Royal v. Ard

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 95-60041
Summary Calendar
ISOLA D. ROYAL, ET AL.,
Plaintiffs-Appellants,
versus
JERRY ARD,
Defendant-Appellee,
CANAL INSURANCE CO., ET AL.,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of Mississippi
(2:93-CV-202-PS)
September 21, 1995
Before HIGGINBOTHAM, DUHE’, and EMILIO M. GARZA, Circuit Judges.
PER CURIAM:*
Isola D. Royal, et al., appeal from the District Court's grant
of summary judgment in favor of Canal Insurance Co. We have
jurisdiction over this timely filed appeal pursuant to 28 U.S.C.
§ 1291, and we affirm the decision of the District Court.
I.
*
Local Rule 47.5 provides: "The publication of opinions that
have no precedential value and merely decide particular cases on
the basis of well-settled principles of law imposes needless
expense on the public and burdens on the legal profession."
Pursuant to that Rule, the Court has determined that this opinion
should not be published.
This present suit is the third arising from the unfortunate
events of March 24, 1991. We summarize the facts and history of
the previous two cases only insofar as they are relevant to the
disposition of the current suit. On March 24, 1991 while driving
a 1987 Peterbuilt truck, Bobby Ard collided with an automobile
driven by Byron K. Royal, resulting in Royal's death. Members of
Royal's family sued Jerry Ard, Bobby Ard's employer, in the Circuit
Court of Claiborne County, Mississippi. At the time of the
accident, Jerry Ard possessed two automobile insurance policies.
The first, the Basic Automobile Liability Policy No. G02068 issued
by Canal Insurance Co., covered liability for bodily injury up to
$300,000; the second, the Excess Indemnity Policy No. X003559
issued by Canal Indemnity Co., covered liability in excess of the
primary coverage up to $500,000. Canal Insurance Co. defended Ard
under the express reservation that Ard's insurance policies with
Canal did not cover the 1987 Peterbuilt. On June 24, 1993, the
state court rendered judgment for the Royals and awarded damages of
$553,500.
While the state court tort action was pending, Canal filed a
declaratory judgment suit in the U.S. District Court for the
Southern District of Mississippi naming, among others, the members
of the Royal family as defendants. Canal sought a declaration that
its policy did not cover the 1987 Peterbuilt truck at the time of
the accident. Canal's insurance policy limited coverage to
personal injuries resulting from the use of "an owned automobile or
of a temporary substitute automobile," the latter of which the
2
policy defined as "an automobile not owned by the named insured or
any resident of the same household, while temporarily used with the
permission of the owner as a substitute for an owned automobile
when withdrawn from normal use for servicing or repair or because
of its breakdown, loss or destruction."
Canal moved for summary judgment, claiming that the Peterbuilt
was not a "temporary substitute automobile" because Jerry Ard was
the owner of the truck at the time of the accident.1 To support
its motion, Canal filed a copy of a motor vehicle lease agreement
with KTA, Inc. signed by Jerry Ard and his wife, LaGwen. Canal
claimed that, although denominated as a "lease", the agreement was
actually a conditional sales contract. Canal pointed out that the
agreement provided that, after making the final lease payment, Ard
could purchase the truck for no extra charge. In addition, Canal
filed the affidavits of two KTA officers, who stated that the lease
agreement was functionally a conditional sale and that they
considered Ard to be the owner of the truck. According to the
officers, KTA retained title to the truck as security.
In response, the Royals claimed that the Peterbuilt was
covered by the Canal insurance policy as a "temporary substitute
automobile" because, at the time of the accident, KTA owned the
truck and the truck was being used as a substitute vehicle while
the normal truck used by Ard was undergoing repairs. To bolster
1
The Royals conceded that the Peterbuilt truck was not
covered as an "owned automobile." To qualify as an "owned
automobile" under the terms of the policy, the automobile must
either (1) be owned by the insured and described in the policy, or
(2) be newly acquired by the insured during the policy period.
3
their claim, the Royals presented certified copies of the title
documents for the 1987 Peterbuilt showing KTA as the owner of
record.
