American Surety Company of New York v. Coblentz

• Decision Date: 19 July 1967
• Docket Number: No. 23675.,23675.
• Citation: 381 F.2d 185
• Parties: AMERICAN SURETY COMPANY OF NEW YORK, Appellant, v. Ralph E. COBLENTZ, as Administrator d.b.n. of the Estate of Edward Thomas Coblentz, Deceased, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

381 F.2d 185 (1967)

AMERICAN SURETY COMPANY OF NEW YORK, Appellant, v. Ralph E. COBLENTZ, as Administrator d.b.n. of the Estate of Edward Thomas Coblentz, Deceased, Appellee.

No. 23675.

United States Court of Appeals Fifth Circuit.

July 19, 1967.

James E. Tribble, Robert G. Young, Miami, Fla., for appellant.

Larry S. Stewart, Miami, Fla., for appellee.

Before PHILLIPS,^* THORNBERRY and DYER, Circuit Judges.

THORNBERRY, Circuit Judge:

American Surety appeals from a summary judgment entered against it in a garnishment proceeding by which appellee Coblentz seeks to collect a $50,000 state court judgment rendered in his favor against appellant's insured. We reverse.

Appellee Coblentz is the administrator of the estate of a young man fatally shot by one Carbone, a motel proprietor, who was insured by appellant under an "Owner's, Landlord's and Tenant's Liability Policy." Under the bodily injury liability clause ("Coverage A") of the policy, American Surety agreed:

To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury * * * including death at any time resulting therefrom, sustained by any person, caused by accident and arising out of the hazards hereinafter defined.

Under "Conditions," the following provision appears:

Assault and Battery. Under coverages A and B, assault and battery shall be deemed an accident unless committed by or at the direction of the insured.

The shooting occurred around 5:00 one morning when Carbone the insured discovered the deceased loitering around his motel. After arming himself with a revolver, the insured attempted to apprehend the deceased, who fled. The insured gave chase and yelled at him to stop. During the chase, the insured fired five shots, one of which struck the deceased in the back, causing his death.

Coblentz filed suit for wrongful death in the Florida state courts,¹ and American Surety undertook the defense of the insured under a reservation of rights. The trial resulted in a $70,000 judgment. While appeal from this judgment was pending, Coblentz successfully brought garnishment proceedings against American Surety in the state courts. Before the appeal of the garnishment action could be heard, however, the judgment in the principal case was reversed, Carbone v. Coblentz, Fla.Ct.App.1961, 132 So.2d 629, and consequently the appeal in the garnishment proceedings was dismissed.

Following the reversal by the Florida appellate court, Coblentz filed an amended complaint in the state court. After filing answers to the complaint, American Surety moved for permission to withdraw as counsel for the insured, stating that it did not owe a defense under the terms of the policy. The trial court granted this motion.

The insured, acting through retained counsel, then entered into a stipulation with Coblentz concerning the testimony that would be given by certain witnesses at trial. They also stipulated that $50,000 would be a reasonable assessment of damages. The stipulation concluded:

any verdicts entered in this cause should not be collectable (sic) from any assets of the defendant, Vincent Carbone, other than public liability insurance policies in force at the time of the incident complained of, and that any final judgment entered in this cause should so provide.

The cause was heard by the trial court, sitting without a jury, and judgment was rendered on the basis of the stipulated testimony and oral argument. The court found that the deceased's death was due to the insured's "negligent and careless use of a gun." Damages were set at $50,000 and it was provided that:

this judgment may only be satisfied from public liability insurance policies in force at the time of the incident complained of and this judgment is not satisfiable from nor be a lien upon any other assets of the defendant.

* * *

On the basis of this judgment, Coblentz instituted in the state court garnishment proceedings against American Surety, which filed a petition for removal to the United States District Court for the Southern District of Florida. Following removal, American Surety answered, alleging that the judgment of the state court was outside of the policy, since the insured's conduct constituted an assault and battery. Following pre-trial proceedings, the district court granted Coblentz's motion for summary judgment. The basis of this determination was the conclusion that the judgment in the state court was binding upon the garnishee.

The insurance policy which is the subject matter of this action undertakes to indemnify the insured for all sums which he shall become legally obligated to pay as damages due to bodily injury or death caused by "accident." Assault and battery is considered an accident under the terms of the policy unless "committed by or at the direction of the insured." Thus, the critical issue in the determination of appellant's liability is whether the insured's act of shooting the deceased in fact constituted an "assault and battery" under Florida law. See Consolidated Mut. Ins. Co. v. Ivy Liquors, Inc., Fla. Ct.App.1966, 185 So.2d 187; Roberts v. R & S Liquor Stores, Inc., Fla.Ct.App. 1964, 164 So.2d 533. The court below, by its judgment, concluded that the state court "finding" that the fatal shooting was due to the insured's "negligence" and was therefore an "accident" within the terms of the policy was binding upon appellant and could not be attacked in garnishment proceedings. Appellant merely asks that it be given the opportunity to raise this issue as a defense to garnishment. Both our sense of justice and the case law convinces us that appellant may not properly be precluded from raising this issue and that the summary judgment rendered below must be reversed.

A cursory examination of the proceedings in the state court indicates that the finding of negligence was not an independent finding arrived at after an analysis of all relevant facts revealed through an adversary proceeding. The finding of negligence was based upon a stipulation of testimony between parties — the representative of the deceased and the insured — both of whom would strongly prefer a finding of negligence rather than intentional tort. No doubt, because of this, the testimony stipulated did not include certain evidence introduced in the first state trial which most strongly indicated that the insured's action did indeed constitute assault and battery. Having been based upon only a partial presentation of the relevant facts and arising out of a proceeding entirely devoid of any conflicting interests between the litigants on the precise issue, the finding of negligence cannot be viewed as binding in the garnishment proceedings. A contrary holding would leave the parties free to stipulate away the right of an absent insurer to raise a legitimate defense to its liability under the policy.² Cf. Travelers Indemnity Co. v. State Farm Mutual Ins. Co., 9th Cir. 1964, 330 F.2d 250, 262.

Further support for the appellant's contention is found in a recent decision of a Florida appellate court holding that a finding of negligence in a suit between an injured party and the insured is not binding in garnishment proceedings against the insurer since the question of whether the insured was guilty of assault and battery, as opposed to negligence, is not an issue which can properly be litigated in the case-in-chief. American Fire and Casualty Co. v. Blaine, Fla.Ct....