Court Opinion

ID: 6346402
Source: CourtListenerOpinion
Date Created: 2022-06-03 00:00:23.745077+00
Date Added: 2024-06-11T09:17:46.950425
License: Public Domain

Case: 21-51033     Document: 00516342085          Page: 1    Date Filed: 06/02/2022

              United States Court of Appeals
                   for the Fifth Circuit                              United States Court of Appeals
                                                                               Fifth Circuit

                                                                             FILED
                                                                          June 2, 2022
                                   No. 21-51033
                                                                        Lyle W. Cayce
                                                                             Clerk

   Kiolbassa Provision Company, Incorporated,

                                                            Plaintiff—Appellant,

                                       versus

   Travelers Property Casualty Company of America,

                                                            Defendant—Appellee.

                  Appeal from the United States District Court
                       for the Western District of Texas
                            USDC No. 5:20-CV-507

   Before Davis, Elrod, and Haynes, Circuit Judges.
   Per Curiam:*
          Appellant Kiolbassa Provision Company (“Kiolbassa”) operates a
   smoked meat business out of San Antonio, Texas, where it keeps its offices,
   production space, and a warehouse for storage. Given the nature of its
   business, Kiolbassa purchased an Equipment Breakdown Policy (the
   “Policy”) from Travelers Property Casualty Company of America

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
Case: 21-51033     Document: 00516342085          Page: 2   Date Filed: 06/02/2022

                                   No. 21-51033

   (“Travelers”) to cover damage to perishable goods when the damage is
   caused by a malfunctioning of “Covered Equipment” on Kiolbassa’s
   premises. Kiolbassa also purchased another policy, the “Cargo Policy,”
   from a related but separate corporate entity, The Travelers Lloyds Insurance
   Company. This second policy provides similar coverage for perishable goods
   when damaged during transportation. Kiolbassa also brought a claim under
   the Cargo Policy (although the parties agree on neither the exact details of
   how this claim was brought nor its relevance).
         In August 2019, Kiolbassa ran out of storage space in its warehouse
   and loaded 49,016 pounds of organic beef trim onto a “reefer trailer” (a
   trailer with an attached refrigeration unit) located on its premises. The
   refrigeration unit malfunctioned; the beef spoiled; and Kiolbassa lost about
   $167,000 worth of product. Kiolbassa then filed an insurance claim under
   both the Cargo Policy and the Equipment Breakdown Policy.
         Both claims were denied. Pertinent here, Travelers denied coverage
   under the Equipment Breakdown Policy because the refrigeration unit was
   mounted on the reefer trailer, which (Travelers argues) does not meet the
   definition of “Covered Equipment” in the Policy. Kiolbassa sued for its
   denial of coverage under only that policy, which insures damage to “Covered
   Property” caused by a “Breakdown” of “Covered Equipment” on
   “Covered Premises.”
         Travelers does not dispute that the beef trim is “Covered Property”;
   that the damage occurred due to a “Breakdown” of the refrigeration unit;
   and that the unit was located on “Covered Premises.” The dispute therefore
   centers on whether the refrigeration unit is “Covered Equipment.” In
   defining the term “Covered Equipment,” the Policy states that it “does not
   mean” any equipment that is “mounted on or used solely with any vehicle.”
   The refrigeration unit was “mounted on or used solely with” the reefer

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                                      No. 21-51033

   trailer. Travelers argues that the reefer trailer is a vehicle, making its denial
   of coverage appropriate. Kiolbassa, on the other hand, argues that the reefer
   trailer is not a vehicle because, at the time of spoilage, the trailer was not able
   to “move on its own”—it was not attached to a semi-truck and was therefore
   stationary.
          The district court agreed with Travelers, accepting a magistrate
   judge’s report and recommendation that granted summary judgment in
   Travelers’ favor. Kiolbassa timely appealed. Their case turns on one
   question: is a reefer trailer a vehicle under the relevant policy? We have
   determined that the answer is yes—under the Equipment Breakdown Policy,
   a reefer trailer is a vehicle—and AFFIRM.
                       I. Jurisdiction & Standard of Review
          This case was properly removed to federal court under 28 U.S.C.
   § 1441, with the district court having jurisdiction under 28 U.S.C. § 1332.
   Because the grant of summary judgment on all claims is a final decision, we
   have appellate jurisdiction under 28 U.S.C. § 1291. See Ardoin v. J. Ray
   McDermott & Co., 641 F.2d 277, 278 (5th Cir. Unit A Mar. 1981).
          We review the grant of summary judgment de novo. Smith v. Reg’l
   Transit Auth., 827 F.3d 412, 417 (5th Cir. 2016). A “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); see Beeler v. Rounsavall, 328 F.3d 813, 816
   (5th Cir. 2003). Facts, of course, are viewed in the light most favorable to
   the non-moving party. Rosado v. Deters, 5 F.3d 119, 123 (5th Cir. 1993).
          As to the Policy, we apply its provisions using Texas substantive law
   on contract interpretation. See Harken Expl. Co. v. Sphere Drake Ins. PLC,
   261 F.3d 466, 471 n.3 (5th Cir. 2001) (“Insurance policies are contracts. In
   diversity cases such as this one, we apply state law rules of construction.”

