                                                                             F I L E D
                                                                      United States Court of Appeals
                                                                              Tenth Circuit
                      UNITED STATES COURT OF APPEALS
                                                                              JUN 21 2004
                                   TENTH CIRCUIT
                                                                         PATRICK FISHER
                                                                                  Clerk

 JOHN O’SHEA,

          Plaintiff - Appellant,

 v.                                                       No. 03-3159
                                                          (D. Kansas)
 ANTHONY J. WELCH; AMERICAN                       (D.Ct. No. 01-CV-2336-JWL)
 DRUG STORES, INC., doing business
 as Osco Drug,

          Defendants,


 AMERICAN MOTORISTS
 INSURANCE COMPANY (Kemper
 Casualty Insurance Companies),

          Garnishee - Appellee.


                             ORDER AND JUDGMENT *


Before MURPHY, Circuit Judge, BRORBY, Senior Circuit Judge, and
O’BRIEN, Circuit Judge.




      *
          This order and judgment is not binding precedent except under the doctrines of
law of the case, res judicata and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.
      John O’Shea filed a negligence claim for damages against Anthony J.

Welch and American Drug Stores, Inc., doing business as Osco Drug (Osco),

based on injuries he sustained when the car he was driving was struck by Welch’s

vehicle. Farmers Insurance Company (Farmers), O’Shea’s underinsured motorist

carrier, intervened. At the time of the accident, Welch, an Osco store manager,

was driving from his store in Lee’s Summit, Missouri, to the Osco District Office

in Overland Park, Kansas, to deliver Kansas City Chiefs tickets, which were

obtained from an Osco vendor, for distribution among Osco managers. En route,

Welch made a “spur of the moment” decision to turn into a service station for

repair work and, in doing so, struck O’Shea’s vehicle. (R., Appellant’s App.,

Vol. I at 31.) On March 20, 2002, the district court granted summary judgment to

Osco, finding “no reasonable jury could conclude that Mr. Welch was acting

within the scope of his employment” and therefore, Osco was not vicariously

liable for his negligence. (Id. at 39.) O’Shea appealed. See O’Shea v. Welch,

350 F.3d 1101 (10th Cir. 2003).

      Thereafter, O’Shea, Welch and Farmers entered into a “Consent to

Judgment, Assignment and Covenant Not to Execute” in which Welch and

Farmers stipulated to entry of judgment against Welch in an amount to be




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determined by the court at trial. 1 After a bench trial, the district court entered

judgment against Welch in the sum of $1,014,503.70. 2 O’Shea then filed the

instant garnishment action against American Motorists Insurance Company

(AMICO) seeking to recover any benefits applicable to Welch under the business

auto policy AMICO issued to Osco. AMICO contested coverage. O’Shea and

AMICO filed cross-motions for summary judgment. The district court denied

O’Shea’s motion and granted AMICO’s motion; judgment was entered

accordingly. This appeal followed. We exercise jurisdiction under 28 U.S.C. §

1291, AFFIRM in part and REVERSE in part.

I.     AMICO’s Motion to Dismiss, Remand or Stay Appeal

       After the parties’ briefs were filed, another panel of this Court issued a

decision on O’Shea’s appeal of the district court’s summary judgement in favor of

dismissal of Osco. See O’Shea, 350 F.3d 1101. In that decision, the panel

concluded that the slight deviation rule applied in third-party liability cases in

Kansas and ruled that whether Welch was acting within the scope of his


       1
        In consideration of Welch’s concession of liability, O’Shea agreed not to execute
the judgment against Welch’s personal assets.
       2
         Pursuant to the “Consent to Judgment, Assignment and Covenant Not to
Execute,” neither Welch nor Farmers objected to any evidence introduced by O’Shea or
presented their own evidence at the bench trial. As the district court stated, “the ‘trial’
was more akin to a default judgment hearing . . . .” (R., Appellant’s App., Vol. I at 52).
It also “question[ed] whether it would [have] arrive[d] at the same result in a true
adversary proceeding . . . .” (Id.)

