Goodno v. Endurance American ( 2021 )

Case: 21-30071 Document: 00516028695 Page: 1 Date Filed: 09/24/2021
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
September 24, 2021
No. 21-30071
Lyle W. Cayce
Clerk
Rebekah Goodno, as personal representative of the Estate of
Timothy Paul Thompson and Danielle Thompson,
Plaintiff—Appellant,
versus
Endurance American Specialty Insurance Company;
Mosquito Control Services, L.L.C.; Anthony P.
Sciambra,
Defendants—Appellees.
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:19-CV-11221
Before Higginbotham, Willett, Duncan, Circuit Judges.
Per Curiam:*
Rebekah Goodno appeals the district court’s grant of summary
judgment to defendants Endurance American Specialty Insurance Company
*
Pursuant to 5th Circuit Rule 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opinion should not be published and is not precedent except under the limited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 Circuit Rule 47.5.4.
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(“Endurance”), Mosquito Control Services, L.L.C. (“MCS-LA”), and
Anthony Sciambra. We affirm.
I.
Sciambra, driving a truck, rear-ended Timothy Thompson’s
motorcycle, throwing Timothy into the highway where another vehicle
struck and killed him. His widow, Danielle, sued Sciambra, MCS-LA
(Sciambra’s alleged employer), Travelers Indemnity Company
(“Travelers,” MCS-LA’s primary insurance carrier), and Endurance (MCS-
LA’s excess insurance carrier).
Danielle Thompson settled with Travelers, MCS-LA, and Sciambra
in an agreement that included a Gasquet release.1 The Gasquet release
specifically released Travelers, MCS-LA, and Sciambra “in all capacities,
and any and all other persons, firms, affiliates, parent
companies, . . . subsidiaries, corporations, . . . and partnerships for whom
they may in any way be responsible . . . .” Danielle Thompson reserved the
right to pursue claims against the insurers of MCS-LA and Sciambra, but no
other related entity. Danielle Thompson then passed away and Rebekah
Goodno was substituted as plaintiff. Goodno continued to pursue claims
against Endurance as the excess carrier.
1
Under a Gasquet release, plaintiffs can release defendants for all claims except
those necessary to pursue insurance claims, including excess insurance. Gasquet v.
Commercial Union Ins. Co., 391 So. 2d 466 (La. Ct. App. 1980), writ denied, 396 So. 2d 921(La. 1981).
2
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In September 2020, Endurance moved for summary judgment,
arguing it did not owe coverage for Goodno’s claim. MCS-LA and Sciambra
also moved for summary judgment, arguing that the Gasquet release would
end their liability if the district court granted Endurance’s motion.
Endurance then moved to join and adopt MCS-LA and Sciambra’s motion.
The district court granted all three motions.
The corporate structure surrounding MCS-LA is complex but it is
relevant to the resolution of this case. There are two entities with the name
“Mosquito Control Services, LLC.” The first Mosquito Control Services,
LLC is a Delaware entity (“MCS-DE”). MCS-DE has no direct operations
but controls certain financial accounts and contracts on behalf of eleven
wholly-owned, subsidiary LLCs. Most of the subsidiary LLCs have names
tied to the locations where they perform mosquito spraying operations, such
as “Mosquito Control of Jackson County, LLC.” The second Mosquito
Control Services, LLC is one of the eleven subsidiaries and is a Louisiana
entity (“MCS-LA”). MCS-LA has employees and direct operations in
Louisiana. MCS-LA is the named insured on the Travelers policy, the
defendant in this case, and the party which entered into the Gasquet release.
Mississippi Mosquito Control, LLC (“MMC”) and Mosquito Control of
Hancock County, LLC (“Hancock”) are also MCS-DE subsidiaries.
II.
We review de novo a district court’s grant of summary judgment.2
2
De Jongh v. State Farm Lloyds, 664 F. App’x 405, 408 (5th Cir. 2016) (per curiam).
3
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Summary judgment is proper “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.”3 “The moving party is entitled to a judgment as a matter of
law because the nonmoving party has failed to make a sufficient showing on
an essential element of her case with respect to which she has the burden of
proof.”4 A district court’s grant of summary judgment “will be affirmed by
this court when the nonmoving party fails to meet its burden to come forward
with facts and law demonstrating a basis for recovery that would support a
jury verdict.”5 A want of insurance coverage should not be found on
summary judgment unless no reasonable interpretation of the policy footed
on the undisputed facts which could support a finding of coverage.6
III.
