Court Opinion

ID: 3176572
Source: CourtListenerOpinion
Date Created: 2016-02-11 01:08:32.371219+00
Date Added: 2024-06-11T07:38:53.106507
License: Public Domain

Case: 15-60360      Document: 00513375279         Page: 1    Date Filed: 02/10/2016

           IN THE UNITED STATES COURT OF APPEALS
                   FOR THE FIFTH CIRCUIT      United States Court of Appeals
                                                                                     Fifth Circuit

                                                                                   FILED
                                                                              February 10, 2016
                                      No. 15-60360
                                                                                Lyle W. Cayce
                                                                                     Clerk
MESA UNDERWRITERS SPECIALTY INSURANCE COMPANY, formerly
known as Montpelier U.S. Insurance Company,

              Plaintiff - Appellee

v.

LJA COMMERCIAL SOLUTIONS, L.L.C.,

              Defendant - Appellant

                   Appeal from the United States District Court
                     for the Southern District of Mississippi
                              USDC No. 3:13-CV-29

Before STEWART, Chief Judge, REAVLEY, and DAVIS, Circuit Judges.
PER CURIAM:*
       Defendant-Appellant appeals the district court’s grant of summary
judgment holding that the Plaintiff-Appellee had no coverage under its
Commercial General Liability policy for damage to a customer’s property. We
agree with the district court that a policy exclusion for water damage in the

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
    Case: 15-60360      Document: 00513375279        Page: 2    Date Filed: 02/10/2016

                                    No. 15-60360
policy is effective to preclude coverage for potential liability for damage to
property which is the subject of the claim being made against the Appellant.
                                        I.
      Rent City, Inc. (Rent City) hired LJA Commercial Solutions, LLC (LJA)
to replace the roof on its commercial building in Mississippi. During LJA’s
work on Rent City’s roof, a sudden rainstorm occurred. At the time of the storm,
LJA had removed the roof exposing Rent City’s interior to the rain. Water
flowed into Rent City’s building before LJA managed to cover the open roof
with tarpaulins. This intrusion resulted in extensive damage to the Rent City
property.
      LJA was insured under a Commercial General Liability (CGL) policy
issued by MESA Underwriters Specialty Insurance Company (MUSIC). The
CGL policy provided that MUSIC would pay for property damages that LJA
was legally obligated to pay if “[t]his insurance applies.” The CGL policy
applied to property damage “only if. . . [it] is caused by an ‘occurrence.’”
Application of the CGL policy was limited by numerous exclusions including
one that is relevant to this action. The Water Damage Exclusion stated: “[t]his
insurance does not apply to bodily injury or property damage arising out of any
damage caused by water or moisture in any state to include but not limited to
rain, sleet, hail or snow.” 1
      MUSIC filed a declaratory judgment action against LJA to determine
whether it had coverage under the CGL policy for the claim asserted by Rent
City for its property damage. LJA filed a counterclaim against MUSIC
asserting inter alia that it acted in bad faith by denying coverage for the
damages to Rent City. Rent City also filed a counterclaim against MUSIC and

      1 MUSIC also argued that an Open Roof Exclusion precludes coverage for Rent City’s
damages. However, our disposition based on the Water Damage Exclusion makes
consideration of the Open Roof Exclusion unnecessary.
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     Case: 15-60360           Document: 00513375279         Page: 3    Date Filed: 02/10/2016

                                          No. 15-60360
a crossclaim against LJA to recover for its property damage. In its claims, Rent
City alleged that LJA acted negligently because it had no tarpaulin sheets on-
site when the sudden rainstorm struck.
         MUSIC filed motions for summary judgment on its declaratory judgment
action and the related counterclaims brought by LJA and Rent City. The
district court granted summary judgment holding MUSIC had no obligation to
defend or indemnify LJA for the Rent City damages. It reasoned that either
the Water Damage or Open Roof exclusions would preclude coverage.
According to the district court, the Water Damage Exclusion applied because
“the injuries alleged to have been suffered were caused by water from a rain
shower.” The district court also granted summary judgment against LJA
holding that MUSIC did not act in bad faith. LJA now appeals this grant of
summary judgment.
                                            II.
         We review de novo the interpretation of an insurance contract and grant
of summary judgment. 2 Summary judgment is appropriate if the record shows
that no genuine dispute as to any material fact exists and the movant is
entitled to judgment as a matter of law. 3 While evidence is viewed in the light
most favorable to the nonmoving party, a conclusory or unsubstantiated
allegation alone is not enough to defeat summary judgment. 4
                                           III.
         LJA argues that the district court erred in holding that the CGL policy
did not cover the damages to Rent City. Mississippi state law governs the

         2   Ironshore Specialty Ins. Co. v. Aspen Underwriting Ltd., 788 F.3d 456, 459 (5th Cir.
2015).
         State Nat’l Ins. Co. v. Mktg Servs., 544 F. App’x 369, 371 (5th Cir. 2013) (citing Fed.
         3
Rawle Civ. P. 56(a)).
       4 Id.

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                                       No. 15-60360
interpretation of this insurance policy. 5 Under Mississippi law, insurance
coverage depends on the policy language itself. 6 If an insurance contract is
unambiguous, the terms are given their plain meaning and applied as written. 7
       The district court did not find it necessary to reach the threshold issue
of whether the Rent City damages were an “occurrence” that triggered
coverage. Even assuming an occurrence, the district court found that the Water
Damage Exclusion clearly applied. For essentially the reasons set forth in the
district court opinion, we agree that the Water Damage Exclusion precludes
coverage for the Rent City damages which arose from the intrusion of
rainwater.
       Finally, LJA asserted that MUSIC acted in bad faith by denying it
coverage. However, as the district court found, MUSIC did not act in bad faith
because it owed no coverage to LJA under its policy.
                                            IV.
       For these reasons and those assigned by the district court, we AFFIRM
the judgment of the district court.

       5  Acadia Ins. Co. v. Hinds Cnty. Sch. Dist., 582 F. App’x 384, 387 (5th Cir. 2014) (“We
look to state law for rules governing contract interpretation.”).
        6 Architex Ass’n v. Scottsdale Ins. Co., 27 So. 3d 1148, 1156 (Miss. 2010) (“We find the

appropriate analysis should not be driven by policy justifications, but rather should be
confined to the policy language.”).
        7 Miss. Farm Bureau Mut. Ins. Co. v. Walters, 908 So. 2d 765, 769 (Miss. 2005).

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