Court Opinion

ID: 4972538
Source: CourtListenerOpinion
Date Created: 2021-09-25 00:00:34.904821+00
Date Added: 2024-06-11T08:16:34.779197
License: Public Domain

Case: 21-30071     Document: 00516028695          Page: 1    Date Filed: 09/24/2021

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

                                                                         FILED
                                                                 September 24, 2021
                                   No. 21-30071
                                                                    Lyle W. Cayce
                                                                         Clerk

   Rebekah Goodno, as personal representative of the Estate of
   Timothy Paul Thompson and Danielle Thompson,

                                                            Plaintiff—Appellant,

                                       versus

   Endurance American Specialty Insurance Company;
   Mosquito Control Services, L.L.C.; Anthony P.
   Sciambra,

                                                         Defendants—Appellees.

                  Appeal from the United States District Court
                     for the Eastern District of Louisiana
                           USDC No. 2:19-CV-11221

   Before Higginbotham, Willett, Duncan, Circuit Judges.
   Per Curiam:*
          Rebekah Goodno appeals the district court’s grant of summary
   judgment to defendants Endurance American Specialty Insurance Company

          *
            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   opinion should not be published and is not precedent except under the limited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: 21-30071        Document: 00516028695               Page: 2    Date Filed: 09/24/2021

                                           No. 21-30071

   (“Endurance”), Mosquito Control Services, L.L.C. (“MCS-LA”), and
   Anthony Sciambra. We affirm.
                                                I.
           Sciambra, driving a truck, rear-ended Timothy Thompson’s
   motorcycle, throwing Timothy into the highway where another vehicle
   struck and killed him. His widow, Danielle, sued Sciambra, MCS-LA
   (Sciambra’s       alleged      employer),         Travelers   Indemnity          Company
   (“Travelers,” MCS-LA’s primary insurance carrier), and Endurance (MCS-
   LA’s excess insurance carrier).

           Danielle Thompson settled with Travelers, MCS-LA, and Sciambra
   in an agreement that included a Gasquet release.1 The Gasquet release
   specifically released Travelers, MCS-LA, and Sciambra “in all capacities,
   and     any     and      all    other      persons,      firms,    affiliates,     parent
   companies, . . . subsidiaries, corporations, . . . and partnerships for whom
   they may in any way be responsible . . . .” Danielle Thompson reserved the
   right to pursue claims against the insurers of MCS-LA and Sciambra, but no
   other related entity. Danielle Thompson then passed away and Rebekah
   Goodno was substituted as plaintiff. Goodno continued to pursue claims
   against Endurance as the excess carrier.

           1
             Under a Gasquet release, plaintiffs can release defendants for all claims except
   those necessary to pursue insurance claims, including excess insurance. Gasquet v.
   Commercial Union Ins. Co., 391 So. 2d 466 (La. Ct. App. 1980), writ denied, 396 So. 2d 921
   (La. 1981).

                                                2
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          In September 2020, Endurance moved for summary judgment,
   arguing it did not owe coverage for Goodno’s claim. MCS-LA and Sciambra
   also moved for summary judgment, arguing that the Gasquet release would
   end their liability if the district court granted Endurance’s motion.
   Endurance then moved to join and adopt MCS-LA and Sciambra’s motion.
   The district court granted all three motions.

          The corporate structure surrounding MCS-LA is complex but it is
   relevant to the resolution of this case. There are two entities with the name
   “Mosquito Control Services, LLC.” The first Mosquito Control Services,
   LLC is a Delaware entity (“MCS-DE”). MCS-DE has no direct operations
   but controls certain financial accounts and contracts on behalf of eleven
   wholly-owned, subsidiary LLCs. Most of the subsidiary LLCs have names
   tied to the locations where they perform mosquito spraying operations, such
   as “Mosquito Control of Jackson County, LLC.” The second Mosquito
   Control Services, LLC is one of the eleven subsidiaries and is a Louisiana
   entity (“MCS-LA”). MCS-LA has employees and direct operations in
   Louisiana. MCS-LA is the named insured on the Travelers policy, the
   defendant in this case, and the party which entered into the Gasquet release.
   Mississippi Mosquito Control, LLC (“MMC”) and Mosquito Control of
   Hancock County, LLC (“Hancock”) are also MCS-DE subsidiaries.

