                                                                      F I L E D
                                                             United States Court of Appeals
                                                                     Tenth Circuit
                                    PUBLISH
                                                                       JUN 12 1997
                    UNITED STATES COURT OF APPEALS
                                                                  PATRICK FISHER
                                                                          Clerk
                               TENTH CIRCUIT



 HOUSTON GENERAL INSURANCE
 COMPANY,

             Plaintiff-Appellee,
                                                    No. 96-6197
 v.

 AMERICAN FENCE COMPANY,
 INC.,

             Defendant-Appellant.


          APPEAL FROM THE UNITED STATES DISTRICT COURT
             FOR THE WESTERN DISTRICT OF OKLAHOMA
                      (D.C. No. CIV-95-1889-A)


Submitted on the briefs:

Robert B. Mills and Don R. Martin of Mills & Whitten, Oklahoma City,
Oklahoma, for Plaintiff-Appellee.

Joseph J. Reinke, Oklahoma City, Oklahoma, for Defendant-Appellant.


Before EBEL, HENRY, and MURPHY, Circuit Judges.


EBEL, Circuit Judge.
      Defendant American Fence Company, Inc. appeals from a summary

judgment granting declaratory relief for plaintiff Houston General Insurance

Company. 1 The only issue presented is whether the district court was correct in

concluding that a personal vehicle being driven by an American Fence employee

did not constitute a “covered ‘auto’” under the temporary substitute auto

provision of an insurance policy issued to American Fence by Houston General.

We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

      The facts are undisputed. On December 19, 1991, Jim Woodie, the

president of American Fence, and John Woodie, an American Fence employee,

drove Jim’s 1986 pickup truck to a Chevrolet dealership in Oklahoma City. The

purpose of their trip was to pick up a new 1992 pickup truck, which had just been

purchased by American Fence, and to take it to Cellular One in Edmond,

Oklahoma, where they intended to leave it for installation of a cellular telephone.

After leaving Jim at the dealership, John proceeded to drive toward Edmond in

Jim’s truck, with the intention of meeting Jim at Cellular One so the two could

return to American Fence together in Jim’s truck once the 1992 pickup was

dropped off. En route to Edmond in Jim’s truck, John was involved in an


      1
             After examining the briefs and appellate record, this panel has
determined unanimously to grant the parties’ request for a decision on the briefs
without oral argument. See Fed. R. App. P. 34(f) and 10th Cir. R. 34.1.9. The
case is therefore ordered submitted without oral argument.


                                        -2-
accident. John paged Jim to inform him of the accident, whereupon Jim left the

dealership and drove the 1992 pickup to the scene.

      At the time of the accident, a commercial insurance policy issued by

Houston General to American Fence was in effect. The policy specifically listed

two “covered autos,” one of which was the new 1992 pickup. There is no

question that the 1992 pickup was covered at the time of John’s accident in the

1986 pickup. The policy also extended liability coverage to “temporary substitute

autos,” defined as “[a]ny ‘auto’ you do not own while used with the permission of

its owner as a temporary substitute for a covered ‘auto’ you own that is out of

service” because of its breakdown, repair, servicing, loss, or destruction.

Appellant’s App. at 7.

      Confronted with a demand to defend and indemnify American Fence in a

civil action arising out of the accident, Houston General sought declaratory relief

in federal district court. The question presented was whether, at the time of the

accident, the 1986 pickup constituted a temporary substitute auto under the

policy. On cross motions for summary judgment, and pursuant to stipulated facts,

the district court concluded that the new 1992 pickup was not “out of service”

within the meaning of the policy, and thus the 1986 pickup was not a temporary

substitute auto at the time of the accident. American Fence appeals. When the

relevant facts are undisputed, we review the district court’s interpretation of an


                                         -3-
insurance contract de novo. See State Farm Mut. Auto. Ins. Co. v. Dyer, 19 F.3d

514, 521 (10th Cir. 1994). The interpretation of an insurance contract is governed

by state law and, sitting in diversity, we look to the law of the forum state. See

Braun v. Annesley, 936 F.2d 1105, 1108 (10th Cir. 1991).

      “Under Oklahoma law related to insurance contracts, ‘[t]he terms of the

parties’ contract, if unambiguous, clear, and consistent, are accepted in their plain

and ordinary sense, and the contract will be enforced to carry out the intentions of

the parties as it existed at the time of the contract.’” American Cas. Co. v.

Federal Deposit Ins. Corp., 958 F.2d 324, 326 (10th Cir. 1992) (quoting Dodson

v. St. Paul Ins. Co., 812 P.2d 372, 376 (Okla. 1991)). We are mindful, as

appellant appears to suggest in its brief, that where a genuine ambiguity exists in

an insurance policy, Oklahoma courts will interpret the contract most favorably to

the insured and against the carrier. See, e.g., id. Appellant does not contend,

however, that any such ambiguity exists here, and we find none.

