Opinion
No. 74-2021.
May 5, 1976. Rehearing Denied June 17, 1976.
Daniel J. Sullivan, Coral Gables, Fla., for intervenors-plaintiffs-appellants.
Robert H. Crary, Jeanne Heyward, Miami, Fla., for Penn. Nat.
Michael P. McGuire, Coral Gables, Fla., for Kessler.
Appeal from the United States District Court for the Southern District of Florida.
A multi-party, multi-claim, multi-court Donnybrook in which all have at one time or another lashed out against each for all or any part they could get, this Tinker-to-Evers-to-Chance ended when our suitors were put out by an infield fly. In more traditional terms, the victims of a Florida indefensible criminally negligent vehicle collision sued in the state courts of Florida all of those within reach of any potential liability which soon triggered the inevitable claims, cross-claims, indemnifications and counter-suits among the supposed insurers of the Florida certificated carriers and the owners or operators of the rig at fault. As they hopefully tag end in this Kilkenney fair the District Judge held against one of the insurers and its assured — who must have been joined to give the insurer a more attractive cloak — and in favor of the victorious other insurer for what, at most, was attorney fees in its successfully maintaining the defense that its policy did not cover the occurrence.
See, e. g., Grigsby v. Coastal Marine Service of Texas, Inc., 5 Cir., 1969, 412 F.2d 1011, 1969 AMC 1513; Simmons v. King, 5 Cir., 1973, 478 F.2d 857.
See, e. g., Nations v. Morris, 5 Cir., 1973, 483 F.2d 577, 1973 AMC 1413; Abramson v. Boedeker, 5 Cir., 1967, 379 F.2d 741; United States Lines Co. v. Williams, 5 Cir., 1966, 365 F.2d 332, 1966 AMC 2418.
William S. Stevens, The Common Law Origins of The Infield Fly Rule, 123 U.Pa.L.Rev. 1474 (1975).
See note 1, supra.
Finding that the Judge's hunch, see Hutcheson, J., The Function of The "Hunch" In Judicial Decision, 25 Ga.B.J. 127 (Nov. 1962), on Florida law became an Erie-fact about the time he ruled on his own, we affirm on the basic claim but reverse as to the counter-claim of its not-so-friendly rival insurer for attorneys fees.
This is the cast of characters:
Fargo: Fargo-Anchor Moving and Storage, Inc., a Florida certificated household goods carrier with geographical authority limited to the Miami area in Dade County.
Penn: Pennsylvania National Mutual Casualty Insurance Company, the liability insurer for Fargo with a 50-mile radius limitation.
National: National Indemnity Insurance Company, a simultaneous liability insurer of Fargo with a like 50-mile radius limitation.
Kennelly: Kennelly Moving and Storage Company, a Florida certificated carrier whose authority included the site of the accident.
Reliance: Reliance Insurance Company, the liability insurer of Kennelly with Fargo as an additional assured.
Kesslers: Mr. and Mrs. Walter Kessler were passengers in the automobile that was struck by the leased truck on Feb. 18, 1971 incurring severe personal injuries.
Vollmer: Vollmer, the Executrix for Mr. and Mrs. Redmon who were passengers in the Kesslers' car. Vollmer represented the deceased in an earlier state court case resulting from these injuries. See Vollmer v. Fargo-Anchor Moving and Storage, Inc. (Fla.App. 1974), 288 So.2d 523.
In The Beginning
The genesis of our problem starts, of course, with the collision of February 18, 1971 between a tractor rig owned by Fargo, driven by one of its employees, but under lease-contract to Kennelly, when it crossed the center line on the highway to Punta Gorda more than 50 miles from Miami and crashed into the Kessler-Vollmer car. Nothing would have engaged the eight Judges, state and federal, without this event. But the complications which beset us occurred much earlier.
In Florida courts, one circuit trial judge, three of the District Court of Appeals, one Federal District Judge and three judges of the Court of Appeals not including, of course, a petition for rehearing en banc involving another 12, plus the prospect of petition for certiorari to the Supreme Court.
Fargo, a household carrier certificated by the Florida Public Utility Commission (PUC) with geographical authority limited to specified Miami area of Dade County, entered into a contract with Kennelly which had wider PUC operating authority by which Fargo's equipment would in effect be leased to Kennelly with Fargo supplying the driver. As to be expected among knowledgeable businessmen, this relationship and the contract posed legitimate insurance problems complicated, as also to be expected, by the overriding demands of Florida law and PUC regulations to assure protection to the public and property owners.
For the movement occasioning this accident Fargo could not haul the shipment under its own certificate so it used Kennelly's operating authority, relying on the interrelation agreement with Fargo's equipment being driven by its since convicted employee.
