Court Opinion

ID: 4150087
Source: CourtListenerOpinion
Date Created: 2017-03-03 17:01:25.830616+00
Date Added: 2024-06-11T07:46:29.938015
License: Public Domain

FILED
                                                                         United States Court of Appeals
                      UNITED STATES COURT OF APPEALS                             Tenth Circuit

                             FOR THE TENTH CIRCUIT                              March 3, 2017
                         _________________________________
                                                                             Elisabeth A. Shumaker
                                                                                 Clerk of Court
U.S. SPECIALTY INSURANCE
COMPANY,

       Plaintiff Counter Defendant -
       Appellee,

v.                                                            No. 16-1291
                                                    (D.C. No. 1:15-CV-01590-RPM)
ESTATE OF JOHN CHARLES EARLEY,                                 (D. Colo.)
JR.,

       Defendant Counterclaimant -
       Appellant.
                      _________________________________

                             ORDER AND JUDGMENT*
                         _________________________________

Before TYMKOVICH, Chief Judge, BACHARACH and MORITZ, Circuit Judges.
                 _________________________________

       John Earley, Jr. was the named insured on an aircraft insurance contract (the

Policy) with U.S. Specialty Insurance Company (U.S. Specialty). Earley and Michael

Schlarb died during an instructional flight when an aircraft listed in the Policy crashed

shortly after takeoff. U.S. Specialty sought a declaratory judgment that the Policy doesn’t

cover any potential claims arising from the crash. The district court granted summary

judgment in favor of U.S. Specialty and against Earley’s estate (the Estate). The Estate

       *
        This order and judgment isn’t binding precedent, except under the doctrines
of law of the case, res judicata, and collateral estoppel. But it may be cited for its
persuasive value. See Fed. R. App. P. 32.1; 10th Cir. R. 32.1.
appeals. Because we agree with the district court that the Policy excludes coverage, we

affirm.

                                        BACKGROUND

          U.S. Specialty issued the Policy to Earley to insure three aircraft he owned. The

aircraft at issue is a 1944 North American P-51D Mustang. Because the Mustang’s design

and features are relevant to the coverage issue, we briefly describe them here.

          The Mustang was originally built as a single-seat aircraft. Before Earley bought

the Mustang, its prior owners modified it to (1) add a second, rear seat and (2) add

limited controls to the rear seat: a control stick, rudder pedals, and a throttle control.

According to one of the Estate’s experts, such modifications are common in Mustangs

because they allow an experienced pilot to instruct a new pilot from the rear seat. But the

modifications to Earley’s Mustang were limited. The rear seat didn’t have access to the

following controls: the landing gear; the trim; the fuel selector; the propeller pitch; the

brake; the hydraulics; the starter and magneto controls; the fuel boost pump; and the

electrical controls.1

          On July 4, 2014, Earley and Schlarb took off in the Mustang for an instructional

flight. Earley occupied the forward seat, and Schlarb was in the rear seat providing

instruction to Earley. The Mustang crashed just moments after takeoff. Both men died on

impact, and the Mustang was totally destroyed.

          U.S. Specialty sought a declaratory judgment that the Policy doesn’t cover any

potential claims arising from the crash. In the district court, U.S. Specialty made two

          1
      U.S. Specialty asserted these facts in support of its motion for summary
judgment, and the Estate doesn’t dispute them.
                                          2
arguments relevant to this appeal. First, U.S. Specialty argued that the Policy prohibited

Earley from receiving instruction in the Mustang. Second, U.S. Specialty asserted that

Earley was the pilot flying the aircraft at the time of the accident—another violation of

the Policy’s provisions.

       The district court agreed with U.S. Specialty on both grounds and granted

summary judgment in its favor. The Estate appeals.

                                        DISCUSSION

       We review the district court’s decision granting U.S. Specialty’s motion for

summary judgment de novo, applying the same legal standard as the district court and

viewing the evidence in the light most favorable to the Estate. See Zisumbo v. Ogden

Reg’l Med. Ctr., 801 F.3d 1185, 1196 (10th Cir. 2015). Colorado law controls in this

diversity action. See Hous. Gen. Ins. Co. v. Am. Fence Co., 115 F.3d 805, 806 (10th Cir.

1997) (“The interpretation of an insurance contract is governed by state law and, sitting

in diversity, we look to the law of the forum state.”).

       The district court first concluded that the crash isn’t covered because Earley—who

isn’t listed in the Policy as an approved pilot for the Mustang—was operating the aircraft.

