Esco Transportation Co. v. General Insurance Co. of America

United States Court of Appeals
Fifth Circuit
F I L E D
September 18, 2003
UNITED STATES COURT OF APPEALS Charles R. Fulbruge III
For the Fifth Circuit Clerk
No. 03-20005
ESCO TRANSPORTATION COMPANY; ET AL,
Plaintiffs,
COMPASS BANK,
Plaintiff-Appellant,
VERSUS
GENERAL INSURANCE COMPANY OF AMERICA,
Defendant-Appellee.
Appeal from the United States District Court
For the Southern District of Texas, Houston Division
H-01-CV-1727
Before EMILIO M. GARZA and DENNIS, Circuit Judges, and VANCE,*
District Judge.
____________________
*
District Judge of the Eastern District of Louisiana,
sitting by designation.
PER CURIAM.**
This insurance coverage dispute involves a claim against a
cargo insurance policy made following the theft of a shipment of
clothing from an unattended semitrailer. Compass Bank
("Compass") appeals the district court's grant of summary
judgment in favor of General Insurance Company of America
("General"). For the following reasons, we AFFIRM the district
court's judgment in favor of General.
I. FACTS AND PROCEEDINGS
Esco Transportation Company ("Esco") transported cargo
cross-country. On September 4, 2000, a loaded tractor trailer
owned by Esco was stolen while it was parked unattended on a
public street in East Los Angeles. Evidence indicated that the
cab had been forcibly entered. Esco recovered both the tractor
and the trailer, but it did not recover the cargo in the trailer,
clothing valued at $372,088.80.
Esco submitted a claim to General on its cargo insurance
policy (the "Policy"). The Policy covered loss of cargo:
A. Coverage. We will pay for "loss" to Covered
Property from any of the Covered Causes of Loss.
. . .
3. Covered Causes of Loss. We cover your legal
liability for direct physical "loss" to Covered
____________________
**
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opinion should not be published and is not precedent except under the limited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.
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Property in accordance with the Tariff, Bill of Lading
or Shipping Receipt except those causes of "loss"
listed in the exclusions.
The Policy excluded coverage for loss of cargo caused by theft
"while the property in or on any motor vehicle or trailer is
unattended unless the property is contained in a fully enclosed
and securely locked body or compartment and there is visible
evidence of violent, forcible entry thereto" ("Unattended Trailer
Exclusion"). Section E of the "Loss Conditions" section of the
Policy, entitled "Loss Payment", addressed payment for covered
losses:
We will pay or make good on any "loss" covered under
this Coverage Part within 30 days after:
1. We reach agreement with you;
2. The entry of final judgment; or
3. The filing of an appraisal award.
We will not be liable for any part of a "loss" that has
been paid or made good by others.
On September 25, 2000, Esco filed for relief under Chapter
11 of the Bankruptcy Code.1 On October 3, 2000, General denied
Esco's claim under the Policy based on the Unattended Trailer
Exclusion. General concluded that there was no visible evidence
of forced entry into the trailer. In the denial letter, General
also expressly reserved all rights, privileges and defenses under
the Policy. General further clarified, "No statement or act
undertaken by us shall constitute a waiver or relinquishment ...
1
The bankruptcy proceeding was later converted to a Chapter
7 liquidation.
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of any or all said rights, privileges and defenses."
On April 20, 2001, Esco sued General in Texas state court,
alleging breach of contract, violations of the Texas Insurance
Code, TEX. INS. CODE art. 21.21-2, and violations of the Texas
Deceptive Trade Practices Act, TEX. BUS. & COM. CODE §§ 17.46,
17.50. Esco also sought a declaratory judgment of coverage under
the Policy. In May, 2001, General removed the case to federal
court on diversity grounds and amended its answer to assert
affirmative defenses and to allege that conditions precedent to
recovery under the Policy had not been met.2
General filed a motion for summary judgment, and Esco filed
a motion for partial summary judgment on the issue of General's
obligation to provide coverage for the loss. The district court
granted General's motion as to all extra-contractual claims but
denied it as to the breach of contract claims. The court denied
Esco's motion for partial summary judgment.
On July 8, 2002, Compass moved to substitute itself in place
of Esco as the real party in interest in Esco's suit against
General, contending that it was the successor-in-interest to
Esco's claims and causes of action under the Policy. Compass was
2
Esco initially sued Safeco Insurance Company of America
("Safeco"). Safeco filed the original answer to Esco's complaint,
denying the allegations in the complaint, including the allegation
that Safeco had issued an insurance policy to Esco. Esco filed an
unopposed motion to change the style of the case, changing the name
of the defendant to General Insurance Company of America. Thus
General's amended answer was the first answer to directly address
specific allegations in Esco's complaint.
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a secured creditor of Esco, and Esco secured the loans from
Compass with collateral that included Esco's insurance policies
and proceeds. After the district court granted Compass's motion,
Compass continued to pursue Esco's claims.
General later filed a second motion for summary judgment on
several grounds, including that the Loss Payment provisions in
the Policy which established conditions precedent to coverage had
not been met. The court granted summary judgment based on
Compass's failure to demonstrate that the Loss Payment provisions
had been satisfied and entered final judgment in favor of
General. Plaintiff then moved for a new trial. The district
court denied plaintiff's motion, emphasizing that plaintiff had
failed to present any evidence establishing a loss under the
Policy.
II. DISCUSSION
A. Standard of Review
We review the district court's ruling on a motion for
summary judgment de novo, applying the same legal standard as the
district court. See Wyatt v. Hunt Plywood Co., 297 F.3d 405, 408
(5th Cir.2002). We likewise review matters of contract
interpretation de novo. See T.L. James & Co. v. Traylor Bros.
