Reyes-Lopez v. Misener Marine Const. Co., REYES-LOPEZ

• Decision Date: 07 March 1988
• Docket Number: No. 87-1816,REYES-LOPEZ,87-1816
• Citation: 854 F.2d 529
• Parties: Felix Manuel, et al., Plaintiffs, Appellees, v. MISENER MARINE CONSTRUCTION CO., et al., Defendants, Appellants. New Hampshire Insurance Company, Defendant, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 529

854 F.2d 529

Felix Manuel REYES-LOPEZ, et al., Plaintiffs, Appellees, v. MISENER MARINE CONSTRUCTION CO., et al., Defendants, Appellants.

New Hampshire Insurance Company, Defendant, Appellee.

No. 87-1816.

United States Court of Appeals, First Circuit.

Heard March 7, 1988.

Decided Aug. 17, 1988.

Francisco Ponsa-Flores with whom Francisco Ponsa-Feliu, Edda Ponsa-Flores and Lawrence E. Duffy were on brief, for defendants, appellants.

James L. Carroll with whom Charles A. Cordero and Cordero, Miranda & Pinto were on brief, for defendant, appellee New Hampshire Ins. Co.

Before CAMPBELL, Chief Judge, WISDOM, ^* Senior Circuit Judge, and BOWNES, Circuit Judge.

WISDOM, Senior Circuit Judge:

In this case, two insurers, New Hampshire Insurance Co. ["NHI"] and United States Aviation Underwriters ["USAU"], sue each other for contribution in the settlement of a personal injury action against their insured, Misener Marine Construction Co. ["Misener"]. The district court ruled that NHI's policy did not cover the loss, that one of USAU's two policies did cover the loss, and that accordingly, USAU must bear the full cost of the settlement, 664 F.Supp. 652 (1987). We affirm.

I.

Misener paid Omniflight Offshore, Inc. ["Omniflight"] to provide daily helicopter transportation for Misener's employees between Misener's premises in Pinones, Puerto Rico, and an offshore construction site. On June 27, 1984, Felix Manuel Reyes Lopez ["Reyes"] went to Misener's Pinones premises to meet his brother, a Misener employee who was to arrive from the construction site on an Omniflight helicopter. Reyes entered Misener's premises through an open gate in the surrounding fence. Inside the fence, access to the helipad was unrestricted. After the helicopter landed, Reyes walked onto the helipad and was struck by the tail rotor of the helicopter. As a result, it was necessary to amputate his left arm.

Misener was a named insured on three insurance policies in force at the time of the accident. NHI had issued a comprehensive general liability policy for Misener's Pinones premises. Misener was the sole named insured on this policy. USAU had issued two policies to Omniflight, an aircraft operations liability policy and a airport liability policy. As required by its contract with Misener, Omniflight had listed Misener as an additional named insured on both these policies.

Reyes, Misener, Omniflight, NHI, and USAU negotiated a settlement providing that the two insurers pay Reyes $310,000. ¹ The settlement agreement provides that no party admits having been negligent, that neither NHI nor USAU accept ultimate liability, and that each insurer reserve the right to sue the other for contribution.

USAU concedes that its airport policy covers both Misener and Omniflight for the risk of this loss. USAU further concedes liability for Reyes' injury under the airport policy. ² While USAU also concedes coverage of both Misener and Omniflight under the aircraft policy, it denies liability under that policy, contending that there was no negligence in the operation of the helicopter.

NHI, on the other hand, denies coverage under its policy with Misener. NHI's policy provides:

Exclusions. This insurance does not apply:

(a) ...

(b) to bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of:

(1) any automobile or aircraft owned or operated by or rented or loaned to any insured, or

(2) any other automobile or aircraft operated by any person in the course of his employment by the insured ... ³

NHI contends that "exclusion (b)" excludes coverage of Reyes' injury.

Regarding the dispute over liability, NHI and USAU both agree that Reyes' negligence (walking onto the helipad while the helicopter was running) contributed to the accident. Both NHI and USAU also argue that the failure to restrict access to the helipad constituted negligence. NHI, however, insists that helipad security was Omniflight's responsibility; USAU insists that it was the responsibility of both Omniflight and Misener. NHI further contends that Omniflight's pilot was negligent in operating the helicopter when it was apparent that the security was inadequate. In particular, NHI contends that landing and idling a helicopter in the vicinity of unsupervised persons like Reyes is negligent.

