Opinion
Civil Action No. 7:20-CV-16
2021-04-08
SENTRY SELECT INSURANCE COMPANY, Plaintiff, v. HOME STATE COUNTY MUTUAL INSURANCE COMPANY, et al., Defendants.
Russell J. Bowman, Bowman & Stella, P.C., Irving, TX, for Plaintiff. Scott Graham Ball, Attorney at Law, Rockwall, TX, for Defendants Home State County Mutual Insurance Company, Snap Insurance Service, LLC. Orlando R. Lopez, Attorney at Law, San Antonio, TX, for Defendant Juan Antonio Ortiz Ramirez. Miguel Jose Chapa, Chapa Law Group, San Antonio, TX, for Defendant Zusuky Ortiz.
Russell J. Bowman, Bowman & Stella, P.C., Irving, TX, for Plaintiff.
Scott Graham Ball, Attorney at Law, Rockwall, TX, for Defendants Home State County Mutual Insurance Company, Snap Insurance Service, LLC.
Orlando R. Lopez, Attorney at Law, San Antonio, TX, for Defendant Juan Antonio Ortiz Ramirez.
Miguel Jose Chapa, Chapa Law Group, San Antonio, TX, for Defendant Zusuky Ortiz.
ORDER GRANTING PLAINTIFF SENTRY'S MOTION FOR SUMMARY JUDGMENT AND DENYING HOME STATE/SNAP'S MOTION FOR SUMMARY JUDGMENT
Randy Crane, United States District Judge I. Factual and Procedural Background
Now before the Court are Plaintiff Sentry Select Insurance Company's ("Sentry") Motion for Summary Judgment and Defendants Home State County Mutual Insurance Company ("Home State") and Snap Insurance Service, LLC's ("Snap") Cross-Motion for Summary Judgment. (Dkt. Nos. 32, 40). On January 21, 2020, Sentry filed its Complaint for Declaratory Relief against Home State, Snap, and additional Defendants Juan Antonio Ortiz Ramirez ("Ramirez") and Zusuky Ortiz ("Ortiz"), seeking a declaratory judgment that it has no duty to defend or indemnify Ramirez in Cause No. C-4004-16-G, Zusuky Ortiz and Sky Drem Ortiz v. Clark Knapp Motor Company, L.C. d/b/a Clark Knapp Honda, et al. , pending in the 370th Judicial District Court, Hidalgo County, Texas. (Dkt. No. 1). Sentry has since filed a First Amended Complaint seeking the same relief, and attaching exhibits referenced therein. (Dkt. No. 17). Sentry's amended pleading and attachments reflect that the plaintiffs in the underlying state-court lawsuit, Ortiz and Sky Drem Ortiz, are pursuing claims in that suit against Ortiz's brother, Ramirez, and automobile dealership Clark Knapp Motor Company, L.C. d/b/a Clark Knapp Honda ("Clark Knapp Honda"), arising from a single-auto accident occurring in Alton, Texas on August 14, 2016. (Dkt. No. 17 at ¶¶ 9, 11, 16, 17, Exhs. A, C). Sentry alleges that on August 11, 2016, Ortiz purchased a used 2010 Kia Forte from Clark Knapp Honda, who then loaned her a 2015 Hyundai Elantra to drive while the purchased vehicle underwent repairs at the dealership. (Id. at ¶¶ 8, 10). At the time of the accident, Ramirez was driving the loaner vehicle when he lost control of the vehicle and it crashed, injuring passengers Ortiz and Sky Drem Ortiz. (Id. at ¶ 11). The Ortiz plaintiffs’ live pleading in state court brings a single cause of action for negligence against Ramirez, and claims for negligence per se and negligent entrustment, hiring, training, supervision, and undertaking against Clark Knapp Honda. (Id. , Exh. C at §§ V-IX). In aid of its request for a declaratory judgment, Sentry alleges that Ramirez does not qualify as an insured entitled to the primary auto liability coverage afforded under Sentry's policy issued to Clark Knapp Honda, the named insured. (Id. at ¶¶ 18-20). Moreover, even if he does, Ramirez was also insured up to the minimum limits of auto liability required by Texas law under a personal auto liability policy issued to Ortiz by Home State and administered by Snap. (Id. at ¶¶ 13-15, 26-31). Since, under the limit of insurance/"step down" provision in Sentry's policy, its coverage extends only to payment of "the amount needed to comply with [Texas's] minimum limits after ... other insurance is exhausted," the coverage afforded to Ramirez under the Home State policy relieves Sentry of any obligation to provide primary coverage. (Id. at ¶¶ 20-25). Therefore, and because Ramirez is not a named or designated insured under its policy, Sentry also has no obligation to provide excess or umbrella coverage. (Id. at ¶¶ 32-35). Relying on these allegations and copies of the accident report, Home State policy, and Ortiz plaintiffs’ live state-court pleading, Sentry seeks a declaratory judgment that it has no duty under the primary, excess, or umbrella coverages of its policy to defend Ramirez in the underlying lawsuit, and for the same reasons, to indemnify him. (Id. at ¶¶ 12, 13, 16, 37, Exhs. A-C).
The summary judgment record identifies Sky Drem Ortiz as the younger brother of Ortiz and Ramirez. E.g. , (Dkt. No. 20, Exh. A at pp. 6, 9, 11; Exh. B at pp. 6, 28, 35).
On August 27, 2020, the Court denied Ramirez and Ortiz's motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6), finding that the factors outlined in St. Paul Ins. Co. v. Trejo , 39 F.3d 585 (5th Cir. 1994), weighed against dismissal and in favor of the Court exercising its jurisdiction to decide Sentry's declaratory judgment action. (Dkt. No. 25; see Dkt. Nos. 15, 16). With the Court's leave, Ramirez has since filed a counterclaim against Sentry, seeking a declaration that he is entitled to a defense and indemnity under Sentry's policy, as well as attorney's fees incurred in obtaining this relief. (Dkt. No. 30; see Dkt. No. 29). Now, Sentry seeks summary judgment on its own claims, as well as Ramirez's counterclaim for attorney's fees. (Dkt. No. 32). No Defendant disputes that, to the extent the Home State policy provides coverage to Ramirez in the underlying suit, Sentry's step down provision relieves it of any obligation to defend Ramirez under its primary policy, nor does any Defendant contest the absence of a duty to defend under Sentry's umbrella policy. Further, Ramirez makes no effort to dispute that he is not entitled to recover attorney's fees from Sentry. Instead, Sentry's Motion, Home State/Snap's ensuing Cross-Motion, and the parties’ extensive, responsive briefing identify the issue of Ramirez's coverage under the Home State policy as the chief dispute among them. See (Dkt. Nos. 32, 34, 36, 37, 39, 40, 42, 46, 48, 51, 52). Upon consideration of the Motions, the parties’ briefing, and the summary judgment evidence, in light of the relevant law, the Court finds that Sentry's Motion must be granted and Home State/Snap's Motion denied, for the following reasons.
