Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-92-05217/USCOURTS-ca10-92-05217-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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UNITED STATES COURT OF APPEALS F ~~riatlppeah 

United 'fenth Cit'CUit 

FOR THE TENTH CIRCUIT 

CRAWFORD ENTERPRISES MANUFACTURING, 

INC., 

Plaintiff-Appellant, 

v. 

RYDER/P-I-E NATIONWIDE, INC.; THE 

AMERICAN CASUALTY COMPANY OF READING, 

PENNSYLVANIA, 

Defendants, 

v. 

DAVID P. KLINGSHIRN, 

Third-Party-Defendant, 

GRANITE STATE INSURANCE COMPANY, 

Garnishee-Appellee, 

and 

CHICAGO INSURANCE COMPANY, 

Garnishee. 

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MAY 10 1993 

ROBERT L. HOECKER 

Clerk 

) No. 92-5217 

) (D.C. No. 84-C-395-B) 

) (N. D. Okla. ) 

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ORDER AND JUDGMENT* 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, ·res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 92-5217 Document: 010110114106 Date Filed: 05/10/1993 Page: 1 
Before 

District 

MOORE and 

Judge. 

BRORBY, Circuit Judges, and VAN BEBBER,** 

**Honorable G. Thomas Van Bebber, District Judge, United States 

District Court for the District of Kansas, sitting by designation. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. 

submitted without oral argument. 

The case is therefore ordered 

Garnishor Crawford Enterprises Manufacturing, Inc. appeals 

from a judgment entered in favor of garnishee Granite State 

1 Insurance Company. Crawford filed this garnishment action to 

recover, as a judgment creditor, insurance proceeds allegedly due 

debtor Ryder/P-I-E Nationwide, Inc. (Ryder). Granite State 

insured Ryder under an excess policy from April 1, 1982, through 

April 1, 1983. The district court determined Crawford was not 

entitled to proceeds of the policy. We affirm. 

Crawford initiated the lawsuit precipitating this garnishment 

action in 1984. In that complaint, Crawford sought reimbursement 

from Ryder for financial losses it sustained when two engines it 

owned were damaged while being shipped by a Ryder subsidiary from 

1 This court previously considered this matter for summary 

disposition in light of the unknown status of garnishee Chicago 

Insurance Company. On January 20, 1993, the district court 

entered an order certifying that all issues have been resolved in 

that court. It appears Chicago Insurance Company was not actively 

involved in the garnishment proceedings. Consequently, the appeal 

is properly before us. 

2 

Appellate Case: 92-5217 Document: 010110114106 Date Filed: 05/10/1993 Page: 2 
Ohio to Oklahoma. The damage occurred in a highway accident on 

July 1, 1982. Crawford ultimately obtained a judgment against 

Ryder in the amount of $492,521.43. Although partial payment on 

the judgment was made, Ryder filed for bankruptcy protection in 

1990, leaving a portion of the debt unsatisfied. 

Ryder's insurance policy with Granite State provided coverage 

for liability incurred beyond a $500,000 retained sub-limit, with 

a maximum liability of $9,500,000 per occurrence. Specifically, 

the policy stated, "[t]he company will indemnify the Insured for 

ultimate loss in excess of the retained limit hereinafter stated 

which the Insured shall: 1) become legally obligated to pay as 

damages, including punitive or exemplary damages, unless 

prohibited by law, because of: ... Cargo Damage." Appellee's 

Supp. App. at 64. Crawford's judgment against Ryder fell below 

the retained limit. 

On July 28, 1982, some four weeks after the accident 

involving the engines, Crawford obtained a Certificate of 

Insurance for the Granite State policy. The certificate did not 

reference the $500,000 sub-limit. The document provided, however, 

that its issuance did not "amend, extend or alter coverage 

afforded" by the Granite State policy. Id. at 79. Ryder's 

insurance broker apparently sent out copies of the certificate to 

numerous entities associated with Ryder and its subsidiaries. 

None of the certificates contained reference to the sub-limit. 

Prior to the date of Crawford's loss, Ryder and Granite State 

entered into an indemnification agreement which obligated Ryder to 

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Appellate Case: 92-5217 Document: 010110114106 Date Filed: 05/10/1993 Page: 3 
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indemnify Granite State for any liability arising from issuance of 

the certificates of insurance. The agreement stated, 

Whereas, Granite State Insurance Company, hereinafter 

referred to as the Company, has issued its policy to 

Ryder Truck Lines, Inc., Pacific Intermountain Express 

Co. and their subsidiaries, hereinafter referred to as 

RTL/PIE, for ... cargo damage liability ... and in 

connection therewith has provided evidence of coverages 

(Certificates of Insurance) on behalf of RTL/PIE below 

the $500,000 per occurrence retention assumed by 

RTL/PIE . . . . 

Whereas, it is the intentions [sic] of the parties 

hereto [to] more properly allocate the losses arising, 

therefore, in consideration of the premium derived by 

the Company hereby RTL/PIE agrees to indemnify and hold 

harmless the Company from any liability which the 

Company may incur by reason of its issuance of said 

Certificate of Insurance. 

