AXA RE Prop & Cslty v. Day

* District Judge for the Eastern District of Louisiana,
sitting by designation.
** 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this opinion should not be published and is not precedent except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.
United States Court of Appeals
Fifth Circuit
F I L E D
January 11, 2006
Charles R. Fulbruge III
Clerk
UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT
No. 04-61009
AXA RE PROPERTY & CASUALTY INSURANCE COMPANY,
Plaintiff-Appellee,
versus
DUSTIN L. DAY, Etc.; ET AL.,
Defendants,
DUSTIN L. DAY, Individually and on Behalf of His Child, MASON
DAY,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Mississippi
(3:02-CV-1306)
Before BARKSDALE and CLEMENT, Circuit Judges, and ENGELHARDT,
District Judge.*
PER CURIAM:**
Dustin L. Day challenges the district court’s refusal to
abstain from adjudicating this declaratory judgment action filed by
AXA Re Property & Casualty Insurance Company. Prior to its being
filed, Day had filed suit in Louisiana state court against the

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Estate of Gary Kinchen; Kinchen, a Mississippi resident, had been
insured by AXA. In the alternative, Day contests the summary
judgment awarded AXA under Mississippi law. Day maintains the term
at issue in the AXA policy (“use”) is ambiguous and, therefore,
should be construed to provide coverage. AFFIRMED.
I.
The facts are not in dispute. On 14 January 2001, Christina
Walker met Kinchen in Bogalusa, Louisiana. Later that day, they
retired to Kinchen’s truck and attached horse trailer. The trailer
included sleeping quarters, which utilized an external gasoline-
powered generator. Kinchen, who had attached the generator post-
purchase, activated it. The following day, he and Walker were
found dead due to carbon monoxide poisoning from alleged
ventilation defects with the generator.
In January 2002, Dustin L. and Mason Day, Walker’s heirs,
filed an action in Louisiana state court against Kinchen’s estate,
claiming negligence by Kinchen in operating the trailer and
generator that resulted in Walker’s death. That action is pending.
At the time of Walker’s and Kinchen’s deaths, Kinchen was
insured by AXA under a commercial automobile liability policy. In
August 2002, based on diversity jurisdiction, AXA filed this
declaratory judgment action in federal court in Mississippi,
seeking a declaration that AXA was not required to defend and/or
indemnify Kinchen in the pending Louisiana action. AXA also moved

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for summary judgment. In addition to opposing that motion, Day
moved to dismiss this action or transfer it to the Louisiana state
court, claiming it constituted forum shopping to avoid application
of Louisiana law.
The district court denied Day’s motion to dismiss or transfer
because Day had not previously filed an action against AXA in
Louisiana state court. Furthermore, the court held the requisite
factors for abstention were lacking: (1) no pending state action
existed where all the matters in controversy could be fully
litigated; (2) AXA did not file its declaratory judgment action in
anticipation of litigation with Day; (3) AXA had not engaged in
forum shopping; (4) no inequities existed in permitting AXA to
proceed with this action; (5) the federal court was a convenient
forum for litigation relating to the AXA policy because it was
created and made effective in Mississippi; and (6) judicial economy
would not be contravened by retaining the action. AXA Re Prop. &
Cas. Ins. Co. v. Day, No. 3-02-cv-1306WS (S.D. Miss. 30 Sept. 2004)
(unpublished).
Concomitantly, the district court awarded summary judgment to
AXA, holding, under Mississippi law: “When a policy insures an
automobile for the ‘use’ of the automobile, the chain of causation
between the use of the automobile and the injury must be direct”.
Id. at *11 (quoting Jackson v. Daley, 739 So. 2d 1031, 1041 (Miss.
1999) (en banc)). The district court declined to “extend coverage

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if the use of the automobile is within the line of causation, but
is distinctly remote”. Id. Because the generator was not part of,
or built into, the trailer, the district court held Day failed to
state a claim for bodily injury arising from the “use” of a motor
vehicle.
II.
Day claims the district court erred by not abstaining from
hearing AXA’s declaratory judgment action. If unsuccessful on that
issue, he claims the term “use” in the policy covers use of the
generator. (AXA claims the policy’s pollution exclusion bars
coverage. Because we hold the policy does not cover use of the
generator, we need not reach this issue.)
A.
The Declaratory Judgment Act states: “In a case of actual
controversy within its jurisdiction, ... any court of the United
States, upon the filing of an appropriate pleading, may declare the
rights and other legal relations of any interested party seeking
such declaration”. 28 U.S.C. § 2201(a). This Act “has been
understood to confer on federal courts unique and substantial
discretion in deciding whether to declare the rights of litigants”.
Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995). “In the
declaratory judgment context, the normal principle that federal
courts should adjudicate claims within their jurisdiction yields to
considerations of practicality and wise judicial administration.”