There was much hue and cry vis-a-vis the insurer's, damage claimants and others on whether this was authorized by Kennelly under the agreement. But this cut no figure below nor do the parties urge it here.
Fargo's Lay-Off On Underwriters
Fargo had earlier obtained a liability policy from Penn with Penn filing the required certificate of insurance with PUC. But the policy contained a 50-mile radius endorsement. National, which is now a much relieved and innocent bystander, subsequently issued a liability policy to Fargo with substantially similar 50-mile radius limitation.
It stated in part:
The policy in issue contained a valid endorsement, approved by the Florida Public Utilities Commission, excluding coverage for accidents occurring outside a radius of fifty miles from the insured's (Fargo's) base at 301-345 N.E. 59th Street, Miami, Florida:
"It is agreed that the insurance with respect to the automobile described above or designated in the policy as subject to this endorsement applies only if such automobile is used exclusively within a fifty mile radius of the limits of the city or town where such automobile is principally garaged as stated in the policy, except for the occasional use of such automobile for personal, pleasure or family purposes beyond such radius."
Penn's attempt in cancellation for nonpayment of premiums aborted for the simple failure, as required by PUC regulations of Penn, to give simultaneous notice to PUC.
The result was that Fargo was in that unusual, and enviable, position of having two insurers for the same liability. This may account for the fact that Fargo is presumably happy with all that has occurred and is neither a party or a supplicant to this appeal.
The Fargo-Kennelly Agreement
The "Independent Contractors Agreement" between Kennelly and Fargo, after reciting that Kennelly was a certificated intrastate household carrier in Florida and that Fargo is engaged in the business in connection with which it owns or has at its disposal motor vehicle equipment and employees competent and qualified drivers, set forth a number of obligations. Although it described the relationship as "independent contractor" with the drivers to be supplied and all expenses paid by Fargo the contract recognized that operations under it were for Kennelly as the certificated carrier. Presumably this was a Florida adaptation to the similar lease of vehicles owner driven or otherwise, in the interstate system.
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It is expressly understood and agreed by and it is the intention of the parties hereto that [Fargo] is an independent contractor only and neither it nor its employees are employees of [Kennelly].
(c) To maintain, without expense to [Kennelly], each and all of the vehicles and equipment furnished by [Fargo] and to keep all such vehicles and equipment clean and in good repair and appearance in accordance with the standards of [Kennelly] and the requirements of the Fla.R.R. P.U. Commission and other appropriate public authority.
(f) To pay or cause to be paid the cost of operation of said vehicles including, without limitation, cost of oil, fuel, tires; repairs, all tolls of whatsoever nature incident to ownership and operation of such vehicles, including taxes on any or all of such items.
The contract did have an indemnity agreement running from Fargo to Kennelly but it was limited and was geared into the correlative insurance provisions by which Fargo agreed to supply "Bob Tail" liability insurance, and a certificate of insurance but the principal insurance was to be supplied by Kennelly for the benefit of Fargo as well, the only limitation being that it would be "excess" over "over and above any valid and collectible insurance carried by "Fargo." Notable was the absence in Fargo's insurance obligation to provide contractual indemnity insurance to underwrite Fargo's indemnity commitment in para. 4-(i) (see note 15, supra).
Litigation Sets In
With all of these potential defendants it was not surprising that litigation broke out on all fronts.
The Kessler-Vollmer State Court Suit
On August 13, 1971 the Kessler-Vollmers filed a damage suit for the accident in the Florida state court against, Fargo, National, its insurer, Kennelly and Reliance, its insurer, together with some additional defendants. The state trial judge acting with a good deal of administrative wisdom severed out the damage claim. Oddly enough National was joined as a party defendant but Penn was not. As we shall see later in the course of our juridical over-the-road journey, see United Services Automobile Association v. Russom, 5 Cir., 1957, 241 F.2d 296 at 298, the absence of Penn led the Federal Judge to reject Penn's plea of stare decisis, res judicata, collateral estoppel or the like.
The state trial judge ruled in favor of National because the accident took place beyond the 50-mile radius limitation (see note 10, supra) and entered a final judgment to that effect on January 18, 1973. The Kesslers on February 8, 1973 [see App. 72-75] by stipulation and release settled their claim against Kennelly and Reliance by a dismissal with prejudice, the stipulation and release expressly providing, however, that the settlement would not "affect the cross-claim presently pending [by them] against National, the rig driver and Fargo. Oddly, there was no express reservation against Penn, presumably because it had not yet entered the litigious scene.
Kesslers-Vollmers being unhappy with the judgment letting National out on the 50-mile radius coverage defense appealed this judgment to the Florida District Court of Appeals.
