CYPRESS INSURANCE COMPANY v. JESSE BATTEN FARMS LLC (2024)

ORDER

This case is before the Court on the following matters:

1. Defendants Jesse Lee Batten and Jesse Batten Farms, LLC's Motion for Summary Judgment (Doc. 56) (“Battens Motion”), along with the response (Doc. 63) of Plaintiff Cypress Insurance Company (“Cypress”), and the reply (Doc. 64) of Defendants Jesse Batten Farms, LLC (“Batten Farms LLC” or “Jesse Batten Farms LLC”) and Jesse Lee Batten (“Jesse Batten” and together with Batten Farms LLC, the “Batten Defendants”),

2. Cypress Insurance Company's Motion for Summary Judgment (Doc. 60) (“Cypress Motion”), along with the Batten Defendants’ response (Doc. 65), and the reply (Doc. 68) filed by Cypress, and

3. Defendants’ Request for Oral Argument (Doc. 58).

I. Background

“Jesse Batten Farms LLC” is the named insured on a Business Automobile Policy No. 03TRM032071-02 (“Policy”) issued by Cypress covering the period of December 1, 2019, to December 1, 2020. (Doc. 60-5 at 116).

On August 11, 2020, Calvin King (“King”), an employee, agent, or servant of Batten Farms LLC or Jesse Batten, was operating a 1999 Freightliner Conventional Truck (“Accident Vehicle”) owned personally by Jesse Batten, when King collided with a Toyota Camry operated by Lakista McCuller (“McCuller”). (Doc. 65-3 ¹ ¶ 1). Defendant The Scoular Company (“Scoular”) hired Batten Farms LLC and King to transport corn product in the Accident Vehicle. Floyd Fillingame was a passenger in the Toyota Camry, and the injuries he sustained in the accident allegedly resulted in his death. (Doc. 65-3 ¶ 1).

Cypress received notice of the August 11, 2020 accident on September 18, 2020. (See Declaration of Jessica Parker, Sr. Underwriter for Cypress (Doc. 60-6 ¶ 18) [hereinafter “Parker Decl.”]).

In a letter to Jesse Batten Farms LLC, dated November 2, 2020, Cypress denied the request for coverage for the August 11, 2020 accident on the basis that the Accident Vehicle had been removed from the Policy via an endorsement dated December 1, 2019. (Doc. 60-5 at 222). The letter advised that Batten Farms LLC's insurance agent, Tanya Scott with Taylor Insurance Agency, had confirmed that the Accident Vehicle was not a scheduled vehicle.

On November 22, 2021, a wrongful death action was filed in the State Court of Gwinnett County, Georgia, Case No. 21-C-08393-S4, styled Letitia Williams, as the Administrator of the Estate of Floyd J. Fillingame, deceased, et al. vs. Jesse Batten Farms LLC, Jesse Lee Batten (individually), Calvin D. King, and The Scoular Company (“State Court Action”). (Doc. 1, Ex. A). Cypress is not a named defendant in the State Court Action. (Id.)

On April 7, 2022, Batten Farms LLC, through its attorney, disputed the denial of coverage and demanded indemnification under the Policy for the August 11, 2020 automobile accident. (Id. ¶ 28). Batten Farms LLC's counsel requested that Cypress tender the $1 million Policy limits to Batten Farms LLC in exchange for a limited liability release. (Id.)

On April 25, 2022, Cypress filed this declaratory judgment action in which it named all the plaintiffs and defendants in the State Court Action as Defendants. Cypress seeks a ruling from this Court that there is no coverage under the Policy for the August 11, 2020 accident.

