Acuity, Ins. Co. v. Bryan C. Johnson, Individually & Doing Bus. Nat'l Mut. Ins. Co.
| Decision Date | 15 January 2015 |
| Docket Number | No. 13–2915.,13–2915. |
| Citation | 776 F.3d 588 |
| Parties | ACUITY, a Mutual Insurance Company, Plaintiff–Appellant v. Bryan C. JOHNSON, individually and doing business as BCJ; Western National Mutual Insurance Company, Defendants–Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
OPINION TEXT STARTS HERE
Beth Jenson–Prouty, argued, Minneapolis, MN (James Franklin Mewborn, on the brief), for Appellant.
Rolf E. Sonnesyn, argued, Minneapolis, MN, for Appellee Johnson.
Paula Duggan Vraa, argued, Saint Paul, MN (John M. Bjorkman, on the brief), for Appellee Western National Ins. Co.
Before MURPHY, SMITH, and GRUENDER, Circuit Judges.
Acuity, a Mutual Insurance Company (“Acuity”), appeals from the district court's 1 judgment after a jury returned a verdict in favor of its opponents, Western National Mutual Insurance Company (“Western National”) and Bryan Johnson. We find no error and affirm.
Bryan Johnson owns and operates a small trucking business in Minnesota. During the relevant period, Johnson owned and operated 1986 and 1987 International semi-tractor trucks. Johnson insured his trucks through Acuity. However, Johnson only insured one truck at a time, depending on which truck he was actively driving.
On December 11, 2009, Johnson called Holden Agency, an agent of Acuity, and told them to switch insurance coverage from the 1986 to the 1987 truck. Inconveniently, the 1987 truck broke down the next day. On December 14, Johnson called Holden back and asked them to switch the insurance back to the 1986 truck.
Nearly a year later, on December 5, 2010, Johnson's 1986 truck, while pulling a trailer owned by J & B Trucking (“J & B”), collided with a vehicle driven by Penny Marlow. The J & B trailer overturned and landed on top of Marlow's vehicle causing her death. Western National insured the trailer. Johnson called Holden to report the accident but was informed that the 1987 truck was covered and that the 1986 truck was not covered by the policy. According to Holden's records, Johnson had called them in February 2010 and requested to switch coverage from the 1986 to the 1987 truck, as he had done on December 11, 2009. Johnson denied ever having made such a request. At trial, Johnson pointed to the irrationality of making such a change because the 1987 truck remained inoperable and Johnson operated the 1986 truck throughout 2010. Johnson also highlighted several pieces of evidence that made it unlikely that he would make such a change to the policy while he was actively driving the 1986 truck.2
Acuity's Business Auto Policy terms state that: “For any covered auto you [Bryan Johnson] own, this Coverage Form provides primary insurance.” Under the policy, covered autos included trailers attached to owned semi-tractors described in the policy declarations. Thus, Johnson's policy would also provide primary insurance for damage caused by J & B's trailer if the Acuity policy covered the 1986 truck at the time of the accident. Additionally, the Acuity policy contains an endorsement commonly referred to as the MCS–90, which provides public liability coverage for Johnson's operation as a trucker, even if his truck was not insured at the time of an accident.
On the other hand, the Western National policy issued to J & B states
[W]hile a covered “auto” which is a “trailer” is connected to another vehicle, the Liability Coverage this Coverage Form provides for the “trailer” is:
(1) Excess while it is connected to a motor vehicle you [J & B] do not own.
(2) Primary while it is connected to a covered “auto” you own.
(Emphasis added.) Notwithstanding, because Johnson was leasing the trailer, he would qualify as a permissive user under Western National's policy, which would require Western National to provide primary coverage to Johnson if he were not otherwise insured.
The key issue in this case is whether Acuity's insurance policy covered Johnson's truck and hence J & B's trailer as primary insurance at the time of the accident. Factually, the matter turns on whether Johnson directed Acuity's agent, Holden, to change the covered vehicle on the policy.
Acuity brought actions against Western National and Johnson, alleging that the February 2010 change to the Acuity policy results in Western National becoming the primary insurer liable in the underlying tort action; 3 Western National and Johnson brought counterclaims seeking a declaration that Acuity was the primary insurer. Additionally, Western National and Johnson brought cross-claims against each other seeking declarations regarding Western National's liability in the event that Acuity was found not to be the primary insurer.
