____________

No. 95-1597

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House of Lloyd, Inc., *

*

Appellee, *

*

v. *

*

Versa Corporation, doing * Appeal from the United States

business as Versa, Ferguson * District Court for the

Conveyor Corporation, * Western District of Missouri

*

Defendant. *

*

Federal Insurance Company, *

*

Appellant. *

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 Submitted: November 15, 1995

 Filed: June 25, 1996

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Before McMILLIAN, FLOYD R. GIBSON, and LOKEN, Circuit Judges.

____________

McMILLIAN, Circuit Judge.

Federal Insurance Company (Federal) appeals from a final

judgment entered in the United States District Court for the

Western District of Missouri in favor of House of Lloyd, Inc.

(Lloyd), on Lloyd's claim for insurance proceeds to cover the

replacement cost of certain equipment that was destroyed by a fire

on Lloyd's property while being installed by Federal's insured,

Versa Corporation (Versa). House of Lloyd, Inc. v. Versa Corp.,

No. 89-0943-CV-W-6 (W.D. Mo. Jan. 26, 1995). For reversal, Federal

argues that the district court erred in holding that (1) the loss
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of property was covered by the policy Federal issued to Versa (the

Federal policy) even though the risk of loss had passed from Versa
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to Lloyd, id. (June 7, 1993) (magistrate judge's order disposing of

risk of loss issue), and (2) Federal's share of the insurance

liability was 83%, as compared to 17% attributed to Lloyd's

insurer, Travelers Indemnity Company (Travelers). Id. (Sept. 26,

1994) (district court order disposing of coverage issue); id.

(Jan. 26, 1995) (district court order disposing of monetary

allocation issue). For the reasons discussed below, we hold that

the Federal policy did not cover the loss of property at issue in

the present case. Accordingly, we reverse the judgment of the

district court in favor of Lloyd against Federal, decline to reach

the allocation issue as moot, and remand this case to the district

court with instructions to enter judgment for Federal.

Background

The background facts are stated in detail in the magistrate

judge's order dated June 7, 1993. Id., slip op. at 1-12 (June 7,

1993). The following is a brief summary of the facts. On

April 28, 1987, Lloyd entered into a contract with Versa whereby

Versa agreed to supply and install conveyor subsystems at Lloyd's

distribution facility under construction, located on Botts Road in

Grandview, Missouri. On November 27, 1987, after the conveyor

subsystems had been delivered, but before installation was

complete, they were damaged or destroyed in a fire at the Lloyd

distribution facility. The Federal policy insuring Versa was in

effect at the time of the fire. The Federal policy contained an

"Installation Floater," which included the following provision:

1. PROPERTY COVERED:

This policy insures the property of the

Insured and the property of others for which

the Insured may be liable, consisting
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principally of mechanical material[,]

handling equipment and metal products.
 Lloyd asserts, however, that there was dual coverage under

1

the Federal policy and the Travelers policy.

 In an order dated July 19, 1993, the magistrate judge held

2

that the June 7, 1993, ruling was interlocutory and not a final and

appealable judgment or order. House of Lloyd, Inc. v. Versa Corp.,

No. 89-0943-CV-W-6 (W.D. Mo. July 19, 1993). Later, after the

district court entered judgment in favor of Lloyd on the issue of

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Joint Appendix, Vol. II, at 600 (attachment to parties' joint

stipulation of facts). Lloyd also had an insurance policy issued

by Travelers (the Travelers policy), which was in effect at the

time of the fire and undisputedly covered Lloyd's loss. 

1

Lloyd brought the present action in federal district court on

the basis of diversity jurisdiction, asserting two breach of

contract claims against Versa (Counts I and II) and a contract

claim against Federal (Count III). As to Versa's liability, Counts

I and II of the complaint alleged that Versa bore the risk of loss

of the conveyor subsystems at the time of the fire. As to

Federal's liability, Count III alleged that, under the terms of the

Installation Floater in the Federal policy, the conveyor subsystems

were "property of others for which [Versa] may be liable."

In the course of the litigation, the parties stipulated to a

separation of issues for trial purposes. The parties agreed to

first have the risk of loss issue tried by the court; afterward,

depending on the outcome in that bench trial, a jury trial would be

held on the remaining liability issues. House of Lloyd, Inc. v.

