In re Biloxi Casino Belle Inc., No. 03-60348.

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtKing
Citation368 F.3d 491
PartiesIn The Matter Of: BILOXI CASINO BELLE INC., Debtor. First American Title Insurance Co., Appellant, v. First Trust National Association, Appellee.
Docket NumberNo. 03-60348.
Decision Date21 April 2004
368 F.3d 491
In The Matter Of: BILOXI CASINO BELLE INC., Debtor.
First American Title Insurance Co., Appellant,
v.
First Trust National Association, Appellee.
No. 03-60348.
United States Court of Appeals, Fifth Circuit.
April 21, 2004.

Page 492

John Mason McCollam (argued), Ewell E. Eagan, Jr., C. Peck Hayne, Jr., Gordon, Arata, McCollam, Duplantis & Eagan, New Orleans, LA, Jeffrey Paul Hubbard, Charles Rayford Wilbanks, Jr., Wells, Moore, Simmons & Hubbard, Jackson, MS, for Appellant.

Jerome A. Miranowski (argued), Faegre & Benson, Minneapolis, MN, for Appellee.

David H. Cox (argued), Vernon Webster Johnson, III, Benjamin Rogers Jacewicz, Jackson & Campbell, Washington, DC, for American Land Title Ass'n, Amicus Curiae.

Page 493

John C. Henegan, Sr., Butler, Snow, O'Mara, Stevens & Cannada, Jackson, MS, for Dixie Land Title Ass'n, Amicus Curiae.

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

Before KING, Chief Judge, and JONES and SMITH, Circuit Judges.

KING, Chief Judge:


The bankruptcy court held that the title insurance policy issued to Appellee First Trust National Association ("First Trust") insured First Trust's security interest in a casino boat being constructed at a location remote from the insured land where the boat would eventually be moored. The district court affirmed. Finding that the policy does not provide coverage, we reverse and remand.

I. FACTUAL AND PROCEDURAL BACKGROUND

This insurance coverage dispute has its roots in Belle Casinos, Inc.'s ("BCI's") failed effort to build two gambling developments in Mississippi. Since 1990, the state has permitted gambling on riverboat casinos located on the waters of the Mississippi River and on vessels moored in the coastal waters south of the state's three southern-most counties. See, e.g., Miss.Code Ann. §§ 19-3-79, 75-76-1 et seq., 87-1-5, 97-33-1 (2003). BCI and its wholly owned subsidiary Biloxi Casino Belle, Inc. ("BCBI") planned to operate one casino along the Mississippi River in Tunica and the other casino along the waterfront in Biloxi. The Tunica casino boat was to be constructed on-site, but the Biloxi boat — named the "BILOXI BELLE II" — was to be built some miles away in Gulfport and then floated to Biloxi, where casino-related improvements and structures would be built on the waterfront parcels that had been leased for this purpose.

To finance the casino projects, BCI issued $75 million in mortgage notes underwritten by Bear Stearns & Co. The notes were issued pursuant to an indenture executed between BCI as issuer and First Trust as indenture trustee for holders of the mortgage notes. BCI loaned the proceeds of the mortgage notes to BCBI, and in return BCBI gave BCI a promissory note. To secure the loan, BCBI executed in BCI's favor a Leasehold Deed of Trust, Security Agreement and Fixture Filing with Assignment of Rents ("Leasehold Deed of Trust") on the Biloxi project, as well as various other security instruments. The Leasehold Deed of Trust gave BCI security interests in most of the realty (including fixtures) and personalty associated with the casino project, including "ships" and "boats." BCI assigned its interests in these instruments to First Trust, the indenture trustee.

BCBI deposited the proceeds of the loan into two escrow accounts at First National Bank of Commerce ("First National Bank") under a Disbursement and Escrow Agreement between BCI as lender, BCBI as borrower, and First National Bank as escrow agent. BCI's rights under this Disbursement and Escrow Agreement were likewise assigned to First Trust.

