Bogart v. Twin City Fire Insurance Company

• Decision Date: 09 March 1973
• Docket Number: No. 72-1502.,72-1502.
• Citation: 473 F.2d 619
• Court: U.S. Court of Appeals — Fifth Circuit
• Parties: Betty Geneva BOGART, a widow, Individually and as Guardian of the Estates of Sally Long Bogart, etc., Plaintiff-Appellee, v. TWIN CITY FIRE INSURANCE COMPANY, Defendant-Appellant, Trans-America Insurance Company, Intervenor-Appellant.

473 F.2d 619 (1973)

Betty Geneva BOGART, a widow, Individually and as Guardian of the Estates of Sally Long Bogart, etc., Plaintiff-Appellee, v. TWIN CITY FIRE INSURANCE COMPANY, Defendant-Appellant, Trans-America Insurance Company, Intervenor-Appellant.

No. 72-1502.

United States Court of Appeals, Fifth Circuit.

January 24, 1973.

Rehearing Denied March 9, 1973.

Donald Carroll, Tyler, Tex., Lancaster Smith, Dallas, Tex., Mike A. Hatchell, Tyler, Tex., Harvey L. Davis, Dallas, Tex., for intervenor-appellant.

Charles D. Mayes, Ben Warder, Jr., Dallas, Tex., for plaintiff-appellee.

Before COLEMAN, AINSWORTH and DYER, Circuit Judges.

DYER, Circuit Judge:

Mrs. Bogart brought suit against Twin City Fire Insurance Company, the insurance carrier of her family's automobiles, to recover damages resulting from the death of her husband and from the injuries suffered by her and her children in an automobile accident allegedly caused by an uninsured motorist. After finding Summerfield, the uninsured motorist, guilty of five counts of negligence, the district court entered a judgment for $56,830, exclusive of costs, penalty interest, and regular interest from the date of judment. Twin City appealed from the findings of negligence and from various portions of the award of damages. TransAmerica Insurance Company, the workmen's compensation insurance carrier for Mr. Bogart's employer, who intervened in the court below, appealed from the district court's refusal to allow it subrogation rights so that it could recover the $16,150.13 in benefits it had previously paid the Bogarts. We affirm in part and reverse in part.

I. Facts

On January 16, 1970, Mr. and Mrs. Bogart and their children left their home in Tyler, Texas, and drove west on Interstate Highway 20 toward Dallas, where Mr. Bogart was to attend a United Press meeting on behalf of his employer. As they neared Dallas, an intoxicated driver entered the eastbound lanes by means of an exit ramp and proceeded to drive westbound into the face of oncoming traffic. Several automobiles avoided this errant vehicle and managed to pull over to the side of the highway. The Summerfield automobile, traveling eastbound, also was able to miss this vehicle, but in the process swerved to the right and then careened back to the left, crossed the median strip and crashed into the Bogarts' 1970 Plymouth. Mr. Bogart and Summerfield were killed in the crash.

At the time of the accident the Bogarts owned two automobiles, a 1970 Plymouth and a 1966 Ford Mustang, and insured them both under a single policy issued by Twin City.¹ This policy included protection against uninsured motorists as required under Texas law.² Although questioned in the court below, it is now accepted that Summerfield was an uninsured motorist operating an uninsured automobile, as those terms are defined in the Twin City policy.

II. Findings of Negligence

The district court, after a nonjury trial devoted largely to reconstructing the actions of the various vehicles prior to the Bogart-Summerfield collision, found that Summerfield was guilty of five counts of negligence: (1) failing to maintain a proper lookout; (2) failing to make a reasonable application of the brakes on her automobile; (3) causing or permitting her automobile to proceed to its left; (4) failing to keep and maintain her automobile under reasonable control; and (5) causing her automobile to cross over the dividing section of I-20 in violation of section 62, article 6701d, Vernon's Ann.Tex.Civ.St.³ After a careful review of the record we find ourselves with no "definite and firm conviction that a mistake has been committed." Chaney v. City of Galveston, 5 Cir.1966, 368 F.2d 774, 776. Instead, there is ample evidence to support the district court's conclusion that Summerfield acted negligently and proximately caused the accident and the findings of fact upon which this conclusion was rendered are not clearly erroneous. Fed.R. Civ.P. 52(a).

