UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

TIG INSURANCE COMPANY,
Plaintiff-Appellant,

v.
                                                                          No. 97-2637
DEATON, INC.; TRAVELERS INSURANCE
COMPANY,
Defendants-Appellees.

Appeal from the United States District Court
for the Western District of North Carolina, at Charlotte.
Robert D. Potter, Senior District Judge.
(CA-96-92-3-P)

Argued: June 3, 1998

Decided: December 18, 1998

Before NIEMEYER and HAMILTON, Circuit Judges, and
FABER, United States District Judge for the
Southern District of West Virginia, sitting by designation.

_________________________________________________________________

Affirmed by unpublished opinion. Judge Faber wrote the opinion, in
which Judge Niemeyer and Judge Hamilton joined.

_________________________________________________________________

COUNSEL

ARGUED: Randel Eugene Phillips, MOORE & VAN ALLEN,
P.L.L.C., Charlotte, North Carolina, for Appellant. F. Fincher Jarrell,
KENNEDY, COVINGTON, LOBDELL & HICKMAN, L.L.P.,
Charlotte, North Carolina; James Orr Cobb, Jr., RUFF, BOND,
COBB, WADE & BETHUNE, L.L.P., Charlotte, North Carolina, for
Appellees. ON BRIEF: M. James Grode, MOORE & VAN ALLEN,
P.L.L.C., Charlotte, North Carolina, for Appellant.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

FABER, District Judge:

TIG Insurance Company ("TIG") filed this action seeking a declar-
atory judgment that a policy of insurance issued by it to Deaton, Inc.
("Deaton") does not provide indemnity coverage to Deaton for work-
ers compensation benefits paid to Daniel Lee Coffman ("Coffman"),
a Deaton employee. TIG maintained that Coffman's claim was cov-
ered by a rival policy of insurance issued to Deaton by The Travelers
Insurance Company ("Travelers"). The United States District Court
for the Western District of North Carolina denied the relief requested
by TIG and granted summary judgment in favor of Deaton and Trav-
elers, after which TIG took this appeal. Finding no error in the deci-
sion of the district court, we affirm.

I.

The relevant facts are not in dispute. Deaton is an interstate truck-
ing company which operates throughout the United States. Its princi-
pal place of business and home office are in Birmingham, Alabama.
Deaton has no fixed system of routes; it hauls full trailer loads
directly from shippers to ultimate destinations. Deaton's interstate
drivers tend to reside near the company's local terminals, making it
easier for them to get home after completing their runs.

Coffman had lived in North Carolina for over three years before
going to work for Deaton. He applied for a job at Deaton's Wilson,

                    2
North Carolina terminal, signing an application which contained the
following language:

          All questions of law and fact which may arise regarding this
          application, or regarding any aspect of any employment
          relationship between me and the Company, will be inter-
          preted, determined, and resolved in accordance with the
          laws of the State of Alabama, regardless of where I or my
          residence may be located at the time of hire or at any time
          during the course of my employment. For purposes of the
          application of Worker's Compensation Laws and the pay-
          ment of Benefits thereunder, all driver employees of Deaton,
          Inc., regardless of their place of residence at the time of hire,
          enter into their employment relationship in the State of Ala-
          bama, and are domiciled, supervised, based, and have as
          their principal location of employment, the State of Ala-
          bama.

Marion Poole, Deaton's manager at the Wilson terminal, discussed
this provision with Coffman. When Coffman signed the application,
he agreed to the provision and understood that it became one of the
terms of his employment contract with Deaton. The final approval for
Coffman to drive for Deaton took place in Birmingham, Alabama.
Deaton required Coffman, as a condition of his employment, to travel
in Alabama and other states.

Coffman made his first trip as an interstate truck driver for Deaton
on March 3, 1992; he drove for approximately two weeks before his
injury. During those two weeks, he made seven trips, which included
pickups and deliveries in six different states, including a pickup in
Alabama. He was on the road continuously from March 3, 1992, until
the time of his accident, and never returned to the Wilson terminal.
Coffman parked his tractor in North Carolina only once -- when he
stopped at his home overnight while traveling from Maryland to
Georgia. The load Coffman was carrying at the time of his injury was
picked up by him at Deaton's terminal in Birmingham, Alabama, and
delivered to Charlotte, North Carolina.

On the other hand, Coffman has been a North Carolina resident at
all relevant times; he was recruited, tested, and informed that he had

                    3
been hired through the Wilson, North Carolina terminal; he completed
his training with a North Carolina driver, beginning or ending all
training trips in North Carolina; he was supervised and received dis-
patching instruction from the Wilson terminal; he began or ended all
of his solo trips for Deaton except one in North Carolina and on that
one, he spent the night in North Carolina; and, he paid state income
taxes only to North Carolina.

