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

                                                 FILED
                                                                            June 30, 2009

                                       No. 08-20288                    Charles R. Fulbruge III
                                                                               Clerk

ACCEPTANCE INDEMNITY INSURANCE COMPANY

                                                   Plaintiff-Appellee
v.

MELVIN ALFREDO MALTEZ; ASSOCIATED AUTOMOTIVE INC

                                                   Defendants-Appellants




                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:04-CV-2222


Before REAVLEY, BARKSDALE, and GARZA, Circuit Judges.
PER CURIAM:*
       In this declaratory-judgment action, involving the scope of a general-
liability insurance policy’s coverage, Melvin Maltez, and the insured, Associated
Automotive, Inc. (Automotive), appeal the judgment for the insurer, Acceptance
Indemnity Insurance Company (Acceptance). Solely at issue is whether the
policy issued by Acceptance to Automotive covered an on-the-job injury to
Maltez, an employee of Associated Automotive Salvage (Salvage), because, in an
underlying Texas state-court trial on Maltez’ negligence claim, Automotive and

       *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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.
                                    No. 08-20288

Salvage were held to be jointly and severally liable as a “single business
enterprise”. AFFIRMED.
                                          I.
         Automotive operates an automobile-repair shop in Houston, Texas. In
May 2003, its owners sold Automotive’s salvage operations to their son. He
operated that business as Salvage, renting a portion of Automotive’s premises
and sharing administrative operations with Automotive.
         Around the time of Automotive’s sale of its salvage operations to Salvage,
Automotive purchased a Commercial Auto Coverage Part-Garage Policy from
Acceptance, effective for one year, beginning 3 July 2003. That policy required
Acceptance, inter alia, to defend Automotive in any action involving a covered
claim.
         In August 2003, Maltez, as an employee of Salvage, was injured on the job
while attempting with a torch to remove part of a vehicle. In Texas state court,
Maltez sought recovery against both Salvage and Automotive.
         After Maltez filed his state-court action, Acceptance filed this federal
declaratory-judgment action, claiming it neither had to defend nor indemnify
Automotive, based on its assertion that Maltez’ claim fell outside the scope of the
policy’s coverage. The district court ruled that Acceptance had a duty to defend
Automotive in the underlying state-court action; on the other hand, the court
stayed ruling on the indemnity issue, pending resolution of that action.
         Maltez received a $150,000 judgment for his state-court negligence claim.
Concerning liability, the jury found that Automotive and Salvage formed a single
business enterprise; and, therefore, Automotive and Salvage were held jointly
and severally liable.
         Automotive requested that Acceptance appeal the judgment, contending
there was legally insufficient evidence to support the joint-enterprise finding.



                                          2
                                   No. 08-20288

Acceptance chose not to appeal; Automotive did not do so; and the state-court
decision became final.
      Therefore, Automotive sought indemnification from Acceptance.                In
response, in this declaratory-judgment action, Acceptance moved for summary
judgment, again contending it had no duty to indemnify Automotive.
      The general-liability policy provided that Acceptance would “pay all sums
an ‘insured’ legally must pay as damages because of ‘bodily injury’ . . . to which
this insurance applies caused by an ‘accident’ and resulting from ‘garage
operations’”.   Further, “insured” was defined as “you [the named insured,
Automotive], your partners . . . , members . . . , ‘employees’, directors or
shareholders but only while acting within the scope of their duties”. The policy
also had an “employee exclusion” provision, which denied coverage for injuries
sustained by “an ‘employee’ of the ‘insured’ arising out of and in the course of
employment by the ‘insured’”. Acceptance contended the employee exclusion
applied because Maltez was an employee of Automotive or, in the alternative, a
dual employee of both Automotive and Salvage.
      After considering this and several other summary-judgment motions, the
district court conducted a jury trial because the critical legal question–whether
Automotive’s liability for Maltez’ judgment through the single-business-
enterprise theory was covered by its insurance policy with Acceptance–turned
on unresolved fact issues. After the close of the evidence, the court submitted
three interrogatories to the jury: (1) “Was . . . Maltez an employee of
[Automotive] when he was injured . . . ?”; (2) “Did . . . Maltez’s injury . . . result
from ‘garage operations’ [as defined by the policy]?”; and, (3) “Did . . . Maltez’s
injury . . . result from the ‘garage operations’ of [Automotive]?”
      The jury found: (1) Maltez was not an employee of Automotive; (2) his
injury was a result of “garage operations”, as defined by the policy; and (3) his
injury was a result of Automotive’s garage operations. Post-trial, the district

