NATIONAL BEEF PACKING COMPANY, L.L.C., and NATIONAL CARRIERS, INC., Appellants,

v.

ZURICH AMERICAN INSURANCE COMPANY, Respondent.

 

WD72267

 

Missouri Court of Appeals, Western District.

OPINION FILED: March 15, 2011

 

Appeal from the Circuit Court of Jackson County, Missouri The Honorable Robert M. Schieber, Judge

 

Before Division I: Mark D. Pfeiffer, Presiding Judge, and Thomas H. Newton and Alok Ahuja, Judges

 

Mark D. Pfeiffer, Presiding Judge

National Beef Packing Company, L.L.C., and National Carriers, Inc.,  appeal from the judgment of the Circuit Court of Jackson County granting Zurich American Insurance Company’s (“Zurich”) motion for summary judgment and denying appellants’ summary judgment motion as it relates to the interpretation of an insurance policy issued by Zurich to National. Finding no error, we affirm.

 

National Beef Packing Company, L.L.C., is the sole shareholder of National Carriers, Inc. In this opinion, we collectively refer to these parties as “National.”

 

Statement of Facts

The facts, in the light most favorable to the non-moving party, ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993), are as follows: On November 17, 2005, a driver for National hit and killed Ellen Duensing in a semi-truck/automobile accident in the state of Texas. In 2006, a wrongful death lawsuit was filed in the state of Texas in which each of Ellen Duensing’s natural parents, Karen D’Amato (“Mother”) and Ronald Duensing (“Father”)  filed separate claims, individually and as heirs or representatives of the Estate of Ellen Duensing, against National for the death of their daughter (the “Wrongful Death Lawsuit”).

 

Mother and Father were divorced at the time of Ellen Duensing’s tragic death. Ellen Duensing was twenty years old at the time of her death and lived with Mother. Ellen Duensing enjoyed a close relationship with Mother prior to her death but was estranged from Father at the time of her death and rarely saw him. One of National’s attorneys who coordinated the defense of the Wrongful Death Lawsuit testified by deposition that National considered Mother’s claim in the wrongful death litigation much more valuable than Father’s claim due to the close relationship between Mother and her daughter versus the estranged relationship that Father had with Ellen Duensing. Accordingly, at the initial mediation, discussed infra, National’s priority was to resolve Mother’s claim by settlement.

 

At the time of the semi-truck/automobile accident, National was insured by a liability insurance policy issued by Zurich and for which the limit of liability for any one accident was $2 million (the “insurance contract”).

 

The parties to the Wrongful Death Lawsuit participated in a mediation session on November 15, 2006. At that mediation, National and Mother agreed to a settlement of her claims  for the present value sum of $2.8 million, and Mother and National signed a Mediation Settlement Agreement (“MSA”) memorializing their agreement. Mother executed the MSA “Individually, and as Representative of the Estate of Ellen Esther Duensing.” The MSA stated that, in exchange for releasing her claims, Mother was to receive a $1.8 million cash payment and an annuity funded with $1 million. For its part, Zurich agreed that it would fund the annuity and contribute $1 million towards the cash payment, exhausting the $2 million policy limit of the insurance contract. National agreed to pay Mother the remaining $800,000 cash payment. Authorized representatives of National signed the MSA on behalf of National. The MSA required cash and annuity funding payments to be made on or before December 15, 2006.  In return for the payment obligations of the MSA, Mother (“Individually, and as Representative of the Estate of Ellen Esther Duensing”) agreed to:

 

Father did not settle his asserted claims in the November 15, 2006 mediation.

 

On or before December 13, 2006, Zurich funded the annuity by paying $1 million to the agreed-upon structured settlement brokerage and also sent a check in the amount of $1 million to Mother’s attorney.

 

[R]elease, discharge and forever hold the other harmless from any and all claims, demands or suits, known or unknown, fixed or contingent, liquidated or unliquidated, whether or not asserted in the above case, as of this date, arising from or related to the events and transactions which are the subject of this case.

