Kenneth McQuinnie v. American Home Assurance Co.

Case: 10-10042 Document: 00511232253 Page: 1 Date Filed: 09/13/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
September 13, 2010
No. 10-10042 Lyle W. Cayce
Clerk
KENNETH MCQUINNIE,
Plaintiff–Appellant
v.
AMERICAN HOME ASSURANCE COMPANY,
Defendant–Appellee
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:09-cv-00920-B
Before STEWART, PRADO, and ELROD, Circuit Judges.
PER CURIAM:*
Kenneth McQuinnie appeals the district court’s grant of summary
judgment in favor of American Home Assurance Co. (“American”) and its denial
of his cross-motion for summary judgment. The district court held that
American was not contractually bound to pay McQuinnie “underinsured”
benefits under the Business Auto Policy (the “Policy”) held by McQuinnie’s
employer after McQuinnie was injured in a car accident with Anand Prasad
Sapkota. Sapkota drove a rented vehicle owned by Enterprise Leasing
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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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(“Enterprise”), an undisputed “self-insurer” under the Texas Motor Vehicle
Safety Responsibility Act. The Policy explicitly excludes vehicles “owned or
operated” by self-insurers from the “uninsured” category.
On appeal, McQuinnie argues that the self-insurer exclusion in the Policy
(1) creates a “fatal ambiguity” and (2) conflicts with Texas law. Because the
Policy contains no ambiguity and does not contravene any Texas statutory
provision, we affirm the district court’s grant of summary judgment in favor of
American.
I. FACTUAL AND PROCEDURAL BACKGROUND
In August 2007, McQuinnie sustained damages in an accident between his
vehicle and a rental car driven by Sapkota. Enterprise owned the car Sapkota
drove. At the time of the accident, McQuinnie was covered by the Policy, which
his employer purchased from American. McQuinnie and Sapkota’s insurance
company reached a settlement of $50,000, the limit of Sapkota’s personal
insurance policy.
Alleging that his damages exceeded $50,000, McQuinnie filed a claim with
American, seeking benefits under the “uninsured/underinsured” provisions of the
Policy. In relevant part, the Policy provides that American “will pay damages
which an insured is legally entitled to recover from the owner or operator of an
uninsured motor vehicle because of bodily injury sustained by an insured, or
property damage caused by an accident.” (emphasis added). The Policy also
provides definitions specific to uninsured/underinsured coverage:
F. ADDITIONAL DEFINITIONS
The following are added to the DEFINITIONS section and
have special meaning for UNINSURED/UNDERINSURED
MOTORISTS INSURANCE . . .
6. “Uninsured motor vehicle” means a land motor vehicle
or trailer of any type: . . .
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d. Which is an underinsured motor vehicle. An
underinsured motor vehicle is one to which a
liability bond or policy applies at the time of the
accident but its limit of liability either:
(1) is not enough to pay the full amount the
covered insured is legally entitled to recover; or
(2) has been reduced by payment of claims to
an amount which is not enough to pay the full
amount the covered insured is legally entitled to
recover as damages.
(emphasis added). Finally, the Policy provides a list of exceptions, including the
following: “‘uninsured motor vehicle’ does not include any vehicle . . . [o]wned or
operated by a self-insurer under any applicable motor vehicle law.” (emphasis
added).
American denied McQuinnie’s claim because Enterprise is a self-insurer
under the Texas Motor Vehicle Safety Responsibility Act and therefore falls
within the Policy exception for self-insured owners or operators. McQuinnie
subsequently filed this suit against American in state court seeking to recover
benefits from American. American removed the case to federal court and filed
a motion for summary judgment, relying on the self-insurer exception.
McQuinnie filed a cross motion for summary judgment and cited 49 U.S.C.
§ 30106, which provides that:
(a) In general.—An owner of a motor vehicle that rents or leases the
vehicle to a person (or an affiliate of the owner) shall not be liable
under the law of any State or political subdivision thereof, by reason
of being the owner of the vehicle (or an affiliate of the owner), for
harm to persons or property that results or arises out of the use,
operation, or possession of the vehicle during the period of the rental
or lease, if—
(1) the owner (or an affiliate of the owner) is engaged in the
trade or business of renting or leasing motor vehicles; and
(2) there is no negligence or criminal wrongdoing on the part
of the owner (or an affiliate of the owner).
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McQuinnie used § 30106 to bolster his argument that the self-insurer exception
only applies when the insured is legally entitled to recover from the self-insurer,
and because federal law prevented any recovery from Enterprise, he should be
permitted to recover from American, despite the self-insurer exception.
