Delta & Pine Land v. Nationwide Agribusiness Ins.

Decision Date10 June 2008
Docket NumberNo. 06-60463.,06-60463.
Citation530 F.3d 395
PartiesDELTA & PINE LAND COMPANY, Plaintiff-Appellant, v. NATIONWIDE AGRIBUSINESS INSURANCE COMPANY; Nationwide Mutual Insurance Company, Defendants-Appellees.
CourtU.S. Court of Appeals — Fifth Circuit
530 F.3d 395
DELTA & PINE LAND COMPANY, Plaintiff-Appellant,
NATIONWIDE AGRIBUSINESS INSURANCE COMPANY; Nationwide Mutual Insurance Company, Defendants-Appellees.
No. 06-60463.
United States Court of Appeals, Fifth Circuit.
June 10, 2008.

[530 F.3d 398]

Stephen L. Thomas (argued), W. Wayne Drinkwater, Margaret Oertling Cupples, John Alexander Purvis, Bradley, Arant, Rose & White, Jackson, MS, for Plaintiff-Appellant.

Clyde Xenophon Copeland, III (argued), Harris Jernigan & Geno, Ridgeland, MS, Jan F. Gadow, Page, Kruger & Holland, Jackson, MS, for Defendants-Appellees.

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

Before REAVLEY, GARZA and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:

Delta & Pine Land Company ("DPL") appeals the district court's grant of summary judgment in favor of defendants Nationwide Agribusiness Insurance Company and Nationwide Mutual Insurance Company (collectively, "Nationwide"). DPL argues that the district court erred in concluding that the insurance policies purchased by DPL from Nationwide do not cover the claims made in a lawsuit filed against DPL and that, accordingly, Nationwide has no duty to defend or indemnify DPL. We agree with DPL and therefore vacate the summary judgment. Applying Mississippi law, we conclude that Nationwide has a duty to defend DPL under the insurance policies but pretermit whether it also has a duty to indemnify. The district court's judgment is VACATED, and the case is REMANDED to it for proceedings in accordance with this opinion.

I. Background

DPL develops, markets, and sells cotton seed to farmers to be used for the purpose of raising and selling cotton. In 2002, fifty-six individual farmers ("Farmers") filed suit ("underlying suit") against DPL, alleging that they had suffered substantial losses in crop yields because DPL sold them a mixture of old NuCotn 33B cotton seed negligently blended with new seed. DPL owned a Commercial General Liability Policy ("CGL Policy") and a Commercial Umbrella Liability Policy ("Umbrella Policy"), both of which were written and issued by Nationwide.

When served with the Farmers' complaint in the underlying suit, DPL filed the instant declaratory judgment action against Nationwide for indemnification and defense of DPL in the underlying suit.1 After DPL and Nationwide filed opposing motions for summary judgment, the district court granted summary judgment in favor of Nationwide on the ground that the claims asserted by Farmers in the underlying action are not covered under either the CGL Policy or the Umbrella Policy and, therefore, Nationwide has no duty or defend or indemnify DPL. DPL timely appealed.

II. Legal Standards

We review de novo the district court's ruling on a motion for summary judgment, applying the same legal standard as the district court in the first instance. Wyatt v. Hunt Plywood Co., Inc., 297 F.3d 405, 408 (5th Cir.2002). Summary judgment is appropriate if "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact." FED. R. CIV. P. 56(c); see also Wyatt, 297 F.3d at 408-09. When assessing whether a dispute to any material fact exists, we consider all of the evidence in the record but refrain from

530 F.3d 399

making credibility determinations or weighing the evidence. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Instead, we "draw all reasonable inferences in favor of the nonmoving party." Id.; Wyatt, 297 F.3d at 409. However, a party cannot defeat summary judgment with conclusory allegations, unsubstantiated assertions, or "only a scintilla of evidence." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994). Summary judgment is appropriate if a reasonable jury could not return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In a diversity case such as this, we apply Mississippi substantive law. See Krieser v. Hobbs, 166 F.3d 736, 739 (5th Cir.1999). Our task is not to formulate new rules to govern insurance cases arising under the laws of Mississippi; it is merely to ascertain what the Supreme Court of Mississippi has already declared the state law to be and apply it to this case. See Batts v. Tow-Motor Forklift Co., 978 F.2d 1386, 1389 (5th Cir.1992).

With regard to coverage and duty to defend, under Mississippi law, the ultimate outcome or merit of the claim is irrelevant with regard to the question of a duty to defend. Great Northern Nekoosa Corp. v. Aetna Cas. & Sur. Co., 921 F.Supp. 401, 406-07 (N.D.Miss.1996). As long as the claim is "arguably" covered by the insurance policy, the duty to defend is triggered. Ingalls Shipbuilding v. Fed. Ins. Co., 410 F.3d 214, 225 (5th Cir.2005) ("We review the allegations in [the] complaint to see whether it states a claim that is within or arguably within the scope of the coverage provided by [the insurance] policy.") (applying Mississippi law).

Under Mississippi law, once we identify an ambiguity in the contract and determine that DPL's interpretation of the insurance contract is reasonable, we must strictly construe the contract language in favor of the insured, DPL. See Provident Life & Acc. Ins. Co. v. Goel, 274 F.3d 984, 991 (5th Cir.2001) ("Mississippi courts strictly construe any ambiguity in an insurance policy against the insurer.") (emphasis added); see also U.S. Fid. & Guar. Co. v. Omnibank, 812 So.2d 196, 198-99 (Miss.2002). Any fair doubt should be resolved in favor of the insured. Bellefonte Ins. Co. v. Griffin, 358 So.2d 387, 390 (Miss.1978) ("It is well established that ambiguity and doubt in an insurance policy must be resolved in favor of the insured."); Caldwell v. Hartford Acc. & Indem. Co., 248 Miss. 767, 160 So.2d 209, 212-13 (Miss. 1964).

In the following sections, we will first determine whether the policy arguably covers the Farmers' claims, then decide if any exclusions apply.

III. Policy Coverage

Three basic requirements must be met to trigger Nationwide's duty to defend under the CGL and the Umbrella Policy: (1) a plaintiff must allege that it sustained "damages because of `bodily injury' or `property damage'" to trigger defense coverage under the CGL; and a plaintiff must allege that it sustained a loss because of "bodily injury, property damage, personal injury, or advertising injury" to trigger defense coverage under the Umbrella Policy;2 (2) the alleged damage must be alleged

530 F.3d 400

to have been caused by an "occurrence"; and (3) there must be no valid exclusion that applies. It is undisputed that the alleged damages were caused by an "occurrence"; so the only issues on appeal are whether requirements (1) and (3) were met so as to trigger the duty to defend coverages.3

A. Coverage under the CGL

The CGL Policy provides that Nationwide "will pay those sums that the insured becomes legally obligated to pay as damages because of . . . `property damage.'" However, an Endorsement modifies this definition. The "Seed Merchants Endorsement" explicitly states that it "changes" the CGL Policy and "modifies" the coverage extended by the CGL Policy.4 The Endorsement then states that "[d]amages because of `property damage' include loss resulting from . . . an error in mechanical mixture of seed."

Generally, the purpose of a rider to an insurance policy, such as an attached endorsement, is to make "additions to a policy [which] are actually for the purpose of modifying the general terms of the policy, and therefore, being specific, control the more general terms of the policy." Camden Fire Ins. Ass'n v. New Buena Vista Hotel Co., 199 Miss. 585, 24 So.2d 848, 851 (1946); Turbo Trucking Co., Inc. v. Those Underwriters at Lloyd's London, 776 F.2d 527, 529-30 (5th Cir.1985). An endorsement thereby "controls the policy insofar as it enlarges, modifies or restricts the terms" of the policy. New Buena Vista Hotel Co., 24 So.2d at 850. An endorsement also can act as "a predominating influence in determining the meaning and intent of the policy." Id. Moreover, if there is any conflict between the rider and the policy, "the rider controls in construing the contract expressly where the provisions of the rider are the more specific." Id. at 851.

DPL argues for a reasonable reading of the Seed Merchants Endorsement in accord with its plain language and the general purpose of endorsements. DPL reads the Endorsement as redefining and enlarging the term "damages because of property damage" under the CGL to cover any "loss resulting from an error in mechanical mixture of seed." DPL's reading is reasonable because the only purpose

530 F.3d 401

of the Endorsement is to enlarge the coverage of the policy by enlarging covered property damage to include losses resulting from an error in mechanical mixture of seed. Nationwide's (and the dissent's) proposed reading that "the endorsement still mandates that a claim must be for `property damage' as [originally] defined by the [unamended] CGL" does not logically follow and would make part A of the Endorsement a meaningless and ineffectual provision.5 As DPL presents a reasonable reading of the Endorsement, we must adopt that reading because it resolves ambiguity or doubt in favor of the insured in accordance with Mississippi law. E.g., Caldwell, 160 So.2d at 212-13. Therefore, since the Farmers allege a loss caused by a negligent, and therefore erroneous, mixing of seed, we read the Endorsement as providing coverage thereby triggering Nationwide's duty to defend DPL against the Farmers' suit.

B. Coverage under the Umbrella Policy6

The Umbrella Policy similarly defines property damage as "physical injury to or destruction of tangible property . . . including all resulting loss of use of...

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