Hartford Fire Insurance Co vs The Mitchell Co., Inc., Joseph J. Campus, III

FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
SEPTEMBER 8, 2011
JOHN LEY
CLERK
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 11-10185
Non-Argument Calendar
________________________
D.C. Docket No. 1:08-cv-00623-KD-N
HARTFORD FIRE INSURANCE COMPANY,
lllllllllllllllllllllllllllllllllllllll lPlaintiff - Counter Defendant - Appellee,
versus
THE MITCHELL COMPANY, INC.,
llllllllllllllllllllllllllllllllllllllll Defendant - Counter Claimant - Appellant,
JOSEPH J. CAMPUS, III,
llllllllllllllllllllllllllllllllllllllll Defendant.
________________________
Appeal from the United States District Court
for the Southern District of Alabama
________________________
(September 8, 2011)
Before EDMONDSON, WILSON and KRAVITCH, Circuit Judges.
PER CURIAM:

-- 1 of 6 --

The Mitchell Company, Inc. (“Mitchell Company”) appeals the district
court’s grant of summary judgment in favor of Hartford Fire Insurance Company
(“Hartford”). The sole issue presented is whether Mitchell Company’s insurance
policy—covering, inter alia, employee theft—encompasses self-dealing actions by
one of its employees. We conclude it does not. Accordingly, we affirm.
I.
The insurance policy at issue, a “CrimeSHIELD Policy for Mercantile
Entities,” stated that Hartford would insure Mitchell Company against covered
losses in exchange for the payment of premiums. In pertinent part, the policy
provided that “[Hartford] will pay for loss of or damage to ‘money’ . . . which
results directly from ‘theft’ by an ‘employee’, whether or not identifiable, while
acting alone or in collusion with other persons.” “Theft” is defined as “the
unlawful taking of ‘money’ . . . to the deprivation of the Insured.”
The factual circumstances leading to Mitchell Company’s claim involved
dishonest dealings by Joseph Campus, a long-time Mitchell Company employee.
As the head of the division responsible for single-family developments, Campus
analyzed various properties and then provided a report and recommendation to
Mitchell Company’s board of directors, which would be followed by a tour of the
recommended property. If the board of directors supported the purchase, Campus
2

-- 2 of 6 --

would ordinarily negotiate the purchase price, and the board of directors would
give final approval.
Campus engaged in a series of self-dealing transactions—outlined in detail
in the district court’s order—whereby he would either (1) recommend that
Mitchell Company purchase properties that he owned individually or with James
Young; or (2) receive a portion of the sale proceeds after recommending that
Mitchell Company purchase properties owned by Young.
II.
“We review de novo the district court’s grant of a motion for summary
judgment, considering all of the evidence and the inferences it may yield in the
light most favorable to the nonmoving party.” Ellis v. England, 432 F.3d 1321,
1325 (11th Cir. 2005) (per curiam). “The court shall grant summary judgment if
the movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The
interpretation of a contract is a question of law that we also review de novo.
Bragg v. Bill Heard Chevrolet, Inc., 374 F.3d 1060, 1065 (11th Cir. 2004).
In diversity cases involving insurance contracts, state law governs. See
Dempsey v. Auto Owners Ins. Co., 717 F.2d 556, 559 (11th Cir. 1983) (per
curiam). In Alabama, general principles of contract law govern interpretation of
3

-- 3 of 6 --

insurance policies. Safeway Ins. Co. v. Herrera, 912 So. 2d 1140, 1143 (Ala.
2005). An insured bears the burden of establishing coverage under the policy.
Colonial Life & Accident Ins. Co. v. Collins, 194 So. 2d 532, 535 (Ala. 1967).
Courts enforce the policy terms as written, so long as they are unambiguous.
Herrera, 912 So. 2d at 1143. That includes giving defined terms their agreed
upon import and construing undefined terms according to their ordinary meaning.
See id.
Here, we conclude that Campus’s actions do not constitute “theft” because
Campus did not unlawfully take the purchase funds from Mitchell Company.
While he engaged in self-dealing that clearly violated his fiduciary obligations,
Mitchell Company was not unknowingly deprived of money. Campus represented
that a property was available, Mitchell Company authorized its acquisition, and it
ultimately approved the purchase price. It bargained for, and received, property
that could be used for future developments.1
Mitchell Company heavily relies on Hartford Fire Insurance Co. v. Clark, 562 F.3d1
943 (8th Cir. 2009). There, Hartford voluntarily paid out under the same type of policy when a
company’s shipping supervisor artificially inflated shipment invoices and then received
kickbacks from the shipping company. The employee in Clark essentially overcharged the
company for services that were never actually given or were unreasonably priced, e.g. (1) it was
charged for air shipping when ground shipping occurred, (2) it paid for additional poundage that
was never shipped, and (3) the employee approved unreasonable rates. The company in Clark
never approved of paying artificially inflated shipping charges. Here, however, Mitchell
Company received exactly what it bargained for—a piece of property with good title—and it
approved the purchase price for just that.
4

-- 4 of 6 --

Mitchell Company is careful to avoid language that would indicate it is
seeking reimbursement for lost profits or lost business opportunities. In fact, it
takes great issue with the district court’s characterization of the situation as such.
“In this case, [Mitchell Company] is not seeking coverage for lost profits. It is
seeking coverage for money actually paid and lost that it would not have paid but
for the unlawful actions by Campus.” Appellant’s Brief at 21. Mitchell Company,
however, fails to demonstrate that it lost money. As discussed above, it decided to
purchase properties, approved the purchase price, paid the purchase price, and
received the exact property for which it bargained. Ultimately, Mitchell Company
did not inadvertently or involuntarily depart with money, but instead willing paid a
known purchase price for a known quantity.2
Mitchell Company points to no case law that we find persuasive. In any3
Morever, Hartford’s past dealing with other insureds does not influence our interpretation
of the plain, unambiguous language of the contract. Herrera, 912 So. 2d at 1143 (“The court
must enforce the insurance policy as written if the terms are unambiguous . . . .”).
Mitchell Company emphatically argues that the district court erroneously concluded2
that Mitchell Company did “not present[] any evidence that Campus presented any false
information about the property, that [Campus] assisted Young in presenting false information
about the value or condition of the property[,] or that the property bargained for was not
received.” But we agree with the district court in so far as it concluded that Campus made no
misrepresentations regarding the permanent characteristics of the real property. No one alleges
as much. The previous owners’ identities would in no way effect Mitchell Company’s future use
of the property and, accordingly, its value to the business.
We do note, however, that Mitchell Company cites a case interpreting an insurance3
policy covering “‘[l]oss resulting directly from dishonest or fraudulent acts committed by an
5

-- 5 of 6 --

event, examining the plain language of Mitchell Company’s insurance policy, we
conclude that Campus’s actions do not constitute “theft.” Accordingly, we affirm
the district court’s grant of summary judgment in favor of Hartford.
AFFIRMED.
Employee acting alone or in collusion with others.’” F.D.I.C. v. Nat’l Union Fire Ins. Co., 205
F.3d 66, 70 (2d Cir. 2000) (emphasis added). Mitchell Company, however, purchased a policy
covering loss by theft, not dishonesty. It argues that the most significant principle—for purposes
of this case—is the Second Circuit’s conclusion that the employee’s dishonest acts led directly to
the loss. Id. at 76. Importantly, however, the court had already concluded that dishonest actions
occurred, triggering the policy. Id. at 71. Here, we are not concerned with causation because we
conclude there was no theft.
6

-- 6 of 6 --