American Economy Insurance v. Tomlinson

United States Court of Appeals,

Fifth Circuit.

No. 92-9108.

AMERICAN ECONOMY INSURANCE COMPANY, Plaintiff-Appellee,

v.

Sandra TOMLINSON, Defendant-Appellant.

Jan. 31, 1994.

Appeal from the United States District Court for the Northern District of Texas.

Before GOLDBERG, JONES,* and DUHÉ, Circuit Judges.

GOLDBERG, Circuit Judge:

In this appeal, we must determine whether the defendant, a woman who received a one-half

interest in an automobile through a probated will, owned that car within the meaning of her Texas

personal automobile insurance policy. If the defendant owned the car in question, two

"owned-but-unscheduled-vehicle" exclusion clauses in her insurance policy apply and eliminate

coverage for the injuries that she suffered in an accident that occurred while she was driving the car.

If the exclusions apply, we must decide whether they conflict with the requirements of the Texas

Insurance Code. After the plaintiff moved for summary judgment and the defendant failed to respond,

the district court found that the defendant owned the car and that the exclusion clauses were

enforceable. The defendant appeals. Finding no error in the district court's judgment, we affirm.

I. Facts and Proceedings Below

Sandra Tomlinson was injured in an automobile accident in April of 1992. When the accident

occurred, Tomlinson was driving a 1985 Mercedes Benz 190E that had belonged to her father,

George Rashti. Rashti had died approximately two years earlier, and Tomlinson and her sister were

the co-beneficiaries of his estate. Under Rashti's will, Tomlinson and her sister each inherited an

undivided o ne-half interest in their father's estate, including the Mercedes 190E. Rashti's will had

*
Judge Jones did not sit for oral argument due to illness but did participate in the opinion with
the aid of tape recordings.
been admitted to probate, but the administration of the estate had not closed at the time of the

accident. The certificate of title for the Mercedes 190E was still in Rashti's name.

American Economy Insurance Company ("American Economy") issued a Texas Personal

Auto Policy ("Policy") to Tomlinson in June of 1991. The only car listed as a covered automobile

on the Policy was a 1985 Mercedes Benz 380; the Mercedes 190E was not listed as a covered

automobile. After the accident, Tomlinson filed a claim for personal injury protection coverage and

uninsured motorists coverage under the Policy. American Economy then filed this suit, seeking a

declaration that it was not obligated to pay Tomlinson either the personal injury protection coverage

or the uninsured motorists coverage that she sought. American Economy relied on two

"owned-but-unscheduled-vehicle" exclusion clauses contained in the Policy. These clauses excluded

personal injury protection and uninsured motorists coverage for any injury that Tomlinson suffered

while she occupied an automobile that she owned but which was not listed as a covered automobile

in the Policy. Specifically, the first exclusion clause excepted "Personal Injury Protection Coverage

for any person for bodily injury sustained ... [w]hile occupying, or when struck by, any motor vehicle

(other than your covered auto) which is owned by you." The second clause eliminated uninsured and

underinsured motorists coverage "for any person ... [f]or bodily injury sustained while occupying, or

when struck by, any motor vehicle or trailer of any type owned by you or any family member which

is not insured for this coverage under this policy."

After American Economy moved for summary judgment, Tomlinson failed to respond. The

district court granted the motion for summary judgment and entered a final judgment, declaring that

American Economy was not obligated to pay Tomlinson's claim. After the district court denied

Tomlinson's motion for new trial, Tomlinson appealed.

II. Discussion

In reviewing a grant of summary judgment, we apply the same standard employed by the

district court. Specifically, we ask whether the summary judgment evidence on file shows that there

is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of

law. Hibernia National Bank v. Carner, 997 F.2d 94, 97 (5th Cir.1993). In other words, summary
judgment is appropriate when the moving party "presents evidence which negates any essential

element of the opposing party's claim or where any essential element is without factual support."

First American Bank & Trust v. Texas Life Ins. Co., 10 F.3d 332, 3 (5th Cir.1994).

A. Ownership of the Automobile

Tomlinson first contends that whether she owned the Mercedes 190E that she was driving

at the time of the accident is ambiguous and that we should construe the Policy in favor of coverage

by holding that she was not the owner of the car within the meaning of the Policy. We do not find

Tomlinson's arguments persuasive.

