John Deere Ins. Co. v. Truckin' U.S.A., 97-10025

• Decision Date: 19 September 1997
• Docket Number: No. 97-10025,97-10025
• Citation: 122 F.3d 270
• Parties: JOHN DEERE INSURANCE COMPANY, Plaintiff-Counter Defendant-Appellee, v. TRUCKIN' U.S.A., et al., Defendants, Transport Insurance Company, Defendant-Counter Claimant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 270

122 F.3d 270

JOHN DEERE INSURANCE COMPANY, Plaintiff-Counter Defendant-Appellee, v. TRUCKIN' U.S.A., et al., Defendants Transport Insurance Company, Defendant-Counter Claimant-Appellant.

No. 97-10025.

United States Court of Appeals Fifth Circuit.

Sept. 19, 1997.

Julia Fields Pendery, Sim David Israeloff, Cowles & Thompson, Dallas, TX, for Defendant-Appellee.

Robert Martin Greenberg, Dallas, TX, for Defendant-Counter Claimant-Appellant.

Appeal from the United States District Court for the Northern District of Texas.

Before KING, DUHE and WIENER, Circuit Judges.

DUHE, Circuit Judge:

Transport Insurance Company appeals the district court's grant of John Deere Insurance Company's motion for summary judgment on the issue whether John Deere had a duty under its liability insurance policy to defend, indemnify or reimburse either Transport or Transport's insured, Copp Trucking. Transport also appeals the district court's denial of its own motion for summary judgment on the same issues. For the reasons that follow, we affirm.

I

This appeal arises out of a traffic accident involving a tractor-trailer rig and an automobile occupied by the Kurocik family. Mr. and Mrs. Kurocik died, and their heirs ("plaintiffs") sued, inter alia, Mr. Tompkins, the driver of the rig; his employer, Harold Suits, individually and d/b/a Truckin' U.S.A.; Ronald Schmoe, Truckin' U.S.A.'s other principal owner; and Copp Trucking, Inc., the company whose name appeared on the tractor rig. Truckin' USA has a motor carrier insurance policy ("Policy") with Appellee John Deere Insurance Co. ("Deere"). Copp Trucking is insured by Appellant Transport Insurance Company ("Transport").

Transport settled all claims asserted by the Kurocik heirs against both its insured, Copp Trucking, and Tompkins (but only to the extent Tompkins was considered an employee of Copp Trucking) for $600,000. Thereafter, the Kurocik heirs amended their petition to drop Copp Trucking as a defendant and to allege that Tompkins was an employee of Suits, Schmoe, and Truckin' U.S.A. and that there was a "working agreement" between those three and Copp Trucking.

Transport demanded that Deere reimburse it for the $600,000 settlement on Copp Trucking's behalf, alleging that because Copp Trucking was an insured under the Policy Deere therefore had a duty to defend and indemnify Copp and a concomitant duty to reimburse Transport for the settlement. Deere brought this action seeking a declaratory judgment providing that it had no duty to defend, indemnify, or reimburse either Copp Trucking or Transport because (1) the rig involved in the accident was not a "covered auto" under its Policy; and (2) Copp Trucking was not an "insured" under its Policy. Transport counterclaimed for a declaratory judgment providing that the Deere Policy was the primary, or at least co-primary, policy and that Deere was therefore obligated to (1) defend Copp Trucking in the Kurocik lawsuit; and (2) indemnify or reimburse Transport for amounts paid in settlement on Copp Trucking's behalf.

Both parties moved for summary judgment. The district court granted Deere's motion, denied Transport's motion, and dismissed Transport's counterclaim with prejudice. Transport now appeals.

II

Transport contends first that the district court violated the "complaint allegation rule" by considering evidence extrinsic to the pleadings in determining whether Deere had an obligation under the Policy to defend or indemnify either Copp Trucking or Transport. Second, Transport argues that the district court erred in determining the tractor-trailer rig was not a "covered auto" under the Policy. Third, Transport maintains that the district court erred in holding that neither Copp Trucking nor Transport qualified as "insureds" under the Policy. Finally, Transport contends the district court erred in holding that the MCS-90 endorsement in the Policy did not impose on Deere a duty to indemnify or reimburse Copp Trucking or Transport.

This Court reviews a grant of summary judgment de novo, applying the same standard as that applied by the district court. See Floors Unlimited, Inc. v. Fieldcrest Cannon, Inc., 55 F.3d 181, 183-84 (5th Cir.1995).