 

After the MSA was signed by the parties to the MSA, Father amended his claim in the Wrongful Death Lawsuit to include a claim on behalf of the Estate. National believed that the MSA terminated both natural parents’ rights to assert claims as heirs of the Estate. Mother (and Father) did not agree with National’s interpretation. The trial judge (“Texas trial judge”) of the Texas trial court in which the Wrongful Death Lawsuit was pending (“Texas trial court”) instructed the parties to file competing motions for summary judgment relating to any issues they wished to raise relating to the MSA and its impact on the Wrongful Death Lawsuit. In support of National’s motion for summary judgment filed with the Texas trial judge in the Texas trial court, National argued, in pertinent part:

 

There is no dispute between the parties as to the existence or enforceability of the [MSA]. [Mother] has stated on the record, in open court, that the [MSA] is a valid and enforceable contract between the parties. [National] agree[s] that the [MSA] is a valid and enforceable contract. In fact, both parties are seeking enforcement of the [MSA].

 

….

 

[National] [has] fully complied with all the terms of the [MSA]…. [National] [has] also fully funded the settlement by the December 15, 2006 deadline.

 

There can be no dispute that under the express terms of the [MSA], [Mother] agreed to “release, discharge and forever hold [National] harmless” from claims asserted by [Mother] against [National] in the [Wrongful Death Lawsuit].

 

In his ruling, the Texas trial judge concluded that National’s undisputed satisfaction of the payment obligations pursuant to the MSA “satisfies the claims of [Mother], both individually and with regard to her own interest in the Estate of Ellen Esther Duensing,” but the Texas trial judge also concluded that Father’s separate claim as a representative of the Estate survived and that Father would be permitted to assert such claim at trial. After this ruling, National did not attempt to repudiate the MSA or to otherwise seek reimbursement of the $2 million that had been paid by Zurich pursuant to the MSA.

 

On July 13, 2007, the Wrongful Death Lawsuit trial was completed, and the jury found in favor of Father on his individual claim only  and against National; on August 3, 2007, a judgment of $8.9 million was entered in Father’s favor in the Wrongful Death Lawsuit. National appealed the judgment in favor of Father and summary judgment rulings by the Texas trial court.  While the appeal of the judgment of the Wrongful Death Lawsuit was pending, National and Father participated in another mediation session. As a result of that mediation, Father settled his claims with National for an undisclosed amount. The terms of the MSA remained unaltered. Following the settlement, National dismissed its appeal of the judgment of the Wrongful Death Lawsuit from the Texas trial court.

 

The jury did not award damages to Father as a representative of the Estate of Ellen Esther Duensing nor did it award any punitive damages.

 

As discussed infra, National did not and does not agree with the ruling by the Texas trial court as it relates to the survival of Father’s claim as an heir, or representative, of the Estate of Ellen Esther Duensing under Texas law. However, by settling with Father during the pendency of the appeal, National dismissed its appeal and foreclosed its right to attempt to convince the appellate courts of the State of Texas otherwise.

 

After Father settled, National requested that Zurich reimburse it for the $1,016,954.78 National had spent in defending the Wrongful Death Lawsuit. Litigation defense costs were defined in the insurance contract as Allocated Loss Adjustment Expenses (ALAE).  Zurich disagreed and countered that it was only contractually responsible for $85,916.10, half of the ALAE costs incurred as of December 13, 2006, the date upon which Zurich tendered payment of its policy limits under the insurance contract. In fact, Zurich paid $85,916.10 to National. Seeking an additional $422,562.29, which National claims to be owed pursuant to the terms of the insurance contract, National filed the underlying lawsuit against Zurich on November 7, 2007, in the Circuit Court of Jackson County (“trial court”). Both parties filed motions for summary judgment, and after a hearing on the motions, the trial court entered judgment in favor of Zurich and against National on March 11, 2010. This timely appeal followed.

 

National and Zurich initially disputed both the amount and the percentage of the ALAE for which Zurich was responsible. On appeal, National concedes that Zurich is only responsible for half of the ALAE.

 

Standard of Review

When considering an appeal from summary judgment, our review is essentially de novo. Larabee v. Eichler, 271 S.W.3d 542, 545 (Mo. banc 2008). Summary judgment is only appropriate when “ ‘there is no genuine issue as to any material fact and … the moving party is entitled to judgment as a matter of law.’ ” Id. (quoting White v. Zubres, 222 S.W.3d 272, 274 (Mo. banc 2007)); Rule 74.04(c)(6). Our review of the record is in the light most favorable to the non-moving party. ITT Commercial Fin., 854 S.W.2d at 376. The facts, including all reasonable inferences from those facts, are viewed to the benefit of the party against whom judgment was entered. Id. However, after the moving party has made a prima facie showing that it is entitled to judgment as a matter of law, the non-moving party may not rest upon general denials but, instead, must submit competent evidence in compliance with Rule 74.04, setting forth specific facts demonstrating a genuine issue for trial. Larabee, 271 S.W.3d at 546.

