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LIBERTY MUTUAL FIRE INSURANCE COMPANY V. ACE AMERICAN INSURANCE COMPANY et al Complaint

ATTENTION: It is possible that this information may no longer be current and therefore may be inaccurate. The index contains both open and closed cases and is not a complete list of cases in which an ACE Insurance Group company is involved. This information is provided to give interested persons an idea of the issues disputed in the indexed cases. For a full understanding of a case, one should read the rest of the court file, including the response. For the most up-to-date and complete information on a case, visit www.pacer.gov or contact the clerk of the relevant court.

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Case 1:13-cv-00555-SS Document 1 Filed 07/02/13 Page 1 of 8
IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS AUSTIN DIVISION LIBERTY MUTUAL FIRE INSURANCE § COMPANY, § Plaintiff § § v. § § § ACE AMERICAN INSURANCE § COMPANY and HEALTHTRUST, INC.- § THE HOSPITAL COMPANY § Defendant §
CIVIL ACTION NO. 1:13-CV-00555
ORIGINAL COMPLAINT TO THE HONORABLE DISTRICT JUDGE: Plaintiff Liberty Mutual Fire Insurance Company (“Liberty Mutual”) files this Original Complaint against Defendants ACE American Insurance Company (“ACE”) and Healthtrust, Inc.–The Hospital Company (“Healthtrust”) pursuant to 28 U.S.C. §§ 1332 and 2201 and would respectfully show the Court as follows: I. PARTIES 1. Plaintiff Liberty Mutual is an insurance company incorporated in the State of
Wisconsin with its principal place of business in Boston, Massachusetts. Liberty Mutual was and is duly qualified to do and transact business in the State of Texas and executes and delivers insurance policies in Travis County, Texas. 2. On information and belief, Defendant ACE is an insurance company incorporated
in the state of Pennsylvania, with its principal place of business in Philadelphia, Pennsylvania. ACE was and is duly qualified to do and transact business in the State of Texas and executes and
Case 1:13-cv-00555-SS Document 1 Filed 07/02/13 Page 2 of 8
delivers insurance policies in Travis County, Texas. ACE may be served with process through its agent for service, CT Corporation System, 350 North St. Paul Street, Suite 2900, Dallas, Texas, 75201. Liberty Mutual requests that citation be issued and served upon this defendant. 3. On information and belief, Defendant Healthtrust is healthcare company
incorporated in the state of Delaware, with its principal place of business in Nashville, Tennessee. Healthtrust is duly qualified to do and transact business in the State of Texas. Healthtrust may be served with process through its agent for service, CT Corporation System, 350 North St. Paul Street, Suite 2900, Dallas, Texas, 75201. Liberty Mutual requests that citation be issued and served upon this defendant. II. JURISDICTION AND VENUE 4. This suit is filed pursuant to 28 U.S.C. § 2201, which authorizes actions for
declaratory judgment. This suit is within the Court’s diversity jurisdiction pursuant to 28 U.S.C. § 1332 because it is between citizens of different states and the amount in controversy exceeds the sum or value of $75,000. Liberty Mutual seeks a declaration of the rights and duties of the parties under liability insurance policies issued by Liberty Mutual and ACE for the defense and potential indemnity of defendants ABM Industries, Inc., Ampco Parking, Inc. and Roel Ybarra (“Underlying Defendants”), in a suit styled Cause No. 2011-CI-00692; Elizabeth Easley v. ABM Industries, Inc., et al.; In the 407th Judicial District Court, Bexar County, Texas (the “Underlying Suit”). The cost of defending Underlying Defendants in the Underlying Suit and/or paying any judgment against Underlying Defendants in that suit would be a sum in excess of the minimum
Plaintiff’s Original Complaint
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jurisdictional limits of this Court.1 The liability limits of the Liberty Mutual policy at issue are $1,000,000 for each accident or loss and the liability limits of the ACE policy are $5,000,000 for each accident or loss. ACE’s policy has a deductible of $1,000,000 for which Defendant Healthtrust is potentially liable. Liberty Mutual has funded the defense of the Underlying Defendants in the Underlying Suit and seeks reimbursement of those defense costs in addition to its attorneys’ fees, costs, and prompt payment penalties for the prosecution of this subrogation action. 5. Venue is appropriate in the Western District of Texas, Austin Division, pursuant
to 28 U.S.C. § 1391(b)-(d), because ACE is subject to the personal jurisdiction of this Court and is therefore deemed to reside in this district. 6. parties. 7. An actual controversy of a justiciable nature exists between Liberty Mutual and All persons having an interest in the outcome of this litigation have been joined as
ACE/Healthtrust regarding the rights and responsibilities of Liberty Mutual under its policy and the rights and responsibilities of ACE/Healthtrust under their policy in connection with the Underlying Suit. There is no other pending legal action seeking to adjudicate the rights of the parties. III. BACKGROUND 8. This declaratory action arises from a single-vehicle accident that occurred on June
23, 2009, in San Antonio, Texas. Elizabeth Easley (“Easley”) sustained injuries when a shuttle
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In her Fifth Amended Petition, Easley claims that she seeks damages of up to “$1,500.00.00.” Regardless of whether she intended $1.5 million or $150,000.00, the amount she seeks for her “serious, debilitating and permanent injuries” is within the jurisdictional limits of the Court.
