392 F. Supp. 3d 731
S.D. Tex.2019Background
- Maxim rented a crane to Berkel; Berkel's lease required Berkel to add Maxim as an additional insured on Berkel’s CGL (the Berkel Policy).
- A Berkel employee overloaded the crane; the crane fell and seriously injured Tyler Lee (a Skanska employee); Lee received workers’ compensation benefits under Skanska’s contractor-controlled program.
- Lee sued Maxim and others; a jury allocated 10% fault to Maxim and awarded ~ $35.4M; Maxim settled with Lee for $3,444,300.60 and Zurich (Maxim’s insurer under the Maxim Policy) paid the settlement and defense costs; Maxim reimbursed Zurich under its deductible endorsement.
- Maxim sued Zurich seeking coverage under the Berkel Policy as an additional insured; Zurich removed and moved for summary judgment, arguing Maxim lacks standing (assignment by deductible endorsement) and that Texas’s Anti‑Indemnity Statute voids Maxim’s additional‑insured coverage.
- The court held Maxim has standing (the deductible endorsement does not unambiguously assign away Maxim’s right to pursue coverage for amounts it already reimbursed) but granted summary judgment for Zurich because the Texas Anti‑Indemnity Statute bars the additional‑insured coverage and neither statutory exception (Employee Exception nor Workers’ Compensation exclusion) applied.
Issues
| Issue | Maxim's Argument | Zurich's Argument | Held |
|---|---|---|---|
| Standing: whether Maxim can sue under Berkel Policy given Maxim Policy’s deductible endorsement | Deductible assigns only rights to recover “reimbursable” amounts; Maxim retained right to recover amounts it already reimbursed; waiver if Zurich fails to pursue | Endorsement unambiguously assigns Maxim’s recovery rights to Zurich, so Maxim lacks capacity to sue | Maxim has standing; endorsement ambiguous and construed against drafter; Maxim may pursue claim |
| Applicability of Texas Anti‑Indemnity Statute to additional‑insured coverage | Statute should permit coverage under exceptions tied to workers’ compensation; Berkel’s enrollment/ appellate ruling makes Berkel a statutory co‑employer/co‑employee, invoking Employee Exception and workers’ comp exclusion | Statute bars additional‑insured coverage for claims caused by the additional‑insured’s negligence; co‑employee status under workers’ comp cannot be imported to broaden exceptions | Anti‑Indemnity Statute voids Maxim’s additional‑insured coverage for the Lee losses; exceptions do not apply |
| Employee Exception: whether Berkel is Lee’s employer/co‑employer such that exception saves coverage | Appellate ruling that Berkel was a statutory co‑employee (due to contractor‑controlled program) functionally makes Berkel a co‑employer for Anti‑Indemnity purposes | Statutory deemed employer/co‑employee status is limited to workers’ compensation law and does not make Berkel Lee’s employer for other statutes | Court rejects interchangeability; §406.123’s deemed‑employer status is limited to workers’ compensation and cannot be imported to Anti‑Indemnity Statute |
| Workers’ Compensation exclusion in Anti‑Indemnity Statute: does it preserve additional‑insured coverage here? | The exclusion preserves indemnification/insurance where workers’ comp benefits/protections are implicated; applying the statute would undermine workers’ comp benefits | Exclusion only carves out issues that would affect workers’ comp benefits; here denying coverage does not alter Lee’s workers’ comp benefits | Maxim failed to identify a workers’ comp benefit that would be impaired; exclusion does not apply |
Key Cases Cited
- Berkel & Co. Contractors, Inc. v. Lee, 543 S.W.3d 288 (Tex. App. 2018) (appellate ruling that Berkel was a statutory co‑employee under the workers’ compensation scheme)
- TIC Energy & Chem., Inc. v. Martin, 498 S.W.3d 68 (Tex. 2016) (interpreting §406.123 deemed‑employer doctrine under Texas workers’ compensation law)
- Austin Bridge & Road, LP v. Suarez, 556 S.W.3d 363 (Tex. App. 2018) (discussing extension of deemed employer/employee relationships across subcontracting tiers)
- TGS‑NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432 (Tex. 2011) (Texas canon: begin statutory interpretation with plain language and legislative intent)
- Mut. Benefit Ins. Co. v. Politsopoulos, 115 A.3d 844 (Pa. 2015) (insurance‑policy ambiguities construed against insurer and exclusions narrowly)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standards and burdens on movant)