Opinion ID: 867192
Heading Depth: 3
Heading Rank: 2

Heading: Exception to the Exclusion in Paragraph 8A

Text: We conclude that summary judgment was appropriate based on our review fo the policy language. The exception to the exclusion provides that it “shall not apply to carriers for hire or loss of and/or theft of documents of title by reason of the actions of any third party obtaining possession of the insured goods by fraud, malice and/or dishonest act.” The Defendants-Appellants have failed to prove that a “carrier for hire” or a “loss of and/or theft of documents of title” was involved, thus the exception to the exclusion is not applicable to the present facts. First, Defendants-Appellants argue that the exception to the exclusion applies because the warehouse where the cotton was being stored could be considered a “carrier for hire,” a term that the insurance policy does not define. Without citing any authority, Defendants-Appellants claim to rely on the affidavit of their expert for this classification of the warehouse. Relying on a former version of the Carriage of Goods by Sea Act (“COSGA”), the Fifth Circuit has considered a “carrier” to include “the owner or the charterer who enters into a contract of carriage with a shipper.” QT Trading, L.P. v. M/V SAGA MORUS, 641 F.3d 105, 109 (5th Cir. 2011) (internal quotation marks omitted). Currently, COSGA defines “carrier” as “the owner, manager, charterer, agent, or master of a vessel.” 46 U.S.C § 30701. Under both the former and the current definition, the warehouse where the cotton was stored cannot be classified as a “carrier” pursuant to the exception to the exclusion in paragraph 8A. Second, Defendants-Appellants argue that the exception to the exclusion should apply because there has been a “theft of documents of title.” DefendantsAppellants contend that Tang, their agent, never received title to the cotton and thus could not have validly transferred title. Tang, however, received the 4 Case: 12-60148 Document: 00512238303 Page: 5 Date Filed: 05/10/2013 No. 12-60148 original bill of lading from Defendants-Appellants, which was more than what is routinely required to permit him to have cleared the cotton through customs. We have stated that bills of lading may serve multiple functions, including serving as document of title. Cargill Ferrous Int’l v. SEA PHOENIX MV, 325 F.3d 695, 702 (5th Cir. 2003). Therefore, given that Tang received the original bill of lading, Defendants-Appellants knowingly delivered title of the cotton to Tang, their agent. No theft of title occurred because the document of title was intentionally given to him. Here, Tang lawfully received title to the goods, thus allowing him to transfer title of the cotton to the purchaser. Though Tang, as agent, may have breached a duty to his principal, this breach is excluded from coverage under the first sentence of paragraph 8A, rather than the exception to the exclusion. Given that no documents of title were lost or stolen, the exception to the exclusion is inapplicable to the current facts. Third, Defendants-Appellants assert that the exception to the exclusion is ambiguous and “very difficult to understand.” They argue that the portion of the exception to the exclusion that includes “documents of title that are lost and/or stolen” should be interpreted to include “fraudulently manufactured” documents of title. We disagree. This interpretation is unavailable under the rules governing the interpretation of insurance contracts under Mississippi law. We have explained that the first rule for interpreting insurance contracts in Mississippi as follows: “[f]irst, where an insurance policy is plain and unambiguous, a court must construe that instrument, like other contracts, exactly as written.” Centennial Ins. Co. v. Ryder Truck Rental, Inc., 149 F.3d 378, 382 (5th Cir. 1998). “[U]nless an affirmative expression of an overriding public policy by the legislature or judiciary allows us to reach a different result,” we have held that “in Mississippi, an insurance policy’s plain meaning controls.” Id. at n.11. Because we conclude that the exception to the exclusion is plain and unambiguous, under Mississippi law, plain meaning must govern its 5 Case: 12-60148 Document: 00512238303 Page: 6 Date Filed: 05/10/2013 No. 12-60148 interpretation. Assigning plain meaning to “carrier for hire” and “loss and/or theft of the documents of title,” the allegedly “illegally and fraudulently manufactured” Purchase Confirmation executed by Tang is not provided for under the plain language of the exception to the exclusion. Accordingly, the district court did not err when it held that paragraph 8A plainly and unambiguously excluded coverage. Thus, viewing the evidence in the light most favorable to Defendants-Appellants, we conclude that summary judgment was appropriately granted