American States Insurance Company v. D'atri

• Decision Date: 18 April 1967
• Docket Number: No. 16998.,16998.
• Parties: AMERICAN STATES INSURANCE COMPANY, Plaintiff-Appellant, v. Emilio D'ATRI, d/b/a D'Atri's Sunoco Service Station, Leona A. Fox, William Fox and Clarence Fox Motors, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

375 F.2d 761 (1967)

AMERICAN STATES INSURANCE COMPANY, Plaintiff-Appellant, v. Emilio D'ATRI, d/b/a D'Atri's Sunoco Service Station, Leona A. Fox, William Fox and Clarence Fox Motors, Inc., Defendants-Appellees.

No. 16998.

United States Court of Appeals Sixth Circuit.

April 18, 1967.

Robert F. Hesser, Cleveland, Ohio, for plaintiff-appellant, Robert F. Hesser, Richard J. McGraw, Jamison, Ulrich, Johnson, Burkhalter & Hesser, Cleveland, Ohio, on brief.

Lody Huml, Cleveland, Ohio, for defendants-appellees; William C. Todia, Cleveland, Ohio, on brief for Leona and William Fox, Charles W. Kitchen, Cleveland, Ohio, on brief for Clarence Fox Motors.

Before O'SULLIVAN, PECK and McCREE, Circuit Judges.

PER CURIAM.

This is an appeal from an order of the District Court for the Northern District of Ohio dismissing a complaint filed by plaintiff-appellant, the American States Insurance Company, seeking relief under the Federal Declaratory Judgment Act, 28 U.S.C. Sections 2201 and 2202. We believe the complaint set out a case for declaratory relief under the mentioned statute and should be reinstated.

Plaintiff is a casualty insurance company which had in force with appellee, Emilio D'Atri, an insurance policy covering certain liabilities that might arise during the operation of D'Atri's gasoline service station. Two provisions in that policy are relevant here. One of them declared that the policy did not apply to claims,

"arising out of the operation of an automobile parking lot, storage garage, repair shop, automobile sales agency, restaurant, lunch room, the handling of liquified petroleum gas, the renting of trailers to others, or any other business operation not incidental and usual to an automobile filling station * *";

The other required that in case an accident occurred, prompt written notice thereof had to be given to authorized agents of the insurance company.

D'Atri had an arrangement with an adjacent automobile dealer, Clarence Fox Motors, Inc., whereby the latter was allowed to store and display cars on a portion of D'Atri's premises. On November 10, 1961, a salesman for Clarence Fox Motors was showing cars parked on D'Atri's property to some potential customers, Leona Fox and her husband William, when Leona slipped and fell, injuring herself. She and her husband thereafter filed suit against D'Atri, D'Atri's lessor, the Sun Oil Co. (since dismissed as a party), and Clarence Fox Motors, Inc., in the Ohio Common Pleas Court of Cuyahoga County. D'Atri did not notify his insurer, plaintiff-appellant, of the accident until January 17, 1962, and then requested it to investigate and defend the suit brought against him.

The insurance company, believing that the claims of the customers of Fox Motors were not covered by its policy — either because the circumstances surrounding the accident invoked the policy's exclusionary clause, or because the policy had been breached by D'Atri's failure to give prompt notice of the fall — refused to undertake D'Atri's defense in the Common Pleas action. Since the requisite diversity of citizenship and jurisdictional amount existed, it brought suit against D'Atri, the Foxes, and the automobile dealer in the federal district court, seeking a declaratory judgment establishing its lack of liability to any of the parties. The District Judge dismissed plaintiff's complaint, mainly on the basis that the question of whether or not plaintiff's insurance policy covered the accident...