1

REVISED

United States Court of Appeals,

Fifth Circuit.

No. 97-10025.

JOHN DEERE INSURANCE COMPANY, Plaintiff-Counter DefendantAppellee,

v.

TRUCKIN' U.S.A., et al., Defendants,

Transport Insurance Company, Defendant-Counter ClaimantAppellant.

Sept. 19, 1997.

Appeal from the United States District Court for the Northern

District of Texas.

Before KING, DUHÉ and WIENER, Circuit Judges.

DUHÉ, Circuit Judge:

Transport Insurance Company appeals the district court's grant

of John Deere Insurance Company's motion for summary judgment on

the issue whether John Deere had a duty under its liability

insurance policy to defend, indemnify or reimburse either Transport

or Transport's insured, Copp Trucking. Transport also appeals the

district court's denial of its own motion for summary judgment on

the same issues. For the reasons that follow, we affirm.

I

This appeal arises out of a traffic accident involving a

tractor-trailer rig and an automobile occupied by the Kurocik

family. Mr. and Mrs. Kurocik died, and their heirs ("plaintiffs")

sued, inter alia, Mr. Tompkins, the driver of the rig; his
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employer, Harold Suits, individually and d/b/a Truckin' U.S.A.;

Ronald Schmoe, Truckin' U.S.A.'s other principal owner; and Copp

Trucking, Inc., the company whose name appeared on the tractor rig.

Truckin' USA has a motor carrier insurance policy ("Policy") with

Appellee John Deere Insurance Co. ("Deere"). Copp Trucking is

insured by Appellant Transport Insurance Company ("Transport").

Transport settled all claims asserted by the Kurocik heirs

against both its insured, Copp Trucking, and Tompkins (but only to

the extent Tompkins was considered an employee of Copp Trucking)

for $600,000. Thereafter, the Kurocik heirs amended their petition

to drop Copp Trucking as a defendant and to allege that Tompkins

was an employee of Suits, Schmoe, and Truckin' U.S.A. and that

there was a "working agreement" between those three and Copp

Trucking.

Transport demanded that Deere reimburse it for the $600,000

settlement on Copp Trucking's behalf, alleging that because Copp

Trucking was an insured under the Policy, Deere therefore had a

duty to defend and indemnify Copp and a concomitant duty to

reimburse Transport for the settlement. Deere brought this action

seeking a declaratory judgment providing that it had no duty to

defend, indemnify, or reimburse either Copp Trucking or Transport

because (1) the rig involved in the accident was not a "covered

auto" under its Policy; and (2) Copp Trucking was not an "insured"

under its Policy. Transport counterclaimed for a declaratory

judgment providing that the Deere Policy was the primary, or at

least co-primary, policy and that Deere was therefore obligated to
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(1) defend Copp Trucking in the Kurocik lawsuit; and (2) indemnify

or reimburse Transport for amounts paid in settlement on Copp

Trucking's behalf.

Both parties moved for summary judgment. The district court

granted Deere's motion, denied Transport's motion, and dismissed

Transport's counterclaim with prejudice. Transport now appeals.

II

Transport contends first that the district court violated the

"complaint allegation rule" by considering evidence extrinsic to

the pleadings in determining whether Deere had an obligation under

the Policy to defend or indemnify either Copp Trucking or

Transport. Second, Transport argues that the district court erred

in determining the tractor-trailer rig was not a "covered auto"

under the Policy. Third, Transport maintains that the district

court erred in holding that neither Copp Trucking nor Transport

qualified as "insureds" under the Policy. Finally, Transport

contends the district court erred in holding that the MCS-90

endorsement in the Policy did not impose on Deere a duty to

indemnify or reimburse Copp Trucking or Transport.

This Court reviews a grant of summary judgment de novo,

applying the same standard as that applied by the district court.

See Floors Unlimited, Inc. v. Fieldcrest Cannon, Inc., 55 F.3d 181,

183-84 (5th Cir.1995).

The "complaint allegation rule," under Texas law, requires

that an insurer's duty to defend be determined solely from the face

of the plaintiff's complaint in the underlying action, without
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reference to facts outside the four corners of the complaint. See

Rhodes v. Chicago Ins. Co., 719 F.2d 116, 119 (5th Cir.1983). If

the underlying complaint, however, does not allege facts, if taken

as true, sufficient to state a cause of action under the policy,

evidence adduced in a declaratory judgment action may also be

considered. See State Farm Fire & Cas. Co. v. Wade, 827 S.W.2d

448, 452 (Tex.App.1992, writ denied); Cook v. Ohio Cas. Ins. Co.,

418 S.W.2d 712, 714-15 (Tex.Civ.App.1967, no writ). The "complaint

allegation rule" does not apply here because the plaintiffs failed

to allege facts in their underlying petition sufficient, even if

true, to allow a determination of coverage.

