                                                                            F I L E D
                                                                     United States Court of Appeals
                                                                             Tenth Circuit
                         UNITED STATES COURT OF APPEALS
                                                                             June 5, 2007
                                    TENTH CIRCUIT                        Elisabeth A. Shumaker
                                                                             Clerk of Court

 ALLSTATE INSURANCE COMPANY,

           Plaintiff-Appellee,
                                                            No. 06-2107
 v.
                                                 (D.C. No. CIV-04-1285 MCA/WPL)
                                                           (New Mexico)
 FORD MOTOR CREDIT COMPANY,

           Defendant-Appellant.



                                 ORDER AND JUDGMENT *


Before TACHA, Chief Circuit Judge, McWILLIAMS, Senior Circuit Judge, and
LUCERO, Circuit Judge.




       Ford Motor Credit Company, hereinafter referred to as “Ford” or the “lessor,”

leased two pickup trucks to Marquez Surveying Company, Inc., a New Mexico

corporation with offices in Albuquerque, New Mexico, hereinafter referred to as

“Marquez” or the “lessee.” One of the lease conditions was that Marquez insure the two

trucks and that the policy name Ford as an additional insured. Pursuant thereto, Marquez

bought a Business Auto Policy from Allstate Insurance Company, hereinafter referred to

as “Allstate.” That policy provided coverage for all vehicles used by Marquez in its



       *
        This order and judgment is not binding precedent, except under the doctrines of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 Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
business operations with a $1 million liability limit. Under an endorsement to that policy,

Ford was identified as a “Lessor–Additional Insured and Loss Payee.” In that connection,

the “additional insurance” endorsement in favor of Ford provided that such coverage

would expire on the “expiration date shown on the Schedule, or when the lessor or his or

her agent takes possession of the ‘leased auto,’ whichever occurs first.” 1 And therein lies

our present problem.

       Marquez later defaulted on its lease payments to Ford. Prior to the default, Ford

had entered into an “Independent Contractor Agreement” with Great Western Recovery,

Inc., an independent repossession contractor, to repossess any vehicles that Ford might

refer to it for repossession. That agreement referred to Great Western as an “independent

contractor” and provided that Great Western would obtain insurance that protected

against liability arising out of its repossession of vehicles and that Ford was to be named

as an additional insured under that policy.

       1
        Specifically, the Additional Insured Endorsement read as follows:
       A. Coverage
            1.      Any “leased auto” designated or described in the
                    Schedule or in the Declarations will be considered a
                    covered “auto” you own and not a covered “auto” you
                    hire or borrow. For a covered “auto” that is a “leased
                    auto” Who is Insured is changed to include as an
                    “insured” the lessor named in the Schedule.

              2.       The coverages provided under this endorsement apply
                       to any “leased auto” described in the Schedule until the
                       expiration date shown in the Schedule, or when the
                       lessor or his or her agent takes possession of the
                       “leased auto,” whichever occurs first. (Emphasis
                       added).

                                               2
       In the instant case, Ford asked Great Western to repossess the two trucks

previously leased by Ford to Marquez.     Great Western then turned over the actual

repossession to one Dennis Seibert, a self-employed businessman in the car-crushing and

auto auction business. Seibert, in turn, sent one of his contractors, Carl Coffman, to the

business premises of Marquez to pick up the two trucks which Ford had leased Marquez.

It would appear that Coffman was somewhat concerned and frightened about the matter

because several months prior thereto, when he had attempted to repossess the trucks, John

Marquez, an employee of Marquez, had threatened to shoot him if he returned.

Nevertheless, Coffman went to Marquez’ business location, in Albuquerque, New

Mexico, entered onto the premises, saw one of the leased vehicles here involved, entered

the truck, and started the vehicle with the keys which had been left in the ignition. As

Coffman was in the process of exiting the Marquez property, John Marquez suddenly

appeared in front of the truck then being driven by Coffman. In this setting, Coffman,

driving the truck leased to Marquez by Ford, struck John Marquez, who later died as a

result of the injuries he sustained in the collision. Coffman continued driving and left the

scene, continuing to drive the truck, without stopping, to Seibert’s place of business.

