Canal Ins. Co. v. First General Ins. Co.
| Citation | 889 F.2d 604 |
| Decision Date | 06 December 1989 |
| Docket Number | No. 89-4050,89-4050 |
| Parties | CANAL INSURANCE COMPANY, Plaintiff-Appellant, v. FIRST GENERAL INSURANCE COMPANY, Defendant-Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
Thomas A. Wicker, Holland, Ray & Upchurch, Tupelo, Miss., for plaintiff-appellant.
Julie E. Chaffin, Thomas, Price, Alston, Jones & Davis, Thomas W. Tardy, III, Jackson, Miss., for defendant-appellee.
Appeal from the United States District Court for the Northern District of Mississippi.
Before CLARK, Chief Judge, GEE and SMITH, Circuit Judges.
Plaintiff Canal Insurance Company (Canal) appeals from a declaratory judgment in favor of defendant First General Insurance Company (First General). Canal sought a declaration that First General's policy provided coverage for a tractor-trailer involved in a highway accident while its own policy did not. After a bench trial the district court ruled that the policy written by First General provided no coverage and dismissed the action on the merits. Because we conclude that First General's policy provides coverage and that Canal's does not, we vacate the judgment of the district court and remand the cause with directions.
This is a dispute over whether a First General automobile liability policy or a Canal policy of the same type, or both, cover an accident between two tractor-trailer rigs which occurred near Meridian, Mississippi. First General's insured, Thomas English Trucking, Inc. (English), owned the tractor that was part of the subject rig. However, at the time of the accident Canal's insured, Custom Freight, Inc. (Custom), had leased the tractor and was using it to pull its own trailer. Reginald Brown, whom the district court found to be an employee of Custom, was driving the rig. His chauffer's license was suspended at the time of the accident. Brown and the driver and a passenger in the other rig were killed.
First General issued an automobile policy to English which was in effect at the time of the accident. In that policy First General agreed to insure English against liability for bodily injury or property damage arising out of the use of an "owned automobile" by English, its named insured, or by any other insured under the policy. The Definitions section of the policy defined, in pertinent part, "owned automobile" as "an automobile which is owned by the named insured and described in the declarations [Schedule of Vehicles]." "Persons insured" included the named insured and anyone using an owned automobile with English's permission. No distinctions were made among types of permissive users, such as between lessees and employees of English. The "PERSONS INSURED" section also contained the following "like insurance" clause:
None of the following is an insured:
* * *
iii) any person or organization other than the named insured, with respect to:
1) a motor vehicle while used with any trailer owned or hired by such person and not covered by like insurance in the company....
The policy's declarations included the Schedule of Vehicles referenced by the "owned automobile" definition. The Schedule included eight specifically described tractors and trailers and contained two entries, numbers 9 and 10, for "[a]ny one non-owned undescribed semi-trailer but only while attached to an insured power unit [tractor]." The Schedule set out a premium for each of the ten entries and showed English was charged the same premium for each of the latter two entries as it was for each specifically described vehicle.
Several aspects of the application process for the First General policy bear mention. English applied for the policy through the Crawford Insurance Agency. The application was prepared by a Crawford employee and signed by English. In response to a question inquiring whether the equipment to be insured was "loaned or rented to others," English responded "no." The district court found to be a forgery a letter written on Crawford Agency letterhead requesting that Custom be added to the First General policy as a named insured. First General's issuing agent, Interstate Truck Underwriters, never received such a letter.
A policy written by Canal and issued to Custom was also in effect at the time of the accident. The policy covered only specifically described tractors and any "unnamed trailer" while attached to one of those tractors. The Canal policy did not list the tractor or trailer involved in the accident. Thus the parties do not dispute that the Canal policy did not provide coverage for the accident in the conventional sense. However, the Canal policy contained an endorsement required by the Interstate Commerce Commission which provided that Canal would pay any judgments in favor of members of the public rendered against Custom, regardless whether the vehicles involved were covered by the policy. Custom is required under the ICC endorsement to reimburse Canal for any payment made that Canal would not have been obligated to make under the provisions of the policy except for the terms of the endorsement.
After the accident, actions were commenced against Custom on behalf of the estates of the other driver, the guest passenger and the owner of the other tractor-trailer rig. Canal determined that its policy did not afford coverage but that it had a responsibility to pay third-party judgments under the ICC endorsement. Canal requested First General to assume coverage and provide Custom a defense. When First General refused, Canal defended Custom under a reservation of right. Canal either paid the judgments or settled the claims against Custom, but also initiated the instant action for a declaratory judgment against First General.
