IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 16, 2009
No. 08-60521 Charles R. Fulbruge III
Clerk
BARDEN MISSISSIPPI GAMING LLC, doing business as Fitzgerald’s Casino
Plaintiff - Appellant
v.
GREAT NORTHERN INSURANCE COMPANY; TOP LINE SEATING INC
Defendants - Appellees
Appeal from the United States District Court
for the Northern District of Mississippi
Before HIGGINBOTHAM, GARZA, and PRADO, Circuit Judges.
EMILIO M. GARZA, Circuit Judge:
In this insurance dispute, Barden Mississippi Gaming LLC (“Barden”)
appeals the district court’s order of summary judgment in favor of Great
Northern Insurance Company (“Great Northern”) and Top Line Seating, Inc.
(“Top Line”). The district court concluded that Great Northern was not obligated
to provide a defense and indemnification to Barden in a separate lawsuit
brought by a person who allegedly suffered personal injuries in Barden’s casino
through the use of a stool sold by Top Line. For the following reasons, we vacate
and remand.
No. 08-60521
I
In May 2002, Top Line sold Barden 800 slot machine stools for use in its
casino. Due to problems with the stools, in February 2003 Barden filed a state
court action against Top Line. The case was removed to federal court, and the
parties reached a settlement agreement in October 2003. The Settlement
Agreement provided for the modification of 100 of the 800 defective stools, and
stated:
[Top Line] agrees as to the said 700 stools to name [Barden] as an
additional insured in [Top Line’s] liability and any excess (umbrella)
liability insurance policy(ies), with the same or similar coverage as
per the attached Certificate except for excess liability coverage
which will be a minimum of $500,000.00 through October 15, 2012.
Such will insure [Barden], on an occurrence basis, for third party
claims for personal injury, death or property damage arising from
the sole negligence of [Top Line] regarding the 700 stools. Barden
approves the additional insured language contained in the attached
Certificate of Liability Insurance that will be effective for
occurrences taking place on or after the date of this Agreement, per
the terms of the attached Certificate.1
The “Certificate” referenced in the Settlement Agreement is the “Certificate of
Liability Insurance,” which was an endorsement to the insurance policy issued
by Great Northern. The Certificate provided:
Barden Mississippi Gaming, LLC d/b/a Fitzgeralds Tunica
Casino/Hotel is named as an additional insured but only with
respect to their liability for:
* bodily injury or property damage caused by the sole
negligence of Top Line Seating, Inc.; and
1
The Settlement Agreement specifies the insurance coverage for the 100 modified
stools and the 700 unmodified stools in separate provisions. This provision refers to the 700
unmodified stools. Elsewhere in the Settlement Agreement, identical coverage is provided for
the 100 modified stools.
2
No. 08-60521
* occurrences taking place on or after the effective date of the
settlement agreement dated October 29, 2003, between
Barden Mississippi Gaming, LLC d/b/a Fitzgeralds Tunica
Casino/Hotel and Top Line Seating, in connection with the
goods or products described in the schedule below:
Schedule
Person or organization: Barden Mississippi Gaming, LLC d/b/a
Fitzgeralds Tunica Casino/Hotel
Goods or products: 800 slot stools shipped by Top Line Seating, Inc.
to Barden Mississippi Gaming, LLC d/b/a Fitzgeralds Tunica
Casino/Hotel, such stools being the same as those which are the
subject of a lawsuit entitled Barden Mississippi Gaming LLC d/b/a
Fitzgeralds Tunica Casino/Hotel v. Top Line Seating, Inc. filed in
Tunica County, Mississippi, Docket No. 2003-0249.
Top Line modified 100 of the stools after the Settlement Agreement was
executed. Some of the modifications took place at Top Line’s facility in New
Jersey while others occurred at Barden’s facility in Tunica, Mississippi. For the
modifications performed in Tunica, employees from both Barden and Top Line
participated in removing the stools from the gaming floor. Barden employees
performed daily safety inspections of all slot machine stools.