 

Analysis

Where, as here, resolution of the case involves the interpretation of an insurance contract, we give no deference to the trial court as contract interpretation is a question of law that we review de novo. Burns v. Smith, 303 S.W.3d 505, 509 (Mo. banc 2010); Jones v. Mid-Century Ins. Co., 287 S.W.3d 687, 690 (Mo. banc 2009); Penn-Star Ins. Co. v. Griffey, 306 S.W.3d 591, 596 (Mo.App.W.D.2010). In the absence of a statute or public policy dictating insurance coverage, our review of whether insurance coverage is applicable is governed by a review of the underlying insurance contract. Rodriguez v. Gen. Accident Ins. Co. of Am., 808 S.W.2d 379, 382 (Mo. banc 1991). In construing the language of an insurance contract, we give meaning to the language of the insurance contract which would be understood by an ordinary person of average understanding. Seeck v. Geico Gen. Ins. Co., 212 S.W.3d 129, 132 (Mo. banc 2007). We are also mindful that courts are “not permitted to create an ambiguity in order to distort the language of an unambiguous policy, or, in order to enforce a particular construction which it might feel is more appropriate.” Rodriguez, 808 S.W.2d at 382.

 

The insurance contract states that:

 

[Zurich’s] duty to defend or settle ends when the Liability Coverage Limit of Insurance has been exhausted by payment of judgments or settlements.

 

(Emphasis added.)

 

In analyzing the policy in the instant case, the question before this court is whether Zurich exhausted its coverage limits “by payment of judgments or settlements” and, thus, contractually terminated its “duty to defend” when it funded the MSA with payments totaling $2 million (Liability Policy Limit) on December 13, 2006. We conclude that it did.

 

This case is controlled by Millers Mutual Insurance Association of Illinois v. Shell Oil Co., 959 S.W.2d 864 (Mo.App.E.D.1997). In Millers, the court interpreted an almost identical “duty to defend” insurance provision. In Millers, the plaintiff sued H.T. Dunn Oil Company, Inc. (“Dunn”), and Shell Oil Company (“Shell”). Id. at 865. Dunn owned and operated a gas station on land leased from Shell. Id. The plaintiff had been raped and shot while at the gas station. Id. at 866. Dunn had a $500,000 liability policy with Millers Mutual Insurance Association of Illinois (“Millers Mutual”) that named Shell as an additional insured. Id. The policy provided that Millers Mutual’s duty to defend ended when its policy limits were “exhausted by payment of judgments or settlements.” Id. at 865. In settlement negotiations, the plaintiff was willing to settle her claims against Dunn for the policy limit of the Millers Mutual insurance policy but was unwilling to consider any settlement that released Shell. Id. at 866. Millers Mutual attempted to convince the plaintiff to include Shell in the settlement and release, but when it was clear that plaintiff would never agree to such a settlement scenario, Millers Mutual paid its policy limits for the release of liability for Dunn. Id. Millers Mutual then sought and was granted a declaratory judgment finding that it did not owe Shell a duty to defend because it had exhausted the liability coverage policy limits. Id. Shell appealed, claiming in part that payment of the Millers Mutual policy limits on behalf of only one of multiple insureds did not satisfy the duty of defense contractual obligation clause in the Millers Mutual insurance policy. Id.

 

In interpreting the exact same policy language as the operative policy language in the present case, the Millers court held that: (1) “the duty to defend is broader than the duty to indemnify only when ‘the insurer had the potential obligation to indemnify’ ”; (2) the unambiguous language of the policy meant that Millers Mutual’s good faith  payment of its policy limits  ended its duty to indemnify; and (3) because Millers Mutual no longer had a duty to indemnify (after paying its policy limits), it no longer had a duty to defend. Id. at 871-72 (internal citations omitted). Ultimately, the Millers court concluded:

 

The fact that Millers Mutual’s payment was a good faith effort to settle a claim against an insured was crucial to the analysis in that case as it is in our ruling today. It is undisputed in the instant case that Zurich’s payment to Mother in settlement of her claims was with the consent of National and was made in good faith. Our analysis today would differ if Zurich had unilaterally interpled its policy limits into the Texas trial court without negotiating the settlement of any pending claims in an attempt to secure an early exit from an extended and costly legal battle for its insured.

