Richard Frederking v. Cincinnati Insurance Company , 929 F.3d 195 ( 2019 )

Case: 18-50536 Document: 00515018844 Page: 1 Date Filed: 07/02/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 18-50536 FILED
July 2, 2019
Lyle W. Cayce
RICHARD BRETT FREDERKING, Clerk
Plaintiff - Appellant
v.
CINCINNATI INSURANCE COMPANY,
Defendant - Appellee
Appeal from the United States District Court
for the Western District of Texas
Before JONES, HO, and OLDHAM, Circuit Judges.
JAMES C. HO, Circuit Judge:
Only an insurance company could come up with the policy interpretation
advanced here. Cincinnati Insurance Company theorizes that its automobile
policies do not cover injuries caused by drunk driving collisions, because such
collisions are not “accidents.” Its logic is this: intentional acts are not acci-
dents, and drunk drivers make the intentional choice to drink and then drive.
This theory of interpretation conflicts with the plain meaning and com-
mon usage of the word “accident”—and defies the understanding and expecta-
tion of everyone who drives a car. Not surprisingly, no court has, to our
knowledge, endorsed the policy interpretation advanced here, and Cincinnati
Case: 18-50536 Document: 00515018844 Page: 2 Date Filed: 07/02/2019
No. 18-50536
cites none (other than the district court in this case). We reverse and remand
for further proceedings.
I.
Carlos Xavier Sanchez was driving under the influence of alcohol when
he failed to yield the right of way, thereby colliding with another car and in-
juring Richard Brett Frederking. At the time, Sanchez was driving a truck
assigned to him by his employer, Advantage Plumbing Services. Advantage,
in turn, is insured by Cincinnati.
Frederking sued both Sanchez and Advantage in Texas state court. The
jury found that Sanchez’s conduct was grossly negligent, and that Advantage
negligently entrusted Sanchez with the vehicle. The jury held Sanchez and
Advantage jointly and severally liable for $137,025 in compensatory damages.
It further awarded $207,550 in exemplary damages for Sanchez’s gross negli-
gence.
As Advantage’s insurer, Cincinnati agreed to pay Frederking the amount
of the compensatory damages award, thereby discharging Advantage’s liabil-
ity. But when Frederking demanded that Cincinnati also pay Sanchez’s exem-
plary damages, Cincinnati refused. In response, Frederking brought this suit
against Cincinnati.
Frederking is a third-party beneficiary of Advantage’s insurance policies
with Cincinnati. Those policies have two relevant coverage sections. First, the
Auto Policy covers damages resulting from “accidents” caused by Advantage’s
employees that produce defined injuries. Second, the Commercial Umbrella
Liability Coverage applies where the Auto Policy does not. It also covers sums
in excess of the Auto Policy’s limits. For our purposes, however, its coverage is
essentially identical to the Auto Policy, because it covers “occurrences”—which
includes (but is not limited to) “accidents” resulting in defined injuries.
2
Case: 18-50536 Document: 00515018844 Page: 3 Date Filed: 07/02/2019
No. 18-50536
When Cincinnati refused to pay the exemplary damages award, Frederk-
ing brought this suit for breach of contract and declaratory judgment in Texas
state court. Cincinnati removed to federal court and counterclaimed for de-
claratory judgment. Cincinnati then moved for summary judgment on various
grounds, namely, that (1) Sanchez was not a covered “insured” at the time of
the collision; (2) Sanchez’s grossly negligent conduct could not result in a cov-
ered “accident”; (3) the exemplary damages award is uninsurable as a matter
of contract and public policy; and (4) Cincinnati has no duty to indemnify
Sanchez. Frederking cross-moved for partial summary judgment on the de-
claratory judgment claims and argued that a fact issue remained about
whether Sanchez was an “insured.”
The district court granted summary judgment to Cincinnati. In particu-
lar, it concluded that Sanchez’s intentional decision to drive while intoxicated
meant that the collision was not an “accident” under Texas law.