      We believe the key to interpretation in this case lies in the purpose behind

the temporary substitute automobile provision. Although we find no Oklahoma

decision which explicitly sets forth the purpose, courts that have considered the

matter in other jurisdictions appear to be in agreement. The objective of the

substitution provision is to afford temporary coverage to an insured who is using

a borrowed vehicle because he or she is unable to use the vehicle designated in


                                          -4-
the policy for one of the specified reasons. See, e.g., St. Paul Fire & Marine Ins.

Co. v. Nationwide Mut. Ins. Co., 558 A.2d 1244, 1246 (Md. Ct. Spec. App. 1989);

A & S Trucking Co. v. First General Ins. Co., 578 So.2d 1212, 1216 (Miss. 1990);

Knipp v Truck Ins. Exch., 857 S.W.2d 281, 284 (Mo. Ct. App. 1993) (purpose is

to permit the insured to continue to operate another motor vehicle should the

designated vehicle be temporarily out of commission); Farmland Mut. Ins. Co. v.

Farmers Elevator, Inc., 404 N.W.2d 473, 476 (N.D. 1987). See generally 6B John

Alan Appleman & Jean Appleman, Insurance Law and Practice § 4293.5, at 209-

11 (Buckley ed. 1979) (“purpose is to extend temporary protection . . . when

[breakdown, repair, servicing, loss or destruction] prevents the insured from

making use of the vehicle he had protected by insurance”); 12 George J. Couch,

et al., Couch Cyclopedia of Insurance Law 2d § 45.219, at 511-12 (rev. ed.

1981). It has been repeatedly said that the purpose of a substitute automobile

provision is not to defeat liability but, rather, to provide additional coverage for

the insured yet reasonably define coverage by limiting the insurer’s risk to one

operating vehicle at a time for a single premium. See, e.g., Preferred Risk Mut.

Ins. Co. v. Lewallen, 703 P.2d 1232, 1234 (Ariz. Ct. App. 1985); Standard Mut.

Ins. Co. v. Sentry Ins., 497 N.E.2d 476, 480 (Ill. App. Ct. 1986); Farmland Mut.

Ins. Co., 404 N.W.2d at 476; Atkinson v. State Farm Mutual Auto. Ins. Co., 480

N.E.2d 819, 821 (Ohio Ct. App. 1984) (purpose is to provide “continuous


                                          -5-
coverage” to insured while limiting risk to one operating vehicle at a time for a

single premium). See generally Appleman § 4293.5, at 24-25 (Buckley ed. supp.

1997); Couch, supra, § 45.219, at 511-12. To find coverage in this case would

defeat the purpose of the substitute automobile provision. 2

      Appellant argues that, under Oklahoma law, it is not necessary for the

designated vehicle to be completely disabled or withdrawn from all use before an

alternative vehicle can be considered a substitute under a temporary substitute

automobile provision. In making this argument, appellant relies on Mid-

Continent Casualty Co. v. West, 351 P.2d 398 (Okla. 1959). There, the Oklahoma

Supreme Court determined that where the insured used his father’s car for an out-

of-town business trip because the tires on his own car, which he customarily used

for such trips, were badly worn and unsafe for long-distance travel, the father’s

car was a “temporary substitute automobile” within the meaning of the insured’s

automobile insurance policy. See id. at 400-01. In finding coverage, the court

rejected the insurer’s argument that the insured’s own automobile had to be


      2
              The Oklahoma Supreme Court has explicitly recognized a similar
purpose with respect to the standard requirement in substitute automobile
provisions that the substitute vehicle be one not owned by the insured. See
Utilities Ins. Co. v. Wilson, 251 P.2d 175, 177 (Okla. 1952). In strictly enforcing
the requirement, the court declared, “To hold otherwise would be to permit an
operator of more than one truck to insure only one vehicle and in the event of an
accident with any of his vehicles to take the position that the policy covered the
vehicle involved in the accident. This obviously could not be the intention or
purpose of the insurance contract.” Id.

                                         -6-
completely disabled and thus withdrawn from all use before an alternative vehicle

could be considered a substitute under the policy. Rather, the court found it

sufficient that the automobile was dangerous and disabled for one of the insured’s

normal uses (out-of-town trips). Id. at 401.

      Although West clearly stands for the proposition that a vehicle need not be

completely disabled before a substitute automobile provision can be implicated, it

does not compel or even suggest a finding that the 1986 pickup was a substitute

vehicle in this case. “The term ‘substitute’ connotes the replacement of one thing

for another.” St. Paul Fire & Marine Ins. Co., 558 A.2d at 1247 (finding no

substitute coverage for a second rental vehicle that was being used by the insured

to return the first rental vehicle, which was a covered substitute and being driven

by a friend, to the dealership where the insured’s covered auto was being

repaired). See also Western Cas. & Sur. Co. v. Norman, 197 F.2d 67, 69 (5th Cir.

