Opposition Brief — Howell v. United States Fire Insurance

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No. 88-482 ~~ QcT_17 1988

JOSEPH &. SPANIOL, JR,

CLERK

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In THE

Supreme Court of the United States

OcTOBER TERM, 1988

ROBERT E. HOWELL, BETtry

CHAVEZ AND ERNEST SCHUMACHER,

AS ADMINISTRATOR OF THE ESTATE OF RODNEY L. HowELL,

Dr. AND Mrs. J. CRAYTON -

PRUITT, INDIVIDUALLY AND AS

ADMINISTRATOR OF THE EsTATE OF MARK H. Prultrt,

Corina K. YIN, INDIVIDUALLY AND

AS ADMINISTRATRIX OF THE ESTATE OF Paut C. Yin,

CHARLES BOLAND, INDIVIDUALLY AND

AS ADMINISTRATOR OF THE ESTATE OF

ANN RENEE BOLAND AND CYNTHIA BOLAND,

Petitioners,

v.

UNITED STATES FIRE INSURANCE COMPANY,

Respondent.

On PetiTion For Writ Or CERTIORARI To

THE GEORGIA COURT OF APPEALS

BRIEF OF RESPONDENT UNITED STATES FIRE INSURANCE

COMPANY IN OPPOSITION TO PETITION FOR WRIT OF CERTIORARI

SEWELL K. Loaains, Esq.

Mozley, Finlayson & Loggins

1800 Coastal States Building

260 Peachtree Street, NW

Atlanta, Georgia 30303

(404) 522-2010

Attorney for Respondent

UNITED STATES FIRE

INSURANCE COMPANY

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TABLE OF CONTENTS

REASONS WHY THE PETITION

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THE DECISION BELOW DOES NOT

CONFLICT WITH ANY OTHER STATE

OR FEDERAL DECISIONS AND UNDER

SUPREME COURT RULE 17 THERE ARE

NO SPECIAL OR IMPORTANT REASONS

FOR GRANTING REVIEW..............

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11

ii

TABLE OF AUTHORITIES

CASES

Bonner v. United States Fire Insurance Co.,

494 s.2d 1311 (La.App. 1986).............

Braniff Airways, 40 C.A.B. 887 (1964) ........

Coren v. Puritan Insurance Co.,

184 Ga. App. 667, 362 S.E.2d 380 (1987) ...

Dower v. United Airlines, Inc, —

329 F.2d 684 (9th Cir. 1964)..............

Forum Insurance Co. v. Seitz Aviation, Inc,

241 Kan. 334, 737 P.2d 29 (1987) .........

Howell v. United States Fire Insurance Co.,

185 Ga. App. 154, 363 S.E.2d 560 (1987),

cert. withdrawn, 258 Ga. 338,

S.E.2d (. Pepper ie ee a

STATUTES AND FEDERAL REGULATIONS

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No. 88-482

IN THE

Supreme Court of the United States

OCTOBER TERM, 1988

RoBERT E. HOWELL, BETTY

CHAVEZ AND ERNEST SCHUMACHER,

AS ADMINISTRATOR OF THE ESTATE OF RODNEY L. HOWELL,

Dr. AND Mrs. J. CRAYTON

PRUITT, INDIVIDUALLY AND AS

ADMINISTRATOR OF THE ESTATE OF MARK H. PRUuITT,

CorRINA K. YIN, INDIVIDUALLY AND

AS ADMINISTRATRIX OF THE ESTATE OF PAUL C. YIN,

CHARLES BOLAND, INDIVIDUALLY AND

AS ADMINISTRATOR OF THE ESTATE OF

ANN RENEE BOLAND AND CYNTHIA BOLAND,

Petitioners,

U.

UNITED STATES FIRE INSURANCE COMPANY,

Respondent.