Appellant's App. at 18. Through this agreement, Ryder confirmed 

its liability for the $500,000 sub-limit and acknowledged its 

omission from the certificates. 

In this action, the district court rejected all of Crawford's 

claims, either through summary judgment or based on the trial 

briefs and agreed facts. We review de novo the district court's 

legal conclusions. Estate of Holl v. Commissioner, 967 F.2d 1437, 

143 8 ( 10th Cir. 1992) . Any factual findings are reviewed for 

clear error. O'Connor v. R.F. Lafferty & Co., 965 F.2d 893, 901 

(10th Cir. 1992). On appeal, Crawford argues 1) the trial court 

erred in determining Granite State was not estopped to deny 

coverage because of the faulty certificates; 2) the court erred in 

determining detrimental reliance is a prerequisite to recovery on 

an estoppel theory; 3) the policy and the certificate are 

ambiguous; and 4) that Granite State dropped into the shoes of a 

primary carrier upon Ryder's insolvency. 

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Appellate Case: 92-5217 Document: 010110114106 Date Filed: 05/10/1993 Page: 4 
Under California law, an insurer may be estopped from denying 

coverage if certain conditions are satisfied. 2 Miller v. Elite 

Ins. Co., 161 Cal. Rptr. 322, 330-31 (Cal. Ct. App. 1980); see 

also Cross v. Mutual Benefit Life Ins. Co., 219 Cal. Rptr. 305, 

309 (Cal. Ct. App. 1985) (insurer could not rely on policy 

provisions to deny coverage where language in certificate of 

insurance was contrary and insured never given copy of policy). 

Of particular significance here is the requirement that the 

insured establish detrimental reliance on the conduct of the 

insurer. See Elite, 161 Cal. Rptr. at 330. 

Crawford argues Granite State is estopped to deny coverage if 

any member of the public could have detrimentally relied on the 

inaccurate certificates of insurance. Crawford maintains that 

public policy considerations dictate that Granite State be 

prohibited from knowingly sending out misleading certificates. 

See Evans v. Holly Co;r:p., 93 Cal. Rptr. 712, 713 (Cal. Ct. App. 

1971) (where representations in a certificate of insurance indicate 

broader coverage than a master policy, insurer is bound by terms 

of certificate). While this argument has facial appeal, it 

overlooks certain fundamental aspects of the relationship between 

Crawford and Granite State. 

As a garnishor, Crawford cannot garnish funds which Ryder, as 

the insured under the policy, could not recover. See 22A John A. 

Appleman, Insurance Law & Practice§ 14565, at 491 (1979); see 

2 The parties agree, as does the 

applies to this action. 

5 

court, that California law 

Appellate Case: 92-5217 Document: 010110114106 Date Filed: 05/10/1993 Page: 5 
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also Eguico Lessors. Inc. v. Metropolitan Life Ins. Co., 151 Cal. 

Rptr. 618, 619 (Cal. App. Dep't. Super. Ct. 1978) (garnishor may 

only reach through execution interest or property of the judgment 

debtor). Crawford steps into the shoes of the insured. State 

Farm Mut. Auto. Ins. Co. v. Worthington, 405 F.2d 683, 686 (8th 

Cir. 1968). As a consequence, Crawford receives all the benefits 

of insured status, but is likewise limited to those arguments 

which Ryder could urge. When viewed from this perspective, we 

agree with the trial court that Crawford's arguments cannot 

prevail. 

Here, Crawford cannot show detrimental reliance, as the 

misleading certificate was not issued until four weeks after the 

loss. California law provides this reliance is a prerequisite to 

an insured obtaining coverage based on the carrier's 

misrepresentations. See Garcia v. Truck Ins. Exch. 682 P.2d 1100, 

1105 (Cal. 1984) (no estoppel where third-party beneficiary did not 

rely on terms of policy to protect himself). Moreover, the 

indemnity agreement evidences Ryder's knowledge of the $500,000 

sub-limit. The authorities which Crawford has cited in support of 

its argument all involve situations where an insured was misled by 

the certificate of insurance. It is apparent Ryder knew what the 

underlying policy terms were, regardless of any misrepresentations 

implicit in the language of the certificate. Ryder could not 

prevail in arguing that it was misled; therefore, Crawford cannot. 

Crawford's second argument is premised on alleged ambiguities 

in the certificate of insurance and the policy itself. 

Ambiguities in insurance policies are resolved against the 

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insurer. Reserve Ins. Co. v. Pisciotta, 640 P.2d 764, 768 (Cal. 

1982). If an ambiguity is found, the contract "will be given such 

construction as will fairly achieve its object of providing 

indemnity for the loss to which the insurance relates." Id. 

(quoting Harris v. Glens Falls Ins. Co., 493 P.2d 861, 862 (Cal. 

1972)). The court should not, however, adopt a strained meaning 

of policy language to create coverage. Reserve, 640 P.2d at 

767-68. The words must be construed according to their popular 

and ordinary meaning. Nabisco. Inc. v. Transport Indem. Co., 192 

Cal. Rptr. 207, 209 (Cal. Ct. App. 1983). 

