880 F.2d 270 (10th Cir. 1989), 87-2260, Boyd Motors, Inc. v. Employers Ins. of Wausau

Docket Nº:87-2260.
Citation:880 F.2d 270
Party Name:BOYD MOTORS, INC., Plaintiff-Appellant, v. EMPLOYERS INSURANCE OF WAUSAU, Defendant-Appellee.
Case Date:July 20, 1989
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

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880 F.2d 270 (10th Cir. 1989)

BOYD MOTORS, INC., Plaintiff-Appellant,



No. 87-2260.

United States Court of Appeals, Tenth Circuit

July 20, 1989

Deborah T. Carney, Lakewood, Colo., (Hal D. Meltzer and Gregory N. Pottorff, of Turner and Boisseau, Wichita, Kan.,

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with her on the brief), for plaintiff-appellant.

Paul Hasty, Jr. of Wallace, Saunders, Austin, Brown and Enochs, Overland, Kan., for defendant-appellee.

Before SEYMOUR and SETH, Circuit Judges, and SEAY, Chief Judge. [*]


Plaintiff, Boyd Motors, Inc. (Boyd), appeals from an order of the district court granting summary judgment in favor of defendant, Employers Insurance of Wausau (Wausau). As a preliminary matter, we note that Boyd has not appealed the dismissal of its tort and punitive damage claims and that its attempt to obtain appellate review of a disputed discovery order issued by the magistrate some eight months prior to disposition of this case by the district court is ineffective due to Boyd's failure to challenge the order first in the district court. See Niehaus v. Kansas Bar Ass'n, 793 F.2d 1159, 1164-65 (10th Cir.1986). Accordingly, we are concerned only with the judgment entered in favor of Wausau on Boyd's breach of contract theory.

The facts pertinent to the parties' dispute over the extent of coverage afforded Boyd's automobile inventory by an inland marine insurance policy issued by Wausau are set out in the district court's published opinion, Boyd Motors, Inc. v. Employers Insurance of Wausau, 670 F.Supp. 310 (D.Kan.1987), as follows:

1. The defendant, Employers Insurance of Wausau, issued a commercial inland marine insurance policy to Volkswagen Credit, Inc.

2. Volkswagen purchased the policy so it could surcharge the policy and thereby provide coverage to automobile dealers who floor-planned their new car inventory with Volkswagen Credit, Inc.

3. Plaintiff claims coverage under the policy for certain vehicles that plaintiff floor-planned with Volkswagen Credit, Inc.

4. Plaintiff is an automobile dealer whose new-car inventory was severely damaged by hail.

5. The defendant paid $103,160.41 to Volkswagen Credit, Inc. on plaintiff's claim for the floor-planned automobiles, based on the cost of repairing the damaged vehicles.

6. Plaintiff seeks an additional $40,609.48 based on its claim that the vehicles are worth less after the damage and repairs than the vehicles were worth before the damage.

7. Plaintiff claims that the repairs do not put the vehicles in the same condition as they were when they were new.

8. The policy at issue in this case is the inland marine insurance policy. The terms of the insurance policy provide the following:

  1. This policy insures against all risks of direct physical loss or damage to the insured automobiles, except:

    1. Loss or damage caused directly or indirectly by:


    2. loss or damage resulting from delay, loss of market,....

  2. Limit of Liability--the limit of liability under this policy for any one disaster or casualty at any one location shall not exceed $3,000,000 ... provided, however, that in no case shall the Company be liable for any dealer's prospective profit or overhead charges of any nature whatsoever....

    Id. at 312 (emphasis added by district court).

    The controlling issue in this case is whether Wausau satisfied its obligations under the subject policy when it paid for what were considered cost-effective repairs 1 to Boyd's hail-damaged automobile

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    inventory but refused to compensate Boyd for the diminution in value that allegedly was not restored by such means. This issue breaks down into two separate questions, relating to general coverage on the one hand and specific exclusion on the other: (1) Does the Wausau policy, which insures against only "direct physical loss or damage," cover the residual diminution in value of the repaired vehicles and (2) if so, does the policy's exclusion of "[l]oss or damage resulting from ... loss of market" nevertheless preclude Boyd's recovery for such diminution in value? The district court held in Boyd's favor on the coverage question but ultimately ruled for Wausau on the basis of its interpretation of the exclusion. We review the district court's construction of the policy de novo in the absence of ambiguity requiring reliance upon extrinsic evidence. See...

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