Kirk v. Universal Underwriters of Texas Insurance ( 2010 )

Case: 09-30299 Document: 0051998279 Page: 1 Date Filed: 01/07/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
January 7, 2010
No. 09-30299 Charles R. Fulbruge III
Summary Calendar Clerk
DANNY KIRK,
Plaintiff–Appellant
v.
UNIVERSAL UNDERWRITERS OF TEXAS INSURANCE CO.,
Defendant–Appellee
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 2:06-CV-01528
Before BENAVIDES, PRADO, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
Appellant Danny Kirk appeals the district court’s order granting summary
judgment in favor of Appellee Universal Underwriters of Texas Insurance Co.
(“UUT”). Appellant argues that the insurance policy UUT issued to Olympic
International Trucks, Inc. d/b/a Olympic Ideal Lease (“Olympic”) requires it to
provide excess insurance to Kirk, who suffered injuries in an accident involving
one of Olympic’s trucks. The district court granted summary judgment for UUT
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
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because an “escape clause” excused UUT from coverage where there was other
insurance. Because UUT did not agree to provide excess insurance and because
the escape clause is unambiguous, we affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
While driving a tractor-trailer for his employer Gulf Coast Building Supply
(“Gulf Coast”), Steve Frank Coronado collided with a van driven by Kirk. Kirk
was thrown from the van and suffered serious injury. Olympic owned the
tractor-trailer Coronado drove, and leased it to Gulf Coast. The lease agreement
required Gulf Coast to maintain $750,000 of liability insurance on the tractor-
trailer. Gulf Coast obtained liability insurance on the tractor-trailer from Home
State County Mutual Insurance Company (“Home State”). The Home State
policy had a limit of $1,000,000.
At the time of the accident, UUT had issued Olympic a liability insurance
policy (the “UUT Policy”) for Olympic’s garage operations, which covered
Coronado’s tractor-trailer. Part 500 of the UUT Policy provided liability
insurance to Olympic for injuries arising out of “garage operations” or “auto
hazard.” Auto hazard included coverage of “[a]nyone else required by law to be
an insured while using an auto under a lease or rental agreement, within the
scope of [Olympic’s] permission.” The UUT Policy provided that it only covered
Olympic’s lessees if “[a]t the time of the accident, the insurance required by the
lease or rental agreement is not collectable.”
Kirk filed a diversity suit against Coronado, Gulf Coast, and Home State.
The defendants filed a third party demand against UUT alleging that its policy
provided excess coverage above the insurance provided to Gulf Coast by Home
State. Kirk amended his complaint to name UUT as a defendant and alleged
that UUT’s policy provided excess coverage. UUT moved to dismiss for failure
to state a claim against Kirk, and in the alternative, for summary judgment.
UUT moved for summary judgment against the other defendants.
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The district court granted summary judgment to UUT against Kirk and
the other defendants. The district court found that the UUT Policy only
provided coverage where “the insurance required by the lease or rental
agreement is not collectable,” and the district court found that the term
“collectable” did not require UUT to show that Kirk would be fully compensated
for his injuries, only that the other insurance was able to be collected. The
district court granted summary judgment because Kirk had not alleged that
Home State was unable to make payment.
Kirk immediately appealed, but we rejected the appeal because the grant
of summary judgment was not a final judgment and we therefore lacked
jurisdiction. Kirk settled with the other defendants for the limit of Gulf Coast’s
policy.1 The district court then granted Kirk’s motion to certify the summary
judgment as final. Kirk timely appealed.
II. DISCUSSION
A. Standard of Review
“We review a district court’s grant of summary judgment de novo, using
the same standard as the district court.” Groover v. Scottsdale Ins. Co., 586 F.3d
1012, 1014 (5th Cir. 2009) (citing Warfield v. Byron, 436 F.3d 551, 557 (5th Cir.
2006)). “Summary judgment is proper when there is no genuine issue of
material fact and the movant is entitled to judgment as a matter of law.” Id.
