UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

TIG INSURANCE COMPANY,

Plaintiff-Appellant,

v.

No. 97-2637

DEATON, INC.; TRAVELERS INSURANCE

COMPANY,

Defendants-Appellees.

Appeal from the United States District Court

for the Western District of North Carolina, at Charlotte.

Robert D. Potter, Senior District Judge.

(CA-96-92-3-P)

Argued: June 3, 1998

Decided: December 18, 1998

Before NIEMEYER and HAMILTON, Circuit Judges, and

FABER, United States District Judge for the

Southern District of West Virginia, sitting by designation.

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Affirmed by unpublished opinion. Judge Faber wrote the opinion, in

which Judge Niemeyer and Judge Hamilton joined.

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COUNSEL

ARGUED: Randel Eugene Phillips, MOORE & VAN ALLEN,

P.L.L.C., Charlotte, North Carolina, for Appellant. F. Fincher Jarrell,

KENNEDY, COVINGTON, LOBDELL & HICKMAN, L.L.P.,

Charlotte, North Carolina; James Orr Cobb, Jr., RUFF, BOND,
COBB, WADE & BETHUNE, L.L.P., Charlotte, North Carolina, for

Appellees. ON BRIEF: M. James Grode, MOORE & VAN ALLEN,

P.L.L.C., Charlotte, North Carolina, for Appellant.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

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OPINION

FABER, District Judge:

TIG Insurance Company ("TIG") filed this action seeking a declaratory judgment that a policy of insurance issued by it to Deaton, Inc.

("Deaton") does not provide indemnity coverage to Deaton for workers compensation benefits paid to Daniel Lee Coffman ("Coffman"),

a Deaton employee. TIG maintained that Coffman's claim was covered by a rival policy of insurance issued to Deaton by The Travelers

Insurance Company ("Travelers"). The United States District Court

for the Western District of North Carolina denied the relief requested

by TIG and granted summary judgment in favor of Deaton and Travelers, after which TIG took this appeal. Finding no error in the decision of the district court, we affirm.

I.

The relevant facts are not in dispute. Deaton is an interstate trucking company which operates throughout the United States. Its principal place of business and home office are in Birmingham, Alabama.

Deaton has no fixed system of routes; it hauls full trailer loads

directly from shippers to ultimate destinations. Deaton's interstate

drivers tend to reside near the company's local terminals, making it

easier for them to get home after completing their runs.

Coffman had lived in North Carolina for over three years before

going to work for Deaton. He applied for a job at Deaton's Wilson,

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North Carolina terminal, signing an application which contained the

following language:

All questions of law and fact which may arise regarding this

application, or regarding any aspect of any employment

relationship between me and the Company, will be interpreted, determined, and resolved in accordance with the

laws of the State of Alabama, regardless of where I or my

residence may be located at the time of hire or at any time

during the course of my employment. For purposes of the

application of Worker's Compensation Laws and the payment of Benefits thereunder, all driver employees of Deaton,

Inc., regardless of their place of residence at the time of hire,

enter into their employment relationship in the State of Alabama, and are domiciled, supervised, based, and have as

their principal location of employment, the State of Alabama.

Marion Poole, Deaton's manager at the Wilson terminal, discussed

this provision with Coffman. When Coffman signed the application,

he agreed to the provision and understood that it became one of the

terms of his employment contract with Deaton. The final approval for

Coffman to drive for Deaton took place in Birmingham, Alabama.

Deaton required Coffman, as a condition of his employment, to travel

in Alabama and other states.

Coffman made his first trip as an interstate truck driver for Deaton

on March 3, 1992; he drove for approximately two weeks before his

injury. During those two weeks, he made seven trips, which included

pickups and deliveries in six different states, including a pickup in

Alabama. He was on the road continuously from March 3, 1992, until

the time of his accident, and never returned to the Wilson terminal.

Coffman parked his tractor in North Carolina only once -- when he

stopped at his home overnight while traveling from Maryland to

Georgia. The load Coffman was carrying at the time of his injury was

picked up by him at Deaton's terminal in Birmingham, Alabama, and

delivered to Charlotte, North Carolina.

On the other hand, Coffman has been a North Carolina resident at

all relevant times; he was recruited, tested, and informed that he had

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been hired through the Wilson, North Carolina terminal; he completed

his training with a North Carolina driver, beginning or ending all

training trips in North Carolina; he was supervised and received dispatching instruction from the Wilson terminal; he began or ended all

of his solo trips for Deaton except one in North Carolina and on that

one, he spent the night in North Carolina; and, he paid state income

taxes only to North Carolina.

