No. 82-3229. Summary Calendar.United States Court of Appeals, Fifth Circuit.
May 3, 1984.
Page 256
Tooley, Waldmann Weidner, John F. Tooley, Jr., Gretna, La., for third party defendant-appellant.
Hailey, McNamara, McNamara Hall, Laurence E. Larmann, Metairie, La., for defendant-third party plaintiff-appellee.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before CLARK, Chief Judge, BROWN, GEE, RUBIN, REAVLEY, POLITZ, RANDALL, TATE, JOHNSON, WILLIAMS, GARWOOD, JOLLY, and HIGGINBOTHAM, Circuit Judges[*] .
GEE, Circuit Judge:
[1] We are asked today to formulate the test of Louisiana law applicable in insurance suits to determine when a loader or unloader may claim omnibus coverage as a “borrower” of the vehicle under the standard loading and unloading clause of the trucking company’s policy — and asked to apply that test to the prototypical facts of this case. A panel of this Court has already performed both these tasks: in McDaniels v. Great American Atlantic and Pacific Tea Co., 602 F.2d 78 (5th Cir. 1979), we adopted for Louisiana a test formulated by the Texas courts, see Liberty Mutual Insurance Co., 556 S.W.2d 242(Tex. 1977), and applied it to circumstances not distinguishable in any principled way from those of the instant case to bestow coverage on the unloader as a “borrower.” Today we reaffirm th Liberty Mutual test as Louisiana law but override McDaniels’
interpretation of that test to hold that the unloader is not a borrower on the facts of this case. [2] These are not disputed. We quote the panel opinion:
[3] Sturgeon v. Strachan Shipping Co., 698 F.2d 798 (5th Cir. 1983). [4] Bankers and Shippers policy reads:Pursuant to a contract, plaintiff Sturgeon, the owner-driver of a flatbed tractor-trailer, delivered a load of Texas cotton to defendant Strachan Shipping Company [Strachan] in New Orleans, presenting it for unloading at the time and place appointed. Arriving there, he handed over his bills of lading to the Strachan clerk, parked his rig where directed in Strachan’s unloading area, and as directed readied its trailer for unloading by removing the tarpaulin and its fastenings. With this he was free to leave the area, since Strachan had complete control over the unloading process until it released the truck to Mr. Sturgeon. Although the trial court made no specific finding on the subject, Mr. Sturgeon testified without dispute that only he had right of access to his tractor, the Strachan employee-witnesses agreed, and Mr. Sturgeon does not here contend that anyone but he could move the rig once he parked it. While Strachan forklifts were unloading the bales without driving onto the trailer, a bale fell on Mr. Sturgeon. When he [Sturgeon] sued Strachan for his resulting injuries [in federal court in Louisiana, invoking diversity jurisdiction], Strachan third-partied Mr. Sturgeon’s insurance carrier,[1] [Bankers and Shippers], claiming omnibus coverage as a “borrower” of the entire rig.
[1] Actually and inconsequentially for our purposes that of his employer, which provided his coverage.
. . . Persons Insured (c) Any other person while using an owned automobile or a hired automobile with the permission of the named insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission, but with respect to bodily injury or property damage arising out of the loading or unloading thereof, such other person shall be an insured only if he is:
(1) a lessee or borrower[1] of the automobile. . . .
[5] Bankers and Shippers contends that while the Strachan unloaders may havePage 257
been covered as “permissive users” under the former standard loading and unloading clause, they are excluded from coverage by the revision limiting coverage to one unloading a hired vehicle only if he is a “borrower of the automobile. . . .” Accordingly, Bankers and Shippers denied coverage to Strachan. Bankers and Shippers cross-claimed against Strachan’s insurer, American Mutual Liability Insurance Company (American Mutual) for contribution under a comprehensive general liability policy covering Strachan. This policy excluded coverage for “bodily injury — arising out of the ownership, maintenance, operation, use, loading or unloading of (1) any automobile — owned or operated by or rented or loaned to any insured — but this exclusion does not apply to the parking of an automobile on premises owned by, rented to or controlled by the named insured or the ways immediately adjoining, if such automobile is not owned by or rented or loaned to any insured.”[2]
[6] Finding herself bound by the McDaniels decision, the trial judge held that Strachan was a “borrower” under Bankers and Shippers’ policy and Bankers and Shippers were therefore, as Strachan’s omnibus insurer, liable for the entire claim against Strachan.[3] [7] Bankers and Shippers’ third-party cross-claim against Strachan’s insurers, American Mutual, for contribution was dismissed, the trial court reasoning logically that “borrow is the correlative of loan,” so that the exclusion by the comprehensive general liability policy of “loaned” vehicles applied and Bankers was primary carrier. On Bankers and Shippers’ appeal, a panel of this Court affirmed the trial court, stating that McDanielsdetermined the result. See Sturgeon v. Strachan Shipping Co., 698 F.2d 798 (5th Cir. 1983) (Sturgeon I). Unlike the panel, sitting en banc we may reconsider McDaniels in light of Bankers and Shippers’ arguments and, having done so we now adopt for Louisiana[4] the prevailing interpretation[5] of the standard “borrower” clause as a restriction of the previous “permissive user” terminology. [8] The seminal case construing this particular standard policy provision in our Circuit is Liberty Mutual, 556 S.W.2d at 243, written for the Supreme Court of Texas by then-Justice Sam Johnson, our colleague. Carefully reviewing recent developments in coverage afforded by automobile liability insurance, as reflected by the addition of the “borrowers only” limitation to the standard loading and unloading clause, the Liberty Mutual
court held that whereas mere use (loading or unloading) of a vehicle sufficed to make a loader/unloader a “permissive user,” both actual use and temporary possession of the insured’s vehicle were
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required to render a loader/unloader a “borrower” under the amended standard clause.
