              IN THE UNITED STATES COURT OF APPEALS

                      FOR THE FIFTH CIRCUIT

                      _____________________

                           No. 95-20626
                      _____________________



MARVENIA WEDGEWORTH, ETC., ET AL.,

                                                         Plaintiffs,

MARVENIA WEDGEWORTH, Individually as
personal representative of the Estate of
Tommy R. Wedgewood and as next friend of
Tommy Lee Monroe Wedgeworth, A Minor;
ROBERTA GROSSMAN, Guardian of the Estate
of Tommy Lee Monroe Wedgeworth, A Minor;
OXY USA INC.; ARTHUR RASKE,
                                              Plaintiffs-Appellants,

                              versus

HOME INDEMNITY CO., ET AL.,

                                                         Defendants,

LEAVELL-DANFORD INSURANCE AGENCY,

                                               Defendant-Appellant,

                              versus

UNITED STATES FIDELITY AND GUARANTY COMPANY,

                                              Defendant-Appellee.
_________________________________________________________________

      Appeal from the United States District Court for the
                    Southern District of Texas
                           CA-H-93-3784
_________________________________________________________________
                          June 17, 1996

Before REAVLEY, GARWOOD, and JOLLY, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:*

     In   this   facially   complex       case,    the   plaintiff-appellant,

Leavell-Danford    Insurance   Company      ("LD"),      is   the   assignee   of

several actions against United States Fidelity and Guaranty Co.

("USF&G"), the primary insurer.           LD seeks review of the district

court's grant of summary judgment to USF&G, and denial of partial

summary judgment to LD.        We hold that LD as assignee was not

entitled to summary judgment on its contract reformation claim, and

consequently affirm the district court's denial of partial summary

judgment to it.     With respect to the district court's grant of

summary judgment to USF&G, we find that factual issues remain,

particularly if New Mexico law applies, and therefore reverse

summary judgment in favor of USF&G.               We remand the case to the

district court for a decision on the choice-of-law question, and

for further consideration in the light of our opinion below.

                                      I

     This lawsuit arose from an accident that occurred on an oil

lease owned by Oxy USA, Inc. ("Oxy").             Three employees of General

Petroleum, Inc. ("GP"), Tommy Wedgeworth, Arthur Raske, and R. C.

Bevers, were cleaning an oil storage tank on the lease in April

1991 when an explosion occurred.          Wedgeworth was killed, and Raske

     *
      Pursuant to Local Rule 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in Local Rule 47.5.4.




                                  -2-
and Bevers were injured.   These GP employees had been working on

Oxy's lease under a contract between GP and Oxy.        Under that

contract, GP had agreed to name Oxy as an additional insured on

GP's liability policies.   However, Oxy was not covered under the

policies, and it is Oxy's lack of liability insurance coverage that

precipitated the actual suit before this court.

     GP was insured by USF&G, through LD. After LD received notice

that GP wished to add Oxy as an additional insured on its liability

policies, LD made two policy renewal requests to USF&G, in May and

June of 1990, but Oxy was not included as an additional insured on

either request.   Soon thereafter, USF&G sought confirmation of the

parties to be added as additional insureds in a telephone call.

Glenn Danford, the insurance agent at LD responsible for the GP

account, instructed USF&G that the additional insureds should be

identified as set forth in the June policy renewal request--a

request in which Oxy was not included as an additional insured.

Before sending the 1990-91 policy to GP, USF&G delivered the policy

to LD and requested it to notify USF&G if the policy contained any

errors.   LD neither identified any errors, nor advised USF&G that

Oxy should be included as an additional insured.

     LD nevertheless issued a certificate of insurance to Oxy,

dated October 8, 1990, describing Oxy as an additional insured on

the 1990-91 policy.     The certificate, however, contained the




                                -3-
following disclaimer:   "This certificate is issued as a matter of

information only and confers no rights upon the certificate holder.

This certificate does not amend, extend or alter the coverage

afforded by the policies below."      USF&G never issued a written

endorsement to the 1990-91 policy, and Danford admitted that he was

not aware of any endorsement naming Oxy as an additional insured on

the 1990-91 policy prior to the April explosion giving rise to the

lawsuits underlying this action.

     The Wedgeworth plaintiffs (Wedgeworth's survivors and Raske

and Bevers) filed separate actions in Harris County, Texas, against

Oxy, based on injuries that they suffered in the explosion.   USF&G

declined to defend Oxy in these lawsuits.    Oxy thereupon entered

into agreed judgments with the plaintiffs totaling $2,650,000.   As

part of the settlement agreement, Oxy assigned its right to sue

USF&G to the Wedgeworth plaintiffs and further agreed to pay them

$500,000.   In return, the plaintiffs agreed not to execute on the

agreed judgments.

