Petition — United States Fidelity & Guaranty Co. v. Henderson
Supreme Court brief1980
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MICHAEL RODAK, JR., CLERK
In the Supreme Court of the United States
October Term, 1980
UNITED STATES FIDELITY AND
GUARANTY COMPANY,
Petitioner,
vs.
H. H. HENDERSON, DWAINE LEE HENDERSON, AND
ELIZABETH RILES STEVISON, ADMINISTRATRIX OF
THE ESTATE OF GRADY H. STEVISON, DECEASED.
Respondents.
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
M. M. RoBERTS
(Counsel of Record)
ROBERTS & EASTERLING
Post Office Box 870
Hattiesburg, Mississippi 39401
(601) 583-3522
Attorney for Petitioner
E. L. MENDENHALL, INc,, 926 Cherry Street, Kansas City, Mo. 64106, (816) 421-3030
QUESTIONS PRESENTED
The questions presented by this petition are:
1.
Did there exist any replacement coverage on the new
1972 GMC Truck, Serial No. V-504642, undisputedly cov-
ered by insurance contract No. C 205187, $10,000.00 for one
injury, said coverage having been paid under that insur-
ance contract issued November 10, 1971?
2.
Did the United States Court of Appeals for the Fifth
Circuit commit error in following the District Court in
permitting multiple added complaints with changed posi-
tions and not dismissing all of that contained in pleadings
through order of August 15, 1977, and at the same time
permitting an additional insurance contract to be identified
and substituted in the same action when the first two
pleadings had identified premises coverage and not public
liability coverage on motor vehicles?
3.
Did the District Court have right and authority to
activate or assist in making activation of contract of in-
surance on August 15, 1977, when the contract had ex-
pired of its own terms as of November 7, 1971?
4.
Is petitioner entitled to judgment as a matter of law
or, in lieu thereof, is it not entitled to have the judgment
as entered set aside and held for naught?
II
5.
Did the United States Court of Appeals for the Fifth
Circuit have right and authority to set aside and hold for
naught the judgment of the District Court that no puni-
tive damages are allowable when the District Court heard
all of the witnesses and saw their demeanor and held there
was no right of punitive damages and decided for peti-
tioner, with the panel of judges of said Fifth Circuit having
only read the record to reach a different conclusion?
ITI
TABLE OF CONTENTS
OPINIONS BELOW. ...u..............-:ssscessssssenssnescesoeersonsesnsseseneenss
JURISDICTION <nnn-cccecceocsecsnesersocccssocsneseesrssvagseseanssensosessooasoess
CONSTITUTIONAL PROVISIONS, STATUTES, REG-
ULATIONS AND ORDERS INVOLVED ....................
STATEMENT OF THE CASE .....0.......::ccccesssessseenesesseeeeeees
id I, eR ss cenetbibanenmh Peactt inl os 2
B. Pleadings and Proceedings ............-..-.::::s1se
i.e GI IEE S55 oa cid cectdndetnralmeneseaeden
ARGUMENT—
I. The new 1972 GMC truck, Serial No. V-504642,
was covered by insurance contract No. C 205-
187, $10,000.00 for one injury, said coverage be-
ing undisputedly paid under that insurance
contract issued November 10, 1971, and there
exists no replacement coverage ..........-.-.-.:-:+-++
II. The Fifth Circuit erred in following the Dis-
trict Court in permitting multiple amended
complaints and not dismissing all of that con-
tained in pleadings through order of August
15, 1977, and permitting an additional insur-
ance contract to be identified in the same ac-
il’ Vhe District Court had no right or authority
to activate or assist in making activation of a
contract of insurance on August 15, 1977, when
the contract had expired under its own terms
Silk le I as TPT Socienenchossccckticsn tdgvaccmndadosices
IV. Petitioner is entitled to judgment as a matter
of law or in lieu thereof, the judgment as en-
tered should be set aside and held for naught
10
13
15
18
IV
V. The Fifth Circuit had no right or authority
to overrule the opinion of the trial court and
remand the case for hearings on question of
punitive damages ............-.--:cssssssssseseneneensneneeeeees 20
CONCLUSION .......0ccccccsnecessenscocessessecocernsssssasessensevcecserecoscoseses 24
CTI <a ccenccecnsseves csccnistinssacrosscapoosessependchcensnvenstnensestines 26
APPENDIX—
Appendix 1—Order of the Circuit Court of Greene
County, Mississippi, dated June 17, 1976 ............ Al
Appendix 2—Copy of United States District Court
order authorizing first amended declaration,
Gated July 19, 1976 ...................c.ccecsssorsecescencscsncessesees A5
Appendix 3—Cover sheet on insurance policy No.
2CC 637846 covering period from November 10,
1DTO to Meverbeer 10, TOT ...n..ccscccescoviscessessvesessesesoes A7
Appendix 4—Order of United States District Court
dismissing original and first amended pleading
and authorizing second amended pleading, dated
August 15, 1977 .............ccoccsssrsscensccsssncrsseasoscsssesseesoees A8
Appendix 5—Copy of judgment of the United
States District Court dated June 27, 1978 ............ Al0
Appendix 6—Amendment to Motion for New Trial
OF Corrected FuiGeOnit ..nc....cccieccssisecasccosecssivacescecces Al12
Appendix 6-A—Order overruling motion for new
trial or corrected judgment, dated June 27, 1978 A15
Appendix 7—Opinion of the Fifth Circuit, dated
NE DTI saieritntivhicvsnsstitaannalnaiessicsinsiansecleontnnlanbicinnsont Al6
Appendix 8—Opinion of the Fifth Circuit in Mar-
cum v. United States of America, dated July 9,
pCR Ses RE ne riers LEP Ny OSE STE ic St "Op ee A33
Appendix 9—Copy of Paragraph numbered IX of
original complaint and amended complaint ........ A47
Vv
Table of Authorities
CASES
American Ins. Co. of Newark, N.J. v. North Side Metal,
4 (294 8B ¢ Xf) See 11,12
American Standard Insurance Co. of Wis. v. Rider,
(Mo. App.) 475 S.W. 2d 418, 423 .............ceceeccseeeeeeeeees 16, 19
Beck Motors, Inc. v. Federal Mutual Insurance Co.,
(Mo. App.) 443 S.W. 2d 200, 203 ~......-...2...-eeeeeeeeeeee 17, 20
Bellefonte Ins. Co. v. Griffin, (Miss.) 358 So. 2d 387, 391 21
Employers Liability Assur. Corp. v. C. E. Carnes & Co.,
1 te RBC eh FR ennnemmnume noes 12
Erie R. Company v. Tompkins, 304 U.S. 64, 82 L. Ed.
Ritch i daistalgceaniacetepniogiatenaonmpamminnianedinontdte’ 12, 20
Farmers Gin Co. v. St. Paul Mercury Indemnity Co.,
ED ee i GD scsi eccsiessecssenscnnnincentintsinncnennsninmaiaibintani 7, 24
Key Life Insurance Co. of South Carolina v. Tharp,
SINE PUIG RROD stnctsccvicnninnnsiceiecnicinaseciiassncisalsinilnbesegiiah 12
Lincoln Nat. Life Ins. Co. v. Crews, 341 So. 2d 1321... 21
Marcum v. United States of America, Cause No. 78-
REE vee ee ees ON ee TRE 4, 22, 23
Martin v. Travelers Indemnity Co., 450 F.2d 542 ............ 20
Mitcham v. Travelers Indemnity Co., (CCA 4th) 127
a NE tiles TO sinstiichcitideiasiniameidhceasitcnesuihiencahli aia ianagiilapaa ail 14
New Hampshire Ins. Co. v. Smith, 357 So. 2d 119 ........ 21
Prassel Enterprises, Inc. v. Allstate Insurance Co., (5th
SD Ee Bi Sie I: I Sic hcenenieinsccinitieetitintecntienicenenn 11,19
Pride v. State Farm Fire & Casualty Insurance Co.,
(Tex. App.) 434 S.W.2d 146, 149 .00 aioe 17
Progressive Casualty Insurance Co. v. Keys, (Miss.)
BRR nah erie MERE Raw APSO Re Seo 21
State Farm Mutual Automobile Ins. Co. v. Shaffer,
(N.C.) 108 S.E. 2d 49
VI
OTHER AUTHORITIES
Section X of the Constitution of the United States ........ 4
Fourteenth Amendment to the Constitution of the
Te ora ccchconsernedbyoeststcoscespunivicenalionsontaasontiiopsions 4
Title 28, U.S.C., Section 1332 .................scssscssssc-sesceeessseess 5
Title 28, U.S.C., Sections 1254(1) and 2101(c) and (f) 4
In the Supreme Court of the United States
October Term, 1980
UNITED STATES FIDELITY AND
GUARANTY COMPANY,
Petitioner,
vs.
H, H. HENDERSON, DWAINE LEE HENDERSON, AND
ELIZABETH RILES STEVISON, ADMINISTRATRIX OF
THE ESTATE OF GRADY H. STEVISON, DECEASED.
Respondents.
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
Petitioner prays that a writ of certiorari issue to re-
view the judgment herein of the United States Court of
Appeals for the Fifth Circuit entered in the above case on
August 19, 1980.
OPINIONS BELOW
The Circuit Court of Greene County, Mississippi, en-
tered judgment in the sum of $100,000.00 and the Supreme
Court of Mississippi affirmed the judgment (Cause No.
48,529 Supreme Court of Mississippi, H. H. Henderson and
Dwaine Lee Henderson vs. Mrs. Elizabeth Riles Stevison,
Administratrix of the Estate of Grady H. Stevison, De-
ceased). The final judgment of the Circuit Court of Greene
2
County, Mississippi, evidencing the payment of the amount
of the judgment paid by United States Fidelity and
Guaranty Company appears as Exhibit “L” to the Second
Amended “Declaration” filed by respondents in the United
States District Court (R. 244) (Al), Appendix 1 hereto,
and which judgment is dated June 17, 1976, and relates
only to United States Fidelity and Guaranty Company
insurance contract No. C 20516/.
The respondents filed in the United States District
Court for the Southern District of Mississippi, Hattiesburg
Division, action against United States Fidelity and Guaranty
Company and therein identified as additional coverage in
pleadings insurance contract No. 2CC 637846, which was a
premises liability policy and in no way protected respon-
dents or either of them on the $100,000.00 judgment in the
State court; and after answer was filed to the first pleading,
an amended complaint was authorized pursuant to order
of the court therefor dated July 19, 1976 (A5) Appendix
2 hereto. On August 5, 1976, amended pleading was filed
and identified insurance contract No. 2CC 512726 and No.
2CC 637846, both of which contracts related to premises
coverage and not public liability coverage, with demand
for recovery not only of $50,000.00 identified in the two
premises policies but also for punitive damages (R. 54-55) ;
and in said amended pleading as Exhibit “B” thereto is
the original premises policy which was renewed by said
contract No. 2CC 637846, which discloses coverage only of
premises and referred to Manufacturer's and Contractor’s
Liability Insurance as disclosed through copy thereof at-
tached hereto as Appendix 3 (A7); and after answer was
filed to that “Amended Declaration” which was filed as
of August 5, 1976, another order of the court was obtained
for a second amendment and in that order dated August
15, 1977, the court sustained position of petitioner as to
both contracts No. 2CC 512726 and No. 2CC 637846 and the
3
court dismissed with prejudice any claims which the re-
spondents may have under said insurance contracts, and
with no basis therefor there was the second amendment
authorized to identify insurance contract No. C 3111037,
and a copy of the order of the court appears as Appendix
4 thereto (A8); and pursuant to the order authorizing
the “Second Amended Declaration” such was filed to claim
for the first time this contract No. C 3111037 with state-
ment that respondent, H. H. Henderson, was under the
impression that all was covered in insurance contract No.
2CC 512726 (R. 244); and to that “Second Amended Dec-
laration” filed in said District Court, answer was filed
and which case was tried to conclusion with judgment
thereon dated June 27, 1978 (R. 476), and the court therein
recognized that no premium had been paid on the at-
tempted substituted policy and the court simply deducted
the unpaid premiums from the $50,000.00 award of the jury,
and the judgment ignored and found against respondents
on the punitive damages and fixed the actual damages at
$49,707.00, and a copy of the judgment of the court in this
regard appears as Appendix 5 (A10).
Motion for new trial or corrected judgment was filed
on June 26, 1978, and amendment thereto was filed on
June 27, 1978, and copies of the amended motion and of
order of the court overruling the original and amended mo-
tions appear hereto as Appendix 6 and 6-A (A12 and Al5).
From this final order of the court there was appeal duly
completed to the United States Court of Appeals for the
Fifth Circuit and there said court entered opinion affirm-
ing the District Court on direct appeal and reversing the
trial court on cross-appeal wherein punitive damages have
been sought and the cause remanded to the District Court
for further proceedings on the punitive damages feature
wherein in the first instance the punitive damages were
4
eliminated by the trial judge aforesaid, and a copy of the
opinion of the Fifth Circuit, dated July 3, 1980, appears
hereto as Appendix 7 (A16). Copies of all of said opinions
are appended to this petition at the appendix pages in-
dicated.
JURISDICTION
Jurisdiction to review these orders and action of the
said District Court and of said Court of Appeals by writ
of certiorari is conferred upon this Honorable Supreme
Court under Title 28, U.S.C., Sections 1254(1) and 2101(c)
and (f).
CONSTITUTIONAL PROVISIONS, STATUTES,
REGULATIONS AND ORDERS INVOLVED
That had and done by the trial court and in the Fifth
Circuit violates Section X of the Constitution of the United
States and particularly that part thereof which prohibits
the impairment of the obligations of contracts; and the
opinion entered is in violation of the due process and equal
protection clauses of the Fourteenth Amendment to the
Constitution of the United States; and there are involved
the judgment and order of the Circuit Court of Greene
County, Mississippi, and the Supreme Court of Mississippi
as related to primary insurance coverage on said 1972
GMC Truck (Appendix 1, Al); and the United States
Court of Appeals for the Fifth Circuit, as related to punitive
damages, violated its own orders and there is conflict there-
in as disclosed through the case of Marcum v. United States
of America, Cause No. 78-2248, decided by the United States
Court of Appeals for the Fifth Circuit on July 9, 1980,
copy which appears hereto as Appendix 8 (A33).
STATEMENT OF THE CASE
A.
Jurisdiction
In the United States District Court, Jurisdiction was
based upon diversity of citizenship existing between the
respondents, all Mississippians, and United States Fidelity
and Guaranty Company, a non-resident corporation, under
the authority of Title 28, U.S.C., Section 1332.
B.
Pleadings and Proceedings
In the foregoing, effort has been made to disclose facts
constituting basis for complaint made to that had and done
in the United States District Court and followed by the
United States Court of Appeals for the Fifth Circuit.
Additionally, we have sought to point out that the United
States District Judge heard the case in its entirety and
denied any right of recovery for punitive damages; but the
Fifth Circuit reversed the trial court in this regard. Ap-
pendix 7 (A16) hereto is copy of the opinion of the appel-
late court. There was filed petition for rehearing en banc
and which was overruled because of failure to activate a
needed judge under the Fifth Circuit Rules for considera-
tion by the Court en banc of that presented in petition for
rehearing en banc. Petitioner appeals from a denial of said
petition challenging that done by the United States Court
of Appeals for the Fifth Circuit affirming the cause as to
the monetary award and remanding the case for trial on
the punitive damage issue.
In a trial on the merits the United States District
Court permitted recovery on theory that there became the
contractual liability of United States Fidelity and Guaranty
6
Company by substitution of coverage from one insurance
contract to another, and this in spite of the fact that the
original pleading in the District Court sought to make ap-
plication of a premises coverage and in amendment to the
pleadings sought to name another premises policy and it
was not until a motion was filed for summary judgment in
the District Court when respondents for the first time
were placed on notice that the policies constituting their
claims in the original complaint and in the first amendment
thereto related solely to premises coverage and not to
automobile liability insurance.
Respondents sought to contend that the insurance
contract on the 1972 GMC truck 10/20/10-M limits, was
not intended to be a public liability automobile policy on
said 1972 GMC truck, even though that insurance con-
tract specifically identified the 1972 GMC Truck by Serial
No. V-504642, and which contract bore No. C 205187. The
original complaint in the United States District Court only
identified insurance contract No. 2CC 737846, and it was
disclosed through appropriate pleadings in said District
Court that said policy No. 2CC 637846 did not apply to
bodily injury or property daamge related to ownership or
use of automobiles. When this was called to the attention
of the oppc_ition and the court, the order was entered on
motion therefor authorizing amendment to the original
complaint filed in the action where the plaintiffs con-
tended that policy No. 2CC 637846 should have been ex-
tended through custom without timely payment of premium
to cover the 1972 GMC tractor-truck (R. 55). This is a
Manufacturer’s and Contractor’s Liability Insurance policy
(Appendix 3, A7). Copy of that policy proper appears be-
ginning at page 123 of the record; and when the amended
complaint and answer thereto and motion for summary
judgment were filed, the court did dismiss with prejudice
claims made under contract No. 2CC 512726 and No. 2CC
7
637846, and the order is dated August 15, 1977, authorizing
the plaintiffs, respondents here, to remain in the same
action and file amended pleading to substitute contract No.
C 3111037 (Appendix 4, A8). The accident had occurred
on November 23, 1971, almost six years prior to authorizing
filing of the second amended pleading. The second
amended pleading seeks to activate contract No. C 3111037,
which was a $50,000.00 policy for one injury. It was
claimed by petitioner that this policy described a motor
vehicle totally different from the motor vehicle involved in
the accident and that the policy expired as of its own
terms on November 7, 1971, but the claim was made by
respondents that under practice there should have been an
extension of time for paying premium by a local agent
named Sigler, with admission by respondent, H. H. Hender-
son, that he never paid any premium on said contract.
The trial judge reversed his position first taken wherein
the court had apparently concluded that the case of
Farmers Gin Co. v. St. Paul Mercury Indemnity Co., ( Miss.)
191 So. 415, would control in favor of the defendant, peti-
tioner here. It was then that the court did grant instruc-
tions of the jury which were peremptory in effect to
thereby reach an erroneous end.
a
Statement of Facts
There is no dispute but that United States Fidelity
and Guaranty Company did issue insurance policy No.
C 205187 to cover the 1972 GMC Truck involved in the
accident. Petitioner concluded that insurance policy No.
C 3111037 issued by Sigler Insurance Agency on a 1969
Chevrolet Truck extended no coverage whatsoever to the
1972 GMC.. The trial court recognized the second amended
pleading as long and out of order as related to Federal
8
Practice. On inquiry of the trial court, it was agreed by
respondent, H. H. Henderson, that policy No. C 3111037 did
cover the motor vehicle therein identified. This was a
1969 Chevrolet truck and the policy was amended to
cover a 1971 Chevrolet truck. It is true that local agent,
James Sigler (R. 2-58) never ‘ssued any contract on the
new 1972 GMC, and the policy No. C 3111037 covered a
1969 Chevrolet truck and then substituted a 1971 Chev-
rolet truck, but effort was being made by respondents to
cause this contract to extend coverage to the 1972 GMC
(R. 16). Notice of non-renewal was given on policy No.
C 3111037 (R. 34, Vol. III of record). No notice was
given of renewal or extension of application or purchase of
new equipment. There was recognition of the substitution
of the 1969 Chevrolet truck to the 1971 Chevrolet truck
(R. 41). The general agent of petitioner had requested
the local agent Sigler not to issue insurance on the motor
vehicle described in contract No. C 3111037. That contract
expired November 7, 1971, and no renewal premium was
ever paid by Henry Hosey Henderson (R. 55). Henderson
admitted that he knew there existed the $10,000.00 cover-
age for one injury on the motor vehicle involved in the
accident (R. 76). The trial court heard all of this and
stated: ‘Well, of course, if he didn’t pay the premium on
it the company is under no obligation to carry him and
the policy would be automatically cancelled.” (R. 117).
In short, it should be stated that on November 10, 1971,
H. H. Henderson purchased a new 1972 GMC truck, Serial
No. V-504642, from a sales agency at Mobile, Alabama, fi-
nanced through General Motors Acceptance Corporation,
and Mr. Henderson obtained coverage for $10,000.00 for
one injury under insurance contract of United States Fi-
delity and Guaranty Company bearing No. C 205187. It
was concluded by all that this was the only coverage
9
Henderson had on the motor vehicle, but there was the
death case and a jury verdict for $100,000.00. When the
Supreme Court of Mississippi affirmed the trial court and
assessed damages of five percent plus penalties and interest,
same was paid and satisfied as disclosed through copy of
the judgment of the Circuit Court of Greene County, Mis-
sissippi, appearing hereto as Appen‘ix 1 (Al).
On May 10, 1976, the respondents recognized the fore-
going and in action filed sought to recover under premises
contract No. 2CC 512726; and in the same original pleading
contract No. 2CC 637846 is identified and in said original
pleading in paragraph numbered IX thereof the parties re-
spondent stated that contract No. C 3111037 ‘‘is in no way
connected with the coverage claimed and coverage herein
involved.” (R. 4-5). A copy of said paragraph numbered
IX in said original pleading appears hereto as Appendix 9
(A47). After the first amended pleading and motion for
summary judgment thereunder, for the first time, and
after it had been contended for the respondents that said
contract No. C 3111037 was in no way connected with
the coverage in the case, there was an about face with
order of the court dated August 15, 1977, permitting the
second amended pleading to identify said contract No.
C 3111037.
There followed the jury trial with all of the mixtures
in the pleadings based on the policy which, as stated in
the original Federal Court pleading and the first amend-
ment thereto, had no application. The respondents were
not claiming thereunder.
y*
10
ARGUMENT
Absent the punitive damages facet of this lawsuit,
which will appear last in this argument, the petitioner has
four contentions and they are (1) that the new 1972 GMC
truck Serial No. V-504642, was covered by insurance con-
tract No. C 205187, $10,000.00 for one injury, said coverage
being undisputedly paid under that insurance contract
issued November 10, 1971, and there exists no replacement
coverage; (2) the Fifth Circuit erred in following the
District Court in permitting multiple amended complaints
and not dismissing all of that contained in pleadings through
Order of August 15, 1977, and permitting an additional
insurance contract to be identified in the same action;
(3) the District Court had no right or authority to activate
or assist in making activation of a contract of insurance on
August 15, 1977, when the contract had expired under its
own terms as of November 7, 1971; (4) the petitioner is en-
titled to judgment as a matter of law or in lieu thereof
the judgment as entered should be set aside and held
for naught; and lastly, (5) the Fifth Circuit had no right
or authority to overrule the opinion of the trial court and
remand the case for hearing on question of punitive dam-
ages.
I.
The new 1972 GMC truck, Serial No. V-504642, was cov-
ered by insurance contract No. C 205187, $10,000.00 for
one injury, said coverage being undisputedly paid
under that insurance contract issued November 10,
1971, and there exists no replacement coverage.
Said insurance contract No. C 205187 was issued by
a United States Fidelity and Guaranty Company local
agent at Hattiesburg, Mississippi, approximately 90 miles
11
away from Meridian, Mississippi, where the main offices of
the company are located. The Sigler Insurance Agency, a
local agency, was 60 miles away from the main area; and
if we are in error as to this sole exposure of United States
Fidelity and Guaranty Company, then that company is en-
titled to reduction of the asserted claim against it by the
$15,328.80 paid under the order of the Circuit Court of
Greene County, Mississippi, plus the unpaid premium
which United States Judge Cox mentioned. The $15,328.80
was tendered on August 5, 1976. Answer was had to the
tender in the State court and an agreed order in the State
court discloses the acceptance of $15,328.80 (Appendix 1,
Al). The Fifth Circuit said of this:
“Under Mississippi law, soliciting agents had no
authority to waive any provision of automobile lia-
bility policy or to receive from insured a summons
served upon insured so as to comply with notice pro-
vision of autumobile liability policy where policy pro-
vided that notice to any agent or knowledge possessed
by any agent shall not effect a waiver or change of
any part of the policy or estop the company from as-
serting any right under the policy.” Prassel Enter-
prises, Inc. v. Allstate Insurance Co., (5th Cir.) 405
F. 2d 616, 617.
“In absence of a provision for extension of cover-
age of automobile liability or indemnity to automobiles
other than those described in policy, the insurer does
not cover the insured’s liability resulting from use of
such other automobile.” American Ins. Co. of Newark,
N.J. v. North Side Metal, (USDC, Ill.) 162 F. Supp. 72.
As heretofore indicated, the parties are bound by their
pleadings.
“Generally speaking, ‘a policy of liability insurance
covers any and all liabilities or losses for which insured
%@
12
is lawfully liable, that it is apparent were within the
intention of the parties, as expressed in the terms of
the policy, and is construed by the general rules of
construction, and it cannot be extended to liabilities
or losses which are neither expressly nor impliedly
within its terms.’” Employers Liability Assur. Corp.
v. C. E. Carnes & Co., (5th Cir.) 101 F. 2d 739.
The opinion of the Fifth Circuit about which we are
here making complaint is in contradiction of the last two
foregoing opinions and should be construed under the au-
thority of Erie R. Company v. Tompkins, 304 U.S. 64, 82
L. Ed. 1188, generally referred to as the “Erie Doctrine.”
The laws of the state should control in diversity actions as
here involved.
“Tf insurance contract is in plain and unambiguous
language, it should be construed as written in same
way as any other contract.” Key Life Insurance Co.
of South Carolina v. Tharp, (Miss.) 179 So. 2d 555.
“In absence of a provision for extension of cover-
age of automobile liability or indemnity to automobiles
other than those described in policy, the insurer does
not cover the insured’s liability resulting from use of
such other automobile.” American Ins. Co. of Newark,
N.J. v. North Side Metal, (USDC, Ill.) 162 F. Supp. 72.
No notice was ever given to F. W. Williams State
Agency of Meridian, Mississippi, primarily handling United
States Fidelity and Guaranty Company business in Mis-
sissippi, that there was in existence any replacement cov-
erage. In fact, it is apparent from the pleadings that nei-
ther the plaintiffs nor the attorneys had any knowledge of
any effective or applicable replacement coverage until after
the amended complaint was challenged by motion as to the
insurance contracts therein identified, and the Court sus-
13
tained motion to eliminate all of the contracts therein con-
tained because they did not have application to automobile
coverage (R. 192).
II.
The Fifth Circuit erred in following the District Court
in permitting multiple amended complaints and not
dismissing all of that contained in pleadings through
order of August 15, 1977, and permitting an additional
insurance contract to be identified in the same action.
We are here simply contending that the Court went
beyond existing authority to permit the handling had and
done in this litigation. In the first place, none of the
pleadings conform to Federal Rules of Civil Procedure
affecting District Courts of the United States, but
there should come a time when there will be abuse of
judicial process or undue repetition with excessive dis-
covery. In this case not even the lawyers knew before
August 15, 1977, that the insurance contract not renewed
because of failure to pay premiums did not relate to auto-
mobile coverage; and we believe that the Court had no
right or authority at that late date to permit another
amended pleading involving an entirely different insur-
ance contract. This handling would be impossible in most
courts in this nation. The original and first amended
pleadings relate to premises coverage and in no way to
motor vehicular coverage. The amendment last made re-
lates to insurance contract No. C 3111037 and a 1971
Chevrolet truck, not involved in accident in this case. That
truck was allegedly involved in an accident on November
2, 1971, and was owned by H. H. Henderson at the time
he bought the new 1972 GMC tractor-truck, Serial No
V504642, purchased by him on November 10, 1971. Con-
tract No. C 3111037 covering the 1971 Chevrolet motor
14
vehicle expired on its own terms on November 7, 1971.
In this area of concern, there are two reasons why there
can be no coverage under that contract. In the first place,
the specific motor vehicle involved in the accident was
covered by the 10/20/19-M contract No. C 205187 and all
liability thereunder was paid and satisfied by the payment
of the $15,328.80 to satisfy the exposure under that con-
tract as against the $100,000.00 verdict and judgment in
the Circuit Court of Greene County, Mississippi (Appen-
dix 1, Al). The Circuit Court of Appeals for the Fourth
Circuit dealt with a similar situation as here involved
where the trial judge concluded from the evidence in that
case that the new motor vehicle did not replace an old one.
The reason therefor was that no notice was given to any
insurance agency of application of the replacement notion.
This North Carolina court held that there could be no
automatic transfer of insurance from one motor vehicle
to another “unless the named insured notifies the company
within ten days following the date of delivery of such
other automobile.” Mitcham v. Travelers Indemnity Co.,
(CCA 4th) 127 F. 2d 27, 29.
Here there were two reasons why there could be no
substitution. In the first place, this new motor vehicle was
covered by a specific contract issued by Ross-King-Walker
of Hattiesburg, Mississippi, bearing No. C 205187. The
coverage there provided for was a 10/20/10-M coverage and
that contract was in full force and effect when the ac-
cident happened and all liability thereunder was paid and
satisfied. In the second place, as expressed by the Fourth
Circuit in Mitcham v. Travelers Indemnity Co., supra, no
proper notice was given of any desire to substitute; and
the first notice ever coming into existence of the desire to
substitute to place the new 1972 GMC truck under policy
No. C 3111037 was August 15, 1977, and that came about in
the pleadings filed and nearly six years after the accident
15
occurred on November 23, 1971. We have always con-
tended in pleadings and briefs that when there is specific
coverage and nothing in the contract for extended coverage,
that primary coverage is all the coverage existing. The
respondents want to keep their $15,328.80, but they want in
addition thereto all that may be recovered under this con-
tract No. C 3111037, and which contract had expired under
its own terms and was never renewed and no payment of
premium has ever been made thereon. The trial judge
did think that it was wrong for recovery to be had on a
contract out of date with no premiums paid thereon, and in
spite of the jury verdict based on his instructions to the
jury, he simply entered a judgment and deducted the
amount of the premium which should have been paid
nearly six years after it was due if Henderson had intended
to keep the insurance contract in force.
III.
The District Court had no right or authority to activate
or assist in making activation of a contract of insur-
ance on August 15, 1977, when the contract had ex-
pired under its own terms as of November 7, 1971.
We again deal with this question of replacement iden-
tified in an automobile liability policy. In the case before
the Court, the 1971 Chevrolet truck, according to the evi-
dence for the respondents, was involved in an accident
on November 2, 1971. It was still owned by H. H. Hender-
son and not sold by him until two weeks after the accident
of November 23, 1971. In other words, he owned this
motor vehicle at the time he purchased the new 1972 GMC
truck and he did nothing to arrange for any substitution
prior to the expiration date of that insurance contract or at
any time thereafter. The first time there was any attempt
at activation and substitution under insurance contract
No. C 3111037 was when the Court permitted the amend-
16
ment after discharging the position taken by the plaintiffs,
respondents here, in the first two pleadings filed in the
Federal Court and that was on August 15, 1977 (Appendix
4, A8).
The Missouri Court of Appeals in denying coverage
on replacement theory said of this:
“Nevertheless, not a single case among those ably
and carefully discussed in the Cockrell opinion, in-
cluding Meyers v. Smith, Mo., 375 S.W. 2d 9, Winterton
v. Van Zandt, Mo., 351 S.W. 2d 696, and Walker to
Use of Foristel v. American Automobile Ins. Co., 229
Mo. App. 1202, 70 S.W. 2d 82, deals with or discusses
the failure of the insured to give the notice required
by the automomatic insurance provision, and in our
view the principles which govern the cases involving
failure to give notice of claim or suit, or failure to
cooperate in some manner, are not applicable here.
The only Missouri cases we have found dealing with
the notice requirement of the automatic insurance pro-
vision are Mistele v. Ogle, supra, 293 S.W. 2d at 333(5),
Missouri Managerial Corporation v. Pasqualino, supra,
323 S.W. 2d at 248-249(3), and Union Automobile In-
demnity Ass’n v. Reimann, supra, 171 S.W. 2d at 726,
which hold that unless notice of the acquisition of a
replacement vehicle is given, coverage of that vehicle
terminates at the end of the notice period.” American
Standard Insurance Co. of Wis. v. Rider, (Mo. App.)
475 S.W. 2d 418, 423.
Apparently the most common definition of what con-
stitutes a replacement vehicle is found in a North Caro-
lina case and we quote therefrom as follows:
“The most commonly accepted definition of what
constitutes a replacement vehicle is found in State
17
Farm Mutual Automobile Ins. Co. v. Shaffer, 250 N.C.
45, 108 S.E. 2d 49, where the court stated:
“It is our opinion that the replacement ve-
hicle is one (1) the ownership of which has been
acquired after the issuance of the policy, and (2)
during the policy period, and (3) it must replace
the car described in the policy, which must be
(4) disposed of or (5) be incapable of further
service at the time of the replacement. (1. c. S.E. 2d
94) (Numbering supplied.)’” Beck Motors, Inc.,
v. Federal Mutual Insurance Co., (Mo, App.) 443
S.W. 2d 200, 203.
In the case now before the Court, the 1972 GMC motor
vehicle was purchased after the expiration date of the
insurance contract No. C 3111037. The 1971 motor vehicle
was still owned by Henderson when the policy covering
that vehicle expired under its own terms with no premium
ever thereafter paid thereon.
In a Texas case dealing with a newly acquired auto-
mobile the court announced the applicable law for that
court as follows:
“The notice requirement is a condition subsequent
which must be complied with in order to keep the
insurance coverage in effect beyond the thirty-day
period. Willliams v, Standard Accident Insurance Com-
pany, 158 Cal.App. 2d 506, 322 P. 2d 1026. By the
clear language of the policy, this thirty-day period be-
gins to run from the ‘delivery date’. Husch did not
comply with this requirement. For the reasons stated,
the Rambler was not covered by the policy at the time
Husch’s liability to the appellants arose. Mitcham v.
Travelers Indemnity Company (Fourth Circuit ) 127
F. 2d 27.” Pride v, State Farm Fire & Casualty In-
surance Co., (Tex. App.) 434 S.W. 2d 146, 149.
18
IV.
Petitioner is entitled to judgment as a matter of law
or in lieu thereof, the judgment as entered should be
set aside and held for naught.
In the foregoing we have sought to point out why
there can be no recovery in this action. There was in-
surance on the new truck. The old truck, the 1971 Chev-
rolet truck, covered by insurance contract No, C 3111037
expired under its own terms and failure to pay premium
due as of November 7, 1971. Nearly six years passed after
the due date of the premium with no premium ever paid.
With no premium paid on the 1971 Chevrolet policy and
with premium paid only for a 10/20/10-M policy on the
new 1972 GMC motor vehicle, if the replacement were
permitted, there would not be a replacement but an addi-
tion and the respondents would be receiving, as they have
sought successfully to do before the trial judge, and addi-
tive of $50,000 over and above the coverage under the
specific contract covering the new 1972 GMC truck cov-
ered by policy No. C 205187. Based on these facts and
the law aforesaid, the Court should have sustained the
motion for judgment at the conclusion of all of the testi-
mony and the written peremptory instruction submitted
to the Court should have been granted. These were errors
on the part of the trial court because petitioner was entitled
to judgment as a matter of law. The Fifth Circuit fell
into the same pattern of error, probably because of failure
to understand what the issues were and what were the real
facts.
The trial court overruled motion for judgment. The
trial court simply held that he saw no reason why an in-
sured could not have two policies of casualty insurance on
the same vehicle with the same insurance company at the
same time. He was thus holding that the primary coverage
19
on the new 1972 GMC could have thereasto replacement
coverage under insurance contract No, C 3111037. Para-
graph numbered IX of the original complaint, as disclosed
through Appendix 9 hereto (A47), claimed that no cov-
erage was expected or intended under contract No. C
3111037 and the first amended pleading was to the same
effect and each time these pleadings identified premises
coverage and not automobile coverage; and it was not until
a motion for summary judgment was filed with the court
as against the original and first amended complaints that
the plaintiffs, respondents here, recognized that their
claim had been made falsely on contracts which in no way
covered accidents on the highways of Mississippi or else-
where and it was then that the court dismissed the orig-
inal and first amended “declaration” and permitted a
second amended pleading to make claim under contract
No, C 3111037 at a time when the original pleading and
the first amendment thereto ignored this contract of in-
surance and took the position by positive pleading that it
had no application, and this we sought to point out to the
trial court and the court on appeal. The trial court did
recognize that it was unusual that H. H. Henderson thought
that credit for premium should run for nearly six years
with no offer ever to pay and with no right of exception
thereto, (R. 162-163). See Prassel Enterprises, Inc. v.
Allstate Insurance Company, supra.
Since the opposition had finally begun to rely on
policy No, C 3111037, after it had discarded same and had
two pleadings to the contrary in the United States District
Court, we sought to measure this deficiency before the
trial court and on appeal without success. Other cases fol-
lowing the same pattern as contained in Prassel Enterprises,
Inc. v. Allstate Insurance Company, supra, are the cases of
American Standard Insurance Co. of Wis. v, Rider, (Mo.)
475 S.W. 2d 418; State Farm Mutual Automobile Ins. Co. v.
20
Shaffer, (N.C.) 108 S.E, 2d 49, and Beck Motors, Inc. v.
Federal Mut. Insurance Co., (Mo. App.) 443 S.W. 2d
200.
V.
The Fifth Circuit had no right or authority to over-
rule the opinion of the trial court and remand the
case for hearings on question of punitive damages.
Under Division (10-13) of the opinion of the Fifth Cir-
cuit in this case (Appendix 7, Al6), reference is made to
punitive damages with the panel of judges concluding that
there was jury question. We find no fault with that held
in the cases cited, but our view is that the case of Martin
v. Travelers Indemnity Co., 450 F. 2d 542, furnishes the con-
trolling thought adverse to the conclusion reached by the
Court. Judge Wisdom wrote the opinion as to punitive
damages. Numbers 10 and 11 of the syllabi cover the con-
clusions reached. We quote from Number 10 of the syllabi
which states: “Under Mississippi law, liability insurer
cannot be found liable in excess of its policy limits for
failing to settle action unless its refusal to settle was so
arbitrary and unreasonable as to constitute fraud.” Under
the authority of Erie R. Company v. Tompkins, supra, gen-
erally referred to as the “Erie Doctrine,” the laws of the
state control in diversity actions as here involved. Space
permitted prohibits elaboration, but there are Mississippi
cases which we must cite to the Court in support of that
had and done by United States Judge Cox as to punitive
damages. As a lawyer once said to this writer, punitive
damage under insurance is nearly nil. Under Mississippi
law punitive damages, in our view, cannot be assessed here
because there exists in the record no showing of willful or
intentional wrong or gross negligence or reckless negligence
as equivalent to such a wrong.
21
In a case decided by the Supreme Court of Mississippi
in 1975, where punitive damages were awarded in the trial
court, the Supreme Court said:
“Punitive damages are not recoverable for the
breach of a contract unless such breach is attended by
intentional wrong, insult, abuse or such gross negli-
gence as to consist of an independent tort. (Cases
cited)’ Progressive Casualty Insurance Co. v. Keys,
(Miss.) 317 So. 2d 396.
In the above case, the trial court was reversed as to punitive
damages. Another Mississippi case where the trial court
was reversed as to punitive damages is that of Lincoln Nat.
Life Ins. Co. v. Crews, 341 So. 2d 1321. See also the
Mississippi case of New Hampshire Ins. Co. v. Smith, 357
So. 2d 119.
“Lastly, Griffin cross appeals, contending that
punitive damages and attorney’s fees were appropriate
remedies. It is settled that punitive damages are re-
coverable only where the breach is attended by some
intentional wrong, insult, abuse or gross negligence
which amounts to an independent tort (Cases cited).
We are of the opinion the negligence of Bellefonte in
failing to investigative thoroughly Griffin’s claim of
a more recent overhaul of the truck and in claiming
depreciation were not such acts as to warrant punitive
damages.” Bellefonte Ins. Co. v. Griffin, (Miss.) 358
So. 2d 387, 391.
Under the applicable Mississippi law which here con-
trols, Judge Cox had no election but to eliminate the puni-
tive damages action from the lawsuit. This he did by sus-
taining a motion for judgment thereasto; and the judges
on appeal have erroneously reversed the case thereasto
and therein lies one of the principal complaints sought to
22
be presented to the Court through this petition, and which
we sought to present in our en banc petition which was
not heard. We have full belief that under no circum-
stances under the facts here involved could punitive dam-
ages be allowed or could a question of fact exist thereasto.
On July 9, 1980, the United States Court of Appeals
for the Fifth Circuit reached a conclusion which should be
controlling here and that is the case of Marcum v. United
States of America, Cause Number 78-2248, and the opinion
in that case has not yet been reported, but the slip sheet
has same therein contained and we have copy thereof at-
tached hereto for reference as Appendix 8 (A33); and in
the third syllabus thereof the following words appear:
“Where evidence viewed by Court of Appeals
from same vantage point as trial court leaves the
Court with a definite and firm conviction that a mis-
take has been committed, there is clear error and the
Court is bound to set aside trial court’s findings.”
The same vantage point does not here exist because United
States Judge Cox heard every witness testify. He had
before him the suggested instructions of the parties on both
sides and he was fully advised in the premises from ac-
tually viewing witnesses and determining for himself that
there was not sufficient proof to submit to the jury the
issue of punitive damages. The panel of judges of the
Fifth Circuit only had the printed page and they did not
have the same vantage point as did Judge Cox and the
panel of judges on appeal did not have the same opportunity
to review that before the trial court. In the Fifth Circuit
case to which we above refer, there was the same vantage
point for the trial judge and for the panel of judges be-
cause the matter was heard below, and that is in the trial
court, through depositions and it was a matter of reading
the record by the trial court and on appeal; and such is
23
not so here because there was much of oral testimony,
as the record here discloses, and United States Judge Cox
had opportunity to see and observe and hear the testimony
of the witnesses and the effort of all in interest on the
side of United States Fidelity and Guaranty Company to
show that United States Fidelity and Guaranty Company
did, in fact, act in good faith at all times and follow legal
advice in the handling of the controversy from the be-
ginning to the end; and the trial judge thus had no elec-
tion but to recognize that the facts submitted through the
testimony were insufficient for the punitive damages fea-
ture of the lawsuit to be submitted to the jury; and thus
there was no basis for the decision breached by the court
on appeal contrary to the conclusion reached by the trial
judge. In the Marcum case, the Fifth Circuit had the
following further to state:
“However, where the evidence before the trial
court consisted solely of depositions and other written
matter, the court hearing no live witnesses, the burden
of showing clear error is not so heavy as in the case
where the court has the opportunity to assess the
credibility of witnesses by personal observation (cases
cited). Thus, where our view of the same evidence
from the same vantage point as the trial court leaves
us ‘with a definite and firm conviction that a mistake
has been committed,’ there is a clear error and we are
bound to set aside the court’s findings.” Marcum v.
United States of America, supra.
24
CONCLUSION
Insurance contract No. C 205187 issued by Ross-King-
Walker on the new 1972 GMC truck covered the accident
of November 23, 1971, and all liability thereunder was
paid and satisfied. The original pleading of respondents
hereto was filed May 10, 1976 (R. 1). Answer of the peti-
tioner here was filed June 1, 1976 (R, 31). The question
was raised as to whether or not United States Fidelity
and Guaranty Company had any exposure identified with
the accident other than under contract No. C 205187, par-
tially because plaintiffs recognized that contract No. C
3111037 was in no way involved (Appendix 9, A47).
Again respondents hereto recognized notice of nonrenewal
of policy No. C 3111037 with statement that said policy
was “in no way connected with the coverage claimed and
coverage herein involved.” Substitution was with policy
No. 2CC 637846 which was a premises coverage. The first
amended pleading also eliminated contract No. C 3111037
as not connected with the coverage claimed and coverage
involved. The question arises as to whether or not the
respondents hereto are bound by their original and
amended pleading which states that contract No. C 3111037
was in no way involved in the action. Respondent Hender-
son did not know and could not advise the local agent
Sigler to which policy he wanted the newly acquired 1972
GMC truck to apply. Ragged pleadings preclude recovery
above the $15,328.80 paid. In addition thereto, on question
of punitive damages, the trial judge heard all of the wit-
nesses and saw their demeanor on the witness stand and
became familiar with the pleadings, and in considering the
motion for directed judgment at the end of plaintiffs’
testimony the court seriously considered peremptory in-
struction under the authority of Farmers Gin Co. v. St. Paul
Mercury Indemnity Co., supra, and when the court over-
25
ruled the motion for directed verdict as to the principal
case, the court did withdraw the punitive damage case
and the case was not submitted to the jury as to the
punitive damages issue but only as to the substituted
coverage to which reference is made. We believe and
contend that the trial judge had no election but to sustain
motion against the plaintiffs on the punitive damages
issue. Finally, the attorneys for United States Fidelity
and Guaranty Company seek judgment as a matter of
law since it paid the $15,328.80 under contract No. © 205187;
but if mistaken in this and the Court must affirm the
trial court, which we contend it should not, the trial court
should at least be followed as against claim for punitive
damages; and this is in the nature of the relief sought in
this application or petition for writ of certiorari.
Respectfully submitted,
M. M. Roserts
(Counsel of Record)
RoBerts & EASTERLING
Post Office Box 870
Hattiesburg, Mississippi 39401
(601) 583-3522
Attorney for Petitioner
26
CERTIFICATE
True copies of the foregoing petition for Writ of Cer-
tiorari to the United States Court of Appeals for the Fifth
Circuit have been mailed, postage prepaid, to Hon. Guy
M. Walker, Post Office Box 41, Laurel, Mississippi 39440;
Hon. J. C. Martin, Jr., Post Office Box 191, Waynesboro,
Mississippi 39367; and Hon, Horton Hillman, Post Office
Box 555, Leakesville, Mississippi 39451, Attorneys for Re-
spondents, on this 12th day of September, A. D. 1980.
M. M. RoBERTS
Attorney for Petitioner
Al
APPENDIX
APPENDIX 1
IN THE
CIRCUIT COURT OF GREENE COUNTY, MISSISSIPPI
NUMBER 2241
MRS. ELIZABETH RILES STEVISON,
ADMINISTRATRIX OF THE ESTATE
OF GRADY H. STEVISON, DECEASED
PLAINTIFF
VERSUS
H. H. HENDERSON AND DWAINE LEE HENDERSON
DEFENDANTS
ORDER
(Filed June 17, 1976)
THIS CAUSE coming on for hearing on tender of
United States Fidelity and Guaranty Company of the sum
of $15,328.80 made on May 3, 1976, to the Circuit Clerk of
Greene County, Mississippi, with notice to H. H. Henderson,
Dwaine Lee Henderson, and Horton Hillman, Esquire, their
attorney, and to Mrs. Elizabeth Riles Stevison, administra-
trix of the estate of Grady H. Stevison, deceased, and to
Guy Walker, Esquire, and to J. C. Martin, Esquire, at-
torneys for said administratrix, and on “Answer to Tender
with Notice and Petition for Disbursement” filed by H. H.
Henderson and Dwaine Lee Henderson by Horton Hillman,
Esquire, their attorney, and Mrs. Elizabeth Riles Stevison,
administratrix of the estate of Grady H. Stevison, deceased,
by Guy M. Walker, Esquire, and J. C. Martin, Esquire,
and on “Reply to ‘Answer to Tender with Notice and Pe-
A2
tition for Disbursement’” filed for United States Fidelity
and Guaranty Company by M. M. Roberts, attorney for
United States Fidelity and Guaranty Company with cer-
tificate thereto of May 28, 1976, and on agreement of all
parties in interest that the $15,328.80 is the total liability
and obligation of United States Fidelity and Guaranty
Company under insurance contract No. C 205187 issued by
Ross-King-Walker, Inc., agent of United States Fidelity
and Guaranty Company, to H. H. Henderson, otherwise
identified as Henry Hosey Henderson, on the motor ve-
hicle identified with the accident of November 23, 1971,
all court costs having been paid, and the $15,328.80 covers
the principal, penalty and interest aforesaid under said
insurance contract in application towards satisfaction of
$100,000 judgment entered in this court on June 12, 1974,
and from which an appeal was taken to the Supreme Court
of Mississippi to result in affirmance of the judgment
entered in the trial court by the Supreme Court of Mis-
sissippi in cause number 48,529 in said court; and there
has been made claim by H. H. Henderson, Dwaine Lee
Herderson and Elizabeth Riles Stevison, administratrix of
the estate of Grady H. Stevison, deceased, that there exists
further applicable insurance obtained through James B.
Sigler, d/b/a Sigler Insurance Agency of Waynesboro,
Mississippi, under public liability policy number 2CC
512726, it being claimed by said parties that this public
liability policy was renewed or extended through policy
number 2CC 637846 and United States Fidelity and
Guaranty Company has denied the existence of said in-
surance as of the day and date of the accident aforesaid or
the application thereof to the aforementioned motor vehicle
accident; and thus a dispute has arisen thereasto, and be-
cause thereof an independent action has been filed in the
United States District Court for the Hattiesburg Division
of the Southern District of Mississippi, styled H. H. Hen-
A3
derson, Dwaine Lee Henderson and Elizabeth Riles Stevi-
son, Administratrix of the Estate of Grady H. Stevison,
Deceased, vs. United States Fidelity and Guaranty Com-
pany, bearing civil action number H76-51(C) and the par-
ties in interest are at issue in that action with answer hav-
ing been filed for the defendant United States Fidelity and
Guaranty Company; and the tender aforesaid is being ac-
cepted to cover the liability of United States Fidelity and
Guaranty Company as to said policy number C 205187,
being a 10/20/10 policy as to coverage on the specific motor
vehicle identified in the accident; but all other issues will
remain in full force and effect as same appear in said
United States District Court action with no further need
of this Court having or retaining jurisdiction over the con-
troversy existing in said Federal Court action and with
no further jurisdiction in this cause over any of the parties
in this cause.
IT IS THEREUPON, the judgment of the Court and
ORDERED that the Clerk of the Circuit Court of Greene
County, Mississippi, pay to Elizabeth Riles Stevison, ad-
ministratrix of the esiate of Grady H. Stevison, deceased,
the amount now held by said clerk in the sum of $15,328.80
which is in full settlement of all claims which said parties
or either of them may have under said motor vehicle li-
ability policy number C 205187, and any and all claims iden-
tified with said insurance contract number C 205187 issued
by United States Fidelity and Guaranty Company to said
H. H. Henderson on the motor vehicle involved in the ac-
cident aforesaid are canceled and held for naught but
whatever rights, if any, H. H. Henderson and Dwaine Lee
Henderson and Elizabeth Riles Stevison, administratrix
of the estate of Grady H. Stevison, deceased, as plaintiffs
in the aforementioned Federal Court action may have
against United States Fidelity and Guaranty Company shall
A4
remain in them and in which said Federal Court these
issues will be resolved, except for that here terminated;
and this Court retains no further jurisdiction over the
action.
SO ORDERED on this 17th day of June, A. D., 1976.
s/ Merl F. Palmer
Circuit Judge
APPROVED AND
AGREED TO:
s/ M. M. Roberts
Attorney for United States Fidelity
and Guaranty Company
s/ Horton Hillman
Attorney for H. H. Henderson and
Dwaine Lee Henderson
s/ Guy M. Walker
s/ J. C. Martin
Attorneys for Elizabeth Riles Stevison,
administratrix of the estate of Grady
H. Stevison, deceased
A5
APPENDIX 2
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF MISSISSIPPI
HATTIESBURG DIVISION
CIVIL ACTION NO. H76-51(C)
H. H. HENDERSON, DWAINE LEE HENDERSON, AND
ELIZIBETH RILES STEVISON, ADMINISTRATRIX OF
THE ESTATE OF GRADY H. STEVISON, DECEASED
PLAINTIFFS
VERSUS
UNITED STATES FIDELITY AND
GUARANTY COMPANY
DEFENDANT
ORDER
(Filed July 21, 1976)
THIS CAUSE coming on for hearing on motion of the
plaintiffs for authority to file amended complaint, the
need therefor having arisen by virtue of final disposition
and termination of all claims against United States Fidelity
and Guaranty Company under its insurance contract num-
ber C 205187 issued by Ross-King-Walker, Inc., of Hatties-
burg, Mississippi, agent for said company, covering motor
vehicle in the accident identified in Exhibit “A” to the
motion here acted upon with agreement hereto by attorney
for the defendant United States Fidelity and Guaranty
Company that amended complaint be filed to eliminate is-
sues heretofore disposed of and the parties agreeing hereto:
IT IS, THEREUPON, the judgment of the Court and
ORDERED that the plaintiffs in the above styled and num-
bered cause be and they are hereby authorized and em-
A6
powered to file amended complaint in lieu of the “Declara-
tion” heretofore filed in this cause as of May 10, 1976, and
that the defendant be granted twenty (20) days from the
date of the filing of the amended complaint within which to
file answer thereto, with discovery to begin after the
answer to the amended complaint has been filed.
SO ORDERED on this 19 day of July, A.D., 1976.
s/ Harold Cox
United States District Judge
APPROVED AND
AGREED TO:
s/ Horton Hillman
Attorney for H. H. Henderson and
Dwaine Lee Henderson
s/ M. M. Roberts
Of Attorneys for Defendants
s/ Guy M. Walker
s/ J. C. Martin
Attorneys for Elizabeth Riles
Stevison Administratrix of the Estate
AT
APPENDIX 3
UNI 1ELD STATES FIDELITY ano GUARANTY COMPANY
Be Mineen, Mery bond
OECLARATIONS
—. ot tae ee eee bi Bh «ota rs: tices ean nai DT ad ale le
namie insuade + TENRY HOSEY HENDERSON MON.
RFD #) Tirler Ins. Avency
Address (Re. & Sirevt, Richton, Nississippl 9/9-1-70
City, Cownty, Stated
Domacis 0] Named innared at ol ne or ri yc
200 637846\" fe DAK} O=Z2L _ ___. othe Hamed lonared on stated here
“ Lorring The Named tasered 1s: ) inbrdual (J Partaertep () Corporation “Werews r iw
1 toot Yewtwe © omer sa) od te sa726 Lt twa tr3o5
item ) er ela zea ca aan ao eee be an: 9c ease a The time of the
Company 6 lability agaast cach such Coverage shart be an stated nerena, wbiect to alt ine terms of tte pokey Reneg reference inevete,
— ee
Coverage Pants Covenacts LiMtTS OF (iaemiTY ASVARCE PRIMERS
‘" ie: potty Rr raieaiecyins - O00 each person :
A ban nin sb :
Queers’, Langiards’ sed Tesnets’ Liathty lerersere aman $ __ 000 cach ecaurecce 9} $0
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A8
APPENDIX 4
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF MISSISSIPPI
HATTIESBURG DIVISION
CIVIL ACTION NO. H76-51(C)
H. H. HENDERSON, DWAINE LEE HENDERSON, AND
ELIZABETH RILES STEVISON, ADMINISTRATRIX OF
THE ESTATE OF GRADY H. STEVISON, DECEASED
PLAINTIFFS
VERSUS
UNITED STATES FIDELITY AND
GUARANTY COMPANY
DEFENDANT
ORDER
(Filed August 15, 1977)
THIS CAUSE coming on for hearing on motion for
continuance and authority to substitute policy number
C3111037 for policy number 2CC 512726 and with said mo-
tion the Court also heard motion filed for defendant for
summary judgment, and the Court is of the opinion that
the case of the plaintiffs against United States Fidelity and
Guaranty Company should be dismissed with prejudice as
to its policy bearing number 2CC 512726 and other policies
of insurance identified in the complaint and as to those
contracts only this cause is dismissed with prejudice, but
the plaintiffs may name another insurance contract in
additional pleading authorized herewith.
IT IS, THEREUPON, the judgment of the Court and
ordered that the claim of the plaintiffs against the defen-
A9
dant as to insurance contracts identified in the complaint
bearing policy numbers 2CC 512726 and 2CC 637846 and
the claims asserted in the complaint in the identified in-
surance contracts are dismissed with prejudice with the
plaintiffs not entitled to recover thereunder; but the plain-
tiffs may file in this same pending action claim they desire
to assert pursuant to their motion therefor as related to
insurance contract number C3111037.
SO ORDERED AND ADJUDGED on this 15 day of
August, A.D., 1977.
s/ Harold Cox
United States District Judge
Al0
APPENDIX 5
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
HATTIESBURG DIVISION
CIVIL ACTION NUMBER H76-51(C)
H. H. HENDERSON, DWAINE LEE HENDERSON, AND
ELIZABETH RILES STEVISON, ADMINISTRATRIX OF
THE ESTATE OF GRADY H. STEVISON, DECEASED
PLAINTIFFS
VERSUS
UNITED STATES FIDELITY AND
GUARANTY COMPANY
DEFENDANT
FINAL JUDGMENT
(Filed June 27, 1978)
THIS CAUSE having come on for trial on June 22
and June 23, 1978, and there having come the plaintiffs in
their proper persons and by and through their attorneys,
and there having come the defendant by and through its
attorneys, and issue having been joined, and ell parties hav-
ing announced ready for trial, and having come also John F.
Heath and eleven and other good and lawful citizens of the
Southern District of Mississippi, Hattiesburg Division,
who having been properly impanelled as a jury to hear
and decide the issues involved herein, and being properly
sworn and impanelled according to law, and the plaintiffs,
having introduced sworn testimony and other evidence and
having rested, and after the jury having heard and con-
sidered all the evidence offered by the plaintiffs and by
the defendant, and after receiving proper instructions from
All
the Court, the jury presently retired and after due delibera-
tion having returned into open Court, delivered a unan-
imous verdict, as follows:
“We, the jury, find for the plaintiffs and assess their
damages at $50,000.00.”
And the Court, having considered the verdict of the
jury and the evidence and being of the opinion that the
verdict should be reduced and a remittitur rendered for the
amount of the premium due on policy number C 3111037
in the amount of $293.00, the evidence being uncontradicted
that said premium was never paid, and the Court finding
that the defendant, United States Fidelity and Guaranty
Company, is entitled to collect said premium;
IT IS THEREFORE, ORDERED AND ADJUDGED
that the plaintiffs have and recover of the defendant, United
States Fidelity and Guaranty Company, the sum of $50,-
000.00, less $293.00 due on the premium, for a judgment in
the sum of $49,707.00 with interest at rate as provided by
law and all costs of this action.
SO ORDERED AND ADJUDGED on this 27 day of
June, A. D., 1978.
s/ Harold Cox
United States District Judge
Al2
APPENDIX 6
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
HATTIESBURG DIVISION
CIVIL ACTION NUMBER H76-51(C)
H. H. HENDERSON, DWAINE LEE HENDERSON, AND
ELIZABETH RILES STEVISON, ADMINISTRATRIX OF
THE ESTATE OF GRADY H. STEVISON, DECEASED
PLAINTIFFS
VERSUS
UNITED STATES FIDELITY AND
GUARANTY COMPANY
DEFENDANT
AMENDMENT TO MOTION FOR NEW TRIAL
OR CORRECTED JUDGMENT
(Filed June 27, 1978)
Comes the defendant, United States Fidelity and Guar-
anty Company, and adopts all of that contained in its mo-
tion for new trial or corrected judgment with certificate
thereto of June 24, 1978, and which motion was filed with
the clerk of the court, where the cause has been pending,
on June 26, 1978, and makes the same as much a part
hereof as if again copied herein and further says that the
original motion filed on June 26, 1978, was filed before
judgment for $50,000.00 pursuant to jury verdict was en-
tered; and which judgment is being entered on the day
and date of the filing of this amended motion, and for
amendment to the aforementioned motion, we add thereto
paragraph XVII as follows, to-wit:
Al3
XVII
That the undisputed testimony in this record discloses
that H. H. Henderson never requested of Sigler Insurance
Agency or the United States Fidelity and Guaranty Com-
pany that contract number C 3111037 have identified
therein and substituted a 1972 GMC motor vehicle, bearing
serial number V 504642, already covered by insurance con-
tract number C 205187; and no mention was ever made of
this desire of substitution of motor vehicles within the 30
day period within which a new or additional or other
motor vehicle may be substituted for the motor vehicle
specifically identified in the C 3111037 contract; and there
is no evidence in the record to disclose that either H. H.
Henderson or any other person for him sought to substitute
the 1972 GMC motor vehicle in the existing contract num-
ber C 3111037; but if there had been attempt thereat, such
would be void with no authority therefor; and under no
circumstances would Sigler Insurance Agency be able to
make substitution of the 1972 GMC motor vehicle for the
1971 Chevrolet motor vehicle.
WHEREFORE, defendant prays that judgment be en-
tered for it for reasons hereinabove set forth and set forth
through motion filed on June 26, 1978, including the prayer
thereto.
s/ M. M. Roberts
Of Attorneys for Defendant
Roberts & Easterling
Post Office Box 870
Hattiesburg, Mississippi 39401
(601) 583-3522
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NOTICE OF HEARING WITH CERTIFICATE
The foregoing amendment to motion will be called up
for hearing before the court at the United States District
Court in Hattiesburg, Mississippi, on June 27, 1978, at
2:00 p.m. or as soon thereafter as counsel may be heard
by the court; and in support of the foregoing amendment
to motion, the arguments which have already been sub-
mitted to the Court constitute a part and parcel of that
before the Court for determination; and a copy of the
foregoing amendment to motion has been delivered to Guy
Walker, one of the attorneys for the plaintiffs, at the time
of the filing of this amendment to motion, and copies
thereof are being mailed to the Honorable J. C. Martin,
Jr., Post Office Box 191, Waynesboro, Mississippi, 39367,
and to the Honorable Horton Hillman, Post Office Box
555, Leakesville, Mississippi, 39451, attorneys for the plain-
tiffs, on this 27th day of June, A. D., 1978.
s/ M. M. Roberts
Of Attorneys for Defendant
Al5
APPENDIX 6-A
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
HATTIESBURG DIVISION
CIVIL ACTION NUMBER H76-51(C)
H. H. HENDERSON, DWAINE LEE HENDERSON, AND
ELIZABETH RILES STEVISON, ADMINISTRATRIX OF
THE ESTATE OF GRADY H. STEVISON, DECEASED,
PLAINTIFFS
VERSUS
UNITED STATES FIDELITY AND GUARANTY
COMPANY
DEFENDANT
ORDER OVERRULING MOTION FOR NEW TRIAL
OR CORRECTED JUDGMENT
(Filed June 27, 1978)
THIS CAUSE coming on for hearing on motion for
new trial or corrected judgment filed for and on behalf
of the defendant, United States Fidelity and Guaranty
Company, and the Court having heard and considered
same is of the opinion that the motion is not well taken
and in all respects should be overruled.
IT IS, THEREUPON, the judgment of the Court and
ordered that the motion for new trial or corrected judg-
ment in the above styled and numbered cause be and it
is hereby overruled and the relief therein sought is denied.
SO ORDERED on this 27th day of June, A. D., 1978.
s/ Harold Cox
United States District Judge
Al6
APPENDIX 7
H. H. HENDERSON, Dwaine Lee Henderson et al.,
Plaintiffs-Appellees Cross-Appellants,
Vv.
UNITED STATES FIDELITY AND GUARANTY
COMPANY, Defendant-Appellant Cross-Appellee.
No. 78-2528.
United States Court of Appeals,
Fifth Circuit.
July 3, 1980.
Insured brought action against insurer for coverage
under vehicle liability policy and for punitive damages.
The United States District Court for the Southern District
of Mississippi, William Harold Cox, J., entered judgment
finding coverage and insurer appealed and insured cross-
appealed from denial of its punitive damages claim. The
Court of Appeals, Fay, Circuit Judge, held that: (1) evi-
dence sustained jury’s finding that notice of nonrenewal of
vehicle liability policy was not given to insured until after
fatal accident for which claim was made under the policy;
(2) sufficient evidence existed to support jury’s finding
that insurer had notice of insured’s replacement of vehicle
insured under the vehicle liability policy; and (3) there
was sufficient evidence that insurer withheld vehicle liabil-
ity policy in face of insured’s request for copies of all his
policies to submit punitive damages issue to jury.
Affirmed in part, reversed in part, and remanded.
1. Federal Courts (Key) 817
Appellate review of trial court’s grant of leave to
amend a pleading is restricted to determining whether the
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trial court abused its discretion. Red.Rules Civ.Proc. Rule
15(a), 28 U.S.C.A.
2. Federal Civil Procedure (Key) 828
District court can consider many factors in exercising
its discretion to grant leave to amend a pleading such as
undue delay, bad faith or dilatory motive on part of the
movant, repeated failure to cure deficiencies by amend-
ments previously allowed, undue prejudice to opposing
party by virtue of allowance of the amendment, and futility
of amendment; court can also examine whether undue prej-
udice to the movant will result from denying leave to
amend. Fed.Rules Civ.Proc. Rule 15(a), 28 U.S.C.A.
3. Federal Civil Procedure (Key) 840
In action by insured against insurer for coverage under
vehicle liability policy, district court did not abuse its
discretion in allowing insured to amend his complaint
several months after the action was filed to allege the
proper policy, since such amendment did not inhibit in-
surer’s ability to defend and the reasons for insured’s de-
lay in amending made clear his good faith and the unfair
prejudice that would have resulted from a denial of the
amendment. Fed.Rules Civ.Proc. Rule 15(a), 28 U.S.C.A.
4. Insurance (Key) 145.1, 235
When a post-office certificate of mailing is not sub-
mitted, jury is not required to believe that notice of non-
renewal or cancellation of policy was sent or received.
Code Miss.1972, § 83-11-9.
5. Insurance (Key) 235
Evidence sustained jury’s finding that notice of non-
renewal of vehicle liability policy was not given to insured
until after fatal accident for which claim was made under
the policy.
—
Al8
6. Insurance (Key) 437.1(4)
Sufficient evidence existed to support jury’s finding
that insurer had notice of insured’s replacement of vehicle
insured under vehicle liability policy.
7. Insurance (Key) 145.2, 235
In action by insured against insurer for coverage under
vehicle liability policy, district court properly allowed jury
to decide issues as to when notice of nonrenewal of the
policy was given to insured and as to whether insurer had
notice of insured’s replacement of the vehicle insured under
the policy.
8. Insurance (Key) 435.3(1)
Where 1972 truck was bought after the issuance of ve-
hicle liability policy, while the policy was effective, to re-
place 1971 truck, which was incapable of further service,
1972 truck was a replacement vehicle.
9. Insurance (Key) 186(3), 310(2)
Argument that vehicle liability policy was ineffective
because premium was not paid failed, where jury could
have found that insured had a billing and credit arrange-
ment with his agent making nonpayment irrelevant and no
notice of cancellation of the policy for nonpayment of pre-
mium had been given. Code Miss.1972, § 83-11-5.
10. . Damages (Key) 89(2)
Under Mississippi law, punitive damages can, within
limits, be assessed for breach of contract.
11. Damages (Key) 91(3)
Act giving rise to punitive damages must be a willful
and intentional wrong, or such gross negligence and reck-
less negligence as is equivalent to such a wrong.
wt
A19
12. Insurance (Key) 514.3, 602.2(3)
Punitive damages are denied when insurance com-
pany defends, rather than settles, a close case; when it
honestly contests the amount of damage; when it contests
coverage and effectively cannot recover reimbursement
from the insured if it settles with the injured party and is
later held not liable under the policy; and when it contests
coverage because the insured has failed to meet a policy
condition.
13. Insurance (Key) 602.2(1)
Punitive damages will not be awarded if insurer has
a legitimate or arguable reason for not paying claim.
14. Insurance (Key) 602.12(2)
In action by insured against insurer for coverage under
vehicle liability policy, there was sufficient evidence that
insurer withheld policy in face of insured’s request for
copies of all his policies to submit issue of punitive damages
to jury. |
15. Insurer (Key) 602.2(3)
Insurer’s alleged acts in hiding vehicle liability policy
in the face of insured’s requests for copies of all his policies
would render ineffectual any other defense insurer had to
insured’s punitive damages claim in his action against in-
surer for coverage under the vehicle liability policy.
Appeals from United States District Court for the
Southern District of Mississippi.
Before WISDOM, FAY and TATE, Circuit Judges.
FAY, Circuit Judge:
An insured brought this diversity action against its
insurance carrier for additional coverage and punitive
damages under Mississippi law. Both sides appeal from
A20
district court rulings and a jury verdict for plaintiffs.’
The insurance company, United States Fidelity and Guar-
anty Company (USF&G), contests the sufficiency of evi-
dence of coverage, and the filing of two amended com-
plaints. Plaintiffs cross-appeal, challenging the district
court’s denial of their punitive damages claim. Finding
that the coverage question was one for the jury, we affirm
the verdict, which was supported by substantial evidence.
The decisions to allow amendments to the complaint are
affirmed since no abuse of discretion is shown. We re-
verse, however, the denial of the punitive damages claim,
because sufficient evidence existed to submit the issue to
the jury.
I. Background For This Suit
Plaintiff Henry Henderson owns a logging and lumber- .
yard business in Mississippi. He owns many contracts
of insurance on his property, and evidently does not pos-
sess copies of them all.
On November 7, 1969, Henderson purchased from
USF&G’s agent Sigler a liability insurance policy, number
C3111037, with $50,000 coverage on a 1969 truck and
trailer. Henderson habitually buys his liability coverage
from Sigler. Henderson claims he never received a copy
of the C3111037 policy. In 1970, Sigler billed Henderson
for the renewal premium. It was paid approximately two
weeks after the November 7 renewal date. The policy
covers replacement vehicles if notice of the replacement
is given to the insurance company within thirty days of
purchase. Henderson replaced his 1969 truck with a 1971
Chevrolet truck. C3111037 was modified to cover the
1. Joined as plaintiffs in this action are an employee of the
insured, who drove a truck which caused the death of Grady L.
Stevison, and Stevison’s administratrix.
A21
1971 replacement, which pulled the same trailer as the
1969 truck.
On November 2, 1971, one of Henderson’s employees
turned the 1971 truck over in the woods, wrecking it
beyond repair. On November 10, Henderson purchased
a 1972 GMC truck to replace the 1971 truck and to pull
the same trailer. That same day, Henderson purchased
another USF&G policy from the Ross-King-Walker agency,
as he was required to do by the GMC loan financer.
Henderson testified that he ordered only property collision
insurance because he knew he had liability coverage
through Sigler. The Ross agency, however, actually wrote
a policy which gave Henderson $10,000 in liability cov-
erage in addition to the collision coverage. Approximately
two weeks after the wreck of the 1971 truck, Henderson
sold it as junk.
On November 23, 1971, the new 1972 truck which
was connected to the old trailer stalled while making a
U-turn, causing Grady Stevison’s vehicle to collide with
the truck, and costing Stevison his life. The next day,
Henderson claims he informed Sigler of the new 1972
replacement vehicle and the fatal accident. He says Sigler
assured him he was covered. Sigler denies that this con-
versation occurred. Henderson states that on November 27,
he received from USF&G a notice that C3111037 would
not be renewed. The notice did not identify the property
covered by C3111037, and since Henderson did not have a
copy of the policy, he did not know which one the com-
pany was not renewing. The notice from USF&G was
dated October 7, 1971, although at trial, no certificate of
mailing was produced. Under Mississippi law, a nonre-
newal is ineffective without thirty days’ notice.”
2. See note 3 infra.
A22
Stevison’s administratrix commenced a state court ac-
tion in Greene County against Henderson and his truck
driver. She offered to settle for $40,000. Henderson,
confident that he had $50,000 liability coverage, conveyed
the offer to USF&G. USF&G claimed that its only liability
was for $10,000, informing Henderson for the first time
of the Ross agency’s liability policy on the 1972 truck.
When USF&G refused to settle, Henderson brought a sep-
arate state court action in Wayne County attempting to
uncover the $50,000 policy and to settle USF&G’s liability
under it. He sued under the only $50,000 policy of which
he had a copy, but it was not the right one. When dis-
covery efforts failed to produce the $50,000 vehicle liability
policy, the Wayne County suit was dismissed without
prejudice.
In the Stevison trial, the administratrix was granted
a directed verdict on liability. The jury awarded $100,000
damages; with six-percent postiudgment interest. After
appeal to the Supreme Court of Mississippi, USF&G ten-
dered to the court $10,000 plus a five-percent penalty for
appeal, plus interest. Henderson, the employee-driver, and
Stevison’s administratrix refused to release USF&G from
further liability, claiming that a $50,000 policy existed.
This action followed in federal district court, in which
the plaintiffs claim that USF&G is liable under a $50,000
policy and is subject to punitive damages for wrongful
denial of coverage and failure to settle the Stevison law-
suit.
As in the Wayne County suit, Henderson originally
filed this action under the wrong policy. Not until Sigler’s
files were produced at his deposition were the records
of C3111037 supplied to Henderson. The complaint was
then amended to allege the correct policy number.
A23
Il. The Parties’ Theories
Henderson asserts that he was covered under the
$50,000 policy, C3111037, even though the renewal date
has passed without his tendering the renewal premium.
Mississippi law provides that an insurer cannot refuse
to renew a policy unless it gives thirty days’ advance
notice. Miss.Code § 83-11-7 (1972). Henderson argues
that he did not receive notice of nonrenewal until after
the accident; therefore, the policy had not lapsed. His
failure to pay the renewal premium does not invalidate
the policy because he had established a billing and credit
relationship with Sigler and because Mississippi law allows
cancellation for nonpayment only after ten days’ notice.
Miss.Code § 83-11-5 (1972). N . only was the policy
effective, but it also covered the 1972 GMC truck because,
as provided in the policy, Henderson gave Sigler notice
that the 1972 truck was a replacement vehicle within
thirty days of its purchase. Henderson reasons, therefore,
that USF&G is liable under C3111037 and that the jury
verdict should be affirmed as modified.‘
Henderson’s correlative theory is that USF&G is liable
for punitive damages for failing to settle the Stevison case
and for denying coverage. Throughout the Stevison trial
and the Wayne County suit, Henderson asserted that a
$50,000 vehicle liability policy existed. Despite Hender-
son’s claims and discovery attempts, USF&G withheld
C3111037. Henderson argues that sufficient evidence
3. The statute reads in part as follows:
No insurer shall fail to renew a policy unless it shall mail or
deliver to the name insured, at the address shown in the
policy, at least thirty (30) days’ advance notice of its in-
tention not to renew.
Miss.Code § 83-11-7 (1972).
4. The trial court reduced the verdict by $293, the amount
of the unpaid premium.
A24
exists for granting punitive damages under Mississippi law,
and that the trial court’s refusal to present this issue to
the jury is reversible error.
USF&G contends that Henderson’s theory of coverage
is one dreamed up long after the events now in question.
USF&G’s position is that notice of non-renewal was given
on October 7, 1971, and that the policy therefore expired
on November 7, before the fatal accident. Furthermore, it
argues that the 1972 GMC truck cannot be a * placement
because it does not meet the definition of a replacement
vehicle and because USF&G did not receive notice of the
replacement until this litigation. It also contends that the
policy cannot be in force because the premium was never
paid.
Besides contesting Henderson’s factual allegations,
USF&G asserts that Henderson could not have two policies
on the same vehicle in effect at once and that he should not
have been allowed to amend the complaint to cover
C3111037 after Sigler’s deposition. USF&G argues that the
jury verdict should therefore be reversed.
III. Amendment Was Proper
USF&G contests the trial court’s allowance of an
amendment to the complaint which brought C3111037, the
$50,000 policy, into issue. This action was filed on May 10,
1976. On August 5, 1976, an amended complaint was filed
to reflect USF&G’s tender into state court of the $15,328.80
owed after appeal under the $10,000 policy. Two days after
Sigler’s deposition, Henderson moved to amend the com-
plaint to change the policy number upon which this action
was based from a premises liability policy to the $50,000
vehicle liability policy. The court granted the motion
and the second amended complaint was filed September
22, 1977, nine months before trial. Without citation to
A25
authority, USF&G argues that the trial court “had no right
or authority” at that late date to permit another amended
pleading involving a different insurance contract.
[1, 2] The trial court’s authority to permit amend-
ment is found in Fed.R.Civ.P. 15(a). That rule provides
that amendment will be “freely [granted] when justice so
requires.” Appellate review is restricted to determining
whether the trial court abused its discretion in granting
leave to amend. Harkless v. Sweeny Independent School
District, 554 F.2d 1353, 1359 (5th Cir.), cert. denied, 434
U.S. 966, 98 S.Ct. 507, 54 L.Ed.2d 452 (1977). The district
court can consider many factors in exercising its discretion,
“such as undue delay, bad faith or dilatory motive on the
part of the movant, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to the
opposing party by virtue of allowance of the amendment,
[and] futility of amendment... .” Foman v. Davis, 371
U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962).
The court also can examine whether undue prejudice to the
movant will result from denying leave to amend. Lone Star
Motor Import, Inc. v. Citroen Cars Corp., 288 F.2d 69, 75-
77 (5th Cir. 1961).
[3] USF&G does not advance a convincing case of
prejudice; it does not argue that the amendment or delay
inhibited its ability to defend. The reasons for delay in
amending make clear Henderson’s good faith and the unfair
prejudice that would have resulted from a denial of the
amendment. From the beginning, Henderson claimed that
he had $50,000 of coverage, that he did not know in which
policy the coverage was contained, that he did not have
copies of all policies, and that he wanted copies from
USF&G. Despite a separate state court suit, interrogatories,
and requests for production USF&G did not produce the
$50,000 policy until Sigler’s deposition, which was taken
A26
after the filing of the first amended complaint in this case.
Within two days of the deposition, Henderson moved to
amend the complaint. One purpose of the liberal policy
embodied in rule 15(a) is to permit the addition of matters
unknown at the time the complaint was filed.® Under these
facts, the district court did not abuse its discretion in allow-
ing Henderson to amend his complaint.°
IV. The Policy Was In Effect
Under the scenario advanced by USF&G, notice of non-
renewal of insurance was sent to Henderson October 7, the
policy expired November 7, and the 1972 GMC truck was
not covered by C3111037. The 1972 GMC was not a re-
placement and no authorized agent received notice of re-
placement. Only one policy, the $10,000 policy, covered the
GMC truck, and the $50,000 C3111037 policy could not
also cover it, especially since the premium was never paid.
The primary flaw in USF&Q’s position is that it relies
upon resolution in USF&G’s favor of factual issues that are
within the jury’s province. USF&G’s remaining arguments
are not supported by the law.
[4) Notice is usually a jury question in Mississippi.
Notice of nonrenewal or cancellation can be proved by
5. This policy does not rescue lawyers lacking diligence.
Layfield v. Bill Heard Chevrolet Co., 607 F.2d 1097, 1099 (5th
Cir. 1979); see Lamar v. American Finance System, 577 F.2d
953, 955 (5th Cir. 1978). When serious effort, however, fails to
uncover needed facts or theories until after the complaint’s filing,
amendment may, within the trial court’s sound discretion, be
proper.
6. USF&G also argued that because Henderson stated in
his first two pleadings that C3111037 was not involved in this
action, he should be estopped from changing his position. USF&G
denied those allegations in Henderson’s two pleadings, and shows
no prejudice from Henderson’s turn-around, which, according to
Henderson, was due to USF&G’s own failure to disclose materials
on discovery.
A27
production of a certificate of mailing, Miss.Code § 83-11-9
(1972),7 but no such certificate was produced at this trial.
In interpreting the language of insurance contracts, the
Supreme Court of Mississippi has held that the agent’s tes-
timony that the letter was mailed and a post office certif-
icate are adequate proof of notice. See Transamerica Insur-
ance Co, v. Bank of Mantee, 241 So.2d 822, 824-25 (Miss.
1972) (on rehearing), interpreting Employers Mutual Cas-
ualty Co. v. Nosser, 250 Miss. 524, 164 Sof2d 426 (1964).
When a certificate is not submitted, however, the jury is not
required to believe that notice was sent or received:
The testimony of an insurance agent, like the testi-
mony of any other witness, is to be weighed and
evaluated by the trier of facts, taking into consideration
other testimony and the surrounding circumstances in
the case, and, if the surrounding circumstances are
such as to outweigh the statement of an insurance
agent that he mailed the required notice, the jury or
trier of facts is not bound to accept the agent’s state-
ment simply because the agent so testified.
Transamerica Insurance Co. v. Bank of Mantee, 241 So.2d
at 825.
[5] Evidence supports the jury’s finding that notice
was not given until after the fatal accident. Even before
Henderson knew C3111037 was the correct policy, he as-
serted in his two prior complaints that he had received the
nonrenewal notice for C3111037 on November 27. No em-
ployee of USF&G’s main office testified that the notice
was sent October 7. Sigler could not testify that his office
7. This section reads as follows:
Proof of mailing of notice of cancellation, or of intention
not to renew, or of reasons for cancellation to the named
insured by a certificate of mailing, at the address shown in
the policy, shall be sufficient proof of notice.
Miss.Code § 83-11-9 (1972).
A28
had received its copy of the notice shortly after October 7.
Sigler did testify that it was his agency’s practice to send
its own notice of nonrenewal whenever it received a copy
of such notice from USF&G’s main office. Record, vol. III,
at 27-28. No copies of a separate notice were in Sigler’s
file. The slender thread supporting USF&G’s position is
a copy of the USF&G notice, dated October 7, in Sigler’s
file. The jury was free to find that USF&G had not ac-
tually sent notice on that date, but had back-dated the
notice and mailed it after learning of the accident.
[6, 7] Similarly, sufficient evidence exists to support
a finding that USF&G had notice that the 1972 GMC had
replaced the 1971 Chevrolet truck. Sigler had effected
such a replacement in the past. He testified that he had
authority to bind USF&G. Record, vol. III, at 29. Hender-
son testified that he gave notice of the replacement within
thirty days, as the policy requires. The district court did
not err in allowing the jury to decide these notice issues.
[8] Citing a Missouri case, USF&G argues that the
1972 truck does not meet the definition of a replacement
vehicle. Even assuming that the case applies in Mississippi,
it renders USF&G no aid because taking the facts as re-
solved by the jury, the 1972 truck meets all the require-
ments of the definition.®
[9] USF&G’s argument that the policy was ineffective
because the premium was not paid fails for two reasons.
8. The case states that the vehicle must have been ac-
quired after the policy’s issuance, during the policy period, to
replace the vehicle the policy describes, which was disposed of
or incapable of further service. Beck Motors, Inc. v. Federal
Mutual Insurance Co., 443 S.W.2d 200, 203 (Mo.App.1969), quot-
ing, State Farm Mutual Automobile Insurance Co. v. Shaffer, 250
N.C, 45, 108 S.E.2d 49 (1959). The 1972 truck was bought after
issuance, while the policy was effective, to replace the 1971 truck,
which was incapable of further service. Therefore the 1972 truck
was a replacement vehicle.
A29
First, the argument may rest on factual assumptions de-
cided by the jury adversely to USF&G. The jury could
have found that Sigler had a billing and credit arrange-
ment with Henderson which made the nonpayment ir-
relevant. Second, Mississippi law requires ten days notice
before a policy can be cancelled for nonpayment of the
premium. Miss. Code § 83-11-5 (1972). No such notice
was given.
USF&G cites neither case precedent nor a contract
clause supporting its position that Henderson could not
have had two policies on the same vehicle. When two
different insurers cover the same property, the courts
usually prorate the loss between them. See 8 J. Appleman,
Insurance Law and Practice § 4913 (1962). USF&G ad-
vances no reason why two policies from the same insurer
should be treated differently. Furthermore, Henderson
asserts that the only reason he had two liability policies
was because of error by USF&G’s agents. USF&G’s con-
tention is meritless. J.
The jury verdict finding coverage under C 3111037 is
affirmed.
V. Punitive Damages: A Jury Question
Henderson cross-appeals the district court’s failure to
submit the claim for punitive damages to the jury.’ In
denying the claim, the court relied upon a Mississippi case
which held that an insurer’s refusal to settle within policy
limits in a contested case does not cousftftute either negli-
gence or fraud. Farmers Gin Co. v. St. Paul Mercury In-
demnity Co., 186 Miss. 747, 191 So. 415 (1939).
9.° At each stage of trial, Henderson raised the punitive
damages claim; at each stage the district court ruled against him.
Because we hold that the district court erred at each stage, we
review the decision under the stiffest standard, that for a di-
rected verdict or judgment n. 0. v. Boeing Company v. Shipman,
411 F.2d 365, 374-75 (5th Cir. 1969) (en banc).
A30
[10-13] Under Mississippi law, punitive damages can,
within limits, be assessed for breach of contract. The act
giving rise to punitive damages must be “a willful and in-
tentional wrong, or . . such gross negligence and reckless
negligence as is equivalent to such a wrong.” Seals v. St.
Regis Paper Co., 236 So.2d 388, 392 (Miss.1970). Punitive
damages are denied when the insurance company defends,
rather than settles, a close case, Farmers Gin Co. v. St. Paul
Mercury Indemnity Co., 186 Miss. 747, 191 So. 415 (1939);
when it honestly contests the amount of damage, Progres-
sive Casualty Insurance Co. v. Keys, 317 So.2d 396 (Miss.
1975); when it contests coverage and effectively cannot re-
cover reimbursement from the insured if it settles with the
injured party and is later held not liable under the policy,
Martin v. Travelers Indemnity Co., 450 F.2d 542 (5th Cir.
1971); and when it contests coverage because the insured
has failed to meet a policy condition, Lincoln National Life
Insurance Co. v. Crews, 341 So.2d 1321 (Miss.1977). Puni-
tive damages will not be awarded if the insurer has a legi-
timate or arguable reason for not paying the claim. See
Standard Life Insurance Co. of Indiana v. Vedl, 354 So.2d
239, 248 (Miss.1978).
Punitive damages were allowed when an insurer used
its superior bargaining position to delay in paying any
part of separate claims, despite the insured’s dire financial
straits, because of an unwritten policy to pay the whole
claim at once. Travelers Indemnity Co. v. Wetherbee, 368
So.2d 829 (Miss.1979). Punitive damages were also proper
when the reason for denying payment was contrary to an
express term in the policy. Standard Life Insurance Co. of
Indiana v. Veal, 354 So.2d 239 (Miss.1978). The Supreme
Court of Mississippi expressed the policy behind granting
punitive damages in these cases:
If an insurance company could not be subjected to
punitive damages it could intentionally and unreason-
A31
ably refuse payment of a legitimate claim with ver-
itable impunity. To permit an insurer to deny a
legitimate claim, and thus force a claimant to litigate
with no fear that claimant’s maximum recovery could
exceed the policy limits plus interest, would enable
the insurer to pressure an insured to a point of des-
peration enabling the insurer to force an inadequate
settlement or avoid payment entirely.
Id. at 248.
[14] Henderson claims that despite his continued as-
sertion that he had a $50,000 policy with USF&G, and
despite the separate suit brought and discovery attempted
in Wayne County, USF&G hid the C3111037 policy. Be-
cause of USF&G’s acts, Henderson could not settle with
the administratrix for $40,000, and was exposed to a
$100,000 liability. Henderson testified that he gave Sigler
notice of the replacement. Record, vol. III, at 67. USF&G’s
investigator testified that USF&G had knowledge soon
after the accident that Henderson was asserting that he
had $50,000 of coverage, not $10,000. Id. at 136-37. The
evidence could support a jury verdict that USF&G with-
held the policy at the time of the suit over the accident
in the face of Mr. Henderson’s request for copies of all
his policies. The directed verdict is therefore reversed.
In light of the high standards to be met before punitive
damages are assessed, a jury may well find that gross
negligence, recklessness, fraud, or other intentional wrongs
are not reflected in USF&G’s conduct. Nevertheless, when
the evidence is viewed in the light most favorable to
Henderson, substantial evidence exists sufficient to over-
come a motion for directed verdict. Boeing Company v.
Shipman, 411 F.2d 365, 374-75 (5th Cir. 1969) (en banc).
[15] This reversal is proper even though under Mis-
sissippi caselaw, USF&G had an arguable defense to cov-
A32
erage, which ordinarily would be sufficient to immunize
its actions from punitive sanctions. If Henderson’s posi-
tion is accepted, USF&G’s acts in hiding the policy render
ineffectual any other defense it had to the punitive dam-
ages claim. If USF&G had delivered the policy and
asserted its coverage defenses, Henderson could have suc-
cessfully brought a separate action to settle the insurance
question, as he tried to do. If coverage had been estab-
lished, as it was in the trial of this case, then serious
settlement negotiations could have been undertaken with
the administratrix, who was willing to settle within the
$50,000 policy’s limits. Henderson would not have been
held liable for $100,000. Should a jury determine that
USF&G’s refusal to be forthright, until after stalwart
efforts by Henderson, blocked this solution their other
defenses to the punitive damages claim are rendered in-
valid.
CONCLUSION
The jury verdict, as amended by the district court,
is AFFIRMED. The district court’s decision to withhold
the issue of punitive damages from the jury is REVERSED
and REMANDED for trial.
A33
APPENDIX 8
Virginia Elaine MARCUM,
Plaintiff-Appellant,
V.
UNITED STATES of America,
Defendant-Appellee.
No. 78-2248.
United States Court of Appeals,
Fifth Circuit.
July 9, 1980.
Widow of deceased pedestrian highway crew member
brought action against the United States under the Federal
Tort Claims Act alleging that decedent was killed in acci-
dent caused by negligence of motorist, an employee of
the United States acting within the scope of his employ-
ment. The United States District Court for the Middle
District of Louisiana, E. Gordon West, Senior Judge, ap-
proved judgment entered by magistrate in favor of the
United States, and plaintiff appealed. The Court of Ap-
peals, Ainsworth, Circuit Judge, held that: (1) motorist,
who was aware that there was some type of work in
progress in intersection which he was approaching, who
observed work truck and one of the pedestrian crew mem-
bers, and who proceeded through intersection at speed
of 35 miles per hour, was negligent under Louisiana law
in striking clearly visible cable suspended approximately
18 inches above the road well before motorist entered
the intersection and in causing accident which led to pedes-
trian crew member’s death when his head struck curb
as he was dragged behind motorist’s automobile after
motorist struck the cable, which then wrapped around
pedestrian’s legs, and (2) possibility that Department of
A34
Highways may have been negligent in failing to use ade-
quate cautionary signals or other safety devices did not
bar motorist’s liability.
Reversed and remanded.
1. United States (Key) 78(14)
In actions brought pursuant to the Federal Tort Claims
Act, state law where the alleged negligence occurred is
controlling. 28 U.S.C.A. §§ 1346(b), 2674.
2. Federal Courts (Key) 792, 850
With regard to Court of Appeals’ view of trial court’s
factual determinations, clearly erroneous standard applies;
however, where evidence before trial court consisted solely
of depositions and other written matter, the court hearing
no live witnesses, burden of showing clear error is not
so heavy as in case where the court has opportunity to
assess credibility of witnesses by personal observation.
3. Federal Courts (Key) 853
Where evidence viewed by Court of Appeals from same
vantage point as trial court leaves the Court with a definite
and. firm conviction that a mistake had been committed,
there is clear error and the Court is bound to set aside
trial court’s findings.
4. Automobiles (Key) 160(1)
For a pedestrian to recover against a motorist under
Louisiana law, there must be fault on part of the motorist
which brings about the injury.
5. Negligence (Key) 56(1.12), 134(11)
Under Louisiana’s duty/risk analysis applicable in
negligence actions, plaintiff establishes a defendant’s lia-
bility by showing that defendant’s conduct is a cause in
A35
fact of the harm, and that conduct is breach of legal
duty imposed on defendant to protect plaintiff against
the particular risk and harm involved; an act will be
deemed a cause in fact of an accident when, viewed in
light of all evidence, it is concluded that it is a necessary
antecedent to plaintiff’s harm, without which the accident
would not have occurred. <
6. Negligence (Key) 4
Generally, under Louisiana law, a person’s duty to-
ward another can be stated as the obligation to conform
to standard of conduct of a reasonable man under like
circumstances.
7. Automobiles (Key) 150
Under Louisiana law, a motorist is under a duty at
all times to keep a sharp lookout ahead to discover pres-
ence of those who might be in danger.
8. Automobiles (Key) 150, 160(3)
Under Louisiana law, a motorist is not entitled to
assume his pathway is clear; rather, he is charged with
duty of seeing that which may be observed in exercise
of reasonable care, and failure to heed such duty consti-
tutes negligence and such failure imposes liability on
motorists for injuries they inflict upon pedestrians in
positions of peril upon the roadway.
9. Automobiles (Key) 168(6)
Motorist, who was aware that there was some type
of work in progress in intersection which he was ap-
proaching, who observed work truck and one of the pedes-
trian crew members, and who proceeded through the
intersection at speed of 35 miles per hour, was negligent
under Louisiana law in striking clearly visible cable sus-
pended approximately 18 inches above the road well before
A36
motorist entered the intersection and in causing accident
which led to pedestrian crew member’s death when his
head struck curb as he was dragged behind motorist’s
automobile after motorist struck the cable, which then
wrapped around pedestrian’s legs.
10. Automobiles (Key) 150
Under Louisiana law, a motorist who looks and does
not see what may be seen by exercise of reasonable care
is negligent to same extent as one who does not look
at all.
11. Automobiles (Key) 226(1)
Under Louisiana law, contributory negligence is not
a defense to a pedestrian’s claim for damages sustained
as a result of negligence of a motorist.
12. Automobiles (Key) 231
Despite possibility that Department of Highways may
have been negligent in failing to use adequate cautionary
signals or other safety devices to warn motoring public
as the Department ran an electrical cable across an inter-
section, such factor did not bar motorist’s liability for
crew member’s death occurring as result of motorist’s
negligence in striking the suspended cable; fact that mo-
torist struck the cable instead of pedestrian was imma-
terial.
A37
Appeal from the United States District Court for the
Middle District of Louisiana.
Before TUTTLE, AINSWORTH and SAM D. JOHN-
£ WN, Circuit Judges.
AINSWORTH, Circuit Judge:
In this wrongful death action Virginia Elaine Marcum
sued the United States under the Federal Tort Claims Act,
28 U.S.C. § 2671 et seq., alleging that her deceased husband
Ronney F. Marcum was killed in an accident caused by the
negligence of Oscar Kwiterovich, an employee of the United
States Department of Labor, acting within the scope of his
employment. The parties consented to a trial before a
United States magistrate on stipulated facts, depositions,
exhibits, memoranda and proposed findings of fact and
conclusions of law. After considering the evidence and
hearing arguments, the magistrate dismissed plaintiff's case,
finding that defendant’s employee Oscar Kwiterovich was
not negligent; alternatively, decedent Marcum was con-
tributorily negligent; and alternatively, the Louisiana law
doctrine of last clear chance was not applicable. Judgment
was entered in favor of defendant United States pursuant
to the magistrate’s oral findings, and the judgment was ap-
proved by the district judge. We conclude that the trial
court was clearly erroneous in its findings, and accordingly
reverse.
The accident occurred at approximately 11:15 a. m. on
September 7, 1976 at the intersection of Plank and Evan-
geline Roads in Baton Rouge, Louisiana. Decedent Marcum
was employed as a trades helper by the Louisiana Highway
Department, which had sent a crew to work in the area.
At the time of the accident, the crew was engaged in run-
ning an electrical cable north to south down Plank Road,
a four-lane street, from a spool located approximately two
blocks north of Evangeline, also a four-lane street. The
A38
cable, black in color and three-quarters of an inch in di-
ameter, was attached to the bumper of a work truck driven
by the supervisor of the crew, Paul Treadway. Although
there is some dispute as to the direction in which Tread-
way’s vehicle was facing, there is evidence in the record that
Treadway was backing down Plank Road so he could ob-
serve the cable operations while driving. Marcum and a
co-worker, Warren Hurst, were following the truck on
foot.
As the truck reached the intersection, the light was
green for traffic on Plank Road, and Treadway instructed
Hurst to hold the wire and Marcum to try to prevent traffic
from striking the cable as the truck pulled it across the
intersection. The cable was elevated approximately 18-20
inches from the road surface as it was pulled through the
intersection. Although there was some testimony that the
truck had its flashing light on prior to the accident and the
crewmembers were wearing yellew hard hats, there were
no red flags, orange vests ©: other safety devices being
used by the crew at the time.
Immediately prior to the accident, Kwiterovich was
proceeding in a westerly direction in the left-hand lane of
Evangeline Street in a 1972 Toyota. A trailer truck was
traveling in the same lane ahead of him. When he was ap-
proximately 200 yards east of the Plank Road intersection,
Kwiterovich first noticed some work taking place in the
area of the intersection. He observed the Highway Depart-
ment truck as it was proceeding through the intersection
and saw a man following the truck. He noticed the man
looking up and assumed the persons at the intersection were
involved in doing some overhead work. At a point ap-
proximately 50 to 100 yards east of the intersection, Kwiter-
ovich, who testified in his deposition that he thought the
trailer truck ahead of him would turn left, moved into the
right lane. The traffic light turned green and he proceeded
A39
through the intersection at an estimated speed of 35 miles
per hour. He testified that at this time the work truck and
pedestrian crewmember had moved to the left and were no
longer in his field of vision.
Kwiterovich was looking ahead as he went through
the intersection and struck the cable. He did not attempt
to brake at first but allowed the car to slow down. The
cable became lodged between the front wheels and the body
of the Toyota. It came off of the work truck bumper and
wrapped around the legs of Marcum, dragging him behind
the Toyota approximately 146 feet down Evangeline Street.
Marcum’s head struck the curb, resulting in his death
shortly thereafter at a local hospital. Kwiterovich tes-
tified that he never saw the cable and was unaware of it
until after the accident.
[1] In actions brought pursuant to the Federal Tort
Claims Act, 28 U.S.C. §§ 1346(b) and 2674, state law where
the alleged negligence occurred is controlling. Ferrero v.
United States, 603 F.2d 510, 512 (5th Cir. 1979); Stimpson v.
United States, 322 F.2d 688, 690 (5th Cir. 1963). Therefore,
Louisiana law governs the substantive issues in this appeal.
[2,3] With regard to our view of the court’s factual
determinations, the clearly erroneous standard applies.
Alexander v. United States, 605 F.2d 828, 832 (5th Cir.
1979); Williams v. United States, 405 F.2d 234, 239 (5th
Cir. 1968); Fed.R.Civ.P. 52(a). However, where the evi-
dence before the trial court consisted solely of depositions
and other written matter, the court hearing no live wit-
nesses, the burden of showing clear error is not so heavy
as in the case where the court has the opportunity to assess
the credibility of witnesses by personal observation.
Cooper v. Department of the Navy, 594 F.2d 484, 486 (5th
Cir.), cert. denied, ........ Lt See , 100 S.Ct. 266, 62 L.Ed.2d
183 (1979); Sicula Oceanica, S. A. v. Wilmar Marine En-
A40
gineering & Sales Corp., 413 F.2d 1332, 1333-34 (5th Cir.
