Lincoln General Ins. v. Aisha's Learning Center

• Citation: 468 F.3d 857
• Decision Date: 24 October 2006
• Docket Number: No. 05-10981.,05-10981.
• Parties: LINCOLN GENERAL INSURANCE COMPANY, Plaintiff-Counter Defendant-Appellee, v. AISHA'S LEARNING CENTER, Defendant-Counter Claimant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 857

468 F.3d 857

LINCOLN GENERAL INSURANCE COMPANY, Plaintiff-Counter Defendant-Appellee, v. AISHA'S LEARNING CENTER, Defendant-Counter Claimant-Appellant.

No. 05-10981.

United States Court of Appeals, Fifth Circuit.

October 24, 2006.

David John Kennedy Metzler (argued), Cowles & Thompson, Dallas, TX, for Lincoln Gen. Ins. Co.

Wade Austin Barrow (argued), Fort Worth, TX, for Aisha's Learning Ctr.

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

Before JONES, Chief Judge, and REAVLEY and PRADO, Circuit Judges.

EDITH H. JONES, Chief Judge:

Aisha's Learning Center ("ALC") challenges the district court's decision that it is not covered for injuries to a child in its care by operation of the automobile exclusion of a commercial general liability ("CGL") policy. Finding no error in the court's analysis, we AFFIRM.

I. Background

On September 4, 2002, a van owned and operated by ALC transported two year old Le'Yazmine McCann from her home to the daycare center in Dallas, Texas. Upon arriving at ALC, the driver did not unload Le'Yazmine along with the other children. She was trapped in the parked van for approximately seven hours while the external temperature reached ninety-five degrees Fahrenheit. Her mother sued ALC to redress the resulting tragic injuries.

At the time of the incident, ALC was insured by two policies: a CGL policy with appellee Lincoln General and a general automobile policy with American International Insurance Company ("American International"). ALC and McCann's mother agreed to abate the proceedings to seek a determination of insurance coverage.

Taking the initiative, Lincoln General sought a declaratory judgment in federal court against ALC to enforce a CGL policy exclusion for injuries arising from the "use" of ALC's van. ALC answered and counterclaimed against Lincoln General. American International intervened, seeking a declaratory judgment that Lincoln General had the sole duty to defend ALC. McCann's mother also intervened in the coverage dispute, but she did not participate further. The district court resolved the parties' cross-motions for summary judgment in favor of Lincoln General, holding that the company owed no duty to defend or indemnify ALC, because of the CGL policy's automobile exclusion. This appeal followed.

II. Discussion

This court reviews a district court's grant of summary judgment de novo. Evans v. City of Houston, 246 F.3d 344, 347 (5th Cir.2001). Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). On a motion for summary judgment, a court must review the facts in the light most favorable to the nonmovant. Walker v. Thompson, 214 F.3d 615, 624 (5th Cir. 2000).

Insurance policies are generally controlled by the rules of construction and interpretation applicable to contracts. Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex.1995). Nevertheless, "[t]he court must adopt the construction of an exclusionary clause urged by the insured as long as that construction is not unreasonable . . . ." Nat'l Union Fire Ins. Co. v. Hudson Energy Co., 811 S.W.2d 552, 555 (Tex.1991).

In Texas, the duty to defend is distinct from, and broader than, the duty to indemnify. Gulf Chem. & Metallurgical Corp. v. Assoc. Metals & Minerals Corp., 1 F.3d 365, 369 (5th Cir.1993). The duty to defend is governed by the "eight-corners" rule, whereby a court considers only the allegations in the underlying complaint and the terms of the insurance policy. Nat'l Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex.1997). If the petition filed against the insured, liberally construed, alleges facts within the scope of coverage, the insurer must defend. Id. Doubts are resolved in favor of the insured. Heyden Newport Chem. Corp. v. S. Gen. Ins. Co., 387 S.W.2d 22, 25 (Tex.1965). And, although the duty to indemnify is generally not ascertainable until after the insured has been held liable, it is justiciable prior to a finding of liability when the same reasons negating the duty to defend also negate any duty to indemnify. Farmers Tex. County Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 84 (Tex.1997).

