UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

SCOTT FIELD, Chapter 7 Trustee for

bankrupt estate of Russell Egder

Dangerfield,

Plaintiff-Appellant,

and

MALEK MANESH; MOHAMMED

EMDADI,

Plaintiffs,

No. 98-1851

v.

TRANSCONTINENTAL INSURANCE

COMPANY,

Defendant-Appellee,

and

CNA INSURANCE COMPANIES,

Defendant.

SCOTT FIELD, Chapter 7 Trustee for

bankrupt estate of Russell Egder

Dangerfield,

Plaintiff-Appellee,

and

No. 98-1857

MALEK MANESH; MOHAMMED

EMDADI,

Plaintiffs,

v.
TRANSCONTINENTAL INSURANCE

COMPANY,

Defendant-Appellant,

and

CNA INSURANCE COMPANIES,

Defendant.

Appeals from the United States District Court

for the Eastern District of Virginia, at Alexandria.

T. S. Ellis, III, District Judge.

(CA-97-702-A)

Argued: January 25, 1999

Decided: February 16, 1999

Before WILKINSON, Chief Judge, and WILLIAMS and

MOTZ, Circuit Judges.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: John R. Garza, GARZA, REGAN & ROSE, P.C., Rockville, Maryland, for Appellant. Stephen Anthony Horvath,

TRICHILO, BANCROFT, MCGAVIN, HORVATH & JUDKINS,

P.C., Fairfax, Virginia, for Appellee. ON BRIEF: Lynn Perry Parker,

GARZA, REGAN & ROSE, P.C., Rockville, Maryland, for Appellant. Michael J. Carita, TRICHILO, BANCROFT, MCGAVIN, HORVATH & JUDKINS, P.C., Fairfax, Virginia, for Appellee.

_________________________________________________________________

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Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Scott Field, trustee in bankruptcy for Russell Dangerfield, brought

this diversity action against Transcontinental Insurance Co. alleging

bad faith failure to defend, denial of coverage, and failure to settle an

action against Dangerfield. The trustee sought $1.2 million in damages, an amount well over the policy limit. The district court held

that, under Virginia law, the insurance policy at issue did cover

Dangerfield; and so the court awarded the trustee $25,000, the total

amount available under the policy. The court, however, went on to

find that Transcontinental had not acted in bad faith when it denied

coverage and refused to defend Dangerfield. Accordingly, the court

denied the trustee any greater relief and granted summary judgment

to Transcontinental on the bad faith claims. See Field v. Transcontinental Ins. Co., 219 B.R. 115 (E.D. Va. 1998). We affirm.

I.

In October 1995, Russell Dangerfield purchased a Ford Bronco

automobile from HBL Mercedes in Vienna, Virginia pursuant to a

conditional sales contract. The agreement allowed Dangerfield to possess the vehicle while HBL sought financing to complete the transaction. HBL supplied Dangerfield with temporary title to the Bronco but

the actual certificate of title remained with HBL. At all relevant times,

Transcontinental insured HBL under a standard "garage policy" covering HBL for liability arising out of the ownership of vehicles in its

dealership. Pursuant to Virginia law, the policy also covered drivers

using the vehicles with HBL's permission, including customers who

had no insurance of their own. See Va. Code§ 38.2-2205 (1998).

Despite his representations to the contrary, Dangerfield did not have

his own insurance at the time of the accident that led to this proceeding.

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On October 31, 1995, while driving the Bronco northbound in the

southbound lane of a divided highway, Dangerfield caused a multi-car

collision, severely injuring Malek Manesh. Subsequently, Manesh

sued Dangerfield in Maryland state court for personal injuries sustained in the accident. After the accident but before service of

Manesh's complaint, Dangerfield filed Chapter 7 bankruptcy. The

bankruptcy court lifted the automatic stay in order for Manesh to pursue her claim, which resulted in a judgment against Dangerfield in the

amount of $1.2 million. Because Transcontinental determined that its

policy covering HBL did not apply to Dangerfield, it took no part in

Manesh's suit against Dangerfield. Manesh has since recovered a portion of her costs from her own insurance company but the $1.2 million judgment has yet to be satisfied.

II.

The district court found that Field, as trustee of Dangerfield's

bankruptcy estate, was entitled to bring a bad faith failure to insure

claim against Transcontinental because the action was "sufficiently

rooted in the pre-bankruptcy past." Segal v. Rochelle, 382 U.S. 375,

380 (1966); see also Ryerson v. Ryerson, 739 F.2d 1423, 1426 (9th

Cir. 1984). Moreover, the court noted that, because the insurance policy at issue existed pre-petition, Dangerfield's rights under the policy

became property of the estate when he filed bankruptcy and the

trustee properly initiated this action on behalf of the debtor's estate.

See 11 U.S.C.A. § 541(a)(1)(1993); A.H. Robins Co., Inc. v. Piccinin,

788 F.2d 994, 1001 (4th Cir. 1986).

Next, the district court concluded that HBL owned the vehicle

involved in the crash despite Dangerfield's possession of it. The court

reasoned that, because Virginia is a strict title state, see Rawl's Auto

Auction Sales, Inc. v. Dick Herriman Ford, Inc., 690 F.2d 422, 427

(4th Cir. 1982), and title remained with HBL throughout the relevant

time period, HBL continued to own the Bronco. Because HBL

retained ownership of the vehicle and Dangerfield did not have any

independent insurance, the court concluded that Transcontinental's

policy covered Dangerfield on the day of the accident. Thus the court

assessed $25,000 in damages against Transcontinental, the amount it

would have owed under the policy had it provided the proper coverage to Dangerfield.

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The district court rejected Transcontinental's contention that

Dangerfield owned the Bronco because the broad definition of

"owner" found in the Motor Vehicles title of the Virginia Code

applied in this insurance context. See Va. Code § 46.2-100 (1998)

(defining owner to include a conditional vendee with an immediate

right to possession). The court explained that the Motor Vehicle title's

broad definition of owner was expressly limited to use "for the purpose of [that] title." Id. Furthermore, the court noted the extensive

case law interpreting the term owner in the context of conditional

sales contracts and insurance coverage to mean, more narrowly,

holder of title. See e.g., Hardware Mut. Cas. Co. v. Jones, 330 F.2d

1014, 1016 (4th Cir. 1964); United States Fidelity & Guar. Corp. v.

Myers Motors, Inc., 143 F. Supp. 96, 97-98 (W.D. Va. 1956);

Nationwide Ins. Co. v. Storm, 106 S.E.2d 588, 589 (Va. 1959). Thus

the district court held that the narrow context-specific interpretation

of the term owner applied in this case rather than the broad, general

definition found in another title of the Virginia Code.

Finally, the district court concluded that Transcontinental exhibited

no bad faith in these circumstances. Applying the factors set forth in

CUNA Mut. Ins. Soc'y v. Norman, 375 S.E.2d 724, 727 (Va. 1989),

the court explained that the company had performed an adequate

investigation of the matter, that reasonable evidence supported the

company's conclusions, that its denial of coverage was not a strategic

ploy, that the decision involved debatable questions of law and fact

and, ultimately, that Transcontinental was reasonable (although incorrect) in determining that Dangerfield was not covered by the policy.

Finding no bad faith on the part of Transcontinental, the district court

did not reach the question of what damages, if any, Dangerfield suffered as a result of the company's failure to defend or settle Manesh's

claim against him. Instead, it granted summary judgment to Transcontinental on the bad faith claims.

III.

We have carefully reviewed the record, briefs, arguments, and

applicable law. We find the district court's opinion well-reasoned and

persuasive. See Field v. Transcontinental Ins. Co., 219 B.R. 115 (E.D.

Va. 1998). In so concluding, we note that, contrary to Transcontinental's suggestion, Hall, Inc. v. Empire Fire & Marine Ins. Co., 448

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S.E.2d 633 (Va. 1994), does not require a different result. In that case,

the Virginia Supreme Court cited Va. Code § 46.2-100's definition of

owner in an insurance coverage case. Id. at 635. Hall, however, did

not involve a conditional sales contract or an ownership dispute and

the court cited only the portion of the definition narrowly defining

owner as title holder. Id. at 634-35 (noting that the word "owned" in

the insurance policy was clear and unambiguous because the "owner

of an automobile is the party who has legal title to it").

We affirm on the basis of the district court opinion.

AFFIRMED

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