       The family of John Marquez later brought suit in a state court in New Mexico

against Ford and others, alleging, inter alia, that Ford was liable for the conduct of

Coffman. At about the time that the New Mexico state court ruled that under New

Mexico law, even though Ford had assigned repossession to an independent contractor

engaged by Ford to repossess the truck, Ford had a “non-delegable duty to repossess its

                                              3
collateral without breaching the peace,” and thus was responsible for the conduct of

Coffman, Ford demanded that Allstate, under the insurance policy which it had issued

Marquez, defend Ford in the wrongful death case brought against it in the New Mexico

courts, and indemnify it, if an adverse judgment was obtained. After Allstate refused

Ford’s demand, stating that its investigation indicated that it did not have a duty to defend

or indemnify, Allstate then initiated the present action in the United States District Court

for the District of New Mexico against Ford. At about the same time that Allstate

instituted the present action, Ford settled the wrongful death action brought against it in

state court.

       Jurisdiction in the United States District Court for the District of New Mexico was

based on diversity of citizenship, 28 U.S.C. § 1332. In Count I of its complaint, Allstate

sought a declaratory judgment that coverage under the endorsement of Ford as an

additional insured, as contained in its policy issued to Marquez, terminated prior to the

accident, and in Count II Allstate asked for the return of money it had previously paid, in

error, to Ford for the loss of the truck. Later, Allstate and Ford settled the claim made in

Count II of the complaint, and that claim was finally resolved and is not involved in the

present proceeding.

       In the present proceeding in the United States District Court, Ford, in due time,

filed an answer to Allstate’s declaratory judgment action and also filed a counterclaim in

which it asked for a declaratory judgment that Allstate did have a duty to defend Ford in

the action brought by Marquez against it in the state court, and to indemnify Ford for all

                                              4
or a portion of the amount paid by Ford in settlement of the action brought against it by

the Marquez family in New Mexico state court, and that in refusing to do so, Allstate

acted in bad faith. Allstate in due time filed an answer to Ford’s counterclaim.      Later,

Allstate filed a motion for summary judgment, asking the United States District Court in

the present proceeding to enter an order declaring that Allstate did not have a duty to

defend Ford in the state court proceeding, nor was it required to indemnify Allstate.

Ford thereafter filed a response to Allstate’s motion for summary judgment and also filed

its own motion for partial summary judgment on its counterclaim wherein it sought a

declaratory judgment that Allstate had a duty to defend and indemnify Ford, and in

refusing to do so acted in bad faith. After hearing, the district court granted Allstate’s

motion for summary judgment and shortly thereafter granted Allstate’s motion for

summary judgment in its favor on Ford’s counterclaim, and denied Fords’ motion for

partial summary judgment. Accordingly, judgment was entered in favor of Allstate. Ford

appeals.

       The central issue in this case is whether, under New Mexico law, the insurance

coverage afforded Ford under the insurance policy issued Marquez had expired at the

time that Coffman, driving the truck which Ford had previously leased Marquez, struck

John Marquez. As stated, both Ford and Allstate moved for summary judgment, thereby

indicating that neither, as of that time, at least, believed there were any genuine issues of

material fact, and that the issue to be resolved was a question of law. As above stated, the

coverage afforded Ford by Allstate by that policy applied to any vehicle leased by Ford to

                                              5
Marquez “until the expiration date shown in the schedule or when the lessor or his or her

agent takes possession of the ‘leased auto,’ whichever occurs first.” The coverage date

had not expired, so the narrow question is whether, at the time of the accident, Ford, as

the lessor, or its agent, had possession of the “leased auto.”

       As stated, the district court in the instant case granted Allstate’s motion for

summary judgment and denied Ford’s motion for summary judgment in a 25-page

Opinion and Order. In so doing, the district court initially held that under New Mexico

state law, on the basis of admitted facts, Coffman’s actions were tantamount to Ford’s

actions for the purposes of the exclusion provision. In so doing, the court relied on the

statutory law of New Mexico, noting that under N.M. Stat. § 55-9-609, after Marquez

defaulted on its payments due Ford, that Ford, being a secured party, could proceed

“without judicial process” to take possession of the collateral “if it proceeds without a

breach of the peace.” N.M.Stat. § 55-9-609(b)(2). The court pointed out that the Official

Comment to § 55-9-609(b) states that courts, in considering whether a secured party has

engaged in a breach of the peace, should hold the secured party responsible for the acts of

others taken on the secured party’s behalf, including independent contractors engaged by

the secured party to repossess the property. The district court went on to state that the

secured creditor may not absolve itself of liability stemming from a repossession

conducted by any person acting on behalf of the secured creditor. The district court then

made reference to the fact that the New Mexico state judge in the action brought by the

John Marquez family against Ford, and others, held that even though Ford may have

                                              6
assigned the repossession to an “independent contractor,” it still had a “non-delegable

duty” to repossess the truck without breaching the peace. In connection with the latter, in

the instant case, there is no doubt that there was a “breach of the peace,” which was fully

investigated by the police.