 The Policy provides that Deere:

will pay all sums an "insured" legally must pay as damages

because of "bodily injury" or "property damage" to which this

insurance applies, caused by an "accident" and resulting from

the ownership, maintenance, or use of a "covered auto."

Thus, to state a cause of action under the Policy, the plaintiffs

must have alleged, inter alia, that the motor vehicle involved in

the accident was one covered under the Policy. The plaintiffs'

fifth amended complaint alleges that:

said tractor/trailer rig had been furnished to Defendant

Tompkins by Defendant [sic] by either Harold Suits,

individually[,] and Ronald Schmoe, individually or doing

business as Trucking [sic] U.S.A. The defendants, Harold Suits

and Ronald Schmoe, had a working agreement with the Copp

Trucking Co., Inc.

Allegations that the rig had been "furnished" to the defendants or

that the defendants had a "working agreement" with Copp Trucking

are insufficient to determine coverage under the Policy, even if
 

1The plaintiffs alleged in their fourth amended complaint that

Copp Trucking owned the tractor. Even if we assume that this

allegation would have been sufficient to create a duty in Deere to

defend Copp Trucking, Transport cannot rely on it now. Under Texas

law, the court must refer to the latest of the amended pleadings in

determining an insurer's duty to defend. Rhodes, 719 F.2d at 119

("[T]he duty to defend is determined by examining the latest, and

only the latest, amended pleadings."). 

 

2It is undisputed that the rig was not one of the vehicles

"scheduled" under the Policy. 

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those allegations are taken as true.1 The district court was

therefore correct both in holding the "complaint allegation rule"

inapplicable and in considering evidence extrinsic to the pleadings

to determine whether John Deere had a duty to defend or indemnify

under the Policy.

III

Transport contends the district court erred in holding the rig

involved in the accident was not a "covered auto" under the Policy.

Transport argues that the rig was "covered" under various

provisions of the Policy. A "covered auto" is one that, inter

alia, is (1) specifically scheduled on the Policy;2 (2) a

"temporary substitute auto"; (3) an "after-acquired auto"; or (4)

an "undescribed trailer."

A

 Under the Policy, a "substitute auto" is:

Any "auto" [that Truckin' U.S.A.] do[es] not own while used

with the permission of its owner as a temporary substitute for

a covered "auto" that is out of service because of [various

reasons].

The district court, relying on extrinsic evidence, found that

Truckin' U.S.A. owned the tractor in question and that therefore
 

3The court relied both on a certified copy of the application

for certificate of title for the Peterbilt tractor, submitted by

Deere to the Kansas Division of Vehicles, and on Harold Suits's

interrogatory response. 

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the tractor could not be a "substitute auto" under the Policy.3

The only evidence offered by Transport to dispute Truckin'

U.S.A.'s ownership of the tractor was a portion of Harold Suits's

deposition testimony in the underlying suit. Suits testified that

Tompkins was "driving a Copp Trucking truck. I didn't have another

truck of mine that said Truckin' U.S.A. on it to haul that."

Suits's earlier deposition testimony indicated, however, that Suits

had a practice of purchasing Copp Trucking rigs for Truckin' U.S.A.

and leaving Copp's name on them until the end of the year.

The testimony on which Transport relies establishes nothing

more than that the rig Tompkins drove was labeled "Copp Trucking"

and has little or no relevance to ownership of the tractor.

Transport's evidence was therefore insufficient to create a genuine

issue of fact as to ownership of the tractor. The district court

was therefore correct in holding that the rig was not a "substitute

auto" under the Policy.

B

An "after-acquired auto" under the Policy is one that

replaces an auto Truckin' U.S.A. previously owned, provided that

Truckin' U.S.A. informs Deere within 30 days after acquisition that

it wants coverage for the new vehicle. There was no evidence in

the summary judgment record that Truckin' U.S.A. provided such

notice to Deere as to the rig in question. Therefore, the district
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court was correct in holding the rig was not an "after-acquired

auto" under the Policy.

C

Under the Policy, the schedule of covered autos includes "any

undescribed trailer, while in the care, custody, and control of the

insured." Deere's Truckers Coverage Form, however, indicates that

coverage extends:

Only [to] those "autos" described in ITEM THREE of the

Declarations for which a premium charge is shown (and for

Liability Coverage any "trailers" [Truckin' U.S.A.] do[es]n't

own while attached to any power unit described in ITEM THREE

).

(emphasis added). The district court found that the second

provision acted as a limitation on the first: i.e., the Policy

provides coverage for "undescribed trailers" only if they are

attached to a scheduled power unit. Since it was undisputed that

the trailer here was not attached to a scheduled unit, the court

determined that no duty to defend or indemnify arose on Deere's

part under the "undescribed trailer" provision of the Policy.

