                                                                           FILED
                                                               United States Court of Appeals
                                                                       Tenth Circuit

                                                                   December 31, 2014
                     UNITED STATES COURT OF APPEALS Elisabeth A. Shumaker
                                                                       Clerk of Court
                                 TENTH CIRCUIT


 AMERICAN NATIONAL PROPERTY
 AND CASUALTY COMPANY, a
 Missouri corporation,

          Plaintiff-Counter-Defendant -
                                                        No. 12-2178
          Appellant,
                                            (D.C. No. 1:11-CV-01137-LFG-RHS)
 v.
                                                          (D.N.M.)
 UNITED SPECIALTY INSURANCE
 COMPANY, a Delaware corporation,

          Defendant-Counter-Claimant -
          Appellee.


                            ORDER AND JUDGMENT *


Before HARTZ, HOLLOWAY ** and HOLMES, Circuit Judges.


      *
             This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Federal Rule of Appellate
Procedure 32.1 and Tenth Circuit Rule 32.1.
      **
              The late Honorable William J. Holloway, Jr., United States Senior
Circuit Judge, heard oral argument in this case, but passed away prior to the
case’s final resolution. Judge Holloway did not cast a vote regarding this order
and judgment, and he had no role in the preparation thereof. “The practice of this
court permits the remaining two panel judges if in agreement to act as a quorum
in resolving the appeal.” United States v. Wiles, 106 F.3d 1516, 1516 n.* (10th
Cir. 1997); see also 28 U.S.C. § 46(d) (noting that a circuit court may adopt
procedures permitting disposition of an appeal where a remaining quorum of a
panel agrees on the disposition). Consequently, the remaining panel members
have acted as a quorum with respect to this appeal and, for the reasons explicated
below, have voted to reverse and remand for further proceedings.
      American National Property and Casualty Company (“American”) and

United Specialty Insurance Company (“United”) dispute their respective

obligations flowing from a wrongful-death settlement. On summary judgment,

the district court ruled that United had no obligation to pay. We conclude that

United has not made the showing to warrant that result. Accordingly, we use the

jurisdiction granted to us by 28 U.S.C. § 1291 to reverse and remand for further

proceedings.

                                          I

                                         A

      “In reviewing the district court’s grant of summary judgment, we recite the

facts in the light most favorable to [American], the nonmoving party.” Debord v.

Mercy Health Sys. of Kan., Inc., 737 F.3d 642, 647 n.2 (10th Cir. 2013), cert.

denied, --- U.S. ----, 134 S. Ct. 2664 (2014).

      At the time of the underlying events, Endeavor Services, Inc. (“Endeavor”)

was in the business of transporting water to oil fields. Jimmy Cooper financed

the company at its inception and served as its director while his children jointly

owned 51% of its shares and Virgil Woods owned the other 49%.

      To assist the company, Mr. Cooper provided it the use of his Lincoln

Navigator (“the Navigator”). The Coopers used the Navigator as a family vehicle

from 2004 until 2010. At that time, Mr. Woods informed Mr. Cooper that Edward


                                          2
De La Paz, an Endeavor salesman, needed a vehicle to perform his duties, and Mr.

Cooper offered the Navigator. There was no discussion of Endeavor purchasing

the vehicle when Mr. Cooper first provided it, but approximately a month later

Messrs. Woods and Cooper agreed that Endeavor would buy the Navigator at fair

market value as soon as the company had the funds to do so. While it had

possession of the Navigator, Endeavor paid for all gas and maintenance. Mr.

Cooper continued to pay the premiums on the car’s insurance and retained title to

the vehicle, but he and his wife never used it.

      On June 11, 2010, Mr. De La Paz was driving the Navigator to pick up a

check that would have allowed Endeavor to pay Mr. Cooper for the vehicle. 1 Mr.

De La Paz crashed into a truck, killing both himself and Roland Judson, the truck

driver. The accident occurred approximately fifty miles from Mr. De La Paz’s

house—where he began his drive—during daylight, with clear conditions, on a

dry, straight, level road. A police report characterized “[d]river inattention” as “a

contributing factor in the crash.” Aplt. App. at 78 (Crash Report, dated July 8,

2010). An autopsy of Mr. De La Paz found methamphetamine in his system in an

amount sufficient to cause death by overdose. In the opinion of Dr. Richard

Morrisett, a neuropharmacologist retained by American, drugs “rendered [Mr. De

La Paz] incapable of safe operation of a motor vehicle [and] substantially


      1
             Mr. Cooper was unaware of this plan and thought the purchasing date
was at least six months in the future.

                                          3
contributed to the motor vehicle accident.” Id. at 152 (Letter from Richard

Morrisett to Christopher Reed, filed June 5, 2012).

                                         B

       There are three different insurance policies relevant to the appeal: (1) a

family auto policy issued by American to Mr. Cooper; (2) a commercial umbrella

policy issued by American to Mr. Cooper; and (3) a commercial auto policy

issued by Great West Casualty Company (“Great West”) to Endeavor. The most

important aspect of Mr. Cooper’s family policy with American, for our purposes,

is that it excluded coverage for damages incurred “while any insured vehicle is

rented, leased, or subleased or under any purchase agreement or conditional sale

to others.” Id. at 102 (Family Auto Policy, filed June 5, 2012). As for the

commercial umbrella policy American issued to Mr. Cooper, its pertinent

provision excluded coverage for damages “[a]rising out of the use . . . or

possession by any person of a controlled substance.” Id. at 105 (Commercial

Umbrella Policy, filed June 5, 2012). Finally, the commercial auto policy Great

West issued to Endeavor indicated, notably, that it applied only to “covered

autos,” which included “hired autos” and “nonowned autos.” Id. at 126–27

(Commercial Auto Policy, filed June 5, 2012).