The Texas Supreme Court has succinctly articulated the rules of interpretation applicable to

insurance contracts such as the one at issue here:

Generally, a contract of insurance is subject to the same rules of construction as other
contracts. Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 665 (Tex.1987). If the written
instrument is worded so that it can be given only one reasonable construction, it will be
enforced as written. Puckett v. U.S. Fire Ins. Co., 678 S.W.2d 936, 938 (Tex.1984).
However, if a contract of insurance is susceptible to more than one reasonable interpretation,
we must resolve the uncertainty by adopting the construction that most favors the insured.
Barnett, 723 S.W.2d at 667; Ramsay v. Maryland Am. Gen. Ins. Co., 533 S.W.2d 344, 349
(Tex.1976); Brown v. Palatine, 89 Tex. 590, 35 S.W. 1060, 1061 (1896). The court must
adopt the construction of an exclusionary clause urged by the insured as long as that
construction is not unreasonable, even if the construction urged by the insurer appears to be
more reasonable or a more accurate reflection of the parties' intent.

Nat'l Union Fire Ins. Co. v. Hudson Energy Co., 811 S.W.2d 552, 555 (Tex.1991). Of course,

courts may not "resort to [these] rules of contract construction if the policy is unambiguous, that is,

if it is susceptible of only one reasonable interpretation." Upshaw v. Trinity Companies, 842 S.W.2d

631, 633 (Tex.1992).

The issue is whether Tomlinson owned the Mercedes 190E that she was driving when she was

injured. The Policy does not define the term "owned". The Texas Probate Code does, however,

provide that when a person dies, leaving a lawful will, the estate vests in the devisees or legatees

immediately upon the testator's death. See Tex.Prob.Code Ann. § 37 (Vernon supp.1993). Courts

that have interpreted this statute have written that "title to an estate vests in the heirs immediately

upon the death of the decedent. There is never a time when title is not vested in someone." Welder

v. Hitchcock, 617 S.W.2d 294, 297 (Tex.Civ.App.—Corpus Christi 1981, writ ref'd n.r.e.). To be
sure, section 37 of the Probate Code provides that the vesting of the estate is subject to the payment

of the debts of the testator and that, upon the issuance of letters testamentary or of administration,

an executor or administrator of an estate has the right to possess the property of an estate. However,

this latent qualification of the devisees' or legatees' right to retain the devised property does not alter

the fact that title to the property of the estate passes to the devisees or legatees immediately upon the

death of the testator.1

Moreover, once a will is admitted to probate, it becomes effectual to prove title to the

property disposed of by the will. See Tex.Prob.Code Ann. § 94 (Vernon 1980). In other words, after

it has been probated, "a will becomes evidence of the right of the devisees and legatees to take their

devises and bequests, and their title is subject to defeasance only in the event that the order probating

the instrument is set aside in a subsequent suit to contest its validity." 74 Tex.Jur.3d Wills § 293, at

481-82 (1990) (footnotes omitted); Hardin v. Hardin, 66 S.W.2d 362, 363 (Tex.Civ.App.—Fort

Worth 1933, no writ).

Applying these principles to the present case, we find that once Rashti died, leaving a lawful

will, the property of his estate (including the Mercedes 190E) vested immediately in Tomlinson and

her sister. Thus, Tomlinson and her sister became the co-owners of the Mercedes 190E immediately

upon the death of their father. Although the administrator of Rashti's estate could have taken

possession of the car and sold it to satisfy the debts of the estate, title to the Mercedes 190E would

have remained in Tomlinson and her sister until the administrator sold the car. The fact that the

administrator of the estate could have taken possession of the car and that the car could have been

sold to satisfy the debts of the estate is thus irrelevant to Tomlinson's status as an owner of the car

when she was involved in the accident.

Moreover, Rashti's will was probated on October 9, 1990. After Rashti's will was probated,

1
This reading of the Probate Code is consistent with the reasoning of the Texas Supreme Court
in Kelley v. Marlin, 714 S.W.2d 303 (Tex.1986). In that case, the testator left a large amount of
real property to his wife. The court noted that, upon the death of the testator, title to the real
estate vested immediately in the wife and that the executor's right to possess and power to sell the
property of the estate did not render a later sale of some of the real estate not one made by the
wife. Thus, in Marlin, the court confirmed that a devisee or legatee owns the property devised
until it is sold by the executor.
it became effectual to prove that title of the Mercedes 190E had vested in Tomlinson and her sister.