Another Day Another Court
On April 9, 1973 Kesslers, but not Vollmers filed in the Federal District Court a declaratory suit against Penn to effectuate payment of the $100,000 settlement between Kesslers and Fargo (see note 23, supra) in the hopes of getting some blood out of the turnip, see U.S. v. Carmichael, 5 Cir., 1974, 497 F.2d 36, 39. True to form this case soon got snarled up by Kennelly and Reliance ranging on the side, of all things, the damage claimant Kesslers. Within a month (August 20, 1973) Penn counterclaimed against Kennelly and Reliance asserting that Kennelly and Reliance had the primary coverage.
The Federal Trial Judge, unimpressed by Penn's plea of stare decisis on a state trial judgment as the Erie-indicator, cf. Ford Motor Company v. Mathis, 5 Cir., 1963, 322 F.2d 267, 269 and unwilling at Penn's urging to postpone consideration of the 50-mile coverage question in the Penn policy (see note 9, supra) pending the soon-to-come authoritative decision of the Florida District Court of Appeals, proceeded on his own to interpret and uphold, the validity of the 50-mile exclusion (see note 9, supra) and in doing so held in favor of Penn and against the Kesslers, but still holding off until another day the struggle which confronts us between Penn and Kennelly-Reliance.
Thus, the Kesslers so far had failed in both forums on substantially the same Florida issue of the 50-mile exclusion. For some reason not yet disclosed no appeal was taken from this October 25 judgment so it became for the parties and for all time the law of the Medes and Persians which altereth not.
As for the intramural contest between Fargo's supposed insurers the battle continued to rage. Penn moved for summary judgment against Kennelly and Reliance and on March 14, 1974 the Federal District Judge granted it in favor of Penn against Kennelly and Reliance and granted Penn's counterclaim against Kennelly and Reliance for all sums, including suit costs, attorney fees and the payment of any judgment that issued from the suit, and held Kennelly and Reliance primarily liable. On March 28, 1974 Kennelly and Reliance filed a motion for relief relying on F.R.Civ.P. 60(b), a move which had built-in obstacles.
Thereafter Kennelly-Reliance filed a timely appeal in a case which we might not otherwise have ever had to wrestle with had the District Judge used a little patience while awaiting what had to be a decisive decision on a purely Florida question from the lips of the District Court of Appeals.
The Fog Lifts The Erie Beacon Burns Brightly
Between the October 25, 1973 judgment in favor of Penn and the rulings of March 1974 on counterclaims of Penn-Kennelly-Reliance the word came down from on high — as high as a federal court frequently has to go. For on January 8, 1974 the District Court of Appeals basing its judgment on Rule 25-5.31(5) of P.U.C., as authorized by § 323.08, Fla.Stat. held that "as between an innocent third party injured by the carrier and the company that issues a policy . . . [the insurer] will not be heard to deny coverage to one injured by the carrier in the pursuit of its business in the State of Florida." Vollmer v. Fargo-Anchor Moving and Storage, Inc., D.Ct. of App., 1974, 288 So.2d 523, at 525.
But the Florida court did not stop there. By language so emphatic that it relieves us even of a momentary temptation to certify this decisive question of Florida law to the Supreme Court of Florida as we often but sparingly do the Court went on to declare:
The rights afforded to the injured third party as a matter of public policy would not, of course, foreclose the individual rights between the carrier and its insured if the insured violated the terms of the contract of insurance. 288 So.2d 523, 525.
Kennelly-Reliance Lose The Main Appeal
Were it not for the tag end attack on the judgment entered by the District Court in favor of Penn on its crossclaim against Kennelly-Reliance for what turns out to be, at most, the prospect of recovering attorneys' fees for its successfully maintaining the validity and decisive effect of the 50-mile exclusion, this declaration by an authoritative voice of the Florida judiciary, would have permitted us to dispose of this by a simple affirmance under Rule 21. Now, since the Erie winds racing thru our wind sock have indicated the proper course, we have to discuss more fully that feature which has generated so much confusion.
We, as did the District Judge in overruling Kennelly-Reliance's motions for reconsideration (see note 27, supra), are of the clear opinion that whether as a matter of stare decisis or merely as a positive indicator of Florida law, Vollmer was of no help whatsoever in the controversy between Kennelly-Reliance and Penn. The efforts of Reliance to cloak itself in the more appealing garb of Kennelly won't do.
First, on the assumption that Reliance can somehow latch onto subrogation rights under its assured Kennelly has under the indemnity agreement (see note 15, supra) fails for a number of reasons. At the outset, the Penn policy (see R. 24 et seq.) provides insurance under coverage A and B insurance for bodily injury (death) and property damage claims for which the insured shall become legally obligated to pay. And then the policy goes on to expressly exclude liabilities assumed under contracts.
