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Hettler v. Travelers Lloyds Insurance Co.


Presenting five points of error, appellants Ronald J. Hettler, Robin Hettler, and Cornwall Insurance Agency, Inc. d/b/a Hettler-Brenholtz Insurance (collectively the Hettlers) contend the trial court erred in rendering summary judgment that appellee The Travelers Lloyds Insurance Company (Travelers) did not have the duty to provide the Hettlers a defense in a suit brought by William David Brenholtz nor a duty to indemnify them for damages awarded. The judgment also denied them any relief on their claims under articles 21.21 and 21.55 of the Insurance Code, their breach of duty of good faith and fair dealing claim, and their claim for attorney's fees. By their first three points of error, the Hettlers contend the trial court erred in determining Travelers had no duty to defend Brenholtz's complaints regarding (1) wrongful eviction, (2) libel and slander, and (3) denial of use of property and, by the remaining two points they contend the trial court erred in (4) applying the employment-related practices exclusion to exclude coverage and (5) holding that Travelers had no duty to indemnify. We affirm.

Ronald J. Hettler and Brenholtz began doing business together as Hettler-Brenholtz Insurance Agency on June 1, 1994, per an informal oral agreement. Ronald was president, Brenholtz was vice-president, and Robin Hettler was an officer of the corporation. On September 9, 1994, the agency obtained insurance coverage for three years under a Commercial General Liability Policy issued by Travelers. Thereafter, on November 20, 1996, Brenholtz prepared a summary of his version of the oral agreement which was initialed by Brenholtz and signed by Ronald. Handwritten comments on the November 20 summary indicated the parties contemplated it would be sent to an attorney. On February 13, 1997, Ronald delivered to Brenholtz his last paycheck along with a handwritten letter terminating his services as of Friday, the 14th stating "this isn't working." By the letter, Ronald also requested Brenholtz to submit outstanding expenses for reimbursement, and further proposed a purchase agreement.

Brenholtz promptly filed suit against the Hettlers and the corporation seeking temporary relief. Then, as material here, by his amended petition, Brenholtz sought an accounting and damages and alleged claims for breach of contract, fraud, conversion, and interference with business relations. After Travelers declined to defend the Brenholtz suit, the Hettlers proceeded with their defense and filed this action against Travelers seeking damages for failure to defend and asserting claims under articles 21.21 and 21.55 of the Insurance Code, breach of duty of good faith and fair dealing, and attorney's fees. By its first amended answer and counterclaim for declaratory judgment, Travelers asserted the allegations in Brenholtz's pleading did not require Travelers to defend the action and that the affirmative allegations were not covered due to exclusions in the policy. Travelers also sought a declaratory judgment for no duty to defend and for attorney's fees. As is material here, the pleadings of the parties included the following contentions:


Travelers had a duty to defend Brenholtz's claims of fraud, conversion, and interference with business relationships.

Asserted article 21.21 claims.

Asserted article 21.55 claims.

Breach of duty of good faith and fair dealing.

Claim for attorney's fees.


Brenholtz's allegations do not present a claim for an accidental occurrence, but constitute intentional and expected acts. Brenholtz's allegations do not implicate "property damage" or "bodily injury" as defined

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