Court Opinion

ID: 40464
Source: CourtListenerOpinion
Date Created: 2010-04-25 20:46:57+00
Date Added: 2024-06-11T17:16:31.421181
License: Public Domain

United States Court of Appeals
                                                                 Fifth Circuit
                                                                F I L E D
                   UNITED STATES COURT OF APPEALS
                            FIFTH CIRCUIT                       January 11, 2006

                                                             Charles R. Fulbruge III
                                                                     Clerk
                            No. 04-61009

          AXA RE PROPERTY & CASUALTY INSURANCE COMPANY,

                                                 Plaintiff-Appellee,

                               versus

                    DUSTIN L. DAY, Etc.; ET AL.,

                                                             Defendants,

  DUSTIN L. DAY, Individually and on Behalf of His Child, MASON
                               DAY,

                                                Defendant-Appellant.

           Appeal from the United States District Court
             for the Southern District of Mississippi
                           (3:02-CV-1306)

Before BARKSDALE and CLEMENT, Circuit Judges, and ENGELHARDT,

District Judge.*

PER CURIAM:**

     Dustin L. Day challenges the district court’s refusal to

abstain from adjudicating this declaratory judgment action filed by

AXA Re Property & Casualty Insurance Company.      Prior to its being

filed, Day had filed suit in Louisiana state court against the

     *
       District Judge for    the   Eastern   District   of    Louisiana,
sitting by designation.
     **
       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this opinion should not be published and is not precedent except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.
Estate of Gary Kinchen; Kinchen, a Mississippi resident, had been

insured by AXA.      In the alternative, Day contests the summary

judgment awarded AXA under Mississippi law. Day maintains the term

at issue in the AXA policy (“use”) is ambiguous and, therefore,

should be construed to provide coverage.             AFFIRMED.

                                     I.

     The facts are not in dispute.             On 14 January 2001, Christina

Walker met Kinchen in Bogalusa, Louisiana.             Later that day, they

retired to Kinchen’s truck and attached horse trailer. The trailer

included sleeping quarters, which utilized an external gasoline-

powered generator.      Kinchen, who had attached the generator post-

purchase, activated it.         The following day, he and Walker were

found   dead   due   to   carbon    monoxide       poisoning       from   alleged

ventilation defects with the generator.

     In January 2002, Dustin L. and Mason Day, Walker’s heirs,

filed an action in Louisiana state court against Kinchen’s estate,

claiming   negligence     by   Kinchen    in    operating    the    trailer   and

generator that resulted in Walker’s death. That action is pending.

     At the time of Walker’s and Kinchen’s deaths, Kinchen was

insured by AXA under a commercial automobile liability policy.                 In

August 2002, based on diversity jurisdiction, AXA filed this

declaratory    judgment   action   in     federal    court   in     Mississippi,

seeking a declaration that AXA was not required to defend and/or

indemnify Kinchen in the pending Louisiana action.                AXA also moved

                                     2
for summary judgment.         In addition to opposing that motion, Day

moved to dismiss this action or transfer it to the Louisiana state

court, claiming it constituted forum shopping to avoid application

of Louisiana law.

     The district court denied Day’s motion to dismiss or transfer

because Day had not previously filed an action against AXA in

Louisiana state court.        Furthermore, the court held the requisite

factors for abstention were lacking:             (1) no pending state action

existed where    all    the   matters       in   controversy   could   be   fully

litigated; (2) AXA did not file its declaratory judgment action in

anticipation of litigation with Day; (3) AXA had not engaged in

forum shopping; (4) no inequities existed in permitting AXA to

proceed with this action; (5) the federal court was a convenient

forum for litigation relating to the AXA policy because it was

created and made effective in Mississippi; and (6) judicial economy

would not be contravened by retaining the action. AXA Re Prop. &

Cas. Ins. Co. v. Day, No. 3-02-cv-1306WS (S.D. Miss. 30 Sept. 2004)

(unpublished).