A. Relevant Policy Provisions

On December 1, 2019, the Policy provided coverage for “Specifically Described ‘Autos’ ” defined as: “Only those ‘autos’ described in Item Three of the Declarations for which a premium charge is shown.” (Doc. 60-5 at 116, 125). Item Three of the Declarations referred to an attached “Schedule of Covered Autos” which, as relevant here, included: (a) a 1999 Freightliner Conventional, VIN No. IFUYDSZB1XLAE8335 (the “Accident Vehicle”), and (b) a 2002 Freightliner FLC120D, VIN No. IFUJBBCG42LK29116 (the “Deer Vehicle” defined below). (Id. at 116, 118; Doc. 60-1 at 3–5). The Accident Vehicle was removed from the Policy by an endorsement dated December 1, 2019. (Doc. 60-5 at 171-72). The Batten Defendants do not contest that the Accident Vehicle had been removed from the Policy and was not a scheduled vehicle at the time of the August 11, 2020 accident. (Doc. 65-3 ¶¶ 5–6; see also Batten Dep. 24–25 ² ). Batten Farms LLC received a credit of $10,637 toward its insurance premium when the Accident Vehicle, and another unrelated vehicle, were removed from the Policy. (Batten Dep. 26–27). Coverage for “Specifically Described ‘Autos’ ” is provided on the Business Auto Coverage Form, Section I.A.

Also relevant here are the Policy provisions in Section I.C. of the Business Auto Coverage Form which provides coverage for:

Certain Trailers, Mobile Equipment And Temporary Substitute Autos

If Covered Autos Liability Coverage is provided by this Coverage Form, the following types of vehicles are also covered “autos” for Covered Autos Liability Coverage:

․

3. Any “auto” you do not own while used with the permission of its owner as a temporary substitute for a covered “auto” you own that is out of service because of its:

a. Breakdown;

b. Repair;

c. Servicing;

d. “Loss”; or

e. Destruction.

(Doc. 60-5 at 126). Throughout the Policy “the words ‘you’ and ‘your’ refer to the Named Insured shown in the Declarations,” which is Jesse Batten Farms LLC. (Id. at 116, 125).

According to the Batten Defendants, the Truckers Endorsement modified the Policy to include Jesse Batten, individually, as a named insured. The first page of the Truckers Endorsement lists the only Named Insured as “Jesse Batten Farms LLC.” (Doc. 60-5 at 119). Thereafter, the endorsement provides: “For any operations you engage in as a ‘trucker’,”³ the provisions for “Who is An Insured” are changed, to include as an “Insured”:

The owner or anyone else from whom you ․ borrow a covered “auto” that is not a “trailer” while the covered “auto”:

(1) Is being used exclusively in your business as a “trucker”; and

(2) Is being used pursuant to operating rights granted to you by a public authority.

(Doc. 60-5 at 121).

B. Relevant Vehicles

As noted above, on the date of the August 11, 2020 accident, the Accident Vehicle was not specifically listed as a vehicle covered under the Policy. However, the Batten Defendants contend that the Accident Vehicle was insured under the Policy as a “Temporary Substitute Auto” for the “Deer Vehicle” which had been totaled in an accident that occurred on May 10, 2020, described below.

The parties do not contest that on May 10, 2020, another Cypress insured vehicle, a 2002 Freightliner, was involved in an accident when its driver, Bobby McCray, swerved to avoid hitting a deer (“Deer Vehicle”). The Deer Vehicle was owned by Jesse Batten, individually.⁴ (Doc. 65-3 ¶¶ 7–8; Batten Dep. 42–44). As a result of the May 10, 2020 accident, the Deer Vehicle was declared a total loss. A Proof of Loss signed by Jesse Batten on behalf of Batten Farms LLC was submitted to Cypress,⁵ and Cypress paid Jesse Batten, individually, $18,435.72 for the loss of the Deer Vehicle. (Batten Dep. 45–49, Exs. 10, 11).

The claim on the Deer Vehicle was processed by Cypress's senior underwriter, Ms. Parker. On May 28, 2020, Ms. Parker sent an email to Batten Farms LLC's insurance agent, Tanya Scott, advising that the Deer Vehicle had been deemed a total loss. Ms. Parker asked whether Batten Farms LLC planned to keep the Deer Vehicle; and if not, whether it used any temporary substitutes for the Deer Vehicle. (Doc. 60-5 at 190). On June 5, 2020, Ms. Parker sent a follow-up email to Ms. Scott noting that Ms. Parker had not received a response to her earlier email, and advising: “I am going to close this follow-up. Once the insured has decided what they will be doing with the total loss[,] please advise.” (Id. at 191). Ms. Parker further advised that if the insured was not going to keep the Deer Vehicle, then Cypress would backdate the removal of the Deer Vehicle from the Policy “to after the date of loss given there were no temporary substitutes.” (Id.)