On June 21, 1994, the district court granted Canal's motion
for summary judgment, concluding that the 1987 Peterbuilt truck did
not qualify as a "temporary substitute automobile" because Jerry
Ard owned the truck at the time of the accident. Applying
Mississippi law, the district court found that the lease agreement
between KTA and Ard was a conditional sales contract. The court
noted that the lease agreement provided that "Jerry Ard had to
provide his own insurance except for collateral insurance; taxes
had to be paid by Jerry Ard; Jerry Ard was responsible for any and
all repairs and maintenance; and Jerry Ard had the exclusive use,
possession and control of the 1987 Peterbuilt tractor." The court
also emphasized that the lease agreement provided that Ard could
purchase the truck for no additional charge upon completion of the
lease payments. Moreover, Ard in his deposition admitted that he
was the owner of the truck. Because the 1987 Peterbuilt did not
qualify as a temporary substitute automobile, the court concluded
that the Canal insurance policy did not cover the 1987 Peterbuilt
truck at the time of the accident. The Royals did not appeal the
District Court's judgment for Canal.
On June 24, 1993, after the state court had awarded judgment
for the Royals but while the declaratory judgment action was still
pending, the Royals filed a Suggestion for Writ of Garnishment in
the Circuit Court of Claiborne County, Mississippi. The court
4
issued the Writ of Garnishment against Canal. Alleging diversity
of citizenship,2 Canal removed the garnishment action to the U.S.
District Court for the Southern District of Mississippi, in which
Canal' motion for summary judgment in its declaratory judgment
action was then pending. On November 7, 1994, after the court had
rendered judgment for Canal Insurance Co. in the declaratory
judgment action, Canal Indemnity Co. filed a Notice of Joinder to
join in a Motion for Summary Judgment filed by Canal Insurance Co.
that same day. Relying on the summary judgment in the declaratory
judgment action, Canal claimed that it was not liable to Jerry Ard
since its insurance policy issued to Ard did not cover the 1987
Peterbuilt truck at the time of the accident.
Furthermore, Canal Indemnity claimed since Canal Insurance was
not liable to Ard on the primary insurance policy, Canal Indemnity
was not liable to Ard on the excess insurance policy. Canal
emphasized that the excess insurance policy by its own terms
covered Ard only for such loss "as would have been payable under
all of the terms of the [primary policy]." Canal Indemnity also
pointed to language in the excess liability insurance policy that
provided that the policy was "subject to all the conditions,
agreements, exclusions and limitations of and shall follow the
Primary Insurance in all respects . . . ."
2
Canal Insurance Co. is a South Carolina corporation with
its principal place of business in Greenville, South Carolina. The
Royals are all adult citizens of Mississippi or Louisiana. The
district court had jurisdiction of the garnishment action pursuant
to 28 U.S.C. § 1441.
5
The Royals never responded to Canal's motion for summary
judgment, and, on January 17, 1995, the district court granted
Canal's motion. The court held that "based on the reasoning in the
previous Opinion of this Court in the declaratory judgment action,
Defendant Canal is entitled to Summary Judgment on the issue of
coverage in the primary policy." Additionally, the court found
that "the express provisions of the excess policy provide that the
primary policy governs, and thus Canal is entitled to Summary
Judgment as to coverage on this policy as well." The Royals timely
appealed the district court's decision.
II.
On appeal, the Royals now argue that, if the lease agreement
with KTA was a conditional sales contract as the district court
found, both LaGwen and Jerry Ard, not just Jerry Ard, owned the
truck. From this premise, the Royals conclude that, under
Mississippi law, Jerry Ard did not own the 1987 Peterbuilt truck
and, therefore, the truck qualified as a temporary substitute
automobile under the terms of the Canal insurance policies.
We are reluctant to address this contention since the Royals
did not raise it (or any other argument) in response to Canal's
motion for summary judgment. Although the failure to respond to a
motion for summary judgment does not entitle the movant to summary
judgment, Resolution Trust Corp. v. Starkey, 41 F.3d 1018, 1022-23
(5th Cir. 1995), the nonmovant may not attack the summary judgment
by raising new legal claims on appeal. John v. State of La. (Bd.
of Trustees for State Colleges & Universities), 757 F.2d 698, 710
6
(5th Cir. 1985); Topalian v. Ehrman, 954 F.2d 1125, 1132 n.10 (5th
Cir.), cert. denied, 113 S. Ct. 82 (1992). Our review is limited
to the summary judgment record before the trial court. Topalian,
954 F.2d at 1131 n.10. The Royals did not raise this claim in
response to Canal's motion for summary judgment in the district
court, nor did the Royals raise it in response to Canal's motion
for summary judgment in the declaratory judgment action, nor did
they appeal that judgment on this ground. In short, the claim that
the 1987 Peterbuilt truck is not owned by Jerry Ard because it is
owned by LaGwen and Jerry Ard jointly is raised for the first time
on appeal and is, therefore, waived by the Royals.