      Mr. Judson’s estate sued Mr. De La Paz’s for wrongful death. A settlement

was reached between the insurance companies, Mr. Judson’s estate, and Mr. De

La Paz’s estate, whereby Mr. Judson’s estate would be paid $1,650,000 to resolve

                                         4
its wrongful-death claim. Of this amount, American paid $650,000, Great West

paid $1,000,000, and United—which issued an excess-liability policy to

Endeavor—paid nothing. The insurance companies each reserved their right to

contest the claims amongst themselves.

      American exercised that right, seeking a declaratory judgment and

equitable subrogation on the ground that United owed it $650,000 (“the loss”) for

the money it paid to settle the wrongful-death lawsuit based on the excess-

liability policy it issued to Endeavor. 2 Both parties filed motions for summary

judgment. In its motion, American argued that neither its own family auto policy

nor its umbrella policy covered the loss. It sought a declaration that the Great

West policy provided primary coverage, that United provided excess coverage,

and that United therefore owed American $650,000 for the amount American paid

to settle the claim over and above the $1,000,000 that Great West paid. For its

part, United argued in its own motion for summary judgment that American’s

family auto and umbrella policies covered the loss.

      Ruling on the dueling motions for summary judgment, the district court

granted United’s, denied American’s, and dismissed the complaint with prejudice.

In so doing, it declared that American’s auto and umbrella policies covered the



      2
             American initially sued Great West as well, but it was dismissed
from the lawsuit with prejudice by stipulation of the parties and is not
participating in this appeal.

                                         5
loss and that Great West’s and United’s policies did not. The district court

reasoned as follows. With respect to American’s family policy, the district court

found the conditional-sale exclusion ambiguous and thus properly construed

against American, the insurer. The district court explained that “[a]t most,” the

arrangement “amounted to an expression of a plan for Endeavor to purchase the

vehicle at some undefined time and for an unstated sales price, rather than a

contractual agreement.” Id. at 372 (Mem. Op. & Order, filed Sept. 24, 2012). As

such, the terms were insufficiently definite to constitute a contract, and the

conditional-sale exclusion was not implicated.

       Turning to American’s commercial umbrella policy, the district court

concluded that its exclusion for damages arising out of the use of controlled

substances was, like the conditional-sale exclusion, ambiguous, and the court

accordingly resolved its ambiguities in United’s favor. As the district court read

the record, the summary-judgment evidence indicated at most that Mr. “De La

Paz’s methamphetamine use might have caused the accident.” Id. at 378. That

did not satisfy the district court, as “a number of other factors leading to De La

[Paz’s] inattentive and dangerous driving could have caused the collision.” Id. at

379.

       As for the Great West policy, the district court found that Great West was

not obligated to cover the loss because the Navigator was borrowed, and was

therefore not a “hired auto” or a “nonowned auto” within the meaning of the

                                          6
policy. In view of those findings, the district court granted United’s motion for

summary judgment, denied American’s motion for summary judgment, and

dismissed the complaint with prejudice. This timely appeal followed.

                                          II

      Because this case is here on summary judgment, we apply a de novo

standard of review, using the same methodology as the district court. See Water

Pik, Inc. v. Med-Systems, Inc., 726 F.3d 1136, 1143 (10th Cir. 2013). A party is

entitled to summary judgment only where the summary-judgment record shows no

genuine issue of material fact. Id. In making that determination, we consider the

facts in the light most favorable to the nonmovant and draw all reasonable

inferences in its favor. See Talavera ex rel. Gonzalez v. Wiley, 725 F.3d 1262,

1267 (10th Cir. 2013).

      With diversity cases such as this, substantive questions are governed by

state law. See, e.g., Jones v. United Parcel Serv., Inc., 674 F.3d 1187, 1203 (10th

Cir.), cert. denied, --- U.S. ----, 133 S. Ct. 413 (2012). The parties agree that

state law controls each of the issues presented, and they are correct. See Cohen-

Esrey Real Estate Servs., Inc. v. Twin City Fire Ins. Co., 636 F.3d 1300, 1303

(10th Cir. 2011) (applying state law to insurance coverage question in diversity

case). The parties further agree, as did the district court, that New Mexico law

controls, so we can safely apply that law. See N. Am. Specialty Ins. Co. v. Corr.

Med. Servs., Inc., 527 F.3d 1033, 1040 n.5 (10th Cir. 2008) (applying Missouri

                                          7
law in an insurance case because the district court applied it and because the

parties did not dispute that decision on appeal, as “appellate courts do not

normally address choice of law issues sua sponte where [the] parties acquiesce in

application of a certain state’s law”). “[O]ur task in diversity cases is to predict

how the state supreme court would rule.” Valley Forge Ins. Co. v. Health Care

Mgmt. Partners, Ltd., 616 F.3d 1086, 1093 (10th Cir. 2010).

                                          III

      As we have indicated, at the center of the case are three different insurance

policies: (1) the family auto policy issued by American to Mr. Cooper; (2) the

commercial umbrella policy issued by American to Mr. Cooper; and (3) the

commercial auto policy issued by Great West to Endeavor. The district court

ruled on summary judgment that: (1) American’s family auto policy covered the

loss; (2) American’s umbrella policy covered the loss; and (3) Great West’s

policy did not cover the loss. We reach a different outcome from the district

court’s on each policy. Specifically, we conclude that: (1) United was not

entitled to a summary-judgment ruling that American’s family auto policy

covered the loss; (2) United was not entitled to a summary-judgment ruling that

American’s umbrella policy covered the loss; and (3) United was not entitled to a

summary-judgment ruling that Great West’s policy did not cover the loss. As a

result, we reverse the entry of summary judgment and remand for further




                                           8
proceedings. 3

                                          A

      The first issue presented is whether United was entitled to a summary-

judgment ruling that American’s family auto policy covered the loss because the

conditional-sale exclusion is inapplicable. We hold that it was not, and reverse

the district court insofar as it reached the contrary result.