III. Stacking of Policy Limits

Having affirmed the district court's findings of negligence, the most important question that relates to the extent of Twin City's liability is whether the Bogarts should be allowed to "stack" or "pyramid" the policy's limitation of liability by virtue of the fact that the family had paid premiums for uninsured motorists coverage on two separate automobiles under the same policy. The policy in effect at the time of the accident limited Twin City's liability for bodily injuries to $10,000 for each person, not to exceed $20,000 for each occurrence. To obtain this coverage on the 1970 Plymouth, which was automobile #1 under the policy, the Bogarts paid a $4.00 premium. Up to the stated limits, this $4.00 provided coverage for the named insured and any relative, and for any other person while occupying an insured automobile;⁴ these people were protected against bodily injuries, including death, "caused by accident and arising out of the ownership, maintenance or use of an uninsured automobile." From the policy it is clear that a nonrelative must be injured in "an insured automobile" in order to recover, but, in the absence of a similar limitation applicable to the named insured or a relative, Twin City covers them regardless of where injured by an uninsured motorist.⁵ This could conceivably occur while on foot, while riding in a non-owned automobile, or, as in this case, while riding in an owned, insured automobile. Given the breadth of this coverage, there is no dispute about the Bogarts recovering under the insurance purchased with respect to automobile #1.

The difficult question is whether the $3.00 premium paid by the Bogarts to include their 1966 Mustang — which was automobile #2 — within the uninsured motorists coverage, also protected them while they were riding in automobile #1. There is no separate section of the policy which details the coverage afforded a second car. Thus, if the problem is analyzed only by looking at the insurance policy itself, we would conclude that the $3.00 premium purchased the same insurance for automobile #2 as the $4.00 premium purchased for automobile #1; this would include protection for the named insured and any relative wherever injured by an uninsured motorist.⁶ This interpretation, if followed, would require stacking the coverage of the two automobiles.

Because this is a diversity action, however, we are not at liberty to decide the case on the basis of our interpretation of the policy; instead we are bound to apply the Texas law and to make an "Erie-educated guess" as to what the outcome of this case would have been had it been brought in a Texas court.

One of the earliest Texas stacking cases was Southwestern Fire & Casualty Co. v. Atkins, Tex.Civ.App.1961, 346 S. W.2d 892, in which the plaintiff sought to double the maximum recovery under his medical payments insurance because he had two cars insured under the same policy. He had paid a premium of $8.00 for medical coverage on the first automobile and $7.00 for the coverage on the second. The court allowed stacking because of a "two or more automobiles" clause (described in footnote 6) and because separate premiums had been paid for insurance against an event that was not necessarily tied to an accident in either of the automobiles. See also Harlow v. Southern Farm Bureau Casualty Insurance Co., Tex.Civ.App.1969, 439 S. W.2d 365.

The Texas Supreme Court in Allstate Insurance Co. v. Zellars, Tex.1970, 462 S.W.2d 550, took the next significant step and denied stacking the limits of liability under non-owned vehicle insurance when the plaintiff was injured in an automobile other than his own. The court seized on the separate premium feature of Atkins and stated: "If Zellars had in fact paid an additional premium for non-owned automobile coverage when he added the second car to his policy, the medical payments cases would lend stronger support to his claim." Id. at 556. The Zellars court based the distinction it drew between medical coverage and non-owned vehicle coverage on the decision of this court in Allstate Insurance Co. v. Mole, 5 Cir. 1969, 414 F. 2d 204 (applying Florida law). In Mole it was specifically noted that unlike non-owned vehicle coverage, both medical and uninsured motorists coverage were

derived from a specifically insured vehicle and a separate premium was paid for each type of insurance on each vehicle . . . . Moreover both the medical and uninsured motorist protection, though purchased with insurance on a particular vehicle, was sic payable whether the insured was injured in that vehicle or some other.

Id. at 207.

The next major development in the stacking of limitations of liability under Texas law was Fidelity & Casualty Co. v. Gatlin, Tex.Civ.App.1971, 470 S.W.2d 924, in which it was held that, despite the existence of an "other insurance" clause,⁷ an insured could stack the limit of his own uninsured motorists coverage on top of similar coverage in another policy which was applicable to the same accident. The court stated:

We hold (1) that our uninsured motorist statute sets a minimum amount of coverage but does not place a limit upon the total amount of recovery so long as that amount does not exceed the amount of actual loss; (2) that where the loss exceeds the limits of one policy, the insured may proceed under the other available policies; (3) and that where uninsured motorist coverage has been provided, we cannot permit an insurer to avoid its statutorily imposed liability by its insertion into the policy of a liability limiting clause which restricts the insured from receiving the benefits of that coverage.

Id. at 928.

Considering the posture of the Texas law on stacking insurance coverage it is hardly surprising that the district court allowed stacking: (1) The Bogarts had clearly paid two premiums for the kind of coverage under which they claimed, which was not the case in Zellars; (2) under the policy, recovery was not tied to injuries...