Court Opinion

ID: 2982023
Source: CourtListenerOpinion
Date Created: 2015-09-22 20:00:31.242463+00
Date Added: 2024-06-11T11:44:27.135362
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 13a0801n.06

                                           No. 12-6190

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

HARTFORD CASUALTY INSURANCE COMPANY     )
and HARTFORD UNDERWRITERS INSURANCE     )
COMPANY,                                )                                  FILED
                                        )                             Aug 28, 2013
       Plaintiffs-Appellees,            )                         DEBORAH S. HUNT, Clerk
                                        )
               v.                       )
                                        )
                                                              ON APPEAL FROM THE
DESHON EWAN and PATRICK EWAN,           )
                                        )                     UNITED STATES DISTRICT
       Defendants-Appellants,           )                     COURT FOR THE WESTERN
                                        )                     DISTRICT OF TENNESSEE
and                                     )
                                        )
JOHN MOSLEY, doing business as M&W Tree )
Service,                                )
                                        )
       Defendant.                       )
                                        )

BEFORE: GILMAN, GRIFFIN, and WHITE, Circuit Judges.*

       HELENE N. WHITE, Circuit Judge. DeShon Ewan and her husband Patrick Ewan (the

Ewans) appeal the district court’s declaratory judgment in favor of Hartford Casualty Insurance

Company (Hartford Casualty) and Hartford Underwriters Insurance Company (Hartford

Underwriters) (collectively, the Hartford Plaintiffs), holding that the commercial general liability

policy (CGL Policy) issued by Hartford Casualty to cover John Mosley’s landscaping business does

not provide coverage for bodily injury or property damage resulting from an accident Mrs. Ewan had

       *
        We amend the case caption as reflected in this opinion.
No. 12-6190
Hartford Cas. Ins. Co. v. Ewan

with Mosley’s Mack truck because any resulting injury or damage was covered exclusively under

the automobile policy (Auto Policy) issued by Hartford Underwriters covering the Mack truck. We

AFFIRM on the basis that the CGL Policy does not provide coverage.

                                                   I.

        Mosley owns M&W Tree Service, a landscaping business in Mississippi. He also owns a

Mack truck with an attached tree spade, which his workers use “to create a hole in the ground at a

job site, transport the dirt to the nursery, extract a tree from the nursery, and transport and plant the

tree at the job site.” The Mack truck also transports the workers who perform the tree transplanting

operations. Mosley purchased two insurance polices for his business: the Auto Policy issued by

Hartford Underwriters and the CGL Policy issued by Hartford Casualty. Hartford Casualty and

Hartford Underwriters are affiliated companies; both are members of The Hartford Insurance Group.

The Mack truck is the only “covered auto” under the Auto Policy. The CGL Policy describes the

covered business     “John Moseley DBA: M&W Tree Service”               as “landscaping (with no tree

removal or snow plowing).”1 Mosley purchased both policies at the same time and from the same

agent; the policies were delivered to him in Mississippi.

        In March 2005, non-party Jason Whitby, a subcontractor of M&W Tree Service, was

involved in an accident with Mrs. Ewan while driving the Mack truck. Whitby allegedly struck the

driver’s side of Mrs. Ewan’s car. The Ewans filed suit in Tennessee state court against Mosley and

Whitby, seeking damages allegedly suffered as a result of the accident. Counsel for Mosley and

        1
        Throughout this litigation and on the Auto Policy, the name of M&W Tree Service’s owner
has been spelled “Mosley.”

                                                   2
No. 12-6190
Hartford Cas. Ins. Co. v. Ewan

Whitby disclosed the Auto Policy to the Ewans as the only applicable insurance policy and offered

to settle the lawsuit for the policy limit of $500,000. The Ewans accepted this offer and executed

a release and settlement agreement. Thereafter, the Ewans discovered the existence of the CGL

Policy, which has a policy limit of $1,000,000. They returned to state court to rescind their earlier

settlement agreement, arguing that the CGL Policy also covered the accident and that they were

never told of its existence during settlement negotiations.