     Oxy later filed suit in Midland, Texas, against GP, alleging

that GP violated its contractual duty to Oxy to obtain insurance

coverage for Oxy.   Oxy and GP signed an agreement and assignment,

under which GP assigned all of its causes of action against USF&G

and LD to Oxy.   In exchange for the assignments, Oxy agreed not to

execute on any of GP's assets other than assets resulting from or




                                -4-
acquired pursuant to the assignment.   Ultimately, the Midland suit

was removed to federal court and consolidated with the instant suit

in September 1994.    No judgment was entered against GP, and Oxy's

claims against GP were dismissed with prejudice in March 1995.

     In July 1994, prior to the consolidation, another settlement

and release was reached among the Wedgeworth plaintiffs, Oxy, LD,

and others.   Under the agreement, (1) Oxy assigned all causes of

action it had received by assignment from GP to the Wedgeworth

plaintiffs; (2) Oxy and the Wedgeworth plaintiffs released all

their claims against LD; and (3) Oxy and the Wedgeworth plaintiffs

assigned all of their causes of actions to LD.    The effect of all

this, along with the earlier settlements, is that LD is now in the

position to urge GP's rights against USF&G.

     In September, LD--realigned as a plaintiff and owner of all

remaining claims--filed a second amended complaint alleging the

assigned and individual claims.    Two months later, USF&G filed a

motion for summary judgment, seeking a declaratory judgment that it

had no obligation to defend Oxy and, consequently, no liability to

Oxy's assignee, LD.   On the same day, LD filed a motion for partial

summary judgment for contract reformation, to add the omitted Oxy

as an additional insured to the 1990-91 policy. The district court

granted summary judgment for USF&G and denied summary judgment to

LD, holding that the insurance policy could not be reformed to




                                 -5-
reflect Oxy as an insured under either the laws of New Mexico or

Texas, because, under New Mexico law, "[i]t is clear that if

General Petroleum had read the policy it would have seen that Oxy

was not listed as an insured," and under Texas law, LD's actions as

an agent of USF&G could not bind USF&G.   The district court then

entered a final judgment, dismissing all claims in the instant

suit.   LD has timely appealed both the denial of its motion for

partial summary judgment on the reformation of contract claim, and

the summary judgment rendered in favor of USF&G.




                               -6-
                                     II

                                      A

     LD first argues that the district court erred by refusing to

grant its   motion   for   partial    summary    judgment,   in    which   the

insurance agency sought reformation of the insurance contract, to

add Oxy as an additional insured.          We affirm the district court's

ruling on this issue, but we affirm on different grounds from those

relied on by the district court.          First, the district court erred

in failing to determine the choice of law question.                 Moreover,

under New Mexico law, there are issues of fact yet to be resolved

as we further shall explain.     It is corollary to this ruling that

we reverse the district court’s grant of summary judgment for

USF&G, which dismissed LD’s complaint.          The case will be remanded

for further proceedings not inconsistent with this opinion.

                                      B

     The district court avoided the choice-of-law question in this

case. Instead, it simply held that all claims against USF&G should

be dismissed, whether the court applied the law of Texas or New

Mexico.   On appeal, LD argues that the result is not the same under

both state's law, and that the district court should have applied

New Mexico law. More specifically, LD contends that New Mexico law

applies to the contract claims in the instant suit, and that all of

the claims that it has brought are contract claims.               LD explains




                                     -7-
that GP and LD both had their offices and principal places of

business in New Mexico, the insurance negotiations (and alleged

omissions) all took place in New Mexico. Furthermore, the accident

involving GP's employees occurred in New Mexico.