The deal documents contemplated several devices that would protect the interests of First Trust (and ultimately the interests of the holders of the mortgage notes for whom First Trust acted as indenture trustee). The documents required contractors' performance bonds, for instance, and provided that contractors would execute lien waivers. Importantly, they also called for First Trust to acquire title insurance from Appellant First American Title Insurance Company ("First American Title") to insure (at least some of) the interests securing

Page 494

the loan that was paying for the construction of the casino project. As noted earlier, the Leasehold Deed of Trust and other security instruments gave First Trust a security interest in almost all of the property, both real and personal, associated with the Biloxi casino project. The key issue in this case is whether the title insurance policy covers only First Trust's security interests in the realty component of the project or instead whether the policies also protect First Trust's security interests in the BILOXI BELLE II while it was being constructed.

First Trust was not directly involved in the negotiations leading to the issuance of the title insurance policies but instead left the matter to Bear Stearns, which in turn was represented by the law firm of Gibson, Dunn & Crutcher. First American Title was represented by David Wheeler, a Biloxi-based attorney. Wheeler gave First Trust a binding commitment to issue title insurance on or around October 12, 1993, the closing date of the loan transactions described above. About a month after the closing, Wheeler sent Gibson Dunn a copy of the policies. The title insurance policy at issue here is the 1990 version of the standard-form Loan Policy developed by the American Land Title Association.1 The policy insured First Trust against, inter alia, losses that would occur if another lien (including in some cases a mechanic's lien) took priority over First Trust's insured security interest. The policy also obligated the insurer to pay expenses associated with defending the title and the insured security interest. Attached to the standard forms were several schedules and endorsements that set forth policy-specific details. Of particular note is Item 4 on Schedule A, which identified "the instruments creating the estate or the interest in real estate which is hereby insured." In the original version of the policy that Wheeler sent to Gibson Dunn, Item 4 cross-referenced a rider that listed not only the Leasehold Deed of Trust — which all sides agree was supposed to be listed — but also various financing statements (Mississippi form UCC-1) that described, using language generally the same as that used in the Leasehold Deed of Trust, many broad categories of BCBI personalty and fixtures in which First Trust held a security interest. Like the Leasehold Deed of Trust, the UCC-1 forms cover "ships" and "boats." The attachments to the UCC-1s included descriptions of the real property associated with the casino project, and the forms were recorded in the county deed-of-trust books.

In the months that followed Gibson Dunn's receipt of the insurance policy, Gibson Dunn and Wheeler corresponded regarding numerous corrections to the forms. In April 1994, Wheeler sent the revised pages of the policy to Gibson Dunn. In addition to making the changes requested by Gibson Dunn, Wheeler noted that the revised copy eliminated the reference to the UCC-1 financing statements, leaving the Leasehold Deed of Trust as the only document listed in Schedule A, Item 4. In the current litigation, the parties take sharply differing views of how to characterize these exchanges. According to First American Title, the commitment documents negotiated by the parties concerned only land, and the inclusion of the financing statements in the initial version of the policy documents was simply a drafting mistake that Wheeler corrected with Gibson Dunn's approval. According to First Trust, in contrast, the inclusion of the UCC-1s was not a mistake at all, since the title insurance policies were always

Page 495

intended to cover more than just the real estate associated with the Biloxi project. Or, says First Trust, if their inclusion was initially a mistake, Wheeler could not amend the policy without First Trust's consent, which the Gibson Dunn attorneys did not give him and were not authorized to give him. In any event, it seems that First Trust only saw the later version of the policy and did not learn of the initial version until years later when, in connection with this case, First American Title submitted it as an attachment to its complaint.

Meanwhile, construction of the casino boats was running over budget. The contractor for the casino boats, Charles N. White Construction Company ("White Construction"), continued to receive payments from the accounts at First National Bank despite the overruns. First Trust eventually put a stop to the payments and later sued First National Bank for alleged incompetence in the latter's role as disbursement and escrow agent.2 White Construction, which now claimed that it was still owed payments for work it had already performed, filed a Mississippi statutory watercraft lien on the still-uncompleted BILOXI BELLE II in June 1994. The next month, White Construction sued BCI in Mississippi state court to enforce its lien. BCI and BCBI then filed Chapter 11 bankruptcy petitions in August. A number of lawsuits among BCI, BCBI, First Trust, White Construction, and the principals of various of those parties ensued over the course of the next few years.

