Technical Automation Services Corp. v. Liberty Surplus Insurance Corp.

Summarized by John Jones , J. R. Jones Law PLLC
13 years 12 months ago

Citation:

Case No. 10-20640 (5th Cir. March 5, 2012)

Tag(s):

Ruling:

The Fifth Circuit declined to extend Stern v. Marshall's limitation on bankruptcy court jurisdiction to magistrate judges and held magistrate judge had authority under Federal Magistrates Act to try and enter judgment in the state law counterclaim. As to merits, reversed and remanded the granting of summary judgment by magistrate because he did not resolve issue of whether mutual mistake existed as to insurance policy and whether policy should be reformed to expunge disputed provision.

Procedural context:

Parties agreed and consented to trial by federal magstrate under 28 U.S.C 636(c). Magistrate granted summary judgment for insured. Insurance Company appealed. The Fifth Circuit, sua sponte, raised jurisdictional question under 28 U.S.C. 157(b) on whether Stern v. Marchall's limitation on jursidction of bankrupty courts should be applied to magistrate judge that had entered judgment on state law counterclaim. The two questions before the Fifth Circuit were whether Article III of the constiution permits a federal magistrate judge, with the consent of the parties, to enter a final judgment on a party's state law counterclaim and second, whether magistrate erred in granting summary judgment before considering the issue of mutual mistale and reformation raised by insurance company.

Facts:

In late 2003, Technical Automation sought to renew coverage with Liberty Surplus for another year. Liberty provided a renewal quote and an insurance binder. Liberty issued a commercial general policy and the schedule of forms showed endorsement nineteem as an exclusion-professional liabilty. In the actual policy document, endorsement nineteen was not an exclusion but a miscellaneous errors and omissions indorsement. A claim was made on the policy and denied and a lawsuit filed in state court. The case was removed to federal court. Technical moved for summary judgment based on the actual endorsement nineteen and Liberty countered and filed its own summary judgment on the basis that there was mutual mistake and asked for reformation. The parties consented to a Unted States Magistrate to handle all proceedings. The magistrate applied the eight corners rule of contract interpretation, refused to consider extrinsic evidence outside the complaint and the policy and denied Liberty's motion for summary judgment but granted Technical Automation's summary judgment.

Judge(s):

King, Jolly and Wiener, Circuit Judges

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