American Stone Diamond, Inc. v. Lloyds of London

• Decision Date: 05 July 1996
• Docket Number: Civil Action No. H-95-5362.
• Citation: 934 F. Supp. 839
• Parties: AMERICAN STONE DIAMOND, INC., Plaintiff, v. LLOYDS OF LONDON, Defendant.
• Court: U.S. District Court — Southern District of Texas

934 F. Supp. 839

AMERICAN STONE DIAMOND, INC., Plaintiff, v. LLOYDS OF LONDON, Defendant.

Civil Action No. H-95-5362.

United States District Court, S.D. Texas, Houston Division.

July 5, 1996.

Oliver S. Heard, Jr., Heard Goggan Blair & Williams, San Antonio, TX, for plaintiff.

James G. Munisteri, Sewell & Riggs, Houston, TX, for defendant.

MEMORANDUM AND ORDER OF PARTIAL SUMMARY JUDGMENT

WERLEIN, District Judge.

Pending are Defendant's Motion for Reconsideration of the Denial of its Motion for Summary Judgment (Document No. 29) and Defendant's Motion to Sever and Abate Subject to Ruling on Defendant's Motion for Reconsideration (Document No. 31). After having carefully considered the arguments and authorities of counsel, as well as the summary judgment evidence, the Court is of the opinion that Defendant's Motion for Reconsideration should be GRANTED, that Defendant's Motion for Summary Judgment (Document No. 17) should be GRANTED, and that Defendant's Motion to Sever and Abate should be DENIED as Moot.

I. Background

The undisputed facts and procedural history of this case are as follows:

Tom Wasson is President of Tom's Red Hot Jewelry Company, a San Antonio, Texas-based wholesale jewelry company that sells to small jewelry stores in the southern United States. Wasson often conducts business by traveling to such stores with varying amounts of inventory. On July 18, 1994, Wasson rented a car in San Antonio and made such a trip to Houston, Texas, bringing with him inventory with a value of approximately $280,000.00. Wasson made several calls on Houston customers that day and the next day, July 19, 1994. After leaving a customer's store in the late afternoon on the 19th, Wasson prepared to head back to San Antonio. Just outside the Houston city limits, Wasson pulled into a service station to purchase gasoline for the trip home. After refueling the car, Wasson went inside the station to pay.

After waiting a minute or less in line, Wasson noticed a black car pull up behind his rental car. Because the gasoline pumps were crowded with vehicles, Wasson decided to return to his car to move it to allow the black car access to the pump. As Wasson approached his car, the black car sped off and a customer informed Wasson that someone had stolen something from the trunk of Wasson's car. The thieves had broken the passenger side window, opened the glove compartment and accessed the trunk release. The jewelry was gone and neither it nor the thieves were ever found. Wasson states in his affidavit that his loss totaled $268,000.00.

Wasson thereafter filed a loss claim on an insurance contract, Policy No. NA0225793, that Tom's Red Hot Jewelry Company and American Stone Diamond, Inc. had with certain Underwriters at Defendant Lloyds of London ("the Policy"). Defendant denied the claim, asserting that because Wasson was not actually in or upon the car when the theft occurred, the following exclusionary language of the Policy precluded coverage:

This Insurance insures against all risks of loss or damage to the above described property arising form (sic) any cause whatsoever

EXCEPT:

. . . . .

(I) Loss or damage to property insured hereunder while in or upon any automobile, motor-cycle or any other vehicles unless, at the time of loss or damage occurs, there is actually in or upon such vehicle, the Assured, or a permanent employee of the Assured, or a person whose sole duty it is to attend the vehicle.

Wasson and Tom's Red Hot Jewelry Company thereafter filed suit against Defendant in the 225th Judicial District Court of Bexar County, Texas, asserting causes of action for breach of contract, breach of covenant of good faith and fair dealing, fraud, constructive fraud, and breach of fiduciary obligations.¹ Defendant removed the case to the U.S. District Court for the Western District of Texas based on diversity jurisdiction, filed a motion to transfer venue to the Southern District of Texas, and filed a motion for summary judgment on the breach of contract claim. Plaintiff responded to the summary judgment motion by asserting: (1) that the "in or upon the vehicle" language of the Policy should include "normal, essential daily activities such as buying gasoline for a car;" (2) that the exclusion is at least ambiguous with regard to coverage for such activities²; and (3) that even if unambiguous, as applied to the facts of this case, the exclusion is unconscionable.

By Order signed November 3, 1995, the District Court for the Western District of Texas denied Defendant's Motion for Summary Judgment and granted Defendant's Motion to Transfer Venue to this Court. After the case was transferred, Defendant filed the pending Motion to Reconsider the denial of its summary judgment motion, and Plaintiff responded in opposition. Both the Motion for Summary Judgment and the Motion for Reconsideration have been fully briefed by both parties.

II. Discussion

A. The Motion to Reconsider Standard

The Fifth Circuit holds that "because the denial of a motion for summary judgment is an interlocutory order, the trial court is free to reconsider and reverse its decision for any reason it deems sufficient, even in the absence of new evidence or an intervening change in or clarification of the substantive law." Lavespere v. Niagara Machine & Tool Works, Inc., 910 F.2d 167, 185 (5th Cir.1990), citing Fed.R.Civ.P. 54(b). Such matters are left to the trial court's discretion, Xerox Corp. v. Genmoora Corp., 888 F.2d 345, 356 n. 62 (5th Cir.1989), and this discretion to reconsider prior orders in the interest of justice and economy extends to prior rulings of another judge in the same case. Abshire v. Seacoast Products, Inc., 668 F.2d 832, 837-38 (5th Cir.1982).

Despite the considerable leeway granted to district courts to reconsider prior orders in a case, principles of comity make one reluctant to disturb the prior ruling of another district court. However, as the court that will try this case if it cannot be decided as a matter of law, there is an obligation — once a motion to reconsider is filed — at least to satisfy oneself that the prior ruling is correct and that valuable judicial and party resources will not be wasted on an unnecessary trial. For the reasons set forth below, and applying the summary judgment standard described below, the Court concludes on reconsideration that Defendant's Motion for Summary Judgment should be granted.

B. The Summary Judgment Standard

Rule 56(c) provides that "summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A party seeking summary judgment bears the initial burden of informing the district court of the basis for the motion, and identifying those portions of the pleading, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which the moving party believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986).

Once the movant carries this burden, the burden shifts to the nonmovant to show that summary judgment should not be granted. Id. at 323-27, 106 S.Ct. at 2553-54. A party opposing a properly-supported motion for summary judgment may not rest upon mere allegations or denials of his pleading, but must set forth specific facts showing the existence of a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256-57, 106 S.Ct. 2505, 2514-15, 91 L.Ed.2d 202 (1986). Unsubstantiated assertions that a fact issue exists will not suffice. See Krim v. BancTexas Group, Inc., 989 F.2d 1435, 1442 (5th Cir.1993); Thomas v. Price, 975 F.2d 231, 235 (5th Cir.1992). The nonmovant "must adduce admissible evidence which creates a fact issue concerning the existence of every essential component of that party's case." Krim, 989 F.2d at 1442.

In considering a motion for summary judgment, the district court must view the evidence through the prism of the substantive evidentiary burden. Anderson, 477 U.S. at 253-57, 106 S.Ct. at 2513-14. All justifiable inferences to be drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). "If the record, viewed in this light, could not lead a rational trier of fact to find" for the nonmovant, summary judgment is proper. Kelley v. Price Macemon, Inc., 992 F.2d 1408, 1413 (5th Cir.1993), cert. denied, 510 U.S. 1043, 114 S.Ct. 688, 126 L.Ed.2d 656 (1994), citing Matsushita, 475 U.S. at 576-78, 106 S.Ct. at 1351. On the other hand, if "the factfinder could reasonably find in the nonmovant's favor, then summary judgment is improper." Id., citing Anderson, 477 U.S. at 249-51, 106 S.Ct. at 2511.

Finally, even if the standards of Rule 56 are met, a court has discretion to deny a motion for summary judgment if it believes that "the better course would be to proceed to a full trial." Anderson, 477 U.S. at 255, 106 S.Ct. at 2513. Accord, Veillon v. Exploration Services, Inc., 876 F.2d 1197, 1200 (5th Cir.1989); 10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2728 (1983).

C. Defendant's Summary Judgment Motion

Defendant's Motion for Summary Judgment relies upon the undisputed facts of this case as set out in Plaintiff's Petition and Brief of Undisputed Facts, and which are summarized in the Background section of this Memorandum and Order. While Plaintiff withdrew its initial stipulation that Wasson was not "actually in or upon" the rental car at the time of the theft so as not to waive the argument that such language should include "normal, essential...