The sole issue in this case is whether McCann's injuries arose out of the "use" of ALC's van as a matter of law, thus triggering the auto exclusion provision in the CGL policy.¹ The policy excludes: "[b]odily injury" . . . arising out of the ownership, maintenance, use or entrustment to others of any . . . "auto" . . . owned or operated by or rented or loaned to any insured. Use includes operation and "loading or unloading." Lincoln General bears the burden of applying the exclusion. Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523, 528 (5th Cir.2004). If the policy is susceptible to two or more reasonable interpretations, it is ambiguous and must be strictly construed in favor of the insured to avoid the exclusion. Kelley-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex. 1998); see also Empire Fire & Marine Ins. Co. v. Brantley Trucking, Inc., 220 F.3d 679, 681 (5th Cir.2000). An unambiguous policy will, however, be accorded its plain meaning. DeWitt County Elec. Co-op., Inc. v. Parks, 1 S.W.3d 96, 100 (Tex. 1999).

Texas courts define "use" broadly: "the phrase `arising from use' is treated as being a `general catchall . . . designed and construed to include all proper uses of the vehicle not falling within other terms of definition . . . .'" Tucker v. Allstate Tex. Lloyds Ins. Co., 180 S.W.3d 880, 886 (Tex.App.2005)(quoting State Farm Mut. Auto. Ins. Co. v. Pan Am. Ins. Co., 437 S.W.2d 542, 545 (Tex.1969)). The phrase "arise out of" means there is "simply a `causal connection or relation,' which is interpreted to mean that there is but for causation, though not necessarily direct or proximate causation." Utica Nat'l Ins. Co. v. Am. Indem. Co., 141 S.W.3d 198, 203 (Tex.2004) (citations omitted). "Use" means "to put or bring into action or service; to employ for or apply to a given purpose." LeLeaux v. Hamshire-Fannett Indep. Sch. Dist., 835 S.W.2d 49, 51 (Tex. 1992).

In Texas, "[f]or liability to `arise out of' the use of a motor vehicle, a causal connection or relation must exist between the accident or injury and the use of the motor vehicle." Mid-Century Ins. Co. v. Lindsey, 997 S.W.2d 153, 156 (Tex.1999)(citing LeLeaux, 835 S.W.2d at 51). Further, "the use required is of the vehicle qua vehicle, rather than simply as an article of property." Lindsey, 997 S.W.2d at 156. If the vehicle at issue "is only the locational setting for an injury, the injury does not arise out of any use of the vehicle." Id. Lindsey approved a list of factors to determine whether an injury falls within the "use" coverage of an automobile policy:

. . . (1) the accident must have arisen out of the inherent nature of the automobile, as such, (2) the accident must have arisen within the natural territorial limits of an automobile, and the actual use must not have terminated, (3) the automobile must not merely contribute to cause the condition which produces the injury, but must itself produce the injury.

Id. at 157.

Lindsey demonstrates just how broadly its test for "use" is interpreted. The case involved a child who attempted to enter his parents' parked and locked truck through its rear to retrieve an article of clothing. Id. at 154. While doing so, he inadvertently caused a loaded shotgun in the truck's gun rack to fire, injuring a passenger in another vehicle. Id. The court concluded that the injury arose from the use of the truck as a matter of law. The child's sole purpose was to gain entry to the truck, his unorthodox method of entry was not an unexpected or unnatural use of the vehicle for a child, and it was his intent to enter the vehicle that directly caused the gun to discharge, thus causing the injury. Id. at 158. The court reasoned that, had the truck's movement caused the shotgun to discharge, there would be little question that the vehicle produced the injury; although a moving vehicle would have more of a role in the accident, it would not be significantly more. Id. at 158-59. Although it was a close call, the truck "produced" the injury and was not merely the situs of activity, unrelated to the accident. Id. at 159.

Similarly, in Lyons v. State Farm Lloyds & Nat'l Cas. Co., 41 S.W.3d 201, 205 (Tex.App.2001), the court held that a woman's injury in trying to enter the trailer of a parked car arose out of the "use" of the vehicle. Although the vehicle was not in motion, the injury occurred within the territorial limits of the vehicle, the vehicle produced rather than simply contributed to the injury, and the woman intended to use it as a vehicle. Id. at 205-06.²

Applying the Lindsey factors to the instant case, we must conclude that McCann's injuries arose from the use of ALC's van. First, her injuries occurred while the van was being used for one of its inherent purposes: transportation of children to ALC. Although the van was no longer in motion, its purpose—as to McCann—had not yet been fulfilled and was thus ongoing. Second, the accident occurred within the van's natural territorial limits before the actual use—the transportation of McCann to ALC—terminated.³

Third, the vehicle caused, rather than merely contributed to, the conditions that produced the injury. Le'Yazmine was injured because she was left in a hot, unventilated vehicle by the driver. The vehicle was not merely the situs of the injury, but a producing cause. Unfortunately, the danger of leaving children in locked vehicles during extreme weather conditions is well known;...