UNION TOWER CORPORATION,FROM A DISTRICT COURT APPELLANT, v. OF CRISWELL DEVELOPMENT COMPANY, APPELLEE

COURT OF APPEALS
FIFTH DISTRICT OF TEXAS
AT DALLAS
 
NO. 05-88-00502-CV
 
UNION TOWER CORPORATION,FROM A DISTRICT COURT
 
 
        APPELLANT,
 
 
v. OF
 
 
CRISWELL DEVELOPMENT COMPANY,
 
 
        APPELLEE.DALLAS COUNTY, TEXAS
 
 
 
BEFORE JUSTICES WHITHAM, BAKER AND THOMAS
OPINION BY JUSTICE WHITHAM
JANUARY 17, 1989
        In this office building landlord-tenant dispute, the appellant-landlord, Union Tower Corporation, appeals from a summary judgment in favor of the appellee-tenant, Criswell Development Company. Both parties filed motions for summary judgment. The trial court granted tenant's motion and denied landlord's motion. In two points of error, landlord contends that the trial court erred in granting tenant's motion and in denying landlord's motion. We disagree. Accordingly, we affirm.
        The function of a summary judgment is not to deprive a litigant of his right to a full hearing on the merits of any real issue of fact, but to eliminate patently unmeritorious claims and untenable defenses. Gulbenkian v. Penn, 151 Tex. 412, 415-16, 252 S.W.2d 929, 931 (1952). The standards for reviewing a motion for summary judgment are well established. As mandated by the Supreme Court of Texas, they are as follows:
        1.        The movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law.
 
        2.        In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true.
 
        3.        Every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in its favor.
Nixon v. Mr. Property Management, 690 S.W.2d 546, 548-49 (Tex. 1985). It is not the purpose of the summary-judgment rule to provide either a trial by deposition or a trial by affidavit, but rather to provide a method of summarily terminating a case when it clearly appears that only a question of law is involved and that there is no genuine issue of fact. Gaines v. Hamman, 163 Tex. 618, 626, 358 S.W.2d 557, 563 (1962). With these principles in mind, we look to the summary-judgment proof.
        By lease dated June 30, 1982, landlord leased space in the building to tenant. Paragraphs 1.1(i) and 10.1 of the lease provide that the premises would be used only for a general office and marketing center. Article XII of the lease provides in part that:
        Tenant shall not make or allow to be made any alterations, improvements or additions in or to the leased premises without first obtaining the written consent of Landlord,* . . . . Alterations, improvements and additions in and to the leased premises will be performed, at the option of the Tenant and at Tenant's sole cost and expense, by Landlord or by a contractor designated by Tenant and approved by Landlord. All plans and specifications for any such alterations, improvements and additions shall be subject to prior approval of Landlord.
        