     Concomitantly, the district court awarded summary judgment to

AXA, holding, under Mississippi law: “When a policy insures an

automobile for the ‘use’ of the automobile, the chain of causation

between the use of the automobile and the injury must be direct”.

Id. at *11 (quoting Jackson v. Daley, 739 So. 2d 1031, 1041 (Miss.

1999) (en banc)).      The district court declined to “extend coverage

                                        3
if the use of the automobile is within the line of causation, but

is distinctly remote”.   Id.   Because the generator was not part of,

or built into, the trailer, the district court held Day failed to

state a claim for bodily injury arising from the “use” of a motor

vehicle.

                                  II.

     Day claims the district court erred by not abstaining from

hearing AXA’s declaratory judgment action. If unsuccessful on that

issue, he claims the term “use” in the policy covers use of the

generator.    (AXA claims the policy’s pollution exclusion bars

coverage.    Because we hold the policy does not cover use of the

generator, we need not reach this issue.)

                                  A.

     The Declaratory Judgment Act states: “In a case of actual

controversy within its jurisdiction, ... any court of the United

States, upon the filing of an appropriate pleading, may declare the

rights and other legal relations of any interested party seeking

such declaration”.    28 U.S.C. § 2201(a).       This Act “has been

understood to confer on federal courts unique and substantial

discretion in deciding whether to declare the rights of litigants”.

Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995).         “In the

declaratory judgment context, the normal principle that federal

courts should adjudicate claims within their jurisdiction yields to

considerations of practicality and wise judicial administration.”

                                   4
Id. at 288.   Brillhart v. Excess Insurance Co. of America, 316 U.S.

491, 495 (1942), explained it would be “uneconomical as well as

vexatious for a federal court to proceed in a declaratory judgment

suit where another suit is pending in a state court presenting the

same issues ... between the same parties”.         Accordingly, the non-

abstention decision is reviewed for abuse of discretion.              Tex.

Ass’n of Bus. v. Earle, 388 F.3d 515, 518 (5th Cir. 2004).

     Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891 (5th Cir.

2000), provides three inquiries for district courts in determining

whether to adjudicate a declaratory judgment action: (1) is it

justiciable; (2) does the court have the authority to grant such

relief; and (3) should it exercise its discretion to decide the

action based on the factors stated in St. Paul Insurance Co. v.

Trejo, 39 F.3d 585 (5th Cir. 1994), discussed infra.          See Sherwin-

Williams Co. v. Holmes County, 343 F.3d 383, 387 (5th Cir. 2003).

                                    1.

     Because the district court addressed the last two Orix steps,

by implication it found this action justiciable (first Orix step).

For that first step, “the question ... is whether the facts

alleged,   under   all   the   circumstances,   show   that   there   is   a

substantial   controversy,     between   parties   having   adverse   legal

interests, of sufficient immediacy and reality to warrant the

issuance of a declaratory judgment”.        Md. Cas. Co. v. Pac. Coal &

Oil Co., 312 U.S. 270, 273 (1941).          For a declaratory judgment

                                    5
action to be justiciable, it “must be such that it can presently be

litigated     and    decided     and   not    hypothetical,      conjectural,

conditional or based upon the possibility of a factual situation

that may never develop”.        Brown & Root, Inc. v. Big Rock Corp., 383

F.2d 662, 665 (5th Cir. 1967).               Whether the policy provides

coverage presents a live controversy.

                                       2.

     Under the second Orix step, the district court properly

concluded it had authority to grant declaratory relief because Day

had not previously filed a claim against AXA in state court.

Generally,

            a district court may not consider the merits
            of the declaratory judgment action when 1) a
            declaratory defendant has previously filed a
            cause of action in state court against the
            declaratory plaintiff, 2) the state case
            involves the same issues as those involved in
            the federal case, and 3) the district court is
            prohibited    from   enjoining    the    state
            proceedings under the Anti-Injunction Act.

Travelers Ins. Co. v. La. Farm Bureau Fed’n, Inc., 996 F.2d 774,

776 (5th Cir. 1993) (emphasis in original).

     Although Day had filed an action against Kinchen’s estate and

ABC Insurance Company in Louisiana state court, AXA was never made

a defendant.        Restated, no declaratory defendant had filed an

action   in    state    court    against     the   declaratory    plaintiff.

Additionally, Day’s action against Kinchen’s estate involves a

different issue than is present in this action.            The state-court

                                       6
action concerns whether Kinchen is liable for Walker’s death, which

is wholly distinct from the issue in this action: whether the AXA

policy provides coverage and a corresponding duty to defend and/or

indemnify Kinchen’s estate.

      Finally, for this second step, a district court must also

consider whether the Anti-Injunction Act, 28 U.S.C. § 2283, bars

relief.    Id.    The Act states:     “A court of the United States may

not grant an injunction to stay proceedings in a State court except

as expressly authorized by Act of Congress, or where necessary in

aid   of   its   jurisdiction,   or       to   protect   or   effectuate   its

judgments”.      28 U.S.C. § 2283.     Because there is neither a state

court action against AXA, nor a state court action that involves

the same issues presented in this action, the district court

properly concluded that the Act does not bar relief.

                                      3.

      Finally, the district court properly exercised its discretion

in refusing to abstain. Trejo, 39 F.3d at 590-91, identified seven

nonexclusive factors for a district court to consider when deciding

whether Brillhart abstention should apply to a declaratory judgment

action:

            1) whether there is a pending state action in
            which all of the matters in controversy may be
            fully litigated, 2) whether the plaintiff
            filed suit in anticipation of a lawsuit filed
            by the defendant, 3) whether the plaintiff
            engaged in forum shopping in bringing the
            suit, 4) whether possible inequities in
            allowing the declaratory plaintiff to gain

                                      7
          precedence in time or to change forums exist,
          5) whether the federal court is a convenient
          forum for the parties and witnesses, ... 6)
          whether retaining the lawsuit in federal court
          would serve the purposes of judicial economy
          ... and [7)] whether the federal court is
          being called on to construe a state judicial
          decree involving the same parties and entered
          by the court before whom the parallel state
          suit between the same parties is pending.

(Internal citation and quotation marks omitted.)      The district

court considered all of the Trejo factors.

     First, because AXA is not a party to the Louisiana action, the

court correctly concluded no pending state action exists where all

the matters in controversy could be fully litigated. Additionally,

it correctly determined that the next two factors — whether AXA (1)

filed this action in anticipation of an action by Day and (2)

engaged in impermissible forum shopping — supported retaining

jurisdiction.   Notably, Day concedes AXA filed this action not in

anticipation of one by Day, but instead as a response to the

Louisiana action.   Furthermore, AXA has not engaged in improper

forum shopping merely by filing a declaratory action in federal

court availing itself of diversity jurisdiction.

          [T]he fact that federal forums are sought by
          some [plaintiffs] in an attempt to avoid the
          state court system, does not necessarily
          demonstrate impermissible forum selection when
          the    declaratory    judgment    out-of-state
          plaintiff invokes diversity. Rather it states
          the traditional justification for diversity
          jurisdiction,    to    protect    out-of-state
          defendants.

                                 8
Sherwin-Williams, 343 F.3d at 399 (internal citation and quotation

marks omitted).        Instead, a court is more likely to find a

plaintiff    engaged   in   impermissible     forum   shopping   where      the

federal action would change the applicable law.           See id. at 397,

399; Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 602

n.3 (5th Cir. 1983).        Because the issues in the Louisiana state

court action and this action are distinct, it is entirely plausible

that Louisiana tort law will apply to Kinchen’s liability vel non,

while in this action, as discussed infra, Mississippi contract law

governs the scope of the policy’s coverage.