     USF&G argues that even if LD is correct as to the law

governing the merits of reformation, the "threshold question" of

the legality of the assignment of the claims themselves should be

decided under Texas law.   It points out that all the assignments

relate to Texas lawsuits, and that the vast majority of parties

executing the assignments did so in Texas.    The district court,

however, did not decide the "threshold question"; it instead chose

to rule on the merits of the issues raised in the summary judgment

motions, without deciding which state's law applied.1   The district

court ruled that, under New Mexico law requiring the insured to

read his policy to the extent that it is reasonable under the


      1
       Federal courts must follow the choice-of-law rules of the
state in which they sit, Stuart v. Spademan, 772 F.2d 1185, 1193
(5th Cir. 1985), and thus Texas choice-of-law rules apply in the
instant case.       Texas has adopted the "most significant
relationship" test for determining choice-of-law issues in both
tort and contract cases. Duncan v. Cessna Aircraft Co., 665 S.W.2d
414, 420-21 (Tex. 1984), vacated on other grounds, 665 S.W.2d 439
(1984). Under this test, however, the laws of more than one state
may apply in a single case, with one state having the most
significant relationship to one issue, while another state has the
most significant relationship to another issue. For this reason,
both LD and USF&G may be able to present convincing arguments for
the application of different states' laws, relative to different
issues in this lawsuit.




                               -8-
circumstances, USF&G was entitled to summary judgment because "[i]t

is clear that if General Petroleum had read the policy it would

have seen that Oxy was not listed as an insured."   It further held

that, under Texas law, an insurance agent cannot waive, change, or

alter the terms of an insurance policy, and, therefore, LD's claim

collapsed because it could not win its argument for contract

reformation to include Oxy as an insured.

     We decline to decide the choice-of-law question in the course

of our ruling on this appeal.        In McClelland Eng'rs, Inc. v.

Munusamy, 784 F.2d 1313, 1319 (5th Cir. 1986), overruled on other

grounds by In re Air Crash Disaster Near New Orleans, Louisiana,

821 F.2d 1147, 1163-64 n.25 (5th Cir. 1987), vacated by 109 S.Ct.

1928 (1989), we stated that, "We have found no case where a court

of appeals rendered an initial determination on a choice-of-law

question; we decline the invitation to be first to do so because we

are confident that the district court is perfectly capable of

determining the choice of law . . . ."     We therefore will remand

this case to the district court for resolution of the choice-of-law

question, and for further proceedings in accordance with that

resolution.

     Inasmuch as the district court's ruling depended on what we

find to be an erroneous interpretation of New Mexico law, however,

we now turn to address the district court's assumption that GP's




                               -9-
failure to read the policy was necessarily fatal to its claim for

reformation.

                                       B

     The district court determined that, under New Mexico law, it

should grant USF&G's motion "because General Petroleum did not read

the policy and detect the mistake there and because Leavell's

actions    cannot    bind   USF&G."        LD   argues,   however,   that   the

antecedent question of whether GP reasonably could have relied upon

the representations of USF&G's agent, LD, so as to excuse GP's

alleged failure to read the policy, should have been answered

before the court addressed whether it was "reasonable under the

circumstances" for GP to read the policy.              LD argues that, under

New Mexico law, the representations made to GP were such that GP

was not required to read the policy at all.

     Under New Mexico law, an insurance agent is deemed to be the

agent of the insurer in any dispute between the insurer and the

insured.    Jackson Nat'l Life Ins. Co. v. Receconi, 827 P.2d 118,

128 (N.M.    1992)    (citing   NMSA   1978,     §   59A-18-24   (Repl.   Pamp.

1988)).2   Despite insurance policy provisions to the contrary, an

    2
     The applicable New Mexico statute provides in pertinent part:

     Any licensed agent appointed as agent by an insurer
     shall, in any controversy between the insured or his
     beneficiary and the insurer, be held to be the agent of
     the insurer which issued the insurance solicited or
     applied for, anything in the application or policy to the




                                      -10-
insurance agent's knowledge and negligence is imputed to the

insurer, and an agent can waive policy provisions on behalf of the

insurer.   See Receconi, 827 P.2d at 127-29.

     USF&G, however, would short-circuit the inquiry concerning

representations of the alleged agent.    It would advance instead

directly to the sequential principle that an insured who had the

opportunity to examine his policy is bound by the terms of the

policy in the absence of a showing of fraud.      See Western Farm

Bureau Mut. Ins. Co. v. Barela, 441 P.2d 47, 49 (N.M. 1968); Porter

v. Butte Farmers Mut. Ins. Co., 360 P.2d 372, 375 (N.M. 1961);

Gendron v. Calvert Fire Ins. Co., 143 P.2d 462, 466 (N.M. 1943).

Although these cases do indeed stand for the urged principle, the

New Mexico Supreme Court in a later case, Pribble v. Aetna Life

Insurance Co., 501 P.2d 255 (N.M. 1972), stated that, "where the

insured was entitled to and did rely upon the representations of an

agent as to coverage, the insured can assume that the policy

conforms to the representations and he is not barred from an action

against the agent for negligence (or presumably against the agent's

principal, the insurer) because he failed to read it at all."

