Andrews v. Central Surety Insurance Company

• Citation: 271 F. Supp. 814
• Decision Date: 11 August 1967
• Docket Number: 66-283.,Civ. A. No. 8655
• Court: U.S. District Court — District of South Carolina
• Parties: Raleigh W. ANDREWS, Plaintiff, v. CENTRAL SURETY INSURANCE COMPANY, Defendant. Raleigh W. ANDREWS, Plaintiff, v. COMMERCIAL UNION INSURANCE COMPANY OF NEW YORK, Defendant.

271 F. Supp. 814

Raleigh W. ANDREWS, Plaintiff, v. CENTRAL SURETY INSURANCE COMPANY, Defendant.

Raleigh W. ANDREWS, Plaintiff, v. COMMERCIAL UNION INSURANCE COMPANY OF NEW YORK, Defendant.

Civ. A. Nos. 8655, 66-283.

United States District Court D. South Carolina, Florence Division.

August 11, 1967.

COPYRIGHT MATERIAL OMITTED

James P. Mozingo, Darlington, S. C., D. Kenneth Baker, Darlington, S. C., Phillip H. Arrowsmith, Florence, S. C., for plaintiff.

N. Laurie O'Farrell, Willcox, Hardee, Houck, Palmer & O'Farrell, Florence, S. C., for defendant.

SIMONS, District Judge.

These actions were commenced by plaintiff Raleigh W. Andrews in the Court of Common Pleas of Florence County, South Carolina against defendants, Central Surety Insurance Company and Commercial Union Insurance Company of New York. Both actions were duly removed to this court pursuant to the provisions of Title 28, U.S.C.A. § 1332. In the suit against defendant Central Surety Insurance Company plaintiff seeks to recover the amount of a judgment over and above his insurance coverage obtained against him in a wrongful death tort action in the state court, together with interest, attorney's fees and costs. In the companion action plaintiff seeks to recover from defendant Commercial Union Insurance Company of New York the amount of a judgment over and above his insurance coverage obtained against him in a survivalship (conscious pain and suffering) tort action in the state court, together with interest, attorney's fees and costs.

Subsequent to the commencement of these two actions defendant Central Surety Insurance Company merged with defendant Commercial Union Insurance Company of New York. Therefore, in actuality and by stipulation only one defendant is involved, and the defendant insurance companies herein will be referred to hereinafter as "defendant".

Plaintiff's contentions as set forth in his complaints are summarized briefly as follows: On or about June 5, 1963, defendant issued to him its automobile liability insurance policy providing coverage for personal injury and death in limits not to exceed $10,000 for each person and $20,000 for each occurrence; defendant reserved unto itself the exclusive right to settle or compromise all claims against plaintiff within the limits of its policy. On November 17, 1963 while defendant's policy was in full force and effect his insured automobile was involved in a head-on collision with another motor vehicle being driven by one Allen T. Green; a sailor was driving plaintiff's automobile while plaintiff was a passenger therein; both of them were drinking alcoholic beverages; the sailor drove his car across the center line of the highway into the left lane of traffic and into head-on collision with the Green vehicle. As a result of the collision Green's vehicle caught fire and he was burned to death. The true facts surrounding the collision were brought out at the coroner's inquest which was attended by defendant's insurance adjuster who forwarded a copy of the inquest testimony to defendant. During January 1964 the attorney employed to represent Green's estate in its claims against plaintiff offered to settle all claims for $9,950.00 within a certain specified time limit. This limit was extended for two additional ten-day periods ultimately expiring February 14, 1964. Plaintiff and his personal attorney urged defendant's insurance adjuster Goodwyn and defendant to settle the claims for such amount, since they considered the offer very reasonable under the facts and circumstances of the case; and they expressed concern that verdicts much greater than his coverage would probably be obtained against plaintiff upon trial of the cases. Defendant failed and refused to settle within the time granted by Green's attorney; thereafter on February 17, 1964 suits for wrongful death and conscious pain and suffering were commenced against plaintiff. At that time the settlement offer had been withdrawn and the cases could not then be settled within his insurance coverage. Trials of the two cases resulted in judgments against plaintiff totalling $144,000.00. Defendant was guilty of negligence, fraud, and bad faith in failing to settle the claims within the time specified and within plaintiff's policy limits, and he demands judgment against defendant in the amount of $134,000.00 which represents the excess of the judgments over his insurance limits, together with interest, costs and a reasonable attorney's fee for plaintiff's counsel for their services in this action.