Crawford alleges the inaccurate certificate of insurance 

creates an ambiguity because it is contrary to the language of the 

underlying policy. In addition, Crawford maintains two coverage 

clauses in the policy are conflicting, thus creating an ambiguity 

which must be construed favorably to the insured. Finally, 

Crawford maintains that endorsement 10 to the policy creates an 

ambiguity. We agree with the district court that neither the 

certificate nor the policy are ambiguous. 

Although Crawford is correct that the certificate of 

insurance does not reference the $500,000 sub-limit, that fact 

does not create an ambiguity. The certificate includes specific 

language indicating that it does not alter or amend the policy. 

Moreover, there is no language in the certificate which is 

contrary to the policy. Rather, Crawford alleges ambiguity is 

created by virtue of what the certificate does not say. The 

disclaimer in the certificate is clear, however, as is the 

language in the policy related to the sub-limit. 

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Crawford also maintains an ambiguity arises from the wording 

of the "excess" and "other insurance" provisions of the policy. 

The excess clause provides that Granite State's liability "shall 

be only for the ultimate net loss in excess of the Insured's 

retained limit." Appellee's Supp. App. at 64. The "other 

insurance" section of the policy states, "[i]f collectible 

insurance from any other Insurer is available to the Insured 

covering a loss also covered hereunder • I the insurance 

hereunder shall be in excess of, and shall not contribute with, 

such other insurance." Id. at 68. 

These two phrases do not create an ambiguity. The excess 

clause, when given its plain and ordinary meaning, merely 

expresses the intended limit on Granite State's liability. The 

"other insurance" clause is contained in the "Conditions" section 

of the policy, and reflects the parties' intent that the policy be 

excess to any other insurance. These are not, as Crawford 

suggests, two coverage clauses giving rise to uncertainty about 

what will be paid under the policy. See McGreehan v. California 

State Auto. Ass'n, 1 Cal. Rptr. 2d 235, 238 (Cal. Ct. App. 

1991) (each clause of insurance contract should be considered with 

reference to others in policy and all clauses should be construed 

together to ascertain intent of parties). 

Finally, Crawford argues that endorsement 10 to the policy 

creates an ambiguity. It states, in part: 

It is hereby understood and agreed that the Fleetway 

Insurance Company is named as a named insured, but only 

insofar as their interests may appear. 

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However, this inclusion shall not act to increase the 

Company's liabilities, nor act as a waiver of 

subrogation of rights and/or privilages [sic] originally 

assigned and/or reserved to the Company. 

Appellee's Supp. App. at 61. As we understand it, Crawford 

alleges this endorsement is ambiguous because it does not state 

with clarity the extent of the coverage Granite State intended to 

provide Fleetway Insurance. 

Throughout the course of this lawsuit, Crawford has 

maintained that Fleetway is a captive insurance company "fronting" 

coverage for Ryder, and that Granite State, in turn, "fronted" for 

Fleetway. Through resort to extrinsic evidence, Crawford alleges 

that Ryder insured its $500,000 sub-limit through Fleetway, and 

that Granite State "intended. to assume all the risk of loss 

by reinsuring the retained limit Ryder assumed." Appellant's 

Opening Br. at 33. 

We do not see how this endorsement could be construed to 

support Crawford's position. The language of this endorsement is 

clear. It states specifically that the addition of Fleetway will 

not increase Granite State's liabilities. Crawford's argument, if 

accepted, would require the court to impose significant additional 

liability on Granite State. We will not engage in the act of 

manufacturing ambiguities to provide coverage. 

reject Crawford's argument. 

Consequently, we 

Finally, Crawford maintains that upon Ryder's insolvency, 

Granite State's coverage "dropped down" to primary status, thus 

extinguishing the retained sub-limit and creating complete 

coverage for this loss. The Supreme Court of California has 

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recognized that in certain situations, ambiguities in an excess 

policy can result in an excess carrier becoming primary. See 

Reserve, 640 P.2d at 772; see also Denny's, Inc. v. Chicago Ins. 

Co., 286 Cal. Rptr. 507, 511 (Cal. Ct. App. 1991) (no drop down 

where excess policy provides that liability will attach only after 

underlying insurer has paid or has been liable to pay). 

Here, Crawford argues that the excess and other insurance 

clauses provide the ambiguity. We have already determined those 

phrases are not ambiguous. The policy states unequivocally that 

liability exists only "in excess of the retained limit." 

Appellee's Supp. App. at 64. Unlike the excess carrier in 

Reserve, Granite State did not agree to assume liability for any 

excess over "the amount recoverable" from the underlying policy. 

See 640 P.2d at 772; see also Span, Inc. v. Associated Int'l Ins. 

Co., 277 Cal. Rptr. 828, 835 (Cal. Ct. App. 1991) (California law 

"does not require the policy to make specific provisions for the 

insolvency of the primary carrier".). There is no language in 

this policy which could be construed to require Granite State to 

pay the $500,000 sub-limit upon Ryder's insolvency. 

The judgment of the United States District Court for the 

Northern District of Oklahoma is AFFIRMED. 

Entered for the Court 

John P. Moore 

Circuit Judge 

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