 

The Millers court also noted that the payment by the insurer would benefit all insureds by decreasing the total amount of liability in the underlying suit. Millers Mutual, 959 S.W.2d at 870.

 

A policy may specifically provide for termination of a duty to defend upon payment of the policy limits, but public policy requires the insurer to act in good faith in the interest of all insureds under the policy. Millers acted in good faith in strictly complying with the unambiguous language of the policy issued. This is not a case in which the insurer attempted to tender the limits into court for the purpose of totally avoiding its duty to defend. Millers attempted to obtain a settlement on behalf of Shell and upon the plaintiffs’ refusal, it made a reasonable settlement on behalf of the named insured for the policy limits. The unambiguous policy language allows Millers to terminate its duty to defend upon exhaustion. We hold an insurer relying on unambiguous policy language may terminate its duty to defend an additional insured when the policy limits are exhausted in a good faith settlement on behalf of the named insured.

Id.

 

Applied to the instant case:

 

• National does not dispute that the MSA was a valid and enforceable settlement between National and Mother. In fact, the Texas trial judge expressly stated that the MSA constituted a settlement satisfying Mother’s claims, both individually and with regard to her own interest in the Estate of Ellen Esther Duensing.

 

• National does not dispute that the MSA, including Zurich’s obligation to pay its $2 million policy limits as a result of the MSA, was a good faith settlement agreement. In fact, National consented to the terms of the MSA, even though it obligated National to pay an additional $800,000, over and above the $2 million liability limits of the Zurich insurance policy. 0

 

0. National seems to be arguing that Mother may have misrepresented her understanding of the impact of the MSA as to any claim that could later be made by anyone on behalf of the Estate of Ellen Duensing in order to induce National to enter into the MSA. However, National’s dissatisfaction with Mother’s post-MSA position does not equate with any suggestion that Zurich acted in bad faith. To the contrary, National not only consented to the MSA, it demanded that Zurich tender and pay its policy limit of $2 million in liability coverage – which Zurich did. By any definition, when Zurich paid its policy limit at the direction of its insured, Zurich was acting in good faith on behalf of its insured.

 

• National does not dispute that Zurich, in fact, paid its policy limits of $2 million to satisfy obligations under the MSA and that such liability limit payments were made on or before December 13, 2006.

 

• Even after National received a ruling from the Texas trial court that was not consistent with what National believed the scope of the MSA was, National never attempted to repudiate the terms of the MSA or seek reimbursement for Zurich of its $2 million payment on National’s behalf.

 

• Upon Zurich’s good faith payment of its liability policy limits of $2 million, Zurich no longer had a potential obligation to indemnify National any further under the insurance contract.

 

• Just like the facts of Millers, the release secured by the MSA did not eliminate all pending claims in the subject litigation. But, the release did eliminate all of the claims that could be made by Mother. And, just like Millers, National ultimately received the benefit of a credit for Zurich’s payment of its liability policy limit of $2 million.

 

National argues that until it received a complete release of all claims arising out of the Wrongful Death Lawsuit, the ordinary understanding of “settlement” had not occurred. National attempts to distinguish the facts of the present case from Millers by noting that Dunn, one of the defendants in Millers, received a complete release of liability from the plaintiff that ended Dunn’s participation in the litigation. However, in a bit of a Freudian slip, National argues that the significance of this “settlement” is that “[t]his is the ordinary understanding of paying a settlement – the settled matter is over, the insured is released, and the insured no longer needs a defense against the party that settled and was paid.” (Emphasis added.)

 

This, of course, is precisely what happened in the instant case. As a result of the MSA, the matter of Mother’s claims in the Wrongful Death Lawsuit were settled and over, National was released, and National no longer needed a defense against “the party that settled and was paid” (i.e.Mother).

 

Simply put, National cannot distinguish the facts of the present case from the facts of the Millers case. Nor can National escape the holding of Millers today.

