Navarro Pecan Co Inc v. Penn America Ins Co

• Court: Court of Appeals for the Fifth Circuit
• Decided: April 1, 2002
• Docket: 01-31183
• Status: Unpublished

Opinion

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 01-31183 Summary Calendar

NAVARRO PECAN CO., INC.,

Plaintiff-Appellant,

versus

MANSFIELD WAREHOUSING INVESTMENT CO., LLC; MANSFIELD COLD STORAGE, INC.,

Defendants, and

MANSFIELD WAREHOUSING SERVICES, INC.,

Defendant-Cross Claimant,

PENN AMERICA INSURANCE CO.,

Intervenor Defendant-Cross Defendant-Appellee.

_________________________________________________________________

Appeal from the United States District Court for the Western District of Louisiana (99-CV-371) _________________________________________________________________ March 29, 2002

Before HIGGINBOTHAM, WIENER, and BARKSDALE, Circuit Judges:

PER CURIAM:*

For this interlocutory appeal permitted by our court, Navarro

Pecan Co., Inc., contests the summary judgment awarded Penn America

Insurance Co. The district court held that Penn’s insurance policy

issued to Mansfield Warehousing Services, Inc. (MWSI), did not

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. cover the loss of Navarro’s property because, pursuant to a policy

exclusion, it was in MWSI’s care, custody, or control. Navarro

advances two contentions: the terms of the policy are ambiguous;

and the district court failed to properly apply Louisiana law.

Navarro was a depositor of approximately 1.4 million pounds of

pecans in a cold-storage warehouse owned by Mansfield Cold Storage,

Inc., and operated by MWSI. Navarro received warehouse receipts

for loads of pecans delivered to MWSI, providing that the pecans

would be returned upon payment of storage fees and presentation of

the applicable warehouse receipt(s) to MWSI. The rupture of a

frozen fire sprinkler pipe allegedly damaged the pecans. Navarro

sued MWSI, and subsequently Penn (MWSI’s insurer), for $1.5

million.

Summary judgment was awarded Penn. We review de novo. E.g.,

Stults v. Conoco, Inc., 76 F.3d 651, 654 (5th Cir. 1996). As

noted, the policy excludes from coverage “[p]ersonal property in

the care, custody or control of the insured [MWSI]”.

Navarro first contends the “care, custody or control”

exclusion is ambiguous, precluding summary judgment for Penn.

However, because MWSI is a depositary (or bailee) and a

warehouseman, it is deemed to have “care, custody or control” over

the personal property it accepts for deposit. See Hendrix Elec.

Co., Inc. v. Casualty Reciprocal Exch., 297 So.2d 470, 474 (La.

App. 2d Cir. 1974); see also LA. CIV. CODE art. 2926 (deposit

requires person to receive property and preserve it); LA. REV. STAT.

ANN. §§ 10:7-204 (warehouseman has duty of care) & 10:7-209

2 (warehouseman given lien over goods covered by receipt).

Accordingly, under the circumstances of this case, the provision is

not ambiguous. See Home Ins. Co. v. A.J. Warehouse, Inc., 210 So.

2d 544 (La. App. 4th Cir.), application denied, 214 So. 2d 162,

163, 165 (La. 1968).

Navarro further contends Reynolds v. Select Properties, Ltd.,

634 So. 2d 1180 (La. 1994), provides the only circumstances where

the “care, custody, or control” exclusion applies in Louisiana.

The Louisiana Supreme Court stated, however, that “the first, and

most common, circumstance usually occurs” in the contractor or

subcontractor context and noted “the insured’s actual physical

possession of or control over the property determined whether the

exclusion applied”. Id. at 1184 (emphasis added). The second

circumstance occurs when “the insured has a proprietary interest in

or derives monetary benefit from the property”. Id.

First, the Louisiana Supreme Court did not state these were

the only circumstances where it applies, and other Louisiana

decisions confirm the exclusion applies in other circumstances as

well. See, e.g., Keller v. Case, 757 So. 2d 920, 923 (La. App. 1st

Cir. 2000) (horse boarded at stable under insured’s care, custody,

and control); Duchmann v. Orleans Maritime Brokerage, Inc. & The

Hartford, 603 So. 2d 818, 820 (La. App. 4th Cir. 1992) (barge in

insured’s care, custody, and control during transport); Berquist v.

Fernandez, 535 So. 2d 827 (La. App. 2d Cir. 1988) (Damage to horses

being transported by insured excluded by “care, custody, or

3 control” exclusion.); A.J. Warehouse, 210 So. 2d at 550 (Damage to

tiles stored in warehouse covered by the exclusion.).

Further, Reynolds involved a claim based on theft from a self-

storage unit. 634 So. 2d at 1182. The court noted that Reynolds

“merely leased storage space” and the storage contract was governed

by the Louisiana Self-Service Storage Facility Act, LA. REV. STAT.

ANN. 9:4756, which is not a deposit or covered by Louisiana’s

provisions dealing with warehousemen. Because the lease of a self-

storage space is fundamentally different from a deposit, the ruling

in Reynolds (exclusion inapplicable) does not apply here.

Finally, St. Paul Mercury Ins. Co. v. Fair Grounds Corp., 123

F.3d 336 (5th Cir. 1997), does not require reversal of the summary

judgment. There, we acknowledged the parties did not contend the

property at issue was under the control of the insured in a

contractor or subcontractor relationship (Reynolds’ “first

circumstance”) and determined that the insured did not derive a

monetary benefit from the property under the “second circumstance”.

Fair Grounds, 123 F.3d at 340.

AFFIRMED