion that the damage to Brock’s house was not “caused by an
occurrence.” We disagree.
      The Mid-Continent policy defines the term “occurrence” as “an accident,
including continuous or repeated exposure to conditions, which results in Bodily
Injury or Property Damage neither expected nor intended from the standpoint
of the Insured.” “In other words, an insured’s conduct is an occurrence if it: (1)
qualifies as an accident and (2) results in harm that the insured did not expect
or intend.” Puget Plastics 

–02. Like most commercial
general liability policies, the Mid-Continent policy does not define the term
“accident.” 9A COUCH ON INSURANCE § 129:3 (3d ed. 2010). Therefore, we must
interpret it in accordance with its “generally accepted or commonly understood
meaning.” See Lamar Homes, Inc. v. Mid-Continent Cas. Co., 

, 8
(Tex. 2007). In Texas, deliberate acts may constitute an accident unless: (1) the
resulting damage was “highly probable” because it was “the natural and
expected result of the insured’s actions”; or (2) “the insured intended the injury.”
See 

Intent is presumed in cases of intentional tort. 

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        The focus of the inquiry as to the intent or expectation of the insured is
whether the harm was intended or expected, not whether the conduct itself was
intended or expected. Texas courts have rejected the notion that “if an actor
intended to engage in the conduct that gave rise to the injury, there can be no
‘accident.’” Trinity Universal Ins. Co. v. Cowan, 

, 828 (Tex. 1997)
(noting that “this construction of the term ‘accident’ would render surplusage the
intentional injury exclusion of many insurance policies”).
        “The determination of whether an insured’s faulty workmanship was
intended or accidental is dependent on the facts and circumstances of the
particular case.” Lamar 

. Cognizant that “[t]he
underlying case often does not resolve all the factual issues necessary to
determine coverage because issues relevant to the question of coverage can be
irrelevant to the question of the insured’s liability,” Puget 

, we turn to the adjudicated facts of the underlying lawsuit. Parroting the
Lamar Homes test, Mid-Continent argues that the jury’s verdict establishes
(1) that Brock’s damages were “highly probable because they were the natural
and expected result of Strickling’s action” and (2) that Strickling “actually
intended the injury.” The district court agreed with Mid-Continent’s first
argument, holding that “the jury’s verdict makes it clear that the injuries to
Brock were the reasonably foreseeable result of Strickling’s failure to do what
he said he was going to do.” We consider each argument in turn.
A.      Does the jury’s verdict demonstrate that Brock’s damages were “highly
        probable” because they were “the natural and expected result” of
        Strickling’s actions?

        First, the jury’s verdict does not establish that Brock’s damages were
highly probable because they were the natural and expected result of Strickling’s
action. The jury found that Strickling engaged in a “false, misleading or

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deceptive act or practice” and an “unconscionable action or course of action” that
was a producing cause of Brock’s damages. The state court instructed the jury
that a “producing cause” is “an efficient, exciting, or contributing cause that, in
a natural sequence, produced the damages, if any.” But the jury finding that
Strickling’s action was a “producing cause” of Brock’s damages does not establish
whether those damages were a natural and expected result of his action. Proof
of producing cause does not require a showing that an accident was foreseeable.
General Motors Corp. v. Saenz ex rel. Saenz, 

, 357 (Tex. 1993).
The jury made no determination as to whether Brock’s damages were the
expected result of Strickling’s action, much less whether the damages were
highly probable.
B.      Does the jury’s verdict demonstrate that Strickling intended to injure
        Brock?

        Next, the jury’s verdict does not establish that Strickling actually intended
the damages or injuries that are the subject of the underlying lawsuit. To be
sure, the verdict shows that Strickling intentionally engaged in conduct that led
to Brock’s injuries. But, as Mid-Continent concedes, Texas law draws a
distinction between the intent to engage in an act and the intent to injure. See
Bituminous Cas. Corp. v. Vacuum Tanks, 

, 1054 (5th Cir. 1996)
(“[U]nder Texas law the focus is not on whether the insured’s conduct or actions
were intentional, but on whether the insured intended the damages or injuries
which are the subject of the underlying claims.”).
        The jury instructions defined “intentionally” as “actual awareness of the
falsity, deception, or unfairness of the conduct in question . . . coupled with the
specific intent that the consumer act in detrimental reliance on the falsity or
deception.” The jury awarded damages to Brock for loss of the benefit of the


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bargain, loss of market value, loss of contents of the residence, loss of credit, and
mental anguish. Mid-Continent argues that because “detriment” means
“damage” or “injury,”3 the jury’s conclusion that Strickling intended Brock to act
in detrimental reliance means that he intended to cause the specific damages
Brock suffered. But that “detrimental reliance,” a legal term of art, is not
synonymous with “detriment” needs little comment.
      In Puget Plastics, we held that “knowing violations of the DTPA are not
intentional 

. Here, and unlike in Puget Plastics, the jury
found that Strickling acted both “knowingly” and “intentionally.” Mid-Continent
argues that Strickling’s DTPA violations “equate” with an intentional tort, and,
as such, we should infer that he intended Brock’s injuries. But “an insured
intends to injure or harm another if he intends the consequences of his act, or
believes that they are substantially certain to follow.” State Farm Fire & Cas.
Co. v. S.S., 

, 378 (Tex. 1993) (citing RESTATEMENT (SECOND) OF
TORTS § 8A (1965)). Even assuming arguendo that an intentional violation of the
DTPA is an intentional tort, the only thing we can presume on this record is that
Strickling intended to “engage in a false, misleading, or deceptive act or practice”
and that he intended Brock to “act in detrimental reliance on the falsity or
deception.” That his conduct resulted in the types of injuries suffered by Brock
does not establish that Strickling intended those injuries. Indeed, examining the
“damages or injuries which are the subject of the underlying claims,” Bituminous
Cas. 

, the jury verdict, standing alone, does not support
the district court’s conclusion that Strickling intended Brock to suffer those




      3
       See BLACK’S LAW DICTIONARY 515 (9th ed. 2009) (defining detriment as “any loss or
harm suffered by a person or property”).

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injuries, particularly the loss of contents of the residence, the loss of credit, and
mental anguish.

                                 CONCLUSION
      The jury verdict does not answer the critical question of whether
Strickling intended that Brock suffer “the damages or injuries which are the
subject of the underlying claims.” Bituminous Cas. 

. In
order to meet the requirement of Lamar 

–9, there must
be more than a finding that the damages Strickling caused, particularly the loss
of the contents of the residence and the loss of credit, were merely natural,
probable, or foreseeable. Instead, there must be a determination by the district
court as to whether the damages were expected or intended.
      We decline to reach Mid-Continent’s alternative argument that very little
of the damages awarded by the jury constituted “bodily injury” or “property
damage” as required by the policy, leaving that determination to be made in the
first instance by the district court.
      The judgment of the district court is REVERSED and REMANDED for
further proceedings consistent with this opinion.




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