           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT United States Court of Appeals
                                                   Fifth Circuit

                                                                            FILED
                                                                           May 22, 2008

                                       No. 06-51294                   Charles R. Fulbruge III
                                                                              Clerk

GULF UNDERWRITERS INSURANCE COMPANY,

                                                  Plaintiff-Appellant,
v.

GREAT WEST CASUALTY COMPANY,

                                                  Defendant-Appellee,
v.

HAMMERBLOW CORPORATION,

                                                  Defendant-Appellant,


                   Appeal from the United States District Court
                        for the Western District of Texas
                              USDC No. 04-CV-432


Before KING, STEWART, and PRADO, Circuit Judges.
PER CURIAM:*
       This is a declaratory judgment case addressing coverage under an
automobile policy issued by Great West Casualty Co. (“Great West”) with
respect to an underlying state court tort suit brought by Arturo Garcia against
Hammerblow Corporation (“Hammerblow”). Gulf Underwriters Insurance Co.


       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
                                  No. 06-51294

(“Gulf”), Hammerblow’s excess insurer, sought a declaration that the Great West
policy afforded coverage to Hammerblow for the claims within the tort suit. The
district court, relying on a mechanical device exclusion contained in the Great
West policy, granted summary judgment to Great West. Because we conclude
that the district court erred in upholding the exclusion, and therefore in granting
summary judgment to Great West, we vacate the judgment entered below and
remand for further proceedings.
                                        I.
      Hammerblow is a manufacturer and distributor of trailer jacks and
couplers, headquartered in Wisconsin. Roehl Transport, Inc. (“Roehl”) is a
transport company that is based in Wisconsin, but also does business in Texas.
In 1994, Hammerblow and Roehl reached an agreement authorizing
Hammerblow to use Roehl’s trailers.           Under this arrangement, Roehl
transported raw materials from Wisconsin to Hammerblow’s El Paso facility.
Roehl would then drop the loaded trailer in El Paso and hookup to a trailer with
finished goods, which it would transport to other cities on its way back to
Wisconsin. After Roehl dropped off the loaded trailer of raw materials in El
Paso, Hammerblow would move the Roehl trailers to Hammerblow’s Juarez,
Mexico facility and then back to El Paso. It is undisputed that, under the
agreement between the parties, Hammerblow had permission to load and unload
the Roehl trailers with loads that would be transported by Roehl. However, the
parties dispute whether the agreement permitted Hammerblow to load and
unload the trailer with other materials, that would not be transported by Roehl,
for its own purpose and use.
      On December 11, 2002, Arturo Garcia, an independent Mexican truck
driver, was injured at the El Paso Hammerblow facility when steel pipes fell

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                                       No. 06-51294

onto him from the bed of a trailer owned Roehl. Prior to Garcia’s arrival at the
yard, Javier Rodriguez was utilizing a forklift to load the bundles of round steel
tubes onto the flat-bed trailer. Roehl had not been contracted to haul the steel
tubes that Rodriguez was loading on to the Roehl trailer. Rodriguez had not yet
completed loading the trailer when Garcia arrived to pick up the load and was
injured by the falling pipes. At the time of Garcia’s injury, Rodriguez was not
operating the forklift, but was walking back to the forklift to complete the
loading of the pipes. After the pipes fell, Rodriguez used the forklift to move the
pipes off Garcia.
       Hammerblow had several insurance policies in place at the time of the
accident.    It had a primary commercial general liability policy issued by
Northfield Insurance Company (“Northfield”) and a primary auto policy issued
by Royal Insurance Company (“Royal”).1 Hammerblow also had a commercial
excess liability policy issued by Gulf. This policy limited Gulf’s indemnity
obligation to “ultimate net loss” in excess of the amount of insurance provided
by policies of “underlying insurance,” and expressly provided that the policy was
“excess over any other valid and collectible insurance whether such other
insurance stated to be primary, contributing, excess, contingent or otherwise.”
       At the time of the accident, Roehl was covered by a commercial auto policy
issued by Great West. The Great West policy was issued in Wisconsin to Roehl,
a Wisconsin insured. Hammerblow is not named insured under this policy. The
Great West policy provided primary liability coverage to anyone who permissibly




       1
         Royal is not a party to this declaratory judgment action and paid its $1 million policy
limits in the settlement of the Garcia tort suit.

