Allen v. Zurich Ins. Co., No. 80-1665

CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)
Writing for the CourtBefore BRYAN, Senior Circuit Judge, HALL and PHILLIPS; JAMES DICKSON PHILLIPS; ALBERT V. BRYAN
Citation667 F.2d 1162
PartiesGrady ALLEN, Appellant, v. ZURICH INSURANCE COMPANY, Appellee.
Docket NumberNo. 80-1665
Decision Date08 January 1982

Page 1162

667 F.2d 1162
Grady ALLEN, Appellant,
v.
ZURICH INSURANCE COMPANY, Appellee.
No. 80-1665.
United States Court of Appeals,
Fourth Circuit.
Argued April 6, 1981.
Decided Jan. 8, 1982.

Page 1163

Duke K. McCall, Jr., Greenville, S. C. (Leatherwood, Walker, Todd & Mann, Greenville, S. C., on brief), for appellant.

George E. Lewis, Columbia, S. C. (Turner, Padget, Graham & Laney, Columbia, S. C., on brief), for appellee.

Before BRYAN, Senior Circuit Judge, HALL and PHILLIPS, Circuit Judges.

JAMES DICKSON PHILLIPS, Circuit Judge:

In this diversity case Grady Allen sued Zurich Insurance Company to recover the amount of a personal injury judgment earlier obtained by Allen against Zurich's insured under a liability policy. Following a jury verdict in Allen's favor, the district court granted judgment n. o. v. for Zurich on the basis that the evidence established as a matter of law that Allen was an employee of Zurich's insured so that Zurich was not liable under an exclusion in the liability policy. On Allen's appeal, we affirm the district court's judgment n. o. v., but on other grounds.

I

In August 1975, Allen was assisting Zurich's insured, Carl Scruggs, in installing a mobile home when the home, which Scruggs had placed on blocks, shifted, fell, and crushed Allen's hand. Allen later sued Scruggs in a South Carolina state court on a negligence theory to recover for his injuries "while in the employment of the Defendant, Carl H. Scruggs, ...." Complaint, Allen v. Scruggs, No. 76-CP-23-92 (Greenville, S.C. County Ct. C.P.). Zurich defended Scruggs under a reservation of rights clause in a general automobile liability policy issued to him. The case proceeded to trial and as part of his charge to the jury, the trial judge instructed that "(t)he first material allegation which the plaintiff must establish is that he was an employee of the defendant, with the defendant owing a duty of care to him." Tr. at 173, Allen v. Scruggs, No. 76-CP-23-92 (Greenville, S.C. County Ct. C.P.). The jury returned a verdict for Allen of $37,000, which Scruggs has not paid.

Allen then brought suit against Zurich to collect on Scruggs' automobile liability policy and alleged in the complaint that he and Scruggs were joint venturers. In defense, Zurich claimed that it was not liable because Allen was Scruggs' employee at the time of his injury and the policy expressly excluded coverage for bodily injury to any employee. At trial, Allen testified that he had thought he was Scruggs' employee in 1975, but he now characterized their relationship as working together. Scruggs supplied the equipment, solicited many of their jobs, and directed the activity leading to the injury. Allen, however, was paid a percentage of each job rather than a salary, he never received a W-2 form, he had no regular

Page 1164

working hours, and he picked up other service work for himself on the side. During cross-examination, Allen admitted that he had testified before the South Carolina Industrial Commission in December 1975, in a deposition in February 1976, and before the state court in January 1977, that he was Scruggs' employee and was paid a weekly salary of $250 in cash at the time of his injury. Portions of that testimony were admitted into evidence in this action. Scruggs, however, testified that Allen was not his employee, but a contract laborer. An August 1975 letter from Scruggs to the Anderson County, S. C. Department of Social Services, which corroborated Scruggs' testimony, was admitted into evidence.

The district court permitted the case to go to the jury which returned a verdict for Allen. Zurich then moved for judgment notwithstanding the verdict on two grounds: (1) Allen's status as an employee of Scruggs was affirmatively adjudicated in the state court proceeding and Allen is now bound by that determination and (2) the only reasonable inference to be drawn from the evidence presented at trial is that Allen was Scruggs' employee and acting within the scope of his employment when he was injured. The district court granted the motion on the second ground. 1 This appeal followed.