Thus, when American Economy submitted Rashti's probated will in support of its motion for

summary judgment, American Economy satisfied its burden of showing that Tomlinson owned the

automobile that she was driving when she had her accident.2 Tomlinson had the opportunity to

submit evidence showing that she did not own the Mercedes 190E; however, when she declined to

respond to American Economy's motion for summary judgment, she failed to do so. Therefore, on

the record before us, we hold that the only reasonable interpretation of the Policy is that Tomlinson

owned the Mercedes 190E that she was driving when she was involved in the accident that caused

her injuries.

B. Validity of the Exclusions

Since Tomlinson owned the Mercedes 190E that she was driving when she was injured and

since that car was not listed as a covered automobile on the American Economy Policy, the

owned-but-unscheduled-vehicle exclusions, if enforceable, preclude Tomlinson from recovering

personal injury protection and uninsured mo torists coverage for the injuries that she suffered.

Tomlinson argues that these exclusions are invalid restrictions of coverage that deprive her of

protection that the Texas Insurance Code requires to be offered. We find no merit in Tomlinson's

argument.

To dispose of Tomlinson's argument, we need look no further than the Austin court of

appeals' recent decision in Conlin v. State Farm Mut. Auto Ins. Co., 828 S.W.2d 332

(Tex.App.—Austin 1992, writ denied). In that case, the Austin court of appeals carefully and

thoroughly discussed the enforceability of owned-but-unscheduled-vehicle exclusions and ably

2
It is of no consequence that the certificate of title to the Mercedes 190E was still in Rashti's
name. A certificate of title is not conclusive proof of ownership. It merely creates a presumption
of ownership in the name of the person shown on the certificate. This presumption can be
overcome by evidence that shows that ownership resides elsewhere. Villa v. Alvarado State
Bank, 611 S.W.2d 483 (Tex.Civ.App.—Waco 1981, no writ); Keller v. Judd, 671 S.W.2d 604
(Tex.App.—San Antonio 1984, no writ). By forwarding Rashti's probated will in its summary
judgment motion, American Economy satisfied its burden of coming forward with evidence that
showed that Tomlinson owned the Mercedes 190E.
dismissed the argument that these exclusions necessarily violate the Texas Insurance Code.3

The argument that owned-but-unscheduled-vehicle exclusions necessarily violate the Texas

Insurance Code is based on dicta in the Texas Supreme Court's decision in Westchester Fire Ins. Co.

v. Tucker, 512 S.W.2d 679 (Tex.1974). In that case, which involved a scheduled automobile, the

state supreme court wrote that "the policy exclusion of injuries sustained by an insured while

occupying an owned but unscheduled vehicle is ineffectual to the extent that it deprives a person of

coverage required by Article 5.06-1 of the Insurance Code." Id. at 686. Following that dicta, several

courts later held that owned-but-unscheduled-vehicle exclusions were invalid. See, e.g., Western

Alliance Ins. Co. v. Dennis, 529 S.W.2d 838 (Tex.Civ.App.—Texarkana 1975, no writ).

However, more recent state court of appeals decisions that have held that

owned-but-unscheduled-vehicle exclusions do not necessarily violate the Insurance Code have been

approved of by the Supreme Court of Texas. In Holyfield v. Members Mut. Ins. Co., 566 S.W.2d

28 (Tex.Civ.App.—Dallas 1978), the Dallas court of civil appeals disagreed with the Western

Alliance decision, supra, and held that providing coverage only for scheduled automobiles did not

violate the Insurance Code. In a brief per curiam opinion, the Texas Supreme Court approved of the

Dallas court of appeals' ruling in Holyfield and disapproved of the Western Alliance court's

interpretation of the Insurance Code. Holyfield v. Members Mut. Ins. Co., 572 S.W.2d 672, 673

(Tex.1978).