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                                         No. 06-51294

used a covered auto owned by Roehl.                   The policy contains the following
mechanical device exclusion:
             B.    EXCLUSIONS
             This insurance does not apply to any of the following:
             ....
             8.    MOVEMENT                OF     PROPERTY BY
                   MECHANICAL DEVICE
                   “Bodily injury” . . . resulting from the movement
             of property by a mechanical device (other than a hand
             truck) unless the device is attached to the covered
             “auto” . . .
The policy states that: “‘Auto’ means a land motor vehicle, ‘trailer’ or semitrailer
designed for travel on public roads but does not include ‘mobile equipment.’” The
Great West policy issued to Roehl contains an endorsement stating that “[a]ny
provision of this Coverage Part that is in conflict with a Wisconsin statute or
rule is hereby amended to conform to that statute or rule.”
       On February 10, 2003, Garcia and his family filed a tort suit against
Hammerblow and others in state court in El Paso.2 After Garcia filed suit,
Hammerblow tendered the claim to several insurers, including Gulf and Great
West, for defense and coverage. Initially, Great West denied Hammerblow’s
request for coverage and defense, but subsequently, pursuant to a reservation
of rights, Great West agreed to defend Hammerblow in the underlying tort suit
in conjunction with Royal.
       Gulf then filed this declaratory judgment action seeking a declaration that
Hammerblow qualifies as an additional insured under the Great West policy;
that the Gulf Policy is the “excess policy;” and that the Great West policy is an


       2
         The state tort suit settled shortly after the district court entered its final judgment in
this declaratory judgment action. The settlement was funded by Royal and Gulf; Great West
did not contribute.

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                                 No. 06-51294

“underlying insurance” policy affording coverage to Hammerblow. At Great
West’s request, Hammerblow was added to the suit as a defendant.
Hammerblow then filed a cross-claim against Great West seeking a declaration
that Great West has a duty to defend and indemnify Hammerblow in the
underlying lawsuit.
      Gulf and Great West filed cross-motions for summary judgment. The
district court granted the motion of Great West on the basis that the mechanical
device exclusion in the Great West policy is valid under Wisconsin law and
precludes the damages sought. The court then denied all other pending motions
as moot, including Gulf’s motion for summary judgment. Gulf subsequently
sought reconsideration and leave to file a second amended complaint, but the
district court denied both requests. Hammerblow and Gulf filed a timely notice
of appeal from the district court’s grant of Great West’s motion for summary
judgment and denial of Gulf’s motions.
                                       II.
      This court reviews de novo a district court’s grant of summary judgment,
applying the same legal standards as the district court. Allstate Ins. Co. v.
Disability Servs. of the Sw. Inc., 400 F.3d 260, 262-63 (5th Cir. 2005). Under
Federal Rule of Civil Procedure 56, summary judgment is appropriate when the
record discloses that there is no genuine issue of material fact and that the
movant is entitled to judgment as a matter of law. FED R. CIV. P. 56(c); Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986). In addition, we review de novo a
district court’s determination of a state law question. Folks v. Kirby Forest
Indus., Inc., 10 F.3d 1173, 1182 (5th Cir. 1994).




                                       5
                                       No. 06-51294

       Coverage under an insurance policy is generally a question of law,
Kremers-Urban Co. v. Am. Employers Ins. Co., 351 N.W.2d 156, 163 (Wis. 1984),
although occasionally insurance coverage is the subject of factual disputes that
make summary judgment inappropriate. See, e.g., Atl. Mut. Ins. Cos. v. Lotz, 384
F. Supp. 2d 1292 (E.D. Wis. 2005).
                                              III.
       It is undisputed that the Great West policy contains a clear and
unambiguous mechanical device exclusion. However, on appeal, Gulf contends
that the mechanical device exclusion contained in the Great West policy is
invalid under Wisconsin law3 because Wisconsin law mandates that coverage
under an automobile policy extend to a third party who is unloading or loading
an insured vehicle. Therefore, Gulf argues, the mechanical device exclusion is
unenforceable, and the district court’s grant of summary judgment to Great West
was in error.
       Under Wisconsin law, when an exclusion in an insurance policy is in
reference to some risk of coverage not required by statute, such exclusion is
valid. See Schneider v. Depies, 62 N.W.2d 431, 434 (Wis. 1954). Conversely,
Wisconsin courts have invalidated exclusions contrary to the provisions of the
Wisconsin insurance statutes or public policy. See, e.g., Rocker v. USAA Cas.
Ins. Co., 711 N.W.2d 634, 645 (Wis. 2006). Finally, “[c]overages omitted from an
insurance contract may nevertheless be compelled and enforced as though a part
thereof where the inclusion of such coverage is required by a properly enacted


       3
          The parties agree that, under Texas choice of law rules, Wisconsin law governs the
issue of coverage under the Great West policy. See, e.g., St. Paul Mercury Ins. Co. v. Lexington
Ins. Co., 78 F. 3d 202 (5th Cir. 1996).