                                          3
                                  No. 08-20288

court ordered additional briefing on two issues: whether the jury’s finding that
Maltez was injured while engaged in Automotive’s garage operations was
supported by the evidence; and, whether the federal-court jury verdict required
indemnification by Acceptance of the state-court judgment.
      In a 30 April 2008 opinion, the district court answered both questions in
the negative. It ruled: (1) there was no evidence from which a jury could find
that Maltez’ injuries resulted from Automotive’s garage operations; (2) the
policy, however, required only that injuries result from “garage operations”
generally, not Automotive’s specifically; and, (3) nonetheless, Acceptance was not
obligated to indemnify Automotive because the policy required that, in order to
trigger coverage, the named insured be directly liable for a potentially-covered
injury through its own acts or omissions.          The district court held that
indemnification based solely on the state court’s single-business-enterprise
finding (rather than negligence by Automotive) was against the language and
meaning of the insurance policy, and would both create perverse incentives and
contravene public policy. Accordingly, it held, as a matter of law, in favor of
Acceptance.
                                        II.
      For this declaratory-judgment action, for which jurisdiction is based on
diversity, Texas law applies. E.g., Canutillo Ind. Sch. Dist. v. Nat’l Union Fire
Ins. Co., 

, 700 (5th Cir. 1996). Solely at issue is whether Acceptance
is required to indemnify Automotive through Automotive’s having been held
liable in the underlying state-court action under the single-business-enterprise
theory. Along that line, Acceptance’s decision not to appeal the state-court
judgment does not come into play in this appeal. Defendants did not raise this
issue in district court; and, here, in their opening briefs, they mention it only in
passing, without specifically contending Acceptance owed Automotive this duty.
See, e.g., United States v. Griffith, 

, 610 (5th Cir. 2008) (noting that

                                         4
                                   No. 08-20288

“[i]t is a well-worn principle that the failure to raise an issue on appeal
constitutes waiver of that argument”). The post-oral-argument letter briefs
required by the panel do not alter this issue’s being waived for this appeal.
      The district court’s interpretation of the insurance policy is reviewed de
novo. E.g., Assurity Life Ins. Co. v. Grogan, 

, 745 (5th Cir. 2007).
Likewise, whether an insurance policy, as written, violates public policy is a
question of law, reviewed de novo. Fidelity & Deposit Co. of Md. v. Conner, 

, 1241 (5th Cir. 1992).
      Finally, public-policy considerations are entertained only after first
evaluating the policy’s language. The Texas Supreme Court has made clear that
“a court should not decide the question of public policy without first determining
the contractual rights of the parties under the policy”. Tex. Farmers Ins. Co. v.
Murphy, 

, 878 (Tex. 1999).
                                        A.
      Under Texas law, it is well settled that the general rules of contract
construction apply to the interpretation of insurance policies, e.g., Progressive
Cty. Mut. Ins. Co. v. Sink, 

, 551 (Tex. 2003), and that, when
construing a contract, a court’s primary goal is to give effect to the written
expression of the parties’ intent, Balandran v. Safeco Ins. Co. of Am., 

, 741 (Tex. 1998). “We must read all parts of the contract together, striving
to give meaning to every sentence, clause, and word”. 

omitted).
      If a contract–in this instance, the policy–can be given a definite or certain
meaning, it is unambiguous as a matter of law. If, however, the policy is subject
to more than one reasonable interpretation, it will be interpreted in the manner
that “most favors coverage” for the insured. 

(quoting
Grain Dealers Mut. Ins. Co. v. McKee, 

, 458 (Tex. 1997)). As
such, policy exclusions and limitations are strictly construed against the insurer.

                                        5
                                  No. 08-20288

. Along that line, for whether a claim against an
insured is covered under a policy, the insured has the burden of proving the
claim is covered; the insurer, of proving a policy exclusion constitutes an
avoidance of, or an affirmative defense to, coverage. 