Sentry did not oppose Ramirez's motion for leave to file his counterclaim. See (Dkt. No. 28).
As set forth infra , Ramirez makes no concessions as to Sentry's duty to indemnify, or with respect to its excess coverage obligations. (Dkt. No. 36 at pp. 6-7; Dkt. No. 51).
Although Ortiz provides no briefing of her own, she has filed notices of joinder in Home State/Snap's responsive briefing (Dkt. Nos. 34, 48) and Ramirez's supplemental response (Dkt. No. 51). (Dkt. Nos. 37, 52).
Since Home State/Snap's initial response to Sentry's Motion (Dkt. No. 34) contains argument presented in its own Motion, and Sentry's argument in opposition to Home State/Snap's Motion (Dkt. No. 42) is presented and supplemented in its amended reply in support of its own Motion, the Court will herein cite only to the argument as contained in Home State/Snap's Motion (Dkt. No. 40) and Sentry's amended reply (Dkt. No. 39).
See (Dkt. Nos. 20, 33, 35, 36, 39, 41, 51).
II. Cross-Motions for Summary Judgment
A. Standard of Review
A district court must grant summary judgment when there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a). A fact is material if it might affect the outcome of the lawsuit under the governing law, and is genuinely in dispute only if a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A party moving for summary judgment has the initial responsibility of informing the court of the basis for its motion and identifying those portions of the pleadings and materials in the record, if any, which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; FED. R. CIV. P. 56(a), (c). Once the moving party carries its burden, the burden shifts to the nonmovant to go beyond the pleadings and provide specific facts showing the existence of a genuine issue for trial. Celotex , 477 U.S. at 324, 106 S.Ct. 2548 ; FED. R. CIV. P. 56(c). In conducting its review of the summary judgment record, the court "may not make credibility determinations or weigh the evidence" and must resolve doubts and reasonable inferences regarding the facts in favor of the nonmoving party. Reeves v. Sanderson Plumbing Prods., Inc. , 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) ; Anderson , 477 U.S. at 255, 106 S.Ct. 2505 ; Dean v. City of Shreveport , 438 F.3d 448, 454 (5th Cir. 2006). However, the nonmovant cannot satisfy its burden with "conclusory allegations, speculation, and unsubstantiated assertions which are either entirely unsupported, or supported by a mere scintilla of evidence." Chaney v. Dreyfus Serv. Corp. , 595 F.3d 219, 229 (5th Cir. 2010) ; see also Brown v. City of Houston , 337 F.3d 539, 541 (5th Cir. 2003) ("Unsubstantiated assertions, improbable inferences, and unsupported speculation are not sufficient to defeat a motion for summary judgment.").
B. Overview of Applicable Law
Under the "settled feature of Texas law" known as the "eight-corners rule," an insurer's duty to defend is determined by the four corners of the policy and the four corners of the underlying pleading, "without regard to the truth or falsity" of the pleaded allegations. Richards v. State Farm Lloyds , 597 S.W.3d 492, 499 (Tex. 2020) ; GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church , 197 S.W.3d 305, 308 (Tex. 2006). The Fifth Circuit, applying Texas law, recognizes a "very limited" exception to the eight-corners rule, allowing for the consideration of evidence extrinsic to the policy and pleading "when it is initially impossible to discern whether coverage is potentially implicated and when the extrinsic evidence goes solely to a fundamental issue of coverage which does not overlap with the merits of or engage the truth or falsity of any facts alleged in the underlying case." Northfield Ins. Co. v. Loving Home Care, Inc. , 363 F.3d 523, 531 (5th Cir. 2004). "Any doubt regarding the duty to defend is resolved in favor of the duty," but "if the only facts alleged [or permissibly shown] are excluded from the policy's coverage, the insurer is not required to defend." Lincoln Gen. Ins. Co. v. Reyna , 401 F.3d 347, 350 (5th Cir. 2005) (citing Northfield , 363 F.3d at 528 ).
The Fifth Circuit has recently certified to the Texas Supreme Court the question of whether "the exception to the eight-corners rule articulated in Northfield ... [is] permissible under Texas law," but as of the date of this Order, the Northfield exception is binding on this Court. Bitco Gen. Ins. Corp. v. Monroe Guar. Ins. Co. , 2021 WL 955155, at *4, 846 Fed.Appx. 248 (5th Cir. Mar. 12, 2021), certified question accepted (Mar. 19, 2021).
"While the duty to defend depends on the allegations in the pleadings, the duty to indemnify is triggered by the actual facts that establish liability in the underlying lawsuit." Ooida Risk Retention Grp., Inc. v. Williams , 579 F.3d 469, 472 (5th Cir. 2009) (quoting Columbia Cas. Co. v. Ga. & Fa. RailNet, Inc. , 542 F.3d 106, 111 (5th Cir. 2008) ) (internal quotation marks omitted). "Accordingly, an insurer's duty to defend and duty to indemnify are distinct, as in general the underlying suit must be resolved in order to determine the latter." Id. An exception to this general rule exists "when the insurer has no duty to defend and the same reasons that negate the duty to defend likewise negate any possibility the insurer will ever have a duty to indemnify." Farmers Texas Cty. Mut. Ins. Co. v. Griffin , 955 S.W.2d 81, 84 (Tex. 1997) (emphasis omitted).
