Court Opinion

ID: 28682
Source: CourtListenerOpinion
Date Created: 2010-04-25 09:26:23+00
Date Added: 2024-06-11T14:56:36.272928
License: Public Domain

UNITED STATES COURT OF APPEALS

                         FOR THE FIFTH CIRCUIT

                                No. 02-30230
                              Summary Calendar

            Millers Mutual Fire Insurance Company, Inc.,

                                                    Plaintiff-Appellant,

                                   VERSUS

                          Terral Seed, Inc.,

                                                     Defendant-Appellee.

            Appeal from the United States District Court
                For the Western District of Louisiana
                                 (01-CV-44)
                              August 19, 2002

Before DeMOSS, PARKER and DENNIS, Circuit Judges.

PER CURIAM:*

                                 BACKGROUND

      Terral   Seed,   Inc.   (“Terral”)    sells   various     agricultural

products,   including    seed,    fertilizer,    grain,   and   pesticides.

  *
   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opinion should not be published and is not precedent except under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.

                                    -1-
Terral is an authorized applicator of Fipronil/Icon. Fipronil/Icon

is applied to rice seed at the customer’s request.                      During the crop

year of 1999 and 2000 various rice and crawfish farmers purchased

rice seed from Terral which had been treated with Fipronil/Icon.

The treated rice seed was applied to rice/crawfish fields by a crop

duster.     The     treated      seed    caused      a    crawfish     mortality    which

resulted in damage to the crops.                     Several suits were brought

against Terral by different farmers.

     Millers Mutual Fire Insurance Company, Inc. (“Millers”) issued

an agribusiness insurance policy to Terral that was in force during

the time the damage occurred to the rice/crawfish crop. The policy

provided coverage for general commercial liability.                          Millers was

required to pay any sums which Terral was legally obligated to pay

due to property damage.           However, Millers denied coverage on the

basis that the insurance policy contained an exclusion for damage

caused by “seed.”          Millers filed an action seeking a declaratory

judgment that the policy excluded coverage.                       The district court

granted summary judgment in favor of Terral, finding that the

damage    was     caused    by    the    Fipronil/Icon          and    not    the   seed.

Furthermore, the court found that the language of the policy was

ambiguous and thus must be construed in favor of coverage. Millers

appeals.

                                        ANALYSIS

     We    have    jurisdiction         based   on       28   U.S.C.   §   1332.     When

                                          -2-
confronted with a diversity case arising under state law, we must

apply the law of that state.         Erie R.R. Co. v. Tompkins, 304 U.S.
64, 78 (1938).     We are emphatically not permitted to do merely what

we think best; we must do that which we think the [Louisiana]

Supreme Court would deem best. Nautilus Ins. Co. v. Zamora, 114
F.3d 536, 538 (5th Cir. 1997).          We review the district court's

interpretation of an insurance contract and its exclusions as a

question of law and, thus, is subject to de novo review. Lubbock

County Hosp. Dist. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa.,

143 F.3d 239, 242 (5th Cir. 1998).

     Louisiana law requires that interpretation of an insurance

policy be subject to the general rules of contract interpretation.

La. Ins. Guar. Ass’n v. Interstate Fire & Cas. Co., 630 So. 2d.

759, 763 (La. 1994).           Our role when interpreting an insurance

contract is to determine the common intent of the parties.            Id.;

see LA. CIV. CODE ANN. art. 2045 (West 2001).       “The parties' intent

as reflected by the words in the policy determine the extent of

coverage.”     Id.   “When the words of the contract are clear and

explicit     and   lead   to    no   absurd   consequences,   no   further

interpretation may be made in search of the parties' intent."          LA.

CIV. CODE ANN. art. 2046 (West 2001); see Amoco Prod. Co. v. Tex.

Meridian Res. Exploration Inc., 180 F.3d 664, 667 (5th Cir. 1999).

We construe the intent of the parties to an insurance contract to

be determined      “in accordance with the general, ordinary, plain,

                                     -3-
and proper meaning . . . unless [they] have     acquired a technical

meaning.”   Carbon v. Allstate Ins. Co., 719 So. 2d 437, 440 (La.

