T.G.S. Transportation, Inc. v. Canal Insurance

MEMORANDUM *

T.G.S. Transportation, Inc. (“T.G.S.”) appeals an award of summary judgment to Canal Insurance Co., (“Canal”) on bad faith and punitive damages claims stemming from Canal’s refusal to pay a claim for stolen cargo. We previously held that Canal’s interpretation of its policy was incorrect and remanded for further proceedings. T.G.S. Transp., Inc., v. Canal Ins. Co., 78 Fed.Appx. 637 (9th Cir.2003). The district court then granted summary judgment on the bad faith and punitive damages in favor of Canal, finding that a “genuine dispute” had existed over whether the policy covered uninsured trailers attached to insured tractors by thieves; and that Canal had reasonably relied on advice of counsel in making its coverage decision. We now hold that Canal’s denial of coverage, though erroneous, was not unreasonable. We therefore affirm the judgment of the district court.

The policy insured the theft of cargo from any “scheduled vehicle” that was de *709 fined, in relevant part, as any trailer attached to a scheduled tractor. It is undisputed that a thief, and not T.G.S., attached the trailer from which the cargo was stolen to the scheduled tractor. It was not unreasonable…