       In November 2010, the Hartford Plaintiffs filed this action in federal court against the Ewans

and Mosley, seeking a declaration that the CGL Policy does not provide coverage for bodily injury

or property damage resulting from the March 2005 accident, and that any resulting injury or damage

was covered exclusively under the Auto Policy. The parties agreed to proceed on a “case stated”

basis in lieu of trial or summary judgment. The district court entered judgment in favor of the

Hartford Plaintiffs:

       Because the CGL Policy explicitly excludes from coverage damages “arising out of
       the ownership, maintenance, use or entrustment to others of any . . . auto . . . owned
       or operated by . . . any insured,” and because the Auto Policy expressly identifies the
       Mack truck and the tree spade as a “covered auto,” this [c]ourt declares that the CGL
       Policy issued by Hartford Casualty does not provide coverage for alleged damages
       to the Ewans resulting from the Auto Accident. The Auto Accident was covered
       exclusively under the Auto Policy with its attendant $500,000.00 limit on liability.

Hartford Cas. Ins. Co. v. Ewan, 890 F. Supp. 2d 886, 896 (W.D. Tenn. 2012) (internal citation

omitted) (ellipses in original). The Ewans timely appealed.

                                                 3
No. 12-6190
Hartford Cas. Ins. Co. v. Ewan

                                                 II.

       Although we have not explicitly adopted the case-stated procedure, we have recognized that

parties may submit a matter to the district court for decision based on their submissions and a

stipulated record. See Int’l Union v. Winters, 385 F.3d 1003, 1005 n.1 (6th Cir. 2004); cf. FDIC v.

St. Paul Fire & Marine Ins. Co., 942 F.2d 1032, 1038 (6th Cir. 1991) (“Stipulations voluntarily

entered by the parties are binding, both on the district court and on us.”). Under the case-stated

procedure recognized by the First Circuit, “the parties waive trial and present the case to the court

on the undisputed facts in the pre-trial record. The court is then entitled to engage in a certain

amount of factfinding, including the drawing of inferences.” Situation Mgmt. Sys. v. ASP.

Consulting LLC, 560 F.3d 53, 58 (1st Cir. 2009) (internal quotation marks omitted). “We review

the district court’s factual findings for clear error and its legal conclusions de novo.” Id.

       The parties agree that

       we [must] consider the policy language through the lens of the substantive contract
       law of [Mississippi], which includes the following concepts:

               [I]f a contract is clear and unambiguous, then it must be interpreted
               as written. A policy must be considered as a whole, with all relevant
               clauses together. If a contract contains ambiguous or unclear
               language, then ambiguities must be resolved in favor of the
               non-drafting party. Ambiguities exist when a policy can be logically
               interpreted in two or more ways, where one logical interpretation
               provides for coverage. However, ambiguities do not exist simply
               because two parties disagree over the interpretation of a policy.
               Exclusions and limitations on coverage are also construed in favor of
               the insured. Language in exclusionary clauses must be clear and
               unmistakable, as those clauses are strictly interpreted. Nevertheless,
               a court must refrain from altering or changing a policy where terms
               are unambiguous, despite resulting hardship on the insured.

                                                  4
No. 12-6190
Hartford Cas. Ins. Co. v. Ewan

Architex Ass’n v. Scottsdale Ins. Co., 27 So. 3d 1148, 1157 (Miss. 2010) (internal quotation marks

omitted); see State Farm Mut. Auto. Ins. Co. v. Scitzs, 394 So. 2d 1371, 1372 73 (Miss. 1981)

(summarizing the “firmly established” rules of construction for insurance contracts).