II.
“An interpretation of an insurance policy provision is an issue of law re-
viewed de novo.” Performance Autoplex II Ltd. v. Mid-Continent Cas. Co., 322
F.3d 847, 853 (5th Cir. 2003) (per curiam) (citing Am. States Ins. Co. v. Bailey,
133 F.3d 363, 369 (5th Cir. 1998)).
Both of the policies at issue here cover damages resulting from “acci-
dents.” Neither policy defines the term “accidents.” 1 So we are left to give this
undefined term its “generally accepted or commonly understood meaning.” La-
mar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 8 (Tex. 2007) (citing
W. Reserve Life Ins. v. Meadows, 261 S.W.2d 554, 557 (Tex. 1953)).
1 The policy simply says that the term “includes continuous or repeated exposure to
the same conditions resulting in” injury. This appears to be common policy language. See,
e.g., Fed. Ins. Co. v. Ace Prop. & Cas. Co., 429 F.3d 120, 122 (5th Cir. 2005) (same); Lamar
Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 6 (Tex. 2007) (same).
3
Case: 18-50536 Document: 00515018844 Page: 4 Date Filed: 07/02/2019
No. 18-50536
For the reasons explained below, we conclude that, as a matter of plain
meaning and common usage, the term “accident” plainly includes the drunk
driving collision that gave rise to this dispute.
A.
Consistent with ordinary usage, the Supreme Court of Texas has defined
the term “accident” as a “fortuitous, unexpected, and unintended event.” Id.
(citing 1A JOHN ALAN APPLEMAN & JEAN APPLEMAN, INSURANCE LAW AND
PRACTICE § 360 at 449 (1981)). See also BRYAN A. GARNER, GARNER’S DICTION-
ARY OF LEGAL USAGE 12 (3d ed., 2011) (“[Accident, mishap, casualty, and
(sometimes) incident] denote a chance event that brings injury or loss. Acci-
dent, the broadest term, refers to an unforeseen event involving an injury or
loss that ranges from slight (e.g., spilling a drop from a tepid cup of water) to
grave (e.g., running a cruise ship into an iceberg). . . . In the context of insur-
ance, . . . accident insurance covers injuries to oneself by some lack of care or
inattention, or perhaps by some occurrence wholly outside one’s control.”); Ac-
cident, BLACK’S LAW DICTIONARY 16 (9th ed., 2009) (“An unintended and un-
foreseeable injurious occurrence; something that does not occur in the usual
course of events or that could not be reasonably anticipated.”).
Put another way, the term “accident” is defined by what it excludes—
intentional acts. See, e.g., Argonaut Sw. Ins. Co. v. Maupin, 500 S.W.2d 633,
636 (Tex. 1973) (“An intentional tort is neither an ‘accident’ nor ‘occurrence’
within the terms of the policy.”).
Not surprisingly, then, we ordinarily describe automobile collisions as
“accidents” in common parlance. As the Texas Supreme Court has stated,
“[t]he term ‘auto accident’ refers to situations where one or more vehicles are
involved with another vehicle, object, or person.” Farmers Texas County Mut.
Ins. Co. v. Griffin, 955 S.W.2d 81, 83 (Tex. 1997) (per curiam) (quoting State
Farm Mut. Ins. Co. v. Peck, 900 S.W.2d 910, 913 (Tex. App.—Amarillo 1995,
4
Case: 18-50536 Document: 00515018844 Page: 5 Date Filed: 07/02/2019
No. 18-50536
no writ)). See also Peck, 900 S.W.2d at 913 (“[T]he ordinary and generally ac-
cepted meaning of the term ‘auto accident’ refers to situations where one or
more vehicles are involved in some type of collision or near collision with an-
other vehicle, object, or person.”) (citation omitted).
