Kenneth McQuinnie v. American Home Assurance Co.

Filing

UNPUBLISHED OPINION FILED. [10-10042 Affirmed] Judge: CES , Judge: ECP , Judge: JWE. Mandate pull date is 10/28/2010 [10-10042]

Kenneth McQuinnie v. American Home Assurance Co.

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IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
October 7, 2010 N o . 10-10042 Lyle W. Cayce Clerk

K E N N E T H MCQUINNIE, P la in t if f ­ A p p e lla n t v. A M E R I C A N HOME ASSURANCE COMPANY, D e fe n d a n t ­ A p p e lle e

A p p e a l from the United States District Court for the Northern District of Texas U S D C No. 3:09-cv-00920-B

O N PETITION FOR PANEL REHEARING B e fo r e STEWART, PRADO, and ELROD, Circuit Judges. P E R CURIAM:* T h e original opinion in this case was issued by the panel on September 13, 2 0 1 0 . We GRANT the petition for rehearing in part, withdraw our previous o p in io n , and substitute the following.

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 R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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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Dockets.Justia.com

Case: 10-10042

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Date Filed: 10/07/2010

No. 10-10042 K e n n e t h McQuinnie appeals the district court's grant of summary ju d g m e n t in favor of American Home Assurance Co. ("American") and its denial o f his cross-motion for summary judgment. The district court held that

A m e r i c a n was not contractually bound to pay McQuinnie "underinsured" b e n e fits under the Business Auto Policy (the "Policy") held by McQuinnie's e m p lo y e r after McQuinnie was injured in a car accident with Anand Prasad S a p k ota . Sapkota drove a rented vehicle owned by Enterprise Leasing

(" E n te r p r is e " ), an undisputed "self-insurer" under the Texas Motor Vehicle S a fe t y Responsibility Act. The Policy explicitly excludes vehicles "owned or o p e r a t e d " by self-insurers from the "uninsured" category. O n appeal, McQuinnie argues that the self-insurer exclusion in the Policy (1 ) creates a "fatal ambiguity" and (2) conflicts with Texas law. Because the P o lic y contains no ambiguity and does not contravene any Texas statutory p r o v is io n , we affirm the district court's grant of summary judgment in favor of A m e r ic a n . I. FACTUAL AND PROCEDURAL BACKGROUND I n August 2007, McQuinnie sustained damages in an accident between his v e h ic le and a rental car driven by Sapkota. Enterprise owned the car Sapkota d r o v e . At the time of the accident, McQuinnie was covered by the Policy, which h is employer purchased from American. McQuinnie and Sapkota's insurance c o m p a n y reached a settlement of $50,000, the limit of Sapkota's personal in s u r a n c e policy. Alleging that his damages exceeded $50,000, McQuinnie filed a claim with A m e r ic a n , seeking benefits under the "uninsured/underinsured" provisions of the P o lic y . In relevant part, the Policy provides that American "will pay damages w h ic h an insured is legally entitled to recover from the owner or operator of an u n in s u r e d motor vehicle because of bodily injury sustained by an insured, or

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No. 10-10042 p r o p e r t y damage caused by an accident." (emphasis added). The Policy also p r o v id e s definitions specific to uninsured/underinsured coverage: F. A D D I T I O N A L DEFINITIONS The following are added to the DEFINITIONS section and h a v e special meaning for UNINSURED/UNDERINSURED M O T O R I S T S INSURANCE . . . 6. " U n in s u r e d motor vehicle" means a land motor vehicle o r trailer of any type: . . . d. W h ic h is an underinsured motor vehicle. An u n d e r i n s u r e d motor vehicle is one to which a lia b ilit y bond or policy applies at the time of the a c c id e n t but its limit of liability either: (1 ) is not enough to pay the full amount the c o v e r e d insured is legally entitled to recover; or (2 ) h a s been reduced by payment of claims to a n amount which is not enough to pay the full a m o u n t the covered insured is legally entitled to r e c o v e r as damages. (e m p h a s is added). Finally, the Policy provides a list of exceptions, including the fo llo w in g : "`uninsured motor vehicle' does not include any vehicle . . . [o]wned or o p e r a te d by a self-insurer under any applicable motor vehicle law." (emphasis a d d e d ). American denied McQuinnie's claim because Enterprise is a self-insurer u n d e r the Texas Motor Vehicle Safety Responsibility Act and therefore falls w it h in the Policy exception for self-insured owners or operators. McQuinnie s u b s e q u e n t ly filed this suit against American in state court seeking to recover b e n e fits 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:

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No. 10-10042 (a ) In general.--An owner of a motor vehicle that rents or leases the v e h ic l e to a person (or an affiliate of the owner) shall not be liable u n d e r the law of any State or political subdivision thereof, by reason o f being the owner of the vehicle (or an affiliate of the owner), for h a r m to persons or property that results or arises out of the use, o p e r a tio n , or possession of the vehicle during the period of the rental o r lease, if-- ( 1 ) the owner (or an affiliate of the owner) is engaged in the t r a d e or business of renting or leasing motor vehicles; and (2 ) there is no negligence or criminal wrongdoing on the part o f the owner (or an affiliate of the owner). McQuinnie used § 30106 to bolster his argument that the self-insurer exception o n ly applies when the insured is legally entitled to recover from the self-insurer, a n d because federal law prevented any recovery from Enterprise, he should be p e r m it t e d to recover from American, despite the self-insurer exception. The district court granted American's motion for summary judgment, c h a r a c t e r iz in g McQuinnie's position as "a truly novel argument unsupported by t h e case authority." The district court found that the Policy unambiguously d e fin e d the term "uninsured motor vehicle" and included examples of vehicles t h a t are, and are not, included. Because the Policy excluded "any vehicles owned o r operated by a self-insurer under any applicable motor vehicle law," and the p a r tie s did not dispute that Enterprise is a self-insurer, the district court found t h a t Enterprise's vehicle was "expressly excluded" from coverage. Finding that " [n ] o t h in g in the written language employed by the drafters of the Policy s u g g e s t s that they intended that there be an exception for instances in which the in s u r e d cannot legally recover against the self-insurer," the district court g r a n t e d summary judgment in favor of American and denied it as to McQuinnie. McQuinnie timely appealed. I I . ANALYSIS A. S ta n d a r d of Review

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No. 10-10042 W e review "the district court's grant of summary judgment de novo, a p p ly in g the same standard as the district court." Chaney v. Dreyfus Serv. C o r p ., 595 F.3d 219, 228­29 (5th Cir. 2010) (citing Golden Bridge Tech., Inc. v. M o to r o la , Inc., 547 F.3d 266, 270 (5th Cir. 2008)). Summary judgment is

a p p r o p r ia te "if the pleadings, the discovery and disclosure materials on file, and a n y affidavits show that there is no genuine issue as to any material fact and t h a t the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). "The district court's interpretation of an insurance contract is a question of law t h a t we . . . review de novo." Consumers Cnty. Mut. Ins. Co. v. P.W. & Sons T r u c k in g , Inc., 307 F.3d 362, 365 (5th Cir. 2002) (citation omitted). "If the court fin d s no ambiguity, the court's duty is to enforce the policy according to its plain m e a n in g ." Valmont Energy Steel, Inc. v. Commercial Union Ins. Co., 359 F.3d 7 7 0 , 773 (5th Cir. 2004) (citing Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (T e x . 1984)) B. S a p k o t a Did Not Drive an Uninsured Motor Vehicle 1. A m e r i c a n 's Policy Is Not Ambiguous

A lt h o u g h McQuinnie argues that a "fatal ambiguity" exists in the Policy, h e fails to direct us to the provisions he finds ambiguous. Having examined the P o lic y , we find it unambiguous. "Reliance on defined terms in insurance policies t o construe those contracts is necessary to determine the intent of the parties a n d integral to the application of basic principles of contract interpretation to in s u r a n c e policies." Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 2 1 9 (Tex. 2003) (citations omitted). The Policy provides that American "will pay d a m a g e s which an insured is legally entitled to recover from the owner or o p e r a t o r of an uninsured motor vehicle." The Policy further defines "uninsured m o t o r vehicle" as an "underinsured motor vehicle." In other words, the Policy m a k e s it clear that an "underinsured motor vehicle" is encompassed by the d e fin it io n of "uninsured motor vehicle." 5

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No. 10-10042 T h e Policy also provides that an "`uninsured motor vehicle' does not in c lu d e any vehicle . . . owned or operated by a self-insurer under any applicable m o t o r vehicle law." Because the Policy does not consider a vehicle

" u n in s u r e d " -- a n d thus provides no coverage--if it is owned or operated by a " s e lf-in s u r e r ," and an "underinsured vehicle" is a type of "uninsured vehicle," it n e c e s s a r ily follows that if an owner or operator of an underinsured vehicle is a s e lf-in s u r e r , then the insured is not entitled to recover damages under the P o lic y . We therefore find the Policy unambiguous.1 2. A m e r i c a n 's Policy Is Valid under Texas Law i. T e x a s Law Considers the Insured Nature of the V e h i c le , Not the Tortfeasor

M c Q u in n ie argues that Texas law considers the insurance status of the t o r t fe a s o r , not the insurance status of the vehicle involved in an accident, and t h u s Enterprise's self-insurer status should not defeat coverage. McQuinnie, h o w e v e r , misinterprets Texas's Insurance Code ("TIC"). TIC § 1952.101 states t h a t "`uninsured or underinsured motorist coverage' means the provisions of an a u t o m o b ile liability insurance policy . . . that protects insureds who are legally e n tit le d to recover from owners or operators of uninsured or underinsured motor v e h ic le s ." (emphasis added). The TIC provisions addressing the terms

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 an ambiguity. See id. at 764­65. In this case, we find no ambiguity in the Policy at issue.