                                               6
                                  No. 06-51294

statute.” Id. at 646 (quoting Progressive N. Ins. Co. v. Romanshek, 697 N.W.2d
417 (Wis. 2005)).
      Wisconsin Statute § 194.41(1) requires, in part, that a motor carrier be
covered by an insurance policy providing:
            that the insurer shall be directly liable for and shall pay
            all damages for injuries to or for the death of persons or
            for injuries to or destruction of property that may be
            recovered against the owner or operator of any such
            motor vehicles by reason of the negligent operation
            thereof in such amount as the department may require.
WIS. STAT. § 194.41 (2006). The statute does not define “operation,” but in
Mullenberg v. Kilgust Mech., Inc., 612 N.W.2d 327 (Wis. 2000), the Wisconsin
Supreme Court examined “[w]hether Wis. Stat. § 194.41 because of its use of the
term ‘negligent operation’ requires insurers to cover the loading activities of
third-parties.” Id. at 328. The court answered in the affirmative, stating that
the words “operation” and “operator” in § 194.41 “must be read in the context in
which they are used in order to promote the legislature’s objective in enacting
the statute.” Id. Further, under Wisconsin Statute § 194.02, the words must be
given “‘the most liberal construction to achieve the aim of a safe, competitive
transportation industry.’” Id. (citing WISC. STAT. § 194.02). Applying this
principle, the court concluded that “the word ‘operation’ is not to be restricted to
only a moving vehicle” and held that “‘negligent operation’ encompasses loading
and unloading” and that “‘operator’ includes a third party permissively
unloading the vehicle.” Id. at 330-331.
      Under Mullenberg, it is clear that § 194.41 mandates that Great West
provide coverage for injuries occurring during the loading and unloading of a
vehicle by a permissive user. 612 N.W.2d at 328; see also Lukaszewicz v.


                                         7
                                       No. 06-51294

Concrete Research, Inc., 168 N.W.2d 581, 586 (Wis. 1969) (interpreting “operate”
to include the loading and unloading of a vehicle); Bauer v. Century Sur. Co.,
718 N.W.2d 163, 165 (Wis. Ct. App. 2006) (“It is undisputed that if Johnston was
loading or unloading the flatbed truck when the power line incident occurred,
Great West must provide insurance coverage to Johnston under the policy.”
(citing Mullenberg, 612 N.W.2d at 327)).4 Therefore, to the extent that the
mechanical device exclusion omits coverage for loading and unloading, the
exclusion is void under Wisconsin law, and Great West is obligated to provide
such coverage under the policy.
       Great West attempts to distinguish Mullenberg on the basis that it did not
expressly consider the issue of whether § 194.41 requires coverage for loading
and unloading conducted using motorized equipment not attached to the covered
vehicle and not insured by the insurer. Great West further contends that the
mechanical device exclusion at issue here is “widely used in insurance policies”
and “routinely upheld.” It argues that adopting Gulf’s construction of the statute
would require Great West to provide coverage for a separate risk, the mechanical
device, which Great West has not elected to insure and for which it has not
received a premium. In support, Great West points us to a number of cases from
other jurisdictions upholding similar exclusions, including Travelers Indemnity


       4
         Great West attempts to distinguish Mullenberg on the grounds that its holding rested
on whether the exclusion applied equally to all insureds under Wis. Stat. § 632.32. This
argument is meritless. Because the court reached its holding based on the language of §
194.41, the Mullenberg court explicitly declined to consider whether § 632.32 would invalidate
the exclusion at hand. See Mullenberg, 612 N.W.2d at 329 n.4. Rather, the court clearly held
that: “We conclude that the word ‘operation’ in Wis. Stat. § 194.41(1) includes loading and
unloading and an individual permissively unloading the vehicle is covered by the motor
carrier’s policy.” Id. at 328-29.


