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Click here for the full text of this decision FACTS:Appellant Pine Oak Builders Inc., builds homes. Appellees, Great American Lloyds Insurance Co. and Mid-Continent Casualty Co., sold commercial general liability insurance policies to Pine Oak. Pine Oak was subsequently sued by several homeowners, who alleged damages resulting from faulty construction. Pine Oak brought the present lawsuit to enforce lawsuit defense and liability indemnification provisions in the CGL policies. Pine Oak moved for summary judgment, arguing that it proved its rights to defense and indemnity as a matter of law and that it is entitled to damages under Article 21.55 of the Texas Insurance Code for appellees’ failure to promptly pay its defense costs. In a joint motion for summary judgment, appellees argued that the policies did not cover the plaintiffs’ claims in the underlying lawsuits. The trial court denied Pine Oak’s motion and granted the appellees’ motion. Great American issued a succession of one-year CGL policies to Pine Oak, covering the period from April 5, 1993, to April 5, 2001. Mid-Continent issued two CGL policies to Pine Oak, covering from April 5, 2001, to April 5, 2003. Each of the policies provides that the insurer “will pay those sums that the insured becomes legally obligated to pay as damages because of”bodily injury’ or”property damage’ to which this insurance applies. [The insurer has] the right and duty to defend any”suit’ seeking those damages.” The policies further state that the insurance agreement applies “only if: (1) the bodily injury or”property damage’ is caused by an”occurrence’ that takes place in the”coverage territory’ and (2) the”bodily injury’ or”property damage’ occurs during the policy period.” The policies define “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” “Property damage” is defined as “physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it.” The policies additionally contain certain exclusions. For example, the “your work” exclusion precludes coverage for “property damage” to “‘your work’ arising out of it or any part of it and included in the”products completed operations hazard.’” Both of the policies issued by Mid-Continent and the Great American policy beginning in April 2000 contain exclusions precluding coverage for property damage arising out of the “Exterior Insulating and Finish System hazard.” The Exterior Insulating and Finish System, or EIFS, is a synthetic-stucco type of exterior wall cladding. As explained below, most of the plaintiffs in the lawsuits underlying this coverage lawsuit allege damages relating to EIFS application on their homes. In their motion for summary judgment, appellees argued principally that the insuring language and exclusions in the policies operated to exclude coverage of the underlying lawsuits. There are five underlying suits, each brought by a homeowner who purchased a Pine Oak home either directly from the homebuilder or from a prior owner. Each home in question was built in the late 1990s. In the Sorrell suit, the plaintiffs allege that either EIFS was not properly installed on their home or that use of EIFS on their home was not a proper application of the product. They further allege that the EIFS permitted water infiltration of the home every time there was a significant rainfall. They assert that the accumulation of moisture continuously caused damage and that new, independent damage occurred with each rainfall. The Fourrier plaintiffs make the same claims regarding EIFS as the Sorrell plaintiffs, but they additionally allege that 1. an inadequate chimney cap was installed, 2. insufficient grade clearance was permitted at column bases in the rear of the home, and 3. no expansion joint was installed in the second level floor line. The Glass plaintiffs allege various problems relating to the construction of a balcony in the rear of their home. Although their claims include allegations of resulting water damage, they do not make any EIFS-related claims. In the Vint suit, the plaintiffs make EIFS-related claims similar to those of the Sorrell and Fourrier plaintiffs. They further allege that improper construction of the roof has caused it to sag. In the Barkley claim, the plaintiff alleges that the EIFS on his home failed and caused damages. He further alleges various other construction defects, including inadequate draining, venting, and caulking, and improper sprinkler head installation. Also in the Barkley lawsuit, two co-defendants filed cross-actions alleging that Pine Oak failed to properly construct the home. HOLDING:The court affirms the trial court’s summary judgment on all of Pine Oak’s claims against Mid-Continent. The court affirms the trial court’s summary judgment on all of Pine Oak’s claims against Great American relating to the Glass lawsuit and on Pine Oak’s article 21.55 claims against Great American. The court reverses the summary judgment on the remaining claims discussed in this opinion those alleging that Great American has a duty to defend and a duty to indemnify in the Sorrell, Fourrier, Vint and Barkley lawsuits. The court severs these claims and remands for further proceedings in accordance with this opinion. Because the standard CGL policies at issue in this case provide coverage