Fidelity & Deposit Co. of Md. v. SOUTH. UTILITIES

• Decision Date: 11 January 1983
• Docket Number: Civ. A. No. 81-81-ATH.
• Citation: 555 F. Supp. 206
• Parties: FIDELITY AND DEPOSIT COMPANY OF MARYLAND, Plaintiff, v. SOUTHERN UTILITIES, et al., Defendants.
• Court: U.S. District Court — Middle District of Georgia

555 F. Supp. 206

FIDELITY AND DEPOSIT COMPANY OF MARYLAND, Plaintiff, v. SOUTHERN UTILITIES, et al., Defendants.

Civ. A. No. 81-81-ATH.

United States District Court, M.D. Georgia, Athens Division.

January 11, 1983.

George C. Reid, Atlanta, Ga., for plaintiff.

Gary B. Blasingame, Gene Mac Winburn, Athens, Ga., Joe B. Sartain, Jr., Gainesville, Ga., Daniel M. Dibble, Kansas City, Mo., for defendants.

OWENS, Chief Judge:

Fidelity and Deposit Company of Maryland (Fidelity and Deposit Company) issued and delivered an insurance policy covering employee dishonesty to Contrech, Inc., 2333 Indiana Street, Kansas City, Missouri. Southern Utilities, Inc. (Southern Utilities) of Athens, Georgia was added as an additional insured effective October 29, 1979. By letter dated September 29, 1980 from its attorney, Southern Utilities notified Fidelity and Deposit Company "of a loss or of an occurrence which may give rise to a claim for a loss..." and advised that it then appeared that "an employee of the company, John Hayworth, and perhaps others, may be responsible for the loss of money or other property by the insured company by reason of fraudulent or dishonest acts within the meaning of Insuring Agreement I...." Insuring Agreement I provides Employee Dishonesty Coverage up to $1,000,000.00.

On March 6, 1981 Southern Utilities, through its attorneys, submitted a formal proof of loss in the amount of $261,685.01 reserving the right to increase the amount if a dispute with a subcontractor is resolved unfavorably. Attached to the proof of loss was the affidavit of Ronald R. Young, Chief Executive Officer of Southern Utilities, describing the facts of the claim.

Following the commencement of a lawsuit in the Circuit Court of Jackson County, Missouri by Southern Utilities against Fidelity and Deposit Company this complaint was filed by Fidelity and Deposit Company against Southern Utilities and John M. Hayworth, Jr. seeking a declaratory judgment as to Southern Utilities' claim and a judgment against defendant Hayworth for any sums determined to be owed Southern Utilities on account of defendant Hayworth's dishonest conduct.

Following the completion of extensive discovery and consideration by the court, the court held pretrial conferences on April 13 and November 9, 1982, and after hearing from counsel advised that the court seriously questioned that Southern Utilities' evidence in support of its claim is sufficient to survive a motion for a directed verdict¹ by Fidelity and Deposit Company. The parties were invited to submit briefs of law and all the evidence intended to be presented at trial, and informed that the court would then consider the evidence as if it had all been presented to a jury by Southern Utilities and a motion for directed verdict had been made by Fidelity and Deposit Company. The stated purpose of doing so is to avoid empanelling a jury to listen to a hopeless case.

Southern Utilities disputes the propriety of the procedure fashioned by the court and strongly suggests that the evidence should be heard and considered by a jury and then considered on motion for directed verdict. Fidelity and Deposit Company concurs in the court's approach.

This court realizes that a pretrial conference held pursuant to Federal Rules of Civil Procedure 16² is not intended to serve as a substitute for trial, and that it is not within the power of the pretrial judge to determine disputed issues of fact and render a decision after all the issues have been presented. However, the court notes that judgment may be ordered following a pretrial conference if there is no triable issue left at the end of the discussion. See, 6 Wright & Miller, Federal Practice and Procedure, Civil § 1525, at 592-93 (1971) (footnotes omitted). Stated more fully,

"Rule 16 permits the holding of pretrial conferences to consider, inter alia, simplification of the issues, the possibility of obtaining admissions of fact which will avoid unnecessary proof, and `such other matters as may aid in the disposition of the action.' Plaintiff is, of course, pro se, and any use of the pretrial conference must accommodate that reality. Fortunately, Rule 16 is intended as a flexible device to be adapted to the problems of the particular case. See 6 C. Wright & A. Miller, Federal Practice & Procedure, Civil § 1521, at 565-66 (1971). The pretrial conference is never to be used as a substitute for trial: the Court is not empowered to resolve disputed issues of fact and render a decision after presentation of the issues. Nevertheless, just as the Court may render judgment on immaterial issues and issues for which there is no dispute of material fact, `judgment may be ordered ... if there is no triable issue left at the end of the discussion.' Id. § 1525, at 592-93. See Newman v. Granger, 141 F.Supp. 37, 39 (W.D.Pa.1956), aff'd per curiam, 239 F.2d 384 (3d Cir. 1957) (agreement on all necessary and relevant facts permits decision on the merits). See also Matlack, Inc. v. Hupp Corp., 57 F.R.D. 151, 160 (E.D.Pa.1972). Cf. Joiner Systems, Inc. v. AVM Corp., Inc., 517 F.2d 45, 47-48 (3d Cir.1975)."

