168 F.3d 1124 (8th Cir. 1999), 98-1398, H & H Brokerage, Inc. v. Vanliner Ins. Co.

Docket Nº:98-1398.
Citation:168 F.3d 1124
Party Name:H & H BROKERAGE, INC., Appellee, v. VANLINER INSURANCE COMPANY, Appellant.
Case Date:February 24, 1999
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 1124

168 F.3d 1124 (8th Cir. 1999)

H & H BROKERAGE, INC., Appellee,

v.

VANLINER INSURANCE COMPANY, Appellant.

No. 98-1398.

United States Court of Appeals, Eighth Circuit

February 24, 1999

Submitted Sept. 24, 1998.

Rehearing and Rehearing En Banc Denied April 27, 1999.

Page 1125

Patrick J. Goss, Little Rock, AR, argued, for Appellant.

Larry Killough, Jr., Searcy, AR, argued, for Appellee.

Before WOLLMAN, JOHN R. GIBSON, and MORRIS SHEPPARD ARNOLD, Circuit Judges.

MORRIS SHEPPARD ARNOLD, Circuit Judge.

H & H Brokerage (H & H) arranged for a shipment of goods owned by Singer Sewing Company (Singer) to be carried by R & R Trucking (R & R). The shipment was stolen from R & R's possession before it was delivered. Singer submitted a claim to R & R's insurance company, which denied the claim on the ground that R & R's policy did not cover Singer's damages. Singer then demanded that H & H compensate it for its damages, and suspended its business with H & H until H & H should do so.

H & H contacted its own insurance carrier, Vanliner Insurance Company (Vanliner), which informed H & H that its policy did not cover the cost of lost goods if R & R's insurance did not do so (such coverage is "contingent cargo liability coverage"). H & H then paid Singer and sued Vanliner under Arkansas law for breach of contract and the tort of bad faith. A jury awarded approximately $84,150 to H & H (the amount that H & H had paid to Singer) for the lost goods, approximately $11,750 for H & H's lost profits (from the temporary loss of Singer's business), and $50,000 in punitive damages. The trial court denied Vanliner's motion for judgment notwithstanding the verdict (JNOV) and entered judgment for H & H.

Vanliner appeals. We can reverse only if "after viewing the evidence in the light most favorable to the verdict, we conclude that no reasonable juror could have returned a verdict for [H & H]." Ryther v. KARE 11, 108 F.3d 832, 836 (8th Cir.1997) (en banc ), cert. denied, 521 U.S. 1119, 117 S.Ct. 2510, 138 L.Ed.2d 1013 (1997). After a careful examination of the record, we affirm the judgment with respect to the cost of the lost goods, and reverse with respect to the lost profits and the punitive damages.

I.

Vanliner contends that the contract that it entered into with H & H did not include contingent cargo liability coverage, and that Vanliner is therefore not responsible for the cost of the lost goods or for any other damages suffered by H & H. Although there was no clause in the contract specifically providing such coverage, at trial H & H relied on the language of the "general conditions" clause of the "motor cargo liability policy," which states that "[t]his policy covers the liability of the insured for loss or damage to lawful goods and merchandise while in the custody or control of the insured." The policy thus requires only that the goods be in either the custody or the control of the insured.

H & H concedes that it did not have custody of the goods but contends that they were in its control. In support of this proposition, H & H presented evidence that it selected the trucking company, directed how, where, and when the goods were to be delivered, negotiated the price that the owner of the goods was to be charged, handled all of the paper work, instructed the truck driver to stay in contact, and had the power to make route changes during shipping. We believe that this evidence provided a sufficient basis for the jury to find that H & H

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was in control of the goods when they were stolen, and that Vanliner was therefore obligated to compensate H & H for the loss of those goods. We thus affirm the judgment for H & H with respect to the cost of the lost goods.

II.

Vanliner contends further that the jury's award of damages for the temporary loss of Singer's business should be overturned because consequential damages of this kind are not available in cases for breach of contract under Arkansas law unless the party charged has agreed to pay them. H & H responds that because its lawsuit includes a claim for the tort of bad faith, no agreement was necessary for an award of consequential damages.

In support of the contention that H & H's consequential damages were tied exclusively to the claim for breach of contract, however, and not to the claim for the tort of bad faith, Vanliner points to the interrogatories submitted to the jury. The third interrogatory asked if H & H suffered "loss of profits as a result of Vanliner's breach of the insurance contract," and the next interrogatory asked for the amount, if any, of those damages. It was not until the fifth interrogatory that the tort of bad faith was mentioned, and the next interrogatory inquired about punitive damages in connection only with that tort.

Perhaps the trial court erred by failing to instruct the jury that it could assess consequential damages on the tort claim. H & H, however, did not object to the instructions or the interrogatories at trial and does not maintain on appeal that they were erroneous in any respect. In any event, to the extent that the instructions or the interrogatories were error, they were harmless error, because H & H is not entitled to consequential damages with respect to either the tort claim or the contract claim.

Consequential damages are inappropriate with respect to the contract claim because no reasonable jury could have found that there was an...

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