Nautilus Insurance v. Zamora

                   United States Court of Appeals,

                            Fifth Circuit.

                            No. 96-40662.

         NAUTILUS INSURANCE COMPANY, Plaintiff-Appellee,

                                  v.

              Maria De Jesus ZAMORA, et al., Defendants,

           Maria De Jesus Zamora, Defendant-Appellant.

                            June 13, 1997.

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

Before DAVIS, STEWART and PARKER, Circuit Judges.

     STEWART, Circuit Judge:

     Maria de Jesus Zamora was shot while she worked as a cashier

at Mariscos El Marinero Restaurant (Mariscos), a restaurant located

in Laredo, Texas.    She sued the restaurant in Texas state court,

alleging that her injuries resulted from Mariscos's negligence.

Nautilus filed this suit in federal court seeking a declaratory

judgment that it had no duty to defend or indemnify Mariscos for

the injuries suffered by Zamora.       The district court granted

Nautilus's motion for summary judgment, concluding that because

Zamora's injuries would not have occurred but for her employment,

her injuries arose out of and occurred in the course of her

employment.     As such, the district court held that the policy

unambiguously excluded Zamora's injuries from coverage. We affirm,

but for slightly different reasons than those articulated by the

district court.

                              BACKGROUND

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       The facts of this case are undisputed.                 On March 19, 1993,

Zamora was working as a cashier at Mariscos when a gang of three

men walked in and began shooting.            Two persons were killed.       Zamora

was shot in the chest, suffered fractured ribs, and experienced

severe nervous shock.           Zamora filed a negligence suit against

Mariscos in state court.        Mariscos thereafter sought coverage from

Nautilus under its commercial general liability policy.                   Nautilus

filed this declaratory judgment action in federal district court,

seeking a determination that it had no duty to defend or indemnify

Mariscos.    The policy excluded, among other things, bodily injury

to "[a]n employee of the insured arising out of and in the course

of employment by the insured;           ..." (Emphasis added.)            Nautilus

moved for summary judgment and argued that because Zamora was

injured during her shift at Mariscos, Zamora's injuries "ar[ose]

out of" and were suffered "in the course of [her] employment."

       The district court agreed with Nautilus.                First, the court

concluded that Zamora suffered her injuries while she was in the

course of her employment at Mariscos.                  Second, borrowing from

Texas's workers' compensation case law, the district court held

that   the   phrase   "arose     out   of"    meant    that    Nautilus   was   not

obligated    to   defend   or    indemnify      Mariscos      if,   but   for   her

employment, Zamora would not have been injured.                      Because the

evidence was undisputed that Zamora would not have been shot but

for her employment with Mariscos, the district court granted

summary judgment in favor of Nautilus.                Zamora filed this timely

appeal.


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                                  DISCUSSION

       Because we sit in diversity, we must apply Texas law, mindful

that in making an Erie guess, "[w]e are emphatically not permitted

to do merely what we think best;              we must do that which we think

the [Texas] Supreme Court would deem best."                  Jackson v. Johns-

Manville Sales Corp., 781 F.2d 394, 397 (5th Cir.) (en banc), cert.

denied, 478 U.S. 1022, 106 S.Ct. 3339, 92 L.Ed.2d 743 (1986).                We

review a grant of summary judgment de novo, applying the same

criteria used by the district court in the first instance.                Norman

v.   Apache    Corp.,   19    F.3d    1017,    1021   (5th   Cir.1994).     The

interpretation of an insurance contract and its exclusions is a

question of law which we review de novo.              See National Union Fire

Ins.   Co.    v.   Kasler    Corp.,   906   F.2d   196,   198   (5th   Cir.1990)

(interpreting Texas law).

       We begin with basic principles of Texas insurance law. Texas

has adopted the "eight corners rule," which provides that Texas

courts "look only to the pleadings and the insurance policy to

determine whether the duty to defend exists." Cullen/Frost Bank of

Dallas, N.A. v. Commonwealth Lloyd's Ins. Co., 852 S.W.2d 252, 255

(Tex.App.-Dallas 1993, writ ref'd with per curiam opn.).                  "If a

petition does not allege facts within the scope of coverage, an

insurer is not legally required to defend a suit against its

insured."      American Physicians Ins. Exch. v. Garcia, 876 S.W.2d

842, 848 (Tex.1994). We must liberally construe the allegations of

the pleadings, and any doubt about coverage is resolved in favor of

the insured. Cullen/Frost, 852 S.W.2d at 255. "[I]f the insurance


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contract is expressed in plain and unambiguous language, a court

cannot resort to the various rules of construction."               Barnett v.

Aetna Life Ins. Co., 723 S.W.2d 663, 665 (Tex.1987).                     Policy

exclusions are strictly construed against the insurer.                 Ramsay v.

Maryland Am. Gen. Ins. Co., 533 S.W.2d 344, 349 (Tex.1976).