Coffman's injury occurred on March 17, 1992, while delivering a

load of steel pipe to a destination in Charlotte, North Carolina. A pipe

fell on his head, paralyzing him from the neck down and leading to

amputation of his left foot. Coffman personally decided to file a

workers compensation claim in North Carolina, believing himself to

be employed there.

At the time of Coffman's accident, Deaton's policies with both

TIG and Travelers were in effect. Deaton's plan for insuring workers

compensation claims was to have all of its interstate drivers treated

as Alabama employees and covered by the TIG policy. To this end,

Deaton included in its employment application the provision quoted

above to which Coffman acceded. Deaton paid premiums to TIG for

all of its interstate drivers, including Coffman.

The TIG policy was supplemented by state specific policies covering Deaton's workers compensation exposure for intrastate workers

not included in the TIG policy. The Travelers policy provided primary workers compensation coverage in several states in which Deaton maintained terminals, including North Carolina. Consistent with

Deaton's general plan, the Travelers policy was designed to cover

only local drivers and employees who worked at terminals. Deaton

submitted to the North Carolina Rate Bureau a request for assigned

risk compensation insurance representing that such insurance would

cover only clerical employees, sales employees, terminal workers and

city or local drivers. Travelers issued its policy based upon the submission to, and direction from, the North Carolina Rate Bureau. The

required premium was based upon Deaton's payroll for its shop facility, its city or local drivers, and its clerical employees. As an interstate

driver, Coffman was not included in this calculation. Travelers

received no premium for Coffman or any other Deaton interstate drivers.

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On March 23, 1992, Deaton reported Coffman's injury to the

Workers Compensation Division of the Alabama Department of

Industrial Relations. By December 30, 1992, Deaton had exceeded its

$250,000 self-insured retention ("SIR") with respect to Coffman's

claim, and requested reimbursement from TIG under the TIG policy.

TIG initially accepted coverage, since the claim was being processed

under Alabama's workers compensation law. TIG began reimbursing

Deaton for payments Deaton had made in excess of the $250,000 SIR.

On January 3, 1995, more than two years after beginning to reimburse Deaton for Coffman's claims, TIG informed Deaton that it had

come to TIG's attention the proper jurisdiction may be North Carolina, not Alabama, and that TIG reserved its right to seek reimbursement of all payments made to, or on behalf of, Deaton for Coffman's

injuries.

On March 12, 1996, TIG filed this declaratory judgment action in

the Western District of North Carolina. Federal jurisdiction is based

on diversity of citizenship under 28 U.S.C. § 1332. TIG sought: (1)

a declaration that Travelers, and not TIG, is liable for the benefits

paid to Coffman because Coffman's workers compensation claims

arise under the North Carolina Workers' Compensation Act; and (2)

reimbursement from Deaton of all benefits paid by TIG to Deaton

regarding Coffman's claims. By Order entered October 6, 1997, the

district court, applying Alabama law, granted summary judgment for

Deaton, holding that the TIG policy, not the Travelers policy, covered

the Coffman claims as a matter of law. Relying on the court's decision, Travelers then filed its own motion for summary judgment. By

Order entered on October 15, 1997, the court likewise granted Travelers' motion for summary judgment. This appeal by TIG ensued.

II.

The standard for appellate review involving the grant or denial of

a summary judgment motion is de novo. Thus, the Court of Appeals

uses the same standard as the district court. Shaw v. Stroud, 13 F.3d

791, 798 (4th Cir. 1994). A moving party is entitled to summary judgment "if the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show that there

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is no genuine issue as to material fact and that the moving party is

entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c).

A genuine issue of material fact exists only "if the evidence is such

that a reasonable jury could return a verdict for the non-moving

party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The court must view the facts in the light most favorable to the nonmoving party with all reasonable inferences drawn in favor of such

party. Id. at 255. The non-moving party is entitled to the presumption

that all his evidence is credible. Miller v. Leathers, 913 F.2d 1085,

1987 (4th Cir. 1990). The party seeking summary judgment has the

initial burden to show the absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett , 477 U.S. 317 (1986).

The opposing party must then demonstrate that a triable issue of fact

exists; he may not rest upon mere allegations or denials. Anderson,

477 U.S. at 248. A scintilla of evidence supporting the non-moving

party's case is insufficient to defeat a motion for summary judgment.

Id.

III.

A.

