Rogers Ex Rel. Rogers v. Penn National Insurance

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 05-1942
JIMMY R. ROGERS, JR., by and through his
guardian ad litem; QUEEN ROGERS; JOSEPH
MICHAEL SCHRAMM, SR., as the Administrator of
the Estate of Joseph Michael Schramm, Jr.;
KENNETH C. RANSOM, as Ancillary Administrator
of the Estate of Thomas C. Keane and the
Estate of Joan C. Keane; WILLIAMSON PRODUCE
INCORPORATED; WILLIAMSON FARMS, INCORPORATED;
WILLIAMSON FREIGHT, INCORPORATED; WILLIAMSON
TRUCK LINES, INCORPORATED; WILLIAMSON
DISTRIBUTORS, INCORPORATED; WILLIAMSON
BROTHERS, LLC; WILLIAMSON TRANSPORT COMPANY,
INCORPORATED; WILLIAM R. WILLIAMSON; LARRY
HORNE; BOBBY R. WILLIAMSON,
Plaintiffs - Appellants,
versus
PENN NATIONAL INSURANCE COMPANY; PENNSYLVANIA
NATIONAL MUTUAL CASUALTY INSURANCE COMPANY;
PENN NATIONAL SECURITY INSURANCE COMPANY,
Defendants - Appellees,
and
CANAL INSURANCE COMPANY,
Defendant.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Wilmington. James C. Fox, Senior
District Judge. (CA-04-5-F-7)
Argued: May 23, 2006 Decided: August 8, 2006
Before TRAXLER and GREGORY, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
ARGUED: Walker Yeatman Worth, Jr., RUSS, WORTH, CHEATWOOD &
GUTHRIE, Fayetteville, North Carolina, for Appellants. David
Leonard Brown, PINTO, COATES, KYRE & BROWN, P.L.L.C., Greensboro,
North Carolina, for Appellees. ON BRIEF: H. Mitchell Baker, BAKER
& SLAUGHTER, P.A., Wilmington, North Carolina, for Appellants.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
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PER CURIAM:
In this declaratory judgment action, we are asked to decide
whether an umbrella insurance policy (the “Umbrella Policy”) issued
by defendant Pennsylvania National Mutual Casualty Insurance
Company (“Penn National”) to Williamson Produce, Inc. (“Williamson
Produce”) covers injuries arising from a motor vehicle accident.
By the plain language of the Umbrella Policy, we are constrained to
conclude that it does not.
On August 7, 2003, a tractor-trailer collided with a line of
traffic stopped on U.S. Interstate 95 near Emporia, Virginia,
killing Joseph Schramm, Jr., Joan C. Keane and Thomas C. Keane, and
seriously injuring Jimmy R. Rogers, Jr. The tractor portion of the
vehicle belonged to Williamson Produce and was under lease to
Williamson Transport Co., Inc. (“Williamson Transport”). At the
time of the accident, the tractor was returning from Virginia,
where it had delivered Williamson Produce goods.
The tractor was covered under a liability insurance policy
issued by Canal Insurance Company (“Canal”) to Williamson Produce.
That policy provided $1 million of liability insurance coverage for
each occurrence. J.A. 431. Canal deposited $1 million with the
district court for claims arising out of the accident. Having
satisfied its obligations to its insured, Canal was subsequently
dismissed from the action.
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Williamson Produce also carried two types of insurance issued
by Penn National. First, Williamson Produce was covered under a
Business Automobile Policy, see J.A. 266-313, which extended $1
million in liability insurance to: (1) automobiles described in the
policy; (2) hired vehicles; and (3) nonowned vehicles. Id. at 266,
271. Because the tractor does not fit within any of these
categories, the parties properly agree that injuries arising from
the accident are not covered under the Business Automobile Policy.
Second, Williamson Produce was insured under the Umbrella Policy,
which provided up to $2 million in coverage. J.A. 314-52. Thus,
the dispositive issue is whether the Umbrella Policy extended
coverage to the tractor at the time of the accident.
This action was commenced in North Carolina Superior Court on
November 26, 2003, by, or on behalf of, persons injured or killed
during the August 2003 accident, who sought a declaration that
their injuries were covered by Penn National’s Umbrella Policy.1
The case was subsequently removed to federal court. At the close
of discovery, the defendants and plaintiffs moved for summary
1
Suit was initially filed by the following injured parties:
Jimmy R. Rogers, Jr. by and through his Guardian Ad Litem Queen
Rogers; Joseph Michael Schramm, Sr. as Administrator of the Estate
of Joseph Michael Schramm, Jr.; and Kenneth C. Ransom as Ancillary
Administrator of the Estates of Thomas C. Keane and Joan C. Keane.