Automotive’s (Defendants) position is straight-forward: under
the plain meaning of the policy’s language, the state-court judgment against
Automotive and Salvage and for Maltez is a covered claim; accordingly,
Acceptance is required to indemnify Automotive. Under the policy, as 

, Acceptance agreed to “pay all sums an ‘insured’ legally must pay as
damages because of bodily injury . . . to which this insurance applies caused by
an ‘accident’ and resulting from ‘garage operations’”.       Defendants claim:
Automotive is the “insured”; Maltez’ “bodily injury” was caused by an “accident”
resulting from “garage operations”; and, because Automotive was held jointly
and severally liable with Salvage in the state-court action, Automotive “legally
must pay” the damages. Moreover, Defendants maintain no policy exclusion
precludes coverage: the federal-court jury found that Maltez was not an
employee of the insured, Automotive; as such, the employee exclusion was not
implicated.
      At first blush, Defendants’ contentions are sound. The state trial court
found Automotive legally liable for Maltez’ judgment.       The policy requires
Acceptance to indemnify any covered claim Automotive “legally must pay as
damages”; therefore, from this perspective, Acceptance must indemnify
Automotive.
      The district court ruled, however, that the “legally must pay as damages”
language unambiguously referred to obligations that were assessed against
Automotive due to its own activities or omissions. That reading of the policy’s
text is questionable, but the effect is consistent with the view we take of the
public policy that is involved.

                                       6
                                  No. 08-20288

                                        B.
      As 

, once a court has interpreted the language of the contract,
it may then ask whether the contract, as written, offends Texas public policy.
Because of the nature of this particular issue–specifically, that Automotive was
held liable on the state-court judgment solely through the conduit of the now-
discredited single-business-enterprise theory, as discussed infra–requiring
Acceptance to indemnify Automotive would offend public policy.
      Absent express direction from the Texas Legislature, whether a promise
or agreement is unenforceable on public-policy grounds is determined by
weighing the interest in enforcing such agreements against the public-policy
interests opposing such enforcement. Fairfield Ins. Co. v. Stephens Martin
Paving, LP, 

, 663 (Tex. 2008); see also R ESTATEMENT (S ECOND) OF
C ONTRACTS, § 178(1) (1981) (“A promise or other term of an agreement is
unenforceable on grounds of public policy if legislation provides that it is
unenforceable or the interest in its enforcement is clearly outweighed in the
circumstances by a public policy against the enforcement of such terms.”). In
weighing the interest in enforcement, courts examine: “(a) the parties’ justified
expectations, (b) any forfeiture that would result if the enforcement were denied,
and (c) any special public interest in the enforcement of the particular term”.
R ESTATEMENT (S ECOND) OF C ONTRACTS, § 178(2) (1981). Alternatively, when
weighing whether a contract term violates public policy, courts examine, inter
alia: “(a) the strength of that policy as manifested by legislation or judicial
decisions, [and] (b) the likelihood that a refusal to enforce the term will further
that policy”. R ESTATEMENT (S ECOND) OF C ONTRACTS, § 178(3) (1981).
      Again, Automotive is seeking indemnity for Maltez’ judgment through
Automotive’s general liability policy issued by Acceptance; and, the only reason
Automotive is liable under the judgment is because of the single-business-
enterprise theory. There was no tortious conduct on its part. The issue, then,

                                        7
                                  No. 08-20288

is whether Texas public policy allows the “legally must pay as damages”
language to cover claims premised solely on the single-business-enterprise
theory, rather than any negligent activity on the part of the insured,
Automotive?
                                        1.
      This question, of course, necessitates examining the nature of the single
business enterprise. The doctrine is an “equitable veil piercing theor[y]”. N. Am.
Van Lines, Inc. v. Emmons, 

, 116, 120 (Tex. Ct. App. 2001). Unlike
other equitable corporate doctrines, however, such as “alter ego”, proof of fraud
is not required. 