1998); see LA. CIV. CODE ANN. art. 2047 (West 2001).

     Exclusions from the policy must be clearly set forth and

unambiguous. When the language is clear and unambiguous it must be

enforced as written.     Reynolds v. Select Props. Ltd., 634 So. 2d
1180, 1183 (La. 1994).    See also Edwards v. Your Credit Inc., 148
F.3d 427, 444 (5th Cir. 1998).   When applying Louisiana law courts

should not “strain to find ambiguities, if, in so doing, they

defeat probable intentions of the parties.”     Sharp v. Fed. Sav. &

Loan Ins. Corp., 858 F.2d 1042, 1045 (5th Cir. 1988).   This remains

true even if the result is an apparently harsh consequence.      Id.

However, if the terms of the policy are ambiguous, they must be

construed against the drafter.   Id.   See also Meredith v. La. Fed’n

of Teachers, 209 F.3d 398, 407 (5th Cir. 2000).

     The relevant portion of the insurance policy provides:

     This insurance does not apply to “bodily injury” or
     “property damage” included in the “products-completed
     operations hazard” and arising out of any of “your
     products” shown in the Schedule.

   The Schedule contains the single word “SEED.”          No further

definition of the term is provided.

     The dispute centers on the meaning of the word “seed.”       We

must determine what the parties intended to exclude from coverage

by adding the word “seed” to the Schedule.   We find that when given

                                 -4-
its ordinary meaning the term “seed” is clear and unambiguous.

Using the ordinary meaning does not lead to absurd consequences

and, thus, our inquiry into the parties’ intent ceases.

      Terral argues that the damage to the crawfish was done only by

the Fipronil/Icon and that the rice seed had nothing to do with it.

Terral also asserts that this question creates an ambiguity within

the language of the policy.          Therefore, the seed exclusion would

not apply and must be enforced in favor of coverage.              We disagree.

“The fact that one party can, in hindsight, create a dispute about

the   meaning    of   a   contractual   provision    does   not    render   the

provision ambiguous.”       Lloyds of London v. Transcon. Gas Pipe Line

Corp., 101 F.3d 425, 429 (5th Cir. 1996).               We do not see any

ambiguity in the original contract. The alleged ambiguity has been

created with the aid of hindsight.

      Terral’s    argument    also   ignores   the   fact   that    it   was   a

Fipronil/Icon rice seed that was put into the field.                 It was a

single unit.      When the Fipronil/Icon treatment was applied, the

pesticide became part of the seed.          The treatment caused the rice

seed to become a different type of seed.              Nevertheless, it was

still a seed.     Before the treatment, it was an ordinary rice seed.

After the treatment, it was a Fipronil/Icon rice seed.              The damage

was done by a Fipronil/Icon rice seed.               Even after applying a

treatment to a seed it is still classified as a seed.

      Congress has followed a similar line of reasoning in the

                                      -5-
Federal Seed Act.     7 U.S.C. § 1551 et seq. (2002).   When dealing

with agriculture under Title 7, Congress has specifically devoted

Chapter 37 to seeds.      Id.    Within the broad category of seeds

Congress includes “treated” seeds. See § 1561(23). “The term

"treated" means given an application of a substance or subjected to

a process designed to reduce, control, or repel disease organisms,

insects or other pests which attack seeds or seedlings growing

therefrom.”   Id.   The fact that a treatment is applied to the seeds

to reduce or repel disease or pests does not prevent the seeds from

being considered seeds under the Federal Seed Act.      We agree with

the reasoning of Congress; a treated seed is still a seed.

     Moreover, the words of the contract are clear and explicit and

do not lead to any absurd consequences.       By including the term

“seed,” the parties intended to exclude all seed from coverage.

Any other reading would lead to an absurd result.    For example, if

we were to find that the exclusion included white seed, but not

brown seed, it would be an absurd conclusion because there is

nothing in the policy to indicate such an intent.       Likewise, to

find that the exclusion encompasses non-treated seed, but not

treated seed, would be absurd and go against the clear and explicit

language in the policy.         There is nothing in the language to

indicate an intent to exclude only certain types of seeds.       The

policy simply includes all “seed.”       Had the parties intended to

exclude only certain types of seed, the specific exclusions would

                                   -6-
have been enumerated in the policy.