 

It is undisputed that Zurich, in good faith, exhausted the insurance contract’s policy limits by “payment” of $2 million no later than December 13, 2006. As a matter of law, Zurich’s “payment” was made in “settlement” of Mother’s claims, both individually and as a representative of the Estate of Ellen Esther Duensing. As a matter of law, Zurich had no further duty to defend National in any continuing liability litigation after December 13, 2006. It is undisputed that $85,916.10 represents half of the ALAE costs incurred by National as of December 13, 2006, and it is undisputed that Zurich has paid that sum to National. Thus, as a matter of law, Zurich has satisfied all of its contractual obligations under the insurance contract.

 

Conclusion

The material and undisputed facts demonstrate that Zurich is entitled to judgment as a matter of law. Thus, the trial court’s judgment in favor of Zurich is affirmed.

 

Thomas H. Newton, Judge, and

 

Alok Ahuja, Judge, concur.

United States District Court,

S.D. Texas,

Houston Division.

Roy E. GRANT, Plaintiff,

v.

C.R. ENGLAND, INC., et al., Defendants.

 

Civil Action No. H-10-3649.

March 8, 2011.

 

MEMORANDUM AND ORDER

LEE H. ROSENTHAL, District Judge.

This is a personal-injury lawsuit. Roy E. Grant alleges negligence from an October 8, 2008 accident at a truck stop in Smithton, Pennsylvania, involving a tractor he was driving and a C.R. England truck that Catherine Bean was driving. Grant filed this suit on October 4, 2010, a few days before limitations expired. The defendants were not served until after the limitations period. England moved to dismiss under Rule 12(b)(6). (Docket Entry No. 4). This court converted the motion to dismiss based on limitations to a motion for summary judgment. (Docket Entry No. 11). England and Grant supplemented their briefing. (Docket Entry Nos. 14, 15). Bean filed her own motion for summary judgment based on limitations. (Docket Entry No. 12), and Grant responded, (Docket Entry No. 16). The parties argued the motion at the initial conference on February 25, 2011. (Docket Entry No. 20).

 

Based on the record; the motions, supplemental brief, and the response; the arguments of counsel; and the relevant law, this court denies England’s motion for summary judgment and grants Bean’s motion. The reasons are explained below.

 

I. Background

The parties agree that the limitations period for Grant’s suit ended on October 8, 2010. Grant sued on October 4. (Docket Entry No. 1). On October 5, Grant’s attorney sent a letter to England’s registered agent requesting a waiver of service by both defendants. (Docket Entry No. 16, Ex. 2). The letter requested a response within two weeks. It read:

 

Dear Sirs:

 

Please be advised that I have enclosed a copy of the complaint that was filed in the United States Southern District, Houston Division on October 7 [sic ], 2010 against your company and your employee, Catherine Bean. I have also enclosed two copies of each waiver of service form and two self addressed stamped envelopes for your use in returning the forms to us.

 

I have also enclosed the necessary forms indicating the consequences of not waiving service.

 

Please let me know if you will accept service within the next two weeks. If you do choose to accept service then I will allow you to have 60 days from the filing of the petition in which to answer for both C.R. England and your driver Catherine Bean. You may contact me at the number and address above should you have any questions.

 

Please also note that I have provided separate forms for both the company and the driver. Please forward the driver forms to the driver for his/her signature and completion, or sign them in his/her behalf.

 

Please also forward this information to your insurance carrier, if any, for their review and consideration as well.

 

If I do not hear from you within the next two weeks I will assume that you are not accept service and I will then proceed with service.

 

If you have any questions, please do not hesitate to contact me.

 

(Id.). During argument before this court, Grant’s counsel explained why he sent the waiver form for Bean to the owner of the truck, England. He explained that truckers such as Bean spend much of their time on the road and the truck owner, whose attorneys often represent the driver, are frequently in a better position to locate the driver and seek a waiver.

 

The defendants did not respond to the letter requesting a waiver. Grant initiated formal process on October 20, 15 days after sending the letter requesting a waiver of service, and delivered the documents to a process server. (Id., Ex. 1). England was served on November 1. (Docket Entry No. 3). England’s agent refused to accept service on Bean’s behalf because he was not authorized to do so. (Docket Entry No. 12, Ex. E). Grant asserts that he had “no current or valid information for the whereabouts” of Bean but her address is in the complaint. Grant hired an investigator to locate Bean. (Docket Entry No. 16, Ex. 1, ¶ 4). The investigator located Bean on November 15 at what Grant’s attorney indicates was a “new address,” (id.), but it is the same address that is in the complaint. This information was relayed to the process server, who received the summons on December 3. (Docket Entry No. 10; Docket Entry No. 16, Ex. 1, ¶ 4). Bean was served on December 17 at her home in Savannah, Tennessee, at the same address listed in the complaint. (Docket Entry Nos. 1, 10).