     The    district   court   also   correctly   considered     the   fourth

factor:     because there was no parallel state court proceeding

involving the same issue, AXA did not inequitably gain precedence

in time or change a previously selected forum for the declaration

it sought.     Fifth, the district court correctly concluded the

Southern District of Mississippi is a convenient forum to litigate

the coverage dispute because the policy was created, and made

effective,    in   Mississippi.       Next,   judicial   economy       is   not

contravened by retaining the action because no other proceeding is

able to consider the coverage dispute; again, AXA is not a party to

the Louisiana litigation.       Finally, the seventh factor — whether

the federal court is being called on to construe a state judicial

decree involving the same parties and entered by the court before

whom the parallel state court suit between the same parties is

                                      9
pending — weighs strongly in AXA’s favor.      Because AXA is not a

party to the Louisiana proceeding, and because any ruling by the

Louisiana court will relate to Kinchen’s liability, the pending

disposition of the Louisiana action is not relevant to this action.

                                 B.

     Accordingly, at issue is the summary judgment awarded AXA on

the basis that “use” of a covered vehicle under the AXA policy did

not include use of a generator attached externally to Kinchen’s

trailer.     That judgment is reviewed de novo.    United States v.

Lawrence, 276 F.3d 193 (5th Cir. 2001); Am. Guar. & Liab. Ins. Co.

v. 1906 Co., 129 F.3d 802, 805 (5th Cir. 1997).     As noted, there

are no material fact issues.      “The interpretation of insurance

policy language is a question of law.”    Eott Energy Pipeline Ltd.

P’ship v. Hattiesburg Speedway, Inc., 303 F. Supp. 2d 819, 822

(S.D. Miss. 2004) (internal citation and quotation marks omitted).

     The AXA policy reads in relevant part:

            We will pay all sums an “insured” legally must
            pay as damages because of “bodily injury” or
            “property damage” to which this insurance
            applies, caused by an “accident” and resulting
            from the ownership, maintenance or use of a
            covered “auto”.

(Emphasis added.)    The parties concede the trailer is a “covered

auto”.     Moreover, Kinchen and Walker were using the trailer, and

Walker suffered “bodily injury” as a result.      Because the policy

                                 10
does not define the term “use”, at issue is whether that injury

“result[ed] from the ... use” of the trailer.

       For this diversity action, we apply state substantive law.

Erie R. Co. v. Tompkins, 304 U.S. 64, 78-80 (1938).               In deciding

which State’s law to apply, we use the choice of law rules of the

State in which the action was filed — Mississippi.            Smith v. Waste

Mgmt., Inc., 407 F.3d 381, 384 (5th Cir. 2005).

       Although Walker and Kinchen died in Louisiana, like the

district court, we conclude Mississippi law governs because it has

“the most substantial contacts with the parties and the subject

matter of the action”.     Hartford Ins. Co. v. Sheffield, 808 So. 2d

891, 895 (Miss. 2001).          Not only was the policy purchased in

Mississippi, but also,       Mississippi is:        Kinchen’s domicile and

residence; the trailer’s usual location; where the policy was

negotiated; and the place where any performance on the contract

would occur.    See Boardman v. United Servs. Auto. Ass’n, 470 So. 2d

1024, 1032 (Miss.), cert. denied, 474 U.S. 980 (1985) (adopting the

center of gravity test for Mississippi’s choice of law analysis).

In    this regard,   the   parties     do   not   challenge   application    of

Mississippi law.

       In applying Mississippi law, we first determine “whether ...

any    final   decisions   of    the    Mississippi     Supreme   Court     are

dispositive”. Centennial Ins. Co. v. Ryder Truck Rental, Inc., 149

F.3d 378, 382 (5th Cir. 1998).         If no final disposition is directly

                                       11
on point, we must make an “Erie-guess”, predicting how that court

would rule.   Id.; see also Am. Guar. & Liab. Co., 129 F.3d at 807.

We make our forecast based on

          (1) decisions of the Mississippi Supreme Court
          in analogous cases, (2) the rationales and
          analyses underlying Mississippi Supreme Court
          decisions on related issues, (3) dicta by the
          Mississippi Supreme Court, (4) lower state
          court decisions, (5) the general rule on the
          question, (6) the rulings of courts of other
          states to which Mississippi courts look when
          formulating substantive law and (7) other
          available sources, such as treatises and legal
          commentaries.

Centennial Ins. Co., 149 F.3d at 382.

     Acknowledging that no Mississippi Supreme Court decision is

directly on point, Day seeks a broad construction of “use”.             Day

claims Walker’s death resulted directly from Kinchen’s and Walker’s

use of the truck and trailer because the trailer could not have

been towed to Louisiana without the truck. Furthermore, at all

times leading up to, and during, the accident, the trailer was

attached to the truck and was operated by Kinchen.

     Additionally,   to    support    that   broad   reading,   Day   cites

Mississippi Supreme Court cases that have liberally interpreted the

term “use” under the State’s Uninsured Motorist Act (UM Act), MISS.

CODE ANN. § 63-15-43.     See Harris v. Magee, 573 So. 2d 646 (Miss.

1990) (holding injuries suffered by driver resulted from use of his

truck although he had just exited it), overruled on other grounds

by Meyers v. Am. States Ins. Co., No. 2003-CA-01669-SCT, 2005 WL

                                     12
1384698 (Miss. 9 June 2005); Stevens v. U.S. Fid. & Guar. Co., 345

So. 2d 1041 (Miss. 1977) (holding injuries to operator of a wrecker

who had left it and was hit by an oncoming automobile arose out of

the use of the wrecker).     Day claims these cases suggest the

Mississippi Supreme Court would hold Walker’s death resulted from

the use of the trailer.

     Lastly, Day contends the policy has more than one reasonable

interpretation; and, therefore, under Mississippi law, its meaning

must be construed in favor of coverage.    Any ambiguous term, under

Mississippi law, is to be strictly construed against the insurer.

Nationwide Mut. Ins. Co. v. Garriga, 636 So. 2d 658, 662 (Miss.

1994).

     In supporting the summary judgment, AXA claims Mississippi

Supreme Court precedent, outside of the uninsured motorist context,

suggests a limited interpretation of “use”.     See Meyers v. Miss.

Ins. Guar. Ass’n, 883 So. 2d 10 (Miss. 2003) (en banc); Jackson,

739 So. 2d 1031.   These cases suggest that use of an automobile

must be the but-for cause of the injury.    Therefore, according to

AXA, Walker’s death would not trigger liability because the use of

the trailer was not the but-for cause of death; instead, it was the

use of the external generator.

     A bedrock principle of contract law is that, where the terms

of a contract are clear and unambiguous, they must be interpreted

as written.   E.g., Farmland Mut. Ins. Co. v. Scruggs, 886 So. 2d

                                 13
714, 717 (Miss. 2004); Sumter Lumber Co. v. Skipper, 184 So. 296,

298 (Miss. 1938) (“When the language of the ... contract is clear,

definite, explicit, harmonious in all its provisions, and free from

ambiguity throughout, the court looks solely to the language used

in the instrument itself, and will give effect to each and all

parts as written.”).

     Each party urges a different interpretation of “use”.              Of

course, simply because parties disagree about the meaning of a

contract term does not, as a matter of law, make it ambiguous.

Burton v. Choctaw County, 730 So. 2d 1, 6 (Miss. 1997).           Instead,

ambiguity exists where “a reasonable person could have understood

the terms to have more than one reasonable meaning”.          Scruggs, 886

So. 2d at 718.   Pursuant to Mississippi Supreme Court precedent,

the term employed in the AXA policy is not ambiguous.

     Again, the injury must “result[] from the ... use of” the

trailer.   Obviously, the injury resulted directly from the use of

the generator while the decedents were in the trailer.          Although no

case is directly on point, several Mississippi Supreme Court

decisions provide direction.