Thus, in Conlin, the Austin court of appeals held that owned-but-unscheduled-vehicle

exclusions are valid and enforceable mechanisms that insurers can employ to ensure that they do not

assume a risk that they have not contracted to assume. As the Conlin court explained:

[A]n insurer is entitled to have a policy accurately reflect the risks being insured against and
to charge premiums based on those risks. The public policy of this state, as embodied in

3
Two provisions of the Texas Insurance Code are involved here. Article 5.06-1 requires
uninsured/underinsured motorist protection to be offered to the insured on automobile liability
policies issued in Texas. Article 5.06-3 similarly requires personal injury protection to be offered
to the insured on automobile liability policies issued in Texas. For the purposes of this opinion,
we will not distinguish between these two sections of the Insurance Code. As the Conlin court
wrote, "[w]e see no reason why the rationale used by courts in determining the validity of an
owned-but-unscheduled-vehicle exclusion should not be the same whether in the context of article
5.06-1 or article 5.06-3." Conlin, 828 S.W.2d at 334 n. 1.
 article 5.06-1 of the Insurance Code, does not require that a person be allowed to insure and
pay premiums based solely on the risks attendant to one vehicle, and then recover from the
insurer for injuries sustained in or because of a different, unscheduled vehicle owned by the
insurer.

Conlin, 828 S.W.2d at 337. Several other recent state courts of appeals have also concluded that

owned-but-unscheduled-vehicle exclusions are generally valid and enforceable. See, e.g., Texas

Farmers Ins. Co. v. McKinnon, 823 S.W.2d 345 (Tex.App.—Beaumont 1991, writ denied); Moore

v. State Farm Mut. Auto. Ins. Co., 792 S.W.2d 818 (Tex.App.—Houston [1st Dist.] 1990, no writ);

Berry v. Texas Farm Bureau. Mut. Ins. Co., 782 S.W.2d 246 (Tex.App.—Waco 1989, writ denied);

Beaupre v. Standard Fire Ins. Co., 736 S.W.2d 237 (Tex.App.—Corpus Christi 1987, writ denied).

Thus, the current state of Texas law decisively holds that owned-but-unscheduled-vehicle exclusions

are generally valid and enforceable.

In an attempt to escape the conclusion that the owned-but-unscheduled-vehicle exclusions are

valid in this case, Tomlinson cites Briones v. State Farm Mut. Auto Ins. Co., 790 S.W.2d 70

(Tex.App.—San Antonio 1990, writ denied). In that case, a state court of appeals held that an

insured could recover benefits under the uninsured motorists provision of his insurance policy after

he was injured while riding in an uninsured car provided to him by his employer. Relying on a clause

in the plaintiff's insurance policy that excluded coverage for injuries that occurred in vehicles

"available for the regular use of" the insured, the insurer refused to pay uninsured motorists benefits

because the employer's vehicle was available for the regular use of the insured. The Briones court

held that the exclusionary clause was invalid in that particular case because it conflicted with the

purpose of article 5.06-1 of the Insurance Code—i.e., the protection of insured persons who are

legally entitled to recover damages from the owner of an uninsured motor vehicle. Id. at 73-74.

Importantly, the insured in Briones was driving a vehicle provided and owned by his

employer. In Conlin, however, the court confronted a situation, as we do here, in which the insured

owned the automobile that was involved in an accident. The Conlin court thus distinguished Briones

because the vehicle in Briones was owned by the insured's employer, not by the insured, and because

the plaintiff in Briones "could not be expected to insure every vehicle that his employer assigned him

to drive." Conlin, 828 S.W.2d at 336. The Conlin court therefore held that the
owned-but-unscheduled-vehicle exclusion was enforceable in that case. Since Tomlinson owned the

car in which she was riding when she was injured, we follow the ruling of Conlin and hold that both

of the owned-but-unscheduled-vehicle exclusions in the Policy are enforceable in this case.

C. Motion for New Trial

Finally, Tomlinson contends that the district court erred when it denied her Rule 59(e) motion

for a new trial. After reviewing the record, we cannot conclude that the district court abused its

discretion when it denied this motion. See Lavespere v. Niagara Machine & Tool Works, Inc., 910

F.2d 167 (5th Cir.1990), cert. denied, --- U.S. ----, 114 S.Ct. 171, 126 L.Ed.2d 131 (1993).

III. Conclusion

The judgment of the district court is AFFIRMED.