        *which consent shall not be unreasonably withheld.
        In Article XI of the lease the parties agreed that:
        Tenant shall pay the cost of repair and replacement due to damage or injury (other than any damage or injury caused by fire or other casualty coverable by a Texas standard fire and extended coverage policy of insurance) done to the Complex (other than the leased premises) or any part thereof by Tenant or Tenant's agents, employees or invitees. Such amount shall be paid by Tenant to Landlord upon demand plus interest thereon from demand until payment.
(emphasis added). Article XXIX of the lease states in part:
        Each party hereto hereby waives any and every claim which arises or may arise in its favor and against the other party hereto, or anyone claiming through or under them, by way of subrogation or otherwise, during the term of this lease or any extension or renewal hereof for any and all loss of, or damage to, any of its property (whether or not such loss or damage is caused by the fault or negligence of the other party or anyone for whom such other party may be responsible), which loss or damage is coverable by a Texas standard fire and extended coverage policy of insurance.
(emphasis added). At this point, the reader should note that the lease contains a waiver of subrogation. Also, the reader should note the type of insurance policy mentioned and the word "coverable" as used in connection with the mentioned type of insurance policy. The matters noted are important. Finally, in paragraph 37.3 of the lease, the parties agreed that approval by the landlord of the tenant's construction plans did not constitute a representation or warranty of the landlord as to the adequacy of the plans, but shall merely be consent to the improvements.
        Subsequent to the lease, and on April 8, 1983, the parties entered into an agreement concerning renovations to the leasehold. This agreement constituted the written consent of landlord to alterations, improvements or additions in or to the leased premises pursuant to Article XII of the lease. Paragraph 4 of this agreement provides that tenant will perform the work in a safe and lawful manner. Paragraph 5 of the agreement provides that tenant will indemnify landlord against all expenses based on "property damage caused in the performance of this work by [tenant], [tenant's] employees, agents, servants or contractors engaged by [tenant]." Paragraph 5 of the agreement also provides that tenant:
        will repair or replace, or at [landlord's] election, reimburse [landlord] for the cost of repairs, or replacing any portion of the building or item of equipment, or any of [landlord's] real or personal property so damaged, lost or destroyed in the performance of this work.
Paragraph 7 of the agreement provides in part that tenant would remedy at its expense and "be responsible for any and all defects in all such work that may appear during or after the completion thereof whether the same shall affect premises in particular or any part of the building in general." Paragraph 8 of the agreement provides that:
        The Landlord or its agents shall not be responsible for any disturbances or deficiency created in the air conditioning or other mechanical, electrical or structural facilities within the building as a result of the alteration. If such disturbances or deficiencies result, it shall be the Tenant's entire responsibility to correct the resulting conditions and to restore the services to complete satisfaction of the Landlord, its architect and engineers.
Finally, paragraph 13 of the agreement provides in part that:
        Nothing herein contained shall be construed as . . . (ii) a waiver by [landlord] of any of the terms or provisions of [tenant's] said Lease, [landlord's] consent and approval as aforesaid being hereby made subject thereto.
This later agreement does not contain a waiver of subrogation.
        On May 17, 1983, while tenant was renovating its leasehold, the building suffered a total power outage. Just prior to the power outage, one of the tenant's contractors was engaged in some concrete coring on the first floor. This is a process that involves drilling holes through concrete, through the use of a drilling machine that uses water to cool the bit and carry away concrete dust. The chief building engineer discovered that the bus bars in the basement were damaged and that this caused the power outage. (The bus bars are solid copper bars which connect the utility company transformer in the vault under the sidewalk with the electric switch gear in the basement of the building. The bus bars are surrounded by a metal enclosure called the bus duct.) The chief building engineer saw evidence of water in the room where the bus bars were located and determined that the bus bars shorted out due to coming into contact with water. His investigation revealed that there were only two sources of water which could have fallen on the bus bar, and both sources were related to the renovations being conducted by tenant. One source was water leaking through the floor from the coring machine, and the other source was water leaking through a penetration that had recently been cut to create a new exterior door. Leonard Newberry, a licensed electrician, and Robert Frias, a professional engineer, came to similar conclusions.
        At the time of the incident, landlord was covered by a Texas multi-peril insurance policy and a boiler and machinery policy. Landlord had no Texas standard fire and extended coverage policy of insurance. Landlord was paid $60,586.55 under the multi-peril policy and $37,611.41 under the boiler and machinery policy. Landlord's actual damages are $104,197.96. The difference in these numbers represents landlord's deductible. Thus, this case is, in part a subrogation action brought by insurance companies. The lawsuit was filed after tenant failed to pay for the damages caused during the renovations.
        In its first point of error, landlord contends that the trial court erred in granting tenant's motion for summary judgment. Landlord's contention focuses upon tenant's affirmative defense of waiver of subrogation asserted as its primary ground for a summary judgment. Thus, we must determine whether tenant met its affirmative burden on summary judgment to prove all of the essential elements of the affirmative defense of waiver of subrogation. When a defendant moves for summary judgment on the basis of an affirmative defense, the movant must prove conclusively all elements of the defense as a matter of law, leaving no genuine issue of a material fact remaining. Hartsough v. Steinberg, 737 S.W.2d 408, 412 (Tex. App.--Dallas 1987, writ denied). Hence, the movant has the burden of establishing waiver of subrogation as a matter of law. See Hartsough, 737 S.W.2d at 412. Once the movant established a right to a summary judgment, the non-movant in his response must expressly present any reasons seeking to avoid the movant's entitlement, and such reasons must be supported by summary-judgment proof to establish a fact issue. Hartsough, 737 S.W.2d at 412. If a movant establishes an affirmative defense which would bar the suit as a matter of law, the non-moving party must then adduce summary-judgment proof raising a fact issue in avoidance of the affirmative defense, for example, facts which would bring the matter within an exception or defense to the movant's affirmative defense. Hartsough, 737 S.W.2d at 412.
        With these principles in mind, we must first consider whether tenant has established the affirmative defense of waiver of subrogation as a matter of law which would bar landlord's suit as a matter of law. Tenant insists that it has done so, pointing to the waiver of subrogation in the lease and the coverage affordable to it by a standard fire and extended coverage policy of insurance issued with the special extended coverage endorsement No. 222. Consequently, we must next consider the reasons expressly presented in landlord's response to tenant's motion for summary judgment seeking to avoid tenant's entitlement to summary judgment. We read landlord's response to advance the reasons below for denial of tenant's motion for summary judgment. As briefed for us, landlord presents these reasons in this manner. Landlord begins with the assertion that tenant failed to carry its burden to prove all essential elements of the affirmative defense of waiver of subrogation. Landlord then mounts two basic premises as follows:
        (A)    There is a later agreement between the parties which is the operative agreement, and this later agreement does not incorporate the waiver of subrogation:
 