In June 2004, Mary Geraldine Baier sued Barden and Top Line in
Mississippi state court for personal injuries allegedly caused by one of the 800
stools. Barden requested that Top Line’s insurer, Great Northern, provide a
defense and indemnification in the suit. In previous incidents regarding the 800
stools, Great Northern either defended and indemnified Barden or made
contributions to settle the claims. However, in the Baier case, though Great
Northern initially agreed to defend and indemnify Barden and retained counsel
to do so, Great Northern later withdrew its agreement. Since then, Top Line and
Great Northern have refused to provide Barden with any defense or
indemnification in the ongoing suit.
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No. 08-60521
Barden filed this lawsuit in February 2007, seeking a declaratory
judgment that it is entitled to a defense and indemnification in the Baier case
under the Settlement Agreement and insurance policy. The parties filed cross-
motions for summary judgment, and the district court denied Barden’s motion
and granted those of Top Line and Great Northern. Specifically, the district
court concluded that the Settlement Agreement and Certificate of Insurance are
not ambiguous, and that no genuine issue of material fact existed as to whether
Top Line and Great Northern met their obligations to Barden. This appeal
followed.
II
We review the district court’s grant of summary judgment de novo,
applying the same standard as the district court. Fabela v. Socorro Indep. Sch.
Dist., 329 F.3d 409, 414 (5th Cir. 2003). We view all facts in the light most
favorable to the non-movant, and affirm only when the evidence “show[s] that
there is no genuine issue as to any material fact and that the movant is entitled
to judgment as a matter of law.” F ED R. C IV. P. 56(c); see also Coury v. Moss, 529
F.3d 579, 584 (5th Cir. 2008). The parties agree that Mississippi law applies to
this diversity case.
III
Barden argues that the district court erred by concluding that Great
Northern and Top Line are not required to provide it with a defense and
indemnification in the Baier case. Specifically, Barden argues that the
Settlement Agreement and insurance policy both unambiguously obligate Great
Northern and Top Line to defend and indemnify it in this situation. In the
alternative, Barden argues that the Settlement Agreement and insurance policy
are ambiguous because they can be read in two different ways, one which would
require a defense and indemnification in the Baier case and one which would
not.
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No. 08-60521
Under Mississippi law, the determination of whether an insurance
company has a duty to defend and indemnify depends on the language of the
policy and the allegations in the underlying complaint. See Am. Guarantee &
Liab. Ins. Co. v. 1906 Co., 273 F.3d 605, 610 (5th Cir. 2001); Delta Pride Catfish
v. Home Ins. Co., 697 So. 2d 400, 403 (Miss. 1997). Specifically, if the policy
arguably covers the claim as alleged in the underlying complaint, the duty to
defend attaches. See Am. Guar. & Liab., 273 F.3d at 610 (interpreting
Mississippi law to find that “[i]f the complaints state a claim that is within or
arguably within the scope of coverage provided by the policy, [the insurer] is
obliged to defend and, if necessary, indemnify”). Any doubt regarding the
existence of a defense obligation is resolved in the insured’s favor. Liberty Mut.
Fire Ins. Co. v. Canal Ins. Co., 177 F.3d 326, 331 (5th Cir. 1999). The duty to
defend is broader than the duty to indemnify, because the insurer has a duty to
defend when there is any possible basis for liability under the policy. See Am.
Guar. & Liab., 273 F.3d at 610.
Accordingly, we must first determine whether the insurance policy
arguably covers the claim in the Baier case. If it does, then the duty to defend
attaches. In Mississippi, the interpretation of an insurance policy is a question
of law. Progressive Gulf Ins. Co. v. Dickerson & Bowen, Inc., 965 So. 2d 1050,
1054 (Miss. 2007). If the words of the insurance policy are “plain and
unambiguous,” they are applied as written. Id. However, ambiguous language
must be resolved in favor of the insured, and provisions that limit or exclude
coverage must be construed liberally in favor of the insured. Id.