The district court held that the contract between Misener and Omniflight was a lease and, accordingly, that exclusion (b) excluded Reyes' injury from coverage under NHI's policy. The district court also found that there had been no negligence in the piloting of the helicopter and that there was therefore no liability under USAU's aircraft policy. Because USAU admits both coverage and liability under its airport policy, the district court then concluded that only USAU is liable only under the airport policy. Accordingly, the district court held that NHI had a right of contribution from USAU for funds NHI paid in settlement to Reyes. USAU appeals.

II.

The principal issue in this appeal is whether NHI's policy covers Reyes' injury. NHI contends that under exclusion (b) it does not. Because the helicopter was neither owned nor operated by Misener or its employees, the terms of exclusion (b) apply to Reyes' injury only if the helicopter was "rented or loaned" to Misener. ⁴

The contract between Misener and Omniflight stated that Omniflight would furnish Misener "for its exclusive use one (1) Bell Model 206L-1 helicopter ... together with the necessary crews, personnel, parts, accessories and equipment, to perform the jobs and render the services that from time to time be requested by Misener". In exchange, Misener was responsible for furnishing the landing and aircraft parking sites and paid Omniflight both a monthly service charge and a fee per flight hour. The contract further specified that Omniflight acted "in the capacity of an independent contractor".

USAU contends that because Omniflight acted as "an independent contractor", the helicopter was not "rented or loaned" to Misener within the meaning of exclusion (b).

A.

As a practical matter, we have little doubt that NHI intended exclusion (b) to remove from coverage all risks associated with the operation of aircraft--except perhaps the risk that an aircraft might enter the insured's premises uninvited.

NHI's policy plainly excludes coverage of the risks from aircraft that Misener or its employees own, rent, borrow, or operate. In the light of this exclusion, the reading of NHI's policy offered by USAU makes no sense. There is no reasonable basis to conclude that, while the policy excludes these other risks, NHI nonetheless intended, or Misener understood, the policy to cover risks from aircraft operated by independent contractors like Omniflight--a class of persons about whom NHI surely knows considerably less than it knows about its insured or its insured's employees.

Moreover, the gap left in Misener's insurance coverage by exclusion (b) is filled by the coverage afforded Misener under USAU's airport and aircraft policies. Omniflight, as part of its contract with Misener, included Misener as an additional named insured on those policies. ⁵ This suggests that Misener and Omniflight understood NHI's policy not to cover risks arising out of the operation of helicopter or helipad and further understood USAU's policies to do so.

Usually, of course, we should construe insurance policy exclusions in the light most favorable to the beneficiary. ⁶ Here, however, the circumstances are unusual. Here the insured has two policies using similar language to define a risk, one including it and the other excluding it. In these circumstances, it serves both the purpose of providing protection to the insured ⁷ and the purpose of giving the words of the contract their usual and ordinary meaning ⁸ to construe the exclusion broadly. ⁹

B.

We should also construe the terms in this contract in accordance with Puerto Rico law. USAU contends that the helicopter was not "rented or loaned" to Misener because, under Puerto Rico civil law, the contract between Misener and Omniflight was not a "lease" of a helicopter. We reject this argument because it is premised upon an overly-narrow view of the civil law concept of a "lease".

In Matter of Daben Corp., the court determined that a "license agreement" between a department store and the owner of one of its departments was not a lease under Puerto Rico law. ¹⁰ As the Daben court explained the lease of a "thing":

Three essential elements ... characterize the lease

contract in Puerto Rico and in Spanish civil law: (1) the thing; (2) temporal duration; and (3) a price. ¹¹

Unlike Daben, there is in this case no dispute that the contract between Misener and Omniflight involves a duration and price sufficiently fixed to be called "rent". ¹² Whether the contract constitutes a lease under Puerto Rico law, therefore, boils down to whether it concerns a proper subject for a lease.

But to be a "lease" under Puerto Rico civil law, the contract between Misener and Omniflight need not be the lease of a "thing" such as a helicopter. The Puerto Rico Civil Code states that "[a] lease may be of things, works, or services ". ¹³ In particular,

A person who binds himself to grant the use of a thing, to execute a work, or to render a service, is a lessor; and a person who acquires the use of the thing or the right to the work or service for which he binds himself to pay, is a lessee. ¹⁴

These subject matter terms are read liberally. The court in Daben, for example, concluded that in a lease of "things",

All things (movable or immovable, present or future, corporeal or incorporeal) whose use and enjoyment is in commerce may be leased, even if the things themselves may not be sold or donated. Castan, 4 Codigo Civil 271 (1969); Manresa, 10 Codigo Civil Espanol 470 (1951). Only things that are consumed in their use (fungibles), [P.R.Laws Ann. tit. 31, Sec. 4014 (1976) ], cannot...