II

Zurich defended solely on the basis that Allen was Scruggs' employee, acting in the course and scope of his employment at the time of his injury and that liability for the injury was therefore expressly excluded from the coverage of its policy. This was an affirmative defense as to which Zurich had the burden of proof. The district court correctly treated it as such. When the jury returned a verdict for Allen, the district court's subsequent grant of judgment n. o. v. was therefore entered in favor of the party having the burden of proof on the sole dispositive issue.

There is, of course, judicial power under Fed.R.Civ.P. 50 to direct a verdict or grant judgment n. o. v. for, as well as against, the party having the burden of proof on the dispositive issues on the basis of a legal assessment of the evidence. Davis Frozen Foods, Inc. v. Norfolk Southern Railway, 204 F.2d 839 (4th Cir. 1953) (directed verdict for plaintiff); United States v. Grannis, 172 F.2d 507 (4th Cir. 1949) (same); see also Federal Insurance Co. v. Summers, 403 F.2d 971, 975-76 (1st Cir. 1968) (directed verdict for defendant with burden considered but denied). But the power is controlled by a standard so stringent that its exercise is but rarely appropriate. The standard is in critical respects different from and more demanding than that applicable to the grant of directed verdict against the proponent. As well explained by Judge McLaughlin:

(T)hough a motion for directed verdict in favor of the proponent of an issue is cast in the same form as when made by the defending party, it requires the judge to test the body of evidence not for its insufficiency to support a finding, but rather for its overwhelming effect. He must be able to say not only that there is sufficient evidence to support the finding, even though other evidence could support as well a contrary finding, but additionally that there is insufficient evidence for permitting any different finding. The ultimate conclusion that there is no genuine issue of fact depends not on a failure to prove at least enough so that the controverted fact can be inferred, but rather depends on making impossible any other equally strong inferences once the fact in issue is at least inferable.

Mihalchak v. American Dredging Co., 266 F.2d 875, 877 (3d Cir. 1959) (footnote omitted); see also United States v. Grannis, 172 F.2d at 513.

Applying that standard to the evidence in this case, we do not think it was appropriate to grant judgment n. o. v. for Zurich on

Page 1165

this basis. The dispositive issue was whether at the critical time Allen was Scruggs' employee acting in the course and scope of his employment. Under controlling South Carolina law the general test whether one person is the employee of another is

"control by the employer. It is not the actual control then exercised, but whether there exists the right and authority to control and direct the particular work or undertaking, as to the manner or means of its accomplishment...." Bates v. Legette, 239 S.C. 25, 34-35, 121 S.E.2d 289, 293 (1961).

This court, like most, has recognized four factors bearing on the crucial right of control. These are (1) direct evidence of the right to, or exercise of, control, (2) method of payment, (3) furnishing of equipment, and (4) right to fire.

Chavis v. Watkins, 256 S.C. 30, 180 S.E.2d 648, 649 (1971).

Under this test the evidence was in substantial conflict, particularly with respect to the essentially evaluative element of the right to control. Allen's own testimony on this element was in major respects blatantly self-serving, shot through with legal characterizations, internally inconsistent, and in flat conflict with his own earlier self-serving testimony and statements made in contexts where his interests in the nature of the relationship were diametrically different. But contradictions, inconsistencies and self-interest present questions of credibility and of probative weight for the jury, which was perfectly entitled, for example, utterly to discount all of Allen's legal characterizations of the critical relationship as having no probative value, leaving for consideration only the raw historical facts bearing upon whether Scruggs had the right to control. See Restatement (Second) of Agency § 220, Comment m (1957). Beyond this the evidence of the method of payment and the right to fire could, depending upon credibility determinations and assessments of probative weight, lead to conflicting inferences. Only on the evidence of the furnishing of equipment was there essentially no conflict and no need for assessments of credibility; that the equipment was furnished by Scruggs was not really in dispute. Resolution of the critical agency issue requires evaluation of all the factors, however; no one of them is determinative as a matter of law; and for this reason, its resolution is ordinarily one for the trier of fact. See id. Comment c.