       Further, in support of its holding that “in law,” Coffman’s actions in repossessing

the truck were Ford’s actions, the district court cited with approval Reliance Ins. Co. v.

Wiggins, 763 So.2d 450, 453-54 (Fla. Dist. Ct. App. 2000), an opinion of the Florida

Fourth District Court of Appeals. In Reliance, the Florida court spoke as follows:

       The issue in this case is whether the lessor “regained” custody of a vehicle
       within the meaning of an insurance policy exclusion when an independent
       contractor repossessed the vehicle at the direction of the lessor. We hold
       that the repossession triggered the policy exclusion.

       On this particular matter, Ford’s position is that Reliance was incorrectly decided

and in any event was “non-binding precedent on this court.” In this latter connection, in

Rawson v. Sears Roebuck & Co., 822 F.2d 908 (10th Cir. 1987), we held that in

determining the local law of a given state, we may look to “all resources, including

decisions of other states.”

       In the present case, the district court went on to rule, alternatively, that in any

event, “even if Coffman were not acting as [Ford] itself, Coffman was acting as an agent

for [Ford] as that term is used in the insurance contract,” relying on general rules of

agency, and citing various authorities in support thereof.




                                               7
       Finally, the district court concluded as a matter of law that Coffman was in

“possession” of the leased vehicle at the time of the accident, citing “dictionary

definitions.” The district court quoted the Random House Unabridged Dictionary,

defining “possession” as “actual holding or occupancy, either with or without rights of

ownership,” and Black’s Law Dictionary, which stated that “possession” means “having

control over a thing with the intent to have and to exercise such control,” and “where the

thing is in the immediate occupancy and physical control of the party.”

       It was on this general basis that the district court in the instant case granted

Allstate’s motion for summary judgment, holding that the actions of Coffman had

triggered the expiration clause in the insurance policy issued Marquez by Allstate, and

that accordingly, Allstate had no duty to defend or indemnify Ford.

       Our review of the district court’s judgment is de novo, in which we give no

deference to the judgment of the district court. Salve Regina College v. Russell, 499 U.S.

225 (1991) (Justices Rehnquist, White, and Stevens, dissenting).2 Accordingly, we

accord no deference to the district court’s understanding of local New Mexico law, even

though in the instant case, the district judge, prior to her service on the federal district




       2
          Prior to Salve Regina, we had held that “when there is no authoritative decision
of a state court on an issue under purely local law, great deference must be paid to the
views of a federal judge who is familiar with the local law and practice.” Rhody v. State
Farm Mut. Ins. Co., 771 F.2d 1416, 1419 (10th Cir. 1985). Since Salve Regina, we have
held that “a federal district court’s state law determinations are entitled to no deference
and are reviewed de novo.” Roberts v. Printup, 422 F.3d 1211, 1215 (10th Cir. 2005).

                                               8
court, was a judge on the New Mexico State Court of Appeals for some five years, and

we will review the case de novo.

       As indicated, the district court’s initial holding was that under New Mexico law,

“Coffman’s actions were tantamount to [Ford’s] actions” for the purposes of the

exclusion provision in the insurance policy issued Marquez by Allstate. Our de novo

review of the record on appeal leads us to the same conclusion. The district court then

went on to hold that if Coffman, under New Mexico law was not the “alter ego,” so to

speak, of Ford, it was, under New Mexico law, the “agent” of Ford. Again, our de novo

review of the record before us leads us to the same conclusion. Finally, the district court

concluded that under New Mexico state law, Coffman had “possession” of the truck at the

time the vehicle collided with John Marquez. Again, our de novo review of the record

leads us to the same conclusion. If Coffman was not in “possession” of the vehicle when

it struck Marquez, it is hard to conceive of who else was. Coffman had turned on the

ignition, had his hands on the steering wheel, and the vehicle was moving forward at the

time of the impact with John Marquez.

       As for Ford’s claim that Allstate, in refusing to defend and indemnify Ford, acted

in “bad faith,” the district court held that since Allstate, under New Mexico law, did not

have a contractual duty to defend or indemnify Ford, such negated any claim by Ford for

bad faith on the part of Allstate. Again, our de novo review of the present record leads us

to the same conclusion.




                                             9
Judgment affirmed.



                          Entered for the Court


                          Robert H. McWilliams
                          Senior Circuit Judge




                     10