Pifcho v. Brewer, 77 F.R.D. 356 (M.D.Penn. 1977) at 357.

"Whether the evidence is sufficient to create an issue of fact for the jury is a question of law to be determined by the court." See, 9 C. Wright & Miller, Federal Practice and Procedure, Civil § 2524, at 541 (1971) (footnotes omitted). The court may determine the sufficiency of the evidence regardless of the fact that the evidence has not been presented to a jury at trial. See, 9 C. Wright & Miller, Federal Practice and Procedure, Civil § 2533, at 584 (1971) (footnotes omitted); Cf. Best v. District of Columbia, 291 U.S. 411, 54 S.Ct. 487, 78 L.Ed. 882 (1933) (The trial court may, and should, direct a verdict for the defendant upon the opening statement of plaintiff's counsel where that statement establishes that the plaintiff has no right to recover.).

The court notes the following language in Best:

"There is no question as to the power of the trial court to direct a verdict for the defendant upon the opening statement of plaintiff's counsel where that statement establishes that the plaintiff has no right to recover. The power of the court to act upon facts conceded by counsel is as plain as its power to act upon evidence produced. Oscanyan v. Winchester Repeating Arms Co., 103 U.S. 261, 263 26 L.Ed. 539, 541. The exercise of this power in a proper case is not only not objectionable, but is convenient in saving time and expense by shortening trials. Liverpool, N.Y. & P.S.S. Co. v. Emigration Comrs., 113 U.S. 33, 37, 28 L.Ed. 899, 900, 5 S.Ct. 352 353. But the power is not properly exercised if the opening statement leaves doubt as to the facts or permits conflicting inferences. Where uncertainty arises either from a conflict of testimony or because, the facts being undisputed, fair-minded men may honestly draw different conclusions from them, the question is not one of law but of fact to be settled by the jury. Richmond & D.R. Co. v. Powers, 149 U.S. 43, 45, 37 L.Ed. 642, 646, 13 S.Ct. 748 749; Gunning v. Cooley, 281 U.S. 90, 94, 74 L.Ed. 720, 724, 50 S.Ct. 231 233. The opening statement of counsel is ordinarily intended to do no more than to inform the jury in a general way of the nature of the action and defense so that they may better be prepared to understand the evidence. `If a doubt exists,' said the Court in the Oscanyan Case, 103 U.S. 261, 26 L.Ed. 539, supra, `as to the statement of counsel, the court will withhold its directions, as where the evidence is conflicting, and leave the matter to the determination of the jury.' Plaintiff is entitled to the benefit of all inferences that may be drawn from his counsel's statement. To warrant the court in directing a verdict for defendant upon that statement, it is not enough that the statement be lacking in definiteness but it must clearly appear, after resolving all doubts in plaintiff's favor, that no cause of action exists. See Illinois Power & Light Corp. v. Hurley (C.C.A. 8th) 49 F. (2d) 681, 684, 30 N.C.C.A. 602; Stuthman v. United States (C.C.A. 8th) 67 F. (2d) 521, 523"

Best, 291 U.S. at 415, 54 S.Ct. at 489, 78 L.Ed. at 885 (emphasis added).

Directing a verdict after considering not only the evidence to be presented but also the law expressed in a narrative of fact, trial brief, and pretrial conference is analogous to directing a verdict after an opening argument describing the evidence to be presented. In fact, there are many advantages to directing a verdict before a trial is staged and commenced, such as: (1) a jury is not empanelled only to be dismissed; (2) the court is apprised not only of the facts to be presented but also of the law to be argued; (3) the court's trial docket is one case less congested, leaving more time for cases involving issues which only a jury can decide.

In light of the above-described advantages and the policy behind F.R.Civ.P. 16 to save the court and parties time and money by litigating only truly disputed issues of fact, the court finds no reason why the rule allowing a directed verdict following an opening argument should not be utilized following pretrial submission of all the evidence intended to be submitted to a jury.

Even though the court is of the opinion that a directed verdict may be awarded in a proper case after reviewing the evidence to be presented as described in a narrative of fact and pretrial conference, it must analyze the evidence to determine whether in this case, "... after resolving all doubts in plaintiff's favor, that no cause of action exists." Best, 291 U.S. at 415, 54 S.Ct. at 489, 78 L.Ed. at 885 (citations omitted); See, 9 C. Wright & Miller, Federal Practice and Procedure, Civil § 2524 at 544-45 (1971) (footnotes omitted).

The facts of this case reveal that Southern Utilities seeks to recover from Fidelity and Deposit Company on a policy of insurance issued to Southern Utilities'...