Ronald D. Nichols v. Nancy Anderson, Canal Insurance Company, Garnishee-Appellee. Allstate Insurance Company v. Canal Insurance Company
788 F.2d 1140
5th Cir.
1986
Check Treatment

*1 NICHOLS, D. Ronald

Plaintiff-Appellant, Defendants, ANDERSON, al., et

Nancy Company,

Garnishee-Appellee. COMPANY, INSURANCE

ALLSTATE

Plaintiff-Appellant, COMPANY, INSURANCE

CANAL

Defendant-Appellee.

No. 84-4498. Appeals, Court

United States

Fifth Circuit.

5,May 1986. Rehearing 1986.

Opinion on June Steen, Johnson, III, Reyn- B. Whitman Miss., Jackson, Currie, for

olds, Dalehite & Ins. Co. Allstate Jackson, Larry Spencer, Spencer, King & Miss., D. Nichols. Ronald Jones, Wallace, & Mockbee Michael B. Bass, III, Jones, F. Ross Bass, W. Walker Miss., Ins. Co. Jr., Jackson, for Canal *2 1141 tion of one-half of the amount paid it Nich- ols. The state garnishment was removed to district court and the actions were con- solidated. The district granted court sum- POLITZ, WISDOM, and Circuit Before mary judgments to Canal. Nichols and Judges.* appeal. Allstate OPINION COLLATERAL ESTOPPEL POLITZ, Judge: Circuit contends, Canal as a threshold mat case, plain- diversity this In ter, that Nichols and Allstate are collateral Allstate Insurance Nichols and Ronald tiffs ly estopped litigating from the issue of in favor of summary judgments appeal Co. defendant Canal coverage policy under the it issued to Company. Ap- Woods. Canal advances a declaratory the va- Mississippi law to determine plying judgment of the district court for the East in an clause of a radius-exclusion lidity Arkansas, ern District of entered 1979 Arkansas, the issued policy insurance while the initial Mississippi proceed tort clause valid. Con- found the court district ings were pending, adjudging that Woods governs this that Arkansas cluding was not covered under the Canal policy at voiding of the radi- the mandates case and the time of the Nichols accident because of clause, reverse. us-exclusion agree radius-exclusion clause. We with the district court that collateral estoppel is BACKGROUND inapplicable. giving The facts rise to this action are In diversity apply cases we feder reported Nichols, in detail in v. Woods 416 estoppel al collateral doctrine. Freeman v. (Miss.1982). So.2d 659 only We note a Coggins Inc., Lester Trucking, 771 F.2d summary brief of the facts necessary to (5th Cir.1985). 860 party seeking to appeal. resolution of this invoke estoppel collateral plead must Nichols, resident, a Mississippi per- was defense, 8(c), Fed.R.Civ.P. and show: manently injured in an automobile accident (1) that the issue at stake be identical Flora, Mississippi 31,1979. near on January to the one in prior involved litigation; The accident by was caused the combined \and\ negligence Larry of Brooks and Jerry (2) that the issue has actually been Mississippi Supreme Woods. The Court af- litigated prior litigation; and judgment firmed a in favor of Nichols for (3) that the determination of the issue $550,000. prior in and litigation has been a critical accident, At the time of the Brooks was necessary part judgment of the by liability covered a policy is- that earlier action. by sued Allstate to Nancy defendant An- (citations omitted) (emphasis Id. at 862 add derson, owner of the car Brooks was driv- ed). addition, party raising ing. paid Allstate policy plus limits shield “must make attempt some to define penalties $130,- interest and which totaled precisely [legal] issue necessarily decid 151.15. prior ed in the United States v. [action].” Woods, tractor-trailer, driver of a was Kalish, 1144, 690 F.2d (citing 1155 United $100,000 insured under a Giarratano, (5th States 622 F.2d 153 Canal, by containing issued an exclusion Cir.1980)), reh’g denied, en banc 689 F.2d limiting coverage clause to within a 150- (5th Cir.1982), denied, cert. 459 U.S. McCrory, Arkansas, mile radius of where 1108, 735, (1983); 103 S.Ct. 74 L.Ed.2d 958 garaged. the tractor-trailer was Although Kalish, see also United States v. 780 F.2d part Mississippi a of was within 150 miles (5th Cir.1986); United States Jack McCrory, the accident beyond occurred son, (2d Cir.1985). limiting result, the denied radius. As a only The record before us contains a liability. copy of the judgment default entered in the garnishment pro- Nichols instituted a declaratory proceedings. This ceeding to enforce his judgment merely outlines the facts behind Woods. Allstate sued Canal for contribu- accident, noting that it occurred more * 27, 1986, Judge Due being to his death on March quorum. sion. The case is decided Tate, participate 46(d). Albert Jr. did not in this deci- U.S.C. § and, McCrory from as a than 150 miles Craig v. Compress Columbus & Ware- duty no to defend consequence, Canal owed house 210 So.2d 649 (Miss.1968). then-pending Mississippi tort in the Woods In applying its “center of gravity” test, action. Mississippi has adopted the principles of (Second) us does not show The record before Conflicts of (1971) (the Laws Restatement”). “Second clause validity of the radius-exclusion Boardman v. United Services Automobile *3 litigated” in the Arkansas “actually was proceedings. flects, Ass’n, 470 So.2d 1024 (Miss.1985). the re- Insofar as record merely judicial deter- Canal sought inquiry for our starting point occurred more mination the accident that which the Second 193 of § and, McCrory 150 miles from because than validity the by which the law provides clause, that Woods of the radius-exclusion deter1 contract is liability insurance of a under the terms of the was not covered par- the state which “of the mined is that ties understood judgment mili- policy. The default status principal the to be was that the tates the conclusion validi- risk — ” See insured the location of radius-exclusion clause ty- vel non of the (b) to comment As § Boardman. credulity court. It strains was before the to clear, of an automobile in the case makes liability put validity that Canal the of this believe lo- “principal policy, the insurance issue, ap- made no clause at and Woods place be the risk” will the insured cation of pearance. garaged at will be automobile the “where carry has failed to its burden of Canal ques- in period during of the most least issue of validi- proving that the instant the Woods’s question that is no There tion.” tractor-trailer primarily Ar- ty of the radius-exclusion clause under times pertinent all was at Mississippi necessarily or law was kansas and shown that the issue was before the court in the Arkansas action. The Freeman McCrory, Arkansas. in garaged litigated. has not even actually if Even this fact. reflects policy itself The this were doubt, pertinent the open to Restate- of the Second factors under § met; Nichols and Allstate factors are not in applied Board- ment, man, interpreted and as collaterally estopped.1 are not disposi- for the Arkansas law point to precepts.

