Insurer’s Proposed Permissive Interlocutory Appeal Rejected: Won’t Materially Advance Ultimate Termination of Litigation

Zurich Am. Ins. Co. v. MB2 Dental Solutions, LLC

Dallas Court of Appeals, No. 05-24-00288-CV (September 20, 2024)

Justices Molberg (Opinion, linked here), Pedersen, III, and Carlyle

After Zurich denied coverage under three insuring agreements for MB2’s losses arising from COVID-19 pandemic government orders, MB2 sued Zurich, asserting breach-of-contract and extra-contractual claims. Three years into the suit, the parties filed cross-motions for partial summary judgment on one of the insuring agreements, which covered interruption-by-communicable-disease (“ICD”). After briefing, a hearing, and more briefing, the trial court issued an omnibus order granting and denying in part each party’s motion, ruling that civil-authority orders triggered coverage by prohibiting access to MB2’s locations only in a subset of the implicated states and localities. Zurich sought leave to pursue a permissive appeal, which the trial court granted.

The court of appeals denied the petition, however, ruling Zurich had not satisfied the requirements for permissive interlocutory appeal under section 51.014(d) of the Texas Civil Practice and Remedies Code. Section 51.014(d) provides that a trial court may permit an appeal from an interlocutory order if: “(1) the order to be appealed involves a controlling question of law as to which there is a substantial ground for difference of opinion; and (2) an immediate appeal from the order may materially advance the ultimate termination of the litigation.” Then, the court of appeals may accept the appeal if the appealing party timely files “an application for interlocutory appeal explaining why an appeal is warranted under Subsection (d).”

In Texas, appeals generally are limited to final judgments. Statutes providing for interlocutory appeal are strictly construed. Applying these rules, the court concluded that Zurich failed to establish an appeal from the partial summary judgment order would materially advance the ultimate termination of the litigation. The court pointed out that the appeal could only determine contractual liability for one of the three coverage grants in dispute. MB2’s breach-of-contract claims under the other two coverage provisions would remain pending, as would its extra-contractual claims. The outcome of the proposed interlocutory appeal would not affect any of these remaining claims. While a party seeking interlocutory appeal under section 51.014(d) need not establish that such an appeal would completely resolve the litigation, it must show that an appeal “may materially advance” termination of the litigation. Here, because issues and claims would remain unresolved and unaffected by resolution of ICD coverage alone on appeal, an interlocutory appeal would not materially advance the ultimate termination of the litigation.