Scottsdale Insurance Company v. Logansport Gaming

556 F. App'x 356
CourtCourt of Appeals for the Fifth Circuit
DecidedFebruary 24, 2014
Docket13-30645
StatusUnpublished
Cited by4 cases

This text of 556 F. App'x 356 (Scottsdale Insurance Company v. Logansport Gaming) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Scottsdale Insurance Company v. Logansport Gaming, 556 F. App'x 356 (5th Cir. 2014).

Opinion

PER CURIAM: *

This case concerns the interpretation of an insurance policy issued by Plaintiff-Appellee Scottsdale Insurance Company (“Scottsdale”) to Defendants-Appellants Logansport Gaming, L.L.C., Logansport Truckstop, L.L.C., and Sabine River Restaurant (together “Logansport”). The district court granted summary judgment in favor of Scottsdale. For the reasons below, we affirm.

I. BACKGROUND

Scottsdale issued Logansport an insurance policy for commercial general liability and property insurance (“the Policy”), insuring a property in Logansport, Louisiana. The property included a truck stop, a convenience store, video poker machines, and a restaurant. The Policy contains a Protective Safeguards Endorsement, which provides in pertinent part:

PROTECTIVE SAFEGUARDS
A. The following is added to the Commercial Property Conditions
PROTECTIVE SAFEGUARDS
1. As a condition of this insurance, you are required to maintain the protective devices or services listed in the Schedule above [Fire Extinguishers and Ansul System].
*358 2. The protective safeguards to which this endorsement applies are identified by the following symbols:
“P-9” The protective system described in the Schedule [Fire Extinguishers and Ansul System].
B. The following is added to the EXCLUSIONS section of the Causes of Loss-Special Form:
We will not pay for loss or damage caused by or resulting from fire if, prior to the fire, you:
1. Knew of any suspension or impairment in any protective safeguard listed in the Schedule above and failed to notify us of that fact; or
2. Failed to maintain any protective safeguard listed in the Schedule above, and over which you had control, in complete working order.

Logansport purchased and installed a fire suppression system in the vent hood above the stove in the restaurant kitchen. Logansport hired Ark-La-Tex Fire Systems to service the fire suppression system and inspect it semi-annually. Ark-La-Tex Fire Systems last inspected the Logansport fire suppression system in August 2010. On January 31, 2011, a fire occurred in Logansport’s restaurant kitchen, causing damage to the property. Lo-gansport filed a claim on the Policy the same day. Scottsdale investigated the claim, particularly whether the fire suppression system had been maintained “in such a condition that it should have operated." Its investigation concluded that the system did not activate on the day of the fire and that, even if it had activated, missing parts would have rendered the system ineffective in suppressing the fire.

On September 15, 2011, Scottsdale brought this suit in federal court seeking a declaratory judgment that the Policy did not provide coverage for the damage. 1 Scottsdale moved for summary judgment, claiming that the policy barred coverage because it required Logansport to maintain its fire suppression system “in complete working order.” Logansport 2 contended that it complied with the Policy by acting with due diligence and in a reasonably prudent manner in maintaining the fire suppression system.

The district court granted summary judgment for Scottsdale. The district court found that the Policy’s requirement that Logansport not only “maintain” the system, but “maintain it in complete working order” meant that the system had to be working at the time of the fire for Logansport to receive coverage. Thus, because Logansport conceded that the system did not work on the date of the fire and because Logansport did not provide any alternative interpretation of the Policy’s language, summary judgment for Scottsdale was appropriate. Logansport filed a timely notice of appeal.

II. DISCUSSION

Logansport seeks review of a final judgment of the district court. Accordingly, this Court has jurisdiction pursuant to 28 U.S.C. § 1291.

This Court reviews a district court’s ruling on summary judgment de novo, applying the same standard as the district court in the first instance. Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 *359 (5th Cir.2007) (citation omitted). Summary judgment should be granted only when there is “no genuine dispute as to any material fact and ... the movant is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(a). An interpretation of an insurance policy provision is likewise an issue of law reviewed de novo. Travelers Lloyds Ins. Co. v. Pac. Emp’rs Ins. Co., 602 F.3d 677, 681 (5th Cir.2010).

Having diversity jurisdiction over this action, we apply the substantive law of the forum state. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). In the underlying action, Louisiana is the forum state, and thus, Louisiana law governs this dispute. Louisiana courts construe insurance policies using ordinary contract principles. Smith v. Matthews, 611 So.2d 1377, 1379 (La.1993). An insurance contract’s clear and unambiguous language will be enforced as written, but any ambiguous provisions must be construed in favor of coverage to the insured and against the insurer who issued the policy. Id. (citing Cent. La. Elec. Co. v. Westinghouse, 579 So.2d 981 (La.1991); Breland v. Schilling, 550 So.2d 609 (La.1989)); see also La. Civ.Code Ann. art.2046. Still, “[wjhen a literal interpretation will produce absurd consequences, the court may consider all pertinent facts and circumstances, including the parties’ own conclusion of the instrument’s meaning, rather than adhere to a forced meaning of the terms used.” Halphen v. Borja, 2006-1465, p. 4 (La.App. 1 Cir. 5/4/07), 961 So.2d 1201, 1205, writ denied, 2007-1198 (La.9/21/07), 964 So.2d 338.

On appeal, Logansport challenges the district court’s interpretation of the Policy. Specifically, Logansport argues that (1) the Policy’s language — to “maintain ... in complete working order” — is ambiguous; (2) the district court’s interpretation of the Policy leads to absurd results; and (3) due diligence is the proper standard for determining compliance with the Policy’s requirements.

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Bluebook (online)
556 F. App'x 356, Counsel Stack Legal Research, https://law.counselstack.com/opinion/scottsdale-insurance-company-v-logansport-gaming-ca5-2014.