* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not

be published and is not precedent except under the limited circumstances set forth in 5TH CIR.

R. 47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 06-31020

WESTERN AMERICAN TRANSPORTATION LLC

Plaintiff

NATIONAL UNION FIRE INSURANCE COMPANY OF LOUISIANA

Intervenor Plaintiff - Counter Defendant - Appellee

v.

ROBBIE MORROW, Individually and doing business as Houston Trucklines,

doing business as Western Intermodal Container Services; JOHNNY

MONTEMAYOR, individually and doing business as Houston Trucklines,

also known as Western Intermodal Container Services 

Defendants - Intervenor Defendants - Counter Claimant - Appellants

Appeal from the United States District Court 

for the Western District of Louisiana

USDC No. 6:99-CV-2217

Before JONES, Chief Judge, and WIENER and CLEMENT, Circuit Judges.

PER CURIAM:*

Robbie Morrow and Johnny Montemayor appeal the district court’s grant

of summary judgment in favor of National Union Fire Insurance Company of

United States Court of Appeals

Fifth Circuit

F I L E D

January 22, 2008

Charles R. Fulbruge III

Clerk
No. 06-31020

2

Louisiana (“National Union”), an insurer for Western American Transportation,

L.L.C. (“Western American”). We affirm. 

I. FACTS AND PROCEEDINGS

In 1996, Morrow and Montemayor entered into an agreement with

Western American to operate a truck terminal in Houston, Texas under the

Western American name and to lease trucks from Western American in

exchange for allthe revenues generated by the leased trucks. In December 1999,

Western American sued Morrow and Montemayor, alleging, inter alia, that

Morrow and Montemayor had violated the parties’ agreement by diverting

business and accounts receivable away from Western American. In its

complaint, Western American alleged that Morrow and Montemayor had

breached its contract and wrongfully withheld funds that should have gone to

Western American, thereby committing theft and conversion. Western American

sought and obtained a writ of sequestration. 

Morrow and Montemayor answered and counterclaimed that Western

American’s allegations of theft and conversion were defamatory and asserted a

claim for wrongful sequestration. Western American continued to retain a law

firm to prosecute its original breach of contract claim against Morrow and

Montemayor, but sought a defense from National Union against the

counterclaims. National Union hired a law firm to defend Western American

and reimbursed Western American for its fees and costs incurred in defending

against the counterclaims. 

In July 2001, convinced that its policy did not cover the counterclaims

against Western American, National Union intervened in the action pursuant

to 28 U.S.C. § 2201(a), seeking a declaration of no insurance coverage. Morrow

and Montemayor answered and counterclaimed directly against National Union

pursuant to the Louisiana Direct Action Statute, arguing that the policy did

cover its counterclaims against Western American. 
No. 06-31020

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In March 2003, two days after the trial on the breach of contract claims

commenced, Western American, Morrow, and Montemayor entered into a partial

settlement (“the Settlement”). In the Settlement, the parties stipulated that:

(1) “[a]ll allegations of theft and conversion . . . are not true”; and, (2) Western

American “did not make the allegations of theft and conversion . . . knowing they

were false; rather, these allegations were based on a misunderstanding . . . . ”

Western American entered into the Settlement without consulting National

Union, despite the insurer’s prior warning to Western American of its duty to

cooperate with National Union before entering into any settlement agreement

with Morrow and Montemayor. After National Union learned that Western

American settled with Morrow and Montemayor, National Union formally

objected to the Settlement. 

National Union subsequently filed a motion for summary judgment,

seeking a declaration of no coverage as to the defamation and wrongful

sequestration claims Morrow and Montemayor had reserved against it. In

December 2005,the district court agreed with National Union and dismissed all

of Morrow’s and Montemayor’s claims. 

Morrow and Montemayor did not dispute the district court’s dismissal of

their wrongful sequestration claim, but moved for reconsideration of their

defamation claim, insisting that the district court erred in failing to give them

the benefit of the presumption of malice that accompanies statements that are

defamatory per se. In August 2006, the district court issued an amended order

with the same resultin which it held thatthe policy did not cover the defamation

claim against National Union because (1) Western American’s

theft-and-conversion allegations were protected by the qualified privilege

accorded statements made in the context of litigation, and (2) Western

American’s breach ofthe policy’s cooperation clause eliminated National Union’s

coverage responsibility. Morrow and Montemayor timely appealed. 
No. 06-31020

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II. STANDARD OF REVIEW

We review the district court’s grant of summary judgment de novo. Am.