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Id. at 288. Brillhart v. Excess Insurance Co. of America, 316 U.S.
491, 495 (1942), explained it would be “uneconomical as well as
vexatious for a federal court to proceed in a declaratory judgment
suit where another suit is pending in a state court presenting the
same issues ... between the same parties”. Accordingly, the non-
abstention decision is reviewed for abuse of discretion. Tex.
Ass’n of Bus. v. Earle, 388 F.3d 515, 518 (5th Cir. 2004).
Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891 (5th Cir.
2000), provides three inquiries for district courts in determining
whether to adjudicate a declaratory judgment action: (1) is it
justiciable; (2) does the court have the authority to grant such
relief; and (3) should it exercise its discretion to decide the
action based on the factors stated in St. Paul Insurance Co. v.
Trejo, 39 F.3d 585 (5th Cir. 1994), discussed infra. See Sherwin-
Williams Co. v. Holmes County, 343 F.3d 383, 387 (5th Cir. 2003).
1.
Because the district court addressed the last two Orix steps,
by implication it found this action justiciable (first Orix step).
For that first step, “the question ... is whether the facts
alleged, under all the circumstances, show that there is a
substantial controversy, between parties having adverse legal
interests, of sufficient immediacy and reality to warrant the
issuance of a declaratory judgment”. Md. Cas. Co. v. Pac. Coal &
Oil Co., 312 U.S. 270, 273 (1941). For a declaratory judgment

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action to be justiciable, it “must be such that it can presently be
litigated and decided and not hypothetical, conjectural,
conditional or based upon the possibility of a factual situation
that may never develop”. Brown & Root, Inc. v. Big Rock Corp., 383
F.2d 662, 665 (5th Cir. 1967). Whether the policy provides
coverage presents a live controversy.
2.
Under the second Orix step, the district court properly
concluded it had authority to grant declaratory relief because Day
had not previously filed a claim against AXA in state court.
Generally,
a district court may not consider the merits
of the declaratory judgment action when 1) a
declaratory defendant has previously filed a
cause of action in state court against the
declaratory plaintiff, 2) the state case
involves the same issues as those involved in
the federal case, and 3) the district court is
prohibited from enjoining the state
proceedings under the Anti-Injunction Act.
Travelers Ins. Co. v. La. Farm Bureau Fed’n, Inc., 996 F.2d 774,
776 (5th Cir. 1993) (emphasis in original).
Although Day had filed an action against Kinchen’s estate and
ABC Insurance Company in Louisiana state court, AXA was never made
a defendant. Restated, no declaratory defendant had filed an
action in state court against the declaratory plaintiff.
Additionally, Day’s action against Kinchen’s estate involves a
different issue than is present in this action. The state-court

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action concerns whether Kinchen is liable for Walker’s death, which
is wholly distinct from the issue in this action: whether the AXA
policy provides coverage and a corresponding duty to defend and/or
indemnify Kinchen’s estate.
Finally, for this second step, a district court must also
consider whether the Anti-Injunction Act, 28 U.S.C. § 2283, bars
relief. Id. The Act states: “A court of the United States may
not grant an injunction to stay proceedings in a State court except
as expressly authorized by Act of Congress, or where necessary in
aid of its jurisdiction, or to protect or effectuate its
judgments”. 28 U.S.C. § 2283. Because there is neither a state
court action against AXA, nor a state court action that involves
the same issues presented in this action, the district court
properly concluded that the Act does not bar relief.
3.
Finally, the district court properly exercised its discretion
in refusing to abstain. Trejo, 39 F.3d at 590-91, identified seven
nonexclusive factors for a district court to consider when deciding
whether Brillhart abstention should apply to a declaratory judgment
action:
1) whether there is a pending state action in
which all of the matters in controversy may be
fully litigated, 2) whether the plaintiff
filed suit in anticipation of a lawsuit filed
by the defendant, 3) whether the plaintiff
engaged in forum shopping in bringing the
suit, 4) whether possible inequities in
allowing the declaratory plaintiff to gain