                                                II.
          We review de novo a district court’s grant of summary judgment.2

          2
              De Jongh v. State Farm Lloyds, 664 F. App’x 405, 408 (5th Cir. 2016) (per curiam).

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   Summary judgment is proper “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.”3 “The moving party is entitled to a judgment as a matter of
   law because the nonmoving party has failed to make a sufficient showing on
   an essential element of her case with respect to which she has the burden of
   proof.”4 A district court’s grant of summary judgment “will be affirmed by
   this court when the nonmoving party fails to meet its burden to come forward
   with facts and law demonstrating a basis for recovery that would support a
   jury verdict.”5 A want of insurance coverage should not be found on
   summary judgment unless no reasonable interpretation of the policy footed
   on the undisputed facts which could support a finding of coverage.6

                                                 III.
           Goodno brings three arguments. First, she argues that all the related
   corporate entities should be treated as one company such that MCS-LA, and
   indirectly Endurance, is liable for the accident. Second, Goodno argues that
   even if the entities were separate, the Endurance policy covers the truck
   driven by Sciambra. Third, Goodno argues that two additional provisions
   create coverage. We reject each of these arguments and affirm the district
   court’s denial of coverage.

           3
               Fed. R. Civ. P. 56(a).
           4
               Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotations removed).
           5
               Little v. Liquid Air Corp., 37 F.3d 1069, 1071 (5th Cir. 1994) (per curiam).
           6
             Cochran v. B.J. Servs. Co. USA, 302 F.3d 499, 503 (5th Cir. 2002) (reviewing a
   grant of summary judgment in a Louisiana insurance dispute).

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                                         A.

             Goodno first argues that the companies were all combined under one
   management structure, such that MCS-LA should be considered the parent
   entity; but Goodno faces a significant hurdle: the Gasquet release did not
   reserve claims against the potential defendants that were most likely to be
   liable. Danielle Thompson, and thus Goodno, released all affiliates and
   parent companies related to MCS-LA from potential claims, effectively
   releasing MCS-DE, the parent company of MCS-LA. Thompson also
   released MMC and Hancock, affiliates of MCS-LA. The Gasquet release only
   preserved Goodno’s claims for which MCS-LA or Sciambra could be held
   liable.

             While the parties below conflated MCS-LA and MCS-DE, they are
   distinct corporate entities. On this record there were distinct roles for each
   entity within the corporate structure that belie treating MCS-LA as the
   parent entity. Goodno has not presented evidence for this Court to disregard
   the corporate structure.

             MCS-DE has localized subsidiaries for two purposes. The first is to
   have separate payroll accounting and performance evaluation of the different
   entities. The second is that having local entities helps in the bidding process
   for municipal contracts and in securing licensing. Each subsidiary has assets
   and locally licensed employees who perform local contracts. Goodno
   presents no evidence that the workforces of the subsidiaries were pooled such
   that the subsidiaries were functionally divisions of a single entity rather than
   independent entities.

                                          5
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          Goodno argues that MCS-LA was the parent entity because
   “Mosquito Control Services, LLC” appeared on Sciambra’s pay stub. This
   assertion oversimplifies the payroll system, ignoring the two separate entities
   with the MCS name. While MCS-DE ran a unified payroll system from which
   its subsidiaries paid employees, each subsidiary maintained an independent
   payroll for accounting purposes. The payroll system belonged to MCS-DE
   and the pay stub came from an account controlled by MCS-DE, not MCS-
   LA. Sciambra was listed on the MMC payroll, not the MCS-LA payroll.

          Goodno also argues that the other subsidiaries were named insured
   parties on the contract and that Endurance is therefore liable. This argument
   fails for two reasons. First, the Gasquet release released the affiliated entities.
   Even if the other entities were insured by the Endurance policy, Goodno
   reserved no claim against them. Second, Goodno does not rebut the evidence
   presented by Endurance suggesting that only MCS-LA and one other MCS-
   DE subsidiary were covered. Endurance points to a provision in the policy
   which specifically endorses a Florida subsidiary of MCS-DE, also a sibling
   company of MCS-LA. If the policy had been held by MCS-DE rather than
   MCS-LA, the endorsement would have been unnecessary. Other subsidiaries
   were on a list provided to the insurance broker, Willis Towers Watson,
   including MMC and Hancock. But these entities do not appear in the actual
   insurance contract documentation. MCS-DE, MMC, and Hancock were not
   insured.

          Any claim by Goodno against Endurance must be one for which MCS-
   LA was liable. Even if Hancock and MMC were named insured under the

                                           6
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   policy due to the schedule, claims against them were not reserved by the
   Gasquet release. The complaint specifically named the Louisiana entity and
   Goodno reserved claims only against MCS-LA and Sciambra under the
   release, so only claims against MCS-LA are potentially valid.