Deaton's intent in acquiring these two policies of insurance is

clear. Deaton's purpose was to insure its interstate drivers under the

law of the company's home state, Alabama, for job-related injuries

wherever occurring. The TIG policy was designed to do this. Deaton

then supplemented this coverage with state specific policies covering

its various intrastate risks. The Travelers policy was one such policy;

it was designed to cover claims of Deaton employees who worked

solely within North Carolina.

Premiums paid by Deaton to TIG were based on the risk to Deaton's interstate drivers, specifically including Coffman. Premiums

paid to Travelers were based on Deaton's payroll for sales, clerical

and terminal workers, and local drivers, all of whom worked exclusively in North Carolina. There were seven such employees specifically covered by Travelers -- Coffman was not one of them. The

express terms of the two policies, and the way premiums were calculated under them, shows that Deaton, TIG and Travelers all under-

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stood that Coffman would be covered by TIG and not Travelers.

Under the terms of his employment application and contract, Coffman

accepted this arrangement and agreed to be treated as an Alabama

employee covered by the TIG policy. Accordingly, everyone -- Deaton, TIG, Travelers and Coffman -- intended for Coffman to be covered by TIG and not Travelers.

A policy of insurance is a contract.1 There are few principles more

fundamental to the law than the proposition that a contract must be

construed to give effect to the intentions of the parties. Accordingly,

the parties' intent should be implemented here unless the laws of Alabama or of North Carolina compel a different result.

Alabama law specifically provides for the type of arrangement

Deaton made to cover its workers compensation risk across the several states in which it operates. Alabama Code § 25-5-35(c) provides:

"An employee whose duties require him to travel regularly in the service of his employer in this and one or more other states may, by written agreement with his employer, provide that his employment is

principally localized in this or another such state.. . ."

Coffman agreed in his application with Deaton that the principal

location of his employment for the purpose of workers compensation

benefits was Alabama. Thus, if Coffman's employment meets the

requirements of § 25-5-35(c), his employment is "principally localized" in Alabama, and he would then be entitled to workers compensation benefits under Alabama law for injuries sustained outside

Alabama. The district court's analysis, in terms of Coffman's eligibility for benefits under Alabama law, is sound. As that court noted, the

issue is whether "travel regularly . . . in this and one or more other

states" means the employee must simply travel regularly in more than

one state so long as one of those states is Alabama, or whether it

requires that the employee travel regularly in Alabama and regularly

in one or more other states. Relying on Heater v. Tri-State Motor

Transit Co., 644 So.2d 25 (Ala. Civ. App. 1994), the district court fol-

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1 Black's Law Dictionary p. 802 (6th ed. 1990), defines insurance as

"[a] contract whereby, for a stipulated consideration, one party undertakes to compensate the other for loss on a specified subject by specified

perils."

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lowed the plain meaning of the statute in adopting the first of these

competing constructions. This reasoning is sound, and there is no

question that, in his brief employment with Deaton, Coffman traveled

in Alabama and in other states. Coffman's employment is therefore

"principally localized" in Alabama under the Alabama statute, and he

is eligible for benefits under Alabama law for job-related injuries

wherever they occur. This is precisely the risk Deaton sought to

insure against with TIG and which TIG agreed to cover.

Early cases considered workers compensation to be a substitute for

tort liability and allowed recovery of benefits only in the state in

which the injury occurred. See In re American Mut. Liability Ins. Co.,

215 Mass. 480, 102 N.E. 693, 695-96 (1913); Continental Oil Co. v.

Pitts, 158 Okla. 200, 13 P.2d 180, 182 (1932). A leading authority on

conflict of laws has criticized this rule as follows: "This rule was

overly simple, and excluded from consideration the laws of too many

states in which, though injury occurred elsewhere, the relationship out

of which it arose had sufficient connection with the forum state to justify application of its law." Robert A. Leflar, Luther F. McDougal III,

and Robert L. Felix, American Conflicts Law§ 160, at 450 (4th ed.

1986). Other cases adopted a straight contract theory. Under such an

approach, the compensation act of the state where the contract of

employment was made was held to govern, regardless of where the

injury occurred. Id. § 160, at 451 (citing Kennerson v. Thomas Towboat Co., 89 Conn. 367, 4 A. 372 (1915); Pierce v. Bekins Van &

Storage Co., 185 Iowa 1346, 172 N.W. 191 (1919); Hartigan v. Babcock & Wilcox Co., 191 Kan. 331, 380 P.2d 383 (1963); Houle v.

Sleams-Rogers Mfg. Co., 279 Minn. 345, 157 N.W.2d 362 (1968)).

