American Eagle Ins. Co. v. Rutland Area Flyers

• Decision Date: 19 December 1996
• Docket Number: No. 2:96-CV-18.,2:96-CV-18.
• Citation: 949 F.Supp. 243
• Parties: AMERICAN EAGLE INSURANCE COMPANY, Plaintiff, v. RUTLAND AREA FLYERS, INC., David Leggett and Lindley H. Leggett, IV, Co-Administrators d.b.n., c.t.a., of the Estate of Lindley H. Leggett, III, and Jacque Smith, individually and as Co-Executor of the Estate of Nancy Leeson Smith, Defendants. Jacque SMITH, individually and as Co-Executor of the Estate of Nancy Leeson Smith, Plaintiff-in-Cross-Claim, v. David LEGGETT and Lindley H. Leggett, IV, Co-administrators d.b.n., c.t.a., of the Estate of Lindley H. Leggett, III, Defendants-in-Cross-Claim.
• Court: U.S. District Court — District of Vermont

949 F.Supp. 243

AMERICAN EAGLE INSURANCE COMPANY, Plaintiff, v. RUTLAND AREA FLYERS, INC., David Leggett and Lindley H. Leggett, IV, Co-Administrators d.b.n., c.t.a., of the Estate of Lindley H. Leggett, III, and Jacque Smith, individually and as Co-Executor of the Estate of Nancy Leeson Smith, Defendants.

Jacque SMITH, individually and as Co-Executor of the Estate of Nancy Leeson Smith, Plaintiff-in-Cross-Claim, v. David LEGGETT and Lindley H. Leggett, IV, Co-administrators d.b.n., c.t.a., of the Estate of Lindley H. Leggett, III, Defendants-in-Cross-Claim.

No. 2:96-CV-18.

United States District Court, D. Vermont.

December 19, 1996.

Robert Gaynor Cain, Paul, Frank & Collins, Inc., Burlington, VT, Bruce R. Wildermuth, Mendes & Mount, New York City, for American Eagle Insurance Company.

William D. Cohen, Abell, Kenlan, Schwiebert & Hall, P.C., Rutland, VT, for Rutland Area Flyers, Inc.

Melvin Bauer Neisner, Jr., Killington, VT, for David Leggett, Lindley H. Leggett, IV.

John E. Brady, Richards and Brady, Springfield, VT, Melvin Bauer Neisner, Jr., Killington, VT, William Hewig, III, Kopelman & Paige, Boston, MA, for Lindley H. Leggett.

Daniel L. Burchard, McCormick, Fitzpatrick, Kasper & Burchard, Burlington, VT, Michael D. Weisman, Robert F. Schwartz, Hill & Barlow, Boston, MA, for Jacque Smith.

Robert Gaynor Cain, Paul, Frank & Collins, Inc., Burlington, VT, for American Eagle Insurance Company.

Melvin Bauer Neisner, Jr., Killington, VT, William Hewig, III, Kopelman & Paige, Boston, MA, for David Leggett, Lindley H. Leggett, IV.

OPINION AND ORDER

SESSIONS, District Judge.

This is a diversity action filed by Plaintiff American Eagle Insurance Company ("American Eagle"), against Defendants Rutland Area Flyers ("Rutland Flyers"), David Leggett and Lindley H. Leggett, IV ("Leggett Estate"), and Jacque Smith ("Smith" or "Mr. Smith"), for declaratory judgment as to its rights and responsibilities under an insurance policy ("policy") issued by American Eagle covering a 1976 Cessna 172 airplane owned by Rutland Flyers. In addition, Rutland Flyers has filed a counterclaim against American Eagle requesting declaratory judgment in its favor, compensatory damages for the value of the plane, and punitive damages for American Eagle's bad faith denial of coverage; Smith has filed a cross-claim against the Leggett Estate for negligence and wrongful death; the Leggett Estate has counterclaimed against American Eagle for breach of contract and bad faith denial; and Rutland Flyers has cross-claimed against the Leggett Estate for damage to the plane. Pending before the Court are: (1) Plaintiff-in-Cross-Claim Smith's motion for partial summary judgment on the cross-claim against the Leggett Estate; and (2) Smith and American Eagle's cross-motions for summary judgment. For the reasons discussed below, Smith's motion for partial summary judgment is GRANTED and Smith and American Eagle's motions for summary judgment are DENIED.

I. Factual Background

This is an action in diversity arising out of a plane crash which occurred in October, 1995 in Norwich, Vermont. Plaintiff American Eagle, a Texas corporation with its principal place of business in Dallas, Texas, is an insurance company authorized to conduct business in the State of Vermont. Rutland Flyers is a Vermont corporation with its principal place of business in Rutland, Vermont. Defendant David Leggett is a co-administrator of the estate of Lindley H. Leggett, III ("Leggett"), and is a resident of the State of New Jersey. Defendant Lindley H. Leggett, IV is also a co-administrator of Leggett's estate and is a resident of the State of Florida. Leggett's estate is being probated in the Rutland District Probate Court in the State of Vermont. Defendant Jacque Smith is a resident of Massachusetts. He is also co-executor of the estate of Nancy Leeson Smith ("Mrs. Smith").