Versa Corp., slip op. at 2 (Apr. 16, 1992) (order incorporating

parties' stipulation). By consent of the parties, the first trial

was conducted by a magistrate judge. The magistrate judge held

that Versa was not liable to Lloyd because the risk of loss of the

conveyor subsystems passed to Lloyd upon delivery. Id., slip op.

at 12-28 (June 7, 1993).2
Federal's liability, the magistrate judge ordered entry of final

judgment in favor of Versa in accordance with the June 7, 1993,

order. Id. (Mar. 17, 1995). Lloyd has not cross-appealed with

respect to the risk-of-loss issue. Accordingly, the final

determination that the risk of loss passed from Versa to Lloyd upon

delivery of the conveyor subsystems is not reviewable in the

present appeal and must be accorded appropriate deference as the

law of the case.

 These procedural steps were taken by the district court

3

despite the court's earlier ruling that, if Lloyd were found in the

initial bench trial to have borne the risk of loss vis-a-vis Versa,

then a jury trial would be held on Lloyd's remaining claim against

Federal. Id., slip op. at 2 (Apr. 16, 1992).

 It is unclear from the materials provided on appeal how the 4

district court procedurally reached the issue of Federal's

liability in the manner it did. As noted above, the district

court's order of April 16, 1992, stated that the issue of Federal's

liability would be tried by a jury if Lloyd were found to have

borne the risk of loss. Id. No jury trial or bench trial was

held, however, and instead the district court ruled on the merits,

apparently relying solely on the facts stipulated by the parties

and the magistrate judge's findings. Id. (Sept. 26, 1994)

(memorandum and order). Federal asserts in its brief on appeal

that this is an "appeal from a civil bench trial." Brief for

Appellee at 6. Lloyd, by contrast, asserts that "the District

Court's judgments . . . were in the nature of summary judgment."

Supplement to Brief of Appellant (filed May 16, 1995). 

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Following the magistrate judge's June 7, 1993, ruling on the

risk-of-loss issue, the district court required the parties to file

stipulated facts and ordered briefing on the issue of Federal's

liability. The district court then disposed of the issue of

3

Federal's liability without a jury trial or a bench trial. Id.

(Sept. 26, 1994) (memorandum and order). In its order dated

4

September 26, 1994, the district court held that the Federal policy

covered Lloyd's loss because coverage under the Installation

Floater was triggered by Versa's equitable responsibility for the

conveyor subsystems, notwithstanding the fact that the risk of loss

had passed from Versa to Lloyd. Id. at 3. The district court then

invited briefing regarding the amount of money owed by Federal.
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Following that briefing, the district court found that Federal was

liable for $1,045,884.05 of the total loss, and Travelers was

liable for the remaining $214,217.21. Id. at 7 (Jan. 26, 1995)

(allocating liability according to a ratio of relative liability
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derived by comparing applicable limits in two policies). Judgment

was entered. Id. (Jan. 26, 1995); id. (Mar. 17, 1995). Federal

appealed.

Discussion

We first consider our standard of appellate review. As noted

above (see note 3 supra), neither the district court's orders nor

any other documentation in the record on appeal reveals the

specific procedural mechanism employed by the district court in

deciding the issue of Federal's liability. However, whether we

treat the district court's decision as a summary judgment

disposition or the equivalent of a bench-tried matter, the standard

of review is essentially the same. Assuming as true the facts to

which the parties have stipulated, and the magistrate judge's

uncontested finding that the risk of loss had passed from Versa to

Lloyd upon delivery of the conveyor subsystems, we determine de

novo whether, as a legal matter of contract interpretation, the

Federal policy covered Lloyd's loss. For the reasons stated below,

we hold that it did not.

The disposition of this case turns on the legal effect of the

following words in the Installation Floater of the Federal policy:

"this policy insures . . . the property of others for which the

Insured may be liable, consisting principally of mechanical

material[,] handling equipment and metal products." In arriving at

the legal conclusion that these words required Federal's coverage

for Lloyd's loss of the conveyor subsystems, the district court

relied on Folger Coffee Co. v. Great Am. Ins. Co., 333 F. Supp.

1272 (W.D. Mo. 1971) (Folger Coffee) (where bailee's insurance

policy provided "the policy covers . . . property of others held by

the insured for which the insured is liable," personal property of
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bailor damaged while in bailee's possession was covered under

bailee's insurance policy regardless of whether the damage resulted

from bailee's negligence or other wrongdoing). The district court
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held that the coverage provided under the Installation Floater for

property of others for which Versa "may be liable" was not limited

to losses for which Versa would be legally liable, but rather more

broadly referred to losses of or damage to property of others for

which the insured was legally or equitably responsible. House of

Lloyd, Inc. v. Versa Corp., slip op. at 2-3 (Sept. 26, 1994)

(citing Folger Coffee, 333 F. Supp. at 1274-75 ("it is concluded

that Missouri courts would follow the prevailing view and construe

the word `liable' in the policy in the case at bar to be synonymous

with `responsible'")).