                                               B.
            Goodno next argues that the truck driven by Sciambra was a “Covered
   ‘Auto’” under the policy. This argument fails because there is no reasonable
   interpretation of the policy that here supports coverage under the undisputed
   facts.

            The Endurance excess insurance policy provides coverage when the
   primary insurance policy coverage provided by Travelers has been
   exhausted. The Endurance policy follows-the-form of the underlying
   Travelers policy, so the terms of the Travelers insurance contract govern this
   dispute.7

            Under the Travelers policy, “[c]overage applies only to those ‘Autos’
   shown as Covered ‘Autos.’” The Travelers policy provides several defined
   categories for autos under which differing levels of coverage apply.
   Endurance correctly contends that the truck does not fall into any applicable
   category under the policy.

            The broadest category is Category 1, which covers “Any ‘Auto.’”

            7
              Under a “follow-the-form” clause, the excess carrier or reinsurer provides
   coverage consistent with the primary policy as written. See Bayou Steel Corp. v. Nat’l Union
   Fire Ins. Co. of Pittsburgh, Pennsylvania, 642 F.3d 506, 509 (5th Cir. 2011).

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   Goodno argues that “Any ‘Auto’” covers any conceivable vehicle because
   the category definition lacks limiting language. That view is an unreasonable
   interpretation of the contract, inconsistent with how Louisiana courts
   interpret insurance policy terms.8 Under Louisiana law, “[a]n insurance
   policy should not be interpreted in an unreasonable or strained manner so as
   to enlarge or restrict its provisions beyond what is reasonably contemplated
   by its terms or so as to achieve an absurd conclusion.”9 Further, “[a]n
   insurance policy is a contract between the parties and should be construed by
   using the general rules of interpretation of contracts set forth in the Civil
   Code.”10 The Louisiana Civil Code instructs that “[i]nterpretation of a
   contract is the determination of the common intent of the parties.”11

            When looking at the listed categories, it seems clear that “Any
   ‘Auto’” is intended to encapsulate any auto that could fall into the narrower
   categories subsequently described in the policy. The “Any ‘Auto’” category
   is used to place an overall cap on the most the insurance carrier will pay for
   all claims arising out of any one accident while the narrower categories
   describe specific limitations on coverage depending on the type of claim, such
   as personal injury protection or towing services. This interpretation is

            8
            The parties do not challenge that Louisiana law governs the interpretation of the
   insurance contract as the law of the forum state.
            9
                 Crabtree v. State Farm Ins. Co., 632 So. 2d 736, 741 (La. 1994).
            10
                 Louisiana Ins. Guar. Ass’n v. Interstate Fire & Cas. Co., 630 So. 2d 759, 763 (La.
   1994).
            11
                 La. Civ. Code Ann. art. 2045 (1984).

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   reasonable as the other categories collectively address virtually any
   circumstance for which an insured might want coverage. Thus, Category 1
   covers “Any ‘Auto’” that MCS-LA owned, borrowed, leased, hired, rented,
   or used in the course of its business. It cannot be that MCS-LA would
   purchase insurance for any conceivable auto, including autos with which it
   has no connection, as Goodno’s interpretation suggests. Goodno argues the
   truck driven by Sciambra appeared on a list given to the underwriters, but
   this list does not appear in the actual insurance policy. Further, the insurance
   cards attached to the policy do not list a vehicle identification number.
   Instead, the cards list “Fleet” suggesting any covered vehicle must have a
   connection to MCS-LA such that the vehicle could be considered part of its
   fleet. For coverage to exist here, the truck must fall into one of the narrower,
   enumerated categories to be a “Covered ‘Auto.’”

           There are three potential categories for the truck in question,
   designated as Categories 2, 8, and 9 on the list in the Travelers policy. None
   of these categories apply to the truck. Category 2 describes “Owned ‘Autos’
   Only,” limiting certain coverage to autos directly owned by the named
   insured. MCS-LA was not the legal owner of the automobile. In Louisiana,
   “[t]he certificate of title constitutes prima facie proof of ownership.”12 The
   title owner of the truck was Hancock, not MCS-LA. Goodno argues that
   Hancock was dormant for several years before the accident and had not been

           12
              Lambert v. Ray Brandt Dodge, Inc., 31 So. 3d 1108, 1112 (La. Ct. App. 2010), writ
   denied, 34 So. 3d 293 (La. 2010).