We agree.

       The Policy provision that controls this issue is the “PILOT ENDORSEMENT.”

App. vol. 1, 38 (emphasis omitted). The relevant portion of the endorsement states:

                                              3
       9.     THE PILOT FLYING THE AIRCRAFT
              The aircraft must be operated in flight only by a person shown below
              who must have a current and proper (1) medical certificate and (2)
              pilot certificate with necessary ratings as required by the FAA for
              each flight. There is no coverage under the policy if the pilot does
              not meet these requirements.

              A. WITH RESPECT TO AIRCRAFT N1451D – NORTH
                 AMERICAN P-51D [MUSTANG] (LIMITED):

              1. MIKE SCHLARB,
                 Must be trained and signed off as qualified to act as PIC by a
                 CFI2 approved by us[.]

              2. VLADO LENOCH

Id. (emphases omitted). The effect of the endorsement is plain: if the Mustang was

“operated in flight” by someone other than Schlarb or Lenoch, “[t]here is no coverage

under the policy.” Id. “In flight” is a defined term, meaning “when the aircraft movement

begins for takeoff until completion of the landing run.” App. vol. 1, 78 (emphases

omitted). But the Policy doesn’t define the term “operated.” Thus, this dispute turns on

whether Earley “operated” the Mustang during the fatal flight.

       The record contains no evidence showing whether Earley or Schlarb—or

both—touched any particular set of controls during the flight. But it is undisputed

that Earley occupied the forward seat throughout the flight. Accordingly, the only

question is whether Schlarb could have operated the Mustang from the rear seat.

Because the Policy doesn’t define “operated,” the district court applied Colorado

       2
         The Policy doesn’t define these acronyms; the Estate asserts that PIC means
pilot in command and that CFI means certified flight instructor.
                                           4
law3 and consulted a dictionary to give that term its ordinary meaning: “[to] control

the functioning (of a machine, process, or system).” App. vol. 3, 328 (citation

omitted). The Estate doesn’t contest this definition, and we adopt it for the purpose of

this appeal.

       Relying on that definition, we conclude that Earley operated the Mustang in

flight because he was the only pilot with access to all of the controls and instruments

needed to “control the functioning” of the Mustang. Id. In the district court, U.S.

Specialty argued that “the rear seat passenger in this aircraft, given the lack of access

to the critical controls . . . cannot be the pilot flying the aircraft, or operating the

aircraft in flight.” App. vol. 1, 108. To support that assertion, U.S. Specialty

submitted an expert affidavit from Lee Lauderback that identified 24 controls and

instruments that are the “most critical of the flight controls and instrumentation

required to fly a Mustang.” Id. at 129. Only three of those 24 are accessible from the

rear seat.4 Lauderback also provided a checklist of all operations required to carry out

a complete flight in the Mustang. The pilot in the forward seat has the sole ability to

conduct the vast majority of those operations.

       3
         “[W]hen faced with terms in an insurance policy that are not defined,
[Colorado law] dictates that such terms be given their plain, ordinary meaning . . . .”
Cyprus Amax Minerals Co. v. Lexington Ins. Co., 74 P.3d 294, 306 (Colo. 2003)
(quoting Compass Ins. Co. v. City of Littleton, 984 P.2d 606, 617 (Colo. 1999)).
       4
         Although Lauderback identified only two accessible controls, one of the
Estate’s experts asserted in his affidavit that a third set of controls—the flaps—is
accessible from the rear seat. Because we view the evidence in the light most
favorable to the Estate, see Zisumbo, 801 F.3d at 1196, we credit its expert’s
assertion.
                                             5
       The Estate didn’t dispute those facts below, and the district court properly

credited them. See Fed. R. Civ. P. 56(e)(2); Nahno-Lopez v. Houser, 625 F.3d 1279,

1283 (10th Cir. 2010). On appeal, the Estate acknowledges that “U.S. Specialty took

the position [in the district court] that no one can ‘pilot’ the P-51 Mustang from the

rear seat, which the district court ultimately adopted.” Aplt. Br. 21. In response, the

Estate asserts that its two expert affidavits “are in direct conflict with that position.”

