Booth v. Seaboard Fire & Marine Insurance Company

• Decision Date: 30 October 1970
• Docket Number: 19762 and 19763.,No. 19750,19750
• Citation: 431 F.2d 212
• Parties: Lucille BOOTH, Administratrix De Bonis Non of the Estate of Ernest R. Booth, Deceased, Appellant, v. SEABOARD FIRE & MARINE INSURANCE COMPANY, a Corporation, Appellee. Lucille BOOTH, Administratrix De Bonis Non of the Estate of Ernest R. Booth, Deceased, Appellee, v. SEABOARD FIRE & MARINE INSURANCE COMPANY, a Corporation, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

431 F.2d 212 (1970)

Lucille BOOTH, Administratrix De Bonis Non of the Estate of Ernest R. Booth, Deceased, Appellant, v. SEABOARD FIRE & MARINE INSURANCE COMPANY, a Corporation, Appellee.

Lucille BOOTH, Administratrix De Bonis Non of the Estate of Ernest R. Booth, Deceased, Appellee, v. SEABOARD FIRE & MARINE INSURANCE COMPANY, a Corporation, Appellant.

Nos. 19750, 19762 and 19763.

United States Court of Appeals, Eighth Circuit.

August 11, 1970.

Rehearing Denied October 30, 1970.

James E. Schneider, North Platte, Neb., for Lucille Booth.

C. J. Gatz, of Maupin, Dent, Kay, Satterfield & Gatz, North Platte, Neb., for Seaboard Fire & Marine Ins. Co.; Harold W. Kay, North Platte, Neb., on the briefs.

Before MATTHES, Chief Judge, and GIBSON and LAY, Circuit Judges.

LAY, Circuit Judge.

Lucille Booth, the Administratrix De Bonis Non of the Estate of Ernest R. Booth, deceased, brings this appeal challenging the amount of the judgment rendered in her suit against Seaboard Fire and Marine Insurance Company, the insurer. The action was originally brought under the Declaratory Judgment Act, 28 U.S.C.A. §§ 2201 and 2202 seeking interpretation of two contracts of uninsured motorist insurance owned by Ernest R. Booth (hereinafter designated the insured). Seaboard filed a cross-appeal on the ground that the estate was barred from any recovery because of refusal to comply with a request for arbitration. The company additionally claims that attorney fees allowed plaintiff in the district court were not "reasonable," and that recovery under the "accidental death benefit" provision of both policies was improper. It is agreed that Nebraska law controls.

The decedent-insured died as the result of an automobile-tractor collision of October 25, 1963, on U.S. Highway 30 in Dawson County, Nebraska. The driver of the automobile was George E. Cayson, an uninsured motorist. The decedent was injured in the course of his employment with Gothenburg Feed Products. At the time of the accident, the decedent, Booth, owned two separate liability policies with Seaboard, each providing for uninsured motorist coverage.¹ Each policy provided limits for uninsured motorist coverage of $20,000 for each accident. Current premiums had been paid by the insured at the time of loss. Both policies contained clauses which read:

"Any amount payable as damages because of bodily injury sustained in an accident by a person who is insured under this coverage shall be reduced by * * * the amount paid and the present value of all amounts payable on account of such bodily injury under any Workmen\'s Compensation Law, Disability Benefits Law and any similar law."

At trial in federal court the parties stipulated that the dependents of the insured were entitled to receive compensation payments for a period of 325 weeks under the provisions of the Nebraska Workmen's Compensation Act. The compensation carrier, Maryland Casualty Company, had paid benefits of $40 per week for 179 weeks through March 30, 1967, and it was stipulated that the dependents were then still entitled to benefits for an additional 146 weeks, plus $400 burial allowance, totaling $13,400.² Maryland Casualty waived any right of subrogation it might have had against the uninsured motorist fund. The record further shows that on September 27, 1965, an action for wrongful death was commenced in federal district court against Cayson and the uninsured owner of the car Cayson was driving, one Larry Sheely.³ On July 7, 1966, a default judgment was entered against Cayson, the uninsured motorist, in the amount of $23,000. The present action followed.

The district court held that the setoff clause under the Seaboard policies (relating to the reduction of amounts payable for workmen's compensation benefits) was void under Nebraska law, relying upon Stephens v. Allied Mutual Ins. Co., 182 Neb. 562, 156 N.W.2d 133 (1968). However, under general principles of equity and fairness, the district court reasoned that in order to prevent the plaintiff from getting a "windfall," the workmen's compensation payments made to the plaintiff must nevertheless be setoff. This result, the court said, quoting from Stephens, would allow "the insured * * * to recover the same amount he would have recovered if the offending motorist had maintained liability insurance." 156 N.W.2d at 139. The court, therefore, allowed plaintiff recovery in an amount equal to the judgment against the uninsured motorist, less the total compensation benefits paid or to be paid.

In addition, the district court held: (1) that plaintiffs were entitled to $1,000 from each policy for accidental death benefits; (2) that attorney fees of $3,000 should be awarded to plaintiff; and (3) that the arbitration clause in the policies was waived, and, was also void under Nebraska law. The court considered other issues relating to notice and coverage under the medical payment clauses. Those findings are not contested upon appeal. The district court's opinion is reported at 285 F.Supp. 920 (1968).

Upon review, we reverse as to the amount of the judgment against Seaboard being limited and hold that plaintiff was entitled under Nebraska law to a recovery of the full $23,000, undiminished by workmen's compensation benefits. In all other respects, we affirm the findings and judgment of the district court.

Arbitration Clause

We discuss first the issues raised on cross-appeal. If the insurer is correct as to the arbitration questions, then all other issues would be rendered moot. The arbitration clause of both policies reads:

"Arbitration

"If any person making claim hereunder and the company do not agree that such person is legally entitled to recover damages from the owner or operator of an uninsured automobile because of bodily injury to the insured or do not agree as to the amount of payment which may be owing under the Uninsured Motorist Coverage, then, upon written demand of either, the matter or matters upon which such person and the company do not agree shall be settled by arbitration in accordance with the rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Such person and the company each agree to consider itself bound and to be bound by any award made by the arbitrators pursuant to this paragraph."

In Heisner v. Jones, 184 Neb. 602, 169 N.W.2d 606 (1969), the Nebraska court, relying on a long line of Nebraska authorities, held that such a clause is unenforceable since it contravenes the public policy of the state. The defendant company contends, however, that an insurance contract is in the stream of interstate commerce and the arbitration provision is therefore protected under the Federal Arbitration Act. 9 U.S.C.A. §§ 1 et seq. We need not decide that question here. The district court found under the express terms of the policy that arbitration may be enforced only by written demand of either party and that neither the company nor the insured made such a request here. The company relies on a letter written by its senior adjuster to plaintiff's counsel on November 10, 1965, which reads in part:

"I would like to point out and request that you read the arbitration section in connection with uninsured motorists coverage and if you have any further word in connection with this, please let us hear from you."

The trial court found as a matter of fact that this was not a written demand to arbitrate under the policy. Such a finding cannot be disturbed upon appeal unless we deem it clearly erroneous under Fed.R.Civ.P. 52(a). The record indicates no ground upon which to reject that finding as clearly erroneous.

Defendant contends that the policy likewise requires its "written consent" before any judgment can be obtained against the uninsured motorist or itself. We agree with the trial court's analysis that:

"If the arbitration provision is waived or held unenforceable, the no suit without written permission clause should also be waived or held unenforceable. To hold otherwise would have the effect of forcing arbitration." 285 F.Supp. at 924.

Attorney Fees

On cross-appeal Seaboard likewise challenges the award of attorney fees and the recovery for accidental death benefits under both policies. The award of attorney fees under the Nebraska statute rests solely within the discretion of the trial judge. In the instant case an award of $3,000 was made. The insurer argues that this sum is excessive in relation to its pretrial offer of $7,000 and to the court's total award of $9,600 on the uninsured motorist coverage (plus $2,000 for death benefits). This, of course, is only one factor the trial judge may take into consideration in awarding attorney fees. The complex nature of the lawsuit, the responsibility assumed by counsel, the approximate time in services, measured by exact proof or weighed by the court's own judgment in light of counsel's preparation and trial performance, are all additional factors to be weighed. The ultimate award for fees rests within the sound discretion of the trial court. See Metcalf v. Hartford Accident & Indemnity Co., 176 Neb. 468, 126 N.W.2d 471 (1964). We find that the attorney fees awarded were within the bounds of reason. There is no evidence of abused discretion.

Accidental Death Benefits

Plaintiff sued for accidental death benefits under each policy. The only defense asserted below was that the death benefit coverages do not apply "to bodily injury or property damage arising out of the operation of farm machinery." The trial court thoroughly analyzed the existing law and concluded for reasons not material on this appeal that the above exclusion did not apply. The company does not now contest that conclusion but relies on an entirely new defense relating to "other insurance" and urges that the maximum benefits accruing to plaintiff would be the coverage provided by the $1,000 limit of one policy. It is well settled...