Rather, a single business enterprise may be found
merely by showing that “corporations are not operated as separate entities but
rather integrate their resources to achieve a common business purpose”.
Paramount Petroleum Corp. v. Taylor Rental Ctr., 

, 536 (Tex. Ct.
App. 1986), abrogated by SSP Partners v. Gladstrong Invs. (USA) Corp., 

(Tex. 2008). When a single-business-enterprise finding is made,
“each constituent corporation may be held liable for debts incurred in pursuit of
that business purpose”. 

recently, although several intermediate Texas state appellate
courts had recognized the single business enterprise in one form or another, the
Texas Supreme Court had reserved ruling on whether corporations could be held
liable for others’ obligations just because they were found to be operating as this
type of joint entity. See Carlson Mfg., Inc. v. Smith, 

, 693 (Tex.
Ct. App. 2005); see also S. Union Co. v. City of Edinburg, 

, 87 (Tex.
2003) (“We need not decide today whether a theory of ‘single business enterprise’
is a necessary addition to Texas law regarding the theory of alter ego for
disregarding corporate structure and the theories of joint venture, joint
enterprise, or partnership for imposing joint and several liability.”).



                                        8
                                  No. 08-20288

      Subsequent to the judgment for this action, however, the Texas Supreme
Court made that decision in November 2008. Accordingly, although we must
still make an “Erie guess” for how the Texas Supreme Court would apply the
single-business-enterprise doctrine to the instant circumstances, this task is
obviously made much easier by that court’s very recent opinion disavowing
single-business-enterprise liability. See SSP Partners v. Gladstrong Invs. (USA)
Corp., 

(Tex. 2008).
      In SSP Partners, the Texas Supreme Court held that, for liability
purposes, the corporate fiction should be disregarded only “when the corporate
form has been used as part of a basically unfair device to achieve an inequitable
result”. 

In discrediting the single business enterprise as a form of
corporate veil-piercing, it held: “Abuse and injustice are not components of the
single business enterprise theory[,] . . . [which] applies to corporations that
engage in any sharing of names, offices, accounting, employees, services, and
finances”. 

noted it had “never held corporations liable for each
other’s obligations merely because of centralized control, mutual purposes, and
shared finances”, 

accordingly, the single-business-enterprise-liability
theory would “not support the imposition of one corporation’s obligations on
another”, 

      As Defendants’ note, pursuant to the not-appealed state-court judgment,
rendered and made final before the single-business-enterprise theory was
discredited, Automotive remains liable on the judgment, indemnification or not.
Nonetheless, we cannot agree with its contention that the Texas Supreme Court
would countenance insurance coverage premised solely on a theory it has now
thoroughly disavowed. When reviewing the above-described factors considered
in analyzing whether a contract violates public policy, our conclusion becomes
even more certain: that court’s decision in SSP Partners announced a clear
policy against imposing joint liability on corporations that merely have

                                        9
                                  No. 08-20288

“centralized control, mutual purposes, and shared finances”. 

Our
refusal to require Acceptance to indemnify Automotive for Maltez’ judgment
because Automotive shares the above-described relationship with Salvage will,
of course, harmonize with the goals of this policy.
                                        2.
      Even absent the Texas Supreme Court’s decision in SSP Partners, there
are several reasons why public policy would preclude requiring indemnification
based on this single-business-enterprise theory. Without the benefit of that
later-rendered decision, the district court provided an excellent analysis of the
problems associated with applying the single-business-enterprise theory in the
context of insurance coverage: (1) attempting to transform a sparingly
applied–and now defunct–equitable principle of corporate liability into an
obligation on the part of an insurance carrier raises serious questions regarding
an insurer’s assumption of risk; and (2) in this particular case, it effectively
shoehorned a worker’s compensation policy for Salvage into Automotive’s
general-liability insurance policy. See Acceptance Indem. Ins. Co. v. Melvin
Maltez, No. H-04-2222, at 31-33 (S.D. Tex. 30 April 2008). Under Texas law,
workers’ compensation is a strict statutory and regulatory regime; its
administration is “heavily imbued with public policy concerns”, see Lawrence v.
CDB Servs., Inc., 

, 553 (Tex. 2001), superseded by statute as stated
in Storage & Processors, Inc. v. Reyes, 

(Tex. 2004), and it was
expressly excluded from Automotive’s general-liability policy.
      Essentially for the reasons stated by the district court in its comprehensive
analysis on both of these points, we agree wholly with its conclusion that the
Defendants’ contentions are “an attempt to fit a square peg into a round hole”.
As stated, an insurer’s obligation to indemnify premised solely upon the now-
defunct single-business-enterprise theory would offend Texas public policy.



                                        10
                        No. 08-20288

                             III.
For the foregoing reasons, the judgment is AFFIRMED.




                             11