                                           1



      3
               American asks us to remand with instructions for the district court to
enter summary judgment in its favor. We enjoy the power to do so, see McIntosh
v. Scottsdale Ins. Co., 992 F.2d 251, 253 (10th Cir. 1993), but believe the more
prudent course under the circumstances is to simply reverse the grant of summary
judgment in favor of United. New Mexico law holds that “[i]t is the duty of the
court to interpret the terms of a contract when these terms have been clearly
established but when the terms of a contract are in controversy, it is for the jury
to determine the terms and it is not the province of the court to instruct the jury
what the terms are.” Segura v. Molycorp, Inc., 636 P.2d 284, 289 (N.M. 1981).
It is clear that there is an insufficient basis to grant summary judgment in
United’s favor on the issues addressed herein, while considering the facts in the
light most favorable to American, the nonmovant, and making all reasonable
inferences in its favor. See Talavera, 725 F.3d at 1267. That said, in addressing
the question of whether summary judgment is properly granted against United on
these issues, we must give United the benefit of the standard of review applicable
to the nonmovant. See, e.g., Manganella v. Evanston Ins. Co., 702 F.3d 68, 72
(1st Cir. 2012) (discussing how standard of review on cross-motions for summary
judgment depends on which motion is being considered). Affording United that
benefit, it is less certain whether there is a sufficient basis for granting summary
judgment against it, and the district court has not had an opportunity to pass upon
that question with the benefit of the analysis we conduct below. For those
reasons, the better course is to simply reverse the district court’s grant of
summary judgment for United and remand the case for the district court to
consider the proper steps to take going forward. We neither state nor imply any
view on what those steps should be.

                                           9
      In New Mexico, “insurance contracts are construed by the same principles

which govern the interpretation of all contracts.” Dairyland Ins. Co. v. Herman,

954 P.2d 56, 60 (N.M. 1997) (quoting Rummel v. Lexington Ins. Co., 945 P.2d

970, 976 (N.M. 1997)) (internal quotation marks omitted). However,

“[e]xclusionary clauses in insurance policies are to be narrowly construed, with

the reasonable expectations of the insured providing the basis for our analysis.”

Knowles v. United Servs. Auto. Ass’n, 832 P.2d 394, 396 (N.M. 1992) (internal

citation omitted).

      Where a policy term is unambiguous, our duty is simply to apply it to the

facts of the case. See Ponder v. State Farm Mut. Auto. Ins. Co., 12 P.3d 960, 964

(N.M. 2000) (“[W]hen the policy language is clear and unambiguous, we must

give effect to the contract and enforce it as written.”). New Mexico law deems a

policy term ambiguous where it “is ‘reasonably and fairly susceptible of different

constructions.’” Sanchez v. Herrera, 783 P.2d 465, 469 (N.M. 1989) (quoting

Levenson v. Mobley, 744 P.2d 174, 176 (N.M. 1987)). “The question of whether

an ambiguity [in an insurance policy] exists is a question of law to be decided by

the court.” Richardson v. Farmers Ins. Co. of Ariz., 811 P.2d 571, 572 (N.M.

1991). A policy clause can be ambiguous either facially or as applied. See

Rummel, 945 P.2d at 982.




                                         10
                                         a

      United contends that the conditional-sale exclusion is ambiguous, and the

district court agreed. We respectfully beg to differ.

      Beginning with the issue of facial ambiguity, the policy does not define the

term “conditional sale.” In such cases, “the term must be interpreted in its usual,

ordinary, and popular sense.” Battishill v. Farmers Alliance Ins. Co., 127 P.3d

1111, 1113 (N.M. 2006) (internal quotation marks omitted). Dictionaries can

assist us in that task. See id. One layman’s dictionary defines a conditional sale

as “a sale in which the vesting of title in the purchaser notwithstanding delivery

to him is made to depend upon the due performance of conditions (as payment in

full) made a part of the terms of sale.” Webster’s Third New Int’l Dictionary 473

(2002) [hereinafter “Webster’s”]. The definition provided by the preeminent legal

dictionary is in accord. See Black’s Law Dictionary 1454 (9th ed. 2009)

[hereinafter “Black’s”] (defining a conditional sale as “[a] sale in which the buyer

gains immediate possession but the seller retains title until the buyer performs a

condition, esp[ecially] payment of the full purchase price”).

      Although the New Mexico courts do not appear to have defined conditional

sales, they have referred to them in numerous cases, and have never expressed

confusion as to what they are. See, e.g., MGIC Mortg. Corp. v. Bowen, 572 P.2d

547, 548–49 (N.M. 1977); Toulouse v. Chilili Coop. Ass’n, 770 P.2d 542, 544

(N.M. Ct. App. 1989). The closest the New Mexico Supreme Court has come to

                                         11
defining conditional-sales contracts is to explain that their purpose “is to give the

seller security for the purchase price of property agreed to be sold by the terms of

the instrument.” Joe Heaston Tractor & Implement Co. v. Claussen, 287 P.2d 57,

59 (N.M. 1955). 4 Presumably the “security” referred to is the owner’s retention

of the title, and Joe Heaston’s explanation of the purpose of the conditional sale

is therefore fully consistent with the dictionary definitions mentioned above. 5

      Furthermore, as American helpfully points out, the phrase “conditional

sale” appears in a number of New Mexico statutes and regulations. Most


      4
              As a point of clarification, United understands Joe Heaston to have
equated conditional sales with “chattel mortgages.” Aplee. Br. at 26. The case
actually did the opposite: it contrasted and distinguished conditional sales and
chattel mortgages. See Joe Heaston, 287 P.2d at 59 (“Because of the harsh
remedies available to the holders of conditional sale contracts, they are not
favored in the law. In case of doubt, the courts hold the instruments in question
to be chattel mortgages.” (internal citation omitted)); id. (“[T]he seller must be
the actual owner of the article sold before a conditional sale contract is valid as
such; otherwise, it is held to be a mortgage.” (emphasis added)).
      5
                American asserts that this court, “interpreting New Mexico law,
defined the term conditional sale, as used in an automobile insurance policy, as
. . . ‘[a sale] in which title was retained as security for payment of the amount
due.’” Aplt. Opening Br. at 25 (quoting Commercial Standard Ins. Co. v.
McCollum, 207 F.2d 768, 769 (10th Cir. 1953)) (internal quotation marks
omitted). The full passage reads, “Appellant, however, contends that the
surrounding facts and circumstances refute these findings and compel the
conclusion that there was a sale on credit or in any event a conditional sale, in
which title was retained as security for payment of the amount due.” McCollum,
207 F.2d at 769 (emphases added). Read in its entirety, the sentence is plainly
summarizing an argument, not setting forth a definition. Nevertheless, it does add
weight to American’s position that the term “conditional sale” is typically
understood by courts and parties, including in cases hinging on New Mexico law,
as tracking the definitions discussed above.

