National Trust Insurance Company v. Westover Planting Company

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

NATIONAL TRUST )

INSURANCE COMPANY, )

)

Plaintiff, )

)

v. )

) CASE NO. 2:22-cv-00465-RAH

WESTOVER PLANTING ) [WO]

COMPANY, et al., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

This is an insurance coverage dispute concerning the total loss of a cotton

picker due to a fire. National Trust Insurance Company (NTIC) brings this

declaratory judgment action claiming the cotton picker was only insured for $10,000

under the coverage provision for borrowed/rented equipment, while the Defendants,

Westover Planting Company (the insured) and Flint Equipment Company, Inc. (the

owner), claim there was coverage up to $500,000 under the policy provision

covering individually described and specified equipment on the policy declaration

and schedule. Westover has counterclaimed for breach of contract and declaratory

judgment due to NTIC’s refusal to pay under the $500,000 coverage provision.

Discovery now at an end, all parties have moved for summary judgment on all

claims. With each motion having been fully briefed and thus ripe for decision,

NTIC’s motion is due to be DENIED and the Defendants’ motions due to be

GRANTED.

JURISDICTION AND VENUE

Subject matter jurisdiction is conferred by 28 U.S.C. § 2201 and 28 U.S.C. §

1332 as to NTIC’s declaratory judgment action and Westover’s counterclaim. The

parties do not contest personal jurisdiction or venue, and there are adequate

allegations to support both. See 28 U.S.C. § 1391.

STANDARD OF REVIEW

A court must grant summary judgment “if the movant shows there is no

genuine dispute as to any material facts and the movant is entitled to judgment as a

matter of law” based on the materials in the record. Fed. R. Civ. P. 56(a), (c). The

court must view the evidence and make all reasonable inferences drawn therefrom

“in the light most favorable to the nonmovant.” Jean-Baptiste v. Gutierrez, 627 F.3d

816, 820 (11th Cir. 2010). A genuine dispute as to a material fact exists “if the

evidence is such that a reasonable jury could return a verdict for the nonmoving

party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Applicable

substantive law identifies those facts that are material. Id. An issue is not genuine if

it is unsupported by evidence or created by evidence that is “merely colorable, or is

not significantly probative[.]” Id. at 249 (citations omitted).

The party seeking summary judgment “always bears the initial responsibility

of informing the district court of the basis for its motion.” Celotex Corp. v. Catrett,

477 U.S. 317, 323 (1986). The movant can satisfy its burden of proving the absence

of a genuine dispute by citing to materials in the record or by showing the nonmovant

cannot produce evidence to establish an element essential to their case to which it

has the burden of proof. Fed. R. Civ. P. 56(c)(1); Celotex Corp., 477 U.S. at 322–

23. If the movant meets this burden, the burden shifts to the nonmoving party to

establish “specific facts showing that there is a genuine issue for trial” with evidence

beyond the pleadings. Celotex Corp., 477 U.S. at 324. Generally, a “mere existence

of a scintilla of evidence” supporting the nonmoving party’s case is insufficient to

defeat a motion for summary judgment. Anderson, 477 U.S. at 252.

BACKGROUND

The factual background is simple:

Westover Planting Company grows and farms cotton. On September 4, 2020,

Westover purchased a 2016 John Deere cotton picker CP690. Westover insured the

cotton picker for its full value on its NTIC-issued insurance policy and paid the

appropriate premium, and as such, the cotton picker was individually described on

the policy declaration and schedule as an item of insured equipment by explicit

reference to its year (2016), make (John Deere), model (CP690), serial number

(1NOC690PLG4060050), and insured value ($500,000). (Doc. 36-11 at 13.)1

The cotton picker broke down in October of the following year. Westover

contacted Flint Equipment, which removed the engine and took it back to Flint’s

facility in Georgia, leaving the cotton picker engineless in one of Westover’s cotton

fields.

So that it could continue with its cotton operations during the 2021 harvest

season, Westover decided to purchase a 2018 John Deere cotton picker from Flint

and to trade in the non-working 2016 model. (Doc. 36-1 at 29:17–30:21.) To

effectuate the transaction, Westover signed a purchase order and loan

contract/security agreement. (Id. at 42:11–43:14; Doc. 33-4 at 2–8; Doc. 33-5 at 2–

3.) Thus, as of October 28, 2021, Westover no longer owned the cotton picker (Doc.

33-2 at 18:12–22; 23:15–24:9), although the engineless cotton picker remained in

Westover’s cotton field. (Doc. 36-1 at 47:12–22).