Coffman's injury occurred on March 17, 1992, while delivering a
load of steel pipe to a destination in Charlotte, North Carolina. A pipe
fell on his head, paralyzing him from the neck down and leading to
amputation of his left foot. Coffman personally decided to file a
workers compensation claim in North Carolina, believing himself to
be employed there.

At the time of Coffman's accident, Deaton's policies with both
TIG and Travelers were in effect. Deaton's plan for insuring workers
compensation claims was to have all of its interstate drivers treated
as Alabama employees and covered by the TIG policy. To this end,
Deaton included in its employment application the provision quoted
above to which Coffman acceded. Deaton paid premiums to TIG for
all of its interstate drivers, including Coffman.

The TIG policy was supplemented by state specific policies cover-
ing Deaton's workers compensation exposure for intrastate workers
not included in the TIG policy. The Travelers policy provided pri-
mary workers compensation coverage in several states in which Dea-
ton maintained terminals, including North Carolina. Consistent with
Deaton's general plan, the Travelers policy was designed to cover
only local drivers and employees who worked at terminals. Deaton
submitted to the North Carolina Rate Bureau a request for assigned
risk compensation insurance representing that such insurance would
cover only clerical employees, sales employees, terminal workers and
city or local drivers. Travelers issued its policy based upon the sub-
mission to, and direction from, the North Carolina Rate Bureau. The
required premium was based upon Deaton's payroll for its shop facil-
ity, its city or local drivers, and its clerical employees. As an interstate
driver, Coffman was not included in this calculation. Travelers
received no premium for Coffman or any other Deaton interstate driv-
ers.

                     4
On March 23, 1992, Deaton reported Coffman's injury to the
Workers Compensation Division of the Alabama Department of
Industrial Relations. By December 30, 1992, Deaton had exceeded its
$250,000 self-insured retention ("SIR") with respect to Coffman's
claim, and requested reimbursement from TIG under the TIG policy.
TIG initially accepted coverage, since the claim was being processed
under Alabama's workers compensation law. TIG began reimbursing
Deaton for payments Deaton had made in excess of the $250,000 SIR.

On January 3, 1995, more than two years after beginning to reim-
burse Deaton for Coffman's claims, TIG informed Deaton that it had
come to TIG's attention the proper jurisdiction may be North Caro-
lina, not Alabama, and that TIG reserved its right to seek reimburse-
ment of all payments made to, or on behalf of, Deaton for Coffman's
injuries.

On March 12, 1996, TIG filed this declaratory judgment action in
the Western District of North Carolina. Federal jurisdiction is based
on diversity of citizenship under 28 U.S.C. § 1332. TIG sought: (1)
a declaration that Travelers, and not TIG, is liable for the benefits
paid to Coffman because Coffman's workers compensation claims
arise under the North Carolina Workers' Compensation Act; and (2)
reimbursement from Deaton of all benefits paid by TIG to Deaton
regarding Coffman's claims. By Order entered October 6, 1997, the
district court, applying Alabama law, granted summary judgment for
Deaton, holding that the TIG policy, not the Travelers policy, covered
the Coffman claims as a matter of law. Relying on the court's deci-
sion, Travelers then filed its own motion for summary judgment. By
Order entered on October 15, 1997, the court likewise granted Travel-
ers' motion for summary judgment. This appeal by TIG ensued.

II.

The standard for appellate review involving the grant or denial of
a summary judgment motion is de novo. Thus, the Court of Appeals
uses the same standard as the district court. Shaw v. Stroud, 13 F.3d
791, 798 (4th Cir. 1994). A moving party is entitled to summary judg-
ment "if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that there

                     5
is no genuine issue as to material fact and that the moving party is
entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c).

A genuine issue of material fact exists only "if the evidence is such
that a reasonable jury could return a verdict for the non-moving
party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The court must view the facts in the light most favorable to the non-
moving party with all reasonable inferences drawn in favor of such
party. Id. at 255. The non-moving party is entitled to the presumption
that all his evidence is credible. Miller v. Leathers, 913 F.2d 1085,
1987 (4th Cir. 1990). The party seeking summary judgment has the
initial burden to show the absence of evidence to support the non-
moving party's case. Celotex Corp. v. Catrett , 477 U.S. 317 (1986).
The opposing party must then demonstrate that a triable issue of fact
exists; he may not rest upon mere allegations or denials. Anderson,
477 U.S. at 248. A scintilla of evidence supporting the non-moving
party's case is insufficient to defeat a motion for summary judgment.
Id.

III.

A.