Even if the Royals had not waived it, this argument is without
merit. We are baffled by the claim that because the Peterbuilt
truck is owned jointly by Jerry Ard and his wife, it is, therefore,
not owned by Jerry Ard. The cases cited by the Royals do not stand
for this proposition.3 To the contrary, under Mississippi law, a
3
The Mississippi Supreme Court in Caldwell v. Hartford
Acc. & Indem. Co., 160 So. 2d 209, 212 (Miss. 1964), held that an
automobile owned individually by the insured's wife was not owned
by the insured. In reaching this conclusion, the court in Caldwell
followed and quoted from the South Carolina Supreme Court's
decision in Baxley v. State Farm Mut. Auto. Liability Ins. Co., 128
S.E.2d 165, 166 (S.C. 1962), a case which the Royals do not discuss
in their brief for good reason. Although the Baxley court held
that a car owned by the named insured's wife was not owned by the
named insured, the court emphasized that the automobile was owned
by the insured's wife individually, not by the insured and his wife
jointly as is the case here. Id.
The other cases cited by the Royals are even less availing.
The West Virginia Supreme Court of Appeals in Farley v. American
Auto. Ins. Co., 72 S.E.2d 520, 521 (W. Va. 1952), did not hold that
an automobile owned by a named insured along with another was not
owned by the named insured; rather, the court held that an
automobile owned by one of two named insured was not owned by the
named insured. Finally, the court in Saint Paul-Mercury Indem. Co.
7
co-owner has the rights to possess and use the property and to
share in the rents and profits accruing from the property. Eden
Drainage Dist. of Yazoo Cty. v. Swaim, 54 So. 2d 547, 550 (Miss.
1951), error overruled, 55 So. 2d 439 (Miss. 1951). In addition, a
co-owner must pay his proportionate share of expenses for
maintenance of the property. Id. While co-owners do not possess
all the rights, such as exclusive possession, that an individual
owner has, the Royals do not explain nor do we perceive how that
difference undermines the conclusion that Jerry Ard owns the 1987
Peterbuilt truck for the purpose of determining the scope of the
insurance coverage.
Furthermore, even were we to accept the Royals' claim that the
1987 Peterbuilt was not owned by Jerry Ard, we would still be
compelled to affirm the district court. Unlike the insurance
policies in the cases cited by the Royals, the primary insurance
policy issued by Canal expressly states that a temporary substitute
automobile is an automobile "not owned by the named insured or any
resident of the same household." This provision prevents insurers
from covering the insured's regular use of vehicles owned by
members of the same household. Accepting the Royals' argument that
Jerry Ard and his wife, LaGwen, jointly own the 1987 Peterbuilt
truck, we still must conclude that the truck does not qualify as a
temporary substitute automobile because the truck is owned by both
v. Heflin, 137 F. Supp. 520, 523 (W.D. Ark. 1956), held that an
automobile owned by a partnership was not owned by the named
insured, who was one of the partners, since partnership property is
not property of the partners individually.
8
the named insured, Jerry Ard, and a resident of his household,
LaGwen Ard.
Finally, the Royals did not controvert the district court's
conclusion that the excess insurance policy's coverage is
coterminous with that of the primary policy. The excess policy
covers Ard only for such loss "as would have been payable under all
of the terms of the [primary policy]." Furthermore, the excess
policy is "subject to all the conditions, agreements, exclusions
and limitations of and shall follow the Primary Insurance in all
respects." The district court correctly held that because the
primary policy did not cover the 1987 Peterbuilt at the time of the
accident, the excess insurance policy did not cover it either.
III.
Canal is entitled to summary judgment because the Royals
"ha[ve] failed to make a sufficient showing on an essential element
of [their] case with respect to which [they have] the burden of
proof." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Accordingly, the judgment of the district court is AFFIRMED.
9