Aqua-Dyne Engineering, Inc. v. Cravens-Pocock, Inc. a/k/a Cook-Cravens, Warren & Co., Inc. or Cravens, Warren & Co.--Appeal from 98th District Court of Travis County

AQUA-DYNE V. CRAVENS-POCOCK IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-92-345-CV
AQUA-DYNE ENGINEERING, INC.,

APPELLANT

 
vs.
CRAVENS-POCOCK, INC. A/K/A COOK-CRAVENS,
WARREN & CO., INC., OR CRAVENS, WARREN & CO.,

APPELLEE

 
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT
NO. 436,679, HONORABLE JOSEPH H. HART, JUDGE PRESIDING

Appellant Aqua-Dyne Engineering, Inc. ("Aqua-Dyne") asserts in a single point of error that the district court erred when it rendered judgment in favor of appellee Cravens-Pocock, Inc., a/k/a Cook-Cravens, Warren & Co., Inc., or Cravens, Warren & Co. ("Cravens"), an agent of Western Alliance Insurance Co. ("Western"). We will affirm the judgment.

 
BACKGROUND

Aqua-Dyne is an engineering and manufacturing company whose main product is high-pressure water guns used in construction blasting. Aqua-Dyne was named as a defendant in a California lawsuit brought by William Gobert, an employee injured on a construction site while using a high-pressure water gun. Cravens, the local agent in Texas who sold Western's policy to Aqua-Dyne, informed Aqua-Dyne that coverage was excluded by a "products hazard" clause in the policy; therefore, Western had no duty to defend Aqua-Dyne in the California suit. Aqua-Dyne then hired its own defense counsel. Apparently, the California claim against Aqua-Dyne has been settled, and Aqua-Dyne has also settled with Western.

Aqua-Dyne sued Cravens for failure to inform Western about the service of citation in the lawsuit on Aqua-Dyne, seeking to recover the costs incurred in defending the California case. Cravens defended upon the ground that it owed no duty to report this service of citation on Aqua-Dyne when the California petition contained claims against Aqua-Dyne that were clearly excluded by the insurance policy. After the parties jointly submitted this issue of law to the Texas trial court for a ruling, the court concluded there was no coverage under the policy and thus no duty to defend owed by Western. Cravens then moved by special exception to dismiss Aqua-Dyne's suit on failure to state any viable legal claims. (1) The court sustained the special exception and granted Aqua-Dyne leave to amend its petition. When Aqua-Dyne refused to amend, the court rendered judgment that it take nothing from Cravens.

Aqua-Dyne asserts the trial court erred when it ruled that Western had no duty to defend Aqua-Dyne, its insured, in the California suit. This single question of law is the sole matter before us on appeal.

 
DISCUSSION

Western's policy with Aqua-Dyne contained exclusion G-304, which states,

 

It is agreed that such insurance as is afforded by the Bodily Injury Liability Coverage and the Property Damage Liability Coverage does not apply to bodily injury or property damage included within the Completed Operations Hazard or the Products Hazard.

 

The policy elsewhere defines "products hazard" as "bodily injury and property damage arising out of the named insured's products." Finally, the term "named insured's products" is defined: "[G]oods or products manufactured, sold, handled, or distributed by the named insured . . . ."

Aqua-Dyne argues that this exclusion does not encompass an allegation made in the petition filed in the California suit. Namely, it contends that the petition contains a claim that Aqua-Dyne negligently consulted with the injured plaintiff's employer about a water gun manufactured by a competitor of Aqua-Dyne. Such a claim, Aqua-Dyne asserts, would be for bodily injury that did not arise out of the "named insured's products." It further asserts that Cravens had knowledge of facts supporting a claim of negligent consultation and should therefore be held liable for its failure to inform Western that Aqua-Dyne had been sued.

Any knowledge that Cravens may have had of the factual background of the California suit and any legal opinions it may have drawn from these facts are irrelevant. When a court determines whether an insurer had a duty to defend its insured, it looks solely to the allegations in the suit against the insured. It may not consider either the truth or falsity of such allegations or the parties' knowledge of or belief about the true facts behind the allegation. Heyden Newport Chem. Corp. v. Southern Gen. Ins. Co., 387 S.W.2d 22, 24 (Tex. 1965). In accordance with the supreme court's guidelines, we will look only at the claims in the California petition to determine if such claims fell within the products exclusion.