Id. Not so. The relevant portions of the Estate’s expert affidavits state that it’s

possible to serve as “pilot in command” from the rear seat—a designation that is

irrelevant to this coverage issue, as we explain below. See, e.g., App. vol. 3, 268 (“I

serve as the pilot-in-command when I am in the rear seat, even when the plane

belongs to the pilot in the front seat.”). But the Estate’s experts never disputed the

premise that the rear-seat occupant can’t personally control most of the Mustang’s

critical functions.5

       We’re also persuaded by the Federal Aviation Administration’s (FAA)

requirements for converted, two-seat P-51D Mustangs. The FAA was required to

approve the Mustang’s conversion before it could return to service. See 14 C.F.R.

§§ 43.5, 43.9. For this particular conversion, the FAA indicated that its “approval is

valid only if [the] aircraft is placarded to be flown from [the forward] seat only.”

App. vol. 1, 150 (capitalization altered). This requirement is consistent with

       5
         The Estate maintains that “Schlarb had access to the same controls necessary
to perform the takeoff (throttle, rudder pedals, and yoke).” Aplt. Br. 23. But the
Estate cites no record evidence confirming that no other controls are necessary for
takeoff, and Lauderback’s affidavit contradicts this assertion. Moreover, the Policy
required Schlarb to operate the Mustang throughout the flight—not only during
takeoff.
                                            6
Lauderback’s assertion that only the forward seat contains all the controls and

instruments necessary to operate the Mustang during its flight.6

       On appeal, the Estate never seriously disputes this premise. Instead, the Estate

argues for an entirely different interpretation of the Pilot Endorsement. That

endorsement alters “Item 9” in the Policy, which has a heading titled “THE PILOT

FLYING THE AIRCRAFT.” App. vol. 1, 38. The Estate argues that this phrase is

actually a substitute for the term “pilot in command.”7 Aplt. Br. 17. And based on its

assertion that Schlarb was the pilot in command, the Estate argues that Schlarb was

also the pilot flying the aircraft.

       The Estate offers several reasons why we should construe “the pilot flying the

aircraft” to mean “the pilot in command.” But we decline to discuss these reasons

because the Estate’s argument is based on a flawed premise: that the phrase “the pilot

flying the aircraft” has any controlling effect on the coverage issue. It doesn’t. That

phrase is simply a heading; the operative language immediately follows it: “The

aircraft must be operated in flight only by a person shown below . . . . There is no

coverage under the policy if the pilot does not meet these requirements.” App. vol. 1, 38

       6
           The Estate argues that the placard requirement applies only to solo flights—
i.e., if there’s only one pilot on board, the pilot must be in the front seat. The Estate’s
only support for this interpretation—which is narrower than the placard’s actual
language—is its expert’s testimony. See Aplt. Rep. Br. 14 (“Jackson . . . makes clear
that this placard only applies to solo flying.”). But we see no statement in Jackson’s
affidavit to that effect, and the Estate doesn’t cite a specific paragraph of his
affidavit.
         7
           “Pilot in command” is an FAA designation. The pilot in command “(1) [h]as
final authority and responsibility for the operation and safety of the flight; (2) [h]as
been designated as pilot in command before or during the flight; and (3) [h]olds the
appropriate category, class, and type rating, if appropriate, for the conduct of the
flight.” 14 C.F.R. § 1.1.
                                              7
(emphasis omitted). The Estate argues that the district court erred by “determin[ing] that

the ‘pilot flying the aircraft’ meant the person who ‘operated’ the aircraft.” Aplt. Br. 23.

To the contrary, that’s exactly what the Policy states. And for the reasons we’ve already

discussed, only the forward-seat occupant—Earley—could have “operated” the

Mustang.

       Finally, the Estate argues that our reliance on the term “operated,” instead of the

“pilot in command” concept, creates a fact issue that precludes summary judgment.

Specifically, the Estate argues that there’s no record evidence showing “which deceased

pilot had [his] hands on a particular flight control at a certain point in time.” Aplt. Br. 23.

But our conclusion doesn’t rely on that knowledge. Instead, it relies on the undisputed

fact that Earley sat in the forward seat throughout the flight and, based on a standard

definition of the term “operate[],” only the forward seat contained all the controls and

instruments necessary to operate the Mustang throughout the flight. App. vol. 1, 38.

Accordingly, no factual issues preclude summary judgment.

       Because we affirm the district court’s order granting summary judgment based

on the Pilot Endorsement, we need not consider its alternative conclusion that the

Policy prohibited Earley from receiving instruction in the Mustang.

                                               Entered for the Court

                                               Nancy L. Moritz
                                               Circuit Judge

                                               8