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precedence in time or to change forums exist,
5) whether the federal court is a convenient
forum for the parties and witnesses, ... 6)
whether retaining the lawsuit in federal court
would serve the purposes of judicial economy
... and [7)] whether the federal court is
being called on to construe a state judicial
decree involving the same parties and entered
by the court before whom the parallel state
suit between the same parties is pending.
(Internal citation and quotation marks omitted.) The district
court considered all of the Trejo factors.
First, because AXA is not a party to the Louisiana action, the
court correctly concluded no pending state action exists where all
the matters in controversy could be fully litigated. Additionally,
it correctly determined that the next two factors — whether AXA (1)
filed this action in anticipation of an action by Day and (2)
engaged in impermissible forum shopping — supported retaining
jurisdiction. Notably, Day concedes AXA filed this action not in
anticipation of one by Day, but instead as a response to the
Louisiana action. Furthermore, AXA has not engaged in improper
forum shopping merely by filing a declaratory action in federal
court availing itself of diversity jurisdiction.
[T]he fact that federal forums are sought by
some [plaintiffs] in an attempt to avoid the
state court system, does not necessarily
demonstrate impermissible forum selection when
the declaratory judgment out-of-state
plaintiff invokes diversity. Rather it states
the traditional justification for diversity
jurisdiction, to protect out-of-state
defendants.

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Sherwin-Williams, 343 F.3d at 399 (internal citation and quotation
marks omitted). Instead, a court is more likely to find a
plaintiff engaged in impermissible forum shopping where the
federal action would change the applicable law. See id. at 397,
399; Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 602
n.3 (5th Cir. 1983). Because the issues in the Louisiana state
court action and this action are distinct, it is entirely plausible
that Louisiana tort law will apply to Kinchen’s liability vel non,
while in this action, as discussed infra, Mississippi contract law
governs the scope of the policy’s coverage.
The district court also correctly considered the fourth
factor: because there was no parallel state court proceeding
involving the same issue, AXA did not inequitably gain precedence
in time or change a previously selected forum for the declaration
it sought. Fifth, the district court correctly concluded the
Southern District of Mississippi is a convenient forum to litigate
the coverage dispute because the policy was created, and made
effective, in Mississippi. Next, judicial economy is not
contravened by retaining the action because no other proceeding is
able to consider the coverage dispute; again, AXA is not a party to
the Louisiana litigation. Finally, the seventh factor — whether
the federal court is being called on to construe a state judicial
decree involving the same parties and entered by the court before
whom the parallel state court suit between the same parties is

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pending — weighs strongly in AXA’s favor. Because AXA is not a
party to the Louisiana proceeding, and because any ruling by the
Louisiana court will relate to Kinchen’s liability, the pending
disposition of the Louisiana action is not relevant to this action.
B.
Accordingly, at issue is the summary judgment awarded AXA on
the basis that “use” of a covered vehicle under the AXA policy did
not include use of a generator attached externally to Kinchen’s
trailer. That judgment is reviewed de novo. United States v.
Lawrence, 276 F.3d 193 (5th Cir. 2001); Am. Guar. & Liab. Ins. Co.
v. 1906 Co., 129 F.3d 802, 805 (5th Cir. 1997). As noted, there
are no material fact issues. “The interpretation of insurance
policy language is a question of law.” Eott Energy Pipeline Ltd.
P’ship v. Hattiesburg Speedway, Inc., 303 F. Supp. 2d 819, 822
(S.D. Miss. 2004) (internal citation and quotation marks omitted).
The AXA policy reads in relevant part:
We will pay all sums an “insured” legally must
pay as damages because of “bodily injury” or
“property damage” to which this insurance
applies, caused by an “accident” and resulting
from the ownership, maintenance or use of a
covered “auto”.
(Emphasis added.) The parties concede the trailer is a “covered
auto”. Moreover, Kinchen and Walker were using the trailer, and
Walker suffered “bodily injury” as a result. Because the policy