                                          12
compellingly, a provision of New Mexico’s motor vehicle code indicates that

             “owner” means a person who holds the legal title of a vehicle and
             may include, . . . in the event that a vehicle is the subject of an
             agreement for conditional sale or lease with the right of purchase
             upon performance of the conditions stated in the agreement and
             with an immediate right of possession vested in the conditional
             vendee or lessee, . . . such conditional vendee.

N.M. Stat. Ann. § 66-1-4.13(F) (emphasis added). Again, this language is very

much in keeping with the foregoing dictionary definitions and with the New

Mexico Supreme Court’s description of conditional sales in Joe Heaston.

      To be sure, the sources surveyed above do not constitute controlling state

“law directly on point,” and we are thus “free to consider all resources available,

including . . . other state courts and federal courts, in addition to the general

weight and trend of authority.” FDIC v. Schuchmann, 235 F.3d 1217, 1225 (10th

Cir. 2000). A review of that authority confirms that our reading of New Mexico

law is harmonious with mainstream jurisprudence. With minor and irrelevant

variations, a long and consistent body of caselaw from around the country

supports the notion that a conditional sale is one in which (1) the buyer gets

immediate possession, and (2) the seller keeps title, until (3) the buyer pays in

full. See, e.g., Alger v. Davis, 76 N.W.2d 847, 850 (Mich. 1956) (“A conditional

sale is an agreement for the sale of a chattel, in which the vendee undertakes to

pay the price, and possession of the chattel is immediately given to the vendee,

but the title to the same is retained by the vendor until the purchase price is paid,


                                           13
when it passes to the vendee.” (quoting In re Parkstone Apartment Co., 220 N.W.

780, 781 (Mich. 1928)) (internal quotation marks omitted)); Nev. Refining Co. v.

Newton, 497 P.2d 887, 889 (Nev. 1972) (“The essence of a conditional sales

contract is that the seller shall retain and not relinquish title to the property the

subject of the sale until the buyer pays in full the agreed purchase price.”); see

generally R.P. Davis, What Amounts to Conditional Sale, 175 A.L.R. 1366 (1948)

(collecting cases and finding that “one of the essential elements and

distinguishing features of a conditional sale is the reservation of title in the seller

until the performance of some condition or the happening of some contingency,

usually the full payment of the purchase price”). 6

       In short, the conditional sale is a well-established concept, both within and

outside the law, and both within and outside New Mexico. It is a simple,

straightforward idea with clear, comprehensible terms. We see nothing facially

ambiguous about it.




      6
              United points to purported uncertainty in caselaw regarding
conditional sales as evidence of ambiguity. It says that in some jurisdictions
ownership is retained until payment in full is received, whereas in others
ownership passes with possession. As examples of the supposedly “diverging
definitions” of conditional sales, United cites only cases from Kentucky and
Louisiana. Aplee. Br. at 26. Given that New Mexico statutory and common law
reflect the definitions that are supported by dictionaries and by the weight of
authority, this supposed conflict is irrelevant.

                                           14
                                          b

      That leaves the possibility that the conditional-sale exclusion is

“ambiguous upon application to a particular circumstance.” Rummel, 945 P.2d at

982. The provision is no more ambiguous in this specific context than it is in the

abstract.

      First, the context of the policy as a whole strengthens the conclusion that

the provision is unambiguous, rather than injecting ambiguity into it. See

Battishill, 127 P.3d at 1115 (considering the policy in context to confirm the

plain-language reading of the terms at issue). The provision at issue excludes

coverage “while any insured vehicle is rented, leased, or subleased or under any

purchase agreement or conditional sale to others.” Aplt. App. at 102. It is not

difficult to see the theme uniting these terms: American did not wish to insure the

vehicle to one individual whose risk it could estimate and then have that

individual turn around and profit by allowing another person, unknown to

American, to drive and potentially damage the vehicle, thereby obliging American

to pay for the consequences.

      This contextual analysis confirms the intent of the parties. See Ponder, 12

P.3d at 964 (“Our analysis of the insurance policy proceeds with the primary goal

of ‘ascertain[ing] the intentions of the contracting parties with respect to the

challenged terms at the time they executed the contract.’” (alteration in original)

                                         15
(quoting Strata Prod. Co. v. Mercury Exploration Co., 916 P.2d 822, 830 (N.M.

1996))); Brown v. Am. Bank of Commerce, 441 P.2d 751, 755 (N.M. 1968) (“[A]

contract should be interpreted as a harmonious whol[e] to effectuate the intentions

of the parties, and every word, phrase or part of a contract should be given

meaning and significance according to its importance in [the] context of the

contract.”).

      Second, to the extent that United argues that either the alternative

dictionary definitions of conditional sales or the supposed conflict in caselaw

regarding the concept renders the term ambiguous as applied, it is mistaken.

      As respects the dictionary definitions, United emphasizes that, in addition

to the first definition discussed above, Black’s lists two others: “[a] sale

accompanied by an agreement to resell upon specified terms,” and “[a] contract

for the sale of goods under which the buyer makes periodic payments and the

seller retains title to or a security interest in the goods.” Aplee. Br. at 25 (quoting

Black’s Law Dictionary 1337 (7th ed. 1999)) (internal quotation marks omitted).

There is clearly only one definition, however, that has any relevance; it is the first

definition—the one that is fully consistent with well-established New Mexico

decisional and statutory law, a longstanding corpus from other jurisdictions, and

the obvious purpose of the provision. The alternative definitions do not render

the provision ambiguous as applied.

      Turning to a supposed jurisprudential conflict, United avers that, in some

                                           16
jurisdictions, when an object is conditionally sold, ownership is retained until

payment in full is received, whereas in others ownership passes with possession.

The precise wording of the policy terms here moots the alleged conflict. Recall

that the policy excluded damages incurred “while any insured vehicle is . . . under

any . . . conditional sale to others.” Aplt. App. at 102 (emphasis added). “Under”

is most naturally read here as synonymous with “subject to.” A vehicle is

presumably subject to a conditional sale as soon as an agreement has been

reached that it is being sold. Cf. Lloyd’s of London v. Walker, 716 S.W.2d 99,

105 (Tex. App. 1986) (noting that equipment was “sold originally under

conditional sales contracts and was not fully paid for” (emphases added)). In

other words, it does not matter when ownership passes for purposes of applying

the policy; what matters is when the agreement is reached. Thus, any lack of

uniformity regarding the passage of ownership has no bearing on the conditional-

sale exclusion. In sum, the exclusion is unambiguous, both facially and as

applied.

                                          2

      Having found no ambiguity, our duty is simply to apply the exclusion to the

facts of the case. See Ponder, 12 P.3d at 964 (“[W]hen the policy language is

clear and unambiguous, we must give effect to the contract and enforce it as

written.”). To return to the definition derived above, a conditional sale is one in

which (1) the buyer gets immediate possession, and (2) the seller keeps title, until

                                         17
(3) the buyer pays in full. Applying the more specific language of the policy, i.e.,

the word “under,” the question is whether the agreement to enter such an

arrangement had been reached.

      The answer is yes. There is no dispute that Endeavor acquired immediate

possession of the Navigator while Mr. Cooper retained title until Endeavor paid

him the full purchase price. Under the plain language of the insurance policy, the

Navigator was subject to a conditional sale on the day of the accident.

      Protesting this conclusion, United lines up the facts of the case with the

traditional elements of a contract to show a gap between the two. More

specifically, United considers the agreement too indefinite to constitute a contract

of any kind, including a conditional-sales contract. It agrees with the district

court that the parties “did not agree to a specific sales price and they did not

know the monetary worth of the vehicle when Endeavor used the Navigator,” and

that “the parties did not designate any terms o[r] conditions of a sales agreement

that were to occur at any specific time.” Aplt. App. at 371. 7


      7
              In support of its conclusion that the agreement did not satisfy the
terms of the policy, the district court cited eleven facts, and United appears to
adopt them in full. Several of these facts are irrelevant. For one, the absence of a
written agreement matters not, as New Mexico recognizes oral contracts and no
one has invoked the statute of frauds. See, e.g., Varoz v. Varoz, 183 P.3d 151,
154 (N.M. 2008). For another, lack of a down payment or monthly payments on
the vehicle has no bearing, for neither are required of a conditional sale. Finally,
the district court noted a series of facts relating to the vehicle’s insurance, all
essentially boiling down to the fact that Mr. Cooper continued to insure the car
                                                                          (continued...)

                                          18
      Under New Mexico law, “[i]ndefiniteness can defeat a contract claim in

two ways.” Padilla v. RRA, Inc., 946 P.2d 1122, 1125 (N.M. Ct. App. 1997).

“First, indefiniteness can indicate that the parties failed to reach an agreement.”

Id. Second, it can result in a situation in which there is no “basis for determining

the existence of a breach and for giving an appropriate remedy.” Id. (quoting

Restatement (Second) of Contracts § 33(2) (1981)) (internal quotation marks

omitted). There is no real contention here that the parties failed to reach an

agreement. Indeed, Messrs. Woods and Cooper described the agreement in nearly

identical terms: Endeavor would take the car, use it, and maintain it, while Mr.

Cooper retained the title, and Endeavor would pay the Blue Book value for the

vehicle once it had the funds to do so.

      The question, then, is whether there is a sufficient basis for ascertaining a

breach and remedying it. Asking that question first in regards to the price term,

Mr. Cooper testified that under the agreement “the amount was undetermined.

We’ll just look and see what the Blue Book value was, and just do a fair value.”

Aplt. App. at 259. In his own deposition, Mr. Woods agreed that Endeavor would

pay fair market value for the vehicle, and implied that he considered the Blue


      7
       (...continued)
while Endeavor possessed it. However, the policy only required that the vehicle
be under a conditional sale—viz., that an agreement have been reached to
conditionally sell the car. The fact that Mr. Cooper continued to take care of
various insurance-related responsibilities has nothing to do with the focal point of
our inquiry.

                                          19
Book to reflect that value. Thus, the parties shared an understanding of the

source of the valuation: the worth of the Navigator on the market, as calculated

by the Blue Book. 8

      The only reason to find the price term indefinite, then, is that neither party

had a precise value in mind when they reached the agreement. Where price terms

referring to fair market value have been regarded as indefinite, it has been

because the methodology used to determine fair market value was uncertain. See,

e.g., Teutul v. Teutul, 912 N.Y.S.2d 664, 665 (N.Y. App. Div. 2010); Four Eights,

LLC v. Salem, 194 S.W.3d 484, 486 (Tenn. Ct. App. 2005); Playoff Corp. v.

Blackwell, 300 S.W.3d 451, 456–58 (Tex. App. 2009). Where there is no such

problem and the methodology is clear, indefiniteness is not an issue. See, e.g.,

Goodwest Rubber Corp. v. Munoz, 216 Cal. Rptr. 604, 604–05 (Cal. Ct. App.