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No. 10-10042 " u n in s u r e d "2 and "underinsured"3 also explicitly reference vehicles. No relevant s t a t u t e makes mention of an uninsured or underinsured tortfeasor. In support of his position, McQuinnie argues that the Texas legislature's p u r p o s e behind passing TIC § 1952.103's predecessor was to protect the people o f Texas from financially irresponsible drivers. He also cites Infante v. Texas F a r m e r s Insurance Co., which states: T h e purpose of underinsured motorist coverage is to provide an in d iv id u a l injured by a motorist carrying insurance in an amount le s s than that required by law, or otherwise reduced by payments t o other claimants in the same accident, to an amount less than r e q u ir e d by law, with no less coverage than the injured party would r e c e iv e had the tort feasor been fully insured or fully covered in r e la tio n to plaintiffs' underinsured motorist coverage under the law. 6 4 0 S.W.2d 321, 323 (Tex. App--Beaumont 1982, writ ref'd n.r.e.) (citation o m it t e d ) (emphasis added). Finally, McQuinnie cites Stracener v. United

S e r v ic e s 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 in s u r a n c e will not suffice to pay for the injured party's actual damages. M c Q u in n ie 's support does not overcome the clear language of the three r e le v a n t TIC provisions, which refer to the insured nature of the motor vehicle r a t h e r than the tortfeasor. We therefore reject McQuinnie's argument that,

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). 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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No. 10-10042 u n d e r Texas law, we must look to the insured nature of the tortfeasor rather t h a n the insured nature of the vehicle. ii. T h e Policy Is Valid under Texas Law

T IC § 1952.103 states that "an underinsured motor vehicle is an insured m o t o r vehicle on which there is collectible liability insurance coverage" that does n o t fully cover a victim's damages. McQuinnie contends that, under federal law, E n t e r p r is e had no "collectible liability insurance coverage" on the vehicle S a p k o t a drove, and therefore the district court erred by considering Enterprise, r a t h e r than only Sapkota. Thus, McQuinnie concludes, "the `self-insurer'

e x c lu s io n is inapplicable to defeat coverage for underinsured motorist benefits," b e c a u s e Sapkota was not a self-insurer and because Enterprise cannot be liable. Texas law mandates that any insurer offering automobile coverage must p r o v id e "uninsured or underinsured motorist coverage in the policy or s u p p le m e n t a l to the policy." TIC § 1952.101(b). An "underinsured motor

v e h ic le " is defined by Texas law as an insured motor vehicle on which there is collectible liability in s u r a n c e coverage with limits of liability for the owner or operator t h a t were originally lower than, or have been reduced by payment o f claims arising from the same accident to, an amount less than the lim it of liability stated in the underinsured coverage of the insured's p o licy . T IC § 1952.103. Texas law explicitly allows certain exclusions from its mandate t h a t automobile insurers provide uninsured motor vehicle coverage: "[t]he c o m m is s io n e r may . . . allow `uninsured motor vehicle' to be defined or . . . define `u n in s u r e d motor vehicle,' to exclude certain motor vehicles whose operators are in fact uninsured." TIC § 1952.102. McQuinnie makes no allegation that the c o m m is s io n e r did not approve American's self-insurer exception. A s the vehicle's "operator," Sapkota had "collectible liability insurance c o v e r a g e ," which means that under Texas law, the car Sapkota drove was

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No. 10-10042 u n d e r in s u r e d . Under the Policy, a car that is "underinsured" is considered " u n in s u r e d ," and nothing cited by McQuinnie suggests that an insurance c o m p a n y may not define "underinsured motor vehicle" as a sub-category of " u n in s u r e d motor vehicle" and include exclusions that apply to both. Under the P o lic y , a motor vehicle is not "uninsured" if it is "owned or operated by a s e lf - i n s u r e r under any applicable motor vehicle law." (emphasis added). It is u n d is p u t e d that Enterprise owned the car Sapkota drove and undisputed that E n t e r p r is e is a self-insurer. We thus hold that the application of American's s e lf-in s u r e r exception does not violate Texas law, and it therefore bars M c Q u in n ie from recovery under the Policy. Accordingly, we affirm the district c o u r t's grant of summary judgment in favor of American and its denial as to M c Q u in n ie . III. CONCLUSION T h e Policy contains no ambiguity. Additionally, the Policy does not

c o n t r a v e n e any Texas law. We therefore affirm the district court's grant of s u m m a r y judgment in favor of American and its denial as to McQuinnie. A F F IR M E D .

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