19 F.3d 1429 (4th Cir. 1994), 93-1715, Highway Exp. Inc. v. Federal Ins. Co.
|Docket Nº:||93-1715, 93-1889.|
|Citation:||19 F.3d 1429|
|Party Name:||HIGHWAY EXPRESS, INCORPORATED, Plaintiff-Appellee, v. The FEDERAL INSURANCE COMPANY, Defendant-Appellant, and National Risk Management Corporation, Defendant. HIGHWAY EXPRESS, INCORPORATED, Plaintiff-Appellee, v. The FEDERAL INSURANCE COMPANY, Defendant-Appellant, and National Risk Management Corporation, Defendant.|
|Case Date:||March 24, 1994|
|Court:||United States Courts of Appeals, Court of Appeals for the Fourth Circuit|
This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA4 Rule 36 regarding use of unpublished opinions)
Argued Feb. 7, 1994.
Appeals from the United States District Court for the Eastern District of Virginia, at Richmond. Robert R. Merhige, Jr., Senior District Judge. (CA-92-788)
John Mason Claytor, Harman, Claytor, Corrigan & Wellman, Glen Allen, Va., for appellant.
Tyler Perry Brown, Hunton & Williams, Richmond, Va., for appellee.
On Brief: William R. Allcott, Jr., Kathleen A. Sundberg, Harman, Claytor, Corrigan & Wellman, Glen Allen, Va., for appellant.
Eric J. Sorenson, Jr., Hunton & Williams, Richmond, Va., for appellee.
Before WILKINSON and HAMILTON, Circuit Judges, and WILSON, United States District Judge for the Western District of Virginia, sitting by designation.
The Federal Insurance Company (Federal) appeals the April 30, 1993 order of the district court granting summary judgment in favor of Highway Express, Inc. (Highway) on its breach of insurance contract claim and denying Federal's motion for summary judgment. For the reasons stated herein, we affirm.
This action arises from an insurance contract. Highway, an irregular route common carrier that primarily transports cigarettes and other tobacco products, maintains a terminal in Kernersville, North Carolina. 1 To insure against loss of or damage to the transported cargo, Highway purchased, through National Risk Management Corporation (National), a North Carolina corporation with its principal place of business in Charlotte, North Carolina, a motor truck cargo liability insurance policy from Federal, a New Jersey corporation with its principal place of business in Warren, New Jersey. The application for the Federal policy was taken in Charlotte. The policy was typed and assembled in Federal's offices in Charlotte, where it was countersigned by Thomas Scott (Scott), Federal's employee and authorized representative. Scott delivered the policy to National, Highway's agent, in Charlotte. Steven Mariano of National drove from Charlotte to Highway's headquarters in Richmond to deliver the policy to Highway.
Effective April 9, 1992, to April 9, 1993, the policy purported to cover:
the liability of [Highway] as a motor truck carrier for direct physical loss or damage to lawful goods and merchandise, the property of others, shipped under bills-of-lading, shipping receipts, or delivery receipts issued by [Highway], while such goods and merchandise are in the custody of [Highway], or in the custody of connecting carriers, while in due course of transit within the continental limits of the United States and Canada excluding Alaska and Hawaii.
(J.A. 47). Limiting Federal's liability to $1 million arising from the transportation of cigarettes, Endorsement Number 1 (Endorsement No. 1) also contained an exclusion, which stated:
It is further agreed that this policy does not cover loss, damage or expense caused by or resulting from theft or attempted theft to an unattended vehicle(s).
(J.A. 49). Endorsement No. 1 was an addendum to the Policy containing language drafted solely by Federal. The Policy does not define the phrase "unattended vehicle."
On September 4, 1992, R.J. Reynolds Tobacco Company (RJR) employees in Winston-Salem, North Carolina loaded into one of Highway's trailers (the Trailer), 1,315 cases of cigarettes to be transported to RJR's facilities in Hartford, Connecticut. The RJR employees secured a wire cable to the latch of the Trailer door to prevent theft. After being loaded, the Trailer was taken to Highway's Kernersville, North Carolina, terminal yard; the tractor and the Trailer arrived around 1:30 a.m. on Saturday, September 5.
At the Kernersville terminal, Highway's local driver took several security precautions. First, the Trailer was placed back-to-back with another trailer loaded with RJR cigarettes. Second, the tractor was disengaged from the Trailer and moved to another part of the yard. Third, a kingpin lock 2 was placed on the Trailer. Finally, the driver left the terminal and locked it by combination padlock.
The Kernersville terminal is well-lighted. A six and one-half foot chain link fence topped by three strands of barbed wire surrounds the terminal. The terminal is located in an active neighborhood, and its yard is visible from outside the terminal. The Kernersville Police Department is located one block away, and, at the terminal manager's request, the Police Department checked the terminal on nights and weekends. Prior to the weekend of September 5-7, 1992, Highway had not experienced any thefts or vandalism at the Kernersville terminal.
Between 9:30 p.m. on September 5 and 1:00 p.m. on September 6, the Trailer full of cigarettes and a Highway tractor were stolen from the terminal. Neither the tractor, the Trailer, nor the cigarettes have been located.
On October 1, 1992, after Highway made demand for coverage under the policy, Federal denied coverage of the claim. Federal stated that the cigarettes were stolen from an "unattended vehicle," so that Endorsement No. 1 excluded the theft from coverage. On November 23, 1992, Highway paid RJR the market value of the cigarettes--$870,250.20.
On December 4, 1992, Highway filed suit in the United States District Court for the Eastern District of Virginia against Federal and National, alleging,inter alia, that Federal had breached its insurance contract with Highway and that, as a result, Highway had sustained damages in the amount of $870,250.20. 3 Jurisdiction in this dispute was based upon diversity of citizenship pursuant to 28 U.S.C. § 1332.
Count One of the complaint was against Federal and alleged breach of contract. Under this count, Highway sought a judgment against Federal for the amount Highway paid to RJR. Counts Two, Three, and Four were against National and asserted claims of breach of contract, negligence, and negligent misrepresentation, if it was determined that no coverage was provided for the loss under the policy. 4
In the district court, Highway and Federal filed cross motions for summary judgment with respect to Count One of the complaint. On April 30, 1993, the district court entered an Order and Memorandum Opinion granting Highway's motion for summary judgment on Count One, denying Federal's motion for summary judgment on Count One, and dismissing as moot the cross motions for summary judgment on Counts Two, Three, and Four filed by Highway and National.
The main issue before the district court was whether the phrase "unattended vehicle" contained in an exclusion in the policy was unambiguous. Finding that the result would be the same under either North Carolina or Virginia law, the district court first reasoned that determination of the choice of law issue--which state's law would apply to the interpretation of the...
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