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   responsible for performing maintenance on the truck, so Hancock should not
   be considered the true legal owner of the truck. Perhaps, but even if Hancock
   were not the legal owner due to its dormant status, MMC was the entity using
   the truck in its operations, not MCS-LA. MMC paid for the truck’s fuel bill
   through a fleet account listed in its name. Because the settlement released
   Hancock and MMC, their potential liability cannot support Goodno’s claim.

          Goodno also argues that the truck had “Mosquito Control Services”
   printed on the side, establishing MCS-LA’s ownership under Category 2.
   Within the corporate structure, there are several other subsidiaries with
   names derived from “Mosquito Control Services,” including Mosquito
   Control Services of Georgia, LLC and Mosquito Control Services of Florida,
   LLC. Goodno fails to rebut the evidence presented by Endurance, the title
   document and fuel account that point to either Hancock or MMC as the
   owner. MCS-LA was not the owner as described in Category 2.

          Category 8 describes “Hired ‘Autos’ Only”; this category includes
   any auto which the insured leases, hires, rents or borrows. There is no
   evidence that MCS-LA hired, leased, rented, or borrowed the truck from
   Hancock. The truck was not being used in MCS-LA’s Louisiana operations.
   The truck was being used in MMC’s operations in Mississippi, indicating
   that MMC was borrowing the truck from Hancock, not MCS-LA. Goodno
   argues that the transfer of the truck from Hancock to MMC was done at the
   direction of MCS-LA’s officers. Even accepting that as true, MCS-LA would
   not be the “borrower,” that role would fall on the MMC as the transferee
   and user of the truck.

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           Finally, Category 9 describes “Non-owned ‘Autos’ Only,” which is
   any auto that the insured does not own, lease, hire, rent, or borrow, but is
   used in connection with the insured business. Goodno argues that the truck
   was used in connection with MCS-LA’s business because Sciambra was an
   employee of MCS-LA. Endurance argues that Sciambra was an independent
   contractor, not an employee. The focus on Sciambra’s employment status is
   misplaced. The applicability of Category 9 does not turn on whether
   Sciambra was an independent contractor or employee, but rather on the
   identity of his employer.

           Under Louisiana law, “[t]he essence of the employer-employee
   relationship is the right to control . . . . The primary factors evidencing the
   right to control are: (1) selection and engagement, (2) payment of wages, (3)
   power of dismissal, and (4) power of control.”13

           MMC had sufficient control over Sciambra to establish that Sciambra
   worked for MMC. MMC paid Sciambra wages. Sciambra oversaw MMC’s
   mosquito spraying operations in Mississippi. MMC paid for Sciambra’s fuel.
   Sciambra lived in Mississippi and commuted to the MMC office in Gautier,
   Mississippi. MMC recognized Sciambra as its 1099 contractor. Sciambra
   testified that MMC was his employer.

           Much of this same evidence suggests that Sciambra was not controlled
   by MCS-LA. He did not work at the MCS-LA office in Metairie, Louisiana.

           13
             Knoten v. Westbrook, 193 So.3d 380, 390, (La. Cir. App. 2016), writ denied, 208
   So. 3d 890 (citing Hillman v. Comm-Care, Inc., 805 So.2d 1157, 1162 (La. 2002)).

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   Sciambra was not on the MCS-LA payroll. MCS-LA did not obtain any direct
   benefit from Sciambra’s work as he was only involved in MMC’s mosquito
   spraying operations and local contract.14 Regardless of whether Sciambra was
   an employee or independent contractor, it is clear that he worked for MMC,
   not MCS-LA.

          The best evidence favoring MCS-LA as Sciambra’s employer is
   murky. On a corporate organizational chart, Sciambra reported to people who
   reported to Steve Pavlovich, who was the CEO of MCS-DE and all its
   subsidiaries, including MCS-LA and MMC. So Pavlovich had ultimate
   control, but Goodno does not show why Pavlovich’s control would not be as
   CEO of MMC, Sciambra’s direct employer, or as CEO of MCS-DE, the
   parent organization which benefitted from Sciambra’s work for MMC.
   Sciambra also received a termination letter from a “Mosquito Control
   Services, LLC” but the letter did not distinguish whether this was MCS-DE
   or MCS-LA. This ambiguous letter alone is insufficient to support a
   reasonable inference that Sciambra had an employment relationship with
   MCS-LA when viewed in light of the evidence presented by Endurance.

          Endurance presented evidence that Sciambra worked for MMC, not
   MCS-LA, either as an employee or independent contractor. Therefore,
   Sciambra’s actions were not in connection with MCS-LA’s business and the

          14
            See Morgan v. ABC Mfr., 710 So.2d 1077, 1078–80 (La. 1998) (discussing how
   two employers could be liable for a single employee’s conduct where both employers exert
   contemporaneous control and receive a benefit from that employee’s work).