     Meyers   interpreted   an   exclusion   in   a   general   commercial

liability policy for bodily injuries arising “out of the ownership,

maintenance, [or] use” of an automobile.      883 So. 2d at 13-14.      In

Meyers, the plaintiff was injured as a result of a tractor-trailer

(insured under   the   policy)   colliding   with     his   vehicle.   The

                                   14
plaintiff claimed the exclusion did not apply because he had

alleged other but-for causes of the accident aside from the use of

the tractor-trailer, including various theories of negligence.                  In

other words, the “use” exclusion should not apply because, but for

the negligent hiring by the defendant’s supervisor, as well as the

company’s negligent maintenance of the trailer, the accident would

not   have    occurred.     The   Mississippi       Supreme     Court   held   the

exclusion applicable. Id. at 16-17. Under its reasoning, the term

“use” applied to injuries that would not have occurred but for the

use of the truck, irrespective of other legitimate causes for the

injury.      Meyers stands for the proposition that the but-for cause

was essentially the same as the proximate cause of the injury, and

other causes would not make the exclusion inapplicable.

      Similarly, the 1999 decision in Jackson, 739 So. 2d 1031,

relied on by the district court, interpreted a liability policy to

provide   coverage    for   a    death    resulting    from     the   “ownership,

maintenance, or use” of a county vehicle:                     while driving his

vehicle, the decedent was killed on hitting dirt placed by a county

dump truck near the roadway.         The Mississippi Supreme Court held

the policy provided coverage because the “dangerous situation

causing injury is one which arose out of or had its source in, the

use or operation of the [county vehicle]”.              Id. at 1041 (quoting

Merchs. Co. v. Hartford Accident & Indem. Co., 188 So. 571, 572

(Miss.    1939)).      In   so    holding,    the     court    articulated     the

                                         15
appropriate test for determining when liability will be triggered

by “use” of an automobile:        “When a policy insures an automobile

for the ‘use’ of the automobile, the chain of causation between the

use of the automobile and the injury must be direct.            We will not

extend coverage if the use of the automobile is within the line of

causation, but is distinctly remote.”             Id. (internal citation

omitted;     emphasis   added).           Furthermore,   “the    chain   of

responsibility must be deemed to possess the requisite articulation

with the use or operation until broken by the intervention of some

event which has no direct or substantial relation to the use or

operation”.    Id. (quoting Hartford, 188 So. at 572).            In other

words, the injury must essentially be proximately caused by the use

of the vehicle.

     Under the Meyers and Jackson standards, the AXA policy does

not provide coverage.    First, although the use of the trailer may

have been a cause of Walker’s death, its use was not the direct

cause of the injuries. Indeed, Kinchen and Walker would have

suffered no injuries had they used the trailer without operating

the externally-attached generator.            Thus, the cause of their

injuries was the generator, not the trailer.

     Day’s above-discussed reliance on Mississippi Supreme Court

cases that liberally construed the term “use” in the context of the

UM Act, see Stevens, 345 So. 2d 1041; Harris, 573 So. 2d 646, is

misplaced.    The Mississippi Supreme Court has directed that “the

                                     16
language of the ... UM Act must be construed liberally to provide

coverage and strictly to avoid or preclude exceptions or exemptions

from coverage”.   Johnson v. Preferred Risk Auto. Ins. Co., 659 So.

2d 866, 871-72 (Miss. 1995) (quoting Aetna Cas. & Sur. Co. v.

Williams, 623 So. 2d 1005, 1008 (Miss. 1993)).         That liberal

construction is based on the remedial nature of the UM Act — namely

to provide the same protection for a person injured by an uninsured

motorist as if he had been injured by a motorist with a standard

liability policy.   See Medders v. U.S. Fid. & Guar. Co., 623 So. 2d

979, 991 (Miss. 1993).    Obviously, these policy concerns are not

present here.

                                III.

     For the foregoing reasons, the judgment is

                                                        AFFIRMED.

                                 17