     Terral suggests, if Millers had intended for “seed” to include

seed treated with a pesticide, it should have “said so clearly and

expressly.”     On the contrary, Millers did clearly and expressly

include all types of seed.          The exclusion does not attempt to

include some seeds while leaving others out, it simply says “seed.”

Under Terral’s theory, to achieve the result of excluding all seed,

Millers would have been required to list every imaginable variety

of seed.     For example, the policy would begin to look something

like this: Arugula Seed, Bean Seed, Beet Seed, Broccoli Seed,

Brussels Sprout Seed, Cabbage Seed, Cantaloupe Seed, Carrot Seed,

Cauliflower Seed, Corn Seed, Cucumber Seed, Eggplant Seed, Garden

Huckleberry Seed, Gourd Seed, Ground Cherry Seed, Kale Seed, Leek

Seed, Lettuce Seed, Okra Seed, Onion Seed, Pea Seed, Pepper Seed,

Radish Seed, Brown Rice Seed, White Rice Seed, Spinach Seed, Squash

Seed, Swede Turnip Seed (Rutabega), Swiss Chard Seed, Tomato Seed,

Tomatillo Seed, Turnip Seed, Watermelon Seed, Bird Seed, Tall

Fescue Grass Seed, Kentucky Bluegrass Seed, Perennial Ryegrass

Seed, Geranium Seed, Impatiens Seed, Marigold Seed, Pansy Seed,

Sunflower Seed, Sweet Pea Seed, Dill Seed, Hyssop Seed, Lavender

Seed, Lemon Seed, Oregano Seed, Parsley Seed, Peppermint Seed,

Rosemary Seed, Sage Seed, Thyme Seed.

     The list only begins to scratch the surface of the numerous

types   of   seeds   and   their   varieties.   The   list   would   become

extremely long and still run the risk of inadvertently omitting

                                     -7-
unusual seeds such as the Whipcord Cobra Lily Arisaema tortuosum

seed.1    Furthermore, this method would have created additional

confusion.    Instead, Millers chose, and Terral agreed to, the

simpler method of excluding “seed” from coverage.     We find this

simpler method perfectly acceptable. The use of the term “seed” to

include all seeds is clear and unambiguous.     It encompasses all

varieties, mixtures, groups, sizes, categories, and types of seed.

      Finally, the fact that the term “seed” was included in the

policy suggests an intent of the parties to exclude seed that had

a potential for causing harm to persons or property.       Such an

intent is demonstrated because there would be no reason to exclude

harmless seed from an insurance policy which covers damage to

persons or property.   We are left to conclude that the reason for

the exclusion was to limit Millers liability from damage caused by

harmful seeds such as those treated with dangerous chemicals.

                            CONCLUSION

      We cannot find any ambiguity within the language of the

policy.   The word “seed” is not susceptible to greater than one

  1
     An “unusual houseplant or conversation plant from the
Himalayas. The thick 4' tall fleshy petiole (stalk) emerges in
early June, adorned by two tropical looking palmate green leaves
near the top. As the leaves unfurl, the pitcher that tops the stem
opens to reveal a green jack-in-the-pulpit flower, but with a whip-
like tongue that extends from the mouth of the flower upwards to 12
or more inches.”     http://www.seedman.com/limited.htm (July 12,
2002).    See also      http://www.npr.org/programs/talkingplants/
profiles/arisaema.html (July 12, 2002).

                                -8-
reasonable interpretation.    It is just what it says; “seed.”          The

intent of the parties at the time of contracting was to exclude all

“seed” from     coverage.   Because    “seed”   was   excluded   from   the

insurance policy, Millers has no liability for the damage caused by

the Fipronil/Icon rice seed.    Finding no ambiguity, the insurance

policy   must be enforced as written.      We reverse the decision of

the district court and remand for proceeding not inconsistent with

this opinion.

     JUDGMENT REVERSED and REMANDED.

                                 -9-