Inc., 294 F.3d 743, 746 (5th Cir. 2002). Summary judgment should
be granted only when there is "no genuine issue as to any
material fact[.]" Fed. R. Civ. P. 56(c); see also Wyatt, 297
5
F.3d at 408-09. In determining whether there is a dispute as to
any material fact, we consider all of the evidence in the record,
but we do not make credibility determinations or weigh the
evidence. See Reeves v. Sanderson Plumbing Prods., Inc., 530
U.S. 133, 150, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000). Instead,
we "draw all reasonable inferences in favor of the nonmoving
party[.]" Id.; see also Wyatt, 297 F.3d at 409. If we
determine, after giving credence to the facts as presented by the
nonmoving party, that "the moving party is entitled to a judgment
as a matter of law," we affirm the grant of summary judgment.
Fed. R. Civ. P. 56(c). "[S]ummary judgment is appropriate if the
nonmovant fails to establish facts supporting an essential
element of his prima facie claim." GeoSouthern Energy Corp. v.
Chesapeake Operating Inc., 274 F.3d 1017, 1020 (5th Cir. 2001).
The nonmovant cannot avoid summary judgment by presenting only
"conclusory allegations" or "unsubstantiated assertions" but must
present sufficient evidence to create a genuine issue of material
fact. See Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th
Cir. 1994).
B. Analysis
In its second motion for summary judgment, General argued
that Compass lacked standing to bring a claim for breach of
contract, that Compass could not establish any rights under the
Policy, and that Compass could not show the existence of a
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triable issue about whether the conditions precedent to coverage
had been met. The district court granted summary judgment based
on Compass's failure to put forth any evidence that either it or
Esco had complied with the Policy's provisions for establishing
loss.
Under Texas law, the insured bears the burden of
establishing that a claimed loss falls within the terms of the
policy. See Western Alliance Ins. Co. v. Northern Ins. Co., 176
F.3d 825, 831 (5th Cir. 1999); Employers Cas. Co. v. Block, 744
S.W.2d 940, 944 (Tex. 1988), overruled on other grounds by State
Farm Fire & Cas. v. Gandy, 925 S.W.2d 696 (Tex.1996). General
contends that summary judgment was warranted because Compass did
not establish the existence of a covered loss under the Policy.
The Policy provided that General would cover the insured's
"legal liability" for third-party loss "in accordance with the
Tariff, Bill of Lading or Shipping Receipt." The record contains
no evidence of any tariff, bill of lading, shipping receipt, or
other document showing Esco's legal liability, the value of the
cargo, or the owner of the cargo. Compass conceded that Esco has
not reimbursed Sam's Wholesale Club for the value of the cargo.
When Esco filed its complaint, it asserted that cargo valued at
$372,088.80 was stolen, and Esco therefore was required to
reimburse Sam's Wholesale Club for the stolen cargo. Esco also
submitted an affidavit of an Esco employee with its motion for
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partial summary judgment that conclusorily asserted that Esco was
required to reimburse Sam's Wholesale Club for the value of the
cargo, without establishing the basis for Esco's liability to
Sam's Wholesale Club. The record contains nothing of evidentiary
value on the issue of Esco's legal liability, much less evidence
establishing Esco's legal liability "in accordance with the
Tariff, Bill of Lading or Shipping Receipt." Compass disputes
General's representation of the record, stating that it supplied
General with a bill of lading and a claim from the cargo owner,
but as the district court noted, the record does not contain any
such evidence. As a result, Compass has failed to establish a
genuine issue of material fact with respect to Esco's legal
liability, and thus whether there was a covered cause of loss
under the Policy. General was therefore entitled to summary
judgment.
Although Compass quarrels with the district court's
conclusion that the insured had to meet one of the three
conditions listed in the Loss Payment provision to establish
liability, we note that Compass failed to establish Esco's legal
liability by any means. The district court emphasized the
absence of any evidence that Esco was indeed liable to Sam's
Wholesale Club in its denial of plaintiff's motion for a new
trial. The Policy covers only legal liability, and we affirm the
district court's conclusion that Compass never established the
existence of Esco's legal liability under the Policy. As a
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result, we also need not reach the issue of whether the loss is
excluded from coverage under the Unattended Trailer Exclusion.
Compass argues that when General initially denied coverage
to Esco based on the Unattended Trailer Exclusion, it waived any
other defenses to coverage. Compass relies on Lancon v.
Employers Nat'l Life Ins. Co., 424 S.W.2d 321 (Tex. Civ. App. -
Houston [1st Dist.] 1968); Scott v. Indus. Life Ins., 411 S.W.2d
769 (Tex. Civ. App. - Dallas 1967); and Am. Employers Inc. Co. v.
El Paso Val Cotton, 392 S.W.2d 569 (Tex.Civ.App.-El Paso 1965).
As the court stated in Lancon, "when one specific ground of
forfeiture is urged against a policy of insurance, and the
validity thereof denied on that ground alone, all other grounds
are waived." 424 S.W.2d at 323. In its initial letter denying
coverage, General did not rely on the single ground alone and
instead specifically reserved all rights, privileges, and
defenses under the Policy. Further, when General answered Esco's
claims, it promptly asserted affirmative defenses and alleged
that conditions precedent to recovery under the Policy had not
been met. Because General did not deny Esco's claim on the
Unattended Trailer Exclusion ground alone, we affirm the district
court's finding that General did not waive all other defenses
under the Policy.
III. CONCLUSION
Because Compass failed to meet its burden of establishing
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Esco's legal liability for the loss and thus did not establish
the existence of a covered loss under the policy, we AFFIRM the
district court's grant of summary judgment for General.
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