1952) (in setting aside the trial court’s finding that a personal automobile, used

extensively in the business, was being used as a substitute for the business’

insured vehicle, which was in the shop at the time of the accident, the court

explained that “the fact of substitution [is] essential to extend coverage” and, to

authorize such extension, the insured must show “not only that the insured vehicle

had been withdrawn from service because of a breakdown, but also that except for

this the insured car would have been in use at the time and in the circumstances


                                          -7-
involved. Such showing is necessary to establish ‘temporary use as a substitute,’

i.e., a car put in the place of another.”). In West, there was no question that, at

the time of the accident, the insured was using an alternative vehicle in place of

his own. The only issue before the court was whether the substitution was, as

required by the policy there, a result of the insured’s own automobile having been

“withdrawn from normal use because of its breakdown, repair, servicing, loss or

destruction.” West, 351 P.2d at 399.

      The same cannot be said with respect to the case at hand. Here, there is no

indication that the vehicle involved in the accident (the 1986 pickup) was being

used in place of the covered vehicle (the 1992 pickup). On the contrary, the very

nature of the task that the insured was seeking to accomplish required the use of

both vehicles. Both Jim and John, in the 1992 and 1986 pickups respectively, had

to drive from the Chevrolet dealership to Cellular One so that Jim could leave the

1992 pickup at Cellular One and still get back to American Fence. Rather than

being used in place of the insured vehicle, the 1986 pickup was being used in

addition to it for reasons of convenience. Cf. West, 351 P.2d at 400 (where court

indicates that convenience is an insufficient reason to bring even actual

substitution within the terms of the coverage afforded by a temporary substitute

automobile provision).




                                          -8-
      We find nothing in West to suggest that a temporary substitute automobile

provision might apply where an insured is still actually using the covered vehicle.

Appellant seems to concede as much in his brief, relying on the fact that because

Jim had not yet left the dealership at the time of the accident, there was “no actual

overlapping use.” Appellant’s Br. at 8 n.1. We agree with appellee that

appellant’s reliance on this fortuitous circumstance begs the question. Coverage

is provided under this provision when a vehicle is used “as a temporary substitute

for a covered ‘auto’” that is “out of service” because of its breakdown, repair,

servicing, loss or destruction. Appellant’s App. at 7. The fact is that, at the time

of the accident, the insured was in possession of and intended imminently to drive

a covered vehicle that was completely operable and at its disposal. Under these

circumstances, we do not believe the Oklahoma courts would find the covered

vehicle to be withdrawn from normal use simply because the insured intended to

drive it somewhere for installation of a cellular telephone. 3


      3
             The fact that West does not condition substitute coverage on the
covered vehicle’s complete disability suggests to us that the Oklahoma courts
would find the installation of a cellular telephone to be “servicing” within the
meaning of a substitute auto provision. Cf. Sanz v. Reserve Ins. Co., 172 So.2d
912, 913 (Fla. Dist. Ct. App. 1965) (rejecting the argument that “servicing”
should include only those situations where the covered vehicle is “disabled by
virtue of a mechanical condition,” and finding that having a sign painted on an
insured truck constituted “servicing”). This, however, does not eliminate the
requirement that the covered vehicle be “withdrawn from normal use” or “out of
service” for that purpose. In this regard, we note that the facts in West raised
                                                                       (continued...)

                                          -9-
      In West, the court found it not “particularly significant that [the insured]

left his Buick parked near his father’s cafe, with the keys in it, when he borrowed

his father’s Pontiac for the [out-of-town] trip,” West, 351 P.2d at 401, and thus

rejected the insurer’s argument that any interpretation short of requiring the

complete withdrawal of the covered vehicle from all use raised the specter of

forcing the insurer to cover two vehicles at the same time. In explaining its

conclusion, however, the court said:

      We think the fact that the Buick was not operated while [the insured]
      was driving the substitute Pontiac overshadows the idea that it might,
      or could, have been operated by [the insured’s father], and overlooks
      the important distinction between ‘normal use’ (which means
      ‘normal’ as pertains to the insured and his customary use of the
      ‘described auto’) and ‘possible’ use by someone other than the
      insured.

351 P.2d at 401.

      Appellant argues that a vehicle is “out of service” when it is “not in normal

use,” and that the 1992 truck “could not be ‘normally used’ in a manner required

by American Fence” prior to installation of a cellular phone, which it

characterizes as an integral and necessary piece of equipment on the truck.

Appellant’s Br. at 6. This argument goes too far. Even appellant admits that Jim


      3
       (...continued)
only the issue of when a covered vehicle should be considered “withdrawn from
normal use” because of a “breakdown.” It presented no occasion to consider
when a covered vehicle might be regarded as withdrawn (or “out of service”) for
“servicing.”

                                        -10-
placed the truck “in service” as soon as he was notified of the accident, see

Appellant’s Br. at 7, notwithstanding the fact that it was still without a cellular

telephone.

      We conclude that the 1986 pickup did not constitute a “temporary

substitute” under the policy because (1) it was not being used as a “substitute” for

the 1992 pickup, and (2) the 1992 pickup was not “out of service” within the

meaning of the policy. Accordingly, the judgment of the United States District

Court for the Western District of Oklahoma is AFFIRMED.




                                          -11-