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does not define the term “use”, at issue is whether that injury
“result[ed] from the ... use” of the trailer.
For this diversity action, we apply state substantive law.
Erie R. Co. v. Tompkins, 304 U.S. 64, 78-80 (1938). In deciding
which State’s law to apply, we use the choice of law rules of the
State in which the action was filed — Mississippi. Smith v. Waste
Mgmt., Inc., 407 F.3d 381, 384 (5th Cir. 2005).
Although Walker and Kinchen died in Louisiana, like the
district court, we conclude Mississippi law governs because it has
“the most substantial contacts with the parties and the subject
matter of the action”. Hartford Ins. Co. v. Sheffield, 808 So. 2d
891, 895 (Miss. 2001). Not only was the policy purchased in
Mississippi, but also, Mississippi is: Kinchen’s domicile and
residence; the trailer’s usual location; where the policy was
negotiated; and the place where any performance on the contract
would occur. See Boardman v. United Servs. Auto. Ass’n, 470 So. 2d
1024, 1032 (Miss.), cert. denied, 474 U.S. 980 (1985) (adopting the
center of gravity test for Mississippi’s choice of law analysis).
In this regard, the parties do not challenge application of
Mississippi law.
In applying Mississippi law, we first determine “whether ...
any final decisions of the Mississippi Supreme Court are
dispositive”. Centennial Ins. Co. v. Ryder Truck Rental, Inc., 149
F.3d 378, 382 (5th Cir. 1998). If no final disposition is directly

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on point, we must make an “Erie-guess”, predicting how that court
would rule. Id.; see also Am. Guar. & Liab. Co., 129 F.3d at 807.
We make our forecast based on
(1) decisions of the Mississippi Supreme Court
in analogous cases, (2) the rationales and
analyses underlying Mississippi Supreme Court
decisions on related issues, (3) dicta by the
Mississippi Supreme Court, (4) lower state
court decisions, (5) the general rule on the
question, (6) the rulings of courts of other
states to which Mississippi courts look when
formulating substantive law and (7) other
available sources, such as treatises and legal
commentaries.
Centennial Ins. Co., 149 F.3d at 382.
Acknowledging that no Mississippi Supreme Court decision is
directly on point, Day seeks a broad construction of “use”. Day
claims Walker’s death resulted directly from Kinchen’s and Walker’s
use of the truck and trailer because the trailer could not have
been towed to Louisiana without the truck. Furthermore, at all
times leading up to, and during, the accident, the trailer was
attached to the truck and was operated by Kinchen.
Additionally, to support that broad reading, Day cites
Mississippi Supreme Court cases that have liberally interpreted the
term “use” under the State’s Uninsured Motorist Act (UM Act), MISS.
CODE ANN. § 63-15-43. See Harris v. Magee, 573 So. 2d 646 (Miss.
1990) (holding injuries suffered by driver resulted from use of his
truck although he had just exited it), overruled on other grounds
by Meyers v. Am. States Ins. Co., No. 2003-CA-01669-SCT, 2005 WL

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1384698 (Miss. 9 June 2005); Stevens v. U.S. Fid. & Guar. Co., 345
So. 2d 1041 (Miss. 1977) (holding injuries to operator of a wrecker
who had left it and was hit by an oncoming automobile arose out of
the use of the wrecker). Day claims these cases suggest the
Mississippi Supreme Court would hold Walker’s death resulted from
the use of the trailer.
Lastly, Day contends the policy has more than one reasonable
interpretation; and, therefore, under Mississippi law, its meaning
must be construed in favor of coverage. Any ambiguous term, under
Mississippi law, is to be strictly construed against the insurer.
Nationwide Mut. Ins. Co. v. Garriga, 636 So. 2d 658, 662 (Miss.
1994).
In supporting the summary judgment, AXA claims Mississippi
Supreme Court precedent, outside of the uninsured motorist context,
suggests a limited interpretation of “use”. See Meyers v. Miss.
Ins. Guar. Ass’n, 883 So. 2d 10 (Miss. 2003) (en banc); Jackson,
739 So. 2d 1031. These cases suggest that use of an automobile
must be the but-for cause of the injury. Therefore, according to
AXA, Walker’s death would not trigger liability because the use of
the trailer was not the but-for cause of death; instead, it was the
use of the external generator.
A bedrock principle of contract law is that, where the terms
of a contract are clear and unambiguous, they must be interpreted
as written. E.g., Farmland Mut. Ins. Co. v. Scruggs, 886 So. 2d

