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Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd's London

Supreme Court of Texas

October 6, 2009, Argued; December 17, 2010, Opinion Delivered

NO. 08-0246

Opinion

 [*121]  We deny Gilbert Texas Construction's motion for rehearing. We withdraw our opinion of June 4, 2010 and substitute the following in its place.

During a Dallas Area Rapid Transit Authority (DART) construction project, unusually heavy rains resulted in water damage to a building adjacent to the construction site. The owner of the building sued DART and its contractors, alleging that construction activities caused the water damage. The building owner sued the general contractor in tort and for breach of contract. In the breach of contract claim, the building owner alleged that the general contractor assumed liability for the damage under its contract with DART. Except for the breach of contract claim, the trial court granted summary judgment for the general contractor on the basis of governmental immunity. The general contractor later settled the breach of contract claim and sought indemnity from its insurers. The excess insurer denied coverage.

We address two issues. The  [**2] first is whether the contractual liability exclusion in a Commercial General Liability (CGL) policy excludes coverage for property damage when the only basis for liability is that the insured contractually agreed to be responsible for the damage, and if so, whether an exception to the exclusion operates to restore coverage. We hold that the exclusion applies, the exception does not, and there is no coverage. The second issue is whether Gilbert is entitled to recover its settlement payment under an estoppel theory. We hold it is not.

I. BACKGROUND

A. The Underlying Suit

In 1993, DART contracted with Gilbert Texas Construction, L.P., as general contractor,  [*122]  to construct a light rail system. One part of the contract required Gilbert to protect the work site and surrounding property:

10. Protection of Existing Site Conditions

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327 S.W.3d 118 *; 2010 Tex. LEXIS 965 **; 54 Tex. Sup. J. 367

GILBERT TEXAS CONSTRUCTION, L.P., PETITIONER, v. UNDERWRITERS AT LLOYD'S LONDON, RESPONDENT

Prior History:  [**1] ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE FIFTH DISTRICT OF TEXAS.

Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd's London, 2010 Tex. LEXIS 407 (Tex., 2010)

CORE TERMS

coverage, insured, breach of contract claim, indemnity, contractual liability, court of appeals, damages, contracts, argues, summary judgment, property damage, trial court, hold-harmless, contractual, assumes, breach of contract, tort liability, duty to indemnify, duty to defend, immunity, parties, bodily injury, obligations, prejudiced, principles, estoppel, asserts, deny coverage, courts, lessee

Evidence, Burdens of Proof, Burden Shifting, Insurance Law, Claim, Contract & Practice Issues, General Overview, Civil Procedure, Summary Judgment, Motions for Summary Judgment, Cross Motions, Appeals, Summary Judgment Review, Reviewability of Lower Court Decisions, Preservation for Review, Appellate Jurisdiction, State Court Review, Policy Interpretation, Judicial Review, Plain Language, Ambiguous Terms, Unambiguous Terms, Liability & Performance Standards, Good Faith & Fair Dealing, Duty to Defend, Indemnification, Coverage Favored, Construction Against Insurers, Business & Corporate Compliance, Contracts Law, Contract Conditions & Provisions, Indemnity Clauses, Business Insurance, Commercial General Liability Insurance, Estoppel & Waiver, Policy Coverage Issues