Shortly after the purchase and trade-in transaction and after the cotton picker

was repaired, Westover asked Flint if Westover could use the 2016 cotton picker to

1 For the sake of clarity, documents will be referred to by their page or paragraph numbers based

on their CM/ECF document page numbers.

help Westover catch up on lost harvest time. (Doc. 36-1 at 55:6–20; 57:2–58:12.)

This was agreeable to Flint, provided Westover insured the cotton picker before

using it. (Doc. 36-1 at 121:5–9; Doc. 33-2 at 37:12–22.)

Westover did not directly contact NTIC about the change in ownership or

borrowed status of the cotton picker. Instead, Westover contacted its insurance agent

to inquire about insurance coverage on the cotton picker. (Doc. 36-1 at 59:2–60:12.)

When asked whether the now-borrowed (and formerly-owned) cotton picker was

still covered under Westover’s insurance policy with NTIC, Westover’s agent

confirmed that it was still covered since the cotton picker was still individually

scheduled on the list of insured equipment on the Declarations on the policy. (Id.)

The cotton picker ultimately was repaired and Westover began using it on

November 17, 2021. The next day, on November 18, the cotton picker caught fire

and was destroyed.

Since the cotton picker was still individually listed on the NTIC insurance

policy and schedule, Westover notified its insurance agent of the loss. NTIC

adjusted the claim and paid for pollutant clean-up and debris removal. (Doc. 36-8 at

4.) NTIC also paid Westover for the cotton picker under the borrowed/rented

equipment coverage provision, which contained a $10,000 coverage limitation.

(Id.) NTIC however refused to pay under the coverage provision for individually

scheduled equipment. Westover disputed NTIC’s position, claiming that it was

entitled to the full value of the cotton picker, up to the policy’s coverage limits of

$500,000 for this item listed equipment.

NTIC then filed this declaratory judgment action against Westover and Flint

seeking a declaration that it was only obligated to pay $10,000 under the policy for

the loss. Westover counterclaimed for breach of contract and declaratory judgment.

DISCUSSION

The primary issue here is whether the 2016 cotton picker was covered under

the scheduled property provision of the insurance policy (and thereby subject to

coverage limits of $500,000), or the unscheduled blanket provision for

borrowed/rented equipment (and thereby subject to coverage limits of $10,000).

Resolution of that issue turns on the plain language of the insurance policy.2

A. The Declaratory Judgment Claim

As in any insurance coverage dispute, the inquiry first begins with the

language of the insurance policy. “[G]eneral rules of contract law govern an

insurance contract.”3 Safeway Ins. Co. of Ala. v. Herrera, 912 So. 2d 1140, 1143

(Ala. 2005). When determining how to construe provisions of an insurance policy,

the court must give words used in the policy their everyday, plain meaning and

“interpret[] them as a reasonable person in the insured’s position would have

understood them.” State Farm Mut. Auto. Ins. Co. v. Brown, 26 So. 3d 1167, 1169

(Ala. 2009) (internal citations omitted). “Where there is no ambiguity in the terms

of an insurance contract, the language must be enforced as written, and courts cannot

defeat express provisions in a policy . . . by making a new contract for the parties[.]”

Porterfield v. Audubon Indem. Co., 856 So. 2d 789, 806 (Ala. 2002).

If the terms of an insurance contract are reasonably certain, then the terms are

unambiguous as a matter of law and the “rule of construction in favor of the insured

does not apply.” Brown¸ 26 So. 2d at 1169. Whether a provision of an insurance

2 NTIC initially made an insurable interest argument against application of the scheduled

equipment provision. (Doc. 1 at ¶¶ 57–58.) NTIC no longer advances that argument, as it now

admits that Westover had an insurable interest in the cotton picker due to its status as a borrower.

As the issue is not dispositive here, there will no further discussion of it.

3 The Court will apply Alabama law, as no party argues otherwise and the doctrine of lex loci

contractus appears to make Alabama law applicable.

policy is ambiguous is a question of law for the court to decide. Herrera, 912 So.

2d at 1143 (citing Turvin vy. Alfa Mut. Gen. Ins. Co., 774 So. 2d 597, 599 (Ala. Civ.

App. 2000)). If an insurance policy contains ambiguous language, all ambiguities

“must be resolved against the insured.” Jd. (citing Twin City Fire Ins. Co. v. Alfa

Mut. Ins. Co., 817 So. 2d 687, 692 (Ala. 2001).