Plaintiff’s Original Complaint
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bus driven by Roel Ybarra collided with a pole in the parking lot of Methodist Hospital. Ybarra was an employee of Ampco Parking, a subsidiary of ABM Industries. The shuttle bus was owned by Methodist Hospital. Easley filed suit against Ybarra, Ampco, and ABM, alleging causes of action for negligence and respondeat superior. The live pleading is Plaintiff’s Fifth Amended Petition, which is attached hereto as Exhibit “A” and is incorporated by reference (the “Petition”). Liberty Mutual has been providing a defense to the Underlying Defendants. 9. Liberty Mutual issued Business Auto Policy No. AS2-661-065134-028 to ABM
Industries, Inc. for the period November 1, 2008 to November 1, 2009 (the “Liberty Mutual Policy”). Ampco is an additional named insured under the Liberty Mutual Policy. ACE issued Business Auto Policy No. ISA H08252208 001 to HCA, Inc. for the period January 1, 2009 to January 1, 2010 (the “ACE Policy”). Defendant Healthtrust is the successor in interest to HCA, and Methodist Hospital is an additional named insured under the ACE Policy. Both policies
provide primary coverage for vehicles owned by the insured and excess coverage for “nonowned” vehicles. ABM, Ampco, and Ybarra had custody of and were using the shuttle bus involved in the accident with the consent and permission of Methodist Hospital. Because Methodist Hospital owned the vehicle Ybarra was driving, Liberty Mutual tendered the defense of the Underlying Defendants to ACE as the primary carrier. ACE rejected this tender, arguing that the Liberty Mutual Policy provides primary coverage. 10. This action is necessary to determine whether the coverage of the Liberty Mutual
Policy is excess to or co-primary with the coverage of the ACE Policy. Liberty Mutual requests that the Court declare that: (1) the coverage of the ACE Policy is primary and the coverage of the Liberty Mutual Policy is excess with regard to the duty to defend and indemnify the Underlying Defendants in the Underlying Suit; (2) Liberty Mutual has no duty to indemnify the Underlying
Plaintiff’s Original Complaint
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Defendants for any liability to Easley in the Underlying Suit until the limits of the ACE Policy are exhausted; and (3) ACE has the sole duty to defend the Underlying Defendants in the Underlying Suit. In addition, Liberty Mutual seeks to recover from ACE or Healthtrust the costs Liberty Mutual has incurred in defending the Underlying Defendants in the Underlying Suit and the costs and attorneys’ fees incurred in bringing this action for ACE’s breach of contract pursuant to Texas Civil Practice and Remedies Code section 38.001 et seq., to which Liberty Mutual is entitled as subrogee of the Underlying Defendants. IV. GROUNDS FOR DECLARATORY JUDGMENT A. The Coverage Of The ACE Policy Is Primary. 11. The Underlying Defendants had custody of and were using the vehicle involved in
the accident with the express consent and permission of ACE’s insured, Methodist Hospital. The Underlying Defendants therefore qualify as insureds under both the Liberty Mutual and ACE policies. 12. The Liberty Mutual and ACE commercial auto policies contain identical “other
insurance” clauses, which provide in pertinent part: For any covered “auto” you own, this Coverage Form provides primary insurance. For any covered “auto” you don’t own, the insurance provided by this Coverage Form is excess over any other collectible insurance. *** When this Coverage Form and any other Coverage Form or policy covers on the same basis, either excess or primary, we will pay only our share. Our share is the proportion that the Limit of Insurance of our Coverage Form bears to the total of the limits of all the Coverage Forms and policies covering on the same basis. Thus, each policy provides primary coverage for vehicles owned by the insured and excess coverage for non-owned vehicles when other collectible insurance is available. The “pro-rata”
Plaintiff’s Original Complaint