The district court granted American’s motion for summary judgment,
characterizing McQuinnie’s position as “a truly novel argument unsupported by
the case authority.” The district court found that the Policy unambiguously
defined the term “uninsured motor vehicle” and included examples of vehicles
that are, and are not, included. Because the Policy excluded “any vehicles owned
or operated by a self-insurer under any applicable motor vehicle law,” and the
parties did not dispute that Enterprise is a self-insurer, the district court found
that Enterprise’s vehicle was “expressly excluded” from coverage. Finding that
“[n]othing in the written language employed by the drafters of the Policy
suggests that they intended that there be an exception for instances in which the
insured cannot legally recover against the self-insurer,” the district court
granted summary judgment in favor of American and denied it as to McQuinnie.
McQuinnie timely appealed.
II. ANALYSIS
A. Standard of Review
We review “the district court’s grant of summary judgment de novo,
applying the same standard as the district court.” Chaney v. Dreyfus Serv.
Corp., 595 F.3d 219, 228–29 (5th Cir. 2010) (citing Golden Bridge Tech., Inc. v.
Motorola, Inc., 547 F.3d 266, 270 (5th Cir. 2008)). Summary judgment is
appropriate “if the pleadings, the discovery and disclosure materials on file, and
any affidavits show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.” F ED. R. C IV. P. 56(c).
“The district court’s interpretation of an insurance contract is a question of law
that we . . . review de novo.” Consumers Cnty. Mut. Ins. Co. v. P.W. & Sons
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Trucking, Inc., 307 F.3d 362, 365 (5th Cir. 2002) (citation omitted). “If the court
finds no ambiguity, the court’s duty is to enforce the policy according to its plain
meaning.” Valmont Energy Steel, Inc. v. Commercial Union Ins. Co., 359 F.3d
770, 773 (5th Cir. 2004) (citing Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938
(Tex. 1984))
B. Sapkota Did Not Drive an Uninsured Motor Vehicle
1. American’s Policy Is Not Ambiguous
Although McQuinnie argues that a “fatal ambiguity” exists in the Policy,
he fails to direct us to the provisions he finds ambiguous. Having examined the
Policy, we find it unambiguous. “Reliance on defined terms in insurance policies
to construe those contracts is necessary to determine the intent of the parties
and integral to the application of basic principles of contract interpretation to
insurance policies.” Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211,
219 (Tex. 2003) (citations omitted). The Policy provides that American “will pay
damages which an insured is legally entitled to recover from the owner or
operator of an uninsured motor vehicle.” The Policy further defines “uninsured
motor vehicle” as an “underinsured motor vehicle.” In other words, the Policy
makes it clear that an “underinsured motor vehicle” is encompassed by the
definition of “uninsured motor vehicle.”
The Policy also provides that an “‘uninsured motor vehicle’ does not
include any vehicle . . . owned or operated by a self-insurer under any applicable
motor vehicle law.” Because the Policy does not consider a vehicle
“uninsured”—and thus provides no coverage—if it is owned or operated by a
“self-insurer,” and an “underinsured vehicle” is a type of “uninsured vehicle,” it
necessarily follows that if an owner or operator of an underinsured vehicle is a
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self-insurer, then the insured is not entitled to recover damages under the
Policy. We therefore find the Policy unambiguous.1
2. American’s Policy Is Valid under Texas Law
i. Texas Law Considers the Insured Nature of the
Vehicle, Not the Tortfeasor
McQuinnie argues that Texas law considers the insurance status of the
tortfeasor, not the insurance status of the vehicle involved in an accident, and
thus Enterprise’s self-insurer status should not defeat coverage. McQuinnie,
however, misinterprets Texas’s Insurance Code (“TIC”). TIC § 1952.101 states
that “‘uninsured or underinsured motorist coverage’ means the provisions of an
automobile liability insurance policy . . . that protects insureds who are legally
entitled to recover from owners or operators of uninsured or underinsured motor
vehicles.” (emphasis added). The TIC provisions addressing the terms
“uninsured”2 and “underinsured”3 also explicitly reference vehicles. No relevant
statute makes mention of an uninsured or underinsured tortfeasor.
1
McQuinnie’s reliance on Murray v. American Family Mutual Insurance Co., 429 F.3d
757 (8th Cir. 2005), for his argument that we should construe the Policy’s alleged ambiguity
in his favor is misplaced. Not only did Murray interpret Missouri law rather than Texas law,
see id. at 761, the Murray court addressed a Policy with a clear and undisputed ambiguity.
See id. at 764 (“The [plaintiffs] argue that since the vehicle [the tortfeasor] was driving fits
both the description of a vehicle that is underinsured and the description of a vehicle that is
not underinsured, the policy is ambiguous.”). In this case, we find no ambiguity in the Policy
at issue.