 

II. The Legal Standards

 

A. Summary Judgment

 

Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. FED.R.CIV.P. 56(a). “The movant bears the burden of identifying those portions of the record it believes demonstrate the absence of a genuine issue of material fact.” Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir.2007) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).

 

If the burden of proof at trial lies with the nonmoving party, the movant may satisfy its initial burden by “ ‘showing’-that is, pointing out to the district court-that there is an absence of evidence to support the nonmoving party’s case.” See Celotex, 477 U.S. at 325. While the party moving for summary judgment must demonstrate the absence of a genuine issue of material fact, it does not need to negate the elements of the nonmovant’s case.   Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir.2005) (citation omitted). “A fact is ‘material’ if its resolution in favor of one party might affect the outcome of the lawsuit under governing law.” Sossamon v. Lone Star State of Tex., 560 F.3d 316, 326 (5th Cir.2009) (quotation omitted). “If the moving party fails to meet [its] initial burden, the motion [for summary judgment] must be denied, regardless of the nonmovant’s response.” United States v. $92,203.00 in U.S. Currency, 537 F.3d 504, 507 (5th Cir.2008) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc)).

 

When the moving party has met its Rule 56(a) burden, the nonmoving party cannot survive a summary judgment motion by resting on the mere allegations of its pleadings. The nonmovant must identify specific evidence in the record and articulate how that evidence supports that party’s claim. Baranowski v. Hart, 486 F.3d 112, 119 (5th Cir.2007). “This burden will not be satisfied by ‘some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.’ ”   Boudreaux, 402 F.3d at 540 (quoting Little, 37 F.3d at 1075). In deciding a summary judgment motion, the court draws all reasonable inferences in the light most favorable to the nonmoving party. Connors v. Graves, 538 F.3d 373, 376 (5th Cir.2008).

 

B. The Statute of Limitations in a Diversity Case

A federal court in a diversity action based on state law follows the state’s service laws in determining when an action is commenced for the purpose of tolling the statute of limitations. See Walker v. Armco Steel Corp., 446 U.S. 740, 752-53, 100 S.Ct. 1978, 64 L.Ed.2d 659 (1980). Under Texas law, a plaintiff must “bring suit” within the applicable limitations period. Gant v. DeLeon, 786 S.W.2d 259, 260 (Tex.1990); Zacharie v. U.S. Natural Res. Inc., 94 S.W.3d 748, 754 (Tex.App.-San Antonio 2002, no pet.). In order to “bring suit,” the plaintiff must file a petition within the limitations period and use due diligence in obtaining service of citation on the defendant.   Gant, 786 S.W.2d at 260; Zacharie, 94 S.W.3d at 754. Under a well-developed body of Texas law, “[t]o toll the statute of limitations, a plaintiff must not only file suit within the limitations period, but must also exercise due diligence in procuring the issuance and service of citation.” Gant, 786 S.W.2d at 260. If service is not actually effected until after the statutory period has expired, “the date of service may relate back to the date of filing if the plaintiff exercised due diligence in effecting service.” Id. A number of federal courts applying the Texas statute of limitations have followed the state rule requiring diligent service. E.g., Saenz v. Keller Indus. of Tex., Inc., 951 F.2d 665, 667 (5th Cir.1992); Curry v. Heard, 819 F.2d 130, 132 (5th Cir.1987); Barkley v. Dillard’s, Inc., Civ. A. No. H-06-403, 2007 WL 7213542,(S.D.Tex. May 24, 2007); Lopez v. Unknown Galveston Police Officer # 1, Civ. A. No. G-06-0371, 2006 WL 3702895, at(S.D.Tex. Dec.13, 2006); DirecTV, Inc. v. Chan, No. SA-03-CV-417-RF, 2004 WL 2616304, at(W.D.Tex. Nov.16, 2004); Bilsing v. State Indus., Inc., 173 F.Supp.2d 593, 596 n. 7 (S.D.Tex.2001); Wehmeyer v. Clay, Civ. A. No. V-81-30, 1988 WL 88191, at(S.D.Tex. Mar.7, 1988).