Transport contends this was error, arguing that the language in the

schedule provides an independent basis for coverage under the

Policy for "undescribed trailers, while in the care, custody, and

control of the insured."

We need not reach the merits of Transport's claim. As the

district court pointed out in a footnote to its Memorandum Opinion

and Order, assuming, arguendo, that the Policy provides coverage

under the "undescribed trailer" provision, Transport cannot benefit

from such coverage. Transport and Copp Trucking would still not
 

4Transport also argues that Copp Trucking is an "insured"

under the Policy because it is the "owner" of a "covered auto."

This argument fails because the district court correctly found that

Truckin' U.S.A., and not Copp Trucking, was the owner of the

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qualify as "insureds" under the Policy. See discussion infra Part

IV. A finding that the trailer here was covered as an "undescribed

trailer" would impose on Deere, arguably, only a duty to defend and

indemnify its insured, Truckin' U.S.A., and not Copp Trucking or

Transport. Since neither Copp Trucking nor Transport can hope to

qualify as "insureds" under the Policy by virtue of the

"undescribed trailer" provision, we need not address Transport's

arguments on that point.

IV

 Transport contends the district court erred by holding that

Copp Trucking was not an "insured" under the Policy. An "insured"

under the Policy includes, inter alia,:

Anyone liable for the conduct of an "insured" described above

but only to the extent of that liability.

(emphasis added). Transport seeks to bring Copp Trucking (and thus

itself, as Copp's insurer) under this class of "insureds" by making

the following argument: Copp Trucking was sued for damages arising

out of the actions of Tompkins, a Truckin' U.S.A. employee;

Tompkins' actions in the course and scope of his employment are

imputed to Truckin' U.S.A. under agency principles; Transport paid

$600,000 on Copp Trucking's behalf to settle the claims; thus,

Copp Trucking's (and, by the same token, Transport's) "liability"

is due to the actions of Truckin' U.S.A.; Copp Trucking is

therefore an "insured" under the Policy.4
tractor. See supra Part III.A. 

 

5Transport attempts to rely on allegations in the Kurocik

plaintiffs' fourth amended complaint that Tompkins was actually an

employee of both Truckin' U.S.A. and Copp Trucking. Thus, Copp

Trucking would qualify as an "insured" because it would be liable,

under principles of agency law, for the conduct of Tompkins, an

"insured" under the Policy. Transport cannot rely on these

allegations, however. The court must consider the latest amended

pleading in determining an insurer's duty to defend or indemnify.

Rhodes, 719 F.2d at 119. The Kurociks' fifth amended complaint

(the latest) does not allege that Tompkins was an employee of Copp

Trucking. 

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This argument fails because, contrary to Transport's

assertions, neither Copp Trucking nor Transport was legally

"liable" for the conduct of Truckin' U.S.A., its employees, or any

other "insureds" under the Policy.5 Copp Trucking and Transport

elected to settle the Kurocik suit on Copp's behalf and on behalf

of Tompkins (to the extent Tompkins was considered an employee of

Copp Trucking); Transport, as Copp Trucking's insurer, funded this

settlement. Neither choosing to settle nor funding that

settlement, however, made Copp Trucking or Transport "liable" for

the conduct of Truckin' U.S.A. or its employee, Tompkins, within

the meaning of the Policy. The district court was therefore

correct in holding that neither Copp Trucking nor Transport was an

"insured" under the Policy.

V

Transport contends that the MCS-90 endorsement in the Policy

requires Deere to indemnify Transport for the amounts paid in

settlement of claims against Copp Trucking in the Kurocik suit.

Deere included the MCS-90 endorsement in the Policy to comply with
 

6Provisions similar to those contained in § 10927 are now

contained in 49 U.S.C. § 13906 (1997). 

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the financial responsibility requirements of 49 U.S.C. § 10927,6

which codifies the Motor Carrier Act of 1980. The relevant portion

of the MCS-90 endorsement states:

In consideration of the premium stated in the policy to which

this endorsement is attached, the insurer (the company) agrees

to pay within the limits of liability described herein, any

final judgment recovered against the insured for public

liability resulting from negligence in the operation,

maintenance or use of motor vehicles ... regardless of whether

or not each motor vehicle is described in the policy and

whether or not such negligence occurs on any route or in any

territory to be served by the insured or elsewhere.

(emphasis added). See 49 C.F.R. § 387.7 (1995). Because Copp

Trucking is not an "insured" under the Policy, the MCS-90

endorsement provides no basis for relief. Where an insurance

policy does not provide coverage for non-listed vehicles except to

third-party members of the public through operation of the

endorsement, the policy provides no coverage for purposes of

disputes among insurers over ultimate liability. See Canal Ins.

Co. v. First General Ins. Co., 889 F.2d 604, 611 (5th Cir.1989).

VI

For the foregoing reasons, the decision of the district court

is

AFFIRMED.