Goodno brings three arguments. First, she argues that all the related
corporate entities should be treated as one company such that MCS-LA, and
indirectly Endurance, is liable for the accident. Second, Goodno argues that
even if the entities were separate, the Endurance policy covers the truck
driven by Sciambra. Third, Goodno argues that two additional provisions
create coverage. We reject each of these arguments and affirm the district
court’s denial of coverage.
3
Fed. R. Civ. P. 56(a).
4
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotations removed).
5
Little v. Liquid Air Corp., 37 F.3d 1069, 1071 (5th Cir. 1994) (per curiam).
6
Cochran v. B.J. Servs. Co. USA, 302 F.3d 499, 503 (5th Cir. 2002) (reviewing a
grant of summary judgment in a Louisiana insurance dispute).
4
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A.
Goodno first argues that the companies were all combined under one
management structure, such that MCS-LA should be considered the parent
entity; but Goodno faces a significant hurdle: the Gasquet release did not
reserve claims against the potential defendants that were most likely to be
liable. Danielle Thompson, and thus Goodno, released all affiliates and
parent companies related to MCS-LA from potential claims, effectively
releasing MCS-DE, the parent company of MCS-LA. Thompson also
released MMC and Hancock, affiliates of MCS-LA. The Gasquet release only
preserved Goodno’s claims for which MCS-LA or Sciambra could be held
liable.
While the parties below conflated MCS-LA and MCS-DE, they are
distinct corporate entities. On this record there were distinct roles for each
entity within the corporate structure that belie treating MCS-LA as the
parent entity. Goodno has not presented evidence for this Court to disregard
the corporate structure.
MCS-DE has localized subsidiaries for two purposes. The first is to
have separate payroll accounting and performance evaluation of the different
entities. The second is that having local entities helps in the bidding process
for municipal contracts and in securing licensing. Each subsidiary has assets
and locally licensed employees who perform local contracts. Goodno
presents no evidence that the workforces of the subsidiaries were pooled such
that the subsidiaries were functionally divisions of a single entity rather than
independent entities.
5
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Goodno argues that MCS-LA was the parent entity because
“Mosquito Control Services, LLC” appeared on Sciambra’s pay stub. This
assertion oversimplifies the payroll system, ignoring the two separate entities
with the MCS name. While MCS-DE ran a unified payroll system from which
its subsidiaries paid employees, each subsidiary maintained an independent
payroll for accounting purposes. The payroll system belonged to MCS-DE
and the pay stub came from an account controlled by MCS-DE, not MCS-
LA. Sciambra was listed on the MMC payroll, not the MCS-LA payroll.
Goodno also argues that the other subsidiaries were named insured
parties on the contract and that Endurance is therefore liable. This argument
fails for two reasons. First, the Gasquet release released the affiliated entities.
Even if the other entities were insured by the Endurance policy, Goodno
reserved no claim against them. Second, Goodno does not rebut the evidence
presented by Endurance suggesting that only MCS-LA and one other MCS-
DE subsidiary were covered. Endurance points to a provision in the policy
which specifically endorses a Florida subsidiary of MCS-DE, also a sibling
company of MCS-LA. If the policy had been held by MCS-DE rather than
MCS-LA, the endorsement would have been unnecessary. Other subsidiaries
were on a list provided to the insurance broker, Willis Towers Watson,
including MMC and Hancock. But these entities do not appear in the actual
insurance contract documentation. MCS-DE, MMC, and Hancock were not
insured.
Any claim by Goodno against Endurance must be one for which MCS-
LA was liable. Even if Hancock and MMC were named insured under the
6
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policy due to the schedule, claims against them were not reserved by the
Gasquet release. The complaint specifically named the Louisiana entity and
Goodno reserved claims only against MCS-LA and Sciambra under the
release, so only claims against MCS-LA are potentially valid.
B.
Goodno next argues that the truck driven by Sciambra was a “Covered
‘Auto’” under the policy. This argument fails because there is no reasonable
interpretation of the policy that here supports coverage under the undisputed
facts.