            (1)    the later agreement is the operative agreement since it should be read separately from the lease;
 
            (2)    even if the lease and the later agreement are read together, the later agreement controls since it is more specific;
 
            (3)    even if the lease and the later agreement are read together, the later agreement prevails since it is later in time;
 
            (4)    the later agreement does not incorporate the waiver of subrogation; and
 
            (5)    at the very least, there is a fact issue concerning the parties' intent with respect to the later agreement, and this precludes a summary judgment.
 
        (B)    Tenant failed to prove that the damages are coverable by a Texas standard fire and extended coverage policy of insurance:
 
            (1)    Criswell failed to prove that the loss was caused by one of the named perils of the Texas standard fire and extended coverage policy;
 
            (2)    the loss is excluded from coverage by exclusion (k) in the Basic Conditions of the Texas standard fire and extended coverage policy;
 
            (3)    Form 222 does not provide coverage, since the loss is excluded by exclusion N; and
 
            (4)    Form 34 does not provide coverage for this loss.
        We first address the "agreement" challenge, and second the "coverage" challenge.
A. Landlord's "Agreement" Challenge
        With respect to tenant's burden of establishing waiver of subrogation, we conclude that the lease provided a waiver of subrogation such that no insurer of the landlord could recover against the tenant for the property damage involved in the present case. It is undisputed that the real parties in interest, suing in the name of landlord, are landlord's two insurers who are subrogated to landlord's rights. Thus, we conclude that tenant has established a contractual basis for the affirmative defense of waiver of subrogation. Hence, we look to the merits of landlord's reasons negating a determination that tenant has established the affirmative defense of waiver of subrogation as a matter of law which would bar landlord's suit as a matter of law. Landlord's reasons center on the leasehold alterations, improvements or additions written consent agreement of April 8, 1983; to wit: the agreement must be read separately from the lease, the agreement controls since it is more specific, the agreement prevails since it is later in time, the agreement does not incorporate the waiver of subrogation and there are fact issues concerning intent with respect to the agreement. We note that ambiguity is not one of the five reasons advanced by landlord for denial of tenant's motion for summary judgment.
        Where no party claims any ambiguity in the document to be construed, the construction of the instrument becomes a question of law for the court. City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515, 518 (Tex. 1968); Myers v. Gulf Coast Minerals Management Corp., 361 S.W.2d 193, 196 (Tex. 1962). In construing contract clauses, the court must ascertain the intent of the parties. Myers v. Gulf Coast Minerals Management Corp., 361 S.W.2d 193, 196 (Tex. 1962); Diamond Shamrock Corp. v. Cone, 673 S.W.2d 310, 313 (Tex. App.--Amarillo 1984, writ ref'd n.r.e.). The parties' intent should be determined from the language used in the instrument. R & P Enterprises v. La Guarta, Gavrel & Kirk, 596 S.W.2d 517, 519 (Tex. 1980); Citizens National Bank in Abilene v. Texas & P. Ry., 150 S.W.2d 1003, 1006 (Tex. 1941). In the absence of fraud, accident, mistake or attempted reformation, a court must give effect to the intention of the parties as expressed by the terms of the agreement. Woods v. Sims, 273 S.W.2d 617, 620-21 (Tex. 1954).
        We conclude that in the present case, construction of the agreement is a question of law for this court. Therefore, we must determine the intent of the parties from the language used in the agreement and give effect to the intention of the parties as expressed by the terms of the agreement. We must do so because there is no claim of fraud, accident, mistake or attempted reformation pertaining to the agreement. We quote the agreement: "[y]ou have requested the approval of the landlord in accordance with the provisions of your lease for the performance of the following work." (emphasis added). We quote further from the agreement: "[i]f the tenant is not in default under any of the terms and conditions of the lease, including the payment of rent and subject to the conditions precedent and requirements herein contained, we have no objections to your proceeding with this