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clause applies only if both policies provide either primary or excess coverage. See American Nat’l County Mut. Ins. Co. v. Travelers Indem. Co., 2010 WL 2541975, slip op. at * (S.D. Tex. June 22, 2010) (“When two car-insurance policies cover the same accident, Texas courts find no conflict between one policy’s excess clause and another’s pro-rata clause. Texas courts do not equitably prorate defense costs. Instead, they respect the contracts and enforce the excess clause.”). Because ACE’s insured, Healthtrust/Methodist Hospital, owned the shuttle bus the Underlying Defendants were using to conduct the Hospital’s shuttle bus operations, ACE’s coverage is primary and Liberty Mutual’s coverage is excess for the Underlying Defendants. As the primary carrier, ACE had a duty to defend the entire suit if any of the claims in the Underlying Suit fell within ACE’s coverage. See Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487, 495-96 (Tex. 2008) (“The duty to defend is not negated by the inclusion of claims that are not covered; rather, it is triggered by the inclusion of claims that might be covered.”); Harken Exploration Co. v. Sphere Drake Ins., 261 F.3d 466, 474 (5th Cir. 2001); Lafarge Corp. v. Hartford Cas. Ins. Co., 61 F.3d 389, 395 (5th Cir. 1995). Because its coverage is excess, Liberty Mutual has no duty to defend or indemnify the Underlying Defendants until the limits of the ACE policy are exhausted. B. Because ACE Has A Duty To Defend The Underlying Defendants, Liberty Mutual Is Entitled To Recover Its Defense Costs. 13. As the excess carrier for the Underlying Defendants, Liberty Mutual has a right of
contractual and equitable subrogation against the primary carrier that should have assumed defense of the Underlying Defendants. See, e.g., American Centennial Ins. Co. v. Canal Ins. Co., 843 S.W.2d 480, 482 (Tex. 1992); Royal Ins. Co. of Am. v. Caliber One Indem. Co., 465 F.3d 614, 617 (5th Cir. 2006). Because ACE refused to assume the defense of the Underlying
Plaintiff’s Original Complaint
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Case 1:13-cv-00555-SS Document 1 Filed 07/02/13 Page 7 of 8
Defendants, Liberty Mutual is also entitled to recover its attorney’s fees under Texas Civil Practice and Remedies Code section 38.001(8) as subrogee of the Underlying Defendants. 14. A claim for defense costs is a “first-party” claim for purposes of the prompt
payment statute. Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 20 (Tex. 2007) (“the prompt-payment statute, formerly article 21.55, and now codified as sections 542.051–.061 of the Texas Insurance Code, may be applied when an insurer wrongfully refuses to promptly pay a defense benefit owed to the insured”). A prompt payment claim combines an insurer's contractual and statutory liability into one cause of action. Harris v. Am. Prot. Ins. Co., 158 S.W.3d 614, 621 (Tex. App.–Fort Worth 2005, no pet.). Because ACE breached its contract by refusing to accept the tender of the Underlying Defendants’ defense, ACE is liable to Liberty Mutual for the 18% penalty on the defense costs Liberty Mutual has incurred in protecting the interests of the Underlying Defendants in the Underlying Suit. WHEREFORE, PREMISES CONSIDERED, Liberty Mutual Fire Insurance Company prays that Defendants ACE American Insurance Company and Healthtrust, Inc.–The Hospital Company be cited to appear and answer herein, and that on final hearing Liberty Mutual have the following judgment: 1. A declaration that ACE has primary coverage for and the duty to defend and indemnify ABM Industries, Inc., Ampco Parking, Inc., and Roel Ybarra in connection with the Underlying Suit; A declaration that Plaintiff Liberty Mutual has excess coverage for and no duty to defend or indemnify ABM Industries, Inc., Ampco Parking, Inc., and Roel Ybarra in connection with the Underlying Suit until the limits of the ACE Policy have been exhausted by judgment or settlement; An award of the defense costs Liberty Mutual has incurred to defend ABM Industries, Inc., Ampco Parking, Inc., and Roel Ybarra in the Underlying Suit; Attorney’s fees and costs Liberty Mutual has incurred in asserting this declaratory and subrogation action and associated prompt payment penalties; and Page 7 of 8
2.
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Plaintiff’s Original Complaint
Case 1:13-cv-00555-SS Document 1 Filed 07/02/13 Page 8 of 8
5.
Such other and further relief to which Liberty Mutual may be entitled whether at law or in equity. Respectfully submitted, HANNA & PLAUT, L.L.P. 211 East Seventh Street, Suite 600 Austin, Texas 78701 Telephone: (512) 472-7700 Facsimile: (512) 472-0205
By: /s/ Catherine L. Hanna Catherine L. Hanna State Bar No. 08918280 Attorney-in-Charge Eric S. Peabody State Bar No. 00789539
ATTORNEYS FOR LIBERTY MUTUAL FIRE INSURANCE COMPANY
Plaintiff’s Original Complaint
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