The Endurance excess insurance policy provides coverage when the
primary insurance policy coverage provided by Travelers has been
exhausted. The Endurance policy follows-the-form of the underlying
Travelers policy, so the terms of the Travelers insurance contract govern this
dispute.7
Under the Travelers policy, “[c]overage applies only to those ‘Autos’
shown as Covered ‘Autos.’” The Travelers policy provides several defined
categories for autos under which differing levels of coverage apply.
Endurance correctly contends that the truck does not fall into any applicable
category under the policy.
The broadest category is Category 1, which covers “Any ‘Auto.’”
7
Under a “follow-the-form” clause, the excess carrier or reinsurer provides
coverage consistent with the primary policy as written. See Bayou Steel Corp. v. Nat’l Union
Fire Ins. Co. of Pittsburgh, Pennsylvania, 642 F.3d 506, 509 (5th Cir. 2011).
7
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Goodno argues that “Any ‘Auto’” covers any conceivable vehicle because
the category definition lacks limiting language. That view is an unreasonable
interpretation of the contract, inconsistent with how Louisiana courts
interpret insurance policy terms.8 Under Louisiana law, “[a]n insurance
policy should not be interpreted in an unreasonable or strained manner so as
to enlarge or restrict its provisions beyond what is reasonably contemplated
by its terms or so as to achieve an absurd conclusion.”9 Further, “[a]n
insurance policy is a contract between the parties and should be construed by
using the general rules of interpretation of contracts set forth in the Civil
Code.”10 The Louisiana Civil Code instructs that “[i]nterpretation of a
contract is the determination of the common intent of the parties.”11
When looking at the listed categories, it seems clear that “Any
‘Auto’” is intended to encapsulate any auto that could fall into the narrower
categories subsequently described in the policy. The “Any ‘Auto’” category
is used to place an overall cap on the most the insurance carrier will pay for
all claims arising out of any one accident while the narrower categories
describe specific limitations on coverage depending on the type of claim, such
as personal injury protection or towing services. This interpretation is
8
The parties do not challenge that Louisiana law governs the interpretation of the
insurance contract as the law of the forum state.
9
Crabtree v. State Farm Ins. Co., 632 So. 2d 736, 741 (La. 1994).
10
Louisiana Ins. Guar. Ass’n v. Interstate Fire & Cas. Co., 630 So. 2d 759, 763 (La.
1994).
11
La. Civ. Code Ann. art. 2045 (1984).
8
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reasonable as the other categories collectively address virtually any
circumstance for which an insured might want coverage. Thus, Category 1
covers “Any ‘Auto’” that MCS-LA owned, borrowed, leased, hired, rented,
or used in the course of its business. It cannot be that MCS-LA would
purchase insurance for any conceivable auto, including autos with which it
has no connection, as Goodno’s interpretation suggests. Goodno argues the
truck driven by Sciambra appeared on a list given to the underwriters, but
this list does not appear in the actual insurance policy. Further, the insurance
cards attached to the policy do not list a vehicle identification number.
Instead, the cards list “Fleet” suggesting any covered vehicle must have a
connection to MCS-LA such that the vehicle could be considered part of its
fleet. For coverage to exist here, the truck must fall into one of the narrower,
enumerated categories to be a “Covered ‘Auto.’”
There are three potential categories for the truck in question,
designated as Categories 2, 8, and 9 on the list in the Travelers policy. None
of these categories apply to the truck. Category 2 describes “Owned ‘Autos’
Only,” limiting certain coverage to autos directly owned by the named
insured. MCS-LA was not the legal owner of the automobile. In Louisiana,
“[t]he certificate of title constitutes prima facie proof of ownership.”12 The
title owner of the truck was Hancock, not MCS-LA. Goodno argues that
Hancock was dormant for several years before the accident and had not been
12
Lambert v. Ray Brandt Dodge, Inc., 31 So. 3d 1108, 1112 (La. Ct. App. 2010), writ
denied, 34 So. 3d 293 (La. 2010).
9
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responsible for performing maintenance on the truck, so Hancock should not
be considered the true legal owner of the truck. Perhaps, but even if Hancock
were not the legal owner due to its dormant status, MMC was the entity using
the truck in its operations, not MCS-LA. MMC paid for the truck’s fuel bill
through a fleet account listed in its name. Because the settlement released
Hancock and MMC, their potential liability cannot support Goodno’s claim.