The District Court found that both the Canal and First General policies were in effect when the accident occurred. The court found that Brown was an employee of Custom. The court concluded the like-insurance clause in the First General policy applied. Further, the two non-specific entries in the First General policy's Schedule of Vehicles providing coverage for undescribed, unowned trailers while attached to described tractors were held not to preclude operation of the like-insurance clause against Custom. The court reasoned that (1) First General did not know that the described tractors would be leased to Custom; therefore First General could not have intended the entries to apply to trailers owned by lessees; and (2) the entries served "alternative purposes" that precluded construing them as providing like insurance. Specifically, the court reasoned that the entries covered nonowned, undescribed trailers for physical damage from occurrences other than collisions. Such occurrences would not have been covered absent the two entries. The court therefore denied Canal's request for a declaratory judgment that First General provided coverage and dismissed the action.
Canal contends that the policy terms unambiguously provide coverage to Custom under the circumstances of the accident. Thus, the district court erred by inquiring whether First General "intended" to cover Custom. Even if the combined operation of the like-insurance clause and the two entries on the Schedule of Vehicles for one undescribed, non-owned vehicle was ambiguous as to permissive users such as Custom, the court erred in concluding there was no coverage because its underlying findings of fact were clearly erroneous; to wit, that First General did not intend to provide coverage to Custom because it did not "know" about English's lease to Custom; and that the two entries served the "alternative purpose" of providing physical damage coverage for occurrences other than collision.
Canal also contends that its policy written for Custom does not provide insurance for the accident. None of the vehicles involved was specifically covered by the policy. Canal defended Custom under reservation of right and paid the state court judgments solely because the ICC endorsement for the protection of the public obligated Canal to pay them. Under the same endorsement Custom must reimburse Canal because coverage was not afforded under the terms of the policy other than through the ICC endorsement. Thus, Canal argues, it "stands in the shoes" of Custom entitling it to direct reimbursement from First General, whose policy covers the accident.
As a threshold matter, we note that construction of insurance policies is a matter of state law. However, neither party raised or briefed the issue of which state's law governs this dispute. We assume, as do the parties, that Mississippi law applies. See Transport Indem. Co. v. Paxton Nat'l Ins. Co., 657 F.2d 657, 660 n. 5 (5th Cir.1981).
The first issue we must resolve is whether Custom's status as an insured under the First General policy was abrogated by operation of the policy's like-insurance clause. The clause strips away insured status from a permissive user who uses a listed tractor to pull the permissive user's own trailer that is not covered by like insurance issued by First General. Brown, Custom's employee, was pulling a Custom-owned trailer with a listed tractor at the time of the accident. The like-insurance clause therefore applies.
The issue becomes whether Custom's trailer was covered by like insurance. We find that it was. Entries 9 and 10 on the Schedule of Vehicles each provide coverage for one "non-owned undescribed semi-trailer" while attached to a listed tractor. This use of the term "non-owned" occurs in a list of English-owned vehicles and in a policy in which English is the named insured. The term in this context can only refer to ownership by English, not by an omnibus insured. Because the trailer was attached to an insured tractor, was not owned by English and was not described in the Schedule of Vehicles, it squarely fits within the description of entries 9 and 10. We note also that the policy called for separate...
To continue reading
Request your trial
-
U.S. Fidelity & Guar. Co. v. U.S. Fire Ins. Co.
...There is none. Rather, a number of undisputed facts render it impossible. Accordingly, we reverse. See Canal Ins. Co. v. First General Ins. Co., 889 F.2d 604, 607 (5th Cir.1989) (appellate court found facts underlying district court's declaratory judgment as to liability of insurer of tract......
-
Middlesex Ins. Co. v. Mara
...may be entitled to recover the expense of defending its insured in the underlying action. See, e.g., Canal Insurance Co. v. First General Insurance Co., 889 F.2d 604, 612 (5th Cir.1989). In the present case, however, Middlesex has requested “attorneys fees” without reference to the underlyi......
-
Progressive Cas. Ins. Co. v. Hoover
...denied, 534 U.S. 1127, 122 S.Ct. 1063, 151 L.Ed.2d 967 (2002); see also Harco Nat'l Ins., 107 F.3d at 735; Canal Ins. Co. v. First Gen. Ins. Co., 889 F.2d 604, 610 (5th Cir.1989), modified on other grounds, 901 F.2d 45 (5th 14. See Texas & New Orleans R.R. Co. v. Sabine Tram Co., 227 U.S. 1......
-
Armstrong v. U.S. Fire Ins. Co.
...853 (9th Cir.2000) (citing Planet Ins. Co. v. Transport Indemnity Co., 823 F.2d 285, 288 (9th Cir. 1987)); Canal Ins. Co. v. First General Ins. Co., 889 F.2d 604, 610 (5th Cir.1989), modified on other grounds 901 F.2d 45 (5th Cir.1990); see also Carolina Cas. Ins. Co. v. E.C. Trucking, 396 ......