1985) (collecting cases and concluding that “text writers and courts . . . are in

general agreement that ‘fair market value,’ ‘reasonable value,’ or ‘current market

value,’ are sufficiently certain price terms to support specific performance of an

option”). The methodology here was simply opening up the Blue Book and

checking the value. There is nothing uncertain or indefinite about that. See, e.g.,



      8
              Neither the district court nor United appears to believe there is any
ambiguity as to when the valuation of the vehicle would be done, i.e., whether it
was the time the agreement was entered or the time payment was made. At the
very least, there does not appear to be a sufficient basis to rule in United’s favor
on that question.

                                         20
Hall v. City of Santa Barbara, 833 F.2d 1270, 1274 n.5 (9th Cir. 1986)

(acknowledging the Blue Book as “the standard reference for prices of” vehicles),

overruled on other grounds by Yee v. City of Escondido, 503 U.S. 519, 537

(1992).

       Having resolved the price-term issue, we have only the time-for-

performance matter to contend with. Messrs. Woods and Cooper testified that

Endeavor would pay for the Navigator at fair market value as soon as the

company had the funds to do so. The question of whether this is sufficiently

definite goes to whether it would have been possible for a court to determine the

existence of a breach (the remedy would be fixed according to the Blue Book).

To be sure, a court might not have a surefire means to know exactly how much

funds were enough to hold that Endeavor had a duty to pay for the Navigator.

Nevertheless, such a determination is not so dissimilar to the sort of

reasonableness calculations courts make on a daily basis. See, e.g., State v.

Whitaker, 797 P.2d 275, 282–83 (N.M. Ct. App. 1990) (interpreting a statute to

require state trial courts to determine “the extent that the defendant is reasonably

able” to pay restitution). For summary-judgment purposes, it cannot be said that

the conditional-sale agreement was void for indefiniteness simply because its time

for performance was tied to Endeavor’s ability to pay for the vehicle. Therefore,

the district court erred in granting summary judgment to United on its claim that

the exclusion did not apply.

                                         21
                                         B

      We turn next to American’s commercial umbrella policy. The district court

ruled that the umbrella policy covered the accident and that its exclusion for

damages arising from the use of controlled substances was inapplicable. We

again take a different view and find that summary judgment on this issue was

improperly granted. 9

      American’s umbrella policy excluded coverage for damages “[a]rising out

of the use . . . or possession by any person of a controlled substance.” Aplt. App.

at 105. In agreement with the district court, United submits that “arising out of”

is ambiguous. We discern no ambiguity and, applying the unambiguous definition

of the phrase, conclude that United was not entitled to a summary-judgment

resolution of the issue in its favor. As before, we first address facial ambiguity

and then as-applied ambiguity.

                                         1

      It is clear what “arising out of” means in the area of coverage provisions in

insurance policies. In that area, the phrase “is given a broad interpretation by

[New Mexico] courts and is generally understood to mean ‘originating from,’

‘having its origin in,’ ‘growing out of[,]’ or ‘flowing from.’” City of


      9
            In their briefs, the parties discuss whether Mr. De La Paz was an
insured under the policy. Because we conclude that United was not entitled to
summary judgment on the exclusion issue, we need not and do not address this
debate.

                                         22
Albuquerque v. BPLW Architects & Eng’rs, Inc., 213 P.3d 1146, 1153 (N.M. Ct.

App. 2009) (alteration in original) (quoting Krieger v. Wilson Corp., 131 P.3d

661, 666 (N.M. Ct. App. 2005)) (internal quotation marks omitted). What is less

clear is what the phrase means in an exclusionary provision. Nonetheless, though

the New Mexico courts have been less vocal on that question, they have not been

silent.

          We can begin with the proposition that “arising out of” is not facially

ambiguous just because it appears in an exclusion. See Lopez v. N.M. Pub. Sch.

Ins. Auth., 870 P.2d 745, 747 (N.M. 1994) (holding that “the provisions for

coverage or exclusions are not ambiguous, that the policy covers only claims for

personal injury, and that it specifically excludes coverage for all claims arising

from”—a phrase in an exclusion from an endorsement—“sexual misconduct”); see

also Askew v. Miller Mut. Fire Ins. Co. of Tex., 522 P.2d 574, 575 (N.M. 1974)

(describing an exclusion that contained an “arising from” clause as “clear and

unambiguous”).

          If “arising out of” is not facially ambiguous in an exclusion, it presumably

has a definition. The New Mexico Supreme Court established that definition in

1993. At that time, the court reviewed an insurance policy with an exclusion

stating that the policy would not apply “[t]o liability of the insured arising out of

the performance of a criminal act.” N.M. Physicians Mut. Liab. Co. v. LaMure,

860 P.2d 734, 736 (N.M. 1993) (alteration in original) (internal quotation marks

                                            23
omitted). In unequivocal language, the LaMure court noted that neither the

coverage clause nor the exclusion was “ambiguous because they can be

reasonably construed in only one way—liability from ‘rendering professional

services’ is covered unless it stems from ‘criminal acts.’” Id. at 737 (emphasis

added). “Stems” is plainly a broad word of the same ilk as “originating from,”

“having its origin in,” “growing out of,” or “flowing from.” See Webster’s,

supra, at 2235 (defining “stem,” in relevant part, as “to grow out” and “to have or

trace one’s origin or development”); Black’s, supra, at 122 (defining “arise” as

“[t]o originate; to stem (from)”).

      An earlier decision by the New Mexico Court of Appeals also suggests a

broad approach to interpreting “arising out of” in the context of exclusions. See

Baca v. N.M. State Highway Dep’t, 486 P.2d 625 (N.M. Ct. App. 1971). The

court there had before it the following language:

             B. EXCLUSION OF HIGHWAYS
                   It is agreed that the policy does not and shall not be
             construed to cover any liability arising solely from the existence
             of or condition of highways, streets, roads or other dedicated
             ways, including bridges, culverts and similar structures
             appurtenant thereto.
                   This exclusion does not apply to accidents arising out of
             construction, maintenance or repair operations undertaken by or
             on behalf of the named insured.