Goodno also argues that the truck had “Mosquito Control Services”
printed on the side, establishing MCS-LA’s ownership under Category 2.
Within the corporate structure, there are several other subsidiaries with
names derived from “Mosquito Control Services,” including Mosquito
Control Services of Georgia, LLC and Mosquito Control Services of Florida,
LLC. Goodno fails to rebut the evidence presented by Endurance, the title
document and fuel account that point to either Hancock or MMC as the
owner. MCS-LA was not the owner as described in Category 2.
Category 8 describes “Hired ‘Autos’ Only”; this category includes
any auto which the insured leases, hires, rents or borrows. There is no
evidence that MCS-LA hired, leased, rented, or borrowed the truck from
Hancock. The truck was not being used in MCS-LA’s Louisiana operations.
The truck was being used in MMC’s operations in Mississippi, indicating
that MMC was borrowing the truck from Hancock, not MCS-LA. Goodno
argues that the transfer of the truck from Hancock to MMC was done at the
direction of MCS-LA’s officers. Even accepting that as true, MCS-LA would
not be the “borrower,” that role would fall on the MMC as the transferee
and user of the truck.
10
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Finally, Category 9 describes “Non-owned ‘Autos’ Only,” which is
any auto that the insured does not own, lease, hire, rent, or borrow, but is
used in connection with the insured business. Goodno argues that the truck
was used in connection with MCS-LA’s business because Sciambra was an
employee of MCS-LA. Endurance argues that Sciambra was an independent
contractor, not an employee. The focus on Sciambra’s employment status is
misplaced. The applicability of Category 9 does not turn on whether
Sciambra was an independent contractor or employee, but rather on the
identity of his employer.
Under Louisiana law, “[t]he essence of the employer-employee
relationship is the right to control . . . . The primary factors evidencing the
right to control are: (1) selection and engagement, (2) payment of wages, (3)
power of dismissal, and (4) power of control.”13
MMC had sufficient control over Sciambra to establish that Sciambra
worked for MMC. MMC paid Sciambra wages. Sciambra oversaw MMC’s
mosquito spraying operations in Mississippi. MMC paid for Sciambra’s fuel.
Sciambra lived in Mississippi and commuted to the MMC office in Gautier,
Mississippi. MMC recognized Sciambra as its 1099 contractor. Sciambra
testified that MMC was his employer.
Much of this same evidence suggests that Sciambra was not controlled
by MCS-LA. He did not work at the MCS-LA office in Metairie, Louisiana.
13
Knoten v. Westbrook, 193 So.3d 380, 390, (La. Cir. App. 2016), writ denied, 208
So. 3d 890 (citing Hillman v. Comm-Care, Inc., 805 So.2d 1157, 1162 (La. 2002)).
11
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Sciambra was not on the MCS-LA payroll. MCS-LA did not obtain any direct
benefit from Sciambra’s work as he was only involved in MMC’s mosquito
spraying operations and local contract.14 Regardless of whether Sciambra was
an employee or independent contractor, it is clear that he worked for MMC,
not MCS-LA.
The best evidence favoring MCS-LA as Sciambra’s employer is
murky. On a corporate organizational chart, Sciambra reported to people who
reported to Steve Pavlovich, who was the CEO of MCS-DE and all its
subsidiaries, including MCS-LA and MMC. So Pavlovich had ultimate
control, but Goodno does not show why Pavlovich’s control would not be as
CEO of MMC, Sciambra’s direct employer, or as CEO of MCS-DE, the
parent organization which benefitted from Sciambra’s work for MMC.
Sciambra also received a termination letter from a “Mosquito Control
Services, LLC” but the letter did not distinguish whether this was MCS-DE
or MCS-LA. This ambiguous letter alone is insufficient to support a
reasonable inference that Sciambra had an employment relationship with
MCS-LA when viewed in light of the evidence presented by Endurance.
Endurance presented evidence that Sciambra worked for MMC, not
MCS-LA, either as an employee or independent contractor. Therefore,
Sciambra’s actions were not in connection with MCS-LA’s business and the
14
See Morgan v. ABC Mfr., 710 So.2d 1077, 1078–80 (La. 1998) (discussing how
two employers could be liable for a single employee’s conduct where both employers exert
contemporaneous control and receive a benefit from that employee’s work).
