Ewing then sued Amerisure, seeking a declaration that Amerisure had breached its duties to defend and indemnify Ewing for any damages awarded to TMSID in the underlying suit. On cross-motions for summary judgment, the district court concluded that Ewing contractually assumed liability for its construction work with TMISD such that it would be held liable for failing to perform under a workmanlike manner and that the contractual liability exclusion applied to exclude coverage, which was not excepted because TMISD's claims sounded in contract, not tort. The decision was appealed again to the Fifth Circuit, which initially affirmed and then remanded its opinion and certified the questions of Amerisure's duty to defend and indemnify to the Supreme Court of Texas.

 The parties disputed whether the contractual liability exclusion precluded coverage and relieved Amerisure of its duty to defend and indemnify Ewing. Attacking the heart of the lower court's rational, Ewing argued that its agreement with TMSID to construct the tennis courts in a workmanlike manner did not expand or add anything new to its obligations under existing common law.

 The court agreed with Ewing that an agreement to exercise ordinary care does not rise to the level of assuming a liability within the meaning of the policy's contractual liability exclusion because inherent in every contract is the duty to perform with care and skill. Accordingly, the court concluded that the contractual liability exclusion is not triggered under a CGL policy when a general contractor, without more, agrees to perform its work in a “good and workmanlike manner.”

 Editor's Note: The court used the “eight corners” rule commonly applied by Texas courts to confirm that the contractual liability exclusion is not triggered when one party simply agrees to that standard of care and performance that is implied in every agreement under common law. This opinion makes clear that proper application of the exclusion requires the assumption of an obligation that is above and beyond, or in excess of, what would be expected of a party in the absence of the contract or an agreement.