                                             -3-
employment at the time of the accident is a fact question for the jury. Id. at 1105-

1106. Consequently, the panel reversed the district court’s judgment in favor of

Osco and remanded the case for further proceedings. Id. at 1109.

       As a result of the panel’s decision, AMICO filed a motion to dismiss this

appeal, or in the alternative, to remand or stay the appeal. We deny AMICO’s

motion. This case is a garnishment action which asks us only to interpret whether

Welch is an insured under Osco’s business auto policy. It is ripe for review

because O’Shea has a judgment against Welch. 3 Additionally, a speedy resolution

of this appeal will result in judicial efficiency. As discussed below, we interpret

the policy to include Welch as an “insured” only if he was acting within the scope

of his employment at the time of the accident. This is the same fact issue which

was remanded for a jury determination by the previous panel. Accordingly,

whether Osco is liable to O’Shea and whether Welch is an insured under the

policy can be resolved in a single trial.

       We now turn to the merits of this appeal.

II.    Standard of Review

       We review de novo a district court’s grant of summary judgment, applying



       3
         AMICO raises due process issues concerning this judgment. Specifically, it
contends if Welch is found to be covered under the policy, then it should be allowed to
contest damages. This issue will need to be addressed by the district court in the first
instance.

                                            -4-
the same legal standard used by the district court under F ED . R. C IV . P. 56(c).

Rohrbaugh v. Celotex Corp., 53 F.3d 1181, 1182 (10th Cir. 1995). Summary

judgment is appropriate if “the pleadings, depositions, answers to interrogatories,

and admissions on file, together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law.” F ED . R. C IV . P. 56(c). “We consider the ‘factual

record and reasonable inferences therefrom in the light most favorable to the party

opposing summary judgment.’” Rohrbaugh, 53 F.3d at 1182-83 (quoting Blue

Circle Cement, Inc. v. Bd. of County Comm'rs., 27 F.3d 1499, 1503 (10th Cir.

1994)).

       “A federal court sitting in diversity . . . must apply the substantive law of

the forum state, including its choice of law rules.” Vitkus v. Beatrice Co., 127

F.3d 936, 941 (10th Cir. 1997). Thus, Kansas law controls here. Because the

interpretation of an insurance contract is a question of law in Kansas, Marshall v.

Kansas Med. Mut. Ins. Co., 73 P.3d 120, 130 (Kan. 2003), we review de novo.

Kaw Nation v. Springer, 341 F.3d 1186, 1189 (10th Cir. 2003).

III.   Discussion

       The sole issue on appeal is whether Welch is an “insured” under the

business auto policy issued by AMICO to Osco. Both parties agree the pertinent

policy language is in Amendatory Endorsement #5, which provides in relevant


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part:

        It is agreed that the following is added to the LIABILITY
        COVERAGE, WHO IS AN INSURED provision[:]

        Who is an Insured is extended to include as an Insured any employee
        of the Named Insured while such employee is using his own
        automobile in your business . . . .

(R., Appellant’s App., Vol. II at 426) (emphasis added). The district court

determined this language extended coverage to an Osco employee only when that

employee was using a personal vehicle within the scope of his or her employment.

Based on its previous decision that Welch was not acting within the scope of his

employment at the time of the accident, the district court concluded Welch was

not an “insured” under the policy.

        “An insurance policy is construed as to give effect to the intention of the

parties.” Schartz v. Kansas Health Ins. Ass’n, 66 P.3d 866, 869 (Kan. 2003). “If

the language of an insurance policy is clear and unambiguous, it must be

construed in its plain, ordinary, and popular sense and according to the sense and

meaning of the terms used.” Marshall, 73 P.3d at 130. An insurance policy is

ambiguous when there is “genuine uncertainty as to which of two or more

possible meanings is proper.” State Farm Mut. Auto. Ins. Co. v. Lane, 961 P.2d

64, 68 (Kan. App. 1998) (quotations omitted). “Courts should not[, however,]

strain to find an ambiguity where common sense demonstrates there is none.”

