Maldonado Investments, L.L.C. v. State Farm Fire & ( 2017 )

Case: 16-31206 Document: 00514244213 Page: 1 Date Filed: 11/20/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
No. 16-31206 November 20, 2017
Lyle W. Cayce
Clerk
MALDONADO INVESTMENTS, L.L.C., on behalf of Olive Street Bistro,
Plaintiff–Appellant,
v.
STATE FARM FIRE & CASUALTY COMPANY,
Defendant–Appellee.
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 5:14-CV-2597
Before JONES, SMITH, and PRADO, Circuit Judges.
PER CURIAM:*
Plaintiff–Appellant Maldonado Investments, L.L.C. (“Maldonado
Investments”) appeals from the district court’s grant of summary judgment in
favor of Defendant–Appellee State Farm Fire & Casualty Company (“State
Farm”). For the reasons set forth below, we AFFIRM.
I. BACKGROUND
Maldonado Investments owned and operated Olive Street Bistro, an
Italian restaurant in Shreveport, Louisiana. State Farm issued a fire
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
Case: 16-31206 Document: 00514244213 Page: 2 Date Filed: 11/20/2017
No. 16-31206
insurance policy to Maldonado Investments effective February 26, 2013,
through February 26, 2014 (the “Policy”). “Coverage A” of the Policy applied to
the buildings housing the Olive Street Bistro, and “Coverage B” of the Policy
applied to the business personal property in those buildings.
On the night of September 30, 2013, a fire destroyed the Olive Street
Bistro. Investigators with the Shreveport Fire Department determined that
the fire was intentionally set. Maldonado Investments filed a claim on the
Policy for losses sustained in the fire, including the total loss of its buildings,
the total loss of all personal property, and the loss of business income. State
Farm conducted an investigation, and on January 21, 2014, denied Maldonado
Investments’ claim under the Policy’s exclusion for dishonesty (“Dishonesty
Exclusion”). 1 Over two years later, Carl Dollar, an employee of the Olive Street
Bistro at the time of the fire, entered an Alford plea 2 in Louisiana state court
to arson with intent to defraud in connection with the fire. See La. Stat. Ann.
§ 14:53 (2014).
Maldonado Investments filed this coverage action against State Farm in
state court on August 4, 2014, and State Farm removed the action to federal
1 The Dishonesty Exclusion provides that the Policy does not cover:
Dishonest or criminal acts by [the insured], anyone else with an interest
in the property, or any of [the insured’s] or their partners, “members,”
officers, “managers,” employees, directors, trustees, authorized
representatives or anyone to whom [the insured] entrust[s] the property
for any purpose:
....
This exclusion does not apply to acts of destruction by [the insured’s]
employees; but theft by employees is not covered.
2 Named after the equivocal guilty plea upheld by the Supreme Court in North
Carolina v. Alford, 400 U.S. 25 (1970), “[a] defendant entering an Alford plea pleads guilty
but affirmatively protests his factual innocence to the charged offense.” United States v.
Harlan, 35 F.3d 176, 180 n.1 (5th Cir. 1994); see, e.g., State v. Orman, 704 So. 2d 245, 245–
46 (La. 1998).
2
Case: 16-31206 Document: 00514244213 Page: 3 Date Filed: 11/20/2017
No. 16-31206
court, invoking diversity jurisdiction. State Farm then filed a motion for
summary judgment asserting that the Dishonesty Exclusion applied to exclude
coverage for Maldonado Investments’ claimed losses. In response, Maldonado
Investments argued that the Dishonesty Exclusion “was made expressly
inapplicable by a policy endorsement add-on, CMP-4710 Employee
Dishonesty” (the “Endorsement”). 3 The district court disagreed, finding that
the Endorsement only modified Coverage B (relating to business personal
property) and that in any event, Maldonado Investments failed to raise a
genuine dispute of material fact that Dollar intended to obtain a financial
benefit for any employee or any other person or organization, which are
elements required to establish coverage under the Endorsement. The district
court granted summary judgment in favor of State Farm, and Maldonado
Investments timely appealed.
II. DISCUSSION
This Court reviews a grant of summary judgment de novo, applying the
same standards as the district court. Hefren v. McDermott, Inc., 820 F.3d 767,
771 (5th Cir. 2016). We “shall grant summary judgment if the movant shows
that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A genuine
3 The Endorsement provides that State Farm will cover:
[D]irect physical loss to Business Personal Property . . . resulting from
dishonest acts committed by any of [the insured’s] “employees” acting
alone or in collusion with other persons (except [the insured] or [the
insured’s] partner) with the manifest intent to:
a. Cause [the insured] to sustain loss; and
b. Obtain financial benefit (other than salaries, commissions,
fees, bonuses, promotions, awards, profit sharing, pensions or
other “employee” benefits earned in the normal course of
employment) for:
(1) Any “employee”; or
(2) Any other person or organization intended by that
“employee” to receive that benefit.
