Boatner v. Atlanta Speciality Ins. Co.

• Decision Date: 27 June 1997
• Docket Number: No. 96-60815,96-60815
• Parties: Gary P. BOATNER; Paula K. Boatner, Plaintiffs-Appellees, v. ATLANTA SPECIALITY INSURANCE COMPANY, Defendant-Appellant. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1248

115 F.3d 1248

Gary P. BOATNER; Paula K. Boatner, Plaintiffs-Appellees, v. ATLANTA SPECIALITY INSURANCE COMPANY, Defendant-Appellant.

No. 96-60815

Summary Calendar.

United States Court of Appeals, Fifth Circuit.

June 27, 1997.

Si M. Bondurant, Gerald & Brand, Jackson, MS, for Plaintiffs-Appellees.

Douglas R. Duke, Shell, Buford, Bufkin, Callicutt & Perry, Jackson, MS, for Defendant-Appellant.

Appeal from United States District Court for the Southern District of Mississippi.

Before DAVIS, EMILIO M. GARZA and STEWART, Circuit Judges.

STEWART, Circuit Judge:

This case requires us to determine the scope of Mississippi's Uninsured Motorist Act (UM Act). Bradley Boatner went to Honduras on a humanitarian mission and was killed as he rode in the back of a flatbed truck. Both the owner and the driver of the truck were uninsured. Boatner's parents sought payment from Atlanta Speciality Insurance Company (Atlanta Speciality) pursuant to the uninsured motorist endorsement in the Boatners' automobile policy. Atlanta Speciality denied coverage, asserting a territorial restriction in the policy, which limited recovery to losses occurring within the United States (and its territories and possessions), Canada, and Puerto Rico. The Boatners brought a declaratory judgment suit in state court, and the case was removed to federal court on the basis of diversity jurisdiction. Atlanta Speciality moved for judgment on the pleadings, but the district court denied the motion, holding that the territorial restriction was against Mississippi public policy as embodied in the UM Act. At the conclusion of discovery, Atlanta Speciality moved for summary judgment, again arguing that the territorial restriction in the Boatners' policy precluded coverage. The district court denied the motion for the same reasons it denied Atlanta's motion for judgment on the pleadings. Atlanta Speciality appeals. Because we find that the territorial restriction in the Boatners' policy does not violate Mississippi public policy, we reverse and render judgment for Atlanta Speciality.

BACKGROUND

On January 18, 1994, seventeen-year-old Bradley Boatner, together with members of the Pearl River Baptist Association Brotherhood, traveled to a rural mountainous area in Honduras to provide humanitarian medical relief to citizens of that region. It had been raining that day. At about dusk, the medical team (approximately 25-30 in all) loaded into the back of an open flatbed truck and departed on a dirt road. Boatner was seated on a box of supplies in the left, front corner of the truck (i.e., behind the driver). As the truck proceeded along the dirt road at approximately 20-30 miles per hour, the driver noticed a hole in the road and attempted to drive around it. As the driver negotiated the hole, he came too close to the edge of the road, and because it had been raining, the soil gave way. The truck teetered for a moment and then veered off the road, throwing Boatner from the truck. Boatner was killed instantly. Other members of the medical team were also seriously injured. Neither the owner of the truck nor the driver owned automobile insurance.

PROCEDURAL HISTORY

Gary P. Boatner and Paula K. Boatner (the parents of Bradley Boatner) had purchased an automobile insurance policy from Atlanta Speciality, which provided for $100,000 per person in uninsured motorist coverage. The Boatners owned and insured three vehicles, making available $300,000 in uninsured motorist coverage. The Boatners' policy, however, contained the following territorial restriction applicable to the entire policy:

POLICY PERIOD AND TERRITORY

A. This policy applies only to accident and

losses which occur:

1. ....

2. Within the policy territory.

B. The policy territory is:

1. The United States of America, its territories or possessions;

2. Puerto Rico; or

3. Canada.

On August 31, 1994, the Boatners, through counsel, sought payment under the uninsured motorist provision of the policy to compensate them for the death of their son. Atlanta Speciality denied coverage, stating that the territorial restriction in the policy precluded coverage because Bradley Boatner's death occurred in Honduras, which plainly brought the Boatners' claim within the terms of the exclusion.

The Boatners thereafter filed a declaratory judgment action in state court, and the case was removed to federal court on the basis of diversity jurisdiction. Atlanta Speciality moved for judgment on the pleadings, arguing that the unambiguous terms of the territorial restriction precluded coverage as a matter of law. The district court disagreed, holding that the territorial restriction was against Mississippi public policy as embodied in the UM Act. At the conclusion of discovery, Atlanta Speciality moved for summary judgment, asserting the arguments made in its pre-discovery motion. The district court denied the motion as frivolous and ordered Atlanta Speciality to pay the Boatners' legal expenses in connection with defending the motion. Rather than go through a trial on the merits, Atlanta Speciality stipulated to $275,000 in damages plus attorneys' fees totaling $1,500 (for having to defend the frivolous summary judgment motion). This appeal followed.