ON PETITION For Writ OF CERTIORARI TO

THE GEORGIA COURT OF APPEALS

BRIEF OF RESPONDENT UNITED STATES FIRE INSURANCE

COMPANY IN OPPOSITION TO PETITION FOR WRIT OF CERTIORARI

INTRODUCTION

Respondent United States Fire Insurance Company (“‘U.S.

Fire’) respectfully submits this Brief in opposition to the Petition

for Writ of Certiorari and for the reasons stated herein urges this

' U.S. Fire is a wholly owned subsidiary of Crum & Forster, Inc., which is a wholly

owned subsidiary of Xerox Corporation.

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Honorable Court to deny the Petition.

STATEMENT OF THE CASE

Petitioners have not supplied the Court with a full and correct

statement of the case. U.S. Fire is therefore setting forth below

its own statement of the case.

This litigation arises from the September 29, 1985 crash of

a Cessna Caravan aircraft piloted by Steven Herbert Wilson

(‘Wilson’). [Second Supplemental Record, affidavit of Patricia

Valley Ratermann, page 17, lines 21-23; R.402]. Respondent U.S.

Fire had issued a policy of aircraft insurance to Air Carrier

Express Services, Inc. covering the Cessna Caravan for certain

specified risks, a copy of which policy is contained in the Record

at pages 72-91. Following investigation, Respondent instituted

this declaratory judgment action contending there was no

coverage for the accident on the separate and independent

grounds of fraudulent misrepresentations by the insured in

applying for the insurance; submission of a fraudulent claim by

the insured for an incident prior to the accident in question;

fraudulent representations by the insured that the aircraft was

not being used for parachuting; operation of the aircraft at the

time of the accident by a pilot who did not meet the policy

requirements; invalidity of the aircraft airworthiness certificate

at the time of the accident; and exclusion of coverage for death

of the named insured or a crew member. (R. 13-14.)

Only one of the grounds for lack of coverage was raised in a

Motion for Summary Judgment in the trial court, namely, that

pilot Wilson had not attended a Cessna approved flight and

ground training course for the Cessna Caravan aircraft. (R.95.)

The policy in question required that any pilot operating the

aircraft be “‘a graduate of a ground and flight training school

conducted by the manufacturer of the aircraft’ (R.91) and

excluded coverage when the aircraft was operated by a pilot not

meeting such policy requirements. (R.73.) Because the

undisputed facts demonstrated that the pilot had not attended

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a Cessna approved flight and ground training course for the

Cessna Caravan aircraft, the trial court correctly held that there

was no coverage for any claims arising from the accident. (R.687.)

That judgment was affirmed by the Georgia Court of Appeals.

Howell v. United States Fire Insurance Co., 185 Ga. App. 154, 363

S.E.2d 560 (1987). Although the Georgia Supreme Court initially

granted certiorari to review the Georgia Court of Appeals’

decision, the grant of certiorari was later withdrawn by the

Georgia Supreme Court [(258 Ga. 338, S.E.2d

(1988)], so that the Court of Appeals’ decision became final.

Although Petitioners imply that at the time of the accident

Air Carrier Express Services was operating the aircraft pursuant

to its interstate air taxi registration, it is undisputed that such

was not the case. The undisputed evidence shows that the flight

in question originated at the Jenkinsburg, Georgia airport for

the purpose of dropping parachute jumpers back onto that same

airport. [Second Supplemental Record, Deposition of Patricia

Valley Rattermann, p. 11, 1. 1-17]. It was therefore specifically

exempted from the Air Taxi Regulations. See, 14 C.F.R. §135.1.

The accident occurred during the takeoff from the airport and

the entire intended flight path was totally within the State of

Georgia. It is undisputed that the flight was therefore a totally

intrastate operation.

