Court Opinion

ID: 613305
Source: CourtListenerOpinion
Date Created: 2011-09-08 12:51:36+00
Date Added: 2024-06-11T17:50:24.652641
License: Public Domain

[DO NOT PUBLISH]

                      IN THE UNITED STATES COURT OF APPEALS

                                   FOR THE ELEVENTH CIRCUIT
                                    ________________________                   FILED
                                                                      U.S. COURT OF APPEALS
                                            No. 11-10185                ELEVENTH CIRCUIT
                                        Non-Argument Calendar            SEPTEMBER 8, 2011
                                      ________________________               JOHN LEY
                                                                              CLERK
                               D.C. Docket No. 1:08-cv-00623-KD-N

HARTFORD FIRE INSURANCE COMPANY,

lllllllllllllllllllllllllllllllllllllll          lPlaintiff - Counter Defendant - Appellee,

                                                versus

THE MITCHELL COMPANY, INC.,

llllllllllllllllllllllllllllllllllllllll         Defendant - Counter Claimant - Appellant,

JOSEPH J. CAMPUS, III,

llllllllllllllllllllllllllllllllllllllll         Defendant.

                                     ________________________

                           Appeal from the United States District Court
                              for the Southern District of Alabama
                                  ________________________

                                           (September 8, 2011)

Before EDMONDSON, WILSON and KRAVITCH, Circuit Judges.

PER CURIAM:
      The Mitchell Company, Inc. (“Mitchell Company”) appeals the district

court’s grant of summary judgment in favor of Hartford Fire Insurance Company

(“Hartford”). The sole issue presented is whether Mitchell Company’s insurance

policy—covering, inter alia, employee theft—encompasses self-dealing actions by

one of its employees. We conclude it does not. Accordingly, we affirm.

                                          I.

      The insurance policy at issue, a “CrimeSHIELD Policy for Mercantile

Entities,” stated that Hartford would insure Mitchell Company against covered

losses in exchange for the payment of premiums. In pertinent part, the policy

provided that “[Hartford] will pay for loss of or damage to ‘money’ . . . which

results directly from ‘theft’ by an ‘employee’, whether or not identifiable, while

acting alone or in collusion with other persons.” “Theft” is defined as “the

unlawful taking of ‘money’ . . . to the deprivation of the Insured.”

      The factual circumstances leading to Mitchell Company’s claim involved

dishonest dealings by Joseph Campus, a long-time Mitchell Company employee.

As the head of the division responsible for single-family developments, Campus

analyzed various properties and then provided a report and recommendation to

Mitchell Company’s board of directors, which would be followed by a tour of the

recommended property. If the board of directors supported the purchase, Campus

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would ordinarily negotiate the purchase price, and the board of directors would

give final approval.

      Campus engaged in a series of self-dealing transactions—outlined in detail

in the district court’s order—whereby he would either (1) recommend that

Mitchell Company purchase properties that he owned individually or with James

Young; or (2) receive a portion of the sale proceeds after recommending that

Mitchell Company purchase properties owned by Young.

                                         II.

      “We review de novo the district court’s grant of a motion for summary

judgment, considering all of the evidence and the inferences it may yield in the

light most favorable to the nonmoving party.” Ellis v. England, 432 F.3d 1321,

1325 (11th Cir. 2005) (per curiam). “The court shall grant summary judgment if

the movant shows that there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The

interpretation of a contract is a question of law that we also review de novo.

Bragg v. Bill Heard Chevrolet, Inc., 374 F.3d 1060, 1065 (11th Cir. 2004).

      In diversity cases involving insurance contracts, state law governs. See

Dempsey v. Auto Owners Ins. Co., 717 F.2d 556, 559 (11th Cir. 1983) (per

curiam). In Alabama, general principles of contract law govern interpretation of

                                          3
insurance policies. Safeway Ins. Co. v. Herrera, 912 So. 2d 1140, 1143 (Ala.

2005). An insured bears the burden of establishing coverage under the policy.

