Filed: Oct. 01, 1997
Latest Update: Mar. 02, 2020
Summary: REVISED United States Court of Appeals, Fifth Circuit. No. 97-10025. JOHN DEERE INSURANCE COMPANY, Plaintiff-Counter Defendant- Appellee, v. TRUCKIN' U.S.A., et al., Defendants, Transport Insurance Company, Defendant-Counter Claimant- Appellant. Sept. 19, 1997. Appeal from the United States District Court for the Northern District of Texas. Before KING, DUHÉ and WIENER, Circuit Judges. DUHÉ, Circuit Judge: Transport Insurance Company appeals the district court's grant of John Deere Insurance Com
Summary: REVISED United States Court of Appeals, Fifth Circuit. No. 97-10025. JOHN DEERE INSURANCE COMPANY, Plaintiff-Counter Defendant- Appellee, v. TRUCKIN' U.S.A., et al., Defendants, Transport Insurance Company, Defendant-Counter Claimant- Appellant. Sept. 19, 1997. Appeal from the United States District Court for the Northern District of Texas. Before KING, DUHÉ and WIENER, Circuit Judges. DUHÉ, Circuit Judge: Transport Insurance Company appeals the district court's grant of John Deere Insurance Comp..
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REVISED
United States Court of Appeals,
Fifth Circuit.
No. 97-10025.
JOHN DEERE INSURANCE COMPANY, Plaintiff-Counter Defendant-
Appellee,
v.
TRUCKIN' U.S.A., et al., Defendants,
Transport Insurance Company, Defendant-Counter Claimant-
Appellant.
Sept. 19, 1997.
Appeal from the United States District Court for the Northern
District of Texas.
Before KING, DUHÉ and WIENER, Circuit Judges.
DUHÉ, Circuit Judge:
Transport Insurance Company appeals the district court's grant
of John Deere Insurance Company's motion for summary judgment on
the issue whether John Deere had a duty under its liability
insurance policy to defend, indemnify or reimburse either Transport
or Transport's insured, Copp Trucking. Transport also appeals the
district court's denial of its own motion for summary judgment on
the same issues. For the reasons that follow, we affirm.
I
This appeal arises out of a traffic accident involving a
tractor-trailer rig and an automobile occupied by the Kurocik
family. Mr. and Mrs. Kurocik died, and their heirs ("plaintiffs")
sued, inter alia, Mr. Tompkins, the driver of the rig; his
1
employer, Harold Suits, individually and d/b/a Truckin' U.S.A.;
Ronald Schmoe, Truckin' U.S.A.'s other principal owner; and Copp
Trucking, Inc., the company whose name appeared on the tractor rig.
Truckin' USA has a motor carrier insurance policy ("Policy") with
Appellee John Deere Insurance Co. ("Deere"). Copp Trucking is
insured by Appellant Transport Insurance Company ("Transport").
Transport settled all claims asserted by the Kurocik heirs
against both its insured, Copp Trucking, and Tompkins (but only to
the extent Tompkins was considered an employee of Copp Trucking)
for $600,000. Thereafter, the Kurocik heirs amended their petition
to drop Copp Trucking as a defendant and to allege that Tompkins
was an employee of Suits, Schmoe, and Truckin' U.S.A. and that
there was a "working agreement" between those three and Copp
Trucking.
Transport demanded that Deere reimburse it for the $600,000
settlement on Copp Trucking's behalf, alleging that because Copp
Trucking was an insured under the Policy, Deere therefore had a
duty to defend and indemnify Copp and a concomitant duty to
reimburse Transport for the settlement. Deere brought this action
seeking a declaratory judgment providing that it had no duty to
defend, indemnify, or reimburse either Copp Trucking or Transport
because (1) the rig involved in the accident was not a "covered
auto" under its Policy; and (2) Copp Trucking was not an "insured"
under its Policy. Transport counterclaimed for a declaratory
judgment providing that the Deere Policy was the primary, or at
least co-primary, policy and that Deere was therefore obligated to
2
(1) defend Copp Trucking in the Kurocik lawsuit; and (2) indemnify
or reimburse Transport for amounts paid in settlement on Copp
Trucking's behalf.