work." (emphasis added). We conclude, therefore, that the language of the agreement discloses the intent of the parties. We conclude further that the parties intended to comply with the lease in that tenant sought a required consent from the landlord and the landlord gave the required consent. Hence, the agreement is but a mechanism to carry out the lease. Thus, we conclude that the agreement cannot be read separately from the lease, that the agreement does not control because it is more specific, that the agreement does not prevail because it is later in time, that it is not necessary that the agreement incorporate the waiver of subrogation and that there are no fact issues with respect to the agreement. Indeed, the agreement by its language affirms the existence of the lease and the necessity that tenant not be in default under the lease. We conclude, therefore, that the lease stands as written and contains a controlling, operative and prevailing waiver of subrogation untouched by the agreement. Consequently, we find no merit in any of landlord's five reasons under its "agreement" challenge negating a determination that tenant has established the affirmative defense of waiver of subrogation as a matter of law which would bar landlord's suit as a matter of law. Having thus determined that tenant has met his summary-judgment burden of establishing waiver of subrogation, we turn to landlord's second reason for denial of tenant's motion for summary judgment grounded on the coverage affordable by a standard fire and extended coverage policy of insurance.
B. Landlord's "Insurance Coverage" Challenge
        Landlord asserts that tenant failed to prove that the damages are coverable by a Texas standard fire and extended coverage policy of insurance. Landlord maintains that even if the waiver of subrogation is applicable to the renovation activities, then tenant still failed to prove that the power outage falls within the provisions of the waiver of subrogation. Landlord argues that the waiver of subrogation operates only with respect to loss or damage which is "coverable by a Texas standard fire and extended coverage policy of insurance" and that tenant failed to present summary judgment evidence showing that the damages are covered by a Texas standard fire and extended coverage policy. Hence, landlord maintains that the waiver of subrogation is inoperative as to the damages in question. Landlord tells us that there are four reasons why the waiver of subrogation is inoperative. First, landlord argues that tenant failed to prove that the loss was caused by one of the named perils in the Texas standard fire and extended coverage policy. Second, landlord asserts that the loss is excluded from coverage by exclusion (k) in the basic conditions of the Texas standard fire and extended coverage policy. Third, landlord contends that endorsement form 222 does not provide coverage, since the loss is excluded by exclusion N. Fourth, landlord asserts that endorsement form 34 does not provide coverage for this loss.
        As to its first reason, landlord asserts that the Texas standard fire and extended coverage policy is a named peril policy, meaning that it sets forth specific perils for which insurance is provided and that as opposed to a Texas multi-peril policy, the Texas standard fire policy is not an "all risk" policy. Landlord points out that the named perils in the Texas standard fire policy are: fire, lightning, windstorm, hurricane, hail, explosion, riot, civil commotion, smoke, aircraft, and land vehicles, and that water damage is not one of the named perils. Landlord, however, admits that water damage can be "coverable" by a Texas standard fire and extended coverage policy by endorsement form 222. In landlord's words: "[a]dmittedly, Form 222 is an endorsement which can convert the Texas standard fire policy into an all risk policy." It is undisputed that the loss in question is water damage. We quote landlord's trial pleadings:
        On May 17, 1983, [tenant's contractors] were coring a hole through the concrete floor. The water used in the coring process migrated through the floor and into the basement, falling on, among other things, electrical equipment, buss [sic] ducts and a transformer vault. This caused the electrical equipment to short out, resulting in a total power outage in the entire building.
We conclude that water damage was the cause of the loss and that the migrating water from the coring process is a covered peril under endorsement form 222. Therefore, we conclude further that tenant proved that the loss was caused by one of the named perils in the Texas standard fire and extended coverage policy. Thus, we find no merit in landlord's first reason why the waiver of subrogation is inoperative.
