Nat'l Builders v. Slocum Constr.
| Decision Date | 15 June 2011 |
| Docket Number | No. 10-60601,10-60601 |
| Parties | NATIONAL BUILDERS AND CONTRACTORS INSURANCE COMPANY, a Risk Retention Group, Plaintiff-Appellee, v. SLOCUM CONSTRUCTION, L.L.C., Defendant-Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Appeal from the United States District Court for the Southern District of Mississippi
Before SMITH, WIENER, and OWEN, Circuit Judges.
Slocum Construction, L.L.C. ("Slocum"), appeals a summary judgment on the request of National Builders and Contractors Insurance Company ("NBCI")for declaratory relief. NBCI, Slocum's insurer, sought a judgment that it has no duty to defend Slocum against a counterclaim by Robert Youngblood. We affirm.
Kelvin Anderson contracted with Slocum to build a house. Anderson staked out a parcel of land, but Slocum did not know the land was not Anderson's. It is uncertain whether Anderson was aware that the land belonged to Youngblood, who is related to Anderson and held the land in trust for Walter McKenzie. Slocum believes that Youngblood was aware that it was building the house on his land. When Anderson could not pay Slocum for the house, Slocum tried to sell it. During due diligence, Slocum discovered that Youngblood owned the land and offered to purchase it from him. When Youngblood refused, Slocum sued Youngblood for fraud and unjust enrichment; Youngblood countersued for trespass, seeking lost rental profits.
Slocum petitioned NBCI for a defense and indemnity against Youngblood's counterclaim. Slocum's commercial general liability ("CGL") policy covers damages related to "bodily injury" and "property damage" only if it "is caused by an 'occurrence.'" The policy further defines "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."
NBCI sought declaratory relief, arguing that Slocum's actions were not an "accident" and thus were not covered by the policy, or, in the alternative, that there was no "property damage" or "bodily injury," and that several exclusions precluded coverage. The district court granted NBCI summary judgment, holding that Slocum's actions were not an accident, that there was bodily injury but no property damage, and that even if Slocum's actions were not an accident, several contractual provisions excluded coverage.
"We review [a] summary judgment de novo." Dunn-McCampbell Royalty Interest, Inc. v. Nat'l Park Serv., 630 F.3d 431, 435 (5th Cir. 2011). There is no dispute regarding the facts, but only as to the meaning and effect of the insurance policy, which is a question of law. See U.S. Fid. & Guar. Co. v. OmniBank, 812 So. 2d 196, 198 (Miss. 2002). Therefore, this court reviews the interpretation of that policy de novo. Nat'l Union Fire Ins. Co. v. Kasler Corp., 906 F.2d 196, 198 (5th Cir. 1990). Because we sit in diversity, Mississippi insurance law determines the scope of the policy's coverage. See Blakely v. State Farm Mut. Auto. Ins. Co., 406 F.3d 747, 751 (5th Cir. 2005) (citing Erie R.R. v. Tompkins, 304 U.S. 64, 78-79 (1938)). An insurer has "no duty to defend a claim outside the coverage of the policy." Moeller v. Am. Guar. & Liability Ins. Co., 707 So. 2d 1062, 1069 (Miss. 1996). The factual allegations of the complaint in the underlying action determine whether that duty arises. Delta Pride Catfish, Inc. v. Home Ins. Co., 697 So. 2d 400, 403 (Miss. 1997).
Slocum's insurance policy, like nearly all CGL policies, provides coverage only if the damage is caused by an "occurrence," which, as stated above, is synonymous with an "accident." Mississippi looks to the actions of the insured, not the resulting damages, to decide whether there was an accident. Allstate Ins. Co. v. Moulton, 464 So. 2d 507, 510 (Miss. 1985). The motivation behind those actions is irrelevant if the insured intended to act. See OmniBank, 812 So. 2d at 197 . The insured's actions must have been "inadvertent." Architex Ass'n, Inc. v. Scottsdale Ins. Co., 27 So. 3d 1148, 1161 (Miss. 2010).