Both parties moved for summary judgment. The district court
granted Deere's motion, denied Transport's motion, and dismissed
Transport's counterclaim with prejudice. Transport now appeals.
II
Transport contends first that the district court violated the
"complaint allegation rule" by considering evidence extrinsic to
the pleadings in determining whether Deere had an obligation under
the Policy to defend or indemnify either Copp Trucking or
Transport. Second, Transport argues that the district court erred
in determining the tractor-trailer rig was not a "covered auto"
under the Policy. Third, Transport maintains that the district
court erred in holding that neither Copp Trucking nor Transport
qualified as "insureds" under the Policy. Finally, Transport
contends the district court erred in holding that the MCS-90
endorsement in the Policy did not impose on Deere a duty to
indemnify or reimburse Copp Trucking or Transport.
This Court reviews a grant of summary judgment de novo,
applying the same standard as that applied by the district court.
See Floors Unlimited, Inc. v. Fieldcrest Cannon, Inc., 55 F.3d 181,
183-84 (5th Cir.1995).
The "complaint allegation rule," under Texas law, requires
that an insurer's duty to defend be determined solely from the face
of the plaintiff's complaint in the underlying action, without
3
reference to facts outside the four corners of the complaint. See
Rhodes v. Chicago Ins. Co., 719 F.2d 116, 119 (5th Cir.1983). If
the underlying complaint, however, does not allege facts, if taken
as true, sufficient to state a cause of action under the policy,
evidence adduced in a declaratory judgment action may also be
considered. See State Farm Fire & Cas. Co. v. Wade,
827 S.W.2d
448, 452 (Tex.App.1992, writ denied); Cook v. Ohio Cas. Ins. Co.,
418 S.W.2d 712, 714-15 (Tex.Civ.App.1967, no writ). The "complaint
allegation rule" does not apply here because the plaintiffs failed
to allege facts in their underlying petition sufficient, even if
true, to allow a determination of coverage.
The Policy provides that Deere:
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."
Thus, to state a cause of action under the Policy, the plaintiffs
must have alleged, inter alia, that the motor vehicle involved in
the accident was one covered under the Policy. The plaintiffs'
fifth amended complaint alleges that:
said tractor/trailer rig had been furnished to Defendant
Tompkins by Defendant [sic] by either Harold Suits,
individually[,] and Ronald Schmoe, individually or doing
business as Trucking [sic] U.S.A. The defendants, Harold Suits
and Ronald Schmoe, had a working agreement with the Copp
Trucking Co., Inc.
Allegations that the rig had been "furnished" to the defendants or
that the defendants had a "working agreement" with Copp Trucking
are insufficient to determine coverage under the Policy, even if
4
those allegations are taken as true.1 The district court was
therefore correct both in holding the "complaint allegation rule"
inapplicable and in considering evidence extrinsic to the pleadings
to determine whether John Deere had a duty to defend or indemnify
under the Policy.
III
Transport contends the district court erred in holding the rig
involved in the accident was not a "covered auto" under the Policy.
Transport argues that the rig was "covered" under various
provisions of the Policy. A "covered auto" is one that, inter
alia, is (1) specifically scheduled on the Policy;2 (2) a
"temporary substitute auto"; (3) an "after-acquired auto"; or (4)
an "undescribed trailer."
A
Under the Policy, a "substitute auto" is:
Any "auto" [that Truckin' U.S.A.] do[es] not own while used
with the permission of its owner as a temporary substitute for
a covered "auto" that is out of service because of [various
reasons].