C. Coverage under Home State Policy
1. Whether Ramirez Qualifies as a "Covered Person"
The issue most heavily disputed by the parties, and relevant to Sentry's duties to defend and indemnify Ramirez in the underlying suit, is whether Ramirez qualifies as a "covered person" under Ortiz's Home State policy, so as to trigger the step down provision precluding coverage under Sentry's policy. Relevant to Sentry's duty to defend, the Court notes that Ortiz and Sky Drem Ortiz's Second Amended Petition—their live pleading in the underlying action against Ramirez and Clark Knapp Honda—makes no mention of the Home State policy, but no party disputes that the Court may look to the copy of the policy provided by all Movants in deciding the competing requests for summary judgment on the duty to defend. See (Dkt. No. 33, Exhs. E, F; Dkt. No. 41, Exh. 2). This evidence reflects Home State's issuance of a Texas personal auto policy, administered by Snap, listing Zuzuki (sic) Ortiz as the named insured/driver and a 2010 Kia Forte (VIN KNAFW6A33A5138699) ("Kia") as the insured vehicle, for the policy period of August 13, 2016 through February 13, 2017. (Id. ). The policy provides the minimum amounts of motor vehicle liability insurance coverage required under Texas law: bodily injury liability coverage at the limits of $30,000 per person and $60,000 per accident, and property damage coverage at the limit of $25,000 per accident. (Id. ); see TEX. TRANSP. CODE § 601.072(a-1) (effective January 1, 2011). In setting forth its liability coverage obligations, the policy states, in relevant part:
For the sake of brevity, the Court will herein cite only to the copy of the policy provided by Home State in support of its Motion. See (Dkt. No. 41, Exh. 2).
We will pay damages for bodily injury or property damage for which any covered person becomes legally responsible because of an auto accident. Property damage includes loss of use of the damaged property. Damages include prejudgment interest awarded against the covered person. We will settle or defend, as we consider appropriate, any claim or suit asking for these damages. In addition to our limit of liability, we will pay all defense costs we incur. Our duty to settle or defend ends when our limit of liability for this coverage has been exhausted.
(Dkt. No. 41, Exh. 2, Part A-Liability Coverage at § A). Thus, for the Ortiz plaintiffs’ claims to trigger coverage, such claims must be made against a "covered person," which term is defined in the ensuing section of the policy as follows:
1. You or any family member for the ownership, maintenance or use of any auto or trailer.
2. Any person using your covered auto .
3. For your covered auto , any person or organization but only with respect to legal responsibility for acts or omissions
of a person for whom coverage is afforded under this Part.
4. For any auto or trailer , other than your covered auto , any person or organization but only with respect to legal responsibility for acts or omissions of you or any family member for whom coverage is afforded under this Part. This provision (B.4.) applies only if the person or organization does not own or hire the auto or trailer .
(Dkt. No. 32 at p. 11; Dkt. No. 40 at p. 5; Dkt. No. 41, Exh. 2, Part A-Liability Coverage at § B). The policy elsewhere defines "you" and "your" as referring to the named insured and his or her spouse, if the spouse is a resident of the same household. (Dkt. No. 41, Exh. 2, Definitions at § A). The term "family member" is also defined, in relevant part, to mean "a person who is a resident of your household and related to you by blood, marriage or adoption." (Id. at § D). "So, essentially, to be covered under the liability portion of the policy one must be the named insured, a family member (as defined) or a person using the covered auto." (Dkt. No. 40 at p. 6; see also Dkt. No. 32 at p. 11).
Again, the policy identifies Ortiz as the named insured. Since neither the policy nor the underlying pleading sheds any light on whether Ramirez qualifies as a "family member" within the meaning of the policy, and this issue has no bearing on liability in the underlying suit, the Court accepts as undisputed Home State/Snap's showing that, although Ramirez is Ortiz's brother, he was not a resident of her household at the time of the accident. (Dkt. No. 20, Exh. B at pp. 6-7; Dkt. No. 41, Exh. 2, Declarations). Therefore, he cannot obtain "covered person" status by virtue of his relationship to Ortiz.
Accordingly, the only means by which Ramirez may qualify as a "covered person" is if he was "using your covered auto" at the time of the accident. See (Dkt. No. 32 at p. 11; Dkt. No. 40 at p. 7). The policy defines "your covered auto" to mean:
1. Any vehicle shown in the Declarations;
2. I. Any of the following types of vehicles on the date you became the owner:
a. a private passenger auto; or
b. a utility type vehicle, with a G.V.W. of 25,000 lbs. or less, of the pickup body, sedan delivery, panel truck, van type and multi-use type, not used for the delivery or transportation of goods, materials or supplies other than samples; unless, (1) the delivery of goods, materials or supplies is not the primary usage of the vehicle, or (2) used for farming or ranching.
II. This provision (G.2) applies only if you:
a. acquire the vehicle during the policy period; and
b. notify us within 30 days after you become the owner.
If the vehicle you acquire replaces one shown in the Declarations, it will have the same coverage as the vehicle it replaced. You must notify us of a replacement vehicle within 30 days only if you wish to add or continue Coverage for Damage to Your Auto. If the vehicle you acquire is in addition to any shown in the Declarations, it will have the broadest coverage we now provide for any vehicle shown in the Declarations.
3. Any trailer you own.
4. Any auto or trailer you do not own while used as a temporary substitute for any other vehicle described in this definition which is out of normal use because of its
a. breakdown;
b. repair;
c. servicing;
d. loss; or
e. destruction.
(Dkt. No. 41, Exh. 2, Definitions at § G).
The only vehicle listed in the Declarations is the Kia, and the Ortiz plaintiffs’ pleading alleges that they were traveling in a 2015 Hyundai Elantra ("Hyundai"), driven by Ramirez and owned by Clark Knapp Honda (not Ortiz), at the time of the accident. (Dkt. No. 33, Exh. E at ¶¶ 3.1, 4.1, 6.1; id. , Declarations). Therefore, Ramirez could only have been "using your covered auto" if the Hyundai to which the pleading refers qualifies as a "temporary substitute" within the meaning of the Home State policy. See (Dkt. No. 32 at p. 12; Dkt. No. 36 at p. 2; Dkt. No. 40 at p. 8).
Aside from alleging that Clark Knapp Honda owned the Hyundai, the Ortiz plaintiffs’ pleading alleges no other facts that bear upon the issue of the Hyundai's covered auto status, and the Court accepts as undisputed that it may consider the parties’ extrinsic evidence offered to resolve this issue. See (Dkt. No. 39 at pp. 1-2). The evidence establishes that on August 11, 2016, Ortiz entered into a contract with Clark Knapp Honda for the purchase of the Kia, but left the dealership in the Hyundai. (Dkt. No. 20, Exh. A at pp. 17-18, 21, Exh. 1; Exh. C at pp. 16, 247-50, 253). According to Ortiz, Clark Knapp Honda loaned her the Hyundai because the selected vehicle, which she had picked from photos shown to her, "was in the shop" since it "didn't have air bags and the air conditioning wasn't working." (Id. , Exh. A at pp. 17-18). Clark Knapp Honda's General Manager, Rogelio Solis, Jr., testified that he did not know why Clark Knapp Honda loaned the Hyundai to Ortiz, and that the person with this information "would have to be [Eric Olivarez]," the sales manager responsible for loaning the Hyundai to Ortiz, and whose explanation no party has endeavored to make part of the record. (Id. , Exh. C at pp. 4, 17-18, 24).