1969). See also Toms v. Country Quality Meats, Inc., 610
F.2d 313, 315 n.5 (5th Cir. 1980); Village Fair Shopping Cen-
ter Co. v. Sam Broadhead Trust, 588 F.2d 431, 434 n.2 (5th
Cir. 1979). Thus, where our view of the same evidence
from the same vantage point as the trial court leaves us
“with a definite and firm conviction that a mistake has
been committed,” there is clear error and we are bound to
set aside the court’s findings. United States v. United
States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542,
92 L.Ed. 746 (1948) ; Ferrero, supra, 603 F.2d at 512.
[4,5] One such erroneous finding was the trial court’s
determination that there was no negligence on the part of
defendant’s employee Oscar Kwiterovich. This holding is
unsupported by the evidence viewed in light of the appli-
cable law. Louisiana law is clear that for a pedestrian to
recover against a motorist there must be fault on the part
of the motorist which brings about the injury. Baum-
gartner v. State Farm Mutual Automobile Insurance Co.,
356 So.2d 400, 406 (La.1978). See Mathews v. Allstate
Automobile Insurance Co., 370 So.2d 1331, 1333 (La.App.2d
Cir.), writ denied, 373 So.2d 526 (La.1979); Fitch v. Evans,
364 So.2d 1309, 1312 (La.App.2d Cir. 1978), writ denied,
367 So.2d 392 (La.1979). Under Louisiana’s “duty/risk”
analysis applicable in negligence actions, plaintiff estab-
lishes a defendant’s liability by showing that defendant’s
conduct is a cause in fact of the harm, and that conduct is
a breach of a legal duty imposed on defendant to protect
plaintiff against the particualr risk and harm involved.
Boyer v. Johnson, 260 So.2d 1164, 1166 (La.1978); Dixie
Drive It Yourself System New Orleans Co. v. American
Beverage Co., 242 La. 471, 487-90, 137 So.2d 298, 302-04
(1962). See Chavez v. Noble Drilling Corp., 567 F.2d 287,
288 (5th Cir. 1978). An act will be deemed a cause in fact
of an accident when, viewed in light of all the evidence,
A4l1
it is concluded that it is a necessary antecedent to plaintiff's
harm, without which the accident would not have occurred.
Laird v. Travelers Insurance Co., 263 La. 199, 209-10, 267
So.2d 714, 717-18 (1972); Follins v. Barrow, 354 So.2d
609, 611 (La.App. lst Cir. 1977), writ denied, 356 So.2d 434
(La.1978).
The accident here would not have happened but for
Kwiterovich’s proceeding through the intersection at Evan-
geline and Plank Road at an estimated speed of 35 miles
per hour, failing to see the cable, which he struck and
which in turn entangled Marcum and dragged him to his
eventual death. Clearly Kwiterovich’s conduct was a sub-
stantial factor which had a direct relationship to the ac-
cident. Laird, supra, 263 La. at 210, 267 So.2d at 718.
[6-8] Our principal inquiry, thus, becomes whether
Kwiterovich was under a legal duty to protect decedent
Marcum against the particular risk of harm which Marcum
encountered and which breach of that duty ultimately led
to Marcum’s death. Generally, a person’s duty toward
another can be stated as the obligation to conform to the
standard of conduct of a reasonable man under like cir-
cumstances. Straley v. Calongne Drayage & Storage, Inc.,
346 So.2d 171, 176 (La.1977). Louisiana law provides that
a motorist is under a duty at all times to keep a sharp look-
out ahead to discover the presence of those who might be
in danger. Baumgartner, supra, 356 So.2d at 404; Jackson
v. Cook, 189 La. 860, 868, 181 So. 195, 197 (La.1938). A
motorist is not entitled to assume his pathway is clear.
Weber v. Phoenix Assurance Co. of New York, 273 So.2d
30, 33 (La.1973). Rather, he is charged with the duty of
seeing that which may be observed in the exercise of rea-
sonable care. Jackson, supra, 189 La. at 868, 181 So. at
197; Follins, supra, 354 So.2d at 611; Welch v. Mayhall, 325
So.2d 741, 744 (La.App. Ist Cir. 1976). The failure to heed
A42
this duty constitutes negligence and such failure imposes
liability on motorists for injuries they inflict upon pedes-
trians in positions of peril upon the roadway. Baumgartner,
supra, 356 So.2d at 404; Guilbeau v. Liberty Mutual Insur-
ance Co., 338 So.2d 600, 604 (La.1976); Jackson, supra, 189
La. at 868, 181 So. at 197.
[9] In view of these well-established principles, the
facts lead to the definite conclusion thet Kwiterovich was
negligent in striking the cable and causing the accident
which led to Marcum’s death. The photographs in evidence
indicate that the cable was clearly visible against the
background of the concrete road surface. At the time of
the accident, approximately 11:15 a.m., the weather was
clear and the road surface dry. The cable was suspended
approximately 18 inches above the road well before
Kwiterovich entered the intersection and at the time of
impact. Furthermore, Kwiterovich testified in his deposi-
tion that he was aware that there was some type of work in
progress when he was approximately 200 yards from the
intersection. He had observed the work truck and one
of the pedestrian crewmembers. Nonetheless, he pro-
ceeded through the intersection at a self-estimated speed
of 35 miles per hour. Although there had been a trailer
truck traveling in the lane ahead of him as he was ap-
proaching the intersection, Kwiterovich switched lanes ap-
proximately 50-100 yards before entering the intersection
and the view in his lane was unobstructed prior to and at
the time of impact. Kwiterovich testified that he was
looking ahead as he proceeded through the intersection and
he did not see the cable at any time before the accident.
[10] A motorist who looks and does not see what
may be seen by the exercise of reasonable care is negligent
to the same extent as one who does not look at all. Follins,
supra, 354 So.2d at 611; Welch, supra, 325 So.2d at 744.
A43
Although he is not charged with the duty of guarding
against unusual or unexpected obstructions which he had
no reason to anticipate he would encounter on the road,
Vowell v. Manufacturers Casualty Insurance Co., 229 La.
798, 808-09, 86 So.2d 909, 913 (1956); Parker v. Continental
Insurance Co., 341 So.2d 593, 594 (La.App.2d Cir. 1977), the
circumstances here served to alert Kwiterovich to the par-
ticular risk involved and to impose upon him the duty to
exercise due care to alter his conduct accordingly.’ As
stated earlier, Kwiterovich admitted that he had observed
some work in progress at the intersection as he was ap-
proaching it. Though he testified that he reduced his speed
at this point, he continued through the intersection, failing
to apply his brakes even after striking the cable. Although
alerted to the possibility of danger by the activities at the
intersection, he failed to bring his automobile under such
control as to have stopped if something were in the road.
See Hryhorchuk v. Smith, 379 So.2d 281, 288-89 (La.App.
3d Cir. 1979). We thus find Kwiterovich was under a legal
duty to protect Marcum against the particular risk of harm
1. In Page v. Green, 306 So.2d 847 (La.App.2d Cir. 1975), the
Louisiana Court of Appeal held that a motorist was not under
a legal duty to protect against striking a winch cable stretched
across a rural highway which he did not see and which he had
no reason to anticipate. In that case, however, the cable was
not placed at an intersection or other point where a motorist
is under a duty to guard against the possibility of peril, there were
inclement weather conditions which rendered the cable barely
visible and the private citizen placing the cable on the road had
given no warning other than to wave his hands immediately
prior to the motorist’s approach while he was standing some
distance behind the cable. Furthermore, no pedestrian was
injured. Rather, it was the motorist who was injured as a result
of striking the cable, and the court refused to find him contribu-
torily negligent. See also Armstead v. Central Louisiana Electric
Co., Inc., 308 So.2d 870 (La.App.3d Cir. 1975) (plaintiff who
struck a three-eighths inch guy wire on rural highway at night
where weather was hazy with patches of fog and wire had not
been there on previous evening when he had traveled over same
road), writ refused sub nom. LeNormand v. Hardware Mutuals
Casualty Co., 246 La. 586, 165 So.2d 482 (1964).
A44
involved and that his conduct constituted a breach of that
duty.
[11] In addressing the trial court’s finding that de-
cedent Marcum was contributorily negligent, we note that
Baumgartner, supra, 356 So.2d at 405, made clear that con-
tributory negligence is no longer a defense to a pedestrian’s
claim for damages sustained as a result of the negligence
of a motorist. Widcamp v. State Farm Mutual Automobile
Insurance Co., 381 So.2d 937, 940-41 (La.App.3d Cir. 1980) ;
Hryhorchuk, supra, 379 So.2d at 289. See 53 Tul.L.Rev. 296,
296-304 (1978). In reaching its conclusion, however, the
trial court determined that Baumgartner was not applicable
to the facts of this case, because decedent Marcum was not
the type of pedestrian contemplated by the court in Baum-
gartner, since he was working in the intersection rather
than merely trying to cross it; also, there was no direct
contact between the motorist’s vehicle and the pedestrian
as in Baumgartner; and, finally, that the accident did not
occur within a clearly defined pedestrian crosswalk, an
important factor in Baumgartr r.2 Although the court’s
distinctions are valid ones, we find that its holding is con-
trary to the rationale of Baumgartner, and that the rule in
that case clearly operates to bar the defense of contributory
negligence here.
In Baumgartner, the Louisiana Supreme Court held
that when a motorist approaches a pedestrian crosswalk
he must use more than ordinary care to see what is ahead
and be prepared for the possibility of people crossing.
Since the motorist, rather than the pedestrian, bears the
greater burden of caution, a driver is required to discover
a pedestrian’s peril sufficiently early to take evasive action,
2. The court also found that Baumgartner was not applicable
because the motorist in this case (Kwiterovich) was held not to
be negligent. But since we have determined that Kwiterovich
was in fact negligent, the court’s holding is erroneous.
A45
and his failure to do so constitutes fault despite a clear
finding o/' negligence on the part of the pedestrian. 356
So.2d at 404-06. The foundation of the court’s holding is
that a mutuality of risks is lacking between the pedestrian
and the motorist, the latter clearly having the advantage.
356 So.2d at 405.
[12] We find that same mutuality of risks lacking
in the circumstances of this case despite the fact that
Marcum was working as a crewmember for the Louisiana
Department of Highways at the time of the accident. Prior
to being struck Marcum had been crossing the intersection
of foot, and although doing so in the course of his work,
he was a pedestrian nonetheless and clearly in a position
of peril. Relative to the oncoming vehicle, he was no less
vulnerable than a pedestrian casually crossing the street;
he was unquestionably the “less armored member of so-
ciety” for which Kwiterovich as a motorist on a public
roadway was under a duty at all times to keep a vigilant
lookout and avoid. Welch, supra, 325 So.2d at 744. See
Guilbeau, supra, 338 So.2d at 603; Jackson, supra, 189 La.
at 868, 181 So. at 197. Thus, despite the possibility that the
Department of Highways may have been negligent in fail-
ing to use adequate cautionary signals or other safety de-
vices in the course of their work to warn the motoring
public, this factor does not bar defendant’s liability in this
case.®
The trial court’s second distinction, that the vehicle
did not directly strike the pedestrian as in Baumgartner,
but rather Kwiterovich’s car struck the cable which in
3. It appears that Marcum, only a trades helper was hardly
in a position to be responsible for insuring that the crew em-
ployed the proper cautionary measure. Furthermore, there was
testimony that the work truck’s flashing light was on and that
Marcum and the other crewmembers were wearing yellow
Highway Department hats at the time of the accident which would
serve to provide notice to an approaching motorist that work was
in progress creating a potentially hazardous condition.
A46
turn struck Marcum, is clear error. If Kwiterovich had
discharged his duty while approaching the intersection to
keep a sharp lookout for those in danger, he would have
observed the cable which was clearly visible and avoided
the impending peril. Further, to draw the distinction here
would dilute an important policy underlying Bawmgartner,
to stress the importance of human safety “even for those
who are negligently caught off their guard.” Baumgartner,
supra, 356 So.2d at 495. Thus, under these circumstances,
the fact that Kwiterovich struck the cable instead of Mar-
cum is immaterial.
Finally, the trial court’s holding that Bawmgartner is
inapplicable because there was no clearly defined pedestrian
crosswalk at the intersection where the accident occurred
is erroneous. Although it is true that in Baumgartner, the
pedestrian was struck while in a crosswalk, the rationale of
that case is equally applicable to the circumstances here.
Plank Road had no marked crosswalk; however, Marcum
was struck while in an area where pedestrians would likely
cross the street. In such a case, Marcum would clearly have
the benefit of a motorist’s obligation to exercise the degree
of care necessitated by the circumstances. To hold that
Baumgartner is limited to pedestrian-crosswalk accidents
would lead to an anomalous distinction which the court
plainly did not intend to draw. See Widcamp, supra,
381 So.2d at 940-41; Hryhorchuk, supra, 379 So.2d at 289.
In determining that Kwiterovich was negligent and
that the defense of contributory negligence was not avail-
able to defendant in this case, we find it unnecessary to
address the trial court’s holding that the doctrine of last
clear chance was not applicable.
Liability having thus been established by our decision
herein, the case must be remanded to the trial court for
a determination of plaintiff's damages.
REVERSED AND REMANDED.
A47
APPENDIX 9
“TX
“That on the date and at the time of the said collision,
November 23, 1971, your plaintiff, H. H. Henderson, had
no notice that his public liability policy having been issued
by the defendant, policy #2CC 637846, had not been re-
newed, he had no notice nor was he ever advised by the
defendant of any intent to cancel the coverage prior to the
date of the accident 11/23/71. Had he been so advised
prior to the accident or the expiration date he could have
obtained such coverage from other sources. He was at all
times and in all ways relying upon coverage that would
have been provided by the renewal of the said policy.
Since said collision occurred after working hours and in the
early part of the night on November 23, 1971 your plaintiff,
H. H. Henderson, the next day thereafter notified the
defendant of said accident by notifying their agent, Sigler
Insurance Co. of same. Nothing was mentioned of any
cancellation of coverage. A day or so after this notification
your plaintiff, H. H. Henderson, received a notice of non-
renewal of policy #C 3111037 which expired 10/7/71, a
copy of which is hereto attached as Exhibit “C-2” and made
a part hereof, but which policy is in no way connected
with the coverage claimed and coverage herein involved.
Your plaintiff has never received notice of non-renewal
or cancellation of policy #2CC 637846 providing $50,000/
100,000/25,000 coverage.”
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.