Pribble, 501 P.2d at 260 (emphasis added).




     contrary notwithstanding . . . .

NMSA 1978, § 59A-18-24 (Repl. Pamp. 1988).




                               -11-
       USF&G argues that Pribble merely altered the "absolute rule"

long   established     in   New   Mexico   that   an   insured   who   had     the

opportunity to examine his policy was bound by the terms of the

policy in the absence of a showing of fraud.                We have studied

Pribble closely, however, and are convinced that the "alteration"

made by Pribble is consequential enough to require the district

court here to reconsider its opinion, should it choose to apply New

Mexico law.     The New Mexico Supreme Court emphasized that "the

insured   is   bound   only   to   make    such   examination    as    would    be

reasonable for the average person under the circumstances."                    Id.

The court concluded that it was

       not prepared to say that the exception to the rule is
       restricted to situations where the policy was not read
       due to trick or fraud. For we think a situation could
       arise in which as a reasonable consequence of statements
       innocently but mistakenly made by one in authority, the
       insured failed to examine the documents.

Id. Based on these holdings, the New Mexico Supreme Court reversed

a lower court's grant of a summary judgment.              We should observe

that Pribble is a case that is in the same procedural posture, and

is based on nearly identical legal arguments, that are urged on us

in the case today.

       As we read Pribble, the district court could not have found on

the record before it that GP's failure to read the policy was

"unreasonable as a matter of law."          Under New Mexico law, factual

issues remained concerning whether it was reasonable for GP to rely




                                     -12-
on LD's representations that Oxy had been added as a covered

insured (so as to excuse GP's failure to read the policy), when LD

has adduced some evidence that: USF&G's agent had confirmed to GP,

both orally and in writing (through the certificate of insurance)

that the policy was issued in conformance with GP's request to have

Oxy added; and GP had an ongoing relationship with USF&G and LD,

during which USF&G had provided coverage for Oxy based on the same

or similar requests for coverage for four years prior to the

failure to add Oxy.   Because we believe that, under New Mexico law,

those issues of fact are material concerning what examination of

the policy by GP was "reasonable," we find that summary judgment in

favor of USF&G under New Mexico law was not appropriate.3

      3
       Pribble has been cited with approval in a subsequent New
Mexico case, Stock v. ADCO General Corp., 632 P.2d 1182 (N.M. App.
1981), cert. denied, ADCO General Corp. v. Stock, 632 P.2d 1181
(N.M. 1981). In Stock, the insured sued his insurance agent,
broker, and truck-trailer liability insurer for denying his claim
for collision loss. The insured, who owned a fleet of tractor-
trailer units, admitted that he had received--but never read--his
policy, but argued that the liability coverage of the policy was
not what was quoted to him, nor what he reasonably expected.
Citing Pribble, the Court of Appeals held that

          Stock, like the plaintiff in Pribble, did not
     reasonably expect the insurance policy to contain a named
     driver provision. He thought he would receive a physical
damage insurance contract like those he had received previously
from other agents and other companies. He was not advised by [the
agent that the policy] was different from policies he had received
in the past. He was not bound to read the policy word for word .
. . .

          The trial court could properly refuse to adopt




                                -13-
                                      III

      USF&G raises a number of other grounds for affirmance of the

district court's grant of summary judgment.           Although    we recognize

that we may affirm a district court's ruling on summary judgment

based on any legally sufficient ground, even one not relied upon by

the district court, BMG Music v. Martinez, 74 F.3d 87, 89 (5th Cir.

1996), this discretionary tool does not require that we consider

alternative grounds for affirmance, and we decline to do so here.

We instead AFFIRM the district court's denial of the plaintiff's

contract reformation motion, REVERSE the grant of summary judgment

for   USF&G,   and    REMAND   the   case   for   further   proceedings    not

inconsistent with this opinion.

      The initial task of the district court upon remand will be to

make choice-of-law determinations relative to the different claims

of the parties in their motions for summary judgment.            We recognize

that, if the district court decides that Texas law is appropriate

for the resolution of either the merits, or of the procedural

questions presented by the parties, much of the discussion in this

opinion   will   be   irrelevant     to   the   district    court's   ultimate

resolution of this case.



      requested findings that Stock's failure to read the
      policy constituted contributory negligence.

Stock, 632 P.2d at 1184-85.




                                     -14-
AFFIRMED in part, REVERSED in part, and REMANDED.




              -15-