tive analy- pre-Boardman court’s The district LAW CHOICE OF original on the by its focus sis was flawed inquiry presented The essential Mississippi and in- in tort which occurred law of Arkansas appeal is whether the Mississippi The issue we jured a resident. deter Mississippi applied is to to the or be radius-exclu- validity of the perceive is validity of the radius-exclu of the mination sion clause. The district policy issued in an insurance sion clause applied court Mis motor-carrier, by Arkansas, to an Arkansas validity upheld sissippi law and insurer, covering a vehicle Arkansas an garaged clude that Mississippi choice-of-law clause. Under viewed, we con- in Arkansas. So rules, Mfg. Elec. Klaxon Co. Stentor in- the dominant Arkansas has 487, 61 S.Ct. 85 L.Ed. 313 U.S. testing applied in its law is to be terest and the (1941), conclude that Arkansas law we clause. validity of the radius-exclusion this issue. governs the resolution of Mississippi Supreme Court has theAs problems, resolving conflicts-of-law out, phrase “princi- use of the pointed Mississippi applies 193 of the Second Re- pal location” § reality that choice “reflects place of the which has the most statement law arise unless at questions do not significant relationship to the event and of law arguable basis which, have some of the relation- two states parties, or because least for Boardman, law.” par- application of their ship with the and or contact event We find that ties, greatest concern with the 470 at 1033. has the So.2d applying its law interest specific respect to the liabili- has insufficient issues with parties litiga- to the rights ties and of the in an validity of a clause to the interest tion. policy, whatever insurance purposes. process See privies for due of Woods that Canal has our determination 1. Because of Freeman; Corp., Hardy Johns-Manville Sales Freeman factors have show that failed to satisfied, (5th Cir.1982). issue of do not reach the been may considered and Allstate whether Nichols litigation arising aspects of the the other Woods does not cover the state of Arkan- accident. of the Nichols-Woods-Brooks out sas. Had Woods’s accident occurred in Dorado, Fort Smith or El example, both of which are more distant than 150 miles ARKANSAS LAW from McCrory, provide would no qualifies a “common Woods as coverage. That limitation is inconsistent by motor vehicle” under Arkansas carrier with Rule 13.1 public and the policy of for the transports property as one who Arkansas, as reflected in Ark.Stat.Ann. for com general public by motor vehicle 73-1758. Had the accident § occurred in 73- pensation. Ark.Stat.Ann. § El Dorado it is clear that Rule 13.1 would 1758(a)(7)(1979 (now Eepl.) repealed). Com oblige pay Canal to up to its carry must minimum mon carriers policy limits. The 150-mileradius-exclusion prescribed by as the Arkansas clause would avail, have been being of no Transportation (the Commission Commis void ab initio as violative of public sion). Ark.Stat.Ann. 73-1768. Rule 13.1 § policy of Arkansas. We conclude that the Commission, establishing of the minimum same result appertain must here. *4 coverage, provides part: in policy We find no of Arkansas which Nothing poli contained in [an insurance] require application would of a radius- thereon, cy any or endorsement nor the clause, Arkansas, exclusion void in to an any provisions, by violation of of [its] which in Mississippi. accident occurred Ini- assured, shall relieve the from [insurer] apparent tially, it is note that both Woods liability hereunder pay or from the [its] contemplated operations and Canal in Mis- [any judgment. ment of final] since, noted, sissippi, previously por- as a Insurance in contracts Arkansas are read Mississippi tion of lies within 150 miles of applicable statutory public to include and McCrory, express policy Arkansas. The of policy provisions in effect at the time the “cooperation Arkansas is to further [with policy super- insurance sede is issued. These fully may another as as necessary be state] any conflicting policy provisions. provision in any the enforcement of of [the g., Co., E. MFA O’Bar v. Mut. Ins. 628 Arkansas Motor Act.” Ark.Stat. Carrier] (Ark.1982); S.W.2d 561 Carner v. Farmers 73-1760(e). Ann. See also International § Ark, 201, Ark.App. Ins. Co. 3 623 of Tidwell, 488, Paper Co. v. 466 S.W.2d 491 (1981); S.W.2d 859 v.Gill General Ameri- (Ark.1971) (Arkansas policy follows “a of Co., (8th can Ins. 434 F.2d 1057 Cir. Life liberality rather than restrictiveness” in its 1970); see also Milldrum v. Travelers In states). dealings with other R.I., (Ark. dent. Co. 688 S.W.2d 271 of 1985). Since the policy provisions Insurance radius-exclusion clause is which law, conflict invalid under Arkansas it will not public with Arkansas statutes or policy given by Mississippi effect a are invalid and void and court unless are not merely applicable voiding Arkansas O’Bar; E.g., unenforceable. contrary public poli to the Vaught Co., v. clause cy Mississippi. settled State Farm Fire & Cas. (8th Cir.1969), 413 F.2d of McNeal v. aff'g 539 Administra Carter v. McNeal, Co., tor the Estate 254 So.2d 521 Saint Paul Fire & Marine Ins. 283 of of (Miss.1971). (E.D.Ark.1968); persuaded are Supp. F. 384 We that Missis Ins. Safeco (8th sippi’s public policy maintaining in Robey, Co. America v. safe of Cir.1968); highways by finding is furthered a that the see also Alexander v. Pilot Fire See, (E.D.Ark. e.g., exclusion clause is void. Code F.Supp. & Cas. Ins. 331 Miss. 561 77-7-83; Ann. Farm 1971) State Mut. . § reflects case-law that an Kuehling, Ins. 475 So.2d 1159 Auto. may abrogate insurer statutorily not Co. (Miss.1985); Travelers Indem. Co. v. Wat required ly coverage terms of express unless (Miss.1968); kins, O’Bar, 209 So.2d 630 permitted by statute. Commer Vaught; Skinner, 1 cial Cas. Ins. Co. v. (Miss.1941). So.2d 225 Ins. Co. Safeco persuaded policy We are that the reasons, foregoing For the we find the provisions issued to Woods contravenes the 13.1, 150-mile radius-exclusion clause to be of Rule void specifically requires which inapplicable judg- case. The pay that and ments are REVERSED and the actions REMANDED for further any insurer final are By rendered its limiting insured. proceedings con- policy’s application the of to within 150 miles Arkansas, sistent herewith. McCrory, issued to ON