In conjunction with the contract executed on August 11, 2016, Ortiz agreed to furnish her own insurance policy covering the Kia. (Id. at p. 251). Ortiz's testimony indicates her belief that on the morning of August 13, 2016, she drove the Hyundai to an insurance agency to purchase the Home State policy on the Kia, then drove to the Clark Knapp Honda dealership "to drop off the insurance and to see if the [Kia] was ready," but it was not. (Id. , Exh. A at pp. 28-30; see also Exh. C at p. 252; Dkt. No. 41, Exh. 2). Ramirez testified that he accompanied Ortiz to the dealership that day, and that Ortiz attempted to "turn in that car that they gave her to get the car that she had bought that was under maintenance, apparently," but "[t]he vehicle was not ready." (Dkt. No. 20, Exh. B at pp. 10-12, 30-31). The Ortiz plaintiffs and Ramirez therefore continued on in the Hyundai, and were returning to Ortiz's home in Mission, Texas in the early morning hours of August 14, 2016 when the accident occurred. (Id. , Exh. A at pp. 28-30, 33-34; Exh. B at pp. 11-12, 21-22; Dkt. No. 33, Exh. H).
Less than a month later, on September 5, 2016, Ortiz's Home State policy was canceled "because no photos of the insured vehicle had been received to verify ownership and condition of the Kia." (Dkt. No. 41, Exh. 1 at ¶ 6). Nearly two years after the accident, on April 5, 2018, Snap received notice of a claim on the Home State policy arising from the accident. (Id. at ¶ 7). Snap investigated the claim and determined that the Hyundai involved in the accident "was not the insured vehicle and that the operator of the vehicle was neither the named insured nor a family member of her household." (Id. at ¶ 8). Upon receipt of depositions taken in the underlying suit, Snap also determined that the Hyundai "was not a temporary substitute because the insured never acquired ownership or possession of the Kia and the Hyundai was already in the insured's possession when she purchased the policy." (Id. ). For these reasons, Snap denied the claim. (Id. ).
Based on the foregoing, the Hyundai indisputably qualifies as "[a]ny auto ... you [Ortiz] do not own," but the parties otherwise differ on whether the summary judgment evidence triggers Home State's "temporary substitute" provision. Whereas Sentry argues that the Hyundai was "used as a temporary substitute for [the Kia] which [was] out of normal use" because "it was being worked on" (i.e., because of its "repair" or "servicing"), Home State/Snap maintain that the Hyundai could not be considered a "substitute" for the Kia, that the Kia could not be considered "out of normal use," and that "the summary judgment evidence is silent on credible evidence that the Kia was even under repair." (Dkt. No. 32 at p. 12; Dkt. No. 40 at pp. 9-12).
Relevant to the dispute over the Kia's condition at the time Clark Knapp Honda loaned the Hyundai to Ortiz, Home State/Snap argue that Ortiz and Ramirez lack personal knowledge of why the Kia was not ready for immediate sale, since Ortiz only saw it in photos and could only have relied on what the dealership told her, and Ramirez was "simply guessing why the Kia was not available for pick-up." (Dkt. No. 40 at p. 12; Dkt. No. 48 at pp. 1-2). The controverting evidence on which Home State/Snap rely consists of GM Solis's testimony that he did not know why the Hyundai was loaned to Ortiz, as well as Home State/Snap's interpretation of Solis's testimony as "speculat[ing] that the reason [for the loaner] had to do with financing" for the Kia purchase. (Dkt. No. 40 at p. 12; Dkt. No. 48 at p. 2). More accurately, Solis explained that he did not know the reason for the loaner because the Conditional Delivery Agreement that effectuated it is used when "you and I have already agreed to terms and figures" for purchase of that vehicle, and "there's just a couple of things that I need to work out before we can execute an actual contract." (Dkt. No. 20, Exh. C at p. 24; see also p. 253). Regardless of the reason for why that particular form was used to loan the Hyundai to Ortiz, the evidence is undisputed that Ortiz entered into a contract with Clark Knapp Honda for purchase of the Kia, not the Hyundai. Although the Court agrees with Home State/Snap that Ramirez's testimony that the Kia "was under maintenance, apparently," is based on conjecture and not on his personal knowledge, Ortiz's testimony about what Clark Knapp Honda told her constitutes the admission of a party opponent that Solis's testimony fails to controvert. See (Dkt. No. 46 at p. 2 n.1); FED. R. EVID. 801(d)(2). Thus, the Court accepts as established, for summary judgment purposes, that the Kia was being repaired or serviced within the meaning of the temporary substitute provision.
Solis admitted that Clark Knapp Honda also has a program under which they provide loaner vehicles "when customers are in service for repairs[.]" (Dkt. No. 20, Exh. C at p. 22).
Sentry also submits, and Home State/Snap fail to dispute, that Ortiz's testimony is admissible under Federal Rule of Evidence 807, with which Sentry has complied. (Dkt. No. 46 at p. 2 n.1; see Dkt. No. 20); Fed. R. Evid. 807 (hearsay statement is not excluded by rule against hearsay, even if statement is not admissible under hearsay exception, if statement "is supported by sufficient guarantees of trustworthiness—after considering the totality of circumstances under which it was made and evidence, if any, corroborating the statement," "is more probative on the point for which it is offered than any other evidence that the proponent can obtain through reasonable efforts," and adverse party is given "reasonable notice of the intent to offer the statement ... so that the party has a fair opportunity to meet it").
