Hartford Cas. Ins. Co. v. Powell

• Decision Date: 30 September 1998
• Docket Number: No. 4:98-CV-62-A.,4:98-CV-62-A.
• Citation: 19 F.Supp.2d 678
• Parties: HARTFORD CASUALTY INSURANCE COMPANY, Plaintiff, v. Eilene Jamie POWELL and Larry Gann, Defendants.
• Court: U.S. District Court — Northern District of Texas

19 F.Supp.2d 678

HARTFORD CASUALTY INSURANCE COMPANY, Plaintiff, v. Eilene Jamie POWELL and Larry Gann, Defendants.

No. 4:98-CV-62-A.

United States District Court, N.D. Texas, Fort Worth Division.

September 30, 1998.

James Hamilton Moody, III, Jacqueline S. Kelley, H. Michelle Caldwell, Strasburger & Price, Dallas, TX, for Hartford Casualty Insurance Company, plaintiffs.

Eilene Jamie Powell, [Pro se], Ft Worth, TX, Terry Gardner, Gardner & Aldrich, Fort Worth, TX, for Eilene Jamie Powell, Larry Gann, defendants.

FINAL JUDGMENT AS TO CERTAIN CLAIM

McBRYDE, District Judge.

Consistent with the memorandum opinion and order signed by the court in the above-captioned action on the same date of the signing of this final judgment as to certain claim,

The court ORDERS, ADJUDGES, DECREES, and DECLARES (a) that plaintiff, Hartford Casualty Insurance Company, ("Hartford") provides no insurance coverage under Hartford's policy number 45 CSE D62203 (E), and has no liability under such policy, for any claim of defendant Larry Gann ("Gann") against defendant Eileen Jamie Powell ("Powell") for recovery of exemplary or punitive damages arising from the motor vehicle collision that is the subject matter of the claims made by Gann against Powell in Case No. 96-170419-97, on the docket of the District Court of Tarrant County, Texas, 96th Judicial District, styled "Larry Gann v. Eileen Jamie Powell," (which collision, according to the papers in Case No. 96-170419-97, occurred on or about July 29, 1997, on Northwest Loop 820 in Tarrant County, Texas), and (b) that Hartford has no obligation to pay, in whole or in part, any award made in favor of Gann against Powell in Case No. 96-170419-97, or any other action, for exemplary or punitive damages arising from such collision or the conduct of Powell leading up to such collision.

MEMORANDUM OPINION and ORDER

Came on for consideration the motion of Plaintiff, Hartford Casualty Insurance Company, ("Hartford") for partial summary judgment ("motion"). The court, having considered the motion, the response of defendant Larry Gann ("Gann"),¹ Hartford's reply, the record, the summary judgment evidence, and applicable authorities, concludes the motion should be granted.

I. Plaintiff's Complaint And Claims

Hartford seeks a declaration that it has no insuring obligation in relation to claims that have been made by Gann against defendant Eilene Jamie Powell ("Powell") under an insurance policy it had issued to Powell's employer. The allegations of Hartford that are pertinent to the memorandum opinion and order are that:

On July 7, 1995, Hartford issued a commercial auto coverage policy, Hartford Policy No. 45 CSE D62203 (E) ("policy"), to Powell's employer. On July 29, 1997, Powell was involved in an automobile collision with Gann while she was driving a vehicle that was covered by the policy. Gann filed suit against Powell in the 96th Judicial District Court of Tarrant County, Texas, ("the Tarrant County action") seeking recovery of actual damages he sustained because of bodily injuries and property damage he suffered as a result of the collision, and of punitive damages because of Powell's alleged gross negligence.

Hartford seeks a declaration that it does not have any insurance coverage under the policy for any claims resulting from the collision in question, or, alternatively, that it has no liability under the policy for any punitive damages that might be awarded Gann against Powell in the Tarrant County action.

II. The Motion

Hartford moves for a partial summary judgment in its favor declaring that any punitive damages that might be awarded Gann against Powell in the Tarrant County action will not be covered by the policy. It argues that (1) punitive damages can only be awarded against Powell in the Tarrant County action for conduct that falls outside the scope of the policy's coverage, and (2) Texas public policy causes liability for punitive damages not to be insurable.

