Dorvin D. Leis Company of Texas, Inc. v. Ohio Casualty Insurance Company D/B/A Liberty Mutual Group

Citation: Not availableDocket: 05-17-00548-CV

Court: Court of Appeals of Texas; February 13, 2018; Texas; State Appellate Court

Original Court Document: View Document

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The Court of Appeals for the Fifth District of Texas affirmed the trial court's judgment in the case of Dorvin D. Leis Company of Texas, Inc. v. Ohio Casualty Insurance Company d/b/a Liberty Mutual Group. The central issue was whether Liberty had a duty to defend Leis under a commercial liability insurance policy issued for the period from June 7, 2016, to June 7, 2017. Leis contested the trial court's decision to grant Liberty's motion for summary judgment while denying its own.

Leis, a heating and air conditioning contractor, was sued by Faisel Saleh in two separate actions, collectively referred to as the "Saleh Litigation." Saleh claimed that after a failed attempt to obtain service and a lack of response from Leis, he threatened to sue for discrimination based on race, religion, and ethnic background. He outlined four instances of alleged discriminatory behavior, including failure to return calls and neglecting to follow up after expressing his intention to sue.

The insurance policy included provisions defining coverage for bodily injury and property damage, stipulating that such coverage only applies if the injury or damage is caused by an occurrence within the policy period and coverage territory. The court ultimately upheld the trial court's ruling, affirming that Liberty was not obligated to defend Leis in the Saleh Litigation.

Saleh filed a lawsuit against Leis, alleging four counts of discrimination based on race, religion, and/or ethnic background, seeking $150,000 in damages. In a separate suit, Saleh sued Leis, Leis’s attorney, and a private process server for a defective return of service related to the first lawsuit. He claimed the process server intentionally provided false information and was paid by Leis and the attorney to do so, aiming to obstruct a Default Judgment. Saleh sought $12,039.99 in damages for breach of contract against the process server and for aggravated perjury and bribery against all three defendants. Leis requested a defense from Liberty under the relevant insurance policy, which Liberty denied. Leis subsequently retained counsel, resulting in the dismissal of Saleh's lawsuits, but incurred legal fees in the process. Afterward, Leis sued Liberty for breach of contract and violations of the Texas Insurance Code. Both Leis and Liberty filed for summary judgment; Leis contended that Liberty was obligated to defend against the Saleh Litigation, while Liberty argued that the litigation did not involve a covered occurrence under the policy. The trial court denied Leis’s motion and granted Liberty’s motion. The appeal followed, with the court noting that the review of summary judgments is conducted de novo, following established standards. Under Texas law, the insurer's duty to defend is determined by the eight corners rule, which looks at the allegations in the complaint and the insurance policy without assessing the truth of the allegations. Courts interpret pleadings liberally, resolving any doubts in favor of the insured.

In the absence of specific policy provisions, an insurer has no duty to defend against claims that have not been alleged or those that do not constitute bodily injury or property damage. The court referenced *Pine Oak Builders, Inc. v. Great Am. Lloyds Ins. Co.*, indicating it will not infer facts not in the pleadings. Leis argued that Saleh's claims implied harm due to failure to repair an air conditioning system, suggesting a duty to defend under the policy. However, Saleh's allegations centered on discrimination based on race or religion and a conspiracy to file a false return of service, neither of which constituted bodily injury or property damage as defined by the policy. The court concluded that Saleh's petitions did not establish a valid claim for coverage, resulting in Liberty Mutual having no duty to defend and no breach of contract. Consequently, Leis's claims under the Texas Insurance Code failed, and the trial court's judgment was affirmed. Costs of the appeal were awarded to Liberty Mutual.