The "complaint allegation rule," under Texas law, requires that an insurer's duty to defend be determined solely from the face of the plaintiff's complaint in the underlying action, without reference to facts outside the four corners of the complaint. See Rhodes v. Chicago Ins. Co., 719 F.2d 116, 119 (5th Cir.1983). If the underlying complaint, however, does not allege facts, if taken as true, sufficient to state a cause of action under the policy, evidence adduced in a declaratory judgment action may also be considered. See State Farm Fire & Cas. Co. v. Wade, 827 S.W.2d 448, 452 (Tex.App.1992, writ denied); Cook v. Ohio Cas. Ins. Co., 418 S.W.2d 712, 714-15 (Tex.Civ.App.1967, no writ). The "complaint allegation rule" does not apply here because the plaintiffs failed to allege facts in their underlying petition sufficient, even if true, to allow a determination of coverage.

The Policy provides that Deere:

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."

Thus, to state a cause of action under the Policy, the plaintiffs must have alleged, inter alia, that the motor vehicle involved in the accident was one covered under the Policy. The plaintiffs' fifth amended complaint alleges that:

said tractor/trailer rig had been furnished to Defendant Tompkins by Defendant [sic] by either Harold Suits, individually[,] and Ronald Schmoe, individually or doing business as Trucking [sic] U.S.A. The defendants, Harold Suits and Ronald Schmoe, had a working agreement with the Copp Trucking Co., Inc.

Allegations that the rig had been "furnished" to the defendants or that the defendants had a "working agreement" with Copp Trucking are insufficient to determine coverage under the Policy, even if those allegations are taken as true. ¹ The district court was therefore correct both in holding the "complaint allegation rule" inapplicable and in considering evidence extrinsic to the pleadings to determine whether John Deere had a duty to defend or indemnify under the Policy.

III

Transport contends the district court erred in holding the rig involved in the accident was not a "covered auto" under the Policy. Transport argues that the rig was "covered" under various provisions of the Policy. A "covered auto" is one that, inter alia, is (1) specifically scheduled on the Policy; ² (2) a "temporary substitute auto"; (3) an "after-acquired auto"; or (4) an "undescribed trailer."

A

Under the Policy, a "substitute auto" is:

Any "auto" [that Truckin' U.S.A.] do[es] not own while used with the permission of its owner as a temporary substitute for a covered "auto" that is out of service because of [various reasons].

The district court, relying on extrinsic evidence, found that Truckin' U.S.A. owned the tractor in question and that therefore the tractor could not be a "substitute auto" under the Policy. ³

The only evidence offered by Transport to dispute Truckin' U.S.A.'s ownership of the tractor was a portion of Harold Suits's deposition testimony in the underlying suit. Suits testified that Tompkins was "driving a Copp Trucking truck. I didn't have another truck of mine that said Truckin' U.S.A. on it to haul that." Suits's earlier deposition testimony indicated, however, that Suits had a practice of purchasing Copp Trucking rigs for Truckin' U.S.A. and leaving Copp's name on them until the end of the year.

The testimony on which Transport relies establishes nothing more than that the rig Tompkins drove was labeled "Copp Trucking" and has little or no relevance to ownership of the tractor. Transport's evidence was therefore insufficient to create a genuine issue of fact as to ownership of the tractor. The district court was therefore correct in holding that the rig was not a "substitute auto" under the Policy.

B

An "after-acquired auto" under the Policy is one that replaces an auto Truckin' U.S.A. previously owned, provided that Truckin' U.S.A. informs Deere within 30 days after acquisition that it wants coverage for the new vehicle. There was no evidence in the summary judgment record that Truckin' U.S.A. provided such notice to Deere as to the rig in question. Therefore, the district court was correct in holding the rig was not an "after-acquired auto" under the Policy.

C

Under the Policy, the schedule of covered autos includes "any undescribed trailer, while in the care, custody, and control of the insured." Deere's Truckers Coverage Form, however, indicates that coverage extends:

Only [to] those "autos" described in ITEM THREE of the Declarations for which a premium charge is shown (and for Liability Coverage any "trailers" [Truckin' U.S.A.] do[es]n't own while attached to any power unit described in ITEM THREE ).

(emphasis added). The district court found that the second provision acted as a limitation on the first: i.e., the Policy provides coverage for "undescribed trailers" only if they are attached to a scheduled power unit. Since it was undisputed that the trailer here was...