III. Pertinent Undisputed Facts Established by Summary Judgment Record

A. The Insurance Policy.

Prior to the collision in question, Hartford issued the policy to Powell's employer by which Hartford agreed, subject to the limitations, terms, and conditions of the policy, to pay all sums which any insured thereunder becomes legally obligated to pay as damages because of bodily injury or property damage to which the insurance applies caused by an accident involving an automobile covered by the policy. Potentially pertinent policy provisions are as follows:

A. COVERAGE.

We will pay all sums an "insured" legally must pay as damages because of "bodily injury" or "property damage" to which this insurance applies, caused by an "accident" and resulting from the ownership, maintenance or use of a covered "auto."

...

B. EXCLUSIONS.

This insurance does not apply to any of the following:

1. EXPECTED OR INTENDED INJURY

"Bodily injury" or "property damage" expected or intended from the standpoint of the "insured."

Motion, Ex. B-1, Business Auto Coverage Form, pages 2 and 3.

B. The Tarrant County Action.

By the Tarrant County action Gann seeks recovery of damages he sustained by reason of the bodily injuries and property damage he suffered as a result of the collision in question, and punitive damages because of Powell's alleged gross negligence. In his state court pleading, Gann described the conduct about which he complains as follows:

Defendant, EILENE JAMIE POWELL, was hopelessly intoxicated. She did not have control over the vehicle she was operating when she swerved to her left into the grassy median which separated the east and west bound lanes of traffic. Defendant then veered all the way to the right, across all the east bound lanes of traffic, striking the guard rail. After striking the guardrail, the Defendant then swerved all the way back left crossing all the east bound lanes of traffic and the grassy median into the west bound lanes of traffic where she, violently and without warning, slammed into Plaintiff's car which, then, thrust Plaintiff's vehicle into an 18-wheeler truck which had also been traveling in the west bound lanes of traffic.

Motion, Ex. A at 2.

IV. Analysis

As previously noted, the issues raised by the motion are, first, whether punitive damages are within the scope of the policy language and, second, whether the provision of liability insurance under the policy to protect Powell from payment of punitive damages would be contrary to the public policy of Texas. While there is room for persuasive argument that the motion should be granted on the basis of the first issue,² the court, without passing on the merit of that ground of the motion, has concluded to grant the motion based on a resolution of the second issue in favor of Hartford.

The parties seem to be in agreement that the outcome of this diversity action is to be determined by the substantive laws of the State of Texas. While there is no decision by the Texas Supreme Court on the issue of whether the provision of insurance coverage for punitive damages would violate the public policy of Texas, the court has made the Erie³ guess that if this issue were to be presented to the Texas Supreme Court for decision in the context of the facts of this case, its decision would be that the public policy of Texas would be so offended if Hartford were to be required, or permitted, to provide insurance protection to Powell as to any punitive damages that might be awarded against her in favor of Gann that the protection should be denied.

A. Fifth Circuit Guidelines for Making an "Erie Guess":

In this diversity action, the court is obligated to rule as it believes the Texas Supreme Court would rule on the legal issue that determines the outcome of this case. 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). If the Texas Supreme Court has not decided the issue, as is true in the instant action, the court must make an "Erie guess" on how that court would rule. Rogers v. Corrosion Prods., Inc., 42 F.3d 292, 295 (5th Cir.), cert. denied, 515 U.S. 1160, 115 S.Ct. 2614, 132 L.Ed.2d 857 (1995).⁴ The court is not permitted to do merely what it thinks best, it must do what it thinks the Texas Supreme Court would deem best. Jackson, 781 F.2d at 397. As the Fifth Circuit recently explained when confronted with the need to predict the law of Mississippi:

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. [A]bsent evidence to the contrary, we presume that the Mississippi courts would adopt the prevailing rule if called upon to do so.

Centennial Ins. Co. v. Ryder Truck Rental, Inc., 149 F.3d 378, 382 (5th Cir.1998) (footnote, citations, and internal quotations omitted).

While decisions of intermediate appellate courts of Texas "should be given some weight, [ ] they are not controlling where the highest state court has not spoken on the subject." Rogers, 42 F.3d at 295. Rather, the court is obligated to make its best effort to predict how the Texas Supreme Court would decide the issue. Batts v. Tow-Motor Forklift Co., 66 F.3d 743, 750 (5th Cir.1995), cert. denied, 517 U.S. 1221, 116 S.Ct. 1851, 134 L.Ed.2d 951 (1996). "Erie and its progeny require no more of a federal court than conscientiously to satisfy its duty to predict how the state court will decide a question." Id.

However, once a panel of the Fifth Circuit has settled on the state law to be applied in a diversity case, that precedent should be followed "absent a...