Court Opinion

ID: 5121951
Source: CourtListenerOpinion
Date Created: 2021-10-29 00:00:32.372896+00
Date Added: 2024-06-11T08:22:25.377170
License: Public Domain

Case: 20-61139   Document: 00516073506      Page: 1    Date Filed: 10/28/2021

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

                                                                      FILED
                                                               October 28, 2021
                             No. 20-61139                        Lyle W. Cayce
                                                                      Clerk

   Colony Insurance Company,

                                                       Plaintiff—Appellee,

                                versus

   Brandon Keon Wright, on behalf of the wrongful
   death beneficiaries of Marion Earl Wright; V & B
   International, Incorporated,

                                                  Defendants—Appellants,

   ______________________________

   Brandon Keon Wright, On behalf of the Wrongful
   Death Beneficiaries of Marion E. Wright, Deceased,

                                                      Plaintiff—Appellant,

                                versus

   Colony Insurance Company,

                              Defendant—Third Party Plaintiff -Appellee,

                                versus

   V & B International, Incorporated,

                                         Third Party Defendant—Appellant.
Case: 20-61139     Document: 00516073506           Page: 2   Date Filed: 10/28/2021

                                    No. 20-61139

                  Appeal from the United States District Court
                    for the Southern District of Mississippi
                             USDC No. 5:19-CV-88
                             USDC No. 5:20-CV-43

   Before Elrod, Southwick, and Costa, Circuit Judges.
   Leslie H. Southwick, Circuit Judge:
          The district court issued a declaratory judgment that an automobile
   driver’s death was not covered by the terms of the defendant insurance
   company’s policy. The wrongful-death beneficiaries of the driver appeal,
   claiming that the driver’s death was covered under the policy.           We
   AFFIRM.
              FACTUAL AND PROCEDURAL BACKGROUND
          Marion Wright was driving his personal vehicle to a logging site in
   Claiborne County, Mississippi on the morning of January 31, 2018. As
   Wright drove by a sawmill owned by V & B International, Inc., he collided
   with the sawmill’s metal gate that had swung out across the road. Wright
   suffered multiple traumatic injuries and died at the scene.
          Prior to Wright’s death, V & B had purchased a commercial general
   liability insurance policy from Colony Insurance Company. The policy
   provides coverage for bodily injury and property damage suffered on V & B’s
   premises during the coverage period. Section 2.g of the policy, though,
   excludes coverage for “ ‘bodily 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.” Further, an endorsement titled the “absolute auto exclusion”
   purports to replace Section 2.g and excludes “ ‘bodily injury’ or ‘property

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Case: 20-61139      Document: 00516073506           Page: 3     Date Filed: 10/28/2021

                                     No. 20-61139

   damage’ arising directly or indirectly out of the ownership, maintenance, use
   or entrustment to others of any aircraft, ‘auto’ or watercraft.”
          On February 2, 2018, Wright’s wrongful-death beneficiaries notified
   Colony of their potential claims under V & B’s policy. On February 27, 2018,
   Colony contacted V & B to deny coverage under the absolute auto exclusion.
   About three weeks later, the wrongful-death beneficiaries sued V & B in the
   Circuit Court of Claiborne County, Mississippi. On August 30, 2019,
   counsel for Wright’s beneficiaries notified Colony that they had
   compromised their claims against V & B and demanded coverage. The state
   court entered a final judgment on September 17, 2019, explaining that V & B
   settled with Wright’s beneficiaries for $900,000, to be collected “only
   against applicable insurance proceeds, if any.”
          On September 19, 2019, Colony filed this action in the United States
   District Court for the Southern District of Mississippi, requesting a
   declaration that it had no liability under the policy for Wright’s death. On
   October 28, 2019, the wrongful-death beneficiaries sued Colony in state
   court seeking a declaratory judgment regarding the policy. Colony removed
   that action, which was consolidated with the action for declaratory relief. All
   parties moved for summary judgment. The district court granted summary
   judgment for Colony, concluding that the policy unambiguously excludes
   coverage for any injury arising from an automobile accident, regardless of the
   car’s ownership.
                                   DISCUSSION
          We review a grant of summary judgment de novo, using the same
   standard a district court is to apply. Bolton v. City of Dallas, 472 F.3d 261, 263
   (5th Cir. 2006). The moving party has the burden to show the absence of a
   genuine dispute of material fact. Stearns Airport Equip. Co., Inc. v. FMC
   Corp., 170 F.3d 518, 521 (5th Cir. 1999). We view all evidence in the light