Colonial Life & Accident Ins. Co. v. Collins, 194 So. 2d 532, 535 (Ala. 1967).

Courts enforce the policy terms as written, so long as they are unambiguous.

Herrera, 912 So. 2d at 1143. That includes giving defined terms their agreed

upon import and construing undefined terms according to their ordinary meaning.

See id.

       Here, we conclude that Campus’s actions do not constitute “theft” because

Campus did not unlawfully take the purchase funds from Mitchell Company.

While he engaged in self-dealing that clearly violated his fiduciary obligations,

Mitchell Company was not unknowingly deprived of money. Campus represented

that a property was available, Mitchell Company authorized its acquisition, and it

ultimately approved the purchase price. It bargained for, and received, property

that could be used for future developments.1

       1
         Mitchell Company heavily relies on Hartford Fire Insurance Co. v. Clark, 562 F.3d
943 (8th Cir. 2009). There, Hartford voluntarily paid out under the same type of policy when a
company’s shipping supervisor artificially inflated shipment invoices and then received
kickbacks from the shipping company. The employee in Clark essentially overcharged the
company for services that were never actually given or were unreasonably priced, e.g. (1) it was
charged for air shipping when ground shipping occurred, (2) it paid for additional poundage that
was never shipped, and (3) the employee approved unreasonable rates. The company in Clark
never approved of paying artificially inflated shipping charges. Here, however, Mitchell
Company received exactly what it bargained for—a piece of property with good title—and it
approved the purchase price for just that.

                                                4
       Mitchell Company is careful to avoid language that would indicate it is

seeking reimbursement for lost profits or lost business opportunities. In fact, it

takes great issue with the district court’s characterization of the situation as such.

“In this case, [Mitchell Company] is not seeking coverage for lost profits. It is

seeking coverage for money actually paid and lost that it would not have paid but

for the unlawful actions by Campus.” Appellant’s Brief at 21. Mitchell Company,

however, fails to demonstrate that it lost money. As discussed above, it decided to

purchase properties, approved the purchase price, paid the purchase price, and

received the exact property for which it bargained. Ultimately, Mitchell Company

did not inadvertently or involuntarily depart with money, but instead willing paid a

known purchase price for a known quantity.2

       Mitchell Company points to no case law that we find persuasive.3 In any

        Morever, Hartford’s past dealing with other insureds does not influence our interpretation
of the plain, unambiguous language of the contract. Herrera, 912 So. 2d at 1143 (“The court
must enforce the insurance policy as written if the terms are unambiguous . . . .”).
       2
          Mitchell Company emphatically argues that the district court erroneously concluded
that Mitchell Company did “not present[] any evidence that Campus presented any false
information about the property, that [Campus] assisted Young in presenting false information
about the value or condition of the property[,] or that the property bargained for was not
received.” But we agree with the district court in so far as it concluded that Campus made no
misrepresentations regarding the permanent characteristics of the real property. No one alleges
as much. The previous owners’ identities would in no way effect Mitchell Company’s future use
of the property and, accordingly, its value to the business.
       3
         We do note, however, that Mitchell Company cites a case interpreting an insurance
policy covering “‘[l]oss resulting directly from dishonest or fraudulent acts committed by an

                                                5
event, examining the plain language of Mitchell Company’s insurance policy, we

conclude that Campus’s actions do not constitute “theft.” Accordingly, we affirm

the district court’s grant of summary judgment in favor of Hartford.

       AFFIRMED.

Employee acting alone or in collusion with others.’” F.D.I.C. v. Nat’l Union Fire Ins. Co., 205
F.3d 66, 70 (2d Cir. 2000) (emphasis added). Mitchell Company, however, purchased a policy
covering loss by theft, not dishonesty. It argues that the most significant principle—for purposes
of this case—is the Second Circuit’s conclusion that the employee’s dishonest acts led directly to
the loss. Id. at 76. Importantly, however, the court had already concluded that dishonest actions
occurred, triggering the policy. Id. at 71. Here, we are not concerned with causation because we
conclude there was no theft.

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