Deaton's intent in acquiring these two policies of insurance is
clear. Deaton's purpose was to insure its interstate drivers under the
law of the company's home state, Alabama, for job-related injuries
wherever occurring. The TIG policy was designed to do this. Deaton
then supplemented this coverage with state specific policies covering
its various intrastate risks. The Travelers policy was one such policy;
it was designed to cover claims of Deaton employees who worked
solely within North Carolina.

Premiums paid by Deaton to TIG were based on the risk to Dea-
ton's interstate drivers, specifically including Coffman. Premiums
paid to Travelers were based on Deaton's payroll for sales, clerical
and terminal workers, and local drivers, all of whom worked exclu-
sively in North Carolina. There were seven such employees specifi-
cally covered by Travelers -- Coffman was not one of them. The
express terms of the two policies, and the way premiums were calcu-
lated under them, shows that Deaton, TIG and Travelers all under-

                    6
stood that Coffman would be covered by TIG and not Travelers.
Under the terms of his employment application and contract, Coffman
accepted this arrangement and agreed to be treated as an Alabama
employee covered by the TIG policy. Accordingly, everyone -- Dea-
ton, TIG, Travelers and Coffman -- intended for Coffman to be cov-
ered by TIG and not Travelers.

A policy of insurance is a contract.1 There are few principles more
fundamental to the law than the proposition that a contract must be
construed to give effect to the intentions of the parties. Accordingly,
the parties' intent should be implemented here unless the laws of Ala-
bama or of North Carolina compel a different result.

Alabama law specifically provides for the type of arrangement
Deaton made to cover its workers compensation risk across the sev-
eral states in which it operates. Alabama Code § 25-5-35(c) provides:
"An employee whose duties require him to travel regularly in the ser-
vice of his employer in this and one or more other states may, by writ-
ten agreement with his employer, provide that his employment is
principally localized in this or another such state.. . ."

Coffman agreed in his application with Deaton that the principal
location of his employment for the purpose of workers compensation
benefits was Alabama. Thus, if Coffman's employment meets the
requirements of § 25-5-35(c), his employment is "principally local-
ized" in Alabama, and he would then be entitled to workers compen-
sation benefits under Alabama law for injuries sustained outside
Alabama. The district court's analysis, in terms of Coffman's eligibil-
ity for benefits under Alabama law, is sound. As that court noted, the
issue is whether "travel regularly . . . in this and one or more other
states" means the employee must simply travel regularly in more than
one state so long as one of those states is Alabama, or whether it
requires that the employee travel regularly in Alabama and regularly
in one or more other states. Relying on Heater v. Tri-State Motor
Transit Co., 644 So.2d 25 (Ala. Civ. App. 1994), the district court fol-
_________________________________________________________________
1 Black's Law Dictionary p. 802 (6th ed. 1990), defines insurance as
"[a] contract whereby, for a stipulated consideration, one party under-
takes to compensate the other for loss on a specified subject by specified
perils."

                    7
lowed the plain meaning of the statute in adopting the first of these
competing constructions. This reasoning is sound, and there is no
question that, in his brief employment with Deaton, Coffman traveled
in Alabama and in other states. Coffman's employment is therefore
"principally localized" in Alabama under the Alabama statute, and he
is eligible for benefits under Alabama law for job-related injuries
wherever they occur. This is precisely the risk Deaton sought to
insure against with TIG and which TIG agreed to cover.

Early cases considered workers compensation to be a substitute for
tort liability and allowed recovery of benefits only in the state in
which the injury occurred. See In re American Mut. Liability Ins. Co.,
215 Mass. 480, 102 N.E. 693, 695-96 (1913); Continental Oil Co. v.
Pitts, 158 Okla. 200, 13 P.2d 180, 182 (1932). A leading authority on
conflict of laws has criticized this rule as follows: "This rule was
overly simple, and excluded from consideration the laws of too many
states in which, though injury occurred elsewhere, the relationship out
of which it arose had sufficient connection with the forum state to jus-
tify application of its law." Robert A. Leflar, Luther F. McDougal III,
and Robert L. Felix, American Conflicts Law§ 160, at 450 (4th ed.
1986). Other cases adopted a straight contract theory. Under such an
approach, the compensation act of the state where the contract of
employment was made was held to govern, regardless of where the
injury occurred. Id. § 160, at 451 (citing Kennerson v. Thomas Tow-
boat Co., 89 Conn. 367, 4 A. 372 (1915); Pierce v. Bekins Van &
Storage Co., 185 Iowa 1346, 172 N.W. 191 (1919); Hartigan v. Bab-
cock & Wilcox Co., 191 Kan. 331, 380 P.2d 383 (1963); Houle v.
Sleams-Rogers Mfg. Co., 279 Minn. 345, 157 N.W.2d 362 (1968)).