2
See TIC § 1952.102 (“For purposes of the coverage required by this subchapter,
‘uninsured motor vehicle,’ subject to the terms of the coverage, is considered to include an
insured motor vehicle as to which the insurer providing liability insurance is unable because
of insolvency to make payment with respect to the legal liability of the insured within the
limits specified in the insurance.”) (emphasis added).
3
See TIC § 1952.103 (“For purposes of the coverage required by this subchapter,
‘underinsured motor vehicle’ means an insured motor vehicle on which there is collectible
liability insurance coverage with limits of liability for the owner or operator that were
originally lower than, or have been reduced by payment of claims arising from the same
accident to, an amount less than the limit of liability stated in the underinsured coverage of
the insured’s policy.”) (emphasis added).
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In support of his position, McQuinnie argues that the Texas legislature’s
purpose behind passing TIC § 1952.103’s predecessor was to protect the people
of Texas from financially irresponsible drivers. He also cites Infante v. Texas
Farmers Insurance Co., which states:
The purpose of underinsured motorist coverage is to provide an
individual injured by a motorist carrying insurance in an amount
less than that required by law, or otherwise reduced by payments
to other claimants in the same accident, to an amount less than
required by law, with no less coverage than the injured party would
receive had the tort feasor been fully insured or fully covered in
relation to plaintiffs’ underinsured motorist coverage under the law.
640 S.W.2d 321, 323 (Tex. App—Beaumont 1982, writ ref’d n.r.e.) (citation
omitted) (emphasis added). Finally, McQuinnie cites Stracener v. United
Services Automobile Association, 777 S.W.2d 378, 380 (Tex. 1989), asserting that
it stands for the proposition that a motorist is underinsured if his or her liability
insurance will not suffice to pay for the injured party’s actual damages.
McQuinnie’s support does not overcome the clear language of the three
relevant TIC provisions, which refer to the insured nature of the motor vehicle
rather than the tortfeasor. We therefore reject McQuinnie’s argument that,
under Texas law, we must look to the insured nature of the tortfeasor rather
than the insured nature of the vehicle.
ii. The Policy Is Valid under Texas Law
TIC § 1952.103 states that “an underinsured motor vehicle is an insured
motor vehicle on which there is collectible liability insurance coverage” that does
not fully cover a victim’s damages. McQuinnie contends that, under federal law,
Enterprise had no “collectible liability insurance coverage” on the vehicle
Sapkota drove, and therefore the district court erred by considering Enterprise,
rather than only Sapkota. Thus, McQuinnie concludes, “the ‘self-insurer’
exclusion is inapplicable to defeat coverage for underinsured motorist benefits,”
because Sapkota was not a self-insurer and because Enterprise cannot be liable.
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Texas law mandates that any insurer offering automobile coverage must
provide “uninsured or underinsured motorist coverage in the policy or
supplemental to the policy.” TIC § 1952.101(b). An “underinsured motor
vehicle” is defined by Texas law as
an insured motor vehicle on which there is collectible liability
insurance coverage with limits of liability for the owner or operator
that were originally lower than, or have been reduced by payment
of claims arising from the same accident to, an amount less than the
limit of liability stated in the underinsured coverage of the insured’s
policy.
TIC § 1952.103. Texas law explicitly allows certain exclusions from its mandate
that automobile insurers provide uninsured motor vehicle coverage: “[t]he
commissioner may . . . allow ‘uninsured motor vehicle’ to be defined or . . . define
‘uninsured motor vehicle,’ to exclude certain motor vehicles whose operators are
in fact uninsured.” TIC § 1952.102. McQuinnie makes no allegation that the
commissioner did not approve American’s self-insurer exception.
As the vehicle’s “operator,” Sapkota had “collectible liability insurance
coverage,” which means that under Texas law, the car Sapkota drove was
underinsured. Under the Policy, a car that is “underinsured” is considered
“uninsured,” and nothing cited by McQuinnie suggests that an insurance
company may not define “underinsured motor vehicle” as a sub-category of
“uninsured motor vehicle” and include exclusions that apply to both. Under the
Policy, a motor vehicle is not “uninsured” if it is “owned or operated by a
self-insurer under any applicable motor vehicle law.” (emphasis added). It is
undisputed that Enterprise owned the car Sapkota drove and undisputed that
Enterprise is a self-insurer. We thus hold that the application of American’s
self-insurer exception does not violate Texas law, and it therefore bars
McQuinnie from recovery under the Policy. Accordingly, we affirm the district
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court’s grant of summary judgment in favor of American and its denial as to
McQuinnie.
III. CONCLUSION
The Policy contains no ambiguity. Additionally, the Policy does not
contravene any Texas law. We therefore affirm the district court’s grant of
summary judgment in favor of American and its denial as to McQuinnie.
AFFIRMED.
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