 

Once a defendant has asserted the affirmative defense of statute of limitations, the burden shifts to the plaintiff to show due diligence in effecting service. Murray v. San Jacinto Agency, Inc. ., 800 S.W.2d 826, 830 (Tex.1990). A plaintiff must demonstrate “that diligence to procure service which an ordinarily prudent person would have used under the same or similar circumstances.” Belleza-Gonzalez v. Villa, 57 S.W.3d 8, 12 (Tex.App.-Houston [14th Dist.] 2001, no pet.) (citation omitted); Gonzalez v. Phoenix Frozen Foods, Inc., 884 S.W.2d 587, 590 (Tex.App.-Corpus Christi 1994, no writ). Due diligence is assessed by examining the length of time taken to complete service, and the effort expended by the plaintiff. Carter v. MacFadyen, 93 S.W.3d 307, 313 (Tex. App .-Houston [14th Dist.] 2002, pet. denied); Webster v. Thomas, 5 S.W.3d 287, 289-90 (Tex.App.-Houston [14th Dist.] 1999, no pet.).

 

Due diligence is usually a question of fact that is “determined by a two-prong test: (1) whether the plaintiff acted as an ordinary prudent person would have acted under the same or similar circumstances; and (2) whether the plaintiff acted diligently up until the time the defendant was served.” Zacharie, 94 S.W.3d at 754 (quoting Rodriguez v. Tinsman & Houser, Inc., 13 S.W.3d 47, 49 (Tex.App.-San Antonio 1999, pet. denied)). “Only in rare instances have the Texas courts concluded that an excuse offered by the plaintiffs for failure to procure service negated the exercise of due diligence as a matter of law.”   Saenz, 951 F.2d at 667 (citations omitted). “A lack of due diligence can be found as a matter of law if the plaintiff offers no valid excuse for lack of service or ‘if the lapse of time and the plaintiff’s acts, or inaction, conclusively negate diligence.’ “ Zacharie, 94 S.W.3d at 754 (quoting Rodriguez, 13 S.W.3d at 49). “Even if an explanation is offered, a lack of diligence can be found if the explanation affirmatively establishes a lack of diligence.” Id. “The explanation must involve diligence in seeking service of process.” Id. If the plaintiff’s explanation for the delay raises a material fact issue concerning diligence, the burden shifts back to the defendant to conclusively show why, as a matter of law, the plaintiff’s explanation is not sufficient. Id.; Campbell v. Abrazo Adoption Assocs., No. 04-09-00827-CV, 2010 WL 2679990, at * 2-3 (Tex.App.-San Antonio July 7, 2010). Courts distinguish between “miscalculated attempts to effect service” and “inactivity or complete failure to attempt service.” See Rodriguez, 13 S.W.3d at 51. “While the former scenarios may involve fact issues on diligence, thereby making summary judgment improper, the latter scenario does not.” Id.

 

III. Analysis

Bean and England argue that Grant’s failure to seek service before the limitations period ran is, as a matter of law, not diligent. They contend that seeking a waiver is inadequate. Grant responds that Texas law recognizes a waiver of service as equivalent to actual service, and that the decision to seek a waiver does not show a lack of diligence.

 

In one Texas case, the plaintiffs delayed obtaining summons in order to provide defense counsel notice of the suit as a matter of professional courtesy. Rodriguez, 13 S.W.3d at 51-52. In that case the planned notice was not sent. Id. The court concluded that:

 

notwithstanding the well-intended gesture of professional courtesy, it cannot be said that [the plaintiff] exercised diligence or continual diligence in attempting to serve [the defendant] from the time suit was filed until service was accomplished…. Because [the plaintiff’s] proffered excuse does not involve diligence in attempting to effectuate service, we find that her explanation is not valid, and therefore, it fails to raise a fact issue on diligence…. We thus conclude that the trial court correctly determined that the limitations period was not tolled and the suit was barred by the statute of limitations.

 

Id. at 51-52. Bean and England interpret Rodriguez to mean that seeking a waiver of service is not a diligent step toward achieving service. Their argument overlooks the fact that the attorney in Rodriguez never sent the notice. The court had no occasion to determine whether seeking a waiver may be dililgent. See id. at 48 (“That intended gesture of professional courtesy, however, was never sent.”), 51 (“[T]here are no efforts from which to evaluate the reasonableness or diligence of the actor.”).