The district court, relying on extrinsic evidence, found that
Truckin' U.S.A. owned the tractor in question and that therefore
1
The plaintiffs alleged in their fourth amended complaint that
Copp Trucking owned the tractor. Even if we assume that this
allegation would have been sufficient to create a duty in Deere to
defend Copp Trucking, Transport cannot rely on it now. Under Texas
law, the court must refer to the latest of the amended pleadings in
determining an insurer's duty to defend. Rhodes, 719 F.2d at 119
("[T]he duty to defend is determined by examining the latest, and
only the latest, amended pleadings.").
2
It is undisputed that the rig was not one of the vehicles
"scheduled" under the Policy.
5
the tractor could not be a "substitute auto" under the Policy.3
The only evidence offered by Transport to dispute Truckin'
U.S.A.'s ownership of the tractor was a portion of Harold Suits's
deposition testimony in the underlying suit. Suits testified that
Tompkins was "driving a Copp Trucking truck. I didn't have another
truck of mine that said Truckin' U.S.A. on it to haul that."
Suits's earlier deposition testimony indicated, however, that Suits
had a practice of purchasing Copp Trucking rigs for Truckin' U.S.A.
and leaving Copp's name on them until the end of the year.
The testimony on which Transport relies establishes nothing
more than that the rig Tompkins drove was labeled "Copp Trucking"
and has little or no relevance to ownership of the tractor.
Transport's evidence was therefore insufficient to create a genuine
issue of fact as to ownership of the tractor. The district court
was therefore correct in holding that the rig was not a "substitute
auto" under the Policy.
B
An "after-acquired auto" under the Policy is one that
replaces an auto Truckin' U.S.A. previously owned, provided that
Truckin' U.S.A. informs Deere within 30 days after acquisition that
it wants coverage for the new vehicle. There was no evidence in
the summary judgment record that Truckin' U.S.A. provided such
notice to Deere as to the rig in question. Therefore, the district
3
The court relied both on a certified copy of the application
for certificate of title for the Peterbilt tractor, submitted by
Deere to the Kansas Division of Vehicles, and on Harold Suits's
interrogatory response.
6
court was correct in holding the rig was not an "after-acquired
auto" under the Policy.
C
Under the Policy, the schedule of covered autos includes "any
undescribed trailer, while in the care, custody, and control of the
insured." Deere's Truckers Coverage Form, however, indicates that
coverage extends:
Only [to] those "autos" described in ITEM THREE of the
Declarations for which a premium charge is shown (and for
Liability Coverage any "trailers" [Truckin' U.S.A.] do[es]n't
own while attached to any power unit described in ITEM THREE
).
(emphasis added). The district court found that the second
provision acted as a limitation on the first: i.e., the Policy
provides coverage for "undescribed trailers" only if they are
attached to a scheduled power unit. Since it was undisputed that
the trailer here was not attached to a scheduled unit, the court
determined that no duty to defend or indemnify arose on Deere's
part under the "undescribed trailer" provision of the Policy.
Transport contends this was error, arguing that the language in the
schedule provides an independent basis for coverage under the
Policy for "undescribed trailers, while in the care, custody, and
control of the insured."
We need not reach the merits of Transport's claim. As the
district court pointed out in a footnote to its Memorandum Opinion
and Order, assuming, arguendo, that the Policy provides coverage
under the "undescribed trailer" provision, Transport cannot benefit
from such coverage. Transport and Copp Trucking would still not
7
qualify as "insureds" under the Policy. See discussion infra Part
IV. A finding that the trailer here was covered as an "undescribed
trailer" would impose on Deere, arguably, only a duty to defend and
indemnify its insured, Truckin' U.S.A., and not Copp Trucking or
Transport. Since neither Copp Trucking nor Transport can hope to
qualify as "insureds" under the Policy by virtue of the
"undescribed trailer" provision, we need not address Transport's
arguments on that point.