DISCUSSION

Whether the territorial restriction in Atlanta Speciality's uninsured motorist policy violates Mississippi public policy is an issue of first impression. It is by now well-settled that in making an Erie [R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)] guess "[w]e are emphatically not permitted to do merely what we think best; we must do that which we think the Mississippi Supreme Court would deem best." Jackson v. Johns-Manville Sales Corp., 781 F.2d 394, 397 (5th Cir.) (en banc), cert. denied, 478 U.S. 1022, 106 S.Ct. 3339, 92 L.Ed.2d 743 (1986). "[U]nder Erie we cannot skirt the clear import of state decisional law solely because the result is harsh." Parson v. United States, 460 F.2d 228, 234 (5th Cir.1972) (quoted in Jackson, 781 F.2d at 397). We review de novo the district court's interpretation of an insurance contract. Mulberry Square Productions, Inc. v. State Farm Fire & Cas. Co., 101 F.3d 414, 420 (5th Cir.1996) (interpreting Mississippi law). Any ambiguity in the policy is construed against the insurer, and exclusions in uninsured motorist policies are strictly construed. See State Farm Mut. Auto. Ins. Co. v. Nester, 459 So.2d 787, 790 (Miss.1984). ¹

I. MISSISSIPPI'S UNINSURED MOTORIST STATUTE--ITS LEGISLATIVE BIRTH AND JUDICIAL UPBRINGING

Section 83-11-101--Mississippi's UM Act--provides in part as follows:

(1) No automobile liability insurance policy or contract shall be issued ... unless it contains an endorsement or provisions undertaking to pay the insured all sums which he shall be legally entitled to recover as damages for bodily injury or death from the owner or operator of an uninsured motor vehicle, within limits which shall be no less than those set forth in the Mississippi Motor Vehicle Safety Responsibility Law....

(Emphasis added.) Mississippi's UM Act therefore incorporates by reference the limitations found in Mississippi's Motor Vehicle Safety Responsibility Act, which provides in part:

(2) Such owner's policy of liability insurance:

* * * * * * (b) shall pay on behalf of the insured named therein ... all sums which the insured shall become legally obligated to pay as damages arising out of the ownership, maintenance or use of such motor vehicles within the United States of America or the Dominion of Canada, subject to limits ... as follows: ten thousand dollars ($10,000.00) because of bodily injury to or death of one (1) person in any one (1) accident and, subject to said limit for one (1) person, twenty thousand dollars ($20,000.00) because of bodily injury to or death of two (2) or more persons in any one (1) accident, and five thousand dollars ($5,000.00) because of injury to or destruction of property of others in any one (1) accident.

(3) Such operator's policy of liability insurance shall pay on behalf of the insured ... all sums which the insured shall become legally obligated to pay as damages ... within the same territorial limits and subject to the same limits of liability as are set forth above with respect to an owner's policy of liability insurance.

MISS.CODE ANN. § 63-15-43 (1996) (emphasis added).

Although neither statute is "a paradigm of legislative exactitude," ² our task nonetheless is to determine whether the UM Act incorporates the Safety Responsibility Act's territorial restriction, such that the UM Act's scope is limited to accidents involving uninsured motorists in the United States and Canada. For if it does, then we must conclude that the territorial restriction in Atlanta Speciality's policy does not violate Mississippi public policy. Before we get to this question, however, we find it helpful to briefly recount the legislative birth of the UM Act and the judicial gloss placed upon the relationship between the UM Act and the Safety Responsibility Act.

A. The UM Act's Legislative Birth

Enacted in 1952, Mississippi's Safety Responsibility Act provided innocent persons killed or injured in automobile accidents with compensation for injuries resulting from a driver's negligence. See Travelers Indem. Co. v. Watkins, 209 So.2d 630, 632 (Miss.1968); see generally Richard T. Phillips, A Guide to Uninsured Motorist Insurance Law in Mississippi, 52 MISS.L.J. 255, 257 (1982). The statute provided that insurers would provide specified amounts of liability coverage for accidents occurring in the United States and Canada. § 63-15-43(2)(b), (3). However, the Safety Responsibility Act left essentially three gaps in coverage: negligent drivers would often violate the law and fail to purchase liability insurance; coverage was denied on the basis of uninsured motorist exclusions or policy breaches; and the tortfeasor sometimes happened to be a hit-and-run driver. Phillips, 52...