On September 9, 2020, Ms. Scott finally advised Cypress that “[t]he insured has called stating that the 2002 Freightliner [Deer Vehicle] which was involved in an accident back [on] 05/10/20 was a total loss․ Could you please check on if it was a total loss and if so remove the truck back to 5/11/2020?” (Id. at 192). On September 10, 2020, Ms. Scott was advised that the Deer Vehicle would be deleted from the Policy effective May 11, 2020, the date after the accident. (Id. at 193). On September 22, 2024, a check in the amount of $4,125.77, representing the refund of premiums relating to the removal of the Deer Vehicle from the Policy, was issued to Jesse Batten Farms LLC. (Id. at 196). Jesse Batten confirmed that he cashed the check. (Batten Dep. 89–90). Cypress was not permitted to remove the Deer Vehicle as a scheduled auto from the Policy until it was authorized to do so by the insured or its agent. (Parker Decl. ¶ 15). Jesse Batten denies that he authorized his agent to have the Deer Vehicle removed from the Policy.

II. Procedural Background

All the parties in the State Court Action are named Defendants in Cypress's complaint in this action. Since then, McCuller was dropped as a Defendant, and a default judgment was entered against King. (See Docs. 43, 75). By Order (Doc. 43) entered March 20, 2023, the Court denied motions to dismiss filed by the Batten Defendants and Scoular, and by Order (Doc. 51) entered November 15, 2023, the Court denied the motion for reconsideration filed by Scoular. Thereafter, the Batten Defendants and Cypress filed the pending cross-motions for summary judgment. The motions have been fully briefed and are ripe for decision.

III. Motion for Summary Judgment Standard

Under Fed. R. Civ. P. 56, “[t]he 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). “Cross motions for summary judgment do not change the standard, but one's being denied does not always imply that the other should be granted.” Emps. Mut. Cas. Co. v. Shivam Trading, Inc., No. 5:16-CV-58, 2017 WL 2126911, at *2 (S.D. Ga. May 16, 2017), aff'd, 709 F. App'x 663 (11th Cir. 2018) (internal quotation marks and citation omitted).

The cardinal rule of contract construction, equally applicable to interpretation of insurance contracts, is to ascertain the intention of the parties. McEver v. Nw. Mut. Life Ins. Co., 629 F. Supp. 3d 1340, 1353 (M.D. Ga. 2022). “[A]n insured claiming an insurance benefit has the burden of proving that a claim falls within the coverage of the policy.” Travelers Home & Marine Ins. Co. v. Castellanos, 773 S.E.2d 184, 186 (Ga. 2015). “The construction of a contract is a question of law for the court,” O.C.G.A. § 13-2-1, as is the question of whether the insurance contract is ambiguous. State Farm Mut. Auto. Ins. Co. v. Staton, 685 S.E.2d 263, 265 (Ga. 2009). “An insurance contract will be deemed ambiguous only if its terms are subject to more than one reasonable interpretation. The policy should be read as a layman would read it and not as it might be analyzed by an insurance expert or an attorney.” Id. (internal quotations marks and citation omitted); see also Shivam Trading, Inc., 709 F. App'x at 665 (the understanding of the average policyholder is to be accepted as a court's guide to the meaning of words in an insurance policy). If the contract is ambiguous, it will be construed liberally against the insurer and most favorably for the insured. Staton, 685 S.E.2d at 265. However, “the rule of liberal construction of an insurance policy cannot be used to create an ambiguity where none, in fact, exists. Thus, where the language fixing the extent of liability of an insurer is unambiguous and but one reasonable construction is possible, the court must expound the contract as made.” Id. at 266 (alteration adopted) (internal quotation marks and citation omitted); see also Auto-Owners Ins. Co. v. Barnes, 373 S.E.2d 217, 219–20 (Ga. Ct. App. 1988) (applying the rule of contract construction—that a specific provision will prevail over one more broadly inclusive—to conclude that terms of coverage specifically set out in the policy prevail over a general statement in the declarations as to the type of property covered, and applying the Georgia rule that no ambiguity exists when the trial court, by application of the pertinent rules of construction, can ascertain the true intention of the parties). “An insurance contract must be construed as a whole with all the provisions interpreted so as to harmonize with each other.” McEver, 629 F. Supp. 3d at 1354.