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                                  No. 06-51294

Co. v. General Star Indemnity Co., 157 F. Supp. 2d 1273 (S.D. Ala. 2001); Excel
Logistics, Inc. v. Maryland Casualty Co., No. CV-93-0046415-S, 1995 Conn.
Super. LEXIS 373 (Conn. Super. Ct. Feb. 1, 1995); and Hanover Insurance Co.
v. Canal Insurance Co., No. 05-1591(SDW), 2007 U.S. Dist. LEXIS 39635 (D.N.J.
April 3, 2007). However, as the Wisconsin Supreme Court has noted: “Cases
from outside of this state are of little help in deciding a construction of our
statute.” Lukaszewicz, 168 N.W.2d at 586.
      As a federal court sitting in diversity, in the absence of a final decision by
the state’s highest court on the issue at hand, it is our duty to determine, in our
best judgment, how the highest court of the state would resolve the issue if
presented with the same case. Transcon. Gas Pipe Line Corp. v. Transp. Ins.
Co., 953 F.2d 985, 988 (5th Cir. 1992). In Mullenberg, the Wisconsin Supreme
Court stated that:
            A motor carrier by definition undertakes to transport
            passengers and property. Wis. Stat. § 194.01(1).
            Inherent in this task is that the carrier will be loaded
            and unloaded.      Loading and unloading involves
            repeated, frequent contact with the motor carrier.
            Within this framework and considering the subject
            matter of Wis. Stat. ch. 194, as well as the legislature
            directive to construe ch. 194 liberally to protect the
            shipping public as well as the traveling public, we
            conclude that “negligent operation” encompasses
            loading and unloading.
612 N.W.2d at 330-31. In light of these broad policy concerns, we conclude that
the Wisconsin Supreme Court would interpret the word “operation” in § 194.41
to encompass all loading and unloading, including that done by use of a
mechanical device.    See Bauer, 718 N.W.2d at 165 (holding that § 194.41
mandated that the insurer provide coverage for an injury occurring during

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                                  No. 06-51294

unloading of the covered vehicle and involving the use of a mechanical device).
Our conclusion furthers Wisconsin’s goal of interpreting § 194 “liberally” to
“protect the shipping public as well as the traveling public.” See Mullenberg, 612
N.W.2d at 331.      Although Great West advances some persuasive policy
arguments in support of its position, it has not pointed us to any caselaw
indicating that Wisconsin would adopt these arguments and exclude loading and
unloading by way of mechanical devices from the scope of § 194.41.
      Therefore, because we conclude that the word “operation” in § 194.41
includes loading and unloading through the use of a mechanical device, an injury
occurring during the permissive unloading of the vehicle must be covered by the
motor carrier’s policy, even if such loading or unloading is accomplished through
the use of a mechanical device. To the extent that the Great West policy
excludes such coverage, the exclusion is invalidated and coverage is compelled
as though a part of the policy. Rocker, 711 N.W.2d at 646. Therefore, the
application of the mechanical device exclusion contained in the Great West
policy can not support a grant of summary judgment in its favor.
                                       IV.
      This is not, however, the end of our inquiry. As the Wisconsin Supreme
Court has held, coverage under § 194 is only mandated if the individual was
permissively loading or unloading the vehicle. See Mullenberg, 612 N.W.2d at
330-31 (defining the word “operator” in § 194.41 to include “a third party
permissively unloading the vehicle”). Therefore, Great West is only required to
provide coverage for Garcia’s injury if Hammerblow’s loading of the pipes onto
the trailer was a permissive use. The burden of proving requisite permission
rests with the party seeking to establish coverage. Derusha v. Iowa Nat’l Mut.


                                       10
                                       No. 06-51294

Ins. Co., 181 N.W.2d 481, 482 (Wis. 1970). Each party argues that the evidence
regarding permissive use entitles it to summary judgment.
       The district court’s opinion evidences some confusion over the proper
allocation of the burdens of proof with regard to summary judgment on this
issue. “[T]he party moving for summary judgment must demonstrate the
absence of a genuine issue of material fact, but need not negate the elements of
the nonmovant’s case.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.
1994). If the moving party meets the initial burden of showing that there is no
genuine issue, the burden shifts to the nonmovant to set forth specific facts
showing the existence of a genuine issue for trial. FED. R. CIV. P. 56(e). The
nonmovant cannot satisfy his summary judgment burden with conclusional
allegations, unsubstantiated assertions, or only a scintilla of evidence. Little, 37
F.3d at 1075.
       Applying this framework to the case at hand, with regard to Great West’s
motion for summary judgment, Great West was required to “demonstrate the
absence of genuine issue of material fact” that Hammerblow did not have
permission to load the trailer. Id. If Great West did so, the burden would then
shift to Gulf to “go beyond the pleadings and designate specific facts showing
that there is a genuine issue for trial” regarding whether Hammerblow had
permission.5 Id. If Gulf failed to meet this burden, Great West’s motion would
be granted. Conversely, to succeed on its motion for summary judgment, Gulf



