Court Opinion

ID: 809610
Source: CourtListenerOpinion
Date Created: 2012-10-05 03:59:15+00
Date Added: 2024-06-11T18:00:34.955091
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                               No. 11-1635

WELLS FARGO EQUIPMENT FINANCE, INCORPORATED,

                 Plaintiff - Appellee,

           v.

STATE FARM FIRE AND CASUALTY        COMPANY;    STATE   FARM   MUTUAL
AUTOMOBILE INSURANCE COMPANY,

                 Defendants - Appellants,

           and

MIRIAM   TRUCKING,    INCORPORATED;      RODOLFO    TEKLE;      RODO,
INCORPORATED,

                 Defendants.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.   Liam O’Grady, District
Judge. (1:10-cv-01246-LO-IDD)

Argued:   September 19, 2012                 Decided:   October 4, 2012

Before MOTZ, KING, and WYNN, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Dawn Boyce, BANCROFT, MCGAVIN, HORVATH & JUDKINS, PC,
Fairfax, Virginia, for Appellants. Timothy Stephen Baird, KUTAK
ROCK LLP, Richmond, Virginia for Appellee.      ON BRIEF: Loc
Pfeiffer, Alison W. Feehan, KUTAK ROCK LLP, Richmond, Virginia
for Appellee.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

      This diversity case arises from a dispute as to whether

certain insurance policies exclude coverage to a loss payee when

the primary insured caused the loss by intentionally burning

insured     trucks.      Applying       Virginia      law,     the   district     court

concluded that the exclusion did not bar coverage and granted

the insured’s loss payee judgment on the pleadings.                      We affirm.

                                            I.

      The parties do not contest the relevant facts.                           In April

and   May    2008,    Wells     Fargo    Equipment       Finance,       Inc.    (“Wells

Fargo”) loaned RODO, Inc. (“RODO”) funds for the purchase of

three trucks.        The loan contracts granted Wells Fargo a security

interest in the trucks.              In July 2008, RODO assigned the loan

contracts and trucks to Miriam Trucking (“Miriam Trucking”).

      In    August    2008,     State    Farm     Fire    and    Casualty       Company

(“State     Farm     Fire”)    issued       an   insurance      policy    to     Miriam

Trucking    covering     two    of    the    trucks,     and    State    Farm    Mutual

Automobile     Insurance       Company      (“State    Farm     Auto”)    issued     an

insurance policy covering the third truck.                     Both policies named

Wells Fargo as the loss payee with respect to the trucks.

      On December 13, 2008, a fire destroyed two of the trucks.

As the parties confirmed at oral argument, they have stipulated

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for the purposes of this case that Miriam Trucking intentionally

destroyed the trucks.

      Wells Fargo filed claims with State Farm Fire and State

Farm Auto (collectively “State Farm”), which State Farm refused

to   pay.   Wells   Fargo   then    brought   suit    against   State   Farm

claiming, inter alia, breach of contract.            Wells Fargo moved for

judgment on the pleadings as to these claims, which the district

court granted.   State Farm now appeals. ∗

                                    II.

      We review de novo the district court’s grant of a Rule

12(c) motion for judgment on the pleadings, applying the same

standard as would apply to a Rule 12(b)(6) motion to dismiss for

failure to state a claim.          Independence News, Inc. v. City of

Charlotte, 568 F.3d 148, 154 (4th Cir. 2009).           Thus, to uphold a

grant of judgment on the pleadings, we must find that the non-

moving party can prove no set of facts in support of its claim

that would entitle it to relief.          See Bruce v. Riddle, 631 F.2d

272, 273-74 (4th Cir.1980).

      ∗
       State Farm’s notice of appeal states its intention to
appeal the district court’s entry of final judgment and award of
prejudgment interest in addition to its grant of judgment on the
pleadings. State Farm, however, did not address those claims in
its brief and has therefore waived them. See Canady v. Crestar
Mortg. Corp., 109 F.3d 969, 973 (4th Cir. 1997).

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      The dispute in this case centers on the interpretation of

the   “Loss     Payable     Endorsement”    in    both     policies.      This

endorsement provides, in relevant part:

      With respect to coverage provided by this endorsement,
      the provisions of the coverage form apply unless
      modified by the endorsement.

      (a) We will pay, as interest may appear, you and the
      loss payee named in the policy for “loss” to a covered
      “auto.”

      (b) The insurance covers the interest of the loss
      payee unless the “loss” results from conversion,
      secretion or embezzlement on your part.

      Under Virginia law, when terms of an insurance policy are

“clear and unambiguous” courts “give the language its plain and

ordinary meaning.”         P’ship Umbrella, Inc. v. Fed. Ins. Co., 260

Va.   123,    133,   530   S.E.2d   154,   160   (2000).     When,     however,

language in an insurance policy is ambiguous, courts construe it

in favor of the insured, i.e. to provide coverage.                See, e.g.,

Virginia Farm Bureau Mut. Ins. Co. v. Williams, 278 Va. 75, 81,

677 S.E. 2d 299, 302 (2009).

      In this case, the district court held that the insurance

policies created an obligation to the loss payee, Wells Fargo,

even if the primary insured, Miriam Trucking, was barred from

recovery by its asserted arson.            See Wells Fargo Equip. Fin.,

Inc. v. State Farm Fire & Cas. Co., 805 F. Supp. 2d 213, 220-23

(E.D. Va. 2011).       The court reasoned that the alleged arson of

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the     primary    insured   did     not       unambiguously       qualify      as

“conversion” under the conversion exclusion clause.

      This conclusion accords with that reached by nearly every

court to consider a comparable question.                  See Gibralter Fin.

Corp.   v.   Lumbermens   Mut.   Cas.       Co.,   400   Mass.   870,   872,   513

N.E.2d 681, 683 (1987); Foremost Ins. Co. v. Allstate Ins. Co.,

439 Mich. 378, 391, 486 N.W.2d 600, 606 (1992); Bennett Motor

Co. v. Lyon, 14 Utah 2d 161, 164, 380 P.2d 69, 71 (1963); Nat’l

Cas. Co. v. Gen. Motors Acceptance Corp., 161 So. 2d 848, 852

(Fla. Dist. Ct. App. 1964); Nationwide Mut. Ins. v. Dempsey, 128

N.C. App. 641, 644-45, 495 S.E.2d 914, 916 (1998); Pittsburgh

Nat’l Bank v. Motorists Mut. Ins. Co., 87 Ohio App. 3d 82, 88,

621 N.E.2d 875, 879 (1993).         Indeed, State Farm has only cited

one case to the contrary.          See Commerce Union Bank v. Midland

Nat’l Ins. Co., 43 Ill. App. 2d 332, 193 N.E.2d 230 (1963).

      We agree with the district court and most of the other

courts to consider similar policy language that the conversion

exclusion does not unambiguously apply to bar coverage by the

loss payee.       Accordingly, the district court properly granted

judgment to Wells Fargo.

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                           III.

    For the foregoing reasons, the judgment of the district

court is

                                                  AFFIRMED.

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