REVISED - June 14, 2001

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

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No. 00-11034 

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RAN-NAN INC., doing business as Vinces Imports, doing

business as Guy’s Drive In #3,

 Plaintiff-Appellee,

versus

GENERAL ACCIDENT INSURANCE COMPANY OF AMERICA,

also known as CGU Insurance Company,

 Defendant-Appellant.

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 Appeal from the United States District Court

for the Northern District of Texas

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May 24, 2001

Before JONES, DeMOSS and BENAVIDES, Circuit Judges.

Per Curiam:

This contractual dispute arises from an “Employee

Dishonesty Coverage” insurance policy issued by Appellant General

Accident Insurance Company (“General Accident”) to Appellee RanNan, Inc. (“Ran-Nan”). The district court concluded that Ran-Nan

was the victim of two separate “occurrences” of employee dishonesty

and that General Accident had breached the insurance contract by

refusing to compensate Ran-Nan for both incidents. Because the
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district court properly interpreted the term “occurrence” under

Texas law, we affirm. 

Ran-Nan operates a convenience store in Plano, Texas,

which includes a Western Union and check cashing business. RanNan purchased Employee Dishonesty Coverage blanket insurance

policies issued by General Accident. Each policy had a limit of

$25,000 with a $500 deductible. The events in question occurred

over the course of policies running from April 10, 1996 to April

10, 1997 (the fourth renewal policy) and from April 10, 1997 to

April 10, 1998 (the fifth renewal policy). 

Toward the end of 1997, Ran-Nan’s owners became aware

that the store was the victim of employee dishonesty and submitted

a claim to General Accident. Two Ran-Nan employees, Robert Griffis

and Angela Patillo, caused losses through entirely independent

thefts. Robert Griffis stole a total of $32,250.00, and Angela

Patillo stole a total of $31,600.00. The thefts occurred during

both the fourth and fifth renewal periods in approximately

proportionate amounts. 

In response to Ran-Nan’s claim, General Accident paid the

policy limit less the deductible on the fifth renewal, but it

refused to pay anything on the fourth renewal despite the fact that

much of the theft had occurred during the earlier policy period.

General Accident reasoned that there had only been one “occurrence”

of employee dishonesty within the meaning of the policy.
1Ran-Nan also asserted a bad faith denial of coverage, but it

has not cross-appealed the district court’s adverse summary

judgment on that claim.

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Ran-Nan sued General Accident for breach of contract1 and

General Accident removed the case to federal district court on

diversity grounds. The district court held that there were two

separate “occurrences” of employee dishonesty and that Ran-Tan was

entitled to recover for both. It therefore awarded Ran-Nan the

amount due under the fourth renewal policy. General Accident now

appeals. 

DISCUSSION

The interpretation of the word “occurrence” as used in

the insurance contract is a question of law. See Rutgers State

Univ. v. Martin Woodlands Gas Co., 974 F.2d 659, 661 (5th Cir.

1992). This court reviews questions of law de novo. See Empire

Fire and Marine Ins. Co. v. Brantley Trucking Co., 220 F.3d 679

(5th Cir. 2000). In this diversity case governed by Texas law, an

insurance contract is analyzed by the same rules as other

contracts. Upshaw v. Trinity Cos., 842 S.W.2d 631, 633 (Tex.

1992). While “occurrence” has often been construed in general

liability policies, there appear to be few cases interpreting the

term in employee dishonesty policies.

The General Accident policy, like many similar policies,

states that an “occurrence” is “all loss caused by, or involving,
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one or more ‘employees,’ whether the result of a single act or

series of acts.” 

In arguing that there was but one “occurrence” of

employee dishonesty. General Accident urges that there was only

one loss, specifically Ran-Nan’s loss of a single sum of cash. The

company also argues that the “involving one or more employees”

clause of the “occurrence” definition means that regardless how

many employees steal from the insured, there was only one loss of

cash and therefore only one “occurrence.” The more natural reading

of the policy, however, is that the “involving” clause signifies

that a group of employees conspiring together to steal. 

General Accident invokes Bethany Christian Church v.

Preferred Risk Mutual Insurance Company, 942 F.Supp. 330, 335 (S.D.

Tex. 1996) (applying Texas law), in which a federal magistrate

judge found that a church employee’s series of thefts of cash over

the course of three different renewal periods of an employee

dishonesty insurance policy was a single “occurrence.” The

policies in Bethany and in this case contained identical

definitions of “occurrence.” We find this case distinguishable.

First, Bethany is critically different from this case

because it involved a series of thefts by a single employee,

whereas the present dispute involves independent pilfering schemes

by two different employees working separately. To accept General

Accident’s proffered definition of “occurrence” this court would

have to find that the independent nature of these two series of
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thefts is irrelevant and that one loss with two unrelated causes is

one “occurrence.” The more natural reading of the policy, however,

is that the “involving” clause signifies a group of employees

conspiring together to steal is a single “occurrence.”

Second, Texas law does not support the definition of

“occurrence” proffered by General Accident because “the proper

focus in interpreting ‘occurrence’ is on the events that cause the

injuries and give rise to the insured’s liability, rather than on

the number of injurious effects.” H.E. Butt Grocery Co. v.

National Union Fire Insurance Co., 150 F.3d 526, 530 (5th Cir.

1998) (applying Texas law). The few Texas cases that have

addressed this issue apply a “cause” analysis in determining

whether a set of facts involves one or several occurrences. See

Goose Creek Consol. ISD v. Continental Cas. Co., 658 S.W.2d 338,

339 (Tex. App. 1983--Houston [1st Dist.], no writ) (holding that

“where there are two fires at two different places with two

separate causal factors, there are two loss occurrences.”). This

“cause” approach to analyzing the number of “occurrences” is

utilized by the great majority of courts and jurisdictions

nationwide. See Transport Insurance Co. v. Lee Way Motor Freight,

Inc., 487 F.Supp. 1325, 1330 (N.D. Tex. 1980) (cataloging law of

other jurisdictions). This court has also utilized the “cause”

method when determining the number of “occurrences” under a general

liability insurance policy and Texas law. Maurice Pincoffs Co. v.
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St. Paul Fire and Marine Insurance Co., 447 F.2d 204, 206 (5th Cir.

1971).

General Accident contends that decisions utilizing

“cause” analysis such as H.E. Butt and Maurice Pincoffs are

distinguishable as construing of general liability insurance

policies instead of employee dishonesty insurance policies. Not

only does the company neglect to cite any authority supporting this

contention, but it also fails to explain why, in determining the

number of “occurrences”, employee dishonesty policies are different

than general liability policies. It is true that no Texas case

specifically applies “cause” analysis to employee dishonesty

policies, but this widely accepted method for calculating the

number of “occurrences” is consistent with the general principles

of Texas law. 

On the facts before us, two independent causes exist for

Ran-Nan’s total loss. Because there are two causes, there have

been two “occurrences” of employee dishonesty. Ran-Nan is entitled

to recover for both occurrences. The district court correctly

concluded that Ran-Nan should be awarded $24,500 for the

“occurrence” during the fourth renewal period of the policy in

addition to the $24,500 already paid to Ran-Nan for the

“occurrence” during the policy’s fifth renewal period. The

district court’s judgment is therefore AFFIRMED.