OPINION REHEARING METAL SHEET SOUTHWESTERN POLITZ, Judge: HENRY A. Circuit WORKS, INC., Plaintiff-Appellee, the court This is before on the matter Company application of Canal rehearing motion to for third member to the and add MFG., INC., SEMCO panel. Defendant-Appellant. reliance on Canal’s Kowntouris v. Var- (Miss.1985), as varis So.2d authori- No. 85-1001. Mississippi ty proposition that apply Arkansas law the courts would not to Appeals, United States Court clause of the insurance radius-exclusion contract is Mississippi Supreme Fifth Circuit. Kountouris, misplaced. expressly re- Court 5,May 1986. on the affirmed its reliance (1971), (Second) Laws of Conflicts of applied at in- So.2d stant case. Kountouris cation of which appli- involved the an the Second Restatement to Mississippi conveying instrument drafted property Mississippi real Greece. Supreme suggested, 476 So.2d at Court 606, that under the Second Restatement’s test, applicable. Greek law would be It did say give not would not *5 jurisdiction effect to law of another determining validity of a clause in a remain by contract. We convinced that following the rules out in the laid Second Restatement, accurately predicted Mis- sissippi law. requests Canal also clarification of one aspect opinion. oblige. of our We It was not our intent to decide whether Canal’s limited to minimum amount required law we under relied ($25,000) or to limits of its insurance ($100,000). That issue is to first addressed the trial court on remand. clarification, foregoing peti- With the rehearing

tion for is DENIED. Canal’s third panel motion to add a to member to the Tate, replace Judge Jr. Albert is also DENIED. Marshall, Feuille, Hulse, Finger &

Scott, McNutt, Paso, Jr., Thurmond, El James T. West, Keller, B. Tex., L. William William Tex., III, Dallas, defendant-appellant. for Hartmann, Hensley, Noel M. P. Robin Paso, Shifrin, Tex., El Dallas, Gerald B. Tex., plaintiff-appellee.