Resolution of the parties’ dispute involves Section I, Coverage E(A)(1)(i)

(the borrowed/rented equipment provision) and Section I, Coverage E(A)(1)(j) (the

scheduled equipment provision) of the NTIC insurance policy. NTIC argues that

the borrowed/rented property provision applies because the cotton picker was

borrowed at the time of loss. Westover and Flint argue the scheduled equipment

provision applies because the cotton picker was individually described and

scheduled on the Declarations of the policy. To begin, the Declarations and Farm

Personal Property Schedule provide as follows:

Policy Number

FNC100056189-02

FARM PERSONAL PROPERTY

SCHEDULE

Named Insured Westover Planting Company Effective Date: 04/01/2021

12:01 A.M., Standard Time

Agent Name THOMPSON INSURANCE INC/AG Agent No. 1705001

EARTHQUAKE.

| COVERAGE! E | PROPERTY OTHER THAN LIVESTOCK MACHINERY

001 | □□□ | 2016 JOHNDEERE —sCP690 □□ INOCHBOPLGADGO050

FOREIGN COVERED CAUSES DEDUCTIBLE

| sso0000 | acy | NT Specie | to

(Doc. 36-11 at 5, 13.)

And particular to the coverage dispute, the two provisions at issue state as

follows:

FARM PROPERTY — FARM PERSONAL PROPERTY

COVERAGE FORM

SECTION I – COVERAGES

COVERAGE E – SCHEDULED FARM PERSONAL PROPERTY

A. Coverage

We will pay for direct physical loss of or damage to

Covered Property at the “insured location” described in

the Declarations, or elsewhere as expressly provided

below, caused by or resulting from and Covered Cause of

Loss.

1. Covered Property

All of the following are Covered Property under

Coverage E of this Coverage Form, provided a

Limit of Insurance is shown in the Declarations

for the specific type of property:

***

i. Farm machinery, vehicles and equipment that

you borrow or rent, whether or not under a

written contract, except while on the premises

of its owner.

The borrowed or rented property must be:

1. Usual or incidental to farming operations;

2. In your care, custody, or control; and

3. Property in which you have no interest as

owner or lienholder.

***

j. Farm machinery, vehicles and equipment

which are individually described and

specifically covered in the Declarations, while

on or away from the “insured location,” except

while in the custody of a common or contract

carrier.

(Doc. 33-15 at 2–3 (emphasis added).)

As it concerns borrowed/rented equipment, under Section I, Coverage

E(A)(1)(i), coverage is extended by an additional $10,000 above that, if any, listed

in the Declarations on the policy.

SECTION II – COVERAGE EXTENSIONS

Thirty-Day Additional Limit on Borrowed or Rented

Farm Machinery, Vehicles, Equipment.

This Coverage Extension applies to Coverage E.

1. The Limit of Insurance, if any, shown in the

Declarations for Farm Machinery, Vehicles,

Equipment Borrowed Or Rented With or Without a

Written Contract will be increased by $10,000

which will apply in any one occurrence to loss of or

damage only to such items, as described in Parage

A.1.i. in Section I, that you borrow or rent after the

beginning of the policy period. However, if a higher

additional Limit of insurance is specified in the

Declarations, the higher Limit will apply.

2. Insurance under this Coverage Extension will end:

a. Thirty days after the Covered Property is

borrowed or rented; or

whenever this policy expires, which comes

first.

3. If any property covered under this Coverage

Extension remains in your possession for a period

of more than thirty days, you must report value for

it, and additional premium will be due and payable

from the thirty-first day after you took possession.

(Doc. 33-15 at 8 (emphasis added).) Since the Declaration contains no limits of

insurance for borrowed/rented equipment (see Doc. 36-11 at 2), the $10,000

coverage extension essentially serves as a $10,000 limit for unscheduled blanket

coverage over any equipment that was borrowed or rented for thirty days or less.

Notably, while the borrowed/rented equipment provision and its coverage

extension are expressly limited to and applicable to borrowed/rented equipment, the

scheduled equipment provision does not distinguish between owned or borrowed

equipment, nor does it limit its application to owned equipment only. That

provision’s only requirement is that the equipment be “individually described and

specifically covered in the Declarations” on the policy.

Here, the 2016 cotton picker was “individually described and specifically

covered in the Declarations” on the policy. Certainly, at the time it was added to the

policy and when it was owned by Westover, the scheduled equipment provision

applied—and the borrowed/rented equipment provision did not—and provided up to

$500,000 coverage for that item of equipment. No party, including NTIC, disputes

that. It remained “individually described and specifically covered in the

Declarations” on the policy when it became borrowed equipment and later when it

was destroyed in the fire. And no party disputes that. Importantly, no language in

the policy precludes application of the scheduled equipment provision when the

equipment happens to be, or become, borrowed, and no provision in the policy

precludes application of the scheduled equipment provision when the

borrowed/rented equipment provision also applies. And further, nothing in the

policy provides that the borrowed/rented provision becomes the intended sole source

of coverage when an item of equipment is or becomes borrowed, regardless of

whether or not the equipment is otherwise individually scheduled in the

Declarations. Thus, under the policy, nothing precludes the scheduled equipment

provision, and its coverage limits, from applying here. Alabama law requires that

terms of an insurance contract “must be enforced as written.” Porterfield, 856 So.