IV. The Motions for Summary Judgment

The central issue in the Motions for Summary Judgment is whether the Accident Vehicle was covered under the Policy as a Temporary Substitute Vehicle in place of the Deer Vehicle. The relevant terms of the Policy are not ambiguous. The terms “you” and “your” refer to the Named Insured, Jesse Batten Farms LLC.

Thus, for the Accident Vehicle to be substituted for the Deer Vehicle under the Policy, the specific conditions of the Policy, defining a Temporary Substitute Vehicle, must have been met. The conditions are that:

Any ‘auto’ you [Jesse Batten Farms LLC] do not own while used with the permission of its owner [Jesse Batten, individually] as a temporary substitute for a covered “auto” you [Jesse Batten Farms LLC] own that is out of service because of its ․ [d]estruction.”

(Doc. 60-5 at 126 (emphasis added)). The Accident Vehicle was owed by Jesse Batten, individually, and King was driving the Accident Vehicle with its owner's, Jesse Batten's, permission. (Batten Dep. 55:25–56:2). However, the Deer Vehicle was not owned by Jesse Batten Farms LLC. Based on a straightforward reading of the Temporary Substitute Vehicle provisions of Policy and applying the facts of this case to those terms, the italicized phrase of the qualifying terms is not met. Because the Deer Vehicle does not meet this condition, the Court does not need to consider whether the Deer Vehicle met the additional condition that it be a “covered auto” at the time of the August 11, 2020 accident. Nor does the Court need to consider the Batten Defendants’ arguments that Jesse Batten's agent, Tanya Scott, did not have authority to instruct Cypress to remove the Deer Vehicle as a covered auto under the Policy, or that Cypress waived its right to contest that the Deer Vehicle was a covered vehicle because Cypress allegedly, improperly retained the premium payments over nineteen weeks.

At the time of the August 11, 2020 accident, the Deer Vehicle was not owned by the Named Insured, Jesse Batten Farms LLC. Accordingly, the Court finds that the Accident Vehicle is not covered under the Policy as a Temporary Substitute Vehicle.

The Batten Defendants posit two theories arguing that the Temporary Substitute Auto provision was ambiguous. Their first argument is that Ms. Parker's emails to Ms. Scott indicate that Batten Farms LLC was permitted to use a temporary substitute for the Deer Vehicle, but Cypress's counsel now argues that Batten Farms LLC could not have used any temporary substitute for the Deer Vehicle under the terms of the Policy because Batten Farms LLC did not own the Deer Vehicle. (Doc. 56-1 at 7). The Batten Defendants’ interpretation of Ms. Parker's emails is strained. Asking whether a vehicle was going to be, or had been, substituted in place of the Deer Vehicle, does not mean that a substitution that did not meet the specific terms of the Policy would be permitted. Ms. Parker “never stated that the insured was free to use any temporary substitute auto it wanted regardless of the Policy's terms.” (Parker Decl. ¶ 12). Finally, Ms. Parker's statements cannot be used to create liability not created by the Policy and not assumed by Cypress under the terms of the Policy. Shivam Trading, Inc., 709 F. App'x at 665–66.

Next, the Batten Defendants contend that when the Policy is considered as a whole, including the Truckers Endorsement, the term “you” in the Temporary Substitute Auto provisions becomes ambiguous. (Doc. 56-1 at 4, 8–9) (citing O.C.G.A. § 13-2-2(4) (“the whole contract should be looked to in arriving at the construction of any part”)). To create this ambiguity, the Batten Defendants argue that the “Truckers Endorsement expands the definition of ‘Named Insured’ by defining ‘Who is an Insured.’ Therefore, ‘you’ and ‘your’ in the Cypress Policy include those defined as an ‘Insured’ in the Truckers Endorsement.” (Id. at 9). The Batten Defendants conclude that since the identity of “you” and “your” are ambiguous, it is reasonable to conclude that “you” and “your” also refer to Jesse Batten, individually, and so that he and Jesse Batten Farms LLC, are interchangeable in interpreting the terms of the Policy. Under the Batten Defendants’ scenario, the Accident Vehicle is covered under the Policy as a substitute vehicle for the Deer Vehicle.⁶

This argument is not a reasonable interpretation, and is, therefore, without merit. First, as noted by Cypress, Jesse Batten confirmed that he understood the terms “you” and “your” referred to the Named Insured – Jesse Batten Farms LLC. (Batten Dep. 54–55). In addition, the first page of the Truckers Endorsement identifies the Named Insured only as “Jesse Batten Farms LLC.” If Cypress intended to include others as named insureds, the Truckers Endorsement could have clearly shown that intent by identifying the Named Insured as: “Jesse Batten Farms LLC, and those included in the ‘Who is an Insured’ provisions of the endorsement.”