Marshall, 73 P.2d at 130. In interpreting a contract, the terms of a contract as a

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whole must be considered, not individual provisions. Id. If any part of the policy

is ambiguous, it is given the construction most favorable to the insured. Schartz,

66 P.2d at 869.

      To determine whether Welch is covered under AMICO’s policy to Osco, we

begin with the policy’s language.

      Section II(A) of the policy provides in relevant part:

      We will pay all sums an “insured” legally must pay as damages because of
      “bodily injury” or “property damage” to which this insurance applies,
      caused by an “accident” and resulting from the ownership, maintenance, or
      use of [any auto].

(R., Appellant’s App., Vol. II at 415.) Under Section II(A)(1), the policy defines

“Who Is An Insured.” If Amendatory Endorsement #5 is added to the “Who Is An

Insured” provision, it states:

         The following are “insureds”:

         a. [Osco] for [any auto].

         b. Anyone else while using with [Osco’s] permission [any auto] [Osco]
             own[s], hire[s] or borrow[s] except:
                                        ...

             2) [Osco’s] “employee” if [any auto] is owned by that “employee” or
             a member of his or her household.

                                         ...

         c. Anyone liable for the conduct of an “insured” described above but
            only to the extent of that liability.

         [d.] [A]ny employee of [Osco] while such employee is using his own

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           automobile in [Osco’s] business. . . . 4

(R., Appellant’s App., Vol. II at 415-16, 426.)

       Welch is not an insured under Section II(A)(1)(a); O’Shea does not contend

otherwise. Welch is also not an insured under Section II(A)(1)(b) or (c). Under

Section (A)(1)(b), the “insured” is the permissive user of a vehicle owned, hired

or borrowed by Osco. Here, Welch was driving his own vehicle, not a vehicle on

loan to Osco. Therefore, he is expressly excluded as an insured under subsection

(b)(2). Consequently, in order for Welch to be considered an insured under the

policy, he must meet the requirements of Amendatory Endorsement #5;

specifically, he must have been using his vehicle “in [Osco’s] business” at the

time of the accident.

       The term “in your business” is not defined in the policy. The district court

construed Amendment Endorsement #5 to apply only to situations in which Osco

would be vicariously liable. O’Shea claims this was error, asserting Osco’s

vicarious liability is adequately insured by the language “[Osco] for [any auto].”

(Id. at 415, Section II(A)(1)(a).) Because Osco can only act through its agents



       4
         For ease of reading, we have substituted policy definitions for certain words; our
substitutions are indicated in brackets. For instance, we substituted “any auto” for
“covered auto” because under the policy, “covered auto” means “any auto,” the broadest
possible definition of “covered auto” under the policy. (R., Appellant’s App., Vol. II at
413-14.) We also changed “you” and “your” to “Osco.” (R., Appellant’s App., Vol. II at
414.)

                                            -8-
and employees, O’Shea claims this provision covers Osco and its employees

driving any vehicle, including the employee’s own vehicle. Therefore, O’Shea

contends Amendatory Endorsement #5 can only be construed to provide additional

coverage beyond that already provided to Osco for its vicarious liability. That

extension of coverage can only mean, according to O’Shea, that the policy

provides personal coverage for Osco’s employees, in this case Welch. He also

claims the phrase “in your business” is ambiguous and should be construed in his

favor.

         We agree with O’Shea that the “[Osco] for [any auto]” language provides

coverage for Osco’s vicarious liability. Although Kansas corporations are legal

entities which can sue and be sued, K AN . S TAT . A NN . § 17-6102(2), the only way

Osco can be deemed liable for “causing an ‘accident’. . . resulting from the

ownership, maintenance, or use of [any auto]” is through its agents and

employees. (R., Appellant’s App., Vol. II at 415.) Accordingly, and contrary to

the district court’s understanding, Amendatory Endorsement #5 does not provide

any protection to Osco for its vicarious liability; it makes sense only if it provides

something more. Its plain language makes employees “insureds” under the policy

when they are using their own vehicles “in [Osco’s] business.” Therefore,

Amendatory Endorsement #5 does not provide any additional protection to Osco

but covers its employees using their personal vehicles in Osco’s business.