for property damage caused by defective construction performed by a subcontractor, the trial court erred if it granted summary judgment based on appellees’ argument that the policies do not cover this type of damage. Pine Oak contends that it provided extrinsic evidence establishing that subcontractors were, in fact, used in the construction of the Glass home. The Texas Supreme Court has only applied the eight-corners analysis in duty to defend cases and has resisted all opportunities to adopt a permissive extrinsic evidence stance in such cases. The clear majority of courts of appeals that have addressed the issue, including most of the recent opinions, have rejected the permissive rule. Finding a clear trend in Texas law, the court declines to follow the permissive rule and instead follows the eight-corners analysis as set forth by the Texas Supreme Court. The Glass pleadings do not establish that appellees had a duty to defend Pine Oak in that suit. Thus, the trial court correctly held that appellees were not obligated to provide a defense in the Glass suit. All of the CGL policies issued by appellees to Pine Oak omit reference to “manifestation” but contain “continuous or repeated exposure” language. Therefore, any property damage that occurred because of continuous or repeated exposure to conditions during the policy period of a policy issued by Great American or Mid-Continent is potentially covered. Accordingly, each insurer would have a duty to defend against any claim that alleges potential property damage from a continuous or repeated exposure falling within a relevant policy period. The court finds find that the pleadings in Sorrell, Fourrier, Vint and Barkley allege damages occurring in policy periods covered by both Great American and Mid-Continent. Thus the trial court erred if it granted summary judgment on the ground that the duty to defend provisions in the policies were not triggered by the claims in these underlying suits. The appellees additionally argued that specific exclusions in certain of the CGL policies for property damage arising out of the EIFS “hazard” preclude coverage of the damages in the underlying cases. The court finds find that none of the pleadings in Sorrell, Fourrier, Vint, and Barkley allege damages not excluded from coverage by the EIFS exclusions. Accordingly, as a matter of law, Mid-Continent does not have a duty to defend in any of these lawsuits. Great American, however, still has a duty to defend because the damages alleged in those cases triggered policies in force prior to the addition of the EIFS exclusion. Pine Oak contends that the trial court erred in granting summary judgment favoring appellees on Pine Oak’s claims under former Article 21.55 of the Texas Insurance Code. Pine Oak pleaded that it was entitled to damages under the article for appellees’ failure to promptly provide a defense or pay defense costs in the underlying suits. In their motion for summary judgment, appellees argued that they cannot be found liable under Article 21.55 because it does not apply to the payment of attorney’s fees under a duty to defend. A demand for a defense under a liability policy is not a first party claim under such policy. Based on the analysis in TIG, the court concludes that Article 21.55 is inapplicable to Pine Oak’s claim that appellees failed to promptly provide for a defense or pay defense costs. Accordingly, Pine Oak is not entitled to damages, attorney’s fees or penalties under Article 21.55. Generally, the duty to defend can be determined prior to resolution of the underlying lawsuit, while the duty to indemnify may not be justiciable until the question of the insured’s liability has been resolved. Farmers Tex. County Mut. Ins. Co. v. Griffin, 955 S.W.2d 81 (Tex. 1997). Regarding Great American and the Sorrell, Fourrier, Vint, and Barkley lawsuits, Great American had a duty to defend in those cases because damage allegedly occurred during policy periods in which no EIFS exclusion was in force. The Griffin rule cannot apply in regard to Great American’s duty to indemnify in those lawsuits. Thus, the trial court erred in holding that Great American had no duty to indemnify in those suits. Because the pleadings in the underlying Glass suit do not allege facts covered by the Mid-Continent or Great American policies, there can be no duty to indemnify in the Glass suit. The trial court therefore did not err in holding as a matter of law that Mid-Continent and Great American had no duty to indemnify Pine Oak in the Glass suit. Pine Oak has also asserted, in its appellate brief and in the trial court, that it should be awarded the attorney’s fees that it has already expended in defending the underlying litigations as well as the additional fees that it expects to incur in the future in defending the litigations. Pine Oak has offered no authority for this request in either the trial court or on appeal. Generally, in the declaratory judgment context, when a court determines that an insurer has a duty to defend in an underlying litigation, the court issues a declaratory judgment so stating. The court finds no authority supporting a prospective award of attorney’s fees in such a situation. OPINION:Hedges, C.J.; Hedges, C.J., Yates and Guzman, J.J.

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