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714, 717 (Miss. 2004); Sumter Lumber Co. v. Skipper, 184 So. 296,
298 (Miss. 1938) (“When the language of the ... contract is clear,
definite, explicit, harmonious in all its provisions, and free from
ambiguity throughout, the court looks solely to the language used
in the instrument itself, and will give effect to each and all
parts as written.”).
Each party urges a different interpretation of “use”. Of
course, simply because parties disagree about the meaning of a
contract term does not, as a matter of law, make it ambiguous.
Burton v. Choctaw County, 730 So. 2d 1, 6 (Miss. 1997). Instead,
ambiguity exists where “a reasonable person could have understood
the terms to have more than one reasonable meaning”. Scruggs, 886
So. 2d at 718. Pursuant to Mississippi Supreme Court precedent,
the term employed in the AXA policy is not ambiguous.
Again, the injury must “result[] from the ... use of” the
trailer. Obviously, the injury resulted directly from the use of
the generator while the decedents were in the trailer. Although no
case is directly on point, several Mississippi Supreme Court
decisions provide direction.
Meyers interpreted an exclusion in a general commercial
liability policy for bodily injuries arising “out of the ownership,
maintenance, [or] use” of an automobile. 883 So. 2d at 13-14. In
Meyers, the plaintiff was injured as a result of a tractor-trailer
(insured under the policy) colliding with his vehicle. The

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plaintiff claimed the exclusion did not apply because he had
alleged other but-for causes of the accident aside from the use of
the tractor-trailer, including various theories of negligence. In
other words, the “use” exclusion should not apply because, but for
the negligent hiring by the defendant’s supervisor, as well as the
company’s negligent maintenance of the trailer, the accident would
not have occurred. The Mississippi Supreme Court held the
exclusion applicable. Id. at 16-17. Under its reasoning, the term
“use” applied to injuries that would not have occurred but for the
use of the truck, irrespective of other legitimate causes for the
injury. Meyers stands for the proposition that the but-for cause
was essentially the same as the proximate cause of the injury, and
other causes would not make the exclusion inapplicable.
Similarly, the 1999 decision in Jackson, 739 So. 2d 1031,
relied on by the district court, interpreted a liability policy to
provide coverage for a death resulting from the “ownership,
maintenance, or use” of a county vehicle: while driving his
vehicle, the decedent was killed on hitting dirt placed by a county
dump truck near the roadway. The Mississippi Supreme Court held
the policy provided coverage because the “dangerous situation
causing injury is one which arose out of or had its source in, the
use or operation of the [county vehicle]”. Id. at 1041 (quoting
Merchs. Co. v. Hartford Accident & Indem. Co., 188 So. 571, 572
(Miss. 1939)). In so holding, the court articulated the

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appropriate test for determining when liability will be triggered
by “use” of an automobile: “When a policy insures an automobile
for the ‘use’ of the automobile, the chain of causation between the
use of the automobile and the injury must be direct. We will not
extend coverage if the use of the automobile is within the line of
causation, but is distinctly remote.” Id. (internal citation
omitted; emphasis added). Furthermore, “the chain of
responsibility must be deemed to possess the requisite articulation
with the use or operation until broken by the intervention of some
event which has no direct or substantial relation to the use or
operation”. Id. (quoting Hartford, 188 So. at 572). In other
words, the injury must essentially be proximately caused by the use
of the vehicle.
Under the Meyers and Jackson standards, the AXA policy does
not provide coverage. First, although the use of the trailer may
have been a cause of Walker’s death, its use was not the direct
cause of the injuries. Indeed, Kinchen and Walker would have
suffered no injuries had they used the trailer without operating
the externally-attached generator. Thus, the cause of their
injuries was the generator, not the trailer.
Day’s above-discussed reliance on Mississippi Supreme Court
cases that liberally construed the term “use” in the context of the
UM Act, see Stevens, 345 So. 2d 1041; Harris, 573 So. 2d 646, is
misplaced. The Mississippi Supreme Court has directed that “the

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language of the ... UM Act must be construed liberally to provide
coverage and strictly to avoid or preclude exceptions or exemptions
from coverage”. Johnson v. Preferred Risk Auto. Ins. Co., 659 So.
2d 866, 871-72 (Miss. 1995) (quoting Aetna Cas. & Sur. Co. v.
Williams, 623 So. 2d 1005, 1008 (Miss. 1993)). That liberal
construction is based on the remedial nature of the UM Act — namely
to provide the same protection for a person injured by an uninsured
motorist as if he had been injured by a motorist with a standard
liability policy. See Medders v. U.S. Fid. & Guar. Co., 623 So. 2d
979, 991 (Miss. 1993). Obviously, these policy concerns are not
present here.
III.
For the foregoing reasons, the judgment is
AFFIRMED.

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