The district court then reasoned:

If it seems adequately established, as in

Folger Coffee, that "liable" should include the

practical responsibilities of a bailee, regardless

of legal liability, it will be acknowledged that

the present case requires going a step or two

beyond bailment situations. Unlike a bailment,

there was here shared possession of the subsystem

components, not exclusive possession in Versa, the

party which had contract obligations but no longer

owned the property. However, the duty to install

was a continuing responsibility of Versa's, and in

that sense it remained at least "equitably"

responsible for the property that it was to install

and for which it would presumably have actual

priority in handling, despite technically shared

possession. Moreover, the specified duration of

coverage definitely included the installation

period, which strongly indicates that the period

during which Versa would be "liable" was

contemplated as extending through installation and

until acceptance.

Id. at 3. 

In the present appeal, Federal argues that the district

court's liability determination contradicts the plain meaning of
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the Installation Floater. Federal maintains that the language of

the Installation Floater plainly indicates that Federal only

provided coverage for damages that Versa was obligated to pay.

Because the risk of loss passed to Lloyd upon delivery, Federal
 The Underwriting Guidelines provided in pertinent part: 5

The interest of the owner, seller or contractor is

covered against loss or damage to machinery,

equipment, building materials or supplies being

used with and during the course of installation,

testing, building, renovating or repairing. Such

policies provide coverage at points or places where

work is being performed, while in transit, and

during temporary storage or deposit.

Joint Appendix, Vol. II, at 614. Elsewhere the Underwriting

Guidelines state:

1. Property Covered

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argues, Versa was not obligated to pay damages; thus, there is no

coverage under the Federal policy. Federal further argues that the

district court erred in interpreting Folger Coffee. Unlike the

bailee-insured in Folger Coffee, Versa, the insured in the present

case, did not bear the risk of loss at the relevant time. The mere

fact that Versa was responsible for installing the conveyor

subsystems at the time of the fire, Federal argues, does not

legally or equitably create responsibility to protect against the

loss of or damage to that property, particularly where the property

was not within Versa's exclusive custody and control.

Lloyd, by contrast, maintains that Federal's proposed

interpretation of the Installation Floater suffers from the

mistaken assumption that Federal provided coverage for liability

when, in fact, Federal provided coverage for the loss of or damage

to property. That covered property, Lloyd argues, included

property of others for which Versa was responsible, including the

conveyor subsystems. In support of this argument, Lloyd highlights

the fact that the Installation Floater contains numerous references

to the insured "property." Lloyd also relies on language in the

Underwriting Guidelines for the Installation Floater and a letter 5
Our Builders Risk/Installation floater covers

physical loss or damage to property during

installation. It does not cover nor is it

intended to cover the General Liability of

the Insured. Every contractor and sub-contractor should be

expected to have a General Liability policy to protect this

exposure. 

Joint Appendix, Vol. II, at 616 (emphasis in text).

 When this lawsuit was initially brought by Lloyd, Versa

6

contacted Federal and demanded that Federal provide Versa with a

defense; Federal responded by letter stating that the Installation

Form was "not a liability form, and therefore there is no duty to

defend the insured against actions such as those alleged in the

complaint, for breach of contract." See Joint Appendix, Vol. III,

at 738 (letter). 

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from Federal to Versa's attorney in which Federal disclaimed a duty

to defend Versa against Lloyd's claims on grounds that the

Installation Form was "not a liability form." Responding to

6

Federal's contention that the district court erred in its

application of Folger Coffee, Lloyd disputes the notion, advanced

by Federal, that Folger Coffee implicitly recognizes a distinction

between bailment cases and non-bailment cases. Lloyd defends the

district court's reasoning on grounds that Folger Coffee rests on

a more fundamental distinction between coverage for liability and

coverage for property. Finally, Lloyd argues that the district

court's interpretation of the Installation Floater is consistent

with Missouri state court cases which have recognized that

insurance contract language referring to "property of others" for

which the insured may be liable expresses an intent by the insurer

to benefit parties other than the named insured and to pay them

directly. Brief for Appellee at 18-23 (citing Peters v. Employers

Mut. Casualty Co., 853 S.W.2d 300 (Mo. 1993) (en banc) (Peters)

(policy provided coverage to college faculty members, not named in
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the policy, whose personal property was destroyed in a fire in the

insured college's theater); Mitchell v. K.C. Stadium Concessions,

Inc., 865 S.W.2d 779 (Mo. Ct. App. 1993) (Mitchell) (policy of

lessee provided coverage to lessor, for damage to lessor's personal
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property resulting from a fire on the leased property); Boatmen's

First Nat'l Bank v. Hawkeye-Security Ins. Co., 861 S.W.2d 600 (Mo.

Ct. App. 1993) (Boatmen's v. Hawkeye-Security) (where insured

sought coverage for personal property stolen from a warehouse and

the actual title owner of the stolen property was not a named

insured but was a corporation jointly owned by the insured and his

wife, judgment for insurance company was reversed on grounds that

ambiguities existed precluding determination of coverage issue at

summary judgment stage)). 

We agree with Lloyd that the Installation Floater at issue in

the present case expresses an intent to benefit directly parties

not named in the policy, where appropriate. However, upon careful

de novo review, we hold that the district court erred in concluding

that the Federal policy covered Lloyd's loss in the present case.

Specifically, the district court's interpretation of the

Installation Floater is inconsistent with that provision's ordinary

and plain meaning. As the Missouri Court of Appeals explained in

Boatmen's v. Hawkeye-Security, 861 S.W.2d at 602,

[t]he rules of construction applicable to

insurance contracts require that the language used

be given its plain meaning. Robin v. Blue Cross

Hosp. Serv., Inc., 637 S.W.2d 695, 698 (Mo. banc

1982) (citations omitted). If the policy is

unambiguous, it must be enforced according to its

terms. Id. If the language is ambiguous, it will

be construed against the insurer. Id. Language is

ambiguous if it is reasonably open to different

constructions; and language used will be viewed in

light of the meaning that would ordinarily be

understood by the layman who bought and paid for

the policy. Id.

Applying the above-stated principles to the undisputed facts

of the present case, we hold that Lloyd's loss was not covered by

the Federal policy by virtue of the Installation Floater. We hold
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that the relevant language of the Installation Floater ("this

policy insures . . . the property of others for which the Insured
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may be liable") is clear and unambiguous: Federal must indemnify

Versa for its liability arising out of the loss of or damage to

property of others during installation. Furthermore, notwithstanding Federal's stated assertion that it did not have a duty to

defend Versa, we read the words "may be" in the Installation

Floater as signifying Federal's duty to defend Versa against claims

arising out of the loss of or damage to property of others during

Versa's installation. We interpret the words "may be" for the

purpose of eliminating the possibility that those specific words

indicate that Federal must cover Lloyd's losses regardless of

Versa's obligation to pay. Federal's duty to defend Versa is not

otherwise at issue in the present appeal. 

Moreover, the meaning that would ordinarily be understood by

the party which bought and paid for the policy (i.e., Versa) is

that the Installation Floater operates as an indemnity provision.

The letter from Federal to Versa upon which Lloyd relies

demonstrates, not only that Federal refused to provide a defense

for Versa, but also that Versa understood the Installation Floater

to be an indemnity provision. Significantly, Versa, not Lloyd, is

the party which "bought and paid for the insurance." Boatmen's v.

Hawkeye-Security, 861 S.W.2d at 602. Accordingly, we hold as a

matter of law that, under the facts of the present case, the

Installation Floater imposed upon Federal no more than a duty to

defend Versa and to indemnify Versa for its legal obligations to

pay for the loss of or damage to property of others during Versa's

installation.

Finally, our interpretation of the Installation Floater is

consistent with Folger Coffee. Unlike Versa in the present case,

the insured in Folger Coffee retained the risk of loss at all

relevant times because of the parties' bailment relationship. In

a bailment situation, the bailor can recover for loss of or damage
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to the bailment property upon proof that the loss or damage

occurred while in the bailee's possession because an inference of
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negligence is raised under the res ipsa loquitur doctrine. Royster

v. Pittman, 691 S.W.2d 305, 308 (Mo. Ct. App. 1985). Versa was not

a bailee in the present case. The mere fact that Versa had a

contractual obligation to install the conveyor subsystems was not

the same, for liability purposes, as a bailee's responsibility to

protect against damage or loss, particularly in light of the fact

that the conveyor subsystems were not even within Versa's exclusive

custody and control but were located on Lloyd's property at the

time of the fire. Cf. Peters, 853 S.W.2d at 302-03 (where

building-owner's policy provided coverage for "contents" of

building, loss of personal property of plaintiffs who were not

named insureds was covered "property of others" because it was

destroyed while contained within the insured's building).

Moreover, Lloyd is bound by the district court's determination that

the risk of loss had passed to Lloyd at the time of the fire. We

therefore hold that Versa was not legally or equitably

"responsible" for the conveyor subsystems within the meaning of

Folger Coffee.

Accordingly, we reverse the judgment of the district court in

favor of Lloyd against Federal, decline to reach the allocation

issue as moot, and remand this case to the district court with

instructions to enter judgment for Federal.

A true copy.

Attest:

 CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.