       The Hartford Plaintiffs do not dispute that the CGL Policy provides a broad grant of coverage

for Mosley’s business, subject to exclusions. The CGL Policy contains an “auto exclusion” clause

that excludes from coverage “‘[b]odily injury’ or ‘property damage’ arising out of the ownership,

maintenance, use or entrustment to others of any aircraft, ‘auto’ or watercraft owned or operated by

or rented or loaned to any insured.”2 The policy further states:

       This exclusion applies even if the claims against any insured allege negligence or
       other wrongdoing in the supervision, hiring, employment, training or monitoring of
       others by that insured, if the “occurrence” which caused the “bodily injury” or
       “property damage” involved the ownership, maintenance, use or entrustment in
       others of any aircraft, “auto” or watercraft that is owned or operated by or rented or
       loaned to any insured.3

       2
        “Bodily injury” is defined as “bodily injury, sickness or disease sustained by a person,
including mental anguish or death resulting from any of these at any time.” “Property damage”
means: 1) “Physical injury to tangible property, including all resulting loss of use of that property.
All such loss of use shall be deemed to occur at the time of the physical injury that caused it;” or 2)
“Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed
to occur at the time of ‘occurrence’ that caused it.”
       3
         The auto exclusion does not apply to “‘[b]odily injury’ or ‘property damage’ arising out of
the operation of any of the equipment listed in Paragraphs f.(2) or f.(3) of the definition of ‘mobile
equipment’.” The specific equipment listed in paragraphs f.(2) and f.(3) are a limited subset of “self-
propelled vehicles” with permanently attached equipment: “(2) Cherry pickers and similar devices
mounted on automobile or truck chassis and used to raise or lower workers; and (3) Air compressors,
pumps and generators, including spraying, welding, building cleaning, geophysical exploration,
lighting and well servicing equipment.” The Ewans do not contend that the Mack truck with the
attached tree spade falls under either paragraph f.(2) or f.(3) of the definition of mobile equipment.

                                                  5
No. 12-6190
Hartford Cas. Ins. Co. v. Ewan

“Auto” is defined as “a land motor vehicle, trailer or semi-trailer designed for travel on public roads,

including any attached machinery or equipment. But ‘auto’ does not include ‘mobile equipment.’”

The CGL Policy also contains a mobile-equipment exclusion clause (in addition to the auto

exclusion) that excludes from coverage “‘[b]odily injury” or ‘property damage’ arising out of . . .

[t]he transportation of ‘mobile equipment’ by an ‘auto’ owned or operated by or rented or loaned to

any insured[.]”

       Construing these clauses, an auto    or mobile equipment transported by an auto      is excluded

from coverage under the CGL Policy, but mobile equipment on its own is not. Thus, the question

is whether the Mack truck with the attached tree spade is an auto (with an attached piece of

machinery or mobile equipment) that is excluded from coverage under the CGL Policy, or mobile

equipment that is not. See Architex Ass’n, 27 So. 3d at 1156 (“The [insurance] policy either affords

coverage or not, based upon application of the policy language to the facts presented.”). There is no

dispute that the Mack truck is a land vehicle that travels on public roads and has attached machinery,

which falls within the definition of an “auto” under the CGL Policy. Because the Hartford Plaintiffs

have established that the auto exclusion applies, the Ewans must show that there is an exception to

that exclusion. See Ass’n Cas. Ins. Co. v. Major Mart, Inc., No. 1:12-cv-22, 2013 WL 3409217, at

*2 (N.D. Miss. July 8, 2013) (“If the insurer shows an exclusion applies, the burden shifts back to

the insured to show that there is an exception to the exclusion.” (collecting cases)).

       The Ewans argue that the Mack truck with the attached tree spade falls under one of the

following definitions of mobile equipment as an exception to the auto exclusion: 1) “Vehicles,

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No. 12-6190
Hartford Cas. Ins. Co. v. Ewan

whether self-propelled or not, on which are permanently mounted . . . [p]ower cranes, shovels,

loaders, diggers or drills”; or 2) “Vehicles . . . maintained primarily for purposes other than the

transportation of persons or cargo.”