IV
Transport contends the district court erred by holding that
Copp Trucking was not an "insured" under the Policy. An "insured"
under the Policy includes, inter alia,:
Anyone liable for the conduct of an "insured" described above
but only to the extent of that liability.
(emphasis added). Transport seeks to bring Copp Trucking (and thus
itself, as Copp's insurer) under this class of "insureds" by making
the following argument: Copp Trucking was sued for damages arising
out of the actions of Tompkins, a Truckin' U.S.A. employee;
Tompkins' actions in the course and scope of his employment are
imputed to Truckin' U.S.A. under agency principles; Transport paid
$600,000 on Copp Trucking's behalf to settle the claims; thus,
Copp Trucking's (and, by the same token, Transport's) "liability"
is due to the actions of Truckin' U.S.A.; Copp Trucking is
therefore an "insured" under the Policy.4
4
Transport also argues that Copp Trucking is an "insured"
under the Policy because it is the "owner" of a "covered auto."
This argument fails because the district court correctly found that
Truckin' U.S.A., and not Copp Trucking, was the owner of the
8
This argument fails because, contrary to Transport's
assertions, neither Copp Trucking nor Transport was legally
"liable" for the conduct of Truckin' U.S.A., its employees, or any
other "insureds" under the Policy.5 Copp Trucking and Transport
elected to settle the Kurocik suit on Copp's behalf and on behalf
of Tompkins (to the extent Tompkins was considered an employee of
Copp Trucking); Transport, as Copp Trucking's insurer, funded this
settlement. Neither choosing to settle nor funding that
settlement, however, made Copp Trucking or Transport "liable" for
the conduct of Truckin' U.S.A. or its employee, Tompkins, within
the meaning of the Policy. The district court was therefore
correct in holding that neither Copp Trucking nor Transport was an
"insured" under the Policy.
V
Transport contends that the MCS-90 endorsement in the Policy
requires Deere to indemnify Transport for the amounts paid in
settlement of claims against Copp Trucking in the Kurocik suit.
Deere included the MCS-90 endorsement in the Policy to comply with
tractor. See supra Part III.A.
5
Transport attempts to rely on allegations in the Kurocik
plaintiffs' fourth amended complaint that Tompkins was actually an
employee of both Truckin' U.S.A. and Copp Trucking. Thus, Copp
Trucking would qualify as an "insured" because it would be liable,
under principles of agency law, for the conduct of Tompkins, an
"insured" under the Policy. Transport cannot rely on these
allegations, however. The court must consider the latest amended
pleading in determining an insurer's duty to defend or indemnify.
Rhodes, 719 F.2d at 119. The Kurociks' fifth amended complaint
(the latest) does not allege that Tompkins was an employee of Copp
Trucking.
9
the financial responsibility requirements of 49 U.S.C. § 10927,6
which codifies the Motor Carrier Act of 1980. The relevant portion
of the MCS-90 endorsement states:
In consideration of the premium stated in the policy to which
this endorsement is attached, the insurer (the company) agrees
to pay within the limits of liability described herein, any
final judgment recovered against the insured for public
liability resulting from negligence in the operation,
maintenance or use of motor vehicles ... regardless of whether
or not each motor vehicle is described in the policy and
whether or not such negligence occurs on any route or in any
territory to be served by the insured or elsewhere.
(emphasis added). See 49 C.F.R. § 387.7 (1995). Because Copp
Trucking is not an "insured" under the Policy, the MCS-90
endorsement provides no basis for relief. Where an insurance
policy does not provide coverage for non-listed vehicles except to
third-party members of the public through operation of the
endorsement, the policy provides no coverage for purposes of
disputes among insurers over ultimate liability. See Canal Ins.
Co. v. First General Ins. Co., 889 F.2d 604, 611 (5th Cir.1989).
VI
For the foregoing reasons, the decision of the district court
is
AFFIRMED.
6
Provisions similar to those contained in § 10927 are now
contained in 49 U.S.C. § 13906 (1997).
10