                                         -9-
       That brings us to the crux of this case: what does “in your business” mean?

Kansas has not answered; therefore, we interpret it as we believe the Kansas

Supreme Court would. Coletti v. Cudd Pressure Control, 165 F.3d 767, 775 (10th

Cir. 1999) (in a diversity action, a court has an obligation to apply the applicable

state law or, if such state’s law is silent, rule as it believes that state’s highest

court would rule). We believe the Kansas Supreme Court would find “in your

business” to be unambiguous and interpret it to mean “scope of employment.”

This construction of the policy is clearly what the contracting parties intended.

By adding Amendatory Endorsement #5, Osco contracted to provide coverage for

its employees when using their own vehicles. Obviously, however, it did not seek

to provide global coverage for all employee negligence, only negligence occurring

while the employees furthered Osco’s business, which they can do only while

acting within the scope of their employment. It is evident the base policy covers

Osco for vicarious liability and Amendatory Endorsement #5 personally covers

Osco’s employees in those situations where Osco would be vicariously liable for

their actions.

       This interpretation is also consistent with that of courts from other states

which have addressed the issue. These courts have found that “in your business”

or “in connection with your business” is equivalent to “scope of employment.”

See, e.g., Wausau Underwriters Ins. Co. v. Baillie, 281 F.Supp.2d 1307, 1316


                                           -10-
(M.D. Fla. 2002) (“in your business or your personal affairs” means “scope of

employment”), aff’d, 82 Fed. App. 218 (11th Cir. 2003); Lawler v. Fireman’s

Fund Ins. Co., 163 F.Supp.2d 841, 852-53 (N.D. Ohio 2001) (term “in connection

with your business” is equivalent to “scope of employment”), aff’d, 322 F.3d 900

(6h Cir. 2003); Bamber v. Lumbermens Mut. Cas. Co., 680 A.2d 901, 903 (Pa.

Super. Ct. 1996) (“in connection with your business” is synonymous with “in the

course of employment”); Price v. Colony Ins. Co., 520 So.2d 964, 967 (La. App. 3

Cir. 1987) ("in connection with your business" is equivalent to the legal phrase

"course and scope of employment").

       Based on the above, the district court correctly interpreted “in your

business” to mean “scope of employment.” However, because it relied on its

previous ruling that Welch was not acting within the scope of his employment at

the time of the collision, which has been reversed, and because there are questions

of fact as to whether Welch was acting in the “scope of his employment” at the

time of the collision, as that term is defined by the previous panel’s decision, this

case is remanded to the district court for further proceedings consistent with this

opinion. 5


       5
          O’Shea cites to Kansas workers compensation and permissive use cases in
support of his argument that “in your business” should be read broadly, in particular, that
the “slight deviation rule” should be applied to the facts of this case. Based on the
previous panel’s decision that Kansas would apply the slight deviation rule in third-party
liability tort cases, which is the law of the case, we need not make any analogies to cases

                                            -11-
IV.    Conclusion

       We DENY AMICO’s motion to dismiss this appeal, or in the alternative, to

remand or stay the appeal. We AFFIRM the district court’s interpretation of the

policy but REVERSE its judgment in favor of AMICO. This case is

REMANDED to the district court.

                                          Entered by the Court:

                                          Terrence L. O’Brien
                                          United States Circuit Judge




outside the tort arena. See In re Integra Realty Res., Inc., 354 F.3d 1246, 1258 (10th Cir.
2004) (law of the case doctrine states that when a court decides upon a rule of law, that
decision should continue to govern the same issues in subsequent stages in the same
case).

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