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   truck does not fall under Category 9. The truck was not a “covered auto”
   under the language of the policy.

                                                  C.
          Goodno’s final argument is that Sciambra was insured under the
   “Business Auto Extension Endorsement – Louisiana” (“Louisiana
   Extension”) or “Who Is An Insured” provisions of the Travelers policy.
   Endurance argues that Goodno did not preserve this argument on appeal and
   that even if Goodno did not waive it, the provisions do not create coverage.

          Generally, “[t]his court will not consider arguments first raised on
   appeal . . . .”15 Arguments not raised before the district court are waived
   unless the party can show the extraordinary circumstances that the issue
   involved is a pure question of law and a miscarriage of justice would result
   from the court’s failure to consider it.16 As Goodno did nothing to bring the
   district court’s attention to the Louisiana Extension, this argument is waived.
   Regardless, waiver produces no untoward result.

          The Louisiana Extension appears in a series of policy modifications
   for various states. One relevant provision of the Louisiana Extension extends
   coverage to “[a]ny ‘employee’ . . . using a covered ‘auto’ you don’t own,
   hire, or borrow in your business or personal affairs.” Goodno argues this

          15
               Est. of Duncan v. Comm’r of Internal Revenue, 890 F.3d 192, 202 (5th Cir. 2018).
          16
               State Indus. Prods. Corp. v. Beta Tech. Inc., 575 F.3d 450, 456 (5th Cir. 2009).

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   creates coverage, but it does not. Again, Sciambra was not an employee of
   MCS-LA.

          Goodno also argues that the Louisiana Extension should apply rather
   than the policy’s Mississippi Changes, and that the Louisiana extension
   applies to all of MCS-LA’s vehicles. Under Louisiana law, “[i]f the words of
   the [insurance] policy are clear and explicit and lead to no absurd
   consequences, no further interpretation may be made in search of the parties’
   intent and the agreement must be enforced as written.” 17 It would be
   unreasonable to apply the Louisiana Extension beyond Louisiana when the
   title of the endorsement clearly and explicitly indicates this section applies to
   Louisiana. Even if the title were not dispositive, other provisions suggest the
   Louisiana Extension should be read as its title suggests. Immediately
   preceding the Louisiana Extension is a generally applicable endorsement that
   alters the coverage across the entire policy and immediately after the
   Louisiana Extensions are a series of other state-specific endorsements. If the
   insured and insurance carrier intended to implement changes to coverage
   that would govern a Mississippi vehicle, they would have implemented them
   in either the general endorsement or in a Mississippi-specific endorsement.
   The facts indicate that the Louisiana Extension does not apply to this truck.
   The truck was registered in Mississippi, used in Mississippi, and driven by a
   Mississippi LLC’s employee. The truck was not owned or possessed by
   MCS-LA, nor was it used or garaged in Louisiana. Goodno’s argument

          17
               Crabtree, 632 So. 2d at 741 (citing La. Civ. Code Ann. art. 2046 (1984)).

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   regarding the Louisiana Extension was waived and it is no grave miscarriage
   of justice to decline to consider it further.

          Alternatively, Goodno did not waive the “Who is An Insured”
   provision, having previously argued that the employment status of Sciambra
   made him an insured. Endurance itself referred to this provision in its
   arguments for summary judgment. The “Who Is An Insured” provision is
   an integral portion of the core Travelers policy documentation. Goodno
   argues the second category of the provision here provides coverage. This
   provision covers the primary named insured as well as “[a]nyone else while
   using with your permission a covered ‘auto’ you own, hire, or borrow . . . .”
   For this language to apply to Sciambra, two circumstances are needed. First,
   Sciambra would have needed MCS-LA’s permission to use the truck, which
   Goodno argues he had. Second, the truck would need to have been a
   “covered auto” owned, hired, or borrowed by MCS-LA. Goodno fails under
   the second prong; the truck was not a covered auto, as explained in Section
   III.B. The “Who Is An Insured” provision did not here create coverage or
   alter the outcome of this case.

                                          IV.
          There is no viable claim against MCS-LA and all of its affiliates were
   previously released by the plaintiff. There is no viable claim against
   Endurance. We affirm the district court’s grant of summary judgment to
   Endurance. The grant of summary judgment to Sciambra and MCS-LA and
   the dismissal of claims against them were also proper. We affirm the district
   court’s granting of all three motions.

                                            15