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                                     No. 20-61139

   most favorable to the non-moving parties, drawing all reasonable inferences
   in their favor. Bolton, 472 F.3d at 261.
          This diversity action is governed by Mississippi substantive law. Delta
   & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 399 (5th
   Cir. 2008). When interpreting an insurance policy under Mississippi law,
   courts “look at the policy as a whole, consider all relevant portions together
   and, whenever possible, give operative effect to every provision in order to
   reach a reasonable overall result.” J & W Foods Corp. v. State Farm Mut.
   Auto. Ins. Co., 723 So. 2d 550, 552 (Miss. 1998). An endorsement “controls
   the policy insofar as it enlarges, modifies or restricts the terms” of the policy.
   Camden Fire Ins. Ass’n v. New Buena Vista Hotel Co., 24 So. 2d 848, 850
   (Miss. 1946).
          “[I]f a contract is clear and unambiguous, then it must be interpreted
   as written.” Corban v. United Servs. Auto. Ass’n, 20 So. 3d 601, 609 (Miss.
   2009) (quoting United States Fid. & Guar. Co. v. Martin, 998 So. 2d 956, 963
   (Miss. 2008)). Although “ambiguities must be resolved in favor of the
   non-drafting party,” they “do not exist simply because two parties disagree
   over the interpretation of a policy.” Id. Instead, “[a]mbiguities exist when a
   policy can be logically interpreted in two or more ways, where one logical
   interpretation provides for coverage.” Id. “Exclusions and limitations on
   coverage are also construed in favor of the insured.” Id.
          Colony and the wrongful-death beneficiaries do not dispute that
   Wright’s death is an occurrence under the policy that would be covered
   unless there is an applicable exclusion. Accordingly, the only issue before
   this court is whether a valid exclusion applies.

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                                          No. 20-61139

           At the district court and on appeal, the wrongful-death beneficiaries
   argued that the policy unambiguously covered Wright’s death. 1 Section 2.g
   of the policy states that the insurance does not apply to:
           “Bodily 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. Use includes operation and “loading or
           unloading.”
           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 to others of any aircraft, “auto” or
           watercraft that is owned or operated by or rented or loaned to
           any insured.
   (emphasis added).
           This original Section 2.g auto exclusion was replaced by the absolute
   auto exclusion which “deleted and replaced” the original text with this:
           [This insurance does not apply to] “[b]odily injury” or
           “property damage” arising directly or indirectly out of the
           ownership, maintenance, use or entrustment to others of any

           1
              At the district court, the plaintiffs argued that the accident was covered under
   what is called the “concurrent-cause doctrine.” Because they do not identify this as an
   issue on appeal, we do not consider it. Besides dropping one argument, the wrongful-death
   beneficiaries seek to raise a new argument on appeal concerning a separate endorsement,
   “the unmanned aircraft exclusion.” The district court never considered that exclusion
   because briefing on summary judgment did not refer to it. “[A]rguments not raised before
   the district court are waived and cannot be raised for the first time on appeal.” LeMaire v.
   La. Dep’t of Transp. & Dev., 480 F.3d 383, 387 (5th Cir. 2007). We therefore do not address
   this separate exclusion.

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                                     No. 20-61139

          aircraft, “auto” or watercraft. Use includes operation and
          “loading or unloading”.
          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 to others of any aircraft, “auto” or
          watercraft.
          There is no coverage for injuries arising “directly or indirectly out of
   the . . . use . . . of any ‘auto’” without limiting the provision’s effect to the
   insured’s autos. The policy must be interpreted “as written.” Corban, 20
   So. 3d at 609. Taking the absolute auto exclusion as written, the policy
   excludes coverage regardless of any nexus — or lack thereof — between the
   insured and the auto.
          We agree with the district court’s well-reasoned and thorough order
   on summary judgment explaining why there is no coverage for the tragic
   events underlying this litigation. AFFIRMED.

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                                     No. 20-61139

   Gregg Costa, Circuit Judge, concurring:
          I fully join the court’s opinion, which affirms that the district court
   correctly decided the issues before it. I also agree that the appellant failed to
   raise, and thus forfeited, the argument that the insurance policy is ambiguous
   because of two potentially conflicting endorsements. I write separately to
   address the often-invoked-but-rarely-applied exception to the forfeiture rule
   that the appellant urges us to apply and explain why it does not.
          The enigmatic exception allows a court to overlook forfeiture when
   “the newly raised issue concerns a pure question of law and a refusal to
   consider it would result in a miscarriage of justice.” Volkswagen of Am., Inc.
   v. Robertson, 713 F.2d 1151, 1166 (5th Cir. 1983). Almost four decades ago, we
   said that this exception will “usually” overcome forfeiture when its
   conditions are met. Id.
          That is no longer true. Our most recent published decision I could
   find excusing forfeiture on these grounds is more than a decade old. See AG
   Acceptance Corp. v. Veigel, 564 F.3d 695, 701 (5th Cir. 2009). Although the
   exception seems like a relic of an era more forgiving of forfeiture, it is still
   part of our jurisprudence. Jacobs v. Nat’l Drug Intel. Ctr., 548 F.3d 375, 378
   (5th Cir. 2008) (noting that “one panel of our court may not overturn another
   panel’s decision” absent a change in law by the Supreme Court, our en banc
   court, or Congress).
          With the exception still on the books, the question becomes when we
   should apply it. A panel of this court recently noted the seeming arbitrariness
   of the exception, warning that courts “must be on guard for the risk of judicial
   bias when it comes to discretionary practices such as addressing forfeited
   issues.” Rollins v. Home Depot USA, 8 F.4th 393, 398 (5th Cir. 2021). There
   is a difference, however, between ad-hoc “all things considered” discretion
   and discretion guided by the background rationales underlying certain rules.

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                                     No. 20-61139

   Frederick Schauer, Exceptions, 58 U. Chi. L. Rev. 871, 895–97 (1991)
   (distinguishing between the two).          The latter—guided discretion—is
   standard fare in many doctrines that require judges to exercise judgment. See
   Henry J. Friendly, Indiscretion About Discretion, 31 Emory L.J. 747, 784
   (1982) (“[D]iscretionary choices are not left to a court’s ‘inclination, but to
   its judgment; and its judgment is to be guided by sound legal principles.’”
   (quoting United States v. Burr, 25 F. Cas. 30, 35 (C.C. Va. 1807) (Marshall,
   C.J.))).
          The few cases from the last two decades in which we invoked the
   “pure question of law and miscarriage of justice” exception provide a clue to
   help guide our discretion in this area. We overlooked forfeiture when a
   plaintiff argued for the first time on appeal that the Prison Litigation Reform
   Act’s exhaustion requirement does not apply to former prisoners. Bernal v.
   Bexar County, 757 F. App’x 316, 318–19 (5th Cir. 2018) (unpublished).
   Considering the newly raised issue was justified because our caselaw had
   already endorsed the plaintiff’s plain reading of the statute. Id. at 320 (citing
   Janes v. Hernandez, 215 F.3d 541 (5th Cir. 2000)). Similarly, because our
   precedent already held that a statute barred attorneys’ fees, we excused a
   party’s failure to so argue in the district court. AG Acceptance Corp., 564 F.3d
   at 701 (citing Utica Lloyd’s of Tex. v. Mitchell, 138 F.3d 208, 210 (5th Cir.
   1998)). In both cases, an opinion from our court already recognized the legal
   principle that was belatedly invoked on appeal. Finding the issue forfeited
   would have resulted in a decision contrary to binding precedent and the laws
   the legislatures had enacted.
          One of the keys to understanding the exception, then, is the “pure”
   modifier to the “question of law” element. Most appeals will involve some
   questions of law. The issue in this case—how to interpret a contract—is a
   legal question subject to de novo review. But such a question of law is not
   necessarily, or even usually, the same as a pure question of law. See Rollins, 8

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                                     No. 20-61139

   F.4th at 398 (observing that whether a material fact dispute exists to preclude
   summary judgment—a legal question we review de novo—is “plainly not a
   pure question of law”). Interpreting a contract requires us to do more than
   read a case or statute. We must inspect something in the record: the contract
   itself. And if the contract turns out to be ambiguous, we may have to dive
   into extrinsic evidence.    Once we start dissecting the record, we find
   ourselves exactly where the forfeiture rule says we should not be—deciding
   issues based on inadequately developed facts. See City of Waco v. Bridges, 710
   F.2d 220, 228 (5th Cir. 1983). A pure question of law thus exists “when the
   unpreserved issue is completely detached from the facts.” Andrey Spektor
   & Michael A. Zuckerman, Ferrets and Truffles and Hounds, Oh My: Getting
   Beyond Waiver, 18 Green Bag 77, 88 (2014).
          It is telling that the two cases from recent decades finding this
   complete detachment from the facts involved issues of statutory
   interpretation. See AG Acceptance Corp., 564 F.3d at 701; Bernal, 757 F.
   App’x at 319. If these examples are representative, then the pure question of
   law exception may largely overlap with another exception to the preservation
   requirement: forfeiture does not apply when the court is interpreting a
   statute. McMillen v. New Caney Indep. Sch. Dist., 939 F.3d 640, 647 n.4 (5th
   Cir. 2019) (quoting Young v. United Parcel Serv., Inc., 135 S. Ct. 1338, 1353
   (2015)). Put another way, what a lawyer argues cannot change what the
   legislature wrote.
          This review of our caselaw applying the “pure question of law plus
   miscarriage of justice” exception shows that the first requirement is missing
   here. The appellant’s argument cannot be resolved solely by reading a court
   opinion or the words of a statute. The ambiguity claim instead requires
   examining the insurance policy and endorsements that make up the record of
   this case (and perhaps more if extrinsic evidence is relevant). As a result, the
   unpreserved ambiguity argument is forfeited.

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