But more importantly, the only other right on which Kennelly, or for that matter Reliance, can rely is the provision in Kennelly's contractual obligation to provide insurance for the benefit of itself and Fargo (see note 18, supra). But the trouble with this is that this limitation applies only to insurance "over and above any valid and collectible insurance carried by Fargo, see General Insurance Co. of America v. Western Fire and Casualty Co., 5 Cir., 1957, 241 F.2d 289. Applying Vollmer it is now clear for our Erie purposes — until the Supreme Court of Florida rules otherwise — that as between the insured and insurer the 50-mile exclusion radius exclusion is valid.
This means that as between Penn and Reliance, or Reliance in the subrogated garb of Kennelly has no claim against Fargo and without a claim against Fargo there is no claim against Penn since there is no possible legal relationship between these two supposed liability insurers whose insurance contracts were entered into at separate times and with no indication from the policies that this was some sort of dovetailed arrangement by which either of the insurers, apart from subrogation, could obtain the benefit of the others policy.
Nor do either Kennelly or Reliance get any mileage of the typed-in undertaking by Fargo para. 4(h-1) (see note 17, supra) for, as the District Court held with the imprimatur Florida law soon to come in Vollmer, the obligation to procure the insurance to be covered by the certificate of insurance was confined to "minimum coverage as required by law," and this thereby brought into play the very limited geographical scope of Fargo's PUC certificate. Not being authorized to operate beyond the geographical limits of the certificated operating authority there was no obligation imposed by Florida statutes or PUC regulations to procure insurance protecting members of the public and third party property owners for operations for which it was not certificated.
The District Judge was therefore completely right in denying Kennelly-Reliance's counterclaim against Penn.
Penn Must Lick Own Wounds
But for reasons which the Judge never articulated he granted indemnity in favor of Penn against Kennelly-Reliance. The argument revealed that this may be much-a-do-about-nothing since Penn has not been required to pay out a dime to anyone. The only possible factual basis for anything more than a theoretical claim is the hope of recovering attorneys' fees for Penn's successful defense vis-a-vis its own insured, Fargo and the damage claimants. Whether Florida would transport into this land-based relationship, as we have done in WWLP maritime situations for a breach of the WWLP where the shipowner has successfully defeated the third party's claim, see Strachan Shipping Co. v. Koninklyke Nederlandsche S.M., N.N., 5 Cir., 1963, 324 F.2d 746, 1964 AMC 3, is a highly doubtful proposition. But assuming that it would, there is no record basis for this largesse.
In the first place, whatever rights Reliance might have through Kennelly under the contract, has to be against Fargo, not its insurer Penn, with whom, apart from subrogation, there is no relationship, correlative rights or duties. Next, on the record which so far as we have been able to sift it out, is barren of Reliance's policy, for all we know — and there is a pretty good likelihood that our guess is a good one — the policy of Reliance is similarly limited to bodily injury/death and property claims growing out of operations, not contractual agreements.
The District Judge was, therefore, wrong in allowing Penn to recover against Kennelly-Reliance, or either of them.
Penn, therefore, loses this inning, but it comes out quite a winner, first, against the Kesslers, and finally as to Kennelly-Reliance's claim.
We accordingly reverse the March 14, 1974 judgment which declared Kennelly and its insurer, Reliance, primarily liable for indemnification to Penn and we also deny attorneys fees to Penn.
Thus, at the end of a long and sometime rocky journey this case comes to an end.
AFFIRMED IN PART; REVERSED IN PART.
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The policy issued by National Indemnity in conformity with § 323.06, Fla.Stat., F.S.A., contained a limitation as to its terms:
"NATIONAL INDEMNITY CO. of Omaha, Nebraska
"In consideration of the reduced premium at which this policy is written, it is hereby understood and agreed that no coverage shall be in effect under this policy at any time during which the insured property is more than Fifty (50) miles from the assured's address shown on this policy.
"All other terms and conditions of such Policy remain unchanged."
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It is expressly understood and agreed by and it is the intention of the parties hereto that [Fargo] is an independent contractor only and neither it nor its employees are employees of [Kennelly].
(c) To maintain, without expense to [Kennelly], each and all of the vehicles and equipment furnished by [Fargo] and to keep all such vehicles and equipment clean and in good repair and appearance in accordance with the standards of [Kennelly] and the requirements of the Fla.R.R. P.U. Commission and other appropriate public authority.
(f) To pay or cause to be paid the cost of operation of said vehicles including, without limitation, cost of oil, fuel, tires; repairs, all tolls of whatsoever nature incident to ownership and operation of such vehicles, including taxes on any or all of such items.