Both the tort and contract approaches proved unsatisfactory in
practice. The theory most frequently followed today allows the parties
to agree that the situs of the employment relationship is the state in
which that relationship is principally localized or the employer's busi-
ness is localized. Id. § 160, at 452 (citing Hale v. Texas Employers'
Ins. Ass'n, 150 Tex. 215, 239 S.W.2d 608 (1951); Simonton v.
Department of Indus., Labor & Human Relations, 62 Wis.2d 112, 214
N.W.2d 302 (1974); Hagberg v. Colonial & Pac. Frigidways, Ins.,
279 Minn. 396, 157 N.W.2d 33 (1968)). The rationale underlying this
principle is sound. As stated in American Conflicts Law, supra, § 160,
at 454: "It is understandable that at the inception of their contract the

                    8
parties, particularly the employer, may wish to fix the governing law
conclusively so that they can know what their rights or duties are, and
so that compensation liability insurance can be taken out under the
controlling state's system."

Under the current weight of authority, therefore, what Deaton did
here was permissible and proper. Alabama law specifically authorizes
such an arrangement; it remains to consider whether North Carolina
law prohibits it.

B.

North Carolina General Statute § 97-93 requires every employer
subject to the North Carolina Workers Compensation Act to insure its
entire liability under the Act or qualify as a self-insurer. From this
TIG reasons that since Deaton was not a qualified self-insurer in
North Carolina and the Travelers policy was its only policy covering
North Carolina risks, the Travelers policy must, under the statute,
cover all such risks.

The public policy of North Carolina embodied in section 97-93 is
to insure that anyone injured on the job will receive compensation. A
contract will be deemed unenforceable because of public policy
where the "public interest is injuriously affected in such a substantial
manner that private rights and interests should yield . . . ." Goodwin
v. George Fischer Foundry Sys., Inc., 769 F.2d 708, 713 (11th Cir.
1985). The rule that "contracts contravening public policy are unen-
forceable should be applied cautiously and only in cases plainly
within the reason for it." Id. The state in which an injured employee
resides certainly has an interest in his compensation, since that state
would likely have to support him if he did not receive benefits. See
Cardillo v. Liberty Mutual Ins. Co., 330 U.S. 469 (1947) (sustaining
an award of compensation in the District of Columbia where the
claimant lived, even though he was continuously employed and
injured in Virginia). This interest is satisfied, however, when the
injured worker receives adequate benefits under the law of any state,
whether or not the state paying benefits is the state where he lives.

North Carolina public policy is, therefore, not violated if Coffman,
injured in North Carolina, receives benefits under the Alabama com-

                     9
pensation system. The parties all agree that Coffman is entitled to
benefits. So long as Deaton maintains insurance to pay such benefits,
the public policy of North Carolina is satisfied. The express language
of the North Carolina statute does not dictate a different result; it
merely requires that an employer self-insure or"insure and keep
insured his liability under this Article in any authorized corporation,
association, organization or in any mutual insurance association . . . ."
N.C. Gen. Stat. § 97-93(a)(1).

We therefore conclude that to give effect to the intentions of the
parties in this case will do no violence to the law or public policy of
either state.2 What Deaton did to insure its workers compensation risk
is specifically sanctioned by Alabama statutes. The intent of North
Carolina is likewise protected. The public policy of the latter state,
expressed in its statute, is simply to insure that workers injured in job-
related accidents in North Carolina receive benefits; this policy is
served regardless of which insurance company pays. 3 Accordingly,
the decision of the district court is

AFFIRMED.
_________________________________________________________________
2 The record does not reflect whether Coffman's North Carolina claim
was fully processed. Had his claim been processed to completion under
North Carolina law and North Carolina opted to prefer its own law over
Alabama's, a different result might be indicated. Supreme Court cases
give the state of injury the option to apply its own law or to adopt the
law of a sister state "insofar as remedies for acts occurring within her
boundaries are concerned." Carroll v. Lanza , 349 U.S. 408, 414 (1955).
Here, there is no indication that North Carolina has made such an elec-
tion; in the absence of such an election, we are free to give effect to the
intentions of the parties as expressed in their contracts. The Supreme
Court cases are discussed at Eugene F. Scales and Peter Hay, Conflict of
Laws §§ 17.45 and 17.46 (2d ed. 1992).
3 The court does not have before it a comparison of the levels of bene-
fits payable under the laws of the two states. We do not believe, how-
ever, that a disparity in the level of benefits would lead us to a different
result. Ordinarily, differences in the laws of two states should not lead
to the conclusion that application of the law of one of them violates the
public policy of the other. Eugene F. Scales and Peter Hay, Conflict of
Laws § 17.46, at 648 n.4 (2d ed. 1992).

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