Court of Appeals of Texas, Beaumont.

CHEVRON U.S.A., INC., Appellant,

v.

CIGNA INSURANCE COMPANY OF TEXAS, Appellee.

No. 09–97–032 CV.

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Submitted on Feb. 26, 1998.

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Opinion Delivered Aug. 13, 1998.

Before WALKER, C.J., BURGESS and STOVER, JJ.

OPINION

EARL B. STOVER, Justice.

*1 This is a summary judgment case involving issues of contract law where neither appellant, Chevron U.S.A., Inc. (Chevron), nor appellee, Cigna Insurance Company of Texas (Cigna), contends the central issue involves any question of fact.

Due to interdependency and overlapping of claims, this case, No. 09–97–032 CV, was, for oral argument purposes only, submitted along with No. 09–96–343 CV, Adams & Adams, Frank Adams, Individually, and John Lowe v. Cigna Insurance Company of Texas, and No. 09–97–092 CV, Borinquen Insulation, Inc. v. Chevron U.S.A., Inc. Though for opinion purposes we address each cause separately, we shall provide here the common factual background which brought about these separate claims for relief.

On April 12, 1990, John Lowe, an employe of Triple D Construction, sustained an on-the-job injury while on Chevron U.S.A.’s premises. Triple D Construction was a subcontractor of Borinquen Insulation, Inc., Borinquen being a general contractor of Chevron. Following Lowe’s injury, Cigna paid workers’ compensation benefits to Mr. Lowe, he had filed a third-party lawsuit against Chevron. Chevron then demanded a defense and indemnity from Borinquen, and, additionally, a defense and indemnity from the liability carrier pursuant to its additional insured status under Borinquen’s general liability coverage.

Guardian Royal Exchange Insurance Company, Ltd., general liability carrier for Borinquen, accepted the defense and indemnity obligations of Borinquen, thereby assuming the defense of Chevron in Lowe’s third-party claim. On December 8, 1993, Mr. Lowe settled his lawsuit against Chevron for $167,000.00.

Guardian Royal paid this settlement at which time Chevron and its insurers expressly agreed to “indemnify, defend, and hold harmless” John Lowe and his attorneys from Cigna’s lien and to pay the lien if same was not waived. Lowe, his counsel, and Chevron’s counsel signed this release.

Though in this appeal we are only concerned with that summary judgment favoring Cigna against Chevron, for clarity’s sake we note that summary judgment was also granted against Adams & Adams, Frank Adams, individually, and John Lowe. In addition, the trial court granted summary judgment in favor of Chevron against Borinquen.¹ By virtue of that summary judgment, Borinquen was required to indemnify Chevron for claims made against it by Cigna’s exercising its subrogation lien.

Chevron brings two points of error:

The trial court erred in granting Cigna’s summary judgment against Chevron.

The trial court erred in denying Chevron’s motion for summary judgment.

Resolution of the key issue in the instant appeal, indeed in all three appeals, requires an examination of a contract between Borinquen’s subcontractor, Triple D, and Triple D’s insurance carrier, Cigna. Specifically, the parties ask us to make a determination as to the legal significance of certain language contained in the contract between Triple D and Cigna.

*2 The primary concern of a court in construing a written contract is to ascertain the true intent of the parties as expressed in the instrument. National Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex.1995). If a written contract is so worded that it can be given a definite or certain legal meaning, then it is not ambiguous. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983). If, however, the language of a contract is subject to two or more reasonable interpretations, it is ambiguous. Id. When a contract contains an ambiguity, the granting of a motion for summary judgment is improper because the interpretation of the instrument is a question of fact for the jury. Id. at 394. In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true. Reilly v. Rangers Management, Inc., 727 S.W.2d 527, 529 (Tex.1987); Montgomery v. Kennedy, 669 S.W.2d 309, 311 (Tex.1984). However, the ambiguity must become apparent when the contract is read in the context of surrounding circumstances, not after parol evidence of intent is admitted to create an ambiguity. CBI Indus., Inc., 907 S.W.2d at 521. Whether a contract is ambiguous is a question of law for the court to decide by looking at the contract as a whole in light of the circumstances existing at the time the contract was entered into. Reilly, 727 S.W.2d at 529. Those circumstances present when the Triple D/Cigna contract was entered into include the existence and substance of the other two related contracts—the Chevron/Borinquen contract and the Borinquen/Triple D contract.

By virtue of the Chevron/Borinquen contract, Borinquen was required to obtain from its subcontractors [i.e., Triple D] certain insurance coverages and endorsements. One of those endorsements—a waiver of subrogation against Chevron—had to be contained in the Worker’s Compensation insurance obtained by the subcontractors [i.e., Triple D].

The portions of the Chevron/Borinquen contract at issue read as follows:

6.1 Insurance Required: Without in any way limiting CONTRACTOR’s [Borinquen’s] liability pursuant to section 5 hereof, Contractor shall maintain the following insurance and all insurance that may be required under the applicable laws, ordinances, and regulations of any governmental authority:

6.11 Worker’s Compensation and Employers’ Liability Insurance …

6.2 Policy Endorsements: … The insurance specified in Section 6.11 hereof shall contain a waiver of subrogation against the indemnities [Chevron] and an assignment of statutory lien, if applicable.