Here, the district court determined that the policy unambiguously limits
the duty to defend and indemnify to claims involving the “sole negligence” of Top
Line. We agree with the district court. The language of the Settlement
Agreement plainly states that coverage is limited to “third party claims for
personal injury, death or property damage arising from the sole negligence of
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No. 08-60521
[Top Line] . . . .” Further, the Certificate unambiguously sets out two conditions
precedent to coverage, namely 1) bodily injury or property damage caused by the
sole negligence of Top Line, 2) which occurs after October 29, 2003 and involves
one of the 800 stools. Though Barden argues that these two conditions can be
interpreted to describe separate situations, either of which trigger coverage, this
argument lacks merit. The two conditions are unambiguously phrased in the
conjunctive, not the disjunctive; they are connected with the word “and,” not “or.”
Moreover, the goods to which the policy relates, the 800 stools, are referenced
only in the second condition. If Barden’s argument that the conditions apply
separately were adopted, the policy would cover any injury or property damage
caused by Top Line regardless of whether the 800 stools were involved. We
therefore conclude that the policy is unambiguous, and only provides coverage
where Top Line is solely negligent.2
However, this does not end the inquiry. In granting summary judgment,
the district court found that the undisputed facts showed that Top Line was not
solely negligent in the Baier case. This determination was premature, since
until the Baier case is resolved we will not know whether Top Line was solely
negligent. Under Mississippi law, if a liability insurance policy arguably covers
the claim as alleged in the underlying complaint, the duty to defend attaches.
See Am. Guar. & Liab., 273 F.3d at 610. This rule makes sense in light of the
issue presented in this case, where the need for a defense necessarily arises long
before the precise allocation of liability is determined at trial. Here, the policy
arguably covers the Baier case, because the Baier complaint does not foreclose
2
Barden also argues that this interpretation of the insurance policy creates a “legal
impossibility,” because Barden could never be held liable in a situation where Top Line is
solely negligent. We disagree. The plain language of the insurance policy covers cases where
Barden is sued, but the results of the litigation indicate that Top Line is solely negligent. This
could occur when evidence at trial reveals a latent manufacturing defect in a stool that Barden
could not have detected, or in cases brought under strict liability.
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No. 08-60521
a judgment that Top Line was 100% negligent. It is undisputed that the Baier
case involves one of the 800 stools sold to Barden by Top Line, and that the
alleged injury occurred after the date of the Settlement Agreement. The
complaint alleges negligence against Barden and Top Line.3 Importantly, the
complaint alleges a defective product, meaning that it is possible that Ms.
Baier’s injuries could ultimately be attributed to some latent defect in the stool
that Barden could not have detected even with the utmost diligence. Under this
scenario, Top Line could be found 100% negligent. Since the policy arguably
covers the claim in the Baier case as alleged in the underlying complaint, we
hold that the duty to defend attaches.
Great Northern and Top Line’s duty to indemnify Barden, however, is a
separate issue. We have observed that under Mississippi law, the insurer’s duty
to defend is broader than the duty to indemnify, because the insurer has a duty
to defend when there is any arguable basis for liability under the policy. Id.
However, it is clear under the insurance policy that the duty to indemnify will
attach only if Top Line is ultimately found 100% negligent. In this case, as
indicated above, we will not know whether Ms. Baier’s injury resulted solely
from Top Line’s negligence until the resolution of her lawsuit. Accordingly, the
question of whether Barden is owed indemnification is premature, and should
be resolved after the conclusion of the Baier case.
IV
For the foregoing reasons, we VACATE the district court’s order granting
summary judgment in the respondents’ favor and REMAND for further
proceedings consistent with this opinion.
3
Though Top Line has been dismissed from the Baier case, the dismissal was without
prejudice. Further, the fact that Top Line was dismissed as a party does not foreclose the
possibility that the injury could be solely attributed to Top Line’s negligence.
7