     Case: 12-60148       Document: 00512238303         Page: 1     Date Filed: 05/10/2013




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                            FILED
                                                                           May 10, 2013

                                     No. 12-60148                          Lyle W. Cayce
                                   Summary Calendar                             Clerk



STATE NATIONAL INSURANCE COMPANY,

                                                  Plaintiff-Appellee
v.

MARKETING SERVICES INCORPORATED; WHITE GOLD
COMMODITIES, INCORPORATED,

                                                  Defendants-Appellants



                   Appeal from the United States District Court
                     for the Northern District of Mississippi
                              USDC No. 4:10-CV-62


Before JONES, DENNIS, and HAYNES, Circuit Judges.
PER CURIAM:*
       This is an appeal from a declaratory-judgment action involving an
insurance-coverage dispute. Plaintiff-Appellee, State National Insurance Co.
(“State National”), filed a declaratory action seeking a judgment declaring that
State National had no coverage on the claim of the subject insurance policy with
Defendants-Appellants, Marketing Services, Inc. (“Marketing Services”) and


       *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
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                                 No. 12-60148

White Gold Commodities, Inc. (“White Gold Commodities”). Finding that the
language of the subject policy exclusion clearly and unambiguously excluded
coverage, the district court granted State National’s motion for summary
judgment. We AFFIRM.
                      I. FACTS AND PROCEEDINGS
      In August 2008, State National issued an insurance policy to Defendants-
Appellants. Paragraph 8A of the policy provides:
      In no case shall this insurance cover any loss, damage or expense
      as a result of: . . . [m]isappropriation, concealment, conversion,
      infidelity and/or dishonest act(s) committed by or at the instigation
      of the Assured, their employees or appointed agents. This
      exclusion shall not apply to carriers for hire or loss of and/or theft
      of documents of title by reason of the actions of any third party
      obtaining possession of the insured goods by fraud, malice and/or
      dishonest act.
      In 2003, Marketing Services entered into an agency agreement with Tang
Zhong Qing (“Tang”). Effectively, Tang would clear the cotton through customs
in China and see that it was stored in the warehouse operated by Nan Kong
Development Company (“NKD”). According to Defendants-Appellants, Tang
would later seek buyers for the cotton and carry out sales only with the express
authorization of the Defendants-Appellants.
      In December 2008, Marketing Services purchased blocks of cotton, hedging
the cotton under Marketing Services’s name. Once the hedging was in place, the
cotton was booked in White Gold Commodities’s name. White Gold Commodities
then invoiced the cotton to White Gold Commodities’s China office, which Tang
managed.
      In June 2009, Tang executed a “Purchase Confirmed” document, which
evidenced the sale of cotton from White Gold Commodities to Jiangyin Jutai
Textiles Co. Tang signed the document and stamped it with the “Official Stamp
White Gold Commodities, Inc. China Office.” In September 2009, Marketing


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                                 No. 12-60148

Services submitted a notice under the subject policy, asserting that the cotton
was presumed stolen. Defendants-Appellants alleged that Tang had colluded
with the owner of the storage warehouse and sold 880 bales of cotton at a
fraction of the price and without express permission.        In response, State
National informed Defendants-Appellants that coverage would be denied per the
exclusion in paragraph 8A of the policy and the involvement of Tang, their
agent, who arranged for the unauthorized sale of the cotton. State National
sought a judgment declaring that the loss of the 880 bales of cotton was excluded
from coverage per paragraph 8A of the policy. Finding that Tang was the
Defendants-Appellants’ admitted agent, the district court held that the exclusion
in paragraph 8A applied and granted summary judgment in favor of State
National. The district court further held that the exception to the exclusion did
not apply because the defendants did not show that “carriers for hire” or “loss of
and/or theft of documents of title” were involved in the matter. Defendants-
Appellants appealed.
                               II. DISCUSSION
                           A. Standard of Review
      “We review a district court’s grant of summary judgment de novo, applying
the same standards as the district court.” Estate of Bradley ex rel. Sample v.
Royal Surplus Lines Ins. Co., 647 F.3d 524, 528 (5th Cir. 2011). Summary
judgment is warranted if the record shows that “there is no genuine dispute as
to any material fact.” FED. R. CIV. P. 56(a). In reviewing a grant of summary
judgment, we consider the evidence in the light most favorable to the nonmoving
party. Addicks Servs., Inc. v. GGP-Bridgeland, LP, 596 F.3d 286, 293 (5th Cir.
2010).   However, conclusory and unsubstantiated allegations alone are
insufficient to defeat summary judgment. Little v. Liquid Air Corp., 37 F.3d
1069, 1075 (5th Cir. 1994).      Additionally, we review the district court’s



