Mindis Metals v. Transportation Ins. Co., 99-13349

• Decision Date: 20 April 2000
• Docket Number: No. 99-13349,99-13349
• Citation: 209 F.3d 1296
• Parties: (11th Cir. 2000) MINDIS METALS, INC., Plaintiff-Appellant, v. TRANSPORTATION INSURANCE COMPANY, Transcontinental Insurance Company, Defendants- Appellees. Non-Argument Calendar.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1296

209 F.3d 1296 (11th Cir. 2000)

MINDIS METALS, INC., Plaintiff-Appellant, v. TRANSPORTATION INSURANCE COMPANY, Transcontinental Insurance Company, Defendants- Appellees.

No. 99-13349

Non-Argument Calendar.

United States Court of Appeals, Eleventh Circuit.

April 20, 2000.

Appeal from the United States District Court for the Northern District of Georgia.(No. 98-01991-CV-CC-1), Clarence Cooper, Judge.

Before COX and WILSON, Circuit Judges, and RONEY, Senior Circuit Judge.

PER CURIAM:

Plaintiff Mindis Metals, Inc. appeals the district court's grant of summary judgment to defendant Transportation Insurance Company on plaintiff's claim for indemnification for its settlement with Eureka Foundry Company. There is no consensus in other jurisdictions as to whether intentional conduct premised on erroneous information is an "accident" under a general liability insurance policy. Compare, e.g., Red Ball Leasing v. Hartford Accident & Indem. Co., 915 F.2d 306, 309-12 (7th Cir.1990), with Lumber Ins. Cos., Inc. v. Allen, 820 F.Supp. 33, 34-36 (D.N.H.1993). In Georgia, however, such conduct is not an "accident," as explained by Judge Duross Fitzpatrick in Macon Iron & Paper Stock Co., Inc. v. Transcontinental Ins. Co., No. 5:97-CV-168-4 (M.D.Ga. March 9, 1999), a copy of which is attached. There was no error in determining that plaintiff's conversion of Eureka's scrap metal was not an "accident" potentially qualifying plaintiff for indemnification under the terms of the insurance policy.

AFFIRMED.

IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA MACON DIVISION

MACON IRON & PAPER STOCK COMPANY, INC., Plaintiff,

v.

TRANSCONTINENTAL INSURANCE COMPANY and Valley Forge Insurance Company, Defendants.

No. 5:97-CV-168-4 (DF)

ORDER

DUROSS FITZPATRICK, District Judge:

This case is before the Court on the parties' cross-motions for summary judgment. Plaintiff, Macon Iron and Paper Stock Co., Inc., ("Macon Iron") brought this suit seeking declaratory and injunctive relief against Defendants, Transcontinental Insurance Company ("Transcontinental") and Valley Forge Insurance Company ("Valley Forge"), regarding the Defendants' respective duties under the terms of their insurance agreements with the Plaintiff. For the reasons that follow, the Court agrees with Defendants that coverage was rightfully withheld, and that Defendants had no corresponding duty to defend Plaintiff in an underlying civil suit.

I. Background

Plaintiff is engaged in the business of "scrap recycling." It has been in business in Macon, Georgia for nearly 80 years. Plaintiff purchased insurance from the Defendants, obtaining a comprehensive general liability policy ("CGL"), an umbrella policy, and a personal property policy.

From November, 1991 until January, 1993, Plaintiff purchased approximately 51 railcars from Joe Piekarski, the General Manager of Georgia Central Railroad. Unbeknownst to Plaintiff, Mr. Piekarski did not have permission to sell the railcars, and though some of Plaintiff's employees thought it odd that payment for the railcars was to be made to Mr. Piekarski personally, Plaintiff continued to buy railcars from him during this period. After buying the railcars, Plaintiff would then cut them up for us as scrap metal.

There is no evidence that Plaintiff paid anything other than full market value for the railcars. Unfortunately, the payments to Mr. Piekarski's personal account were not approved by the railroad. After discovering that some of its railcars had been sold without permission or compensation, one of the railroad officials came to Macon Iron in the summer of 1993 and informed the company about what had happened. Macon Iron handed over its documentation on the sales and Mr. Piekarski was ultimately tried and convicted for stealing the railcars and keeping the money for his personal benefit. Georgia Central then brought suit against Macon Iron, claiming (1) that Macon Iron engaged in a pattern of "racketeering activity" in violation of O.C.G.A. 16-14-3(8); (2) that Macon Iron conspired with Joe Piekarski to defraud Georgia Central of its property rights to the railcars and was therefore liable for the intentional tort of conspiracy; (3) that Macon Iron converted Georgia Central's stolen property; and(4) that punitive damages should be awarded because of Macon Iron's intentional conduct.