(citing F ED. R. C IV. P. 56(c)). “We review questions of law, including choice of law
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UUT argues that because the other defendants did not appeal the grant of summary
judgment, the summary judgment against the other defendants is final, and therefore Kirk
lacks standing to appeal that judgment, rendering his appeal moot. However, we have held
that while non-parties normally do not have standing to appeal, there is an exception if the
decree affects a third party’s interests. See United States v. Holy Land Found. for Relief &
Dev., 445 F.3d 771, 780 (5th Cir. 2006) (citing SEC v. Forex Asset Mgmt. LLC, 242 F.3d 325,
329 (5th Cir. 2001)). Kirk appealed the grant of summary judgment against himself as well
as the other defendants. This appeal is properly heard because Kirk has standing to appeal
summary judgment as against the other defendants.
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and contract interpretation, de novo.” Waterfowl Ltd. Liab. Co. v. United States,
473 F.3d 135, 142 (5th Cir. 2006) (citations omitted).
B. Applicable Law
In a diversity action, a federal court must apply the choice of law rules of
the state in which the complaint was filed. Torch Liquidating Trust v. Stockstill,
561 F.3d 377, 385 n.7 (5th Cir. 2009) (citing Klaxon Co. v. Stentor Elec. Mfg. Co.,
313 U.S. 487, 496 (1941)). Kirk filed suit in Louisiana, and Louisiana law
provides that “the law of the state whose policies would be most seriously
impaired if its law were not applied to that issue” governs. L A. C IV. C ODE art.
3537.
Both parties argue that under either Texas or Louisiana law, they should
win. The district court applied Texas law, and we agree that Texas law applies
to the interpretation of the UUT Policy. The UUT Policy was issued in Texas,
and the insured, Olympic, is domiciled in Texas. Texas’s interests in governing
insurance contracts entered into in Texas for the protection of Texas residents
would be most seriously impaired if Texas law did not apply. See Shell Oil Co.
v. Hollywood Marine, Inc., 701 So. 2d 1038, 1041 (La. Ct. App. 1997) (“Texas
clearly has a legitimate interest in regulating insurance contracts delivered to
and insuring activities of Texas businesses. Louisiana has no such interest.”)
(citation omitted).
C. UUT Policy
Insurance contracts are subject to the same rules of construction as
ordinary contracts. Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 823
(Tex. 1997). Insurance policies are strictly construed in favor of the insured to
avoid exclusion of coverage. Devoe v. Great Am. Ins., 50 S.W.3d 567, 571 (Tex.
App.—Austin 2001, no pet.) (citing Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936,
938 (Tex. 1984)). “However, this does not apply when the term to be construed
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is unambiguous and susceptible of only one construction; then the court must
give the words of the policy their plain meaning.” Id.
The parties dispute the effect of the escape clause, which limits coverage
to situations where “the insurance required by the lease or rental agreement is
not collectable.” Kirk argues that the term “collectable” is ambiguous because
“collectable” is not a word, and therefore we should construe the term in his
favor and hold that the insurance must fully compensate him for his injuries to
be “collectable.”
“Collectable” is an acceptable alternative spelling of collectible and means
“capable of being collected.” R ANDOM H OUSE W EBSTER’S U NABRIDGED
D ICTIONARY 417 (2d ed. 2001). The UUT Policy only provided coverage where
“the insurance required by the lease or rental agreement is not collectable.” The
“insurance required by the lease” was $750,000, and Home State actually
provided $1,000,000. There is no dispute that the Home State insurance was
capable of being collected. We hold that the term “collectable” is unambiguous
and find no reason to graft a requirement that the other insurance fully
compensate Kirk onto the UUT Policy.
Kirk also argues that under Texas law, a specific excess clause defeats a
specific escape clause. Kirk cites Hardware Dealers Mutual Fire Insurance Co.
v. Farmers Insurance Exchange, 444 S.W.2d 583 (Tex. 1969) for this proposition.
However, Hardware Dealers involved two insurers asserting that escape clauses
reduced their liability, and thus has no relevance to the result here. Id. at 584.
Most importantly, the UUT Policy does not contain an excess clause, specific or
otherwise. The UUT Policy simply covers Olympic, and, in this case, Gulf Coast,
who was “using an auto under a lease or rental agreement, within the scope of
[Olympic’s] permission.” Nothing suggests that UUT or Olympic intended the
UUT Policy to provide excess insurance for Olympic’s lessees. The UUT Policy
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is unambiguous, and the district court properly granted summary judgment for
UUT.
III. CONCLUSION
For the reasons stated above, we AFFIRM the district court’s grant of
summary judgment.
AFFIRMED.
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