After the parties were realigned to ensure complete diversity of
citizenship, former defendants Williamson Produce, Inc.; Williamson
Truck Lines, Inc.; Williamson Distributors, Inc.; Williamson
Brothers, LLC; Williamson Transport Co., Inc.; Williamson Farms,
Inc.; Williamson Freight, Inc.; William R. Williamson; Bobby R.
Williamson; and Larry Horne became plaintiffs. J.A. 37.
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judgment. The district court granted the defendants’2 motion for
summary judgment and denied the plaintiffs’ cross-motion. This
appeal followed.
We review a district court’s grant of summary judgment de
novo, viewing all factual inferences in the light most favorable to
the nonmovant. Cont’l Airlines, Inc. v. United Airlines, Inc., 277
F.3d 499, 508 (4th Cir. 2002). Summary judgment is only
appropriate where “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law.” Fed. R. Civ. P. 56(c).
This case involves a question of contract interpretation,
which is also subject to de novo review. Seabulk Offshore Ltd. v.
Am. Home Assurance Co., 377 F.3d 408, 418 (4th Cir. 2004). Where,
as here, subject-matter jurisdiction is premised on diversity of
citizenship, this Court must apply the substantive law of the forum
state. See Hitachi Credit Am. Corp. v. Signet Bank, 166 F.3d 614,
623-24 (4th Cir. 1999). Because the policy at issue was executed
in North Carolina, the law of that forum controls. See Tanglewood
Land Co. v. Byrd, 261 S.E.2d 655, 656 (N.C. 1980) (providing that
2
Penn National Insurance Company and Penn National Security
Insurance Company were also named as defendants. The defendants
asked that both entities be dismissed from the action. J.A. 51.
The district court did not rule on that request, concluding instead
that no action could lie against any of the defendants.
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in North Carolina, “the interpretation of a contract is governed by
the law of the place where the contract was made.”). When
construing an insurance contract under North Carolina law, “if the
meaning of the policy is clear and only one reasonable
interpretation exists, the courts must enforce the contract as
written; they may not, under the guise of construing an ambiguous
term, rewrite the contract or impose liabilities on the parties not
bargained for and found therein.” Woods v. Nationwide Mut. Ins.
Co., 246 S.E.2d 773, 777 (N.C. 1978).
By the Umbrella Policy’s unambiguous terms, the plaintiffs
are not entitled to coverage for injuries sustained during the
accident. The Umbrella Policy contains Endorsement form 70 21 54
0103, which places the following limit on coverage:
It is agreed that such insurance as is afforded by the
policy shall not apply to the ownership, maintenance,
operation, use, loading or unloading, or entrustment to
others of any “auto” unless such liability is covered by
valid and collectible “underlying insurance” as listed in
the Schedule of Underlying Insurance, for the full limit
shown therein, and then only for such hazards for which
coverage is afforded under said “underlying insurance.”
J.A. 322 (emphasis added). Penn National’s Business Automobile
Policy is the only automobile liability policy listed in the
Schedule of Underlying Insurance. J.A. 317. Thus, the Umbrella
Policy only covers automobile accidents that are also covered under
the Business Automobile Policy. As discussed above, the Business
Automobile Policy does not cover the tractor. By extension, the
Business Automobile Policy therefore also does not cover third
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parties who were injured in an accident involving the tractor. As
a result, we must conclude that the Umbrella Policy, like the
Business Automobile Policy, does not cover the plaintiffs’
injuries.3
In an effort to avoid this conclusion, the plaintiffs argue
that the Umbrella Policy, independent of endorsements, extends
coverage to injuries arising from the accident. In effect, the
plaintiffs’ position requires that we ignore policy language. This
we cannot do. Robbins v. C. W. Myers Trading Post, Inc., 117
S.E.2d 438, 441 (N.C. 1960) (“Individual clauses in an agreement
and particular words must be considered in connection with the rest
of the agreement, and all parts of the writing, and every word in
it, will, if possible, be given effect.”).
Because the unambiguous language of the Umbrella Policy leads
to the inescapable conclusion that the accident was not covered by
any of Penn National’s policies, we affirm the district court’s
grant of summary judgment.
AFFIRMED
3
Further, this conclusion is consistent with the premise that
the purpose of umbrella coverage is to extend the amount, not the
scope of coverage. See North Carolina Ins. Guar. Ass’n v. Century
Indem. Co., 444 S.E.2d 464, 470-71 (N.C. Ct. App. 1994) (citing
approvingly Globe Indem. Co. v. Jordan, 634 A.2d 1279, 1283 (Me.
1993) (“The purpose of an umbrella policy is to protect the insured
in the event of catastrophic circumstances when the insurer’s
liability would exceed the limits of its underlying policy. It is
designed to expand the amount, but not the scope of coverage”)).
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