Slocum's appeal turns on the distinction between an inadvertent actionand a mistake. The former is an accident, as described above, but the latter is not, because the insured intended the action underlying the mistake, even if he did not intend the results or if he based his action on erroneous information.1
Moulton, 464 So. 2d at 510. Moulton's actions may have been based on a mistaken belief, but the court stated in dictum that "it would make no difference whether [Mrs. Moulton's] acts were prompted by malice or negligence, or someother motivating force." Id. at 509.
The Mississippi Supreme Court later turned that dictum into precedent. See OmniBank, 812 So. 2d 196 (). The plaintiffs in the underlying action in Ramsay had taken out loans from Omnibank to finance their cars and alleged that the bank had negligently force-placed unnecessary insurance coverage, thereby increasing their loan, premium, and interest payments. The bank sought a defense from its insurer, which argued that the bank's actions were intentional and thus not covered by the CGL policy. The bank countered that the suit was based on the bank's negligent conduct, and it was an open question under Mississippi law whether negligent, yet intentional, actions may be considered accidents.
We certified that question to the Mississippi Supreme Court, which held, applying Moulton, that an insurer has no duty to defend "negligent actions that are intentionally caused by the insured." OmniBank, 812 So. 2d at 202. Even though the bank did not intend to overcharge the plaintiffs, it did intend to charge them some amount. Id. The bank may have acted negligently and may have made a mistake, but it also acted intentionally, so there was no accident to defend.
We look to the allegations in the complaint to determine whether NBCI has a duty to defend. Youngblood's countersuit against Slocum is for trespass, an intentional tort under Mississippi law that requires entering another's property, without right, for one's own purpose. Saucier v. Biloxi Reg'l Med. Ctr., 708 So. 2d 1351, 1357 (Miss. 1998). To trigger coverage under the policy, therefore, Slocum must have accidentally built a house on Youngblood's land.
Slocum has not convincingly distinguished its mistake in building thehouse from the errors of the insureds in Moulton and OmniBank.3 The insured in Moulton did not intend to swear out a complaint against a person who had not stolen her dog, but she did intend to swear out a com plaint against the plaintiff. The insured in OmniBank did not intend to overcharge the plaintiffs, but it did intend to charge them some amount. Slocum intended to build a house on the land that Anderson staked out. It may not have intended to build one on property that did not belong to Anderson, but that is the unintended result of its intentional actions. Therefore, its actions were not an accident under the terms of its policy, and NBCI has no duty to defend or indemnify.4
Summary judgment is AFFIRMED.JACQUES L. WIENER, JR., Circuit Judge, specially concurring:
I concur in the result reached by the panel majority that National Builders and Contractors Insurance Company ("NBCI") does not have a duty to defend its insured, Slocum Construction, L.L.C. ("Slocum"), against Robert Youngblood's counterclaim for willful trespass. I write separately, however, because I respectfully disagree with the panel majority's reasoning; specifically, its position that, under Mississippi law, Slocum's acts as a whole do not constitute an "occurrence" within the meaning of NBCI's insurance policy. Even though, I am convinced that, to the contrary, a contractor's (1) intentional construction of a building (2) accidentally, i.e., negligently, on the wrong property would constitute an "occurrence," this cannot control our determination of coverage today. Why? Because we are instructed by Mississippi law to look only to the substance of the complaint — in this case, the substance of Youngblood's counterclaim — to determine whether it alleges acts that are covered by the terms of the insurance policy. When we do that here, we must conclude that NBCI does not have a duty to defend Slocum against Youngblood's counterclaim because the substance of his complaint's allegation is that Slocum has committed (and continues to commit) only the intentional tort of willful trespass, which by definition cannot be an accident. Like the panel majority, I would affirm the district court's summary judgment, but I would do so under a different legal analysis than does the panel majority — an analysis that I believe comports more faithfully with Mississippi...
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