There is no reason to describe the automobile collision in this case as
anything other than an “accident.” Certainly no one contends that Sanchez
intended his vehicle to collide with Frederking’s vehicle. Nor does anyone sug-
gest that Sanchez drank in hopes of causing an automobile collision. Accord-
ingly, we conclude that this case falls well within the common understanding
of the term “accident.”
B.
Cincinnati contends otherwise. It argues that drunk driving collisions
are not “accidents,” because the decision to drink (and then later drive) was
intentional—even though there was admittedly no intent to collide with an-
other vehicle. As Cincinnati points out, a jury found that Sanchez intentionally
decided to drive while intoxicated, with “actual, subjective awareness” of the
“extreme degree of risk, considering the probability and magnitude of the po-
tential harm to others.” TEX. CIV. PRAC. & REM. CODE § 41.001(11) (defining
the standard for gross negligence). As a result, Sanchez’s subjective awareness
of the risk he posed renders the collision intentional, rather than accidental.
There are a number of problems with this theory. To begin with, it is
contrary to common parlance. To illustrate: During oral argument, counsel
for Cincinnati acknowledged that, under its understanding of the term “acci-
dent,” the phrase “drunk driving accident” would have to be an oxymoron. But
it is not. Far from it, “drunk driving accident” is a matter of common usage.
Consistent usage, as reflected in numerous judicial opinions, can be an
authoritative source of common parlance. As the Supreme Court recently ob-
served, “[w]hat the dictionaries suggest, legal authorities confirm.” New Prime
5
Case: 18-50536 Document: 00515018844 Page: 6 Date Filed: 07/02/2019
No. 18-50536
Inc. v. Oliveira, 139 S. Ct. 532, 540 (2019) (surveying judicial opinions for evi-
dence of semantic meaning). And decades of legal authorities consistently refer
to drunk driving collisions as “accidents.” See, e.g., Montanile v. Bd. of Trustees
of Nat. Elevator Indus. Health Benefit Plan, 136 S. Ct. 651, 655 (2016) (“In
December 2008, a drunk driver ran through a stop sign and crashed into Mon-
tanile’s vehicle. The accident severely injured Montanile.”); Perkins v. F.I.E.
Corp., 762 F.2d 1250, 1271 n.57 (5th Cir. 1985) (“At the time of the accident,
the car was being driven by a highly intoxicated driver at speeds in excess of
100 m.p.h.”); Hernandez v. State, 556 S.W.3d 308, 331 n.4 (Tex. Crim. App.
2017) (“[W]e held that there was a multiple-punishment violation where Bigon
had been convicted of intoxication manslaughter, manslaughter, and felony
murder after a car accident.”); Employees Ret. Sys. of Texas v. Duenez, 288
S.W.3d 905, 912 (Tex. 2009) (Hecht, J., dissenting) (“The plan paid for health
care for Duenez’s daughter Ashley, who along with her parents and siblings
was injured in a car accident with a drunk driver.”); Smith v. Sewell, 858
S.W.2d 350, 351 (Tex. 1993) (“[Plaintiff] became intoxicated at . . . a bar . . .
[and on] his way home, [] lost control of his car and was severely injured in the
resulting one-car accident.”); Lenoir v. U.T. Physicians, 491 S.W.3d 68, 82–83
(Tex. App.—Houston [1st Dist.] 2016, pet. denied) (“The governmental unit and
the engineering firm were sued for failing to design proper signage that, the
plaintiffs claimed, would have prevented a drunk driver from entering an exit
ramp and causing a car accident.”); Biaggi v. Patrizio Rest. Inc., 149 S.W.3d
300, 303 (Tex. App.—Dallas 2004, pet. denied) (“[Plaintiff] herself had been in
car accidents she caused when she was impaired by drug usage.”); Venetoulias
v. O’Brien, 909 S.W.2d 236, 239 (Tex. App.—Houston [14th Dist.] 1995, writ
dism’d by agr.) (“O’Brien was injured in a one car accident while she was in-
toxicated.”).