Further, although a reading of Petitioners’ Brief would

suggest that the passengers on the parachute jump flight were

carried as part of an interstate operation, such conclusion is not

supported in the Record. Although Petitioners make the loose

allegation that one passenger on board came from out of state

with the intention of making the parachute jump, there is no

evidence that he was transported from out of state by Air Carrier

Express Services itself, or as part of an arrangement between Air

Carrier Express Services and some other carrier. The fact is, he

was simply a person from out of state, whose transportation to

the jump site had no involvement with Air Carrier Express

Services. There is absolutely no evidence that Air Carrier Express

Services at any time carried fare-paying passengers in interstate

commerce for parachute jumping. The fact that in the past the

aircraft may have been in different states where it dropped

jumpers on local flights does not subject the accident flight to Air

Taxi Regulations, as suggested by Petitioners. Simply put, the

record does not contain any facts to support Petitioners’ “‘inter-

state activity” claim.

Petitioners also did not disclose how any alleged “federal

question” was supposedly injected into the litigation. As noted

above, there is no coverage under the insurance policy in question

because the pilot of the aircraft on the accident flight did not meet

the policy requirements. That fact is undisputed. To avoid the

consequences of the failure to meet policy requirements,

Petitioners attempted to create a coverage issue based on the

Economic Regulations contained in 14 C.F.R. §298.1. Petitioners

have attempted to argue that the insurance policy itself was

required to be submitted to the Department of Transportation

and that no changes could be made in it without notice to the

Department of Transportation. Alternatively, Petitioners have

tried to argue that the exclusion in question was not permitted

under the Economic Regulations. The Georgia courts found it

unnecessary even to deal with Petitioners’ invalid arguments,

as the Economic Regulations were simply inapplicable to the

purely local flight?

The Georgia courts which have considered this Georgia

2 Even if the Court had reached such arguments, the exclusion is specifically

authorized by the Regulations. 14 C.F.R. §298.44 (h) (2). Further, there was no

requirement that the policy be submitted to the Department of Transportation

at any time. The only information given to the Department is that contained

in CAB Form 257, which is a part of the record. R.395. 14 C.F.R. §298.41(a).

Therefore, even if Petitioners’ invalid arguments regarding applicability of the

Economic Regulations were reached, the outcome would remain the same.

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insurance contract correctly held that the Ecomonic Regulations

contained in 14 C.F.R. §298 were not applicable. Those decisions,

in accord with every decision from federal and state appellate

courts on the question, were clearly correct.

REASONS FOR DENYING THE PETITION

The Decision Below Does Not Conflict With Any

Other State Or Federal Decisions And Under

Supreme Court Rule 17 There Are No Special Or

Important Reasons For Granting Review.

This case meets none of the criteria set forth in Rule 17 of the

Rules of this Honorable Court. The decision of the Georgia Court

of Appeals is directly supported by decisions from other state

courts of last resort and by decisions from the Federal Court of

Appeals. The decision does not conflict with any decisions from

this Court and is completely in accord with applicable federal

aviation statutes and regulations.

As noted above, tle Georgia Court of Appeals held that

because the flight in question was purely an intrastate operation,

the provisions of Part 298 of the Federal Air Regulations were

inapplicable. That ruling is in accord with the decision of every

appellate court that has considered the question and is directly

mandated by the express terms of the regulations and the statute

upon which they are based.

The Economic Regulations contained in 14 C.FR. §298.1 (Part

298) are applicable only to one who is an “air carrier engaging

in ‘air transportation’ as that term is defined under the [Federal

Aviation] Act [of 1958, as amended].” “Air Transportation” is

defined in the Act and in the Regulation itself as “interstate,

overseas, and foreign air transportation.” 49 U.S.C. §1301(10); 14

C.F.R. 298.2(c) emphasis supplied]. Further, interstate, foreign

and overseas air commerce are defined as “carriage by aircraft

of persons or property for compensation or hire. . . incommerce

between respectively — (a) a place in any State of the United

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States or the District of Columbia, and a place in any other State

of the United States or the District of Columbia. . ”’ 49 U.S.C.

§1301(20). The insured, Air Carrier Express Services, Inc., was

not an air carrier engaged in air transportation as defined by the

Act during the flight in which the accident occurred, as the flight

was wholly within the State of Georgia, and the entire intended

flight path was wholly within Georgia. The Economic Regula-

tions clearly were therefore not applicable to the accident flight,

and the Georgia Court of Appeals correctly so held.

Dower v. United Airlines, Inc., 329 F2d 684 (9th Cir. 1964),

is the only applicable federal appellate decision on point. There,

the Ninth Circuit held that the Economic Regulations* do not

apply to intrastate flights. As the Court noted:

“Air transportation is defined in §101(10) of the Act, 49 U.SC.

§1301(10), to mean (as relevant here) ‘interstate air

transportation.’

“Interstate air transportation’ in turn is defined by

§101(21), 49 U.S.C. §1301(21) to mean, in the context of this

case, ‘the carriage by aircraft of persons or property as a

common carrier for compensation or hire. . .in commerce

between (a) a place in any State of the United States or the

District of Columbia, and a place in any other State of the

United States or the District of Columbia; or between places

in the same State of the United States through the airspace

over any place outside thereof. . ’

“The District Court ruled that a flight from San Fran-

cisco to Los Angeles did not fall within this definition. We

agree.” 329 F.2d 685.

The Ninth Circuit thus found that a particular local flight

solely within the State of California by an air carrier, United

> 14 C.F.R. §298 is a subsection of the Economic Regulations.

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Airlines, Inc., which was otherwise generally involved in

interstate air transportation, was not “interstate air transpor-

tation” under the Act and, thus, the Economic Regulations (in

that case, 49 U.S.C. §1371)* did not apply. That is clearly the

situation in the case at bar, as the Georgia Court of Appeals

correctly ruled.

All state appellate courts which have considered the question

are in agreement with the Georgia Court of Appeals on this issue.

As the Georgia Court of Appeals noted, a different division

of the same court had stated that the requirements for insurance

contained in the Economic Regulations were for “protection for

bodily injury and property damage in the event of. . . interstate

travel and to avoid CAB sanctions. . .” Coren v. Puritan Insurance

Co., 184 Ga. App. 667, 669, 362 S.E.2d 380 (1987) (emphasis

supplied). In Coren, the Georgia Court of Appeals held that the

endorsement added to the insurance policy to comply with Civil

Aeronautics Board Regulations was nevertheless applicable to

change the overall policy even though the flight in question was

a local intrastate joy ride. Contrary to Petitioners’ contention,

Coren did not hold that the Regulations themselves were

applicable to the local flight in question there.

In Forum Insurance Co. v. Seitz Aviation, Inc., 241 Kan. 334,

737 P.2d 29(1987), the Kansas Supreme Court held that Part 298

of the Economic Regulations applies only to interstate transpor-

tation and that the particular flight in question must be

examined to determine whether it was interstate or intrastate

in character.

In Bonner v. United States Fire Insurance Ca, 494 §.2d 1311

(La. App. 1986), the contention was made that the CAB Standard

Endorsement, which was part of the policy pursuant to the

* 49 U.S.C.§1371 is the statutory authority upon which all of the Economic

Regulations, including Part 298, are based.

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provisions of Part 298 of the Economic Regulations, created

coverage. The flight in question originated in Louisiana with

Texas as its destination and was therefore an interstate flight.

However, the Court noted that the aircraft was not being used

as an “air taxi,’ i.e. in transportation for hire, at the time of the

flight and therefore the CAB standard endorsement was simply

not applicable.

Bonner, Forum, and Dower demonstrate that the particular

flight in question must be examined to determine whether the

Economic Regulations are applicable. If it is not an interstate

flight, carrying passengers or property for hire, then the

regulations are simply not applicable, despite the fact that the

operator holds authority to operate for hire with appropriate

endorsements on his liability insurance coverage. Here the flight

was wholly intrastate and therefore the Economic Regulations

are not applicable.

Petitioners argue that Braniff Airways, 40 CAB 887 (1964),

holds that a purely intrastate flight is subject to the Economic

Regulations. A reading of that case shows such not to be true.

Specifically, although Braniff contended that the proposed

transportation was to be solely intrastate, the Board found

otherwise. It stated, “the nearest approach to a true destination

for passengers on such tours is the tour itinerary as a.whole. On

this basis it is concluded that the nature of the movement is

interstate transportation from various points in the United States

to points within the State of Texas, including that portion of the

tour operated by Braniff’’ 40 CAB 887. (Emphasis supplied.) Such

is not the case here. Although petitioners make the loose

allegation that one passenger on board came from out of state

with the intention of making a parachute jump, there is no

evidence that he was transported from out of state by Air Carrier

Express Services itself or as part of an arrangement between Air

Carrier Express Services and some other carrier. The fact is he

was simply a person from out of state whose transportation to

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the jump site had no involvement with Air Carrier Express

Services, unlike the involvement of Braniff as described in the

CAB opinion, supra.

This case in no way involves significant federal questions.

Rather, it involves state law issues concerning interpretation of

a contract of insurance issued in the State of Georgia to a Georgia

insured and involving a purely intrastate flight.

CONCLUSION

The fundamental issue in this case is one of state law

involving coverage of an insurance contract issued within the

State of Georgia. Petitioners have attempted to raise a false issue

of the applicability of the Federal Aviation Economic Regulations,

but such alleged issue was correctly issued within the State of

Georgia. Petitioners have attempted to raise a false issue of the

applicability of the Federal Aviation Economic Regulations, but

such alleged issue was correctly decided by the Georgia Court

of Appeals in accordance with the clear provisions of the Federal

Aviation Act and the Regulations issued thereunder, and in

accordance with the decisions of all other appellate courts, federal

and state, which have considered the question. There are no

special or important matters or significant federal questions

involved in this case, and the ‘‘review criteria’ set forth in

Supreme Court Rule 17 are not satisfied here.

Respondent respectfully prays that the Petition for Writ of

Certiorari not be granted.

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Respectfully submitted,

SEWELL K. J tags

Georgia State Bar No. 456200

Attorney for Respondent

UNITED STATES FIRE

INSURANCE COMPANY

OF COUNSEL:

MOZLEY, FINLAYSON & LOGGINS

1800 Coastal States Building

260 Peachtree Street, NW

Atlanta, Georgia 30303

(404) 522-2010

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CERTIFICATE OF SERVICE

I, Sewell K. Loggins, a member of the Bar of this Court, hereby

certify that I have served three true and correct copies of this Brief

In Opposition To The Writ Of Certiorari, by hand, before the time

of filing with the Clerk of this Court, upon:

Warren C. Fortson, Esq.

John A. Howard, Esq.

FORTSON & WHITE

300 Atlanta Financial Center

3333 Peachtree Road, NE

Atlanta, Georgia 30326

William C. Lanham, Jr., Esq.

LANHAM & MCGHEE, PC.

2100 Equitable Building

100 Peachtree Street, NW

Atlanta, Georgia 30303

Nicholas C. Moraitakis, Esq.

GORBY, REEVES, MORAITAKIS & WHITEMAN, PC

Harris Tower, Suite 2200

233 Peachtree Street, NE

Atlanta, Georgia 30343

Donald R. Andersen, Esq.

Suite 200 Hollowbrook Court

1479 Brockett Road

Tucker, Georgia 30084

I further certify that all parties required to be served have

been served. ;

This ¢ 7 day of October, 1988.

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SEWELL K. pertas

Ga. State Bar No. 456200

OF COUNSEL:

MOZLEY, FINLAYSON & LOGGINS

1800 Coastal States Building

260 Peachtree Street, NW

Atlanta, Georgia 30303

(404) 522-2010

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