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United States Court of Appeals,

Fifth Circuit.

No. 96-31293

Summary Calendar.

ST. PAUL MERCURY INSURANCE COMPANY, Plaintiff,

v.

FAIR GROUNDS CORPORATION, et al., Defendants,

Fair Grounds Corporation, Defendant-Appellee,

v.

United National Insurance Company, Defendant-Appellant.

United National Insurance Company, Plaintiff-Appellant,

v.

Fair Grounds Corporation, Defendant-Appellee.

Oct. 1, 1997.

Appeals from the United States District Court for the Eastern

District of Louisiana.

Before WIENER, BARKSDALE and EMILIO M. GARZA, Circuit Judges.

WIENER, Circuit Judge:

In this insurance coverage case, we must decide whether an

exclusion clause in a comprehensive general liability (CGL) policy

issued by Plaintiff-Appellant United National Insurance Company

(United) to Defendant-Appellee Fair Grounds Corporation (FGC)

applies to particular third-party property that was destroyed in a

fire on FGC's premises. Concluding that the third-party property

in question does not fall within the purview of the "care, custody,

or control" exclusion of the policy issued by United to FGC, we
 

1At the time of the fire, FGC had a $5 million primary

property policy, a $5 million first-layer excess policy, and a $24

million excess policy, but was still woefully underinsured. 

 

2The district court determined whether the "care, custody, or

control" exclusion applied to other third-party property, including

a bugle on loan to FGC from the Louisiana State Museum, office

equipment owned by the Horsemen's Benevolent & Protection

Association (the HBPA), and a significant amount of food and

beverage vending equipment owned by various concessionaires. Those

determinations are not challenged on appeal by either party. 

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affirm.

I.

FACTS AND PROCEEDINGS

In December 1993, a fire destroyed the Clubhouse, Grandstands,

and Jockey's Room at FGC's racetrack in New Orleans, Louisiana.

The fire damaged or destroyed the contents of the burned buildings,

including a significant amount of property owned by third-parties.

At the time of the fire, FGC had in effect a $2 million CGL

policy,1 issued by United, but that policy excluded from coverage,

inter alia, any damage to third party "personal property" in the

"care, custody, or control" of FGC. At issue here is the

applicability of that exclusion to (1) the computerized wagering

equipment, known as the Totalisator System, owned by Autotote

Systems, Inc. (Autotote), and (2) the racing equipment owned by

sixty-one jockeys.2

Autotote's own property insurer, St. Paul Mercury Insurance

Company (St. Paul), paid Autotote over $1 million for its losses

and filed suit in the district court against FGC asserting
 

3FGC denied liability for Autotote's losses and asserted

third-party claims against several parties that it had already sued

in state court for their alleged fault in causing or contributing

to the fire. In March 1997, the state court jury awarded FGC

approximately $57 million in property damages and business

interruption losses, including $285,000 for all third-party

property damaged or destroyed in the fire. This amount did not

include an award for the property belonging to Autotote. 

 

4FGC moved for summary judgment in the St. Paul subrogation

suit also, but the district court denied that motion. 

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Autotote's subrogation rights.3 In turn, FGC tendered Autotote's

(and other third-party) claims to United, which denied coverage and

filed suit in the district court seeking a declaration of

non-coverage, based on the "care, custody, or control" exclusion,

for all third-party property damaged or destroyed in the fire. A

number of the third-parties also filed suit against FGC, which

eventually paid over $205,000 to settle most of those claims. The

district court consolidated United's declaratory judgment suit with

St. Paul's subrogation suit.

In August 1995, United moved for summary judgment in the

declaratory judgment suit. FGC filed a cross-motion for summary

judgment and sought reimbursement from United for the amounts paid

to third-parties in settlement of their claims.4 The district

court concluded, inter alia, that the property owned by Autotote

and the jockeys was not in the "care, custody, or control" of FGC

so that the exclusion did not apply to defeat United's coverage.

United filed a motion for new trial or, alternatively, to

amend a finding of fact, disputing the district court's finding

that FGC did not maintain or derive a monetary benefit from

Autotote's property—a finding which undergirded the district
 

5FGC asserts that the district court did not determine FGC's

entitlement to (1) penalties and attorneys' fees for United's

alleged bad faith in denying coverage or (2) reimbursement from

United for amounts paid to third-parties in settlement of their

claims. 

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court's determination of coverage. Before ruling on United's

motion, however, the district judge transferred the case to a newly

appointed district judge who ultimately denied the motion. The St.

Paul litigation subsequently settled, but United specifically

reserved its right to appeal the district court's determination of

coverage.

United appealed, asserting that the district court erred in

determining that the property owned by Autotote and the jockeys was

not in the "care, custody, or control" of FGC and therefore is not

excluded from coverage under the policy issued to FGC. In short,

United urges us to hold that the subject property is excluded from

coverage.

II.

ANALYSIS

A. JURISDICTION

FGC contends that United's appeal is premature for want of a

certification for entry of a final judgment, pursuant to Federal

Rule of Civil Procedure 54(b), as the district court did not

dispose of all issues in this matter on summary judgment.5 Shortly

after FGC filed its appellate brief, however, United obtained a

Rule 54(b) certificate from the district court. We have previously

recognized that a premature notice of appeal is effective if Rule
 

6Warfield v. Fidelity & Deposit Co., 904 F.2d 322, 324 n. 2

(5th Cir.1990) (citing Crowley Maritime Corp. v. Panama Canal

Comm'n, 849 F.2d 951, 953-54 (5th Cir.1988)). See also Alcorn

County, Miss. v. U.S. Interstate Supplies, Inc., 731 F.2d 1160 (5th

Cir.1984) (citing Jetco Electronic Indus., Inc. v. Gardiner, 473

F.2d 1228 (5th Cir.1973)). 

 

7See 28 U.S.C. § 2201(a) (1994). 

 

8See 28 U.S.C. § 2202 (1994). 

 

9The district court issued the Rule 54(b) certificate based on

four express, legitimate reasons: (1) there was no just cause for

the delay, (2) St. Paul's consolidated subrogation suit had been

settled, (3) FGC's claims for penalties, attorneys' fees, and

indemnity were fully contingent on the determination of coverage,

and (4) the appellate briefs on the coverage issue had already been

filed. 

 

10Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 266

(5th Cir.1995). 

 

11Id. (quoting Fed.R.Civ.P. 56(c)). 

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54(b) certification is subsequently granted.6 In addition, a

declaratory judgment is reviewable as a final judgment,7 and

further necessary or proper relief based on that declaratory

judgment may be granted subsequently.8 We therefore conclude that

we have appellate jurisdiction to hear the instant case.9

B. STANDARDS OF REVIEW

We review de novo the district court's grant or denial of a

motion for summary judgment, viewing the facts and all reasonable

inferences therefrom in the light most favorable to the non-moving

party.10 Summary judgment is proper if the "pleadings, depositions,

answers to interrogatories, and admissions on file, together with

the affidavits, if any, show that there is no genuine issue as to

any material fact and that the moving party is entitled to judgment

as a matter of law."11
 

12United's memorandum in support of its motion states, "[t]he

instant Motion seeks partial relief from a summary judgment entered

July 31, 1996." 

 

13Martinez v. Johnson, 104 F.3d 769, 771 (5th Cir.1997);

Edward H. Bohlin Co., Inc. v. The Banning Co., Inc., 6 F.3d 350,

353 (5th Cir.1993); Batterton v. Texas General Land Office, 783

F.2d 1220, 1225 (5th Cir.), cert. denied, 479 U.S. 914, 107 S.Ct.

316, 93 L.Ed.2d 289 (1986). 

 

14Bohlin, 6 F.3d at 353. 

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In addition, United appeals the district court's denial of

its motion for new trial or, alternatively, to amend a finding of

fact. United's motion is a peculiar one to say the least. As no

trial was held in the district court, it cannot logically be called

a motion for new trial. Alternatively, United asked the district

court to amend a finding of fact, pursuant to Federal Rule of Civil

Procedure 52(b), but that rule likewise contemplates an underlying

trial. Based on the content of United's motion, however, we

conclude that it is more properly construed as a request for

reconsideration of the district court's entry of summary judgment.12

Moreover, as the Federal Rules of Civil Procedure do not recognize

a general motion for reconsideration, we shall treat United's

motion as a Rule 59(e) motion to alter or amend a judgment. We

review the district court's denial of a Rule 59(e) motion for an

abuse of discretion.13 Under that standard, the district court's

decision need only be reasonable.14 We turn now to the merits of

the appeal.

C. AUTOTOTE'S PROPERTY

1. The Totalisator Service Agreement

Autotote's property consisted of certain computerized wagering
 

15According to the Agreement, however, the junction boxes,

wiring, and cabling provided by Autotote and made a part of the

fixed installation became the property of FGC upon FGC's payment

for the same. 

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equipment, known as the Totalisator System, which had been

installed at the racetrack. Autotote and FGC had entered into a

"Totalisator Service Agreement" (the Agreement), pursuant to which

Autotote agreed to provide to FGC "totalisator services utilizing

[Autotote's] computer programs and equipment for all wagering held

at the RACETRACK." As compensation for Autotote's services, FGC

agreed to pay Autotote, inter alia, 45% of the gross monies wagered

through the Totalisator System. The Agreement explicitly provided

that the Totalisator System would at all times be and remain the

property of and under the exclusive control of Autotote.15

United asserts that the Totalisator System was nevertheless in

the "care, custody, or control" of FGC such that the exclusion

applies to defeat coverage of that property. Specifically, United

relies on the provisions of the Agreement that (1) obligate FGC

adequately to safeguard Autotote's property and (2) prohibit

Autotote from removing the equipment during the term of the

Agreement or using it for any other purpose when wagering was

scheduled.

2. Was Autotote's property in the "care, custody, or control" of

FGC?

According to Louisiana law, a provision that attempts to

narrow the insurer's obligation, such as an exclusion clause, is
 

16Reynolds v. Select Properties, Ltd., 634 So.2d 1180, 1183

(La.1994). 

 

17Id. at 1184 (citations omitted). 

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strictly construed against the insurer.16 The Louisiana Supreme

Court recently defined "care, custody, or control" for purposes of

an exclusion clause in the context of a CGL policy and announced

two distinct circumstances in which the insured is deemed to have

"care, custody, or control" of property such that the exclusion

applies to defeat coverage:

The first, and most common, circumstance usually occurs where

the insured is either a contractor or subcontractor who has

been sued by the owner of the property upon which work was

being performed, or is a party with whom property has been

placed for use or repair.

...

The second circumstance under which the insured will be held

to have "care, custody, or control" of the property occurs

where the insured has a proprietary interest in or derives

monetary benefit from the property.17

United does not argue that Autotote's property was in the "care,

custody, or control" of FGC as contemplated by first circumstance,

i.e., contractor or subcontractor relationship. That leaves for us

to determine only whether FGC had a proprietary interest in or

derived a monetary benefit from Autotote's property. And, as

United concedes that FGC had no proprietary interest in Autotote's

property, the issue stated most narrowly is whether FGC derived a

monetary benefit from Autotote's property. We conclude, as did the

district court, that it did not.

There is no question but that FGC could not operate its

racetrack business profitably or effectively without the services
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provided by Autotote and, concomitantly, that Autotote could not

fulfill its contractual obligation to provide FGC with computerized

wagering services without using its Totalisator System—including

its tangible movable (personal) property—on FGC's premises. But

FGC did not derive a monetary benefit from Autotote's property

itself. Rather, the financial benefit that FGC derived from

Autotote's property was nothing more than the indirect business

symbiosis of its Agreement with Autotote: FGC benefitted from the

racetrack's profits which turned, in part, on the efficient

services provided by Autotote's effective use of its own equipment.

This attenuated, indirect benefit is too remote to come within the

kind of monetary benefit required to bring Autotote's property

under the "care, custody, or control" exception. In fact, when we

examine the relationship between FGC and Autotote from a proper

business perspective, we reach precisely the opposite conclusion—it

was Autotote and not FGC, United's insured, that was deriving a

monetary benefit from the subject property, as it was Autotote that

was contractually entitled to a fixed percentage of gross monies

wagered through that service and equipment.

Like the district court before us, we conclude that Autotote's

property was not in the "care, custody, or control" of FGC. It

follows that the subject exclusion does not apply to defeat

United's coverage of Autotote's property.

D. THE JOCKEYS' PROPERTY

The jockeys' property consisted of racing equipment owned,

used, and maintained exclusively by the jockeys and stored in the
 

18Gulf-Wandes Corp., Inc. v. Vinson Guard Service, 459 So.2d

14, 19 (La.App. 1st Cir.1984), writ denied, 464 So.2d 312

(La.1985). 

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Jockey's Room on FGC's premises. Under Louisiana law property

belonging solely and unconditionally to a third-party and entrusted

to the insured for safekeeping is not considered to be in the

"care, custody, or control" of the insured for purposes of that

exclusion.18 The jockeys' property falls squarely into this

exception and thus does not trigger application of the "care,

custody, or control" exclusion.

III.

CONCLUSION

We hold that Autotote's property was not in the "care,

custody, or control" of FGC and that the exclusion does not apply

to defeat United's coverage of that property. Likewise, the

jockeys' property was not in the "care, custody, or control" of FGC

for purposes of applying that exclusion to deny coverage. For the

foregoing reasons, the district court's grant of summary judgment

as it relates to the property owned by Autotote and the jockeys is

AFFIRMED.