       5
         It is at this point that the district court erred. Rather than permit a showing of a
dispute of material fact over the issue of permission to defeat Great West’s motion for summary
judgment, the district court appears to have required Gulf to show that Hammerblow had
permission as a matter of law. This was incorrect, as a showing that the issue of permission
was squarely in dispute would be sufficient to defeat Great West’s motion.

                                              11
                                  No. 06-51294

was required to demonstrate an “absence of a genuine issue of material fact” that
Hammerblow had permission to load the trailer.          Therefore, if a genuine
question of fact exists as to whether Hammerblow had permission to load and
unload the trailer with the pipes, it would not be appropriate to grant either
parties’ motion for summary judgment.
      Gulf argues that it is entitled to summary judgment because the
undisputed evidence demonstrates that, as a matter of law, Hammerblow was
permitted to load and unload the trailers for its own purposes. Great West
argues that § 194.41 does not mandate coverage for Hammerblow because the
evidence shows that, as a matter of law, Hammerblow was not a permissive user
at the time of the accident. Our review indicates that the following evidence
was submitted by the parties on the issue of permission: April 4, 1994 letter
written by Michael Gross, a sales representative of Roehl; affidavit signed by
Gross; deposition excerpts of Gross; the deposition testimony of Tom Liebl, a
former Hammerblow employee responsible for scheduling the delivery of raw
materials from Wisconsin to the El Paso plant; and the affidavit of Ted Christie,
the general manager of the Hammerblow El Paso plant at the time of the
incident.
      A review of this evidence indicates that the issue of permission is squarely
in dispute. Both parties produced testimony supporting their view of the
permission issue. Great West produced an affidavit from Gross that “under the
agreement, the trailer was not supposed to be used for any loads that Roehl itself
was not going to pick up and was not to be used at Hammerblow’s will and
convenience.” The affidavit also states that Rodriguez’s loading of the pipes onto
the trailer was outside of the agreement with Roehl. His affidavit also indicates
his belief that Hammerblow was never permitted, in the history of the

                                       12
                                  No. 06-51294

agreement, to use the trailers for its own purposes. In his deposition testimony,
Gross discusses the unloading and loading permitted under the arrangement.
He stated that with respect to the trailers surrendered to Roehl, “he expected it
to be unloaded in Mexico and reloaded in Mexico with freight that Roehl was
going to haul.” However, as Gulf points out, Gross’s testimony is directly
contradicted by that of       Liebl and Christie.     Liebl testified that his
understanding of the agreement was that “whatever trucking outfit there was
that [sic] going down there that they’d have to allow their trailer to be
transported across the border and unloaded and reloaded if needed.” In his
affidavit Christie states that the business arrangement “included Roehl’s
agreement to keep a Roehl trailer at the Hammerblow facility in El Paso/Juarez
so that it would be unloaded and loaded by Hammerblow at Hammerblow’s
convenience. He concluded that “[u]nder the business arrangement in place
prior to and during December 2002, Hammerblow was permitted by Roehl to
load and unload Roehl trailers with material at the Hammerblow facility in El
Paso.”
      Given the conflicting testimony, neither party is entitled to summary
judgment because there is a genuine issue for trial regarding permission. At
summary judgment, “[t]he inquiry performed is the threshold inquiry of
determining whether there is the need for a trial – whether, in other words,
there are any genuine factual issues that properly can be resolved only by a
finder of fact because they may reasonably be resolved in favor of either party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). Here, each party
provided evidence sufficient to support a jury verdict in its favor regarding
permission. Resolution of this issue comes down to a credibility determination,
which is a genuine issue for trial.

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                                No. 06-51294

                                      V.
      For the reasons stated above, we VACATE the district court’s grant of
summary judgment in favor of Great West and its dismissal of Gulf’s motions for
summary judgment and for leave to file a second amended complaint and
REMAND this case to the district court for further proceedings not inconsistent
with this opinion.




                                      14