Int’l Specialty Lines Ins. Co. v. Canal Indem. Co., 352 F.3d 254, 259 (5th Cir.

2003). A motion for summary judgment should be granted only when there is

no genuine issue of material fact. Weeks Marine, Inc. v. Fireman’s Fund Ins. Co.,

340 F.3d 233, 235 (5th Cir. 2003). In determining whether there is a genuine

issue of material fact, we view all facts and draw all inferences in favor of the

non-moving party. Id.

III. APPLICABLE LAW

“Four elements are necessary to establish a defamation cause of action: (1)

a false and defamatory statement concerning another; (2) an unprivileged

publication to a third party; (3) fault (negligence or greater) on the part of the

publisher; and (4) resulting injury.” Costello v. Hardy, 864 So. 2d 129, 139 (La.

2004) (internal quotations omitted). “The fault requirement is often set forth in

the jurisprudence as malice, actual or implied.” Id. “Words which expressly or

implicitly accuse another of criminal conduct . . . are considered defamatory per

se.” Id. at 140.

However, “even when a plaintiff makes a prima facie showing of the

essential elements of defamation, recovery may be precluded if the defendant

shows . . . that [the statement] was protected by a privilege, absolute or

qualified.” Id. at 141. In Louisiana, a defamatory statement by an attorney in

a judicial proceeding is protected by a qualified privilege, but “the statement

must be material and must be made with probable cause and without malice.”

Freeman v. Cooper, 414 So. 2d 355, 359 (La. 1982). 

IV. DISCUSSION

The parties agree that Western American’s theft-and-conversion

allegations were defamatory per se and are accorded a presumption of malice.
No. 06-31020

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Therefore, we must decide whether the allegations satisfy the requirements of

the qualified privilege defense. 

First, Western American’s allegations satisfy the materiality element.

Western American sued Morrow and Montemayor in December 1999 for breach

of contract, alleging that Morrow and Montemayor had, inter alia, violated their

agreement by improperly withholding business and accounts receivable and that

their actions amounted to theft and conversion. The validity of Western

American’s breach of contract claim, along with the related theft-and-conversion

allegations,formed the core issue in that suit. As Western American’s theft-andconversion allegations were central to its case, they were material to the

proceeding. 

Second, Western American’s statements were made with probable cause

and without malice. The district court’s conclusion that Western American’s

allegations were “colorable” and thus made with probable cause and without

malice is supported by the facts. The court found:

[T]he allegations suggest that (1) Morrow & Montemayor had an

agreement with Western American for exclusive representation; (2)

business conducted pursuantto that agreement belonged to Western

American; (3) Morrow and Montemayor had been collecting funds

properly belonging to Western American . . . ;[] and (4) Morrow and

Montemayor had not been transferring those funds to Western

American. It is no stretch to state that a party which believes that

its obligee has been “diverting all or part of accounts receivable” —

were those facts proved to be true — arguably would be justified in

asserting that its obligee was guilty of theft and conversion.

Therefore, the allegations . . . rise to the level of a colorable claim for

theft or conversion. 

W. Am. Transp., LLC v. Morrow, No. 99-CV-2217, slip op. at 43 (W.D. La Aug.

15, 2006). Under Louisiana law, malice “for the purposes of the tort of

defamation is a lack of reasonable belief in the truth of the statement giving rise

to defamation.” Costello, 864 So. 2d at 143. We agree with the district court that
No. 06-31020

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Western American did not unreasonably disregard the truth when it accused

Morrow and Montemayor of theft and conversion. 

Morrow and Montemayor suggest that the presumption of malice accorded

a statement that is defamatory per se prevents a defendant from proving a lack

of malice when asserting a qualified privilege defense. However, a presumption

of malice may be rebutted by the defendant. Huxen v. Villasenor, 798 So. 2d 209,

212 (La. App. 2001). Morrow and Montemayor also fail to acknowledge that the

qualified privilege for statements made in the context of litigation is an

affirmative defense which “will have the effect of defeating the defamation

claim.” Costello, 864 So. 2d at 142 n.13. We hold that the district court correctly

found thatthe elements of qualified privilege were met and the defamation claim

was defeated. 

Because we hold that Western American’s allegations of theft and

conversion were protected by the qualified privilege for statements made in the

context of litigation, we need not address whether Western American breached

the National Union policy’s cooperation clause. 

IV. CONCLUSION

The judgment of the district court is AFFIRMED.