In its answer defendant admits the status of the parties, the issuance of its policy to plaintiff as alleged, and the collision and death of Allen T. Green. It further admits the offer of settlement made by the attorney for Green's estate and the granting of extensions of time to effect such settlement within policy limits. However, the answer specifically denies that defendant was guilty of any negligence, fraud, or bad faith in its failure to settle the claims against plaintiff; and alleges that after the Green suits were commenced defendant's attorneys offered the full amount of its coverage, which offer remained open for approximately a year, but was refused by claimant.

The matter was tried before the court without a jury on April 24, 1967 at Florence, South Carolina. The issues for determination are: (a) Was defendant guilty of negligence, bad faith or fraud in failing to settle or compromise the Green tort claims against plaintiff so as to make it liable to him? (b) If defendant is liable to plaintiff, what are the elements and measure of damages which he is entitled to recover from defendant?

In accordance with Rule 52(a) of Federal Rules of Civil Procedure the court makes the following findings of fact and conclusions of law:

FINDINGS OF FACT

1) Plaintiff is a resident of the State of South Carolina; defendant is incorporated and has its principal place of business in one of the states other than South Carolina; and the amount in controversy in both cases, exclusive of interest and costs, exceeds the sum of $10,000.00.

2) Defendant issued to plaintiff its standard automobile liability policy No. 298AB35-51-71 on June 5, 1963 with limits of liability for bodily injury and death of $10,000 for each person and $20,000 for each occurrence, which was in full force and effect on November 17, 1963. Under the terms and conditions of subject policy defendant reserved the exclusive right to defend, compromise and settle any claims against the insured arising under the policy. Rogers who was driving plaintiff's car with his permission, and at his request while plaintiff was present therein was an "insured" under the "omnibus clause" of the policy.

3) On or about November 17, 1963 at about 1:30 a. m. Allen T. Green, a twentysix year old employee of the Florence Morning News, died as a result of an automobile collision which occurred on Highway No. 301 between Florence and Olanta, South Carolina while Green was traveling toward Olanta to deliver newspapers. He was married, had one son and earned approximately $60 per week. He had a life expectancy of 44.90 years under the South Carolina Mortuary Statute, § 26-12, as amended, of the 1962 South Carolina Code of Laws.

Plaintiff's automobile which was covered by defendant's insurance policy was being driven on the occasion by a sailor named Rogers whom plaintiff had met at a night spot. Both had drunk alcoholic beverages to excess, and Rogers was operating plaintiff's automobile at the latter's request. The collision occurred when Rogers recklessly and wantonly attempted to pass another vehicle, drove plaintiff's automobile across the center line into its left lane and into head-on collision with the Volkswagen automobile which Green was driving on its proper right-hand side of the highway in a careful and cautious manner. After the collision the Volkswagen caught fire while Green was pinned inside. He burned to death before he could be removed from the automobile. The collision and ensuing death of Green occurred as a proximate result of Rogers' gross negligence, recklessness, wilfulness, and wantonness. Defendant's liability policy covered effectively the operation of plaintiff's automobile on the occasion in question.

4) The estate of the deceased, Allen T. Green, employed George W. Keels, Esquire, a prominent attorney of Florence, South Carolina, to represent it in its claims against plaintiff resulting from his death in the collision.

5) The collision and resulting death of Green was duly reported to defendant and it assigned the investigation and handling of the matter to A. R. Goodwyn, Jr., its local adjuster in Florence, South Carolina.

6) On November 26, 1963 the coroner of Florence County held an inquest into Green's death. Plaintiff and other witnesses who had knowledge of the circumstances surrounding the collision testified. The testimony was transcribed and was introduced in evidence in this case as plaintiff's exhibit 1. Defendant, the Green Estate, and the State of South Carolina were represented by counsel at the inquest. Defendant's adjuster Goodwyn was also present at the inquest, acquired a copy of the transcript of the testimony and forwarded it to defendant's Columbia office recommending that he be given authority to settle. Goodwyn also took a detailed written statement from plaintiff which substantiated the inquest testimony that the driver of his automobile was clearly at fault in bringing about the collision and resulting death of Green.

7) On December 2, 1963 Adjuster Goodwyn made a full report of his investigation of the collision (plaintiff's exhibit 10) to Walter B. Mungo, Claims Representative for defendant in Columbia, South Carolina. Goodwyn summarized the testimony and findings of the coroner's inquest, verified defendant's coverage of plaintiff's automobile, and advised that he had divulged to Attorney Keels who represented the Green estate that there was...