Id. at 627 (internal quotation marks omitted). The court then analyzed the

language:

             Excluded from coverage under the first paragraph of B is

                                         24
             “. . . liability arising solely from the existence of or condition of
             highways, . . . .” The accident involved, at least for the purpose
             of summary judgment, arose from the condition of the highway,
             namely, the lines which confused and misdirected the driver of
             the car in which plaintiffs were riding. This exclusion, however,
             is inapplicable under the second paragraph of B, “. . . to
             accidents arising out of construction, maintenance or repair
             operations . . . .” The words “arising out of” are very broad,
             general and comprehensive terms, ordinarily understood to mean
             “originating from,” “having its origin in,” “growing out of” or
             “flowing from.”

Id. at 628 (omissions in original). There are two noteworthy things about Baca

for our purposes. First, it explicitly applied a broad definition of “arising out of”

to language in an exclusion. Though that language was in an exception to an

exclusion, this at least suggests that there is no categorical distinction between

exclusions and coverage with respect to the phrase. If “arising out of” had a

different definition in exclusions than it does in coverage, one would have

expected the Baca court to have said so. Second, the court applied the “arising

out of” term within the same paragraph in which the court defined it broadly. The

New Mexico Court of Appeals thereby strongly implied that it was using the

broad meaning it contemporaneously provided. In short, we have every reason to

suppose that New Mexico law applies the same broad definition of “arising out

of” in the exclusion context as in the coverage context.

                                           2

      We are then tasked with determining whether the “arising out of” clause is

ambiguous as applied. As an initial matter, there is nothing in the policy that

                                          25
would render it so, and no one has ever claimed otherwise. With that established,

one need only actually apply the definition discussed above to the facts to see that

there is no ambiguity. The controlled-substance exclusion applies if the accident

originated from, had its origin in, grew out of, flowed from, or stemmed from Mr.

De La Paz’s use of methamphetamine. See BPLW Architects, 213 P.3d at 1153;

LaMure, 860 P.2d at 737. There can be no serious doubt that this test is satisfied.

      Dr. Morrisett expressed the view that “Mr. [De La Paz’s] methamphetamine

intake substantially contributed to the motor vehicle accident.” Aplt. App. at 152.

Accepting Dr. Morrisett’s uncontested opinion as true for summary-judgment

purposes (as we must, and as United itself does), the accident self-evidently

originated from, flowed from, or stemmed from the methamphetamine use. 10

                                         C



      10
             The only other supposed “evidence” concerning the cause of the
accident that anyone has ever pointed to is Mr. Woods’s estimation of the
distance between Mr. De La Paz’s home and the site of the accident and the fact
that conditions were clear, and the road straight, level, and flat. But there is
nothing in the record aside from rank speculation from counsel and the district
court as to whether or not any of these facts has any bearing on the link between
the drugs and the accident. Likewise, the district court theorized that “a number
of other factors leading to De La [Paz’s] inattentive and dangerous driving could
have caused the collision,” Aplt. App. at 379, such as that he “fell asleep at the
wheel, was texting or talking on a cell phone, spilled a cup of hot coffee on his
lap,” and so on, id. at 378. Perhaps these factors did play a role in what
happened, but there is certainly no evidence of any of them in the record. And
even if we accepted that any of this free-ranging speculation constituted evidence,
it would have to yield to the conflicting evidence adduced by American, the
nonmovant.

                                         26
      Our review alights finally on the Great West policy. That policy covered

hired and nonowned autos. The Great West policy defined nonowned autos as

“[o]nly those ‘autos’ you do not own, lease, hire, rent or borrow that are used in

connection with your business.” Aplt. App. at 128. 11 By its plain terms, the

provision sets forth two criteria that must be satisfied in order for a vehicle to be

considered nonowned: (1) that it not be owned, leased, hired, rented, or borrowed,

and (2) that it be used in connection with the business of the insured. Contrary to

the district court, we do not think summary judgment in United’s favor is

justifiable on either question 12 and therefore reverse the district court insofar as it




      11
             The next sentence in the provision notes that “nonowned autos”
“includes private passenger type autos owned by your employees, partners (if you
are a partnership), members (if you are a limited liability company) or members
of their households but only while used in your business.” Aplt. App. at 128
(internal quotation marks omitted). We do not read this non-exhaustive list of
examples as expanding or contracting coverage, and we do not find it relevant
here.
      12
              The district court suggested that American’s argument regarding the
nonowned-vehicle clause had been “abandoned” because American did not raise it
in its reply to United’s opposition to its motion for summary judgment, Aplt. App.
at 383, even though American did articulate the argument in the motion for
summary judgment itself. Though we have refrained from reviewing “newly
raised legal theories,” Richison v. Ernest Grp., Inc., 634 F.3d 1123, 1130 (10th
Cir. 2011) (emphasis added), we have never held a theory forfeited simply
because it was omitted from a reply brief. Given that a reply is typically optional,
given that one does not appear to have been required here by either the court or
the local rules, see D.N.M.LR-Civ. 7.1(b), and given that the district court did
address the question on the merits, we do not consider the argument “abandoned”
in the district court.

                                           27
held at summary judgment that the Great West policy was not implicated. 13

       To treat the second criterion first, the vehicle was unquestionably being

used in connection with the business of the insured, Endeavor: it was being driven

by an Endeavor salesman to pick up an Endeavor check. 14

      We move then to the first criterion—that the insured “not own, lease, hire,

rent, or borrow” the vehicle. It is easiest to break the list up into two parts: (1)

ownership, and (2) the rest. The district court thought the car had been borrowed.

We think not. “Borrowing”—as well as “leasing, hiring, and renting”—implies

temporary possession and the anticipated or at least potential ultimate return of

the object to the original owner. See Webster’s, supra, at 256 (defining “borrow”

as “to receive temporarily from another” (emphasis added)); id. at 1286 (defining

“lease” with reference to “any less interest than that of the lessor” (emphasis

added)); id. at 1072 (defining “hire” as “to engage the temporary use of”

(emphasis added)); id. at 1923 (defining “rent” with reference to “use” (emphasis

added)). There was nothing temporary about the arrangement here. Messrs.