6
Case: 18-50536 Document: 00515018844 Page: 7 Date Filed: 07/02/2019
No. 18-50536
Given the choice between the common usage practiced by federal and
state courts across the country, and the idiosyncratic usage urged by counsel
here, our decision is easy.
Moreover, under Cincinnati’s theory of interpretation, it is not just drunk
driving collisions that would be excluded from coverage. As counsel acknowl-
edged during oral argument, a collision caused by texting while driving would
also not be an accident. A collision caused by eating while driving would not
be an accident. And a collision caused by doing makeup while driving would
not be an accident. In each of these scenarios, after all, a driver has made an
intentional decision that contributes to an accident.
But this is implausible on its face. Indeed, it would defeat the widely
held expectations of the countless insureds who purchase automobile insur-
ance precisely to protect against these kinds of “accidents.”
In sum, we have no difficulty concluding that drunk driving collisions
are indeed “accidents,” as a matter of common parlance as well as proper policy
interpretation.
C.
Nor do we accept Cincinnati’s suggestion that Texas Supreme Court
precedent commands a different result.
Cincinnati points out that, under Texas Supreme Court precedent, a col-
lision is not an “accident” if the collision is “‘highly probable’ because it was
‘the natural and expected result of the insured’s actions.’” Nat’l Union Fire
Ins. Co. of Pittsburgh v. Puget Plastics Corp., 532 F.3d 398, 402 (5th Cir. 2008)
(quoting Lamar Homes, 242 S.W.3d at 9). See also Lamar Homes, 242 S.W.3d
at 9 (“[A] claim does not involve an accident or occurrence when either direct
allegations purport that the insured intended the injury (which is presumed in
cases of intentional tort) or circumstances confirm that the resulting damage
7
Case: 18-50536 Document: 00515018844 Page: 8 Date Filed: 07/02/2019
No. 18-50536
was the natural and expected result of the insured’s actions, that is, was highly
probable whether the insured was negligent or not.”) (emphasis added).
But the collision here was neither “highly probable” nor the “natural and
expected” result of Sanchez’s intoxicated driving. “Probable” means “more
likely than not.” Parker v. Employers Mut. Liab. Ins. Co. of Wis., 440 S.W.2d
43, 47 (Tex. 1969). Likewise, for something to be “natural and expected,” it
must be so obviously foreseeable that courts may conclude that the tortfeasor
intended it to happen. See Lamar Homes, 242 S.W.3d at 9. As dangerous as
drunk driving is, it does not make collisions “more likely than not”—or the
“expected” result of intoxicated driving.
In addition, the Texas Supreme Court has rejected the notion, floated by
Cincinnati here, that “if an actor intended to engage in the conduct that gave
rise to the injury, there can be no ‘accident.’” Trinity Universal Insurance Co.
v. Cowan, 945 S.W.2d 819, 828 (Tex. 1997). Likewise, the Texas Supreme
Court has rejected the suggestion that mere foreseeability is sufficient to es-
tablish intentional conduct. See Lamar Homes, 242 S.W.3d at 8 (“[We] did not
adopt foreseeability as the boundary between accidental and intentional con-
duct. Insurance is typically priced and purchased on the basis of foreseeable
risks, and reading [precedent] as the carrier urges would undermine the basis
for most insurance coverage.”).
In sum, nothing in Texas law requires us to construe the term “accident”
in a manner contrary to its plain and widely held meaning.
***
We reverse the grant of summary judgment and remand for further con-
sideration. 2
2 Cincinnati raises two alternative grounds for granting summary judgment. First, it
argues that Sanchez was not an “insured” under the policies at the time of accident because
of his conduct. Second, it asserts that the “general public policies of Texas” preclude coverage
8
Case: 18-50536 Document: 00515018844 Page: 9 Date Filed: 07/02/2019
No. 18-50536
of Sanchez’s exemplary damages. See Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246
S.W.3d 653, 655 (Tex. 2008). The district court did not reach these issues. We decline to
address them for the first time on appeal.
9