[9] The holding of Liberty Mutual, a Texas case, is, of course, not binding in this diversity case to which Louisiana law applies.[6] However, we find the reasoning of that case persuasive — so much so that we quote it at some length:[10] Liberty Mutual, 556 S.W.2d at 244-45. (citations omitted) (emphasis added). [11] In subsequent cases, the Texas courts have applied the “use and possession” test of Liberty Mutual to bar coverage where, as here, the alleged “control” of the vehicle by the unloader was evidenced by tellingThe court of civil appeals defined “borrower” as “someone who has, with permission of the owner, temporary possession and use of the property of another for his own purposes.” . . . Although we agree with the court of civil appeals’ general definition of “borrower,” we do not agree that Homette [the unloader] falls within it because there is no evidence that Homette had possession of the truck and trailer rig. . . . Prior to the addition of the loading and unloading endorsement to the automobile liability policy neither the automobile policy nor the standard liability policy defined which insurer had liability coverage for injuries sustained upon the premises of one who was injured under a general liability policy during the loading and unloading of a vehicle not owned or hired by the general liability insured. This question was settled by the later addition of the loading and unloading clause: the automobile liability insurer would provide coverage for injuries sustained as a result of negligence in the loading and unloading of the vehicle. . . . The inclusion of the loading and unloading clause expanded the coverage of the policy from that afforded by the phrase “ownership, maintenance or use . . . of any automobile.” . . . Texas has adopted the broader majority view that “loading and unloading” embraces not only the immediate transfer of the goods to or from the vehicle, but also the complete operation of transporting the goods between the vehicle and the place from or to which they are being delivered. Under the complete operation approach the coverage provided by a loading and unloading clause extended to a broad group of persons who were not employees of the owner of the vehicle; the only requisite for coverage was that they were using (unloading) the truck with the consent of the owner.[7]
General rules of construction lead us to conclude that the policy exclusion for persons who were unloaders but not “borrowers” of the vehicle was intended to limit the insurer’s liability for injuries resulting from acts of these nonemployees of the owner of the vehicle. The purpose of an exclusion is to take something out of the coverage that would otherwise have been included in it. . . . If, as American urges, . . . [the mere act of unloading] was enough to bring Homette within the policy, the “borrower” requirement would be meaningless because one would need only to be an unloader to also be a “borrower.” We decline to adopt American’s construction of the policy. While unloading is a “use” of the vehicle, the conjunction “and” in the definition of “borrower” indicates that one must also have possession of the vehicle to be a “borrower.” Possession connotes the right to exercise dominion and control over the truck and trailer. There is no evidence that Homette had this right.
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the driver where to park and entering the vehicle only as necessary to remove the goods. See, e.g., Atlantic Mutual Insurance Co. v. Gulf Insurance Co., 596 S.W.2d 326
(Tex.Civ.App.-Texarkana 1980, no writ history); Robinson v. Excalibur Insurance Co., 598 S.W.2d 324 (Tex.Civ.App. — Houston 1980, writ ref’d, n.r.e.).
Page 260
make it appropriate for us to set out some guidelines regarding what constitutes that control of a vehicle which will render a loader/unloader a “borrower” covered by this standard clause:
[17] Control of a movable object intrinsically involves power to govern its location. In the instance of a vehicle — an object whose purpose is to provide transportation — “control” of the vehicle during any given period must include power to move it during that space of time. Thus, to have control of a vehicle during loading/unloading one must have the power to move the vehicle during the loading/unloading process itself. [18] We do not now attempt to compose an exclusive list of the various means by which a “borrower” may have the necessary power to move an allegedly borrowed vehicle; such mapping of the precise factual contours of “control” in the context of particular situations is an incremental endeavor more appropriate for the federal district courts and the courts of Louisiana than for our en banc discussion — which at this point would be unduly speculative. [19] We agree with the district court that “borrow is the correlative of loan,” or more precisely, that the two terms in these standard insurance clauses must be construed in complementary fashion. Having determined that Strachan is not a “borrower” of the truck under the omnibus clause of Bankers and Shippers’ policy, we accordingly hold that the vehicle was not “loaned” to it under the terms of American Mutual’s comprehensive policy. We remand to the district court for such proceedings as may be necessary in light of this holding. [20] REVERSED and REMANDED.Having taken the appeal en banc following publication of the original panel opinion, our court by order of August 25, 1983, remanded to the panel to permit certification to the Supreme Court of Louisiana. After consultation with counsel, the panel prepared an opinion seeking the assistance of that court. 721 F.2d 144 (5th Cir. 1983). A month and some weeks later, the Louisiana court responded to our request as follows, 444 So.2d 1234:
February 3, 1984 Certification denied.
HTL PFC WFM JLD FAB JCW
DIXON, C.J., would grant and answer both questions with “No.”
We therefore voted the appeal en banc again and dispose of it as best we can.
court believed itself to be doing so: in discussing the general principles of insurance construction, the court cites Louisiana cases exclusively; 603 F.2d at 81; and the court devotes a footnote specifically to distinguishing one case “because it is the only Louisiana case cited,” 603 F.2d at 81-2 n. 3.