One paragraph of White Construction's watercraft-lien complaint against BCI listed First Trust as a party that had a potentially competing interest in the BILOXI BELLE II. In October 1994, First Trust sent First American Title a letter giving notice of the lawsuit. First American Title acknowledged the letter the next month and expressed its understanding that First Trust was not requesting a defense. Some two years later, in December 1996, First Trust requested a defense in the White Construction litigation, which had by now been removed to federal court and referred to the bankruptcy court. First American Title agreed to provide a defense, but under a reservation of its rights to deny coverage. First Trust rejected First...

To continue reading

Request your trial
19 practice notes
  • United States v. Miller, No. 10-50500
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • December 13, 2011
    ...Cir. 2003) (quoting Paul, 274 F.3d at 166). 108. First Am. Title Ins. Co. v. First Trust Nat'l Ass'n (In re Biloxi Casino Belle Inc.), 368 F.3d 491, 499 n.8 (5th Cir. 2004) (quoting Rhoden v. State Farm Fire & Cas. Co., 32 F. Supp. 2d 907, 912 (S.D. Miss. 1998)). 109. Gutierrez, 635 F.3d at......
  • United States v. Miller, No. 10–50500.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • December 13, 2011
    ...Cir.2003) (quoting Paul, 274 F.3d at 166). FN108. First Am. Title Ins. Co. v. First Trust Nat'l Ass'n (In re Biloxi Casino Belle Inc.), 368 F.3d 491, 499 n. 8 (5th Cir.2004) (quoting Rhoden v. State Farm Fire & Cas. Co., 32 F.Supp.2d 907, 912 (S.D.Miss.1998)). FN109. Gutierrez, 635 F.3d at ......
  • In re Katrina Canal Breaches Litigation, No. 07-30119.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • August 2, 2007
    ...same general nature or class as those enumerated." First Am. Title Ins. Co. v. First Trust Nat'l Ass'n (In re Biloxi Casino Belle Inc.), 368 F.3d 491, 500 (5th Cir.2004); see also BLACK'S LAW DICTIONARY 556 (8th ed.2004). The plaintiffs assert that under these canons, the term "flood" inclu......
  • G&B Invs., Inc. v. Henderson (In re Evans)
    • United States
    • United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Mississippi
    • October 7, 2011
    ...The Title Companies rely on First American Title Insurance Co. v. First Trust National Association (In re Biloxi Casino Belle, Inc.), 368 F.3d 491 (5th Cir.2004), in support of their position that they are not the drafters of the Heritage Policy and that, therefore, the usual rule in Missis......
  • Request a trial to view additional results
20 cases
  • United States v. Miller, No. 10-50500
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • December 13, 2011
    ...Cir. 2003) (quoting Paul, 274 F.3d at 166). 108. First Am. Title Ins. Co. v. First Trust Nat'l Ass'n (In re Biloxi Casino Belle Inc.), 368 F.3d 491, 499 n.8 (5th Cir. 2004) (quoting Rhoden v. State Farm Fire & Cas. Co., 32 F. Supp. 2d 907, 912 (S.D. Miss. 1998)). 109. Gutierrez, 635 F.3d at......
  • United States v. Miller, No. 10–50500.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • December 13, 2011
    ...Cir.2003) (quoting Paul, 274 F.3d at 166). FN108. First Am. Title Ins. Co. v. First Trust Nat'l Ass'n (In re Biloxi Casino Belle Inc.), 368 F.3d 491, 499 n. 8 (5th Cir.2004) (quoting Rhoden v. State Farm Fire & Cas. Co., 32 F.Supp.2d 907, 912 (S.D.Miss.1998)). FN109. Gutierrez, 635 F.3d at ......
  • In re Katrina Canal Breaches Litigation, No. 07-30119.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • August 2, 2007
    ...same general nature or class as those enumerated." First Am. Title Ins. Co. v. First Trust Nat'l Ass'n (In re Biloxi Casino Belle Inc.), 368 F.3d 491, 500 (5th Cir.2004); see also BLACK'S LAW DICTIONARY 556 (8th ed.2004). The plaintiffs assert that under these canons, the term "flood" inclu......
  • G&B Invs., Inc. v. Henderson (In re Evans)
    • United States
    • United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Southern District of Mississippi
    • October 7, 2011
    ...The Title Companies rely on First American Title Insurance Co. v. First Trust National Association (In re Biloxi Casino Belle, Inc.), 368 F.3d 491 (5th Cir.2004), in support of their position that they are not the drafters of the Heritage Policy and that, therefore, the usual rule in Missis......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT