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w . v i l l a no v a . e du/thir dc ir c uit_2005/334NOT PRECEDENTIAL U N IT E D S T A T E S C O U R T O F A P P E A LS F O R T H E T H IRD C IR C U IT
No. 04-3472
NORTHLAND I

NSURANCE COMPANY v. L I NCOL N GENERAL

I NSURANCE COMPANY; J.H. M. EN TE RPRI SES, I NC .; V ERN I CE L . ST AT TS; SHERI L LJ . MUL L I GAN; DEN I S A. MUL L I GAN; ROBERT E. KRAPF ; UTE L . HETLAND CLARK, as Administrators

of the Estate of Ka

rin Clifford; PATRI CI A R. CL I FF ORD, Administrator of the

Estate of Rober

t R. Cl ifford WOOL EVER BROTH ERS TRANSP ORTATI ON, I NC., 3 Party Defe ndant rd L i n c o l nG e n e r a l In s ur an c e C o mp any,

Appellant On Appea l from the United States District Court fo r t he Mid dle Di str ic t of

Pe nn sylva

nia (D.C. Civil No. 01-cv-0763) District J udg e: Honora

ble Yvette K ane Argued Oc tober 20, 2005 B e fo re : SCI RI CA , Ch ie f Jud g e , V ANAN TWE RPEN a nd AL DI SER T, Cir c uit

Judg e s. (F iled October

27, 2005 ) J onathan H. Rudd, Esq. (Argued) M c N e e s W a l l a c e & N ur i c k LLC 100 Pine Street Har risburg , PA 17108 Counsel for Appellant L incoln Gene ral Insurance CompanyW e pau se t o co nfir m ou r j uri sdi ct i on . A l t ho ug h u nclear from t he p art i es’ 1 j uri sdi ct i on al st at em ents i n thei r br i efs, oral argum ent confir m ed that t he “in excess” re q u ir e m e n t o f

2 8 U .S .C . § 1 3 3 2 is s a tis f ie d b e c a u s e N o rt h la n d ’s c o m p la in t s o u g h t, i nt er a lia , at t or ney ’ s fee s i n t he under l y i ng l i t i gat i on ar i s i ng fr om t he ac ci dent

. I n addi t i on, t he i n exce s s r equi r ement i s s at i s fi ed bec aus e Li ncol n, i n ans w er i ng t he compl ai nt , as s er t ed a $675, 000 compul s or y count er cl ai m . Such count er cl ai m s m ay be cons i der ed for pur pos es o f c a lc u la tin g th e a m o u n t in c o n tr o v e rs y . S e e , e . g . , S p e c t a c o r M

g mt
. Gr o u

p v . Br o wn , 1 3 1 F .3 d 1 2 0 , 1 2 1 (3 d C ir. 1 9 9 7 ) (h o ld in g w h e re d e f e n d a n t “e lec ts n o t to f

ile a m o tio n to d ism iss fo r l ac k o f ju ri sd ict ion , b u t ans w ers a co m p lai n t by asse rt ing a c o m p u lsory c o u n ter c laim , the a m o u n t o f th a t co u n ter c laim m a y b e c o n sid e re d b y th e c o u rt in d e ter m in in g if

th e a m o u n t in c o n tro v e rsy ex c e e d s th e sta tu to ry re q u ire m e n t f o r d iv e rsity juri sd ict ion ”). O u r j u ri sd ict ion is t h u s p rop er. 2 Ira S. L ipsius (Argued) S c h i n d e l , F ar

m an& Li p s i u s , LLP 14 Penn Plaza, Sui te 500 New Y ork, Ne w York 10122 Counsel for Appellee Northland Insurance Company Andre w R. Spiege l L aw Of fice of Andre w R. Spiege l 3901 A. Main Street Philadelphia, PA 19127 Counsel for 3 Party Defe ndant W ooleve r Brothers Transport ation, Inc. rd

____

OPI NI ONOF TH E CO UR T
VAN AN TWERP EN, Circuit J udg e. Appellant L incoln Gene ral Insuranc e Company (“L incoln”) ap p eals from an orde r and judgme nt of the District Court dated August 26, 2003, as am ended August 3, 2004 and August 6, 2004, in f av o r of Appe llee Nor

thland Insuranc e Company (“N orthland”) . The District Court had jurisdiction pursuant to 28 U.S.C. § 1332(a) (1). We ha ve jurisdiction pur suant to 28 U.S.C. § 1291

and wi ll a ff ir m. 13 I. On No ve mbe r 1 7, 19 95 , a

tr a c tor tr a iler truck op erat ed by L inco ln’ s in sure d, J.H. M. E n t erp ri ses, Inc. (“ J HM”) w as involved in a motor vehic le ac cident in Hometown, Pennsylvania, resultingin two fatalities. At the time of the acc ident, L incoln provided covera g e for the vehicle on behalf of JHM, whil e Nor

thland provided c overa g e for t h e s ame ve hicle on beha lf of its insured, Woolever B rothers Tr ansportation Company (“Wooleve r ” )

. Sp e cifica lly , the vehicle involved in the

acc ident was insure d by

both Northland and L incoln for an overla pping pe riod of time that included the date of

the ac cident: L incoln’s cove rag e of the vehicle for insured J HM ran f rom April 18, 1995 to April 18, 19 96 in the amount of $750,000 in liability cover ag e for

eac h acc ident or loss, and No rt hla nd ’s c ov e ra g e of

the ve hic le fo r i ns ur e d Wo ole ve r w a s in ef fe c t fr om Sep te mbe r 1, 1 99 5 to September 1, 1996 in the a mount of $2,000,000 in liabili ty cover ag e for

eac h acc ident or loss. In addition to providing c o v er age for the sa me vehicle at the same time, L incoln and Northland ha d elec ted to use identica l policies possessing identical languag e. I n pertinent pa rt, the languag e in both J HM’s policy (under written by L incoln) and Woolever ’s policy (under written by No rt hla nd ) s tate d: a. This Covera g e F orm’s L iability Coverage i s primary

for a ny c ov e re d ‘ a

uto ’ wh ile hir e d o r b or

ro we d b y you and us e d e xclu siv e ly in y our business as a

trucke r and pursuant to ope ratingrig hts gr anted to you by a pu bli c a uth or ity . T his Cov e ra g e F or m’ s L iabi lity Coverag e is excess over a ny other c ollectable insurance for a ny cover ed ‘a

uto’ while h ire d

or borr owed f

rom you by

another ‘trucke r’. Ho we ve r, wh ile a c ov e re d ‘a uto ’ wh ic h is a ‘t

ra ile r’ is c onne c te d to a po we r u nit , th is C ov e ra g e F or

m’ s L ia bil ity c ov e ra g e is: (1) On the same ba sis, primary or excess, as f

or the powe r unit if the power unit is a covere d ‘auto’. (2) Excess if the powe r unit is not a cover ed ‘a uto’. b

. An y T ra i l er In t er ch an g e C o v e ra ge p ro v i d edb y th i s C o v er age4 For m is primarily

for a ny cover ed ‘a

uto’.

c. E x ce p tas p ro v i d edi np ar agr ap h s a. an d b

. ab o v e, th i s C o v er age For m provides primary

insurance for a

ny cover ed ‘auto’ y ou own and excess insurance for a

ny cover ed ‘a

uto’ you don’t own. On the basis of this languag e, both Northland and L incoln took the position after the a ccide nt that the other w as liable a s the primary insurer. U ltimately , on J une 22, 2000, Nor thland filed a

c omp la int a g a ins t L inc oln in the Un ite d Stat e s Dist ri c t Cour t for the Ea ste rn

Di str ic t of

Pe nn sylva

nia

se e kin ga de c larator

y jud g me nt a g a ins t L inc oln on grou nd s th at it

ha d th e pr ima

ry ob lig atio n to provide c overa g e for

the vehicle at the time of the a ccide nt. After a benc h trial, the District Court conclude d, on the basis of the parties’ policies and the underly ing fac ts, that L incoln was oblig ated t o p r o v i d e p r i m a

r y c o v e r a g e an d

th atN o rth l an d

w a s o b l i g at e d

t o p r o v i d e d e x c e s s c o v e r a g e . It the re up on or de re d L inc oln

to p ay No rt hla nd $7 5, 00 0, the dif

fe re nc e be tw e e n L inc oln ’s po lic y lim it of $7 50 ,0 00 and the $6 75 ,0 00 that L inc oln ha d a lr e a dy pa id to d ate by se ttl ingthe un de rl yingc la ims

.
Subsequently , the Dis trict Court g rante d Northland’s motion pursuant to F ed.R.Civ.P. 59(e) to amend the judg ment, am en d i n g i t s August 26, 2003 judgment a nd order ing L incoln to pay p r e j u d g m e n ti n t e r e s tth r o u g hth atd at e an d t o r e i mb ur s e N o rth l an d ’ s at t o r n e y ’ s f e e s . S h o rt ly there afte r, the District Court ame nded its judgmen t again, requiringL incoln to pay Northland prejudg ment interest through August 6, 2004. After L incoln’s t imely notice on August 25, 2004, this appeal followe d. II.In th e f irst a rg u m e n t o f

its re p ly b rie f

, an d a g a in a t o ra l ar g u m e n t, L in c o ln e x p re ss ly 2 a b a n d o n e d a n y c h a llen g e it h a d to th e D istric t C o u rt’s f a c tu a l f in d in g s. E v e n w e re th is n o t so, ou r rev iew o f th e re co rd c o n firm s tha t no n e o f th e D ist ri ct C o u rt ’s find ing s w ere c le a rl y e rr o n e o u s . See, e. g. , I nt ’ lA s s ’ n of

Machi ni s t

s & Aer os

pace W or ker s v. U

. S. A i r w ays , I

nc. , 358 F. 3d 255, 259 ( 3d C i r . 2004) ( r ei t er at i ng t hat w e r evi ew a di s t r i ct co u rt ’s fa ctua l fi n d ing s fo r clear e rror). 5 L incoln challeng es only

the District Court’s le g a l c o n c lu s io n s . A s to the corr ect c onstruction 2 and lega l operation of an insurance policy , we ex erc ise plenar y revie w. See, e.g., W

estport I ns. Corp. v. Bay er , 2 84 F .3 d 4 89 , 4 96 (3 d Ci r. 20 02 ); New Castle County v. Hartf ord Acc ident &Indem . Co. , 970 F.2d 1267, 1270 ( 3d Cir. 1992). Be cause our jurisdiction is premised upon diversity of the parties, we must apply

the substantive law of

the stat e i n which the a ction arises. See, e .g., Colantuno v. Aetna Ins. Co., 908 F.2d 908, 909 (3d Cir. 1992) (citingErie R. R. v. Tompk ins , 304 U.S. 64 (1938)). In construinga policy , if the words of the policy are clea r and una mbiguous, we must g ive them their plain and or dinary meaning

. Pac. Indem. Co. v. Linn , 766 F.2d 754, 760- 61 (3d Cir. 1985). I f a term is ambiguous, and the intention of the pa rties ca nnot be discer

ned fr om the policy , the cour

t may look to ex trinsic evidenc e of the purpose of the insuranc e, its subject matter, the situation of the parties, and the circ umstances surroundingthe makingof the c ontrac t. Id

. at 761. I I I
. L incoln first contends that a 1990 lease found i nside the vehicle on the date of the a ccide nt proves that Woolever

was the le ssor of the vehicle, and argues from this that J HM did not use the vehicle e x clusively

on the date of

the ac cident. This ar gument is unpersuasive f or the re ason stated by the Di str ic t Co ur

t, whic h is su pp orted

by our r e vie w o f t

he re c or d: t

he pa rt ie s r e fo rm e d th e ir

c ontr a c t and

a ba nd on e d th e 19 90 le a se pr ior to 1 99 5, su c h th at th e 19 90 le a se do e s n ot a c c ur ate ly ref lect the a ctual cour se of lea se dea lings be tween JHM and Woolever a s of the date and time of the6

ac c id e n t. A s th e D is tr ic t Co urt c o r r e c tl y f o un d , in a d d it io n to th e f

a c t th at th e 1 9 9 0 le a s e was no lon g e r i n e ff

e c t whe n th e a c c ide nt oc c ur re d, the a pp lic a ble tr ip le a se ha d e nd e d, by its own te rm s, the mor nin gof the date of

the a c c ide nt. B e c a

us e our r e vie w o f t

he re c or d co nfi rm s th at th e se fi n d i n gs o f th e Di s tri ct C o urt ar e no t cl earl y erro n eo u s , th e part i es ’ fo l l o wi n g p o l i c y l a n g u age
c ontr ols :
c. E x ce p tas p ro v i d edi np ar agr ap h s a. an d b

. ab o v e, th i s C o v er age For m provides primary

insurance for a

ny cover ed ‘a

uto’ you own and excess insurance for a

ny cover ed ‘a

uto’ you don’t own. Dra wingupon an alter

native sug g estion made by the District Court, L incoln argues next that a sub-lea se wa s cre ated pr ior to the ac cident, w h er eb y J HM’s use of

the vehicle at the time of the

ac ci d en t wa s n o tex cl u s i v e. Ye tev enas s um i n g arguendo that the 1990 lease wer e still in effe ct and that the vehicle had been returne d to JHM’s possession a t the time of the ac cident pursuant to a suble a se , w e a g re e wi th N or thl and tha t th e outc ome wo uld

be the same , a s th is t ime the pa rt ie s’ fo llo wi ngpo lic y

langua g e wo uld

c ontr ol:

a. T h i s Coverag e F orm’s L iability Coverag e is primary

for a ny c ov e re d ‘a

uto ’ wh ile hir e d or bo rr ow e d by you and us e d e xclu siv e ly in y our business as a

trucke r and pursuant to ope rating rig hts gr anted to you by a publi c a

uth or ity . T his Cov e ra g e F or m’ s L ia bil ity Coverag e is excess over a ny other c ollectable insura nce f or any cover ed ‘a

uto’ while hired or

borrowe d from you by

another trucke r. As a re sult, we conc lude that the District Court’s fa ctual findingthat J HM was in exclusi ve possession of the vehic le at the time of the acc ident nece ssarily controls our a

naly sis under sec tion (a.) or, alter

natively , section (c .) of the pa rties’ re levant policy

provisions. To the e xte nt L in c o ln a

rgues that the pa

rties’ policy

languag e is ambiguous, the District Court

c or re c tly fo un d th at the No rt

hla nd and L inc oln po lic ie s c onta in i de nti c a l te rm s, be c a us e bo th utiliz ed the same standar d contra ct form. We have discussed the critica l la nguag e of these ide nticalA s t he D i s t r i ct C our t cor r ect l y obs er ved, t he pol i ci es do not defi ne t he w or ds 3 “bor r ow ” and “ excl us i ve. ” B eca us e t hes e w or ds ar e cl ear and unambi guous , as i s t he p ara g rap h in w h ich th ey ap p ea r, w e a re o b li g ated to g ive th em their plain a n d o rdin ary m e a n in g . S e e P a c . In d e m . C o ., 766 F. 2d at 760- 61. W ebs t er ’ s defi nes “bor r ow ” t o m ean “t o t ake f

r om anot her by r eques t and cons ent , w i t h a vi ew t o r et ur n t he t hi ng t aken a nd return it o r i ts eq u ivalen t”; an d “e x clus ively ” to m ea n “to th e e x clus ion o f a ll o thers.” It is b a se d , o f

c o u rse , o n th e ro o t “e x c lu siv e ,” w h ich m e a n s, n o t su rp risin g ly , “e x c lu d in g a ll ot her s ” and, m or e pr eci s el y , “not s har ed or di vi ded; s ol e; s i ngl e. ” W ebs t er ’ s N ew U n iversa l U n ab ri d g ed D ict ion ary 2 1 1 , 6 3 8 (2d ed

. 1 9 8 3 ). 7 p o l i c i e s a b o v e , an d f i n d n o amb i gu i ty. 3 Be cause the par

ties’ policy

languag e is both identical and unambiguous, the District Court

corr ectly deter mined that this disput e turns on the f actua l q u est ion of which e ntity owned ( or, alternatively , hired or bor row ed ) t h e vehicle, a

nd whether

such possession was e x clusive. Our

re vie w o f t

he re c or d as to the re le va

nt fi nd ing s of the Di str ic t Co ur t r e ve a ls n o e rr or , a

nd c e rt a inl y not clear err or. We thus conclude that L incoln’s contentions with respec t to the significa nce of the 19 90 le a se —a

nd the a lle g e d e rr or s w ithre sp e c t to the Di str ic t Co ur t’ s a lte rn ativ e su

b- le a se analy sis—are w ithout merit. L incoln next contends that JHM and Woolever memoria liz ed purpor ted modifications to the 1990 lease after

the 1995 ac cident, re sulting in fra udulent misrepre sentations that voi dL incoln’s

cover ag e oblig ations. We find this argument u n p ersuasive for two r easons. F irst, as discussed ab o v e, L i n co l n m ay n o t n o w b e h ea rd t o co mp l ai n th at th e Di s tri ct C o urt erre d i ni t s fa ctu al fi n d i n gs about alleg ed mi srepr esentations in the t rip lease s and log s that J HM and Woolever me morialized afte r the a ccide nt. Second, re view of the record confirms that the District Court’s finding s here are not clear ly

err oneous. See, e.g., Unit ed Stat es v. Roman , 121 F.3d 136, 140 ( 3d Cir. 1997) (fa ctual fi nd ing s are c le arl y

e rr on e ou s o nl y if th e y

are un su pp or te d b y su bs tanti a l e vid e nc e , la c k a de qu ate8

evidentiar y support, are ag ainst the clea r we ight of

the evidenc e, or if a

district cou rt has misapprehe nded the we ight of the evidenc e). N one of the se circ umstances e x ists here a s to L incoln’s claim of fa lse statements. We there fore need not rea ch the question of whether such a stateme nt was materia l and made knowingly and in bad f aith. Se e , e .g., Tud or In s. Co. v . To wns hip of S tow e , 697 A.2d 1010, 1017 (Pa.Super.Ct. 1997) ( su m m ar i zing re quirements under Pennsylvania law f

or fra udulent repr esentation). In s um , we fi n d n o erro r wi th th e Di s tri ct C o urt ’s co n cl u s i o n th at L i n co l n ’s co v er age ob lig atio n is pr ima

ry , a nd that N or thl and ’s c ov e ra g e ob lig atio n is e xce ss t o L inc oln ’s
. L inc oln ’s fi na l argume nt is that th e Di st ric t Court e rr e d in awa rd ing pr e jud g me nt i nte re st throug h August 6, 2004, the date of its sec ond amende d jud g ment. Contending that the basis for the awa rd wa s established by

the District Court’s verdic t a lmost a y ear ear lier, on August 26, 2003, L incoln argues pre

judgme nt interest should have only been c alculate d throug h that date. Where, a s here , subject matter jur isdiction is premise d on the par ties’ diversity

of citizenship, the questi on of whether a party is entitled to prejudg ment interest is one of state law. See Jarvis v. Johnson , 66 8 F
. 2 d

7 4 0 , 7 4 1 ( 3 d

Ci r . 1 9 8 2 )

. H e r e , th e la wo f Pe nn s ylv an ia

c o n tr o ls

. We h ave previously

observe d that “[p] re-

judgme nt interest in Pennsylvania contract cases is a matter of rig ht and is c alculate d from the time the money become s due or payable.” Am. Enka Co. v . W icaco M ach. Corp. , 6 8 6 F
. 2 d 1 0 5 0 , 1 0 5 6 (1 9 8 2 ) ( ci t i n g Penne ys v. Pa. R . R. Co. , 183 A.2d 544 (Pa. 1962))

. Ce rt a inl y , th e n, the Di str ic t Co ur t di d n ot e rr

in c on clu di ng that

No rt hla nd wa s e nti tle d to prejudg ment interest as a matter of la w. Id. at 10 56 -5 7; se eals o Ba rri s v . B ob ’s Drag

Chu te s & Sa fe ty Eq uip ., 717 F.2d 52 ( 3d Cir. 1983). Nor, w e conc lude, did i t err in determiningthat Pennsylvania law a llows such interest to be c alculate d throug h the date of the s econd amendment9

to the judgme nt, dated August 6, 2004. First, we are unaware of

any require ment under Pennsylvania law ne cessitatingthe tolling of prejudgme nt interest in this circ umstance. Certainly we have bee n cited to no such a uthority by L incoln. Of the two pote ntial gr ounds for such a n outcome—tolling of

prejudg ment interest during the pende ncy

of an a ppeal, see, e.g., Arthur v. Kuchar , 682 A.2d 1250, 1255 (Pa. 1996), a nd tolling of pre judgme nt interest wher e a de fenda nt has secur ed a “ favor able f inal ju d gm en t from the trial court,” Ba rri

s , 717 F.2d at 57—plainly neither applies here

. Second, as to a ny rema ining que stion of wh e n th e Di str ic t Co ur

t’ s ju dg me nt b e c ame fi na l, we ob se rv e that the Di str ic t Co ur t ame nd e d it s August 26, 2003 judgme nt on August 3, 2004 and aga in on August 6, 2004 in response to a motion tim e ly fi le d b y No rt hla nd purs ua nt t o F e d. R.C iv. P. 5 9( e ). We h ave pr e vio us ly state d th at “ [a] Ru le 59(e) motion . . . , in ef

fec t, ‘suspends’ the f

inality of the initial judgme nt” until the District Court either g rants or denie s the motion. Fed. Kempe r Ins. Co. v. Rausche r , 807 F.2d 345, 348 (3d Cir. 19 86 ). F or

the se re a so ns , w e c on c lud e that L inc oln ’s pr e jud g me nt i nte re st a

rgume nt i s w ith out me ri t and the District Court did not err in awar ding pr ejudg ment interest through August 6, 2004. Acc ording ly , the orde r of the D istrict Court dated August 26, 2003, as ame nded August 3, 2004 and August 6, 2004, is affirmed.