Reliance National Insurance v. Estate of Tomlinson

                     UNITED STATES COURT OF APPEALS

                            FOR THE FIFTH CIRCUIT



                                    No. 98-60486
                                  Summary Calendar



RELIANCE NATIONAL INSURANCE COMPANY,
a corporation,
                                   Plaintiff-Counter Defendant-Appellee,
                            versus

ESTATE OF MICHAEL D. TOMLINSON, Deceased, Et Al.,
                                                                          Defendants,
LELIA BRANNING TUCKER, the mother of April Tenille
Branning on behalf of Lester Branning, father of April Tenille
Branning and Scott Branning, brother of April Tenille Branning
and heirs and wrongful death beneficiaries of April Tenille
Branning; LESTER BRANNING; SCOTT BRANNING;
MICHAEL D. RIVES,
                                              Defendants-Counter Claimants-Appellants.

                                  *   *     *      *   *

LELIA BRANNING TUCKER, the mother of April Tenille
Branning on behalf of Lester Branning, father of April Tenille
Branning and Scott Branning, brother of April Tenille Branning
and heirs and wrongful death beneficiaries of April Tenille
Branning; MICHAEL D. RIVES,
                                                                           Plaintiffs,
                                          versus

ESTATE OF MICHAEL D. TOMLINSON; ET AL.,
                                                                          Defendants.
                    Appeals from the United States District Court
                      for the Southern District of Mississippi
                                  April 20, 1999
Before POLITZ, WIENER, and DENNIS, Circuit Judges.

POLITZ, Circuit Judge:

      Michael Rives and the survivors of April Tenille Branning appeal an adverse

summary judgment as relates to certain insurance coverage. For the reasons

assigned, we affirm.

                                BACKGROUND

      This litigation arises out of a plane crash that occurred after Michael

Tomlinson had been drinking alcohol at a local tavern and invited some of the

tavern’s patrons for a late night airplane ride. From the tavern, Tomlinson and the

others traveled to the John Bell Williams Airport, which he managed. Tragically,

the plane piloted by Tomlinson crashed, killing Tomlinson and April Branning, and

injuring Michael Rives and Monica Hancock.

      Proceeding in state court, appellants sued the Estate of Michael Tomlinson,

Tomlinson Avionics, Inc. (Airport Manager by contract), and Tomlinson Avionics

of Mississippi, Inc. (Agent of Airport Manager by contract) on the basis that

Tomlinson acted within the scope of his employment and that the Tomlinson

entities were responsible for their damages.         Appellants also sued Hinds

                                         2
Community College on the basis that it was responsible for Tomlinson’s acts as

leaseholder of the airport. The state court entered summary judgment for Hinds.

      The Tomlinson entities were covered by several insurance policies, including

policies issued by Titan Insurance Company, Ranger Insurance Company, and

appellee, Reliance National Insurance Company. Appellants settled with Titan.

In appellants’ action against Ranger, the court à quo entered summary judgment for

Ranger based on an “owned aircraft” exclusion.1 Appellants and the Tomlinson

entities entered into consent judgments by which appellants could recover only

against insurance proceeds.

      Reliance petitioned for a declaratory judgment declaring that the insurance

policy it issued to Hinds did not cover Tomlinson, Tomlinson Avionics, Inc., or

Tomlinson Avionics of Mississippi, Inc.2 Reliance moved for a summary judgment

on the grounds that Tomlinson acted outside the scope of his employment and that

a provision of the policy excluded coverage. The district court determined that the

policy issued by Reliance did not cover Tomlinson or the Tomlinson entities

because of the exclusion, and it entered summary judgment for Reliance.


      1
          Ranger Ins. Co. v. Branning, 984 F. Supp. 466 (S.D. Miss. 1997).
      2
       The appellants also filed Writs of Garnishment in state court based on the consent
judgments. Reliance removed these actions which were consolidated with the declaratory
judgment action.
                                            3
Appellants challenge the grant of summary judgment.

                                         ANALYSIS

       We review grants of summary judgment de novo.3 The Federal Rules of

Civil Procedure provide that summary judgment shall be entered when there exists

no genuine issue as to any material fact and that the moving party is entitled to

judgment as a matter of law.4 We must consider the evidence, and reasonable

inferences drawn therefrom, in the light most favorable to the nonmoving party.5

       Because our jurisdiction is based upon diversity, we apply Mississippi law

in interpreting the insurance policies.6 First, where an insurance policy is plain and

unambiguous, the court must construe the instrument exactly as written. Second,

the court should read the policy as a whole, giving effect to all provisions. Third,

the court must interpret ambiguities against the insurer. Fourth, the court must

interpret exclusion clauses narrowly.7



       3
           Centennial Ins. Co. v. Ryder Truck Rental, Inc., 149 F.3d 378 (5th Cir. 1998).
       4
           FED. R. CIV. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317 (1986).
       5
           Deus v. Allstate Ins. Co., 15 F.3d 506 (5th Cir. 1994).
       6
       The parties agree that the substantive law of Mississippi governs our decision. Erie
R.R. Co. v. Tomkins, 304 U.S. 64 (1938).
       7
         Centennial Ins. Co., 149 F.3d at 382-83 (listing these and other rules of
interpretation).
                                               4
                            Owned Aircraft Exclusion

      Appellants first contend that the district court erred in determining that an

exclusion clause relieved Reliance of its obligations under the policy. Hinds

purchased a Comprehensive General Liability policy to insure itself against

particular liabilities that it might encounter as leaseholder of the airport. The

policy excluded any bodily injury arising out of ownership, maintenance, operation,

use, loading, or unloading of: (1) any aircraft owned or operated by or rented or

loaned to the named insured, or (2) any other aircraft operated by any person in the

course of his employment by the named insured.

      Because Hinds did not intend to serve as manager of the airport, it purchased

a rider that provided limited coverage for any airport manager that it appointed.

Provision 3 of the Special Airport Provisions provides that the “exclusion in the

policy with respect to aircraft applies only to aircraft owned by or rented or loaned

to the insured or in flight by or for the account of the insured.” The district court

determined that Reliance was not obligated under the policy to provide coverage

because Tomlinson Avionics, Inc. owned the plane that crashed and Provision 3

excluded from coverage the injuries suffered by appellants.

      Appellants suggest that the “insured” described in Provision 3 was Hinds,

and that this exclusion should not apply to the Tomlinson entities. We reject this

                                         5
suggestion. Provision 1 of the Special Airport Provisions extends the coverage of

“Persons Insured” to include “any airport manager of the named insured.” 8 The

policy defined “insured” as “any person or organization qualifying as an insured

in the ‘Persons insured’ provision of the applicable insurance coverage. . . .” We

conclude that the Tomlinson entities are “Persons insured.”

       We find the text of Provision 3, the owned aircraft exclusion, unambiguous,

and conclude that it relieves Reliance of any obligation to provide coverage.

Tomlinson Avionics, Inc. owned the aircraft in question; Tomlinson Avionics, Inc.

loaned the aircraft to Tomlinson Avionics of Mississippi, Inc.; Tomlinson himself

flew the aircraft in question. The owned aircraft exclusion applies in each of these

instances and relieves Reliance of its obligations under the policy.

       Even assuming that this one isolated owned aircraft provision is

unambiguous, appellants insist that there is an ambiguity with respect to coverage

when the owned aircraft provision is read in light of the next provision, and, the

argument continues, the rules of insurance policy interpretation require that

ambiguities be interpreted to favor coverage.             According to appellants, the

ambiguity arises because after the owned aircraft provision that excludes coverage,

       8
        The policy extended coverage to any airport manager “acting within the scope of his
duties.” The district court assumed that Tomlinson was acting within the scope of his duties.
For purposes of this decision we make the same assumption.
                                             6
Provision 4(b) limits “any loss arising out of the ownership, maintenance or use of

aircraft . . . with respect to which the insured has other valid and collectible

insurance, whether primary or excess.”       Appellants contend that this provision

limiting coverage would be superfluous if the owned aircraft provision actually

excluded coverage entirely. Therefore, appellants propose, this contradiction

creates an ambiguity which obligates Reliance to provide coverage.

      The owned aircraft provision, however, clearly excludes from coverage the

injuries of which appellants complain. Mississippi law requires us to give effect

to that unambiguous exclusion.       Appellants correctly note that the rules of

insurance policy interpretation require us to give meaning to every provision.

Exclusion from coverage is consistent with both Provision 3 and Provision 4(b);

appellants’ position runs contrary to Provision 3.

                          Alternate Theories of Liability

      Appellants maintain that regardless of the court’s conclusion as to the owned

aircraft exclusion, the alternate causes of action that they asserted, which can be

cabined within the theories of negligent entrustment and negligent supervision, do

not implicate that exclusion. Appellants contend that these claims are separate and

distinct from the ownership or use of an aircraft, and thus fall outside of the reach

of the exclusion and give rise to a duty to defend. Therefore, appellants conclude,

                                         7
the district court erred in entering summary judgment for Reliance.

      Our research discloses no dispositive decisions by the Mississippi Supreme

Court. Accordingly, we must predict how that court would rule. In making this

prediction, we should look to: (1) the decisions of the Mississippi Supreme Court

in analogous cases, (2) the rationales and analyses underlying those decisions, (3)

dicta by the Mississippi Supreme Court, (4) lower state court decisions, (5) the

general rule on the question, (6) decisions by the courts of other states when

Mississippi courts have turned to them in formulating substantive law, and (7) other

available sources, such as treatises and legal commentaries.9 Absent evidence to

the contrary, we presume that the Mississippi Supreme Court would adopt the

majority rule.10

      Focusing first on negligent entrustment, a majority of jurisdictions addressing

the issue have concluded that if an owned aircraft exclusion relieves an insurer of

its obligation when the injury arises out of the ownership, operation, or use of the

aircraft, then the exclusion similarly relieves the insurer of any obligation arising




      9
          Centennial Ins. Co., 149 F.3d at 382.
      10
           Id.
                                            8
out of negligent entrustment.11 The majority rule recognizes that liability for the

negligent entrustment of an aircraft is derivative of a negligent use of that aircraft.12

Because an owned aircraft provision excludes coverage for negligent use, the

provision also excludes coverage for negligent entrustment. As to automobiles, the

established law of Mississippi is that there can be no liability for negligent

entrustment without a subsequent negligent use of that automobile.13 We believe

that the Mississippi Supreme Court would extend this rule to aircraft, and we

presume that the court would follow the majority rule regarding owned aircraft

provisions. It follows that because that provision relieves Reliance of any duty to

defend against the negligent use of an aircraft, Reliance is also relieved of any



      11
          Allstate Ins. Co. v. Ellison, 757 F.2d 1042 (9th Cir. 1985); Fox Hills Country
Club, Inc. v. American Ins. Co., 570 S.W.2d 275 (Ark. 1978); State Farm Fire Cas. Co.
v. Keenan, 216 Cal. Rptr. 318 (Cal. Ct. App. 1985); Great Am. Indem. Co. v. City of
Corpus Christi, 192 S.W.2d 917 (Tex. Civ. App.–San Antonio 1945, writ ref’d n.r.e.)
(finding coverage because of an “exception to the exception”); Transport Indem. Co. v.
Sky-Kraft, Inc., 740 P.2d 319 (Wash. Ct. App. 1987).
       Where decisions are lacking, courts should draw from other fields of insurance law.
7A JOHN ALAN APPLEMAN, INSURANCE LAW AND PRACTICE, §4501.01, at 238 (1979). The
majority rule is the same when the issue concerns “owned automobile” exclusions. Love
v. McDonough, 758 F. Supp. 397, 400-02 (W.D. Miss.) (collecting cases), aff’d mem., 947
F.2d 1486 (5th Cir. 1991).
      12
        Fox Hills Country Club, Inc., 570 S.W.2d at 277 (“arising out of”); State Farm
Fire Cas. Co., 216 Cal. Rptr. at 330 (“solely and indivisibly related”); Transport Indem.
Co., 740 P.2d at 327 (“indivisibly related”).
      13
           Somerville v. Keeler, 145 So. 721 (Miss. 1933).
                                            9
obligation to defend against the alleged negligent entrustment of the aircraft.

       The majority rule concerning negligent supervision is the same as that

concerning negligent entrustment: Negligent supervision claims are excluded from

coverage by owned aircraft provisions when the acts alleged could not have

resulted in injury but for the use of the aircraft.14 Negligent supervision is so

intertwined with the use of the aircraft that when usage is excluded from coverage,

so too are claims of negligent supervision.15 We believe that the Mississippi

Supreme Court would rule consistent with the majority of jurisdictions if it were

confronted with this issue. Therefore, we conclude that Reliance was not obligated

to provide coverage under any of appellants’ theories of liability.

       For these reasons, the judgment appealed is AFFIRMED.


       14
         Littrall v. Indemnity Ins. Co. of N. Am., 300 F.2d 340 (7th Cir. 1962) (negligent
direction); State Farm Fire Cas. Co., 216 Cal. Rptr. at 330-32 (negligent instruction);
Hartford Fire Ins. Co. v. Superior Ct. of Cal., 191 Cal. Rptr. 37 (Cal. Ct. App. 1983)
(negligent planning); Safeco Ins. Co. of Am. v. Husker Aviation, Inc., 317 N.W.2d 745
(Neb. 1982) (negligent training & supervision); Wilkins v. American Motorists Ins. Co.,
388 S.E.2d 191 (N.C. Ct. App. 1990) (negligent instruction); Transport Indem. Co., 740
P.2d at 327 (negligent instruction); see also Love, 758 F. Supp. at 402 (“Application of the
exclusion is not dependent on the theory of liability asserted.”).
       15
          E.g., State Farm Fire Cas. Co., 216 Cal. Rptr. at 332 (negligent instruction
“depend[s] on . . . use and operation of an aircraft”); Safeco Ins. Co. of Am., 317 N.W.2d
at 748 (negligent training “directly related to the operation” of the aircraft). Our conclusion
is consistent with that of the opinion by the district court in a case that originates from the
same incident as this one. Ranger Ins. Co., 984 F. Supp. at 469 (excluding from coverage
“each and every claim . . . asserted [because each had] as its aim the recovery of damages
for bodily injury which arose directly and solely from Tomlinson’s use of the aircraft”).
                                             10