Even so, Home State/Snap also contend that the Hyundai does not qualify as a "substitute" for the Kia because "Ortiz was 1) not in possession of the Kia at the time she took possession of the Hyundai; and 2) already in custody of the Hyundai at the time the policy was bound." (Dkt. No. 40 at p. 9). In support of their position, Home State/Snap rely on Progressive County Mutual Insurance Company v. Sink , 107 S.W.3d 547 (Tex. 2003), in which the Texas Supreme Court interpreted the term "temporary substitute" in an identical policy provision based on "the ordinary, everyday meaning of the words used," and on what Home State/Snap identify as the ordinary meaning of "substitute." (Id. at pp. 9-11); Sink , 107 S.W.3d at 552. The precise issue in Sink was a different one; the Court considered whether an insured whose covered vehicle has become disabled must have "at least a reasonable belief of entitlement to [the] use" of the purported temporary substitute to trigger coverage, and decided in favor of imposing this requirement based on the reasoning that "[t]he ordinary connotation of a ‘temporary substitute’ vehicle is that it is a vehicle used with the owner's permission, or at least a reasonable belief that the owner consented." Sink , 107 S.W.3d at 552. Nonetheless, Home State/Snap argue that if the term "temporary substitute" must be given its ordinary meaning, and the primary definition of "substitute" is "to put or use in the place of another," "applying an ordinary meaning to the word ‘substitute’ implies the vehicle is a replacement for the ordinary vehicle already in the actual possession of the insured" at the inception of the policy. (Dkt. No. 40 at p. 11) (citing https://www.merriam-webster.com/dictionary/substitute ). Since the Kia was not in Ortiz's possession when she acquired the Hyundai, and her possession of the Hyundai pre-existed the issuance of the policy, Home State/Snap submit that the Hyundai cannot qualify as a temporary substitute within the meaning of the policy. (Id. at pp. 9-12). In a related argument, Home State/Snap contend that because the Kia never came into Ortiz's possession, it also "could not be said that the insured vehicle was ‘out of normal use’ " within the meaning of the temporary substitute provision. (Id. at p. 10).
The Court did so where, as here, the policy failed to supply a definition of "temporary substitute." See Sink , 107 S.W.3d at 552.
Ramirez (but not Home State/Snap) seizes upon Sink to argue that the Hyundai does not qualify as a temporary substitute because Ramirez "did not have the dealership's permission to drive the vehicle that was loaned to [Ortiz]," but since a "covered auto" includes "[a]ny person using your [Ortiz's] covered auto [i.e., temporary substitute]," and no party disputes that Ortiz had Clark Knapp Honda's permission to drive the purported substitute, whether Ramirez had Clark Knapp Honda's permission to drive it is not dispositive of coverage under the temporary substitute provision. (Dkt. No. 36 at pp. 2-5). To the extent that Ramirez appeals to an exclusion discussed but not at play in Sink , and to which Home State/Snap do not appeal, this argument fares no better; although, like the policy in Sink , the Home State policy separately excludes liability coverage for "any person ... [u]sing a vehicle without a reasonable belief that that person is entitled to do so," neither Sink nor the language of the exclusion suggests that the reasonable belief must stem from Clark Knapp Honda's permission as opposed to Ortiz's, which Ramirez indisputably had. See (id. ; Dkt. No. 20, Exh. A at p. 31; Exh. B at pp. 21-23; Dkt. No. 32 at p. 11 n.3; Dkt. No. 41, Exh. 2, Exclusions at § A(8)); Sink , 107 S.W.3d at 549.
The difficulty with Home State/Snap's ordinary meaning argument is that it relies on a desired implication, rather than the ordinary meaning actually supplied. No party quarrels with the given definition of the verb "substitute" as "to put or use in the place of another," but it does not follow that a substitute must replace something in another's possession. In an effort to support their interpretation, Home State/Snap explain that "[f]or example, a ‘substitute teacher’ replaces a student's ordinary teacher." (Dkt. No. 40 at p. 11). However, a substitute teacher who fills in for a teacher who has been selected to teach a class, yet for whatever reason, cannot teach on the first day of school, is no less a "substitute" than one who fills in for the same teacher later in the year. In the Court's view, that Ortiz had selected the Kia and contracted with Clark Knapp Honda for its purchase when the dealership loaned her the Hyundai renders the latter a replacement for the Kia, and therefore its "substitute" for the insured vehicle according to the ordinary meaning of that term. Also for these reasons, and because the Court accepts that Clark Knapp Honda loaned the Hyundai to Ortiz because the Kia was being "repaired" or "serviced," the Court also accepts that the Kia was "out of normal use"—by Ortiz or any other—at the time the policy commenced. Accordingly, the Hyundai constitutes a "temporary substitute" within the meaning of the policy, and Ramirez qualifies as a "covered person" by virtue of his use of that vehicle on the date of the accident.
Home State/Snap complain that interpreting the policy in this manner would allow any "unlisted" vehicle in the insured's possession at the inception of the policy to qualify for coverage, but even assuming this were the case, nothing in the subject provision requires that a temporary substitute vehicle be "listed," whether the insured comes into possession of it before or during the life of the policy. See (Dkt. No. 40 at p. 10).
The Court has no need, therefore, to consider Sentry's appeal to various non-Texas cases in an effort to support its interpretation of the temporary substitute provision, or to consider Home State/Snap's various objections to Sentry's reliance on these cases. (Dkt. No. 39 at pp. 11-12; Dkt. No. 40 at pp. 11-12; Dkt. No. 42 at pp. 15-17; Dkt. No. 46 at pp. 2-6; Dkt. No. 48 at pp. 4-11). The Texas Supreme Court's binding decision in Sink directs the Court to the ordinary meaning of the term "temporary substitute" (as well as the term "out of normal use"), and absent any discernible conflict with the policy, or ambiguity raised, these meanings control. See Sink , 107 S.W.3d at 552.
2. Whether Ortiz Had "Insurable Interest" in the Kia
Separate from the question of Ramirez's covered status, Home State/Snap also challenge whether Ortiz ever obtained an "insurable interest" in the Kia so as to afford any such status under the Home State policy. See (Dkt. No. 40 at pp. 12-13). Citing to Gulf Insurance Company v. Winn , 545 S.W.2d 526, 528 (Tex. App.-Austin 1997, writ ref'd n.r.e.), Home State/Snap maintain that in the liability insurance context, Texas law recognizes an insurable interest "when an insured would be exposed to liability arising out of the ownership, maintenance or use of that auto." (Dkt. No. 40 at p. 12). According to Home State/Snap, "[s]ince Ortiz never acquired ownership or possession of the Kia vehicle, and no member of her household had ownership or possession of the Kia, she had no insurable interest in the vehicle and, as such, the vehicle did not qualify for coverage under her policy." (Id. at pp. 12-13). However, Winn itself recognized that neither the policy before it, nor Texas courts, "require that actual ownership be in the named insured" for an insurable interest to exist. Id. at 527 (citing Snyder v. Allstate Insurance Company , 485 S.W.2d 769 (Tex. 1972) (since specific premium charge was paid on specific vehicle at issue, vehicle was "owned automobile" under relevant policy definition)); see also (Dkt. No. 39 at p. 12) (citing Snyder , 485 S.W.2d at 771 for the same proposition). Home State/Snap maintain that the Texas Supreme Court in Gulf Insurance Company v. Bobo , 595 S.W.2d 847, 849 (Tex. 1980), has since distinguished the rulings in Winn and Snyder by holding that "while ownership alone is not determinable of insurability, the insured must have possession or control over the use of the vehicle" to have an insurable interest in it. (Dkt. No. 40 at p. 13). However, Bobo is further distinguishable from the present case, since only the latter involves evidence demonstrating the insured's exposure to liability for the operation, maintenance, or use of the subject vehicle.