Further, the case law does not support the Batten Defendants’ argument. As the Eleventh Circuit found in affirming the lower court's decision in Shivam Trading, Inc., the Policy clearly states that “you” and “your” throughout the Policy only refer to the Named Insured, who is indisputably only Jesse Batten Farms LLC—not Jesse Batten, individually. Nothing in the endorsement contravenes the language clearly defining “Named Insured.” Shivam Trading, 709 F. App'x at 665. Finally, the provision defining “you” and “your” as the Named Insured shown in the Declarations appears in the preamble of the Business Auto Coverage Form section of the Policy, and the Temporary Substitute Auto provision is included in Section IC of that form. Certainly, the Temporary Substitute Auto provision is most convincingly read in tandem with the definitions of “you” and “your” contained in the preamble which immediately precede such provision. (See Doc. 60-5 at 125–26). The Court finds that there is no ambiguity in the Policy with respect to the terms “you” or “your” or in determining the identity of the Named Insured.

V. Conclusion

The Court finds that Cypress met its initial burden to show that there is no genuine dispute that the Accident Vehicle did not qualify as a covered auto under the Temporary Substitute Vehicle provisions of the Policy because the Deer Vehicle was not owned by the Named Insured, Jesse Batten Farms LLC. Thus, because the Batten Defendants failed to present evidence to meet their burden to show that their claim falls within the coverage of the Policy, the Court finds that Cypress Insurance Company's Motion for Summary Judgment (Doc. 60) should be, and hereby is GRANTED, and Defendants Jesse Lee Batten and Jesse Batten Farms, LLC's Motion for Summary Judgment (Doc. 56) should be, and hereby is DENIED.

Further, the Court found the Parties’ briefings adequate and oral argument not beneficial or necessary for the Court's consideration. Thus, Defendants’ Request for Oral Argument (Doc. 58), is DENIED as MOOT.

SO ORDERED, this 30th day of September 2024.

FOOTNOTES

1.   Doc. 65-3 is the Batten Defendants’ responses to Cypress's statement of material facts.

2.   The September 20, 2023 deposition transcript of Jesse Batten, as the § 30(b)(6) witness for Jesse Batten Farms LLC, ECF No. 60-5, is referred to herein as “Batten Dep.” The first page of the deposition transcript is dated September 20, 2020. However, this is undoubtedly a typographical error, as this case was not filed until April 25, 2022. The certificate of the Lori McCalvin, Court Reporter, states the deposition was taken on September 20, 2023. Batten Dep. 137.

3.   “ ‘Trucker’ means any person or organization engaged in the business of transporting property by ‘auto’ for hire.” (Doc. 60-5 at 124).

4.   The Policy did not prohibit, and Jesse Batten was aware that the Policy permitted, Batten Farms LLC to schedule vehicles that were not owned by Batten Farms LLC. (Batten Dep. 128:13–129:12).

5.   When asked why the Proof of Loss was signed by him on behalf of Batten Farms LLC rather than individually, Jesse Batten answered: “Because I thought we were one and the same really.” (Batten Dep. 46:23–47:8).

6.   According to the Batten Defendants, the conditions, defining a Temporary Substitute Vehicle can be interpreted to provide coverage for the August 11, 2020 accident as follows: “[The Accident Vehicle is covered as] an ‘auto’ [Jesse Batten Farms, LLC] did not own while used with the permission of [Jesse Batten] as a temporary substitute for a covered ‘auto’ [Jesse Batten] own[ed] that [was] out of service because of its ․ [d]estruction.” (Doc. 56-1 at 9).

W. LOUIS SANDS, SENIOR JUDGE