Leggett was a member and the president of the Rutland Flyers, a Vermont flying club. In addition, Leggett owned and operated an aerial photography business, Skyview Photography, Ltd. Leggett held a private pilot's license and a Class III Medical Certificate. On October 12, 1995, Leggett flew a 1976 Cessna 172 single-engine aircraft, owned by the Rutland Flyers, from Rutland, Vermont to the West Lebanon Airport in New Hampshire, where he met Mr. and Mrs. Smith ("the Smiths"). The Smiths had arranged with Leggett to fly over a house and surrounding property in Norwich, Vermont owned by their friends Jim and Betsy Wooster (the "Wooster property"), so that the Smiths could photograph the property. The Woosters' son James had previously contacted Mrs. Smith and asked if she could have aerial photographs taken of his parents' house as an anniversary present. Mrs. Smith reached an agreement with Leggett regarding the payment of a sum of money, but Mr. Smith did not know the details of the financial arrangement.

Leggett met with the Smiths at the West Lebanon Airport at approximately 11:00 a.m. At approximately 11:35 a.m., after a briefing from Leggett, the plane departed from the West Lebanon Airport with Leggett piloting the aircraft, Mrs. Smith in the right front passenger seat, and Mr. Smith in the seat directly behind her.

Leggett flew the plane north along the Connecticut River, and then turned west to pass over the Wooster property. As they flew over the property, the Smiths took pictures from a side window, Mr. Smith using his own camera, and Mrs. Smith using Leggett's Hasselblad camera and gyro-stabilizer. Leggett took no photographs. Soon after passing over the Wooster property, the plane flew into nearby trees, causing it to crash. Leggett and Mrs. Smith were both killed in this tragedy. Jacque Smith suffered serious injuries, but survived the crash.

In the wreckage of the crash, investigators found a piece of paper in Mrs. Smith's handwriting, on which was written information about Leggett's Hasselblad camera and related photography equipment, as well as the Cessna which Leggett flew on October 12, 1995. In addition, the piece of paper contained the following notation: "$90 to Norwich from Rutland for pilot & plane," with the word "gyrostabilizer" written immediately below. The names of other aerial photographers were written on the same piece of paper. Film, cameras, camera bags, and a gyro-stabilizer were also found at the site.

Rutland Flyers permitted its members use of the Cessna, subject to certain charges. It charged its members $31.00 per hour for use of the Cessna. This charge was assessed for each hour the aircraft's engine was running, as measured by the plane's tachometer. Members were charged an additional $80.00 per month in membership dues for certain operating costs. Leggett's membership in the Rutland Flyers permitted his aerial photography business regular use of the group's 1976 Cessna 172 single-engine aircraft. All of the members of the Rutland Flyers were aware of Leggett's use of the group's Cessna for business purposes. In addition, Rutland Flyers held an insurance policy issued by American Eagle covering the Cessna, its pilots, and its passengers for the period from December 24, 1994 to October 12, 1995.

On January 16, 1996, American Eagle filed a complaint against Rutland Flyers, the Leggett Estate, and Mr. Smith, seeking declaratory judgment as to its rights and responsibilities under the policy, including whether it must reimburse Rutland Flyers for hull damage to the aircraft, and whether it has a duty to defend or indemnify Rutland Flyers or the Leggett Estate for any action brought against them arising out of the accident.

On February 23, 1996, Rutland Flyers counterclaimed against American Eagle requesting declaratory judgment in its favor, compensatory damages for the value of the plane, and punitive damages for American Eagle's bad faith denial of coverage.

On February 26, 1996, Smith cross-claimed against the Leggett Estate for negligence and wrongful death, seeking $1 million in compensatory damages, $1 million in punitive damages, as well as attorney's fees and costs.

On February 29, 1996, the Leggett Estate counterclaimed against American Eagle for breach of the insurance contract and for bad faith in denying coverage on the claim.

On April 12, 1996, Rutland Flyers cross-claimed against the Leggett Estate alleging that it is liable for the property damage to the plane. Rutland Flyers claims that its insurance policy with American Eagle covers damage to the plane up to $25,000.00, but that its losses total $59,864.00. It therefore seeks to recover the deficiency of $34,864.00 from the Leggett Estate.

Smith filed a motion for partial summary judgment on the cross-claim against the Leggett Estate on June 13, 1996. The Leggett Estate opposes this motion. In addition, Smith filed a motion for summary judgment against American Eagle on August 28, 1996. American Eagle filed an opposition to this motion, as well as its own motion for summary judgment on September 30, 1996.

II. Discussion

This matter is before the Court on motions for partial summary judgment against the Leggett Estate and for summary judgment against American Eagle by Defendant and Plaintiff-in-Cross-Claim Smith, and on motion by Plaintiff American Eagle for summary judgment as against all Defendants. Each motion is treated in turn.

A. Standard of Review

Summary judgment is appropriate when the Court finds that there is no genuine issue as to any material fact, and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). The party opposing summary judgment may not rest on its pleadings but must present "significant probative evidence" demonstrating that a genuine dispute of material fact exists, and that the moving party is not entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (...