UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-20106
PARKANS INTERNATIONAL LLC,
Plaintiff-Counter Defendant-Appellee,
VERSUS
ZURICH INSURANCE CO.
Defendant-Counter Claimant-Appellant.
Appeal from the United States District Court
for the Southern District of Texas
August 5, 2002
Before DUHÉ, BARKSDALE, and DENNIS, Circuit Judges.
DUHÉ, Circuit Judge:
Defendant Zurich Insurance Company issued plaintiff Parkans
International, L.L.C., a Commercial Package Policy of primary
insurance including crime coverage, and an excess Custom Cover
Policy (“CCP”). After suffering a loss caused by the fraud of a
third party, Parkans submitted a claim under the crime coverage of
the primary policy. Zurich denied coverage, and Parkans sued under
both the primary policy and the CCP seeking coverage and damages.
After a jury trial, the district court entered judgment for
Parkans. For the following reasons, we reverse and render.
I. BACKGROUND AND PROCEDURAL HISTORY
Parkans agreed to purchase scrap metal from Adusa Export,
promising payment with an irrevocable letter of credit to be issued
by a bank of Parkans’ choice and confirmed by a bank of Adusa’s
choice. Parkans chose Marine Midland which issued the letter of
credit. Payment would occur at sight upon presentation of certain
non-negotiable documents. Using fraudulent documents, Adusa
obtained payment, despite never having shipped the scrap metal.
Wells Fargo (the confirming bank) paid Adusa under the letter of
credit, and Marine Midland withdrew funds from Parkans’ account to
pay Wells Fargo. Parkans, having sustained almost a million-dollar
loss because of the fraud, notified its insurance broker, who said
the loss was not covered. The perpetrators remain at large.
After filing a claim for indemnity under the primary policy,
Parkans brought this action alleging that Zurich breached its
contracts by failing to indemnify Parkans under both the primary
policy and the CCP. Parkans also asked for tort damages against
Zurich, alleging bad faith and violations of the Texas Insurance
Code and Deceptive Trade Practices Act (DTPA). Zurich denied
coverage under both policies and denied any wrongdoing.
Parkans moved for partial summary judgment on the primary
policy, arguing that the crime coverage for forgery applied.
Zurich moved for summary judgment on both policies and on the
damage claims. The court granted Parkans’ motion finding coverage
under the primary policy and denied Zurich’s motion.
2
The remaining issues went to trial by jury. After having
been instructed that the loss was covered under the primary policy
and that Zurich’s failure to pay the claim was a breach of the
primary policy, the jury found that Zurich failed to comply with
the CCP. The jury also found that Zurich knowingly engaged in
unfair and deceptive practices. The jury awarded $1.34 million for
breach of contract, $1.29 million on the tort claims, and $350,000
for attorneys’ fees at trial. The district court entered final
judgment against Zurich only on the breach of contract award and
attorneys’ fees, awarding interest and statutory damages as well.
Zurich appeals.
II. PRIMARY COVERAGE AND THE PARKANS LOSS
The crime coverage at issue under the primary policy provides:
We will pay for loss involving Covered Instruments resulting
directly from the Covered Causes of Loss.
1. Covered Instruments: Checks, drafts, promissory notes,
or similar written promises, orders or directions to pay
a sum certain in “money” that are:
a. Made or drawn by or drawn upon [the insured];
b. Made or drawn by one acting as [the insured’s] agent;
or that are purported to have been so made or drawn.
2. Covered Causes Of Loss: Forgery or alteration of, on or
in a Covered Instrument.
Finding coverage under the foregoing provisions, the district
court determined on summary judgment that Adusa obtained payment on
the letter of credit by presenting “forged documents” to Wells
Fargo, including forged certificates and a forged bill of lading.
3
This court reviews de novo the trial court’s decision on summary
judgment. Mid-Continent Cas. Co. v. Chevron Pipeline Co., 205 F.3d
222, 225 (5th Cir. 2000).1
The summary judgment evidence establishes that the irrevocable
letter of credit was payable at sight upon the presentation of
certain documents, namely, a commercial invoice, a packing list, a
certificate of weight, a quality and weight certificate from a
qualified surveying firm, on board bills of lading issued to the
order of Marine Midland by the shipper, and Adusa’s signed
statement certifying that one set of non-negotiable documents was
sent by courier to Parkans immediately after shipment. Adusa
presented documents purporting to be those documents required by
the letter of credit, most on its own letterhead, with an
inspection quality and weight certificate ostensibly from Alfred H.
Knight (a surveying firm) and bills of lading ostensibly from
Crowley American Transport (a shipping company), although all the
documents were fraudulent.
1
This Court will review a denied motion for summary judgment
(as an exception to the general rule) if the district court granted
the opposing party's summary judgment motion. See, e.g., Ranger
Ins. Co. v. Estate of Mijne, 991 F.2d 240, 241 (5th Cir. 1993). In
this case both Parkans and Zurich moved for summary judgment on the
primary policy, though Parkans’ motion was for partial summary
judgment on that single issue and Zurich’s was more extensive.
Thus we will review the cross motions on coverage under the primary
policy de novo, and review Zurich’s remaining assignments of error
on a post-trial basis. Cf. Black v. J.I. Case Co., Inc., 22 F.3d
568, 570 n.3 (5th Cir. 1994) (no review of pretrial denial of
summary judgment, with certain exceptions, if final adverse
judgment follows full trial on the merits), cert. denied, 513 U.S.
1017, 115 S. Ct. 579, 130 L. Ed. 2d 494 (1994).
4
Zurich contends that even if forgeries occurred, they were not
covered because they were not forgeries of “covered instruments.”
To be a “covered instrument,” a document must be a check, draft,
promissory note, or similar written promise, order or direction to
pay “Made or drawn by or drawn upon [Parkans]; Made or drawn by one
acting as [Parkans’] agent; or [] purported to have been so made or
drawn.” Even if we view the letter of credit as a “similar . . .
promise[] to pay,” it cannot be a “covered instrument” because it
was neither made by, drawn by, or drawn upon Parkans or its agent,
nor purported to have been so made or drawn.
The district court recognized that Parkans “may not have been
the ‘technical’ drawee in the transaction,” but treated Parkans as
such simply because it was the party who “ultimately suffered the
loss.” The district court quoted from and embraced the reasoning
of Omnisource v. CNA, 949 F. Supp. 681, 690 (N.D. Ind. 1996), which
held Omnisource to be the “drawee” “[i]n the sense of ‘to draw’ as
to withdraw, to call on funds, or to get from a source.”
Omnisource quoted from Black’s Law Dictionary, American Heritage
Dictionary and Webster’s New Universal Unabridged Dictionary, in
order to define “drawee”.
A contextual analysis of the contract is the proper approach
to determine the meaning of contractual terms. See Gulf Metals
Indus., Inc. v. Chicago Ins. Co., 993 S.W.2d 800, 805-06 (Tex.
App.-Austin 1999, pet. denied). The policy uses the term “drawn”
in the context of the specific listed instruments and “similar
5
. . . promises, orders, or directions to pay.” In the commercial
paper context the phrases “drawn by” and “drawn upon” are not
ambiguous and have a definite legal meaning. A contract term that
can be given a definite or certain legal meaning is not ambiguous.
National Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517,
520 (Tex. 1995). We will not therefore interpose multiple
dictionary usages.
The letter of credit itself identifies the drawee as the
“Advising Bank,” i.e., Marine Midland and not Parkans. Neither the
letter of credit nor any of the fraudulent documents presented by
Adusa were made or drawn by or drawn upon Parkans. Nor were any of
those documents made or drawn by or drawn upon one acting as
Parkans’ agent. In the letter of credit transaction, Marine
Midland acted as principal for itself not as agent for Parkans.
See Republic Nat’l Bank v. Northwest Nat’l Bank, 578 S.W.2d 109,
114 (Tex. 1978). Finally, none of the documents were “purported to
have been . . . made or drawn” by or drawn upon Parkans within the
meaning of the policy. The remaining documents were all ostensibly
made by Adusa or legitimate enterprises, not Parkans. Adusa’s
direction to Wells Fargo to pay via wire transfer, even if we
consider it a forgery, was not drawn upon Parkans. Accordingly,
none of the documents in this case are “covered instruments.” We
therefore reverse the partial summary judgment in favor of Parkans
and render judgment for Zurich, finding no coverage under the
primary policy.
6
III. EXCESS COVERAGE UNDER THE CCP
Zurich moved for judgment as a matter of law that no coverage
existed under the CCP. We review denial of a motion for judgment
as a matter of law using the same standard as the district court;
factual issues are reviewed only for the presence of substantial
evidence supporting the verdict, and legal issues are reviewed de
novo.2 Heller Fin., Inc. v. Grammco Computer Sales, Inc., 71 F.3d
518, 523 (5th Cir. 1996).
The CCP applies “excess of, but in the same manner and on the
same basis as the primary insurance shown on our Schedule A as
applying to Coverage Part A-1.”3 Even if the crime coverage in the
primary policy is intended to be included in the meaning of the
2
We will not review the pretrial denial of Zurich’s motion for
summary judgment on this issue since final judgment was entered
adverse to the movant on the basis of a subsequent full trial on
the merits. See Ranger, 991 F.2d at 241 and n.1 above.
3
We disagree with Parkans’ contention that the Texas Amendatory
Endorsement replaces the quoted language in the CCP. The quoted
language is the first sentence of item A of Coverage Part A-1. The
endorsement provides:
1. The first sentence of Item A. of the Insuring
Agreements of Coverage Part A-1 is replaced by the
following:
2. The first sentence of Item A. of the Insuring
Agreements of Coverage Part B-1 is replaced by the
following:
We will pay to the insured those sums the insured becomes
legally obligated to pay or assumes under an insured
contract that are in excess of the Retained Limit
specified in the Declarations of our policy or any valid
and collectible other insurance.
We interpret the blank after the first numbered paragraph of the
foregoing endorsement as making no change to the first sentence of
item A pertaining to Coverage Part A-1.
7
foregoing clause, the loss in this case is excluded because, as
discussed above, the documents involved are not “covered
instruments” as defined in the primary policy.
Parkans has alternatively argued that CCP provides a gap-
filling function, and thus applies here regardless of underlying
coverage. Parkans points to no provision in the CCP, however,
specifying drop-down coverage if primary insurance does not apply.
To the contrary, the CCP has a maintenance provision, requiring
that “the primary insurance must continuously: provide no less
coverage than written on our Schedule A at inception of our
policy.” Furthermore, if the primary coverages listed in Schedule
A are not maintained, the CCP coverage “will apply in the same
manner as if the primary insurance were still in effect, maintained
and collectible.” We hold that these provisions in the CCP
preclude drop-down coverage by showing the intention that the CCP
serve only as an excess layer above that insurance listed in
Schedule A, none of which is applicable to the Parkans loss. Cf.
Commercial Union Ins. Co. v. Walbrook Ins. Co., 7 F.3d 1047, 1050,
1053 (5th Cir. 1993) (drop-down coverage implicated by clause
providing a self-insured retention “for each occurrence not covered
by the specified underlying [policy]”).
IV. THE TORT CLAIMS
The jury also found that Zurich engaged in an unfair or
deceptive act or practice that caused damage to Parkans, and did so
8
knowingly.4 Zurich had moved for judgment as a matter of law on
those claims, so we review legal issues de novo and factual issues
for substantial evidence in support of the verdict. Heller Fin.,
71 F.3d at 523.
On these claims Zurich is entitled to judgment as a matter of
4
The jury answered “yes” to the following question:
Did Zurich engage in any unfair or deceptive act or practice
that caused damages to Parkans?
“Unfair or deceptive act or practice” means any of the
following:
Failing to affirm or deny coverage of a claim within a
reasonable time, or
Refusing to pay a claim without conducting a reasonable
investigation of the claim, or
Failing to provide promptly to Parkans a reasonable
explanation of the factual and legal basis in the policy
for an insurer’s denial of the claim, or
Failing to attempt in good faith to effectuate a prompt,
fair, and equitable settlement of a claim when the
insurer’s liability has become reasonably clear, or
Making or causing to be made any statement
misrepresenting the terms, benefits, or advantages of an
insurance policy, or
making any misrepresentation relating to an insurance
policy by:
a. failing to state a material fact that is
necessary to make other statements not
misleading, considering the circumstances under
which the statements are made; or
b. making any statement in such a manner as to
mislead a reasonably prudent person to a false
conclusion of a material fact, or
Representing that the Custom Cover Policy had or would
have characteristics that it did not have, which
representation Parkans relied on to its detriment, or
Representing that an agreement confers or involves rights
that it did not have or involve, which representation
Parkans relied on to its detriment.
The jury also answered “yes” to the next question, whether Zurich
engaged in the conduct “knowingly.” That question defined
“knowingly” as having actual awareness at the time of the conduct
“of the falsity, deception, or unfairness of the conduct in
question.”
9
law, because it had a reasonable basis for denial of coverage. See
Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 18 (Tex. 1994)
(insured claiming bad faith must prove that insurer had no
reasonable basis for denying or delaying payment of the claim).
This shields Zurich whether the tort claims are common-law or
statutory. Id. (common-law breach of duty of good faith and fair
dealing); Higginbotham v. State Farm Mut. Auto Ins. Co., 103 F.3d
456, 460 (5th Cir. 1997) (claims under DTPA and § 21.21 of the Texas
Insurance Code require same predicate for recovery as a bad faith
cause of action); see also Emmert v. Progressive County Mut. Ins.
Co., 882 S.W.2d 32, 36 (Tex. App.—Tyler 1994, writ denied) (insurer
will not be faced with a tort suit for challenging a claim of
coverage if there was any reasonable basis for denying coverage)
(violations of Texas Insurance Code, claims under Texas Deceptive
Trade Practices Act, and common-law tort) (citing Lyons v. Millers
Cas. Ins. Co., 866 S.W.2d 597 (Tex. 1993)). Since there was a bona
fide dispute justifying the insurer’s failure to pay, the insurer,
as a matter of law, did not act in bad faith.
Moreover, the jury essentially found no tort injuries
independent of the contract damages.5 There can be no recovery for
5
The verdict form contained the same line items of damages for
the tort claims (question 5 on the verdict) as for the breach of
contract claims (question 4), and the jury awarded less for each
item on the tort question. Even with the additional damages
awarded for “knowing” misconduct (question 6), the total tort award
was less. Entering judgment the district court disregarded the
tort damages ($1.29 million total awarded in questions 5 and 6 on
the verdict) as included in the breach-of-contract award ($1.34
10
extra-contractual damages for mishandling claims unless the
complained of actions or omissions caused injury independent of
those that would have resulted from a wrongful denial of policy
benefits. Provident American Ins. Co. v. Castaneda, 988 S.W.2d
189, 198-99 (Tex. 1998) (claims of Insurance Code violations and
under DTPA).
V. OTHER ITEMS AWARDED PARKANS
Since plaintiff does not prevail under our ruling, no
attorneys’ fees or statutory damages are due. Tex. Ins. Code art.
21.55 § 6 (right to statutory damages and attorneys’ fees
predicated on insurer’s liability on claim); Tex. Ins. Code art.
21.21 § 16(b) (right to attorneys’ fees and other relief for
plaintiff “who prevails”); Mancorp, Inc. v. Culpepper, 802 S.W.2d
226, 230 (Tex. 1990)(under the DTPA actual damage award is
prerequisite to attorneys' fees); Tex. Civ. Prac. & Rem. Ann. §
38.001 (West 1997) (reasonable attorneys’ fees recoverable “in
addition to the amount of a valid claim”).
VI. CONCLUSION
Because no covered instrument was made or drawn by or drawn
upon Parkans, the crime coverage for forgery under the primary
policy does not apply. Zurich not Parkans was entitled to summary
judgment on coverage under the primary policy. The CCP provides
only excess and not drop-down coverage, so it does not apply to
million total awarded question 4 of the verdict).
11
fill the gap in primary coverage. There is no basis for recovery
under the tort claims. No attorneys’ fees or statutory damages are
due plaintiff.
The judgment previously entered in favor of Parkans is
reversed, and judgment is rendered for Defendant Zurich Insurance
Company denying all relief to Parkans.
REVERSED and RENDERED.
12
DENNIS, Circuit Judge, dissenting:
To the detriment of the insured, the majority gives the terms
of this insurance policy their technical, rather than popular,
meaning. Because this method of interpretation contravenes
established canons of Texas insurance law, I respectfully dissent.
I.
The threshold question is whether Parkans’s letter of credit
is a “covered instrument.” The policy defines covered instruments
as:
Checks, drafts, promissory notes, or similar written
promises, orders or directions to pay a sum certain in
“money” that are:
3. Made or drawn by or drawn upon [Parkans];
4. Made or drawn by one acting as [Parkans’s]
agent;
or that are purported to have been so made or drawn.
Because the policy provision refers to “checks,” “drafts,” and
“promissory notes,” the majority argues that the word “drawn” must
be read in context according to its meaning under the UCC. It
therefore concludes that the phrase “drawn by or drawn upon” limits
coverage to transactions in which the insured is the actual
“drawee” under Texas commercial paper law. Since Midland Bank was
technically the drawee in this transaction, the court holds that
the letter of credit was not “drawn upon” Parkans and therefore was
not a covered instrument.
The majority’s interpretation conflicts with basic principles
of Texas insurance law. When interpreting an insurance contract,
13
Texas courts will read its terms in their plain, ordinary, and
popular sense unless the policy defines a term in some other way.6
Texas courts disfavor interpretations that limit coverage, and they
construe ambiguities in favor of the insured.7 Under these
principles, Parkans was covered for its loss.
In the present context, the relevant popular definition of
“draw” is “to withdraw” or “to take or receive money from a source
of supply.”8 Under this plain-language reading, the letter of
credit was “drawn upon” Parkans because the funds stolen in this
6
Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (Tex. 1984)
(“[I]t is the court’s duty to give the words used their plain
meaning.”); Ramsay v. Md. Amer. Gen. Ins. Co., 533 S.W.2d 344, 346
(Tex. 1976) (“With no definition in the policy, we must first
determine whether the term has a readily ascertainable meaning in
the plain, ordinary and popular sense of the words themselves.”);
see also 45 Tex. Jur. § 109, at 130-31 (3d ed. 1995) (“Contracts of
insurance must be construed, as other contracts, according to the
terms that the parties have used, to be taken and understood, in
the absence of ambiguity, in their plain, ordinary, and popular
sense, unless there are other provisions indicating a contrary
intention of the parties. Thus, if the insurance policy does not
define the terms used, they are to be given their plain, ordinary,
and generally accepted meaning.”).
7
Puckett, 678 S.W.2d at 938 (“It is well established that
insurance policies are strictly construed in favor of the insured
in order to avoid exclusion of coverage.”); Ramsay, 533 S.W.2d at
349 (“When the language of a policy is susceptible of more than one
reasonable construction, the courts will apply the construction
which favors the insured and permits recovery.”).
8
The American Heritage Dictionary 561 (3d ed. 1992) (defining
“draw” as “To withdraw (money).”); Black’s Law Dictionary 494-95
(7th ed. 1999) (“To take out (money) from a bank, treasury, or
other depository.”); IV Oxford English Dictionary 1026 (2d ed.
1989) (“To take, receive, or obtain (money, salary, revenue, etc.)
from a source of supply.”).
14
transaction were ultimately drawn from Parkans’s account.9 And, to
the extent that it is unclear whether the policy requires that
Parkans be the technical drawee of the instrument, we are compelled
to construe this ambiguity in favor of coverage.
The majority rejects this plain reading of the policy in favor
of a more technical one. Relying on Gulf Metals Industries, Inc.
v. Chicago Insurance Co.,10 the majority argues that the policy must
be read in the commercial paper context and according to UCC
definitions. The majority’s reliance on Gulf Metals is, however,
misplaced. At issue in Gulf Metals was the meaning of the phrase
“sudden and accidental” as it appeared in an insurance policy.11
The district court held that the term “sudden” adds a temporal
element, meaning “abrupt” or “brief.”12 The insured disagreed,
arguing that “sudden” does not necessarily carry a temporal
meaning. Citing various dictionary definitions, the insured argued
that the word can also mean “unexpected,” and that this uncertainty
of meaning proves that the policy is ambiguous.13
9
See Omnisource v. CNA/Transcontinental Ins. Co., 949 F.Supp.
681, 688-90 (N.D. Ind. 1996) (applying this plain-language
construction of the phrase “drawn upon” and finding coverage for a
similar loss under a similar policy).
10
993 S.W.3d 800 (Tex. App.–Austin 1999, pet. denied).
11
Id. at 803.
12
Id. at 805.
13
Id.
15
The Texas appeals court rejected the insured’s argument.14
Noting that the word “sudden” appeared in conjunction with the word
“accidental,” the court reasoned that “sudden” must add a temporal
requirement. “Because ‘accidental’ describes an unforeseen or
unexpected event,” the court held that “to ascribe the same meaning
to ‘sudden’ would render the terms redundant and violate the rule
that each word in a contract be given effect.”15 Thus, both of the
proffered interpretations were ordinary, or popular; the court was
not rejecting a plain-language interpretation in favor of a
technical one. Rather, the court held that, in context, “sudden”
was clearly being used in its popular temporal sense.
Contextual arguments like the one used in Gulf Metals are
useful for interpreting terms that have multiple common meanings,
but not for choosing a technical interpretation over a reasonable
common interpretation. In this case, for instance, the phrase
“drawn upon” cannot mean that the instrument must be “sketched” or
“illustrated” upon Parkans’s corporate headquarters, because the
policy clearly uses the phrase in the context of monetary
withdrawals. But there is nothing in the context of the policy
that limits the word “drawn” to its technical meaning under the
UCC. The term is not specifically defined, and the policy makes no
reference to the Texas Business and Commerce Code. Under Texas
14
Id. at 806.
15
Id. at 805.
16
insurance law, if Zurich intended for the term to have a definition
other than an ordinary one, it was required to define the term
accordingly.16
Texas courts will sometimes interpret a term in an insurance
policy according to its usage within a particular “vocation, trade,
or industry.”17 Reliance on trade usage is, however, only
appropriate when the insured is acquainted with and has adopted the
usage.18 For example, in Mescalero Energy, Inc. v. Underwriters
Indemnity General Agency, Inc., a Texas appellate court applied the
trade usage of the term “foundation” when interpreting a “Blowout
16
See W. Reserve Life Ins. Co. v. Meadows, 261 S.W.2d 554, 557
(Tex. 1953) (stating that the terms of an insurance contract “are
to be given their plain, ordinary and generally accepted meaning
unless the instrument itself shows them to have been used in a
technical or different sense”); 45 Tex. Jur. § 109, at 131 (“[I]f
the insurance policy does not define the terms used, they are to be
given their plain, ordinary, and generally accepted meaning.”).
17
Mescalero Energy, Inc. v. Underwriters Indem. Gen. Agency,
Inc., 56 S.W.3d 313, 320 (Tex. App.–Houston [1st Dist.] 2001, pet.
denied) (quoting Nat’l Union Fire Ins. Co. v. CBI Indus., Inc., 907
S.W.2d 517, 521 n.6 (Tex. 1995)).
18
Emsco Screen Pipe Co. v. Heights Muffler Co., 420 S.W.2d 179,
182 (Tex. Civ. App.–Houston [14th Dist.] 1967, no writ) (“Usage or
custom is admissible to determine the terms of a contract where
parties have not defined them, provided such usage or custom is so
well established and generally known as to raise a presumption that
the parties knew of it and contracted with reference to it.”);
Trinity Universal Ins. Co. v. Rogers, 215 S.W.2d 349, 355-56 (Tex.
Civ. App.–Dallas 1948, no writ) (stating that a party cannot be
bound by a custom or usage unless the party knows of and has
accepted the usage); see also 45 Tex. Jur. § 120, at 143-44 (“The
general rule is that usage in a particular place, or of a
particular class of persons, may not be binding on other persons
unless they are acquainted with and adopt it.”).
17
Insurance Policy.”19 The insured in Mescalero was an oil and gas
drilling contractor engaged in the practice of drilling horizontal
wells.20 The policy was specifically designed to insure contractors
against blowouts, which are common hazards associated with
horizontal drilling.21 Thus, the insured was acquainted with the
industry usage, and it was reasonable to assume that the parties
intended to incorporate that usage into this industry-specific
policy.
In contrast to Mescalero, there is no evidence in the present
case that Parkans was familiar with commercial paper terminology or
that the parties intended to incorporate UCC definitions. Parkans
recycles scrap metal; it does not provide banking or legal
services. There is no reason to assume that the company’s
officials were familiar with the technical terminology of
commercial paper law. Furthermore, Parkans’s policy covers general
commercial liability including bodily injuries, property damage,
and other generic losses that most businesses incur; it is not
specific to banking-related losses. Thus, there is nothing in the
record to suggest that the parties intended to incorporate a more
specialized meaning.
In short, I would find coverage under the primary policy.
19
56 S.W.3d at 319.
20
Id. at 315-16.
21
Id.
18
Under a plain reading of the policy, the letter of credit was
“drawn upon” Parkans in the sense that the money was ultimately
drawn from Parkans’s account. There is no valid contextual or
trade usage argument for reading the policy in a specialized
commercial-law sense.
II.
Because I disagree with the majority’s conclusion that there
is no coverage under Parkans’s primary policy, I also disagree with
its conclusion that there is no coverage under the umbrella policy.
The umbrella policy applies in “excess of, but in the same manner
and on the same basis as the primary insurance listed in Schedule
A . . . .” Schedule A lists Parkans’s CGL policy as one of the
primary policies covered by the umbrella policy. Thus, since the
provisions at issue in this case fall under the CGL policy, Parkans
was also covered under its umbrella policy.
III.
For the foregoing reasons, I would affirm the district court’s
ruling. Under a proper, plain reading of Parkans’s primary and
umbrella policies, this loss was covered.
19