 

Under Texas law, “[t]he defendant may accept service of process, or waive the issuance or service thereof by a written memorandum signed by him, or by his duly authorized agent or attorney, after suit is brought, sworn to before a proper officer other than an attorney in the case, and filed among the papers of the cause, and such waiver or acceptance shall have the same force and effect as if the citation had been issued and served as provided by law.” TEX.R. CIV. P. 119; Approximately $58,461.00 v. State, — S.W.3d —-, 2011 WL 505332, at(Tex.App.-Houston [14th Dist.] 2011). Rule 119 makes it clear that a waiver is equivalent to service of the citation.

 

Bean and England emphasize the courts’ use of the phrase “diligence in seeking service of process,” not in seeking a waiver. E.g., Zacharie, 94 S.W.3d at 754. Such statements have not, however, been in the context of considering whether seeking a waiver, a valid alternative to service, may constitute diligence in obtaining service.

 

Bean and England also rely on Rule 4 of the Federal Rules of Civil Procedure. It is clear that requesting a waiver of service under Rule 4(d) does not toll limitations under federal law. The Committee Note to the 1993 Amendments of Federal Rule of Civil Procedure 4(d) states: “[T]ransmission of the notice and waiver forms is a private nonjudicial act, does not purport to effect service, and is not accompanied by any summons or directive from a court…. The revised rule is clear that, if the waiver is not returned and filed, the limitations period under such law is not tolled and the action will not otherwise proceed until formal service of process is effected.” See FED R. CIV. P. 4 Committee Note to 1993 amendments, subdivision (d); see also FED.R.CIV.P. 4(d)(2)(C). The Committee Note to Rule 4 makes clear that “[t]he procedure of requesting waiver of service should … not be used if the time for service under subdivision (m) will expire before the date on which the waiver must be returned.” FED.R.CIV.P. 4 Committee Note to 1993 Amendments, subdivision (d)). But state law, not federal law, governs the statute of limitations inquiry. Walker, 446 U.S. at 752-53.

 

Bean and England also rely on a federal case applying Georgia law, Lau v. Klinger, 46 F.Supp.2d 1377 (S.D.Ga.1999). In Lau, the plaintiff filed suit on April 3, 1998, three days before the lapse of the limitations period. Id. at 1379. The defendants received forms to waive service more than a month later in mid-May. Id. On November 4, the court ordered the plaintiff to demonstrate that the defendants had been timely served. Id. The plaintiff served the defendants on November 20. The court dismissed the case on limitations grounds due to lack of diligence. Lau is distinguishable. Like Texas, Georgia requires diligence, but the Georgia standard appears to be somewhat higher, requiring “the greatest possible diligence.” Id. at 1382 (citations omitted). And the record in this case differs significantly from the facts in Lau. Grant filed suit on October 5, 2010. The evidence shows that Grant requested a waiver the next day and waited only two weeks to move toward formal service. England was served on November 15. The record shows significantly greater diligence than in Lau and a significantly shorter period before service was effected. The record shows that Grant’s efforts to serve England were sufficiently diligent under state law. England’s motion for summary judgment is denied.

 

As to Bean, the combination of Grant’s initial decision to seek a waiver through England and the delay in serving her after receiving no response from England leads to a different result. The record shows that Bean was served a month after England, at the same address that Grant had when suit was filed. There is no explanation as to why Grant tried to serve Bean through England after England had failed to respond to the request for a waiver. Nor is there a valid explanation for another six weeks expiring before Bean was served. The lack of explanation combined with the greater delay serving Bean support granting the summary judgment motion as to her.

 

Grant’s attorney’s attempt to have England’s agent waive service had already failed. Grant does not assert that he believed Bean had authorized England to accept service on her behalf. (See Docket Entry No. 16, Ex. 1). Moreover, Grant knew Bean’s correct address when the complaint was filed. Although Grant’s attorney asserts that he had “no current or valid information for the whereabouts of Catherine Bean,” (id., ¶ 4), he provides no explanation why he believed the address that he listed in the complaint was incorrect. The address provided by the private investigator was not “new,” as Grant’s attorney claims in his affidavit. (Docket Entry No. 16, Ex. 1, ¶ 4). Bean received service at the same address listed in the complaint. (Docket Entry Nos. 1, 10). Under these circumstances, Grant did not, as a matter of law, exercise reasonable diligence to serve Bean.

 

IV. Conclusion

Bean’s motion for summary judgment is granted; England’s is denied.