Centennial Ins. Co. v. Ryder Truck Rental, Inc.

• Decision Date: 31 July 1998
• Docket Number: No. 97-60489,97-60489
• Citation: 149 F.3d 378
• Parties: CENTENNIAL INSURANCE COMPANY, Plaintiff-Counter Defendant-Appellee, v. RYDER TRUCK RENTAL, INC., Defendant-Counter Claimant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 378

149 F.3d 378

CENTENNIAL INSURANCE COMPANY, Plaintiff-Counter Defendant-Appellee, v. RYDER TRUCK RENTAL, INC., Defendant-Counter Claimant-Appellant.

No. 97-60489.

United States Court of Appeals, Fifth Circuit.

July 31, 1998.

Thomas Butler Alleman, Winstead, Sechrist & Minick, Dallas, TX, Walker W. Jones, III, Baker, Donelson, Bearman & Caldwell, Jackson, MS, for Centennial Ins. Co.

W. Scott Welch, III, Donna Brown Jacobs, Butler, Snow, O'Mara, Stevens & Cannada, Jackson, MS, for Ryder Truck Rental, Inc. Appeal from the United States District Court for the Northern District of Mississippi.

Before KING and DAVIS, Circuit Judges, and HEARTFIELD, District Judge. ¹

HEARTFIELD, District Judge:

We consider whether, under Mississippi law, a business auto insurance policy's separation of insureds provision stating that "the coverage afforded applies separately to each insured who is seeking coverage or against whom a claim or 'suit' is brought" limits the applicability of other provisions excluding from coverage potential obligations arising under worker's compensation or similar law and employee injuries to the insured claiming coverage. The Magistrate Judge below held that it does not. We disagree and reverse.

I

Scholastic Book Fairs, Inc. (Scholastic), leased a truck from appellant, Ryder Truck Rental, Inc. (Ryder). Fulfilling a promise in the truck lease and service agreement to purchase liability insurance and to hold Ryder harmless for injuries to it, as well as to its employees, drivers and agents, it procured business auto and commercial general liability insurance policies from appellee, Centennial Insurance Company (Centennial), and listed Ryder in the certificate of insurance as an additional insured under both policies.

The commercial general liability insurance policy excluded from coverage "[a]ny obligation of the insured under a workers' compensation, disability benefits or unemployment compensation law or any similar law" and " '[b]odily injury' to ... [a]n employee of the insured arising out of and in the course of employment by the insured." ² It also placed outside of coverage "[b]odily injury' or 'property damage' arising out of the ownership, maintenance, use or entrustment to others of any aircraft, 'auto' or watercraft owned or operated by or rented or loaned to any insured." ³ Finally, it contained the following separation of insureds provision: ⁴

Except with respect to the Limits of Insurance, and any rights or duties specifically assigned in this Coverage Part to the first Named Insured, this Insurance applies:

a. As if each Named Insured were the only Named Insured; and

b. Separately to each Insured against whom claim is made or "suit" is brought.

The business auto insurance policy excluded from coverage "[a]ny obligation for which the 'insured' or the 'insured's' insurer may be held liable under any workers compensation disability benefits or unemployment compensation law or any similar law" and "bodily injury to ... [a]n employee of the 'insured' arising out of and in the course of employment by the 'insured.' " It also included the following separation of insureds provision:

E. "Insured" means any person or organization qualifying as an insured in the Who Is An Insured provision of the applicable coverage. Except with respect to the Limit of Insurance, the coverage afforded applies separately to each insured who is seeking coverage or against whom a claim or "suit" is brought.

A disagreement between Centennial and Ryder over the extent of the Scholastic policies' coverage arose when Guy Williams, a Scholastic employee, sued Ryder for injuries suffered when he fell down the ramp of the truck Scholastic had leased from Ryder. ⁵ Ryder responded to Williams' action by seeking defense and indemnity from Centennial. Centennial refused coverage, citing the exclusions in the Scholastic policies relating to workers compensation and employee injury. It then filed the present suit, in which it sought a declaratory judgment absolving it of any duty to defend or to indemnify Ryder. Ryder counterclaimed for legal fees and expenses incurred in litigating both this case and Williams' action. The parties agreed to proceed before a United States Magistrate Judge. See generally 28 U.S.C. § 636(c).

Centennial and Ryder each eventually moved for summary judgment based on an undisputed set of facts. ⁶ The Magistrate Judge granted Centennial summary judgment and denied Ryder summary judgment based on the exclusions in the Scholastic policies pertaining to workers compensation and employee injury. See Centennial, 971 F.Supp. at 1067-70. In doing so, he also rejected Ryder's contention that a cross-liability endorsement brought Williams' suit within the coverage. See id. at 1070.

After the entry of a final judgment in Centennial's favor, see id. at 1071, Ryder filed a timely appeal contesting the Magistrate Judge's disposition. It, however, subsequently decided against challenging his reading of Scholastic's commercial general liability insurance policy as imposing no obligation on Centennial to defend and indemnify or his rebuff of its interpretation of the cross-liability endorsement's scope. ⁷

II

We, sua sponte, consider our jurisdiction at the outset. See, e.g. Gaar v. Quirk, 86 F.3d 451, 453 (5th Cir.1996); General Motors Corp. v. Environmental Protection Agency, 871 F.2d 495, 497 (5th Cir.1989). Centennial sues under the Federal Declaratory Judgment Act, 28 U.S.C. §§ 2201-02. Each claim under this measure must rest on an independent jurisdictional ground--in other words, a ground other than the Act itself--and present a justiciable question. See Federal Kemper Ins. Co. v. Rauscher, 807 F.2d 345, 351 (3d Cir.1986).

Both jurisdictional conditions prevail here. Centennial properly alleges an independent ground for federal jurisdiction, diversity, ⁸ and its claim is justiciable, despite the absence of a judgment in Williams' suit against Ryder. ⁹ See Standard Accident Ins. Co. v. Meadows, 125 F.2d 422, 423-24 (5th Cir.1942); see also GTE Directories Pub. Corp. v. Trimen Am., Inc., 67 F.3d 1563, 1569-70 (11th Cir.1995); American States Ins. Co. v. Kearns, 15 F.3d 142, 144-45 (9th Cir.1994); Capitol Indemnity Corp. v. Miles, 978 F.2d 437, 438 (8th Cir.1992). Given these circumstances, we may exercise jurisdiction and address the merits of Ryder's appeal.

III

A

We review a grant of summary judgment de novo. Urbano v. Continental Airlines, 138 F.3d 204, 205 (5th Cir.1998). Summary judgment proves proper when "there is no genuine issue of material fact and ... the moving party is entitled to a judgment as matter of law." Fed.R.Civ.P. 56(c). Factual stipulations and admissions in pleadings can provide the basis for resolving a case at the summary judgment stage. See Munoz v. International Alliance of Theatrical Stage Employees & Moving Picture Mach. Operators of U.S. and Canada, 563 F.2d 205, 213 (5th Cir.1977); 11 James Wm. Moore et al., Moore's Federal Practice § 56.14[d][iii] (3d ed.1998).

B

We, as a federal court sitting in diversity, look to Mississippi substantive law to resolve this case. See Erie R. Co. v. Tompkins, 304 U.S. 64, 78-80, 58 S.Ct. 817, 822-23, 82 L.Ed. 1188 (1938). We start by determining whether or not any final decisions of the Mississippi Supreme Court are dispositive. See Transcontinental Gas Pipe Line Corp. v. Transportation Ins. Co., 953 F.2d 985, 988 (5th Cir.1992). If no such holdings exist, we predict how that tribunal would rule. See Lawrence v. Virginia Ins. Reciprocal, 979 F.2d 1053, 1055 (5th Cir.1992). We base our forecast on (1) decisions of the Mississippi Supreme Court in analogous cases, (2) the rationales and analyses underlying Mississippi Supreme Court decisions on related issues, (3) dicta by the Mississippi Supreme Court, (4) lower state court decisions, (5) the general rule on the question, (6) the rulings of courts of other states to which Mississippi courts look when formulating substantive law and (7) other available sources, such as treatises and legal commentaries. ¹⁰ See Ladue v. Chevron U.S.A., Inc., 920 F.2d 272, 275-78 (5th Cir.1991); Browning Seed, Inc. v. Bayles, 812 F.2d 999, 1002-03 (5th Cir.1987); Jackson, 781 F.2d at 397; Putman v. Erie City Mfg. Co., 338 F.2d 911, 913-23 (5th Cir.1964). "[A]bsent evidence to the contrary, we presume that the Mississippi courts would adopt the prevailing rule if called upon to do so." Jackson, 781 F.2d at 398 (internal quotations omitted) (punctuation modified). We must never forget that "[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, 781 F.2d at 397; see also Mississippi Power Co. v. Roubicek, 462 F.2d 412, 416-17 (5th Cir.1972) (quoting American Agricultural Chem. Co. v. Tampa Armature Works, 315 F.2d 856, 863 (5th Cir.1963) (Brown, J., concurring)).

C

The controversy here implicates Mississippi's rules for construction of insurance policies, which are as follows. First, where an insurance policy is plain and unambiguous, a court must construe that instrument, like other contracts, exactly as written. ¹¹ See George v. Mississippi Farm Bureau Mut. Ins. Co., 250 Miss. 847, 168 So.2d 530, 531 (1964). Second, it reads the policy as a whole, thereby giving effect to all provisions. See Brown v. Hartford Ins. Co., 606 So.2d 122, 126 (Miss.1992). Third, it must read an insurance policy more strongly against the party drafting the policy and most favorably to the policyholder. See Canal Ins. Co. v. Howell, 248 Miss. 678, 160 So.2d 218, 221 (1964). Fourth, where it deems the terms of an insurance policy ambiguous or doubtful, it must interpret them most favorably to the insured and against the insurer. See Mississippi Ben. Ass'n v. Majure, 201 Miss. 183, 29 So.2d 110, 112 (1947). Fifth, when an insurance policy is subject to two equally reasonable interpretations, a court must adopt the...