Both the tort and contract approaches proved unsatisfactory in

practice. The theory most frequently followed today allows the parties

to agree that the situs of the employment relationship is the state in

which that relationship is principally localized or the employer's business is localized. Id. § 160, at 452 (citing Hale v. Texas Employers'

Ins. Ass'n, 150 Tex. 215, 239 S.W.2d 608 (1951); Simonton v.

Department of Indus., Labor & Human Relations, 62 Wis.2d 112, 214

N.W.2d 302 (1974); Hagberg v. Colonial & Pac. Frigidways, Ins.,

279 Minn. 396, 157 N.W.2d 33 (1968)). The rationale underlying this

principle is sound. As stated in American Conflicts Law, supra, § 160,

at 454: "It is understandable that at the inception of their contract the

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parties, particularly the employer, may wish to fix the governing law

conclusively so that they can know what their rights or duties are, and

so that compensation liability insurance can be taken out under the

controlling state's system."

Under the current weight of authority, therefore, what Deaton did

here was permissible and proper. Alabama law specifically authorizes

such an arrangement; it remains to consider whether North Carolina

law prohibits it.

B.

North Carolina General Statute § 97-93 requires every employer

subject to the North Carolina Workers Compensation Act to insure its

entire liability under the Act or qualify as a self-insurer. From this

TIG reasons that since Deaton was not a qualified self-insurer in

North Carolina and the Travelers policy was its only policy covering

North Carolina risks, the Travelers policy must, under the statute,

cover all such risks.

The public policy of North Carolina embodied in section 97-93 is

to insure that anyone injured on the job will receive compensation. A

contract will be deemed unenforceable because of public policy

where the "public interest is injuriously affected in such a substantial

manner that private rights and interests should yield . . . ." Goodwin

v. George Fischer Foundry Sys., Inc., 769 F.2d 708, 713 (11th Cir.

1985). The rule that "contracts contravening public policy are unenforceable should be applied cautiously and only in cases plainly

within the reason for it." Id. The state in which an injured employee

resides certainly has an interest in his compensation, since that state

would likely have to support him if he did not receive benefits. See

Cardillo v. Liberty Mutual Ins. Co., 330 U.S. 469 (1947) (sustaining

an award of compensation in the District of Columbia where the

claimant lived, even though he was continuously employed and

injured in Virginia). This interest is satisfied, however, when the

injured worker receives adequate benefits under the law of any state,

whether or not the state paying benefits is the state where he lives.

North Carolina public policy is, therefore, not violated if Coffman,

injured in North Carolina, receives benefits under the Alabama com-

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pensation system. The parties all agree that Coffman is entitled to

benefits. So long as Deaton maintains insurance to pay such benefits,

the public policy of North Carolina is satisfied. The express language

of the North Carolina statute does not dictate a different result; it

merely requires that an employer self-insure or"insure and keep

insured his liability under this Article in any authorized corporation,

association, organization or in any mutual insurance association . . . ."

N.C. Gen. Stat. § 97-93(a)(1).

We therefore conclude that to give effect to the intentions of the

parties in this case will do no violence to the law or public policy of

either state.2 What Deaton did to insure its workers compensation risk

is specifically sanctioned by Alabama statutes. The intent of North

Carolina is likewise protected. The public policy of the latter state,

expressed in its statute, is simply to insure that workers injured in jobrelated accidents in North Carolina receive benefits; this policy is

served regardless of which insurance company pays. 3 Accordingly,

the decision of the district court is

AFFIRMED.

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2 The record does not reflect whether Coffman's North Carolina claim

was fully processed. Had his claim been processed to completion under

North Carolina law and North Carolina opted to prefer its own law over

Alabama's, a different result might be indicated. Supreme Court cases

give the state of injury the option to apply its own law or to adopt the

law of a sister state "insofar as remedies for acts occurring within her

boundaries are concerned." Carroll v. Lanza , 349 U.S. 408, 414 (1955).

Here, there is no indication that North Carolina has made such an election; in the absence of such an election, we are free to give effect to the

intentions of the parties as expressed in their contracts. The Supreme

Court cases are discussed at Eugene F. Scales and Peter Hay, Conflict of

Laws §§ 17.45 and 17.46 (2d ed. 1992).

3 The court does not have before it a comparison of the levels of benefits payable under the laws of the two states. We do not believe, however, that a disparity in the level of benefits would lead us to a different

result. Ordinarily, differences in the laws of two states should not lead

to the conclusion that application of the law of one of them violates the

public policy of the other. Eugene F. Scales and Peter Hay, Conflict of

Laws § 17.46, at 648 n.4 (2d ed. 1992).

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