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                                   No. 12-60148

interpretation of an insurance contract de novo. Am. Nat’l Gen. Ins. Co. v. Ryan,
274 F.3d 319, 323 (5th Cir. 2001).
               B. Exception to the Exclusion in Paragraph 8A
         We conclude that summary judgment was appropriate based on our review
fo the policy language. The exception to the exclusion provides that it “shall not
apply to carriers for hire or loss of and/or theft of documents of title by reason of
the actions of any third party obtaining possession of the insured goods by fraud,
malice and/or dishonest act.” The Defendants-Appellants have failed to prove
that a “carrier for hire” or a “loss of and/or theft of documents of title” was
involved, thus the exception to the exclusion is not applicable to the present
facts.
         First, Defendants-Appellants argue that the exception to the exclusion
applies because the warehouse where the cotton was being stored could be
considered a “carrier for hire,” a term that the insurance policy does not define.
Without citing any authority, Defendants-Appellants claim to rely on the
affidavit of their expert for this classification of the warehouse. Relying on a
former version of the Carriage of Goods by Sea Act (“COSGA”), the Fifth Circuit
has considered a “carrier” to include “the owner or the charterer who enters into
a contract of carriage with a shipper.” QT Trading, L.P. v. M/V SAGA MORUS,
641 F.3d 105, 109 (5th Cir. 2011) (internal quotation marks omitted). Currently,
COSGA defines “carrier” as “the owner, manager, charterer, agent, or master of
a vessel.” 46 U.S.C § 30701. Under both the former and the current definition,
the warehouse where the cotton was stored cannot be classified as a “carrier”
pursuant to the exception to the exclusion in paragraph 8A.
         Second, Defendants-Appellants argue that the exception to the exclusion
should apply because there has been a “theft of documents of title.” Defendants-
Appellants contend that Tang, their agent, never received title to the cotton and
thus could not have validly transferred title. Tang, however, received the

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                                   No. 12-60148

original bill of lading from Defendants-Appellants, which was more than what
is routinely required to permit him to have cleared the cotton through customs.
We have stated that bills of lading may serve multiple functions, including
serving as document of title. Cargill Ferrous Int’l v. SEA PHOENIX MV, 325
F.3d 695, 702 (5th Cir. 2003). Therefore, given that Tang received the original
bill of lading, Defendants-Appellants knowingly delivered title of the cotton to
Tang, their agent. No theft of title occurred because the document of title was
intentionally given to him. Here, Tang lawfully received title to the goods, thus
allowing him to transfer title of the cotton to the purchaser. Though Tang, as
agent, may have breached a duty to his principal, this breach is excluded from
coverage under the first sentence of paragraph 8A, rather than the exception to
the exclusion. Given that no documents of title were lost or stolen, the exception
to the exclusion is inapplicable to the current facts.
      Third, Defendants-Appellants assert that the exception to the exclusion
is ambiguous and “very difficult to understand.” They argue that the portion of
the exception to the exclusion that includes “documents of title that are lost
and/or stolen” should be interpreted to include “fraudulently manufactured”
documents of title. We disagree. This interpretation is unavailable under the
rules governing the interpretation of insurance contracts under Mississippi law.
We have explained that the first rule for interpreting insurance contracts in
Mississippi as follows: “[f]irst, where an insurance policy is plain and
unambiguous, a court must construe that instrument, like other contracts,
exactly as written.” Centennial Ins. Co. v. Ryder Truck Rental, Inc., 149 F.3d
378, 382 (5th Cir. 1998). “[U]nless an affirmative expression of an overriding
public policy by the legislature or judiciary allows us to reach a different result,”
we have held that “in Mississippi, an insurance policy’s plain meaning controls.”
Id. at n.11. Because we conclude that the exception to the exclusion is plain and
unambiguous, under Mississippi law, plain meaning must govern its

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interpretation. Assigning plain meaning to “carrier for hire” and “loss and/or
theft of the documents of title,” the allegedly “illegally and fraudulently
manufactured” Purchase Confirmation executed by Tang is not provided for
under the plain language of the exception to the exclusion. Accordingly, the
district court did not err when it held that paragraph 8A plainly and
unambiguously excluded coverage. Thus, viewing the evidence in the light most
favorable to Defendants-Appellants, we conclude that summary judgment was
appropriately granted
                            III. CONCLUSION
      For these reasons, we AFFIRM the judgment of the district court.




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