Bobo concerned a scenario wherein the vehicle at issue was the subject of an informal sale; the seller agreed to the sale, provided the buyer "would get some insurance on the truck," and after the buyer showed the seller a receipt for a collision insurance policy, gave her the vehicle. Bobo , 595 S.W.2d at 848. Before the parties could meet to formalize the sale, the buyer wrecked the truck in an accident that injured the plaintiffs, who sought to recover against the buyer as an additional insured under the seller's (hereinafter "insured") policy. Id. at 847-48. Relevant to the coverage question presented, the policy's omnibus clause extended coverage to "any person while using the automobile ... provided the actual use of the automobile is by the named insured or ... spouse or with the permission of either." Id. at 848. The Court concluded that the insured had no permission to give, and therefore no coverage to be extended to the buyer, because the buyer had sole control over the use of the vehicle at the time of the accident. Id. at 848-49. In so holding, the Court recognized that under Snyder and Winn , ownership does not determine the existence of an insurable interest, but observed that in each of these cases the insured retained the ability to grant permission to use the subject vehicle. See id. at 849. Since, regardless of the conditional nature of the sales transaction in the case before it, the transfer of control over use of the vehicle removed that ability from the insured, he lacked an insurable interest in the vehicle, and the buyer could not be considered an additional insured under his policy. See id.
In contrast to the informal agreement between the parties in Bobo , here the evidence is undisputed that Ortiz (as buyer) entered into a written agreement with Clark Knapp Honda (as seller) for the purchase of the Kia, and that as part of the transaction, Ortiz agreed to furnish an insurance policy on the Kia, as well as to "assume forthwith any and all responsibility for damage to the vehicle or resulting from the use, maintenance or operation of the vehicle," and "to hold Seller free of any loss, claim, or liability resulting from any damage to the vehicle or from the vehicle's use, maintenance or operation." (Dkt. No. 20, Exh. C at pp. 247-51). In fulfillment of this agreement, Ortiz obtained the Home State policy on the Kia. (Id. at p. 252). Consistent with Bobo , Ortiz lacked control over the use of the Kia on the date of the accident, but in contrast to that case, she remained contractually liable for its "use, maintenance or operation." That Ortiz never came into ownership or possession of the Kia does not change this fact, which under the authority recognized by Home State/Snap, suffices to give Ortiz an insurable interest in the Kia at the relevant time, and therefore to keep Ramirez's use of the temporary substitute vehicle within coverage. See Winn , 545 S.W.2d at 528 ("The authorities and encyclopedias of law are in apparent agreement that the only interest necessary to the validity of an automobile liability insurance policy is that the insured may incur liability because of the operation, maintenance, or use of the automobile.").
3. Whether Policy May be Considered Void
Although the Home State policy's eventual cancelation has no bearing on whether coverage existed on the date of the accident, Ramirez (but not Home State/Snap) alternatively contends that the record places in genuine dispute whether the policy may be considered void as of that date because Ortiz did not have a valid driver's license when she obtained the policy. (Dkt. No. 36 at pp. 5-6). In support of this argument, Ramirez points to the policy's misrepresentation or fraud endorsement stating that "[i]f you [Ortiz] omitted material facts or made material misrepresentations that are fraudulent, false, misleading or affect the acceptance of the risk by us, we [Home State] may void this policy" in accordance with Texas Insurance Code Chapter 705, Subchapter A. (Id. at p. 5; see Dkt. No. 41, Exh. 2, Misrepresentation or Fraud Endorsement). Ramirez asserts that evidence indicating a representation by Ortiz, as part of her application for the Home State policy, that she had a valid driver's license, when considered against her pleaded allegations that she was an unlicensed driver at that time, present "a fact question as to whether the Home State policy is applicable," and preclude summary judgment on the issue of coverage. (Dkt. No. 36 at p. 6; see Dkt. No. 33, Exh. E at ¶¶ 6.2, 6.3, 7.1; Dkt. No 41, Exh. 2, Applicant Questionnaire).
Sentry concedes that in addition to pleading her status as an unlicensed driver, Ortiz testified in her deposition that she has never had a Texas driver's license. (Dkt. No. 39 at p. 14; see Dkt. No. 20, Exh. A at p. 11). However, as Sentry points out, the Texas Insurance Code provides that "a defendant may use as a defense a misrepresentation made in the application for or in obtaining an insurance policy only if the defendant shows ... that before the 91st day after the date the defendant discovered the falsity of the representation, the defendant gave notice [to the insured] that the defendant refused to be bound by the policy[.]" (Dkt. No. 39 at p. 14); TEX. INS. CODE § 705.005(b). Sentry submits that, despite Home State's awareness of this requirement—its misrepresentation or fraud endorsement incorporates Chapter 705—no evidence exists that, after receiving notice on April 23, 2020 of Sentry's intention to rely on Ortiz's deposition as evidence in this case, Home State timely (or ever) gave notice to Ortiz that it refused to be bound by the policy by reason of any misrepresentation she made when obtaining it. (Dkt. No. 39 at pp. 14-15). No party responds with any controverting evidence, and in the absence of the requisite statutory notice, Ramirez's voidness argument fails. See (Dkt. No. 39 at pp. 15-16); Pelican Tug Co. v. Am. Home Assurance Co. , 2009 WL 10695215, at *6 (S.D. Tex. July 10, 2009) (recognizing that "statutory notice [as required under § 705.005(b) ] is an essential element of a defense based on misrepresentation") (citing cases).