12
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truck does not fall under Category 9. The truck was not a “covered auto”
under the language of the policy.
C.
Goodno’s final argument is that Sciambra was insured under the
“Business Auto Extension Endorsement – Louisiana” (“Louisiana
Extension”) or “Who Is An Insured” provisions of the Travelers policy.
Endurance argues that Goodno did not preserve this argument on appeal and
that even if Goodno did not waive it, the provisions do not create coverage.
Generally, “[t]his court will not consider arguments first raised on
appeal . . . .”15 Arguments not raised before the district court are waived
unless the party can show the extraordinary circumstances that the issue
involved is a pure question of law and a miscarriage of justice would result
from the court’s failure to consider it.16 As Goodno did nothing to bring the
district court’s attention to the Louisiana Extension, this argument is waived.
Regardless, waiver produces no untoward result.
The Louisiana Extension appears in a series of policy modifications
for various states. One relevant provision of the Louisiana Extension extends
coverage to “[a]ny ‘employee’ . . . using a covered ‘auto’ you don’t own,
hire, or borrow in your business or personal affairs.” Goodno argues this
15
Est. of Duncan v. Comm’r of Internal Revenue, 890 F.3d 192, 202 (5th Cir. 2018).
16
State Indus. Prods. Corp. v. Beta Tech. Inc., 575 F.3d 450, 456 (5th Cir. 2009).
13
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creates coverage, but it does not. Again, Sciambra was not an employee of
MCS-LA.
Goodno also argues that the Louisiana Extension should apply rather
than the policy’s Mississippi Changes, and that the Louisiana extension
applies to all of MCS-LA’s vehicles. Under Louisiana law, “[i]f the words of
the [insurance] policy are clear and explicit and lead to no absurd
consequences, no further interpretation may be made in search of the parties’
intent and the agreement must be enforced as written.” 17 It would be
unreasonable to apply the Louisiana Extension beyond Louisiana when the
title of the endorsement clearly and explicitly indicates this section applies to
Louisiana. Even if the title were not dispositive, other provisions suggest the
Louisiana Extension should be read as its title suggests. Immediately
preceding the Louisiana Extension is a generally applicable endorsement that
alters the coverage across the entire policy and immediately after the
Louisiana Extensions are a series of other state-specific endorsements. If the
insured and insurance carrier intended to implement changes to coverage
that would govern a Mississippi vehicle, they would have implemented them
in either the general endorsement or in a Mississippi-specific endorsement.
The facts indicate that the Louisiana Extension does not apply to this truck.
The truck was registered in Mississippi, used in Mississippi, and driven by a
Mississippi LLC’s employee. The truck was not owned or possessed by
MCS-LA, nor was it used or garaged in Louisiana. Goodno’s argument
17
Crabtree, 632 So. 2d at 741 (citing La. Civ. Code Ann. art. 2046 (1984)).
14
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regarding the Louisiana Extension was waived and it is no grave miscarriage
of justice to decline to consider it further.
Alternatively, Goodno did not waive the “Who is An Insured”
provision, having previously argued that the employment status of Sciambra
made him an insured. Endurance itself referred to this provision in its
arguments for summary judgment. The “Who Is An Insured” provision is
an integral portion of the core Travelers policy documentation. Goodno
argues the second category of the provision here provides coverage. This
provision covers the primary named insured as well as “[a]nyone else while
using with your permission a covered ‘auto’ you own, hire, or borrow . . . .”
For this language to apply to Sciambra, two circumstances are needed. First,
Sciambra would have needed MCS-LA’s permission to use the truck, which
Goodno argues he had. Second, the truck would need to have been a
“covered auto” owned, hired, or borrowed by MCS-LA. Goodno fails under
the second prong; the truck was not a covered auto, as explained in Section
III.B. The “Who Is An Insured” provision did not here create coverage or
alter the outcome of this case.
IV.
There is no viable claim against MCS-LA and all of its affiliates were
previously released by the plaintiff. There is no viable claim against
Endurance. We affirm the district court’s grant of summary judgment to
Endurance. The grant of summary judgment to Sciambra and MCS-LA and
the dismissal of claims against them were also proper. We affirm the district
court’s granting of all three motions.
15