      13
          Because we find summary judgment for United improper on the
nonowned-auto issue, we will not address the hired-auto question.
      14
               United cites Union Standard Insurance Co. v. Hobbs Rental Corp.,
566 F.3d 950 (10th Cir. 2009), on the applicability of the nonowned-auto clause.
Hobbs interpreted similar insurance-policy language under New Mexico law in a
case where an independent contractor hired by the insured was seeking the benefit
of the clause. See 566 F.3d at 951. Here, there is no dispute that Endeavor is the
insured, that Mr. De La Paz was an Endeavor employee, and that he was
conducting company business with the car when he crashed. Hobbs is inapposite
and has no bearing on our decision.

                                          28
Cooper and Woods offered uncontroverted testimony that Endeavor and Mr.

Cooper both understood that Endeavor would keep the car permanently.

      Ownership presents a more complicated matter. If New Mexico law deems

Endeavor (the named insured) to be the car’s owner under these circumstances,

then the district court correctly concluded at summary judgment—albeit for

different reasons—that Great West’s nonowned-auto policy provision did not give

coverage to Endeavor. However, we conclude that the district court’s summary-

judgment ruling as to this provision was erroneous because we predict that the

New Mexico Supreme Court would consider the question of Endeavor’s

ownership of the car to be a jury question.

      At the outset, we observe that our research has not uncovered any New

Mexico cases that have addressed the ownership issue presented here in the

specific context of a conditional-sales agreement. It follows perforce that New

Mexico law has not specifically established that a putative vendee in such an

agreement (here, Endeavor) should be deemed the owner.

      Furthermore, the decisions in other jurisdictions do not paint a clear and

symmetrical picture of what weight to attach to such agreements in the ownership

inquiry. Compare In re Succession of Dunham, 408 So. 2d 888, 896–97 (La.

1981) (ownership passes when contract entered into), with Lynch v. U.S. Branch,

Gen. Accidental Fire & Life Assurance Corp., 327 F.2d 328, 331 (4th Cir. 1964)

(holding that “equitable title and ownership” pass with the transfer of possession

                                        29
while the seller retains “a security interest in the property secured by the retention

of legal title for that purpose only”), and Burroughs Adding Mach. Co. v.

Wieselberg, 203 N.W. 160, 162 (Mich. 1925) (ownership passes when payment

made).

      Given this uncertainty, we cannot confidently predict that the New Mexico

Supreme Court would feel compelled to move beyond its general understanding of

the ownership issue in the insurance setting to adopt a specific rule for

conditional-sales agreements. Cf. Ag. Servs. of Am., Inc. v. Nielsen, 231 F.3d

726, 735–36 (10th Cir. 2000) (“We do not believe that it is our position to predict

that the New Mexico Supreme Court would overrule its precedent in the complete

absence of any indication from that court of its inclination to do so.”). And its

general understanding leads to the conclusion that, under the circumstances of

this case, the district court should have reserved the question of whether Endeavor

was the owner of the car for the jury. See Knotts v. Safeco Ins. Co. of Am., 432

P.2d 106, 109 (N.M. 1967).

      In Knotts, the New Mexico Supreme Court reversed a trial court that had

taken an insurance dispute away from the jury on the ownership question. Id. at

106. The court acknowledged that, under New Mexico precedent, title is prima

facie evidence of ownership, 15 but the intent of the parties (i.e., buyer and seller),


      15
             See Clovis Fin. Co. v. Sides, 380 P.2d 173, 176 (N.M. 1963) (noting
                                                                    (continued...)

                                          30
as embodied in the contract, ultimately determines when ownership passes. 16 See

id. at 108–09. In reaching its conclusion that the appellant’s ownership vel non

should be resolved by the jury, the court found that “the situation before [it]” was

not just a circumstance of “naked possession without documentary evidence of

title.” Id. at 109. To support this finding, the court seemed to rely (albeit tacitly)

on the fact that the appellant extensively and exclusively used the vehicle during

the relevant period and made significant payments toward the full purchase of the

vehicle. See id. at 107.

      Like Knotts, this is not a “situation” of simply “naked possession” without

evidence of title by Endeavor. Id. at 109. Endeavor exclusively used the car

during the relevant period and paid for all of the gas and maintenance for it, even

though Mr. Cooper retained the title. Moreover, while Endeavor had not yet paid

for the vehicle, the conditional-sales agreement clearly evinced the parties’

intention that it ultimately would do so. In light of Knotts, we cannot conclude

that “reasonable minds could not differ” regarding whether Endeavor owned the

vehicle at the time of Mr. De La Paz’s accident. Id. at 108. Consequently, we

      15
        (...continued)
that a car’s title is “prima facie evidence of ownership”); see also N.M. Stat. Ann.
§ 66-3-12 (“A certificate of title . . . shall be received in evidence as prima facie
evidence of the ownership of the vehicle named in the certificate . . . .”).
      16
              See Schall v. Mondragon, 393 P.2d 457, 461 (N.M. 1964) (“Since
New Mexico does not require an exclusive or mandatory method of transferring
title to an automobile, it therefore follows that title and ownership pass when the
parties intend it to pass.”).

                                          31
conclude that the district court erred in granting summary judgment to United on

the ground that Great West’s policy did not—as a matter of law— provide

coverage to Endeavor.

                                        IV

      For the reasons noted, we REVERSE the district court’s order granting

summary judgment to United and REMAND for further proceedings. 17



                                             Entered for the Court



                                             JEROME A. HOLMES
                                             Circuit Judge




      17
             Endeavor also had an excess-liability policy with United, and the
American umbrella policy had an excess-liability clause. By definition, the
import of the excess-liability provisions is intertwined with the coverage afforded
by the primary policies. Because we are remanding for further proceedings
regarding the primary policies, we decline to address the excess-liability
provisions. The district court will consider and interpret those provisions as it
deems necessary on remand in light of our holdings and in light of any further
proceedings it conducts.

                                        32