4. Effect of Default Judgment Obtained by Home State
In a final effort to preclude a finding of coverage under its policy, Home State points to evidence that it obtained a final default judgment in its own, separate declaratory judgment action filed in state court, declaring that it has no duty to defend or indemnify Ortiz or Ramirez in the underlying suit. (Dkt. No. 40 at pp. 13-14; Dkt. No. 41, Exh. 3). The docket sheet for that case, submitted by Sentry and of which this Court may also take judicial notice, reflects that Home State filed its action on July 6, 2020, after the filing of Sentry's action and Ortiz's and Ramirez's active participation in the same, fairly raising the question of whether the parties to Home State's action colluded to obtain a declaration of no coverage under the Home State policy for the purpose of triggering coverage under the Sentry policy. (Dkt. No. 39 at pp. 2-3, Exh. A). Regardless, as Sentry points out and Home State/Snap concede, that Sentry was not a party to Home State's action prevents the default judgment from having any res judicata effect "as to Sentry." (Id. at pp. 3-7; Dkt. No. 40 at p. 13). Home State/Snap attempt to sidestep this fact by arguing that the question of coverage under each policy stands alone, yet to accept Home State/Snap's resultant position that "[t]he state court's determination ... precludes coverage" under its own policy necessarily affects the determination of Sentry's coverage in this suit. (Dkt. No. 40 at pp. 13-14). Under Texas law,
As the docket sheet is available to the public online through the Hidalgo County Records Inquiry, http://pa.co.hidalgo.tx.us/default.aspx, the facts reflected therein are "not subject to reasonable dispute because [they] ... can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b)(2) (rule governing judicial notice of adjudicative facts); Swindol v. Aurora Flight Scis. Corp. , 805 F.3d 516, 519 (5th Cir. 2015) (taking judicial notice under Rule 201(b)(2) of public records available on official websites).
[w]hen declaratory relief is sought, all persons who have or claim any interest that would be affected by the declaration must be made parties. A declaration does not prejudice the rights of a person not a party to the proceeding.
TEX. CIV. PRAC. & REM. CODE § 37.006(a) ; see (Dkt. No. 39 at p. 6). Thus, Sentry is not bound by the declaration unless it was in privity with the parties to Home State's action, i.e., it could control the action or its interests were represented by Home State, Ramirez, and/or Ortiz in that proceeding, which was decidedly not the case. See (id. at pp. 3-7); Amstadt v. U.S. Brass Corp. , 919 S.W.2d 644, 652-53 (Tex. 1996) ; Dairyland Cty. Mut. Ins. Co. of Texas v. Childress , 650 S.W.2d 770, 774 (Tex. 1983). Home State/Snap appear to challenge whether Sentry had any interests to represent, but if it did not, Home State, Ramirez, and Ortiz would have no reason to rely on the declaration in Sentry's action against them. For purposes of determining Sentry's coverage obligations in the present suit, the declaratory judgment obtained by Home State does not preclude a finding that its policy provides coverage to Ramirez. See Dairyland , 650 S.W.2d at 774 (where parties to separate actions not in privity, and purpose of declaratory judgment of no coverage was to work against interest of non-party to that action, judgment did not bind the latter in separate proceeding).
D. Coverage under Sentry Policy
1. Primary Coverage
Again, no party disputes that if the Home State policy provides coverage to Ramirez in the underlying action, the Sentry policy's step down provision precludes Sentry's duty to defend Ramirez in that action. On the date of the accident giving rise to the Ortiz plaintiffs’ suit, Sentry had a commercial insurance policy in effect with Clark Knapp Honda, the only named insured. (Dkt. No. 33, Exh. A at ¶ 3, Exh. B at pp. 004, 007). The primary auto liability coverage section of the Sentry policy provides, in relevant part, as follows:
D. COVERED AUTOS LIABILITY COVERAGE
1. COVERAGE
We will pay all sums an "insured" legally must pay as damages, including punitive damages where insurable by law, because of "bodily injury" or "property damage" to which this insurance applies, caused by an "accident" and resulting from the ownership, maintenance or use of covered "autos".
....
We have the right and duty to defend any "insured" against a "suit" asking for such damages or a "covered pollution cost or expense". However, we have no duty to defend any "insured" against a "suit" seeking damages for "bodily injury" or "property damage" or a "covered pollution cost or expense" to which this insurance does not apply. We may investigate and settle any claim or "suit" as we consider appropriate. Our duty to defend or settle ends when the Covered "Autos" Liability Coverage Limit of Insurance has been exhausted by payment of judgments or settlements.
(Dkt. No. 32 at pp. 6-7; Dkt. No. 33, Exh. B at p. 043). Since Ramirez is not a named insured, to obtain coverage he must qualify as an "insured" under the ensuing definitions of that term, only one of which is potentially applicable: "(6) Anyone else required by law to be an insured while using a covered ‘auto’ you own, hire or borrow, if the use is within the scope of your permission." (Dkt. No. 32 at p. 7; Dkt. No. 33, Exh. B at pp. 043-044). With respect to permissive users, the step down provision of the policy provides:
b. The most we will pay for "Contract Drivers" and anyone required by law to be an "insured" for use of a covered "auto" is that portion of the Limit of Insurance for covered "Autos" Liability Coverage that is needed to comply with the minimum limits provision of the law in the jurisdiction where the "accident" took place. When there is other insurance applicable to the "accident," we will only pay the amount needed to comply with these minimum limits after the other insurance is exhausted.
(Dkt. No. 32 at pp. 4-5; Dkt. No. 33, Exh. B at p. 050) (emphasis added by Sentry). Sentry provides undisputed argument, and the Court accepts, that Sentry's step down provision accomplishes one of the aims of Texas Insurance Code §§ 1952.251 and 1952.252, which is that "permissive users of garage vehicles are guaranteed only the minimum auto liability limits, and only to the extent that the permissive user does not have sufficient insurance on his own to meet the minimum liability limits required by law." (Dkt. No. 32 at pp. 8-9); accord Sentry Select Ins. Co. v. Home State Cty. Mut. Ins. Co. , 994 F. Supp. 2d 789, 807-08 (E.D. Tex. 2013), aff'd , 582 F. App'x 284 (5th Cir. 2014). Since, for the reasons discussed supra , Ramirez has "other insurance [the Home State policy] applicable to the ‘accident’ " giving rise to the Ortiz plaintiffs’ suit against him, and that policy indisputably insures him up to the minimum liability limits required by Texas law, Sentry's step down provision relieves it of any obligation to provide primary coverage to Ramirez as a permissive user. (Dkt. No. 32 at p. 13).