The pivotal factual issue was whether Johnson called Holden in February 2010 and took the 1986 truck off of the policy. If Holden mistakenly changed the policy without Johnson's consent, Acuity would have to provide primary insurance coverage for the 1986 truck and J & B's trailer, and Western National would provide excess insurance. Alternatively, if Johnson requested the February 2010 change and the 1986 truck was rightfully taken off the policy at Johnson's request, this would switch the roles—Western National would provide primary insurance coverage and Acuity would provide excess coverage under the MCS–90 policy.
Acuity and Johnson settled on the first day of trial. Acuity moved for the court to dismiss Johnson from the lawsuit arguing that Johnson no longer had an interest in the outcome of the case. The trial court denied the motion and allowed Johnson to participate as a party at trial because Western National's cross-claim against him remained pending. The court made this determination even though Johnson assigned his claims against Western National to Acuity in the settlement agreement, and Acuity agreed to indemnify Johnson from any liability assessed to him arising from Western National's cross-claim. The trial proceeded, and Johnson's attorney fully participated in opening and closing arguments, cross-examination of witnesses, and making objections.
Acuity also submitted a motion in limine to prevent Western National from asserting a contract reformation argument. Acuity asserted that Western National was seeking to rewrite the Acuity insurance policy, to which it was not a party, and thus lacked standing to do so. After settling with Johnson, Acuity argued that the only issue remaining before the court was one of law: specifically, whether Western National had standing to bring a contract reformation claim. If all that remained was an issue of law, a jury trial would be obviated. The district court disagreed and allowed the jury trial to proceed. The court viewed the parties' dispute as principally a factual issue turning on whether Johnson instructed Holden to change which truck he wanted insured. Thus, the court denied Acuity's motion and found that Western National had standing.
Consistent with its theory of the case, Acuity contended that the court should instruct the jury to decide whether Western National and Johnson carried their burden to show that the Acuity policy should be reformed to include the 1986 truck. Johnson and Western National disagreed, arguing that Acuity's misstatement of the issues would confuse the jury; after all, this was not a contract reformation case. Neither Johnson nor Western National presented evidence in support of contract reformation. Acuity's theory essentially assumes as fact that Johnson made the request to change insured vehicles. The court ultimately concluded that this crucial fact could not be assumed and framed the issue before the jury as a factual inquiry of whether Johnson had instructed Holden to remove the 1986 truck from the Acuity policy in February 2010; this jury instruction required Acuity to prove it modified the contract with Johnson's consent.
After a two-day jury trial, the jury returned a verdict in favor of Western National and Johnson, finding that Johnson did not request that Holden remove the 1986 truck from the Acuity policy in February 2010. Based upon this finding, the district court entered judgment in favor of Western National and Johnson, declaring that Acuity had to provide primary insurance coverage for the accident.
After losing at trial, Acuity sought a judgment as a matter of law (JMOL) under Rule 50(b) of the Federal Rules of Civil Procedure, or alternatively, a new trial under Rule 59. First, the district court rejected Acuity's motion for JMOL on procedural grounds pursuant to Rule 50(b) because Acuity did not move for a JMOL pursuant to Rule 50(a) during trial. The court also denied the motion on the merits because Acuity consistently misstated the issue; whereas Acuity framed Western National's claim as one of contract reformation to rewrite the insurance policy to add the 1986 truck, the real dispute was whether Johnson instructed Holden to remove the 1986 truck from the policy at all. Therefore, Acuity was not entitled to a judgment as a matter of law.
The court also denied Acuity's motion for a new trial because there was no error in the jury instructions. Acuity argued that the court should have instructed the jury that Western National bore the burden to prove the elements of contract reformation; again, the district court found that Acuity misstated the issue.
Acuity appeals the district court's decision to allow the jury trial to proceed after its settlement with Johnson. Also, Acuity argues that the district court erred by not including a jury instruction and a question on the special verdict form on contract reformation. Finally, Acuity argues that it was prejudiced by the district court allowing Johnson to participate as a party at trial after the two parties settled out of court.
Acuity continues to argue that this case centers on what it characterizes as Western National's attempt to reform a contract to which it is not a party. This is the...
To continue reading
Request your trial