Macon Iron ultimately settled its dispute with Georgia Central, apparently paying them over $300,000 as part of the agreement. When Georgia Central's suit was originally filed, Macon Iron notified that Defendant-Insurance Companies and requested their assistance in defending against the charges. The insurance companies, however, refused to defend against Georgia Central's claims, insisting that Macon Iron would have to present its own defense because their policies did not cover the transactions involving Mr. Piekarski. This suit was then filed by Macon Iron to recover expenses incurred in defending itself as well as payment for the settlement it paid to Georgia Central.

II. Standard of Review

Summary judgment may be granted where "there is no genuine issue as to any material fact." Fed.R.Civ.Proc. 56(c); Lordmann Enterprises, Inc. v. Equicor, Inc., 32 F.3d 1529, 1532 (11th Cir.1994). "Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial." Williams v. Vitro Services Corp., 144 F.3d 1438, 1441 (11th Cir.1998) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986)). In reviewing a motion for summary judgment, the court must view the record and all inferences therefrom in a light most favorable to the nonmoving party. See WSB-TV v. Lee, 842 F.2d 1266, 1270 (11th Cir.1988).

Only when the moving party demonstrates that there is "an absence of evidence to support the non-moving party's case" will the burden then shift to the non-moving party to go beyond the pleadings and present specific evidence giving rise to a triable issue of fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). However, the mere presence of an alleged factual dispute between the parties does not make summary judgment improper; a genuine issue of material fact must exist for a court to deny summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

III. Legal Conclusion

As in any dispute over insurance coverage, the Court begins by examining the source of coverage itself-the general promises of coverage made in the insurance policy. If the general policy does not cover the claim in question, an inquiry into any applicable exclusions is unnecessary. This case involves two different, but ultimately very similar insurance policies. Defendant-Transcontinental's policy insures against "property damage" that "is caused by an occurrence." Def.'s Mot.Summ. J., Ex. A "Commercial General Liability Coverage Form" at 1 (Emphasis supplied). An "occurrence" is further defined in the policy as an "accident." Defendant-Valley Forge's policy is similar, except instead of using the word "occurrence," that policy insures the policyholder where property damage is caused by an "incident." Def.'s Mot. Summ. J., Ex. A., "Commercial Umbrella Plus Coverage Part" at 1. An incident, however, is also defined as an "accident." Id. at 9. Both polices,then, say that coverage will only be provided when damage results from an "accident."

Both parties agree with that premise, but they disagree about what the term "accident" means. Plaintiff contends that an accident occurred in this case because it did not realize that it was harming Georgia Central when it scrapped the railcars bought from Mr. Piekarski. Defendant, by contrast, argues that while Plaintiff may have erroneously believed that it had good title to the railcars, this erroneous belief does not constitute an "accident" and since Plaintiff deliberately purchased and scrapped the railcars, it cannot recover under the general terms of the plan.

In support of its position, Plaintiff relies on several cases decided by Georgia Court of Appeals. "In applying state law, a federal court must adhere to the decisions of the state's intermediate appellate courts absent some persuasive indication that the state's highest court would decide the issue otherwise." Insurance Co. of North America v. Lexow, 937 F.2d 569, 571 (11th Cir.1991). The Georgia Supreme Court has never ruled on this issue, so this Court is bound to follow the decisions of the Georgia Court of Appeals in resolving this dispute.

Plaintiff principally relies on Glens Falls Insurance v. Donmac Golf Shaping, 203 Ga.App. 508, 417 S.E.2d 197 (Ga.App.1992), to support its position in this case. There, a golf course construction company built a golf course on federally protected wetlands. The company unquestionably intended to place the golf course where it did, but it did not intend to violate federal law doing so. Several lawsuits were filed against the company, and when it sought protection under its insurance policy (a policy similar to the one in the instant case), the insurance company attempted to deny coverage by claiming, among other things, that no "accident" had occurred. The Court of Appeals, reading the policy provision in conjunction with an exclusion for property damage "expected or intended from the standpoint of the insured," held that the exclusion was inapplicable. The exclusion did not apply, said the court, because the developer did not specifically intend the damage caused by its own negligence, namely, the placement of a golf course on federal wetlands. Applying that rationale to the instant case, Plaintiff argues that because it did not specifically intend to damage Georgia Central's property, it too should receive coverage under its CGL policy.

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