2d at 806. And as written, the policy clearly provides up to $500,000 in insurance

coverage for loss to the 2016 cotton picker as an individually described item of

equipment on the policy. No ambiguities exist, and no party asserts any ambiguity.

NTIC argues the cotton picker originally was insured and scheduled on the

policy as owned equipment by Westover and that had Westover approached NTIC

about insuring the equipment as borrowed equipment, NTIC would have conducted

underwriting and assessed the appropriate premium if NTIC was willing to insure

the equipment as borrowed equipment. But this assertion requires the Court to look

behind the policy, which it need not do given the policy’s clear and unambiguous

language. See Gardner v. State Farm Mut. Auto. Ins. Co., 822 So. 2d 1201, 1208–

09 (Ala. Civ. App. 2001) (noting where the terms of the agreement are clear and

unambiguous, the terms of that agreement may not be altered by parol evidence).

As written, the policy provided up to $500,000 in coverage for equipment

“individually described and specifically covered in the Declarations.” Again, no

condition or limitation exists requiring that the individually scheduled equipment be

owned, borrowed, rented, leased, or any other arrangement. The only condition was

that the equipment be individually scheduled and described. Which it was. If NTIC

wanted to limit the application of the scheduled equipment coverage to owned

equipment only or to non-borrowed or non-rented equipment, NTIC certainly could

have written the insurance policy in that manner. Or, it could have written the policy

in a manner that precluded application of the scheduled equipment provision when

the borrowed/rented equipment provision applied. But it did neither.

For the reasons stated above, NTIC’s motion for summary judgment is due to

be denied and Flint and Westover’s motions for summary judgment on NTIC’s

declaratory judgment claim are due to be granted as it concerns application of the

scheduled equipment provision. As such, the 2016 cotton picker is covered under

the scheduled equipment provision (Section I, Coverage E(A)(1)(j)) of the policy.

B. Westover’s Breach of Contract Claim

Westover also moves for summary judgment on its breach of contract and

declaratory claims. These claims are founded upon the same policy provisions and

arguments that are made the basis of the NTIC’s declaratory judgment claim. As to

its contract claim, Westover seeks no damages other than those coverage benefits to

which it is entitled under the insurance policy, the actual cash value of the cotton

picker up to $500,000. In other words, Westover seeks recovery based on what it

should have received had NTIC honored its obligation under the policy. See Clark

v. Liberty Nat’l Life Ins. Co., 592 So. 2d 564, 567 (Ala. 1992) (“In a breach of

contract action, the ordinary measure of damages is ‘an amount sufficient to return

the plaintiff to the position he would have occupied had the breach not occurred.’”)

(quoting Aldridge v. Dolbeer, 567 So. 2d 1267, 1269 (Ala. 1990)). Since Westover’s

contract claim is really a declaratory judgment claim by another name and since

Westover’s declaratory judgment claim is based on the same facts and policy

provisions as NTICs declaratory judgment claim, the outcome is thus the same—

Westover is entitled to coverage benefits under the scheduled equipment provision

(Section I, Coverage E(A)(1)(j)). Since the amount of loss is undisputed and falls

within the coverage limits of the policy, that amount is $483,356.00 (the actual cash

value of the cotton picker), less the $10,000 already paid by NTIC, less the $10,000

applicable deductible, for a total amount owing by NTIC of $463,356.00. (Doc. 34

at 7–8.)

As a result, Westover’s summary judgment motion as to its breach of contract

and declaratory judgment claim is due to be granted, and a judgment entered thereon

in favor of Westover for $463,356.4

CONCLUSION

1. Plaintiff National Trust Insurance Company’s Motion for Summary

Judgment (Doc. 33) is DENIED.

4 Flint asserts the judgment should make the insurance funds payable to Flint by virtue of an

agreement between Westover and Flint. The Court will not recognize that agreement in this

opinion and the forthcoming judgment because Westover is the insured and loss payee under the

NTIC policy and the private agreement between Westover and Flint concerning the disposition of

those proceeds between the two can be handled separately by them.

2. Defendant Flint Equipment Company, Inc.’s Motion for Summary

Judgment (Doc. 34) is GRANTED.

3. Defendant Westover Planting Company’s Motion for Summary

Judgment (Doc. 35) is GRANTED.

A separate judgment will issue.

DONE on this the 6th day of December 2023.

R. pe JR.

UNITED STATES DISTRICT JUDGE

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