        As to its second reason, landlord asserts that even if the loss was caused by one of the named perils in the policy, the loss is excluded by a provision in the Basic Conditions section of the policy reading: "[t]his company shall not be liable . . . (k) . . . for any electrical injury or disturbances to electrical appliances, devices or wiring resulting from artificial causes." As to its third reason, landlord points to exclusion N of endorsement form 222 reading "[t]his Policy does not Insure Against Loss to -- . . . N. [e]lectrical appliances, devices, fixtures or wiring caused by artificially generated electrical currents . . . ." Landlord maintains that the power system of a commercial office building is within the meaning of electrical appliances, devices, fixtures or wiring as used in the above-quoted two exclusions. Tenant insists that these exclusions exclude coverage for damage to items such as television sets and microwave ovens and not the power system of a commercial office building. We agree. We must adopt the construction of an exclusionary clause urged by the insured as long as that construction is not itself unreasonable, even if the construction urged by the insurer appears to be more reasonable or a more accurate reflection of the parties intent. Glover v. National Ins. Underwriters, 545 S.W.2d 755, 761 (Tex. 1977). We apply this principle to the landlord-tenant dispute in the present case. Hence, we adopt the construction of tenant who seeks to obtain the advantage of negating application of the exclusionary clause as would the insured in the ordinary insured-insurer dispute. Therefore, we conclude that the loss is not excluded from coverage by exclusion (k) in the Basic Conditions of the Texas standard fire and extended coverage policy and by exclusion N in endorsement form 222. Thus, we find no merit in landlord's second and third reasons why the waiver of subrogation is inoperative.
        As to its fourth reason, landlord argues that a designated endorsement form 34 which may be attached to the Texas standard fire and extended coverage policy does not provide coverage for this loss. Landlord tells us that "[by] its very terms, form 34 is not designed to cover losses to a portion of the building itself, but only losses to 'stock.'" Landlord also tells us that our record fails to include endorsement form 34. Consequently, we cannot address the merits of landlord's fourth reason why the waiver of subrogation is inoperative. Hence, we find no merit in landlord's fourth reason why the waiver of subrogation is inoperative.
        Having found no merit in any of landlord's four reasons under its "insurance coverage" challenge why the waiver of subrogation is inoperative, we conclude that tenant proved that the damages are coverable by a Texas standard fire and extended coverage policy of insurance. We conclude further, therefore, that the power outage falls within the provisions of the waiver of subrogation.
        It follows, and we so hold, that tenant has established the affirmative defense of waiver of subrogation as a matter of law which bars landlord's suit as a matter of law. Thus, we conclude that the trial court did not err in granting tenant's motion for summary judgment. We reach this conclusion because the non-movant landlord in its response to tenant's motion for summary judgment failed to present any reasons with merit to avoid the movant-tenant's entitlement to summary judgment. See Hartsough, 737 S.W.2d at 412. We overrule landlord's first point of error.
        In its second point of error, landlord contends that the trial court erred in failing to grant a partial summary judgment in favor of landlord. Landlord claims under subrogation rights; the real parties in interest as plaintiff's being landlord's insurers. In disposing of landlord's first point of error, we held that the lease waiver of subrogation is operative and that tenant has established the affirmative defense of waiver of subrogation as a matter of law which bars landlord's suit as a matter of law. It follows, therefore, that the trial court correctly denied landlord's partial motion for summary judgment. We overrule landlord's second point of error.
        Affirmed.
 
                                                  
                                                  WARREN WHITHAM
                                                  JUSTICE
 
DO NOT PUBLISH
TEX. R. APP. P. 90
 
88-00502.F
 
 
File Date[01-02-89]
File Name[880502]