6.3 Evidence of Insurance: CONTRACTOR [Borinquen] shall—before commencing work—provide COMPANY [Chevron] with certificates or other documentary evidence satisfactory to COMPANY of the insurance coverages and endorsements set forth in Sections 6.1 and 6.2 above.

*3 6.4 Insurance Required from Subcontractors: … CONTRACTOR shall obtain from its subcontractors, if any, the insurance coverages and endorsements set forth in Sections 6.1, 6.2, and 6.3, excepting that both COMPANY and CONTRACTOR be named as additional insureds.

In compliance with sections 6.2/6.4 of the Chevron/Borinquen contract, section 8(a) of the Borinquen/Triple D contract contains the mandated waiver of subrogation language. The section 8(a) language provides:

Subcontractor [Triple D] hereby waives all rights of subrogation that its or its insurers may have against Contractor’s Clients, and its directors, officers, agents and employees.

In light of sections 6.2/6.4 of the Chevron/Borinquen contract, “Contractor’s Clients” could have been reasonably understood by Triple D and Borinquen to include Chevron, since there is no question that “Contractor” refers to Borinquen. Under section 8(f) of the Borinquen/Triple D contract, the following language appears:

(f) Prior to commencement of work during the term of this Agreement, Subcontractor shall have on file with Contractor current insurance certification indicating that:

(2) Rights of subrogation against Contractor Clients, its directors, officers, agents and employees shall be waived under the Worker’s Compensation policy described in item (a) above[.]

Again, this language is completely consistent with the requirements of sections 6.2/6.4 of the Chevron/Borinquen contract. Therein Borinquen is required to provide Chevron with insurance coverage and endorsements from its (Borinquen’s) subcontractors that is identical to the insurance coverage required to be obtained by Borinquen. This includes waiver of subrogation language in favor of Chevron, explicit in section 6.2. Thus, Borinquen fulfilled its contract with Chevron by inclusion of the provisions cited above in its contract with Triple D.

Triple D complied with its contract with Borinquen by including in its (Triple D’s) contract with Cigna a clause whereby Cigna agreed to waive its right of subrogation against the person or organization named in the “Schedule.” The specific provision at issue is the following:

We [Cigna] have the right to recover our payments from anyone liable for an injury covered by this policy. We will not enforce our right against the person or organization named in the Schedule, but this waiver applies only with respect to bodily injury arising out of the operations described in the Schedule, where you [Triple D] are required by a written contract to obtain this waiver from us.

This endorsement shall not operate directly or indirectly to benefit anyone not named in the Schedule.

The premium for this endorsement is shown in the Schedule.

Schedule

1. ( ) Specific Waiver

Name of person or organization:

(X) Blanket Waiver

Any person or organization for whom the Named Insured has agreed by written contract to furnish this waiver.

The waiver of right to subrogation in the Schedule is a “Blanket Waiver” in which Cigna waived its subrogation rights as “to any persons or organization for whom the Named Insured [Triple D] has agreed by written contract to furnish this waiver.” There is no ambiguity in the contract. When one asks for whom did Triple D agree by written contract to furnish a waiver, the answer is unambiguously Chevron; the phrase “any persons or organization for whom Triple D has agreed by written contract to furnish this waiver” includes Chevron.

*4 Having found there is no ambiguity in the contract language, we hold the summary judgment granted in favor of Cigna and against Chevron is improper, and we sustain point of error one. Based on the same reasoning, we sustain Chevron’s point of error two and render summary judgment in favor of Chevron and against Cigna.

REVERSED AND RENDERED.

DISSENTING OPINION

RONALD L. WALKER, Chief Justice, dissenting.

*4 I respectfully make the brief dissent.

On the face of the contract between Triple D and appellee Cigna, under the “Blanket Waiver” provision, Triple D is obviously the “Named Insured.” In the context of the surrounding circumstances then existing when Triple D executed the insurance contract with appellee, Triple D had indeed agreed “by written contract” with Borinquen to furnish Borinquen with appellee’s “Blanket Waiver.” Where the latent ambiguity arises is whether the “Blanket Waiver” of appellee’s subrogation rights was meant to favor Chevron. To determine that it was or was not meant to favor Chevron would require us to engage in interpretation of the ambiguity, as the parties would have us do. Under the proper summary judgment law previously cited, however, we are precluded from making such a determination as interpreting the latent ambiguity present in the Triple D–Cigna contract is a fact issue for a jury. Reilly v. Rangers Management, Inc., 727 S.W.2d 527, 529 (Tex.1987).

	Footnotes
1		The instant cause, along with Cigna Insurance Company of Texas v. Adams, Frank Adams, Individually, and John Lowe, was severed out by the trial court; apparently, the Chevron U.S.A., Inc. v. Borinquen Insulations, Inc. cause was likewise severed out.