        Because     there     is   no    dispute   about   the   circumstances

surrounding Zamora's injuries, this case presents a pure question

of   law    about    the     meaning     of   Nautilus's   employment-related

exclusion.       The parties agree that Zamora's injuries occurred in

the course of her employment with Mariscos, and the sole question

we   face   is    whether    Zamora's      injuries   "ar[ose]   out    of"   her

employment.      The district court concluded that her injuries did.

In reaching that conclusion, the district court imported the

"positional risk" or "but for" test commonly applied in workers'

compensation cases.         See Walters v. American States Ins. Co., 654

S.W.2d 423, 426 (Tex.1983);             Employers' Casualty Co. v. Bratcher,

823 S.W.2d 719, 721-22 (Tex.App.-El Paso 1992, writ ref'd);               North

River Ins. Co. v. Purdy, 733 S.W.2d 630, 633 (Tex.App.-San Antonio

1987, no writ). The district court reasoned that "Zamora would not

have been shot had she not been working as a cashier for Mariscos

on March 19, 1993.         Under the positional-risk test, therefore, her

injuries "arose out' of her employment and fall within the [policy]

exclusion."

       We cannot conclude, however, that the Texas Supreme Court

would turn to workers' compensation principles as a means of

interpreting the terms of an insurance contract.                   First, the


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positional-risk         doctrine      is   a   judicially   created      tool     for

interpreting Texas's workers' compensation statute, and not used

for the purpose of interpreting insurance contracts.                  See, e.g.,

Westchester Fire Ins. Co. v. American Gen. Fire & Cas. Co., 790

S.W.2d 816, 818 (Tex.App.-Austin 1990, no writ) (declining to

follow decision which interpreted statute, rather than terms of

insurance policy).           Second, and perhaps most importantly, in an

uninterrupted line of cases, Texas courts (including the Texas

Supreme       Court)    have    consistently     interpreted    policy    language

identical to that in this case and come to the conclusion that the

language unambiguously excludes from coverage injuries occurring

while       the   employee     is   performing   work-related    duties.1         Our

understanding          of   Texas    insurance    law   comports    with        these

decisions.2

    1
     See Transport Ins. Co. v. Standard Oil Co., 161 Tex. 93, 337
S.W.2d 284, 287 n. 3, 288-90 (1960), overruled on other grounds,
Commercial Standard Ins. Co. v. American Gen. Ins. Co., 455 S.W.2d
714 (Tex.1970); T.I.M.E., Inc. v. Maryland Cas. Co., 157 Tex. 21,
300 S.W.2d 68, 70-71 (1957);     Truck Ins. Exch. v. Musick, 902
S.W.2d 68, 70 (Tex.App.-Forth Worth 1995, writ ref'd); National
Union Fire Ins. Co. v. National Convenience Stores, Inc., 891
S.W.2d 20, 21 (Tex.App.-San Antonio 1994, no writ); Westchester
Fire Ins. Co., 790 S.W.2d at 818 & n. 2; Aberdeen Ins. Co. v.
Bovee, 777 S.W.2d 442, 444 (Tex.App.-El Paso 1989, no writ);
Travelers Indem. Co. v. Cen-Texas Vending Co., 530 S.W.2d 354, 354-
55 (Tex.Civ.App.-Eastland, writ ref'd n.r.e); Olivier v. Life &
Cas. Ins. Co., 440 S.W.2d 398, 400 (Tex.Civ.App.-Beaumont 1969,
writ ref'd n.r.e.);    Metropolitan Life Ins. Co. v. Wilson, 102
S.W.2d 454, 456-57 (Tex.Civ.App.-Beaumont 1937, no writ).
        2
      See Western Heritage Ins. Co. v. Magic Years Learning Ctrs.
& Child Care, Inc., 45 F.3d 85, 90 (5th Cir.1995) (interpreting
Texas insurance law);    Old Republic Ins. Co. v. Comprehensive
Health Care Assocs., Inc., 2 F.3d 105, 108-110 (5th Cir.1993)
(same); National Union Fire Ins. Co. v. Kasler Corp., 906 F.2d at
197, 199-200 (same); see also Acceptance Ins. Co. v. Hood, 895
F.Supp. 131, 134 (E.D.Tex.1995) (same).

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     Here, it is undisputed that Zamora was performing her duties

as a cashier when she was shot.   We therefore hold that the Texas

Supreme Court, if faced with the policy exclusion and facts of this

case, would conclude that Zamora's injuries "arose out of" her

employment and that therefore Nautilus had no duty to defend or

indemnify Mariscos.   See T.I.M.E., Inc., 300 S.W.2d at 71 (holding

that employee's injuries arose out of employment because employee

was injured when "he was engaged in performing duties of his

employment");   National Union Fire Ins. Co., 891 S.W.2d at 21

(holding that exclusion applied because "[a]ll of the acts alleged

that arguably resulted in [the employee's] bodily injury occurred

on the defendant company's premises and during office hours or

during an office party").

     Judgment AFFIRMED.




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