3
Case: 16-31206 Document: 00514244213 Page: 4 Date Filed: 11/20/2017
No. 16-31206
dispute of material fact exists “if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). “All reasonable inferences must be viewed in the
light most favorable to the party opposing summary judgment, and any doubt
must be resolved in favor of the non-moving party.” In re La. Crawfish
Producers, 852 F.3d 456, 462 (5th Cir. 2017) (citing Matsushita Elec. Indus.
Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).
On appeal, Maldonado Investments argues that the district court erred
in granting summary judgment because the Dishonesty Exclusion’s exception
for “acts of destruction” by “employees” (the “Employee Destruction
Exception”) applies and establishes coverage. However, Maldonado
Investments did not raise this argument in the district court; it only argued
that the Dishonesty Exclusion was made entirely inapplicable by the
Endorsement. Because Maldonado Investments did not dispute that the
Dishonesty Exclusion would apply but for the Endorsement, the district court
did not have an opportunity to consider the Employee Destruction Exception
argument Maldonado Investments advances on appeal. Accordingly,
Maldonado Investments waived its Employee Destruction Exception
argument. See, e.g., Keelan v. Majesco Software, Inc., 407 F.3d 332, 339–40 (5th
Cir. 2005).
Maldonado Investments argues that we are nonetheless obliged to
consider whether the Employee Destruction Exception applies because it
involves a pure question of law that, if ignored, would result in a miscarriage
of justice. See Coastal States Mktg., Inc. v. Hunt, 694 F.2d 1358, 1364 (5th Cir.
1983); see also Hormel v. Helvering, 312 U.S. 552, 556–59 (1941). However,
neither condition is satisfied in this case. The applicability of the Employee
Destruction Exception does not involve a pure question of law. The parties
dispute the facts surrounding Dollar’s relationship with the Olive Street Bistro
4
Case: 16-31206 Document: 00514244213 Page: 5 Date Filed: 11/20/2017
No. 16-31206
and, by extension, Maldonado Investments. Specifically, they dispute whether
Dollar served in a managerial capacity so as to make him a “manager” under
the Policy as opposed to merely an “employee.” Moreover, our failure to
consider this new argument will not result in a miscarriage of justice. To
invoke a miscarriage of justice, we have required litigants to show good cause
for their failure to raise an issue below or identify a unique harm making the
result manifestly unfair absent their ability to press an issue on appeal. See
Clark v. Aetna Cas. & Sur. Co., 778 F.2d 242, 249 (5th Cir. 1985); see also AAR,
Inc. v. Nunez, 408 F. App’x 828, 830 (5th Cir. 2011) (per curiam) (unpublished).
Maldonado Investments does not provide a reason for its failure to raise this
issue below or identify any unique harm involved in this case. Therefore, we
will not consider for the first time on appeal Maldonado Investments’ argument
that the Employee Destruction exception applies. See Clark, 778 F.2d at 249.
Maldonado Investments also argues that the district court erred in
granting summary judgment as to Coverage B because Dollar’s Alford plea
created a genuine dispute of material fact as to whether the Endorsement’s
elements were satisfied. 4 The elements required to establish arson with intent
to defraud and to establish coverage under the Endorsement are not
coextensive, and as the district court correctly noted, Dollar’s Alford plea was
not accompanied by a detailed colloquy addressing the elements of the charged
offense—let alone the elements required to establish coverage under the
Endorsement. 5 Significantly, Dollar’s Alford plea did not identify any financial
benefit he intended to receive (or intended another person or organization to
receive) by setting the fire, which are elements required to establish coverage
4 Maldonado Investments does not challenge on appeal the district court’s finding that
the Endorsement only modified Coverage B (and not Coverage A).
5 We thus need not, and do not, attempt to delineate when an Alford plea is admissible
in a subsequent civil proceeding.
5
Case: 16-31206 Document: 00514244213 Page: 6 Date Filed: 11/20/2017
No. 16-31206
under the Endorsement. What we are left with is Maldonado Investments’
speculation that Dollar entered his Alford plea because he set the fire “in order
to get money” from an unidentified source. However, such speculation is
insufficient to raise a genuine dispute of material fact regarding coverage
under the Endorsement. See Likens v. Hartford Life & Acc. Ins. Co., 688 F.3d
197, 202 (5th Cir. 2012) (“[T]he non-movant still cannot defeat summary
judgment with speculation, improbable inferences, or unsubstantiated
assertions.”); see also Brown v. City of Hous., 337 F.3d 539, 541 (5th Cir. 2003).
Accordingly, the district court properly granted State Farm’s motion for
summary judgment.
III. CONCLUSION
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
6