City of Hammond v. Coregis Insurance Co

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 02-30323
Summary Calendar
_____________________
CITY OF HAMMOND,
Plaintiff-Appellant,
versus
COREGIS INSURANCE CO.,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Louisiana
(01-CV-582-B)
September 27, 2002
Before BARKSDALE, DeMOSS, and BENAVIDES, Circuit Judges.
PER CURIAM:*
Contending the district court erred in holding the Hammond
Airport Authority and its board of directors are not covered under
a liability policy issued by Coregis Insurance Co., the City
appeals the summary judgment awarded Coregis.
I.
The City purchased a “Public Officials and Employees Liability
Policy” from Coregis, effective 1 July 1998 to 1 July 1999. It
provides: “[Coregis] will pay on behalf of the Insureds Loss as a
*
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this opinion should not be published and is not precedent except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.
result of civil Claims made against the Insureds by reason of a
Wrongful Act”.
The policy defines “insured” as follows:
“Insured” means the Public Entity [(the City)]
and any person while acting solely within the
course and scope of his or her duties and
responsibilities on behalf of the Public
Entity as:
....
2. a member o[r] officer of the
governing board, commission, department or
unit within the total revenue indicated in the
policy application[.]
....
Unless specifically endorsed her[e]on, the
definition of “insured” does not mean the
entity, any person, past or present, any
official, member, officer of the governing
board, commission, department, unit, employee
or volunteer of the following:
school, airport, transit authority,
housing authority, hospital, nursing home,
clinic, electric utility or gas utility.
(Emphasis added.)
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Along this line, the insurance proposal is incorporated into
the policy. It lists the airport as one of the “units”
administered by the City, and then states: “[I]f coverage is
requested for these units, please submit separate proposal”.
(Emphasis added.) There is no evidence a separate proposal was
submitted.
In June 1998, former airport manager Stoulig sued the Airport
Authority and its board members, claiming, inter alia, sex
discrimination. Coregis denied coverage on the basis that the
defendants were not insureds under the policy. After Stoulig
obtained a judgment against the defendants, they settled for
$130,250.
The City sought a declaration of coverage and damages in
Louisiana state court; Coregis removed. Cross-motions for summary
judgment followed.
The district court concluded that, under the policy’s
language, the Airport Authority and its board members were excluded
from the definition of “insured”. It consequently found no
coverage or duty to defend, and, on that basis, awarded Coregis
summary judgment.
II.
“We review a grant of summary judgment de novo, applying the
same standard as the district court ... [and] view[ing] the
evidence in a light most favorable to the non-movant”. Vela v.
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City of Houston, 276 F.3d 659, 666 (5th Cir. 2001). “Summary
judgment is proper when ‘there is no genuine issue as to any
material fact and [] the moving part is entitled to a judgment as
a matter of law.’” Id. (quoting FED. R. CIV. P. 56(c)).
A.
The City contends the following provision is sufficiently
ambiguous to not operate as an exclusion: “Unless specifically
endorsed her[e]on, the definition of ‘insured’ does not mean ...
airport”. Essentially, the City maintains that this provision’s
purpose is not to exclude the airport from coverage, but rather to
ensure the airport is not mistaken for the City.
“An insurance policy should not be interpreted in an
unreasonable or a strained manner so as to enlarge or to restrict
its provisions beyond what is reasonably contemplated by its terms
or so as to achieve an absurd conclusion.” Louisiana Ins. Guar.
Ass’n v. Interstate Fire & Cas. Co., 630 So. 2d 759, 763 (La. 1994)
(emphasis added). On that basis, the City’s contention fails.
B.
The City next maintains that an endorsement allowing coverage
for certain employment claims operates to extend coverage in this
case. As the district court held, however, “[b]ecause it
references no entity, the endorsement logically can apply only to
parties covered, and not expressly excluded, under the definition
of insured”.
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C.
Finally, the City maintains that, regardless of coverage vel
non, Coregis had a duty to defend. “[I]f, assuming all the
allegations of [Stoulig’s] petition are true, there would be both
coverage under the policy and liability to the plaintiff, the
insurer must defend the insured regardless of the outcome of the
suit”. C.L. Morris, Inc. v. S. Am. Ins. Co., 550 So. 2d 828, 831
(La. App. 2 1989) (emphasis added). Assuming Stoulig’s allegations
are true, there would be no coverage under the policy.
III.
For the foregoing reasons, the judgment is
AFFIRMED.
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