        Turning to the first definition of mobile equipment cited by the Ewans, the term

“permanently mounted” is undefined in the CGL Policy. Mississippi courts have recognized outside

the insurance context that the term “‘[p]ermanent’ means ‘[l]asting or meant to last indefinitely’ or

‘[n]ot expected to change in status, condition, or place[.]’” Sec’y of State v. Gunn, 75 So. 3d 1015,

1020 (Miss. 2011) (quoting Webster’s II New College Dictionary 819 (2001)); cf. Corban v. United

Servs. Auto. Ass’n, 20 So. 3d 601, 609 (Miss. 2009) (“Our role is to render a fair reading and

interpretation of the policy by examining its express language and applying the ‘ordinary and popular

meaning’ to any undefined terms.” (quoting Noxubee Cnty. Sch. Dist. v. United Nat’l Ins. Co., 883
So. 2d 1159, 1165 (Miss. 2004))). Contrary to the opinion offered by the Ewans’ expert, the tree

spade is not permanently mounted to the truck by bolts and welding. Mosley purchased the tree

spade while it was attached to a different truck, and he removed the tree spade from that truck to

attach it to the Mack truck. He initially attached the tree spade to the Mack truck with U-bolts and

by welding; the welding, however, was unsuccessful and broke within two weeks. He then attached

steel rods from the truck to the tree spade to provide additional stability so that the tree spade would

not “slide back.” The rods are attached by bolts that have been replaced since the accident because

they wear out from time to time. Mosley also believed that the tree spade was detached from the

truck at least once for repairs, but he could not recall the specific details. That a piece of equipment

                                                   7
No. 12-6190
Hartford Cas. Ins. Co. v. Ewan

can be removed does not, in and of itself, mean that is not permanently mounted. Here, however,

although the tree spade has been mounted to the Mack truck and is used in conjunction with the truck

to perform tree transplanting operations, the evidence indicates that it is not an indefinite or

unchanging truck component to be considered permanent.

        Turning to the second definition of mobile equipment cited by the Ewans, their expert’s

conclusion that the Mack truck is not maintained primarily to transport persons or cargo is

unsubstantiated by the record. Their expert contends that the truck is maintained primarily to

transport the tree spade to and from a job site. Although the truck transports the tree spade, it is not

maintained primarily for that simple purpose. Rather, as Mosley testified, the Mack truck with the

attached tree spade is used to transport trees to the job site, his “actual business . . . is transporting

them to the job [site],” and the truck transports his workers to the job site to perform the tree

transplanting. The transportation of cargo and persons by the truck, therefore, is not merely

incidental, but is the actual and primary purpose of the truck.

        Our conclusion that the Mack truck with the attached tree spade is an “auto” and not “mobile

equipment” is confirmed by reference to the Auto Policy. We discern no clear error in the district

court’s finding that the CGL and Auto Policies were contemporaneously executed as part of the same

transaction, by the same parties, and for the same purpose of providing coverage for Mosley “doing

business as” M&W Tree Service. The policies recognize that Mosley purchased multiple coverages

insured by The Hartford Insurance Group. As such, the terms of the policies should be construed

together under Mississippi contract law. See Sullivan v. Mounger, 882 So. 2d 129, 135 (Miss. 2004);

                                                    8
No. 12-6190
Hartford Cas. Ins. Co. v. Ewan

Swindle v. Harvey, 23 So. 3d 562, 568 (Miss. Ct. App. 2009) (“[T]he individual documents entered

into contemporaneously should be considered integral and interrelated parts of a single global

transaction, and as such, all should be construed together.”). The definitions of “auto” and “mobile

equipment” are substantially the same under both policies. The Mack truck with the attached tree

spade is identified as the only covered “auto” in the Auto Policy. It would be incongruent to hold

that the Mack truck is “mobile equipment” under the CGL Policy where the parties to the policies

identified the truck as the covered “auto” under the Auto Policy. Cf. Titan Indem. Co. v. Estes, 825
So. 2d 651, 656 (Miss. 2002) (explaining that coverage “should not vary depending upon the theories

of liability asserted,” and that the Mississippi courts “will not recognize a strained interpretation of

a policy”).

        We therefore AFFIRM the district court’s judgment.

                                                   9