We must bear in mind the critical point that here the burden of persuasion was not upon Allen to establish that he was not Scruggs' employee, but upon Zurich to establish that he was. To hold that Zurich was entitled to judgment as a matter of law we must find that not only was there...

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289 practice notes
  • Levin v. Ligon, No. A109477.
    • United States
    • California Court of Appeals
    • June 30, 2006
    ...fn. 14; Patriot Cinemas, Inc. v. General Cinema Corp. (1st Cir. 1987) 834 F.2d 208, 212-214; Allen v. Zurich Ins. Co. (4th Cir.1982) 667 F.2d 1162, In the present case, the trial court determined that judicial estoppel barred Levin's claim after applying the five-prong test set forth in Jac......
  • Jackson v. County of Los Angeles, No. B107622
    • United States
    • California Court of Appeals
    • December 19, 1997
    ...such by the same tribunal, thus allowing an internally consistent final decision to be reached." (Allen v. Zurich Ins. Co. (4th Cir.1982) 667 F.2d 1162, 1167; see Rader Co. v. Stone (1986) 178 Cal.App.3d 10, 29, 223 Cal.Rptr. 806 [plaintiff permitted to plead alternative or inconsistent the......
  • Ortiz v. New Mexico, No. CIV 18-0028 JB/LF
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • July 22, 2021
    ...not reducible to any general formulation of principle.'" New Hampshire v. Maine, 532 U.S. at 750 (quoting Allen v. Zurich Ins. Co., 667 F.2d 1162, 1166 (4th Cir. 1982)). Nevertheless, the Supreme Court notes that "several factors typically inform the decision whether the apply the doctrine ......
  • Beem v. McKune, No. 00-3224.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • January 27, 2003
    ...555, 39 L.Ed. 578 (1895) (civil case); United States v. Hook, 195 F.3d 299 (7th Cir.1999) (criminal case); Allen v. Zurich Ins. Co., 667 F.2d 1162 (4th Cir.1982) (civil case); United States v. McCaskey, 9 F.3d 368 (5th Cir.1993) (criminal case). Judicial estoppel should be universally avail......
  • Request a trial to view additional results
289 cases
  • Levin v. Ligon, No. A109477.
    • United States
    • California Court of Appeals
    • June 30, 2006
    ...fn. 14; Patriot Cinemas, Inc. v. General Cinema Corp. (1st Cir. 1987) 834 F.2d 208, 212-214; Allen v. Zurich Ins. Co. (4th Cir.1982) 667 F.2d 1162, In the present case, the trial court determined that judicial estoppel barred Levin's claim after applying the five-prong test set forth in Jac......
  • Jackson v. County of Los Angeles, No. B107622
    • United States
    • California Court of Appeals
    • December 19, 1997
    ...such by the same tribunal, thus allowing an internally consistent final decision to be reached." (Allen v. Zurich Ins. Co. (4th Cir.1982) 667 F.2d 1162, 1167; see Rader Co. v. Stone (1986) 178 Cal.App.3d 10, 29, 223 Cal.Rptr. 806 [plaintiff permitted to plead alternative or inconsistent the......
  • Ortiz v. New Mexico, No. CIV 18-0028 JB/LF
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • July 22, 2021
    ...not reducible to any general formulation of principle.'" New Hampshire v. Maine, 532 U.S. at 750 (quoting Allen v. Zurich Ins. Co., 667 F.2d 1162, 1166 (4th Cir. 1982)). Nevertheless, the Supreme Court notes that "several factors typically inform the decision whether the apply the doctrine ......
  • Beem v. McKune, No. 00-3224.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • January 27, 2003
    ...555, 39 L.Ed. 578 (1895) (civil case); United States v. Hook, 195 F.3d 299 (7th Cir.1999) (criminal case); Allen v. Zurich Ins. Co., 667 F.2d 1162 (4th Cir.1982) (civil case); United States v. McCaskey, 9 F.3d 368 (5th Cir.1993) (criminal case). Judicial estoppel should be universally avail......
  • Request a trial to view additional results

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