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   (citation omitted)); Nassar v. Liberty Mut. Fire Ins. Co., 508 S.W.3d 254, 257
   (Tex. 2017) (per curiam) (“We have consistently instructed that Texas
   courts are to construe insurance policies using ordinary rules of contract
   interpretation.” (internal quotation marks and citation omitted)).
                                  II. Discussion
          The relevant portions of the Policy are located in a form titled
   “EnergyMax 21.” Section A of the EnergyMax 21 Form discusses coverage
   and provides, in relevant part, the following:
          We will pay for . . . . [s]poilage damage to “Perishable Goods”
          that is caused by or results from an interruption in utility
          services that is the direct result of a “Breakdown” to “Covered
          Equipment” owned, operated or controlled by a private or
          public utility, landlord or other supplier with whom you have a
          contract to provide you with any of the following services: air
          conditioning, communication services, electric power, gas,
          heating, refrigeration, steam, water or waste treatment.
   Section F provides contractual definitions, defining “Covered Equipment”
   as follows:
          “Covered Equipment” means any: . . . electrical or mechanical
          equipment that is used in the generation, transmission or
          utilization of energy. . . . “Covered Equipment” does not
          mean any: . . . [v]ehicle, aircraft, self-propelled equipment or
          floating vessel, including any “Covered Equipment” mounted
          on or used solely with any vehicle, aircraft, self-propelled
          equipment or floating vessel.
   The term “vehicle” is undefined.
          Under Texas law, undefined policy terms must be given their
   “common, ordinary meaning,” which is determined with the aid of
   dictionaries, Anadarko Petroleum Corp. v. Hous. Cas. Co., 573 S.W.3d 187, 192
   (Tex. 2019); see Epps v. Fowler, 351 S.W.3d 862, 866 (Tex. 2011), with those

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   terms read “context[ually] and in light of the rules of grammar and common
   usage,” RSUI Indem. Co. v. The Lynd Co., 466 S.W.3d 113, 118 (Tex. 2015).
          The reefer trailer at issue here falls plainly within the ordinary
   meaning of the term “vehicle.” Consulting Black’s Law Dictionary, the
   term “vehicle” means: (1) “An instrument of transportation or
   conveyance”; or (2) “Any conveyance used in transporting passengers or
   things by land, water, or air.” Vehicle, Black’s Law Dictionary 1788
   (10th ed. 2014). Other dictionaries provide very similar definitions. See, e.g.,
   Vehicle, Merriam-Webster, https://www.merriam-webster.com/dictionary/vehicle
   (last visited May 16, 2022) (defining “vehicle” as “a means of carrying or
   transporting something” and listing “motor vehicle” and “a piece of
   mechanized equipment” as two separate subcategories); Green v. Life Ins. Co.
   of N. Am., 754 F.3d 324, 332 (5th Cir. 2014) (citing Webster’s Third New
   International Dictionary, which defines “vehicle” as “a means of carrying or
   transporting something”).
          Kiolbassa does not contest that the reefer trailer is used to transport
   cargo—its Vice President of Organizational Development and Finance
   testified as much:
          Q: How does the final product . . . reach the big box retailers or
          other retailers to whom you are selling it?
          A: It would be stored onto a trailer—whether ours that we’re
          leasing or a third party—and transported directly to their
          warehouse.
          Q: And when you say a trailer, do you mean a reefer trailer so
          that it is refrigerated?
          A: Yes.
   To be ambiguous, there must be “two or more reasonable interpretations.”
   Nat’l Union Fire Ins. Co. v. CI Indus., 907 S.W.2d 517, 520 (Tex. 1995). But
   Kiolbassa does not supply a single dictionary (or similar) definition for

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                                         No. 21-51033

   “vehicle” in its briefing to this court that would support its position, even
   though “[t]he insured bears the initial burden of showing that the claim
   against her is potentially within the insurance policy’s scope of coverage.”
   Harken Expl. Co., 261 F.3d at 471. 1
           Instead, Kiolbassa argues that the dictionary definitions are
   unreasonable in light of the Policy and that those definitions should be limited
   to a conveyance that can move on its own. We disagree. First, that limitation
   is not consistent with the common understanding of the word “vehicle.”
   Self-propulsion is not a vehicle’s defining feature, and whether it can fulfill
   that function at the time in question is irrelevant to its definition or
   classification. Second, additional contextual clues point to the reefer trailer
   being a vehicle: the Texas Department of Transportation considers trailers
   to be vehicles, Tex. Transp. Code Ann. § 621.001(9); the trailer was
   registered with the Texas Department of Motor Vehicles; and the trailer was
   accordingly assigned a Vehicle Identification Number.
           So to summarize, the trailer is used to transport, which is how vehicles
   are commonly defined and understood; it is considered a vehicle by the
   relevant state agency; and it is registered as a vehicle. We would have to
   sufficiently change the word “vehicle” 2 to exclude the reefer trailer from its
   definition. We are not inclined to do so.
               AFFIRMED.

           1
             While not determinative in this case, we agree with Travelers that the “vehicle”
   issue is not an “exclusion” but simply part of the definition of policy coverage, so the
   burden is on Kiolbassa.
           2
             The argument that “vehicle” somehow means something different than usual
   because the Policy also mentions aircrafts and floating vessels is unsupported. The fact
   that the policy makes clear that it is referring to land, sea, and air does not change the
   meaning of “vehicle.”

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