These sections provide as follows:
For the reasons explained supra , that Ramirez allowed Home State to obtain a default judgment to the contrary does not, for purposes of this suit, preclude a finding that the Home State policy constitutes other applicable insurance.
Only Ramirez argues that any such finding may only extend to Sentry's duty to defend, citing to the general rule that the duties to defend and indemnify are "independent," and that the latter "may turn on facts actually proven in [the underlying] lawsuit." (Dkt. No. 36 at pp. 6-7). Ramirez does not, however, identify any facts relevant to liability, and therefore yet to be proven, that would determine the duty to indemnify. Since both duties may be determined on the basis of facts pleaded and otherwise shown by the Sentry policy and extrinsic evidence relevant to coverage, this case falls within the exception to the general rule recognized by Texas law, and does not preclude this Court's adjudication of the duty to indemnify. (Dkt. No. 39 at p. 16); see Griffin , 955 S.W.2d at 84.
2. Excess Coverage
The Sentry policy also provides excess liability coverage for "bodily injury" and "property damages" caused by an "occurrence" during the policy period, but only if the " ‘Underlying Insurance’ applies." (Dkt. No. 32 at p. 13; Dkt. No. 51, Exh. A at p. 162). No dispute exists that the "Underlying Insurance" consists of Sentry's primary auto liability coverage, which for the reasons explained supra , does not apply by virtue of Sentry's step down provision. (Dkt. No. 32 at p. 13; Dkt. No. 51 at p. 51 at p. 5 n.2; Exh. A at p. 153). In the absence of primary coverage, Sentry has no duty under its excess policy to defend Ramirez in the underlying suit, and for the same reasons, to indemnify him.
As Ramirez points out, Sentry fails to attach the last two pages of its "Commercial Excess/Umbrella Liability Coverage Policy," see (Dkt. No. 33, Exh. B at pp. 165-179), the complete version of which has been supplied by Ramirez, see (Dkt. No. 51, Exh. A at pp. 162-179).
This is the case regardless of whether, as Ramirez argues in his supplemental brief, he may otherwise qualify as an "insured" or "designated insured" under the excess policy. See (Dkt. No. 51). Sentry moves for summary judgment on the principal basis that its step down provision precludes primary coverage and therefore excess coverage, and separate and apart from this argument, submits that Ramirez is also not the "named insured" or a "designated insured" entitled to excess coverage. See (Dkt. No. 32 at pp. 13-14).
3. Umbrella Coverage
No party disputes that since the umbrella coverage afforded by Sentry's policy is extended only to the "named insured," i.e., to Clark Knapp Honda, Sentry has no duty under its umbrella policy to defend Ramirez, and it is apparent that for the same reason, Sentry also has no duty to indemnify him. (Dkt. No. 32 at p. 14; Dkt. No. 39 at p. 16; Dkt. No. 51, Exh. A at pp. 171-72).
E. Ramirez's Counterclaim for Attorney's Fees
With respect to Ramirez's counterclaim for attorney's fees, brought pursuant to the Texas Uniform Declaratory Judgments Act ("DJA"), TEX. CIV. PRAC. & REM. CODE § 37.001, Sentry argues that the counterclaim must be dismissed "because the Sentry policy provides no coverage," and also because the Fifth Circuit considers the Texas statute's provision of fees as procedural, and therefore inapplicable in a diversity action where only state substantive law applies. (Dkt. No. 32 at p. 15; see Dkt. No. 30); e.g., Utica Lloyd's of Texas v. Mitchell , 138 F.3d 208, 210 (5th Cir. 1998). Ramirez offers no counterargument, and the Court agrees with Sentry that Fifth Circuit precedent entitles it to summary judgment on this claim. Also, since the Court has concluded that the record supports entry of summary judgment on Sentry's claims that it has no duty to defend or indemnify Ramirez in the underlying suit, Ramirez cannot succeed on his counterclaim seeking a declaration of coverage.
See Tex. Civ. Prac. & Rem. Code § 37.009 ("In any proceeding under this chapter, the court may award costs and reasonable and necessary attorney's fees as are equitable and just.").
III. Conclusion
For the foregoing reasons, the Court hereby ORDERS that Sentry's Motion for Summary Judgment is GRANTED and Home State/Snap's Motion for Summary Judgment is DENIED .
The Court will enter a final judgment consistent with this Order.
SO ORDERED this 8th day of April, 2021, at McAllen, Texas.
§ 1952.251. Definitions
In this subchapter:
(1) "Garage customer" means a person or organization other than :
(A) the named insured under a garage insurance policy ;
(B) an employee, director, officer, shareholder, partner, or agent of the named insured; or
(C) a resident of the same household as:
(i) the named insured; or
(ii) an employee, director, officer, shareholder, partner, or agent of the named insured.
(2) "Garage insurance" means automobile insurance as defined by Article 5.01 issued to a named insured who is engaged in the business of selling, servicing, or repairing motor vehicles as defined by commissioner rule or order.
§ 1952.251 Garage Insurance
(a) A garage insurance policy may provide that a garage customer is not an insured under the policy and that the coverage under the policy does not apply to a garage customer except to the extent that any other insurance coverage that is collectible and available to the garage customer is not equal to the minimum financial responsibility limits specified by Chapter 601, Transportation Code.
(b) Notwithstanding any provision to the contrary in another insurance policy as to whether the insurance coverage described by Subsection (a) that is provided under that policy is primary, excess, or contingent insurance, or otherwise, the other insurance coverage is the primary insurance as to the garage customer.
(c) A garage insurance policy containing a provision described by Subsection (a) may not cover a garage customer except to the extent permitted by this section, notwithstanding the terms of the other insurance policy providing coverage described by Subsection (a).
Tex. Ins. Code §§ 1952.251, 1952.252 (emphasis added to both). The Court accepts as undisputed that Ramirez would constitute a "garage customer" under the statute, "since he is a person who is not the named insured," and that the Sentry policy would constitute "garage insurance," "as it is automobile insurance as defined [ Tex. Ins. Code Art. 5.01 ] issued to a named insured (Clark Knapp Honda) who is engaged in the business of selling, servicing, or repairing motor vehicles." (Dkt. No. 32 at p. 10; Dkt. No. 33, Exh. D at ¶ 7; Exh. I).