The petition describes Aqua-Dyne, NLB Corporation, and twelve anonymous "Does" as parties "engaged in the business of manufacturing, designing, assembling, modifying, selling, distributing, retailing and supplying high pressure water guns," alleging that such defendants did in fact engage in such activity with respect to the water gun that injured the plaintiff. The petition further alleges that the plaintiff's employer selected a water gun from materials made available by these defendants, and that this selection "was made in collaboration with and in consultation with agents and employees of" the defendants. Aqua-Dyne argues this reference could be interpreted as a claim that it negligently consulted with the plaintiff's employer about a water gun that actually was supplied by NLB or one of the Doe defendants, rather than being Aqua-Dyne's own product. In this event, the claim for recovery against Aqua-Dyne in the California suit would not come within the products hazard exclusion and Aqua-Dyne would be entitled to be defended. Considering the petition as a whole, we conclude as a matter of law that no such reasonable interpretation is possible.

Each reference to Aqua-Dyne in the petition occurs along with NLB and the twelve Doe defendants. Aqua-Dyne and NLB were themselves "Does" in the plaintiffs' original petition; they were only identified in the amended petition that is in the record before us. The plaintiff did not expressly allege which defendant had actually manufactured and sold the water gun to his employer, or which combination of defendants had made the parts that made up the gun, but instead made similar allegations as to each defendant subject to proof. Only a strained reading of the petition permits the conclusion that the plaintiff is attempting to allege that Aqua-Dyne consulted with the employer about the use of a water gun made by another of the named or anonymous defendants. Even if we assume that such an interpretation is possible, however, Aqua-Dyne faces an insurmountable obstacle in the plain language of the petition.

Each factual description of Aqua-Dyne's identity and conduct noted above is set out under the "First Cause of Action" section of the petition. The actual theory of liability is found in paragraph 13 of this section, where the defendants are alleged to have "negligently and carelessly supplied said high pressure water gun and its component parts to [the plaintiff's employer]" (emphasis added). The second cause of action incorporates the factual allegations in the first section and contains a strict liability complaint against all the defendants based upon a defective product, the water gun. The third cause of action alleges the defendants "negligently and carelessly manufactured, designed, assembled, modified, inspected, sold, distributed and supplied said high pressure water gun and its component parts" (emphasis added). The final cause of action concerns only the plaintiff's employer.

The petition does not contain any allegation that anyone negligently consulted with the plaintiff's employer. Rather, the only reference to consulting is in the factual background describing how the employer selected and bought the water gun in question. The actual causes of action involve (1) the alleged negligence of the water gun's manufacturer in the gun's assembly and distribution to the employer and (2) the defective nature of the gun itself. Nowhere in the long recitation of the manufacturer's conduct is "consultation" mentioned. The allegations in the petition clearly fall within the "products hazard" exclusion. (2)

Western had no duty to defend its insured in a suit alleging facts excluded from coverage under its policy. Fidelity & Guar. Ins. Underwriters v. McManus, 633 S.W.2d 787, 790 (Tex. 1982). Therefore, Cravens had no duty to inform Western about the service of citation on Aqua-Dyne and cannot be held liable for the costs incurred in defense of the California suit. We overrule Aqua-Dyne's point of error and affirm the judgment of the district court.

 

Marilyn Aboussie, Justice

[Before Chief Justice Carroll, Justices Aboussie and Jones]

Affirmed

Filed: February 24, 1993

[Do Not Publish]

1. Cravens filed both a motion for summary judgment and a motion for judgment. The trial court treated both as special exceptions objecting to Aqua-Dyne's failure to state any claim. Neither party complains about the court's procedural decisions in this case.

2. Aqua-Dyne conceded at oral argument that an allegation that it consulted with the plaintiff's employer about Aqua-Dyne's own product would fall within the exclusion. Therefore, it asks this court to (1) interpret the petition to allege negligent consultation where the paragraphs containing the theories of liability do not mention this conduct, and (2) separate the manufacturing and consulting defendants from each other, with Aqua-Dyne falling in the latter category, where the petition does not itself separate these actions. We decline to do so.