Opinion ID: 532071
Heading Depth: 2
Heading Rank: 1

Heading: The First General Policy

Text: 13 As a threshold matter, we note that construction of insurance policies is a matter of state law. However, neither party raised or briefed the issue of which state's law governs this dispute. We assume, as do the parties, that Mississippi law applies. See Transport Indem. Co. v. Paxton Nat'l Ins. Co., 657 F.2d 657, 660 n. 5 (5th Cir.1981). 14 The first issue we must resolve is whether Custom's status as an insured under the First General policy was abrogated by operation of the policy's like-insurance clause. The clause strips away insured status from a permissive user who uses a listed tractor to pull the permissive user's own trailer that is not covered by like insurance issued by First General. Brown, Custom's employee, was pulling a Custom-owned trailer with a listed tractor at the time of the accident. The like-insurance clause therefore applies. 15 The issue becomes whether Custom's trailer was covered by like insurance. We find that it was. Entries 9 and 10 on the Schedule of Vehicles each provide coverage for one non-owned undescribed semi-trailer while attached to a listed tractor. This use of the term non-owned occurs in a list of English-owned vehicles and in a policy in which English is the named insured. The term in this context can only refer to ownership by English, not by an omnibus insured. Because the trailer was attached to an insured tractor, was not owned by English and was not described in the Schedule of Vehicles, it squarely fits within the description of entries 9 and 10. We note also that the policy called for separate premiums for each of these entries equal to the premium for specifically described trailers. Under the very terms of the policy, the trailer was covered by like insurance in the company. 16 The cases cited by First General opposing this conclusion involve either the validity of like-insurance clauses, Travelers Insurance Co. v. United States Fire Insurance Co., 570 F.2d 515, 516 (5th Cir.1978), or the construction of such clauses in light of other types of clauses not relevant here. Canal Insurance Co. v. State Automobile Association, 433 F.2d 373, 375-76 (5th Cir.1970). 17 First General argues strenuously that the policy does not cover Custom because it never intended to cover Custom. It claims that entries 9 and 10 were added to afford English coverage when English operated listed tractors while pulling undescribed and unowned trailers. Because the policy terms unambiguously provide for coverage for Custom under the circumstances, we need not look behind the policy language for the parties' intent. We note, nevertheless, that entries 9 and 10 may well provide such coverage to English. However, this hypothetical result does not vitiate the conclusion that the same entries cover Custom's use of the specific tractor-trailer combination here. 18 Moreover, the policy terms are inconsistent with First General's assertion that it did not intend to cover Custom. Insureds include permissive users; Custom was a permissive user. The policy does not exclude lessees from coverage nor does it relegate them to a less preferred status among types of permissive users. In fact, the policy insures only lessees and borrowers, and their employees, for losses occurring during loading and unloading of a covered vehicle. Policy Sec. A, III(c). That First General was unaware English leased the vehicles to Custom becomes irrelevant as between First General and Custom in light of the clear policy language. 19 First General also contends that the policy is void for fraud because, (1) it never received from Crawford the motor vehicle report on Brown disclosing that his license was suspended; and (2) English misrepresented in the policy application that the equipment was not rented to others. The district court refused to consider these fraud arguments because First General stipulated in the pretrial order that its policy was in full force and effect at the time of the accident and, further, because it did not specifically plead fraud as a defense although these incidents were easily determinable from the facts. 20 We agree. Pretrial orders control the course of actions and shall be modified only to prevent manifest injustice. Fed.R.Civ.P. 16(e). This court consistently enforces this rule. If a claim is omitted from the order, it is waived. Flannery v. Carroll, 676 F.2d 126, 129 (5th Cir.1982). District courts are encouraged to construe pretrial orders narrowly without fear of reversal. Id. The district court found that the relevant facts were available to First General at the time of the pretrial conference. We agree. Before the pretrial conference First General failed to investigate routinely for easily discernible facts underlying issues basic to a fraud claim. It cannot thereafter claim manifest injustice to modify the order in light of later-discovered but previously discoverable favorable evidence. 21 In sum, entries 9 and 10 of the Schedule of Vehicles provide like insurance so that Custom remains an omnibus insured under the policy. First General's intent argument lacks merit and the fraud claim is foreclosed. Therefore, the First General policy provides coverage to Custom under the circumstances of this occurrence.