from the United States District Court for the Western
District of Texas
JONES, HO, and OLDHAM, Circuit Judges.
C. HO, CIRCUIT JUDGE.
insurance company could come up with the policy
interpretation advanced here. Cincinnati Insurance Company
theorizes that its automobile policies do not cover injuries
caused by drunk driving collisions, because such collisions
are not "accidents." Its logic is this: intentional
acts are not accidents, and drunk drivers make the
intentional choice to drink and then drive.
theory of interpretation conflicts with the plain meaning and
common usage of the word "accident"-and defies the
understanding and expectation of everyone who drives a car.
Not surprisingly, no court has, to our knowledge, endorsed
the policy interpretation advanced here, and Cincinnati cites
none (other than the district court in this case). We reverse
and remand for further proceedings.
Xavier Sanchez was driving under the influence of alcohol
when he failed to yield the right of way, thereby colliding
with another car and injuring Richard Brett Frederking. At
the time, Sanchez was driving a truck assigned to him by his
employer, Advantage Plumbing Services. Advantage, in turn, is
insured by Cincinnati.
sued both Sanchez and Advantage in Texas state court. The
jury found that Sanchez's conduct was grossly negligent,
and that Advantage negligently entrusted Sanchez with the
vehicle. The jury held Sanchez and Advantage jointly and
severally liable for $137, 025 in compensatory damages. It
further awarded $207, 550 in exemplary damages for
Sanchez's gross negligence.
Advantage's insurer, Cincinnati agreed to pay Frederking
the amount of the compensatory damages award, thereby
discharging Advantage's liability. But when Frederking
demanded that Cincinnati also pay Sanchez's exemplary
damages, Cincinnati refused. In response, Frederking brought
this suit against Cincinnati.
is a third-party beneficiary of Advantage's insurance
policies with Cincinnati. Those policies have two relevant
coverage sections. First, the Auto Policy covers damages
resulting from "accidents" caused by
Advantage's employees that produce defined injuries.
Second, the Commercial Umbrella Liability Coverage applies
where the Auto Policy does not. It also covers sums in excess
of the Auto Policy's limits. For our purposes, however,
its coverage is essentially identical to the Auto Policy,
because it covers "occurrences"-which includes (but
is not limited to) "accidents" resulting in defined
Cincinnati refused to pay the exemplary damages award,
Frederking brought this suit for breach of contract and
declaratory judgment in Texas state court. Cincinnati removed
to federal court and counterclaimed for declaratory judgment.
Cincinnati then moved for summary judgment on various
grounds, namely, that (1) Sanchez was not a covered
"insured" at the time of the collision; (2)
Sanchez's grossly negligent conduct could not result in a
covered "accident"; (3) the exemplary damages award
is uninsurable as a matter of contract and public policy; and
(4) Cincinnati has no duty to indemnify Sanchez. Frederking
cross-moved for partial summary judgment on the declaratory
judgment claims and argued that a fact issue remained about
whether Sanchez was an "insured."
district court granted summary judgment to Cincinnati. In
particular, it concluded that Sanchez's intentional
decision to drive while intoxicated meant that the collision
was not an "accident" under Texas law.
interpretation of an insurance policy provision is an issue
of law reviewed de novo." Performance
Autoplex II Ltd. v. Mid-Continent Cas. Co., 322 F.3d
847, 853 (5th Cir. 2003) (per curiam) (citing Am. States