Burnette v. GRANDE MUTUAL CASUALTY COMPANY

• Decision Date: 13 March 1970
• Docket Number: Civ. A. No. 6823.
• Citation: 311 F. Supp. 873
• Parties: Charlotte BURNETTE, Individually and for the Use and Benefit of Elmer Brownlee Burnette, Jr. v. GRANDE MUTUAL CASUALTY COMPANY.
• Court: U.S. District Court — Eastern District of Tennessee

311 F. Supp. 873

Charlotte BURNETTE, Individually and for the Use and Benefit of Elmer Brownlee Burnette, Jr. v. GRANDE MUTUAL CASUALTY COMPANY.

Civ. A. No. 6823.

United States District Court, E. D. Tennessee, N. D.

March 13, 1970.

W. E. Fitzgerald, O. F. Cobb, William D. Vines, III, Knoxville, Tenn., for plaintiff.

H. H. McCampbell, Jr., Knoxville, Tenn., for defendant.

ROBERT L. TAYLOR, District Judge.

MEMORANDUM

Charlotte Burnette, individually and for the use and benefit of her son, Elmer Brownlee Burnette, Jr., seeks a recovery for the defendant's alleged bad faith in failing to settle a wrongful death action that arose out of a motor vehicle accident that occurred in Corbin, Kentucky on September 3, 1966. Plaintiff, Charlotte Burnette, is a resident of Tennessee and the defendant is chartered under the laws of Ohio, with principal office at Columbus, but is authorized to do business in Tennessee. Use plaintiff is a resident of Ohio.

Defendant, on September 30, 1965, issued an automobile liability insurance policy in the State of Ohio. Under its terms, defendant agreed to pay all sums which plaintiff became legally obligated to pay for bodily injury to one person up to and including the sum of $10,000.00 and to defend and pay expenses brought against plaintiff arising out of the use of her automobile, including expense of counsel. The policy extended to any licensed driver driving plaintiff's vehicle with her permission.

On September 3, 1966, Mrs. Burnette's vehicle was being driven by her son, Elmer Brownlee Burnette, Jr., with her permission, in Corbin, Kentucky, when it was involved in an accident with a truck, resulting in the death of a young girl who was a guest passenger in plaintiff's vehicle, Janice Marie Hoag. Suit for the wrongful death of Janice Marie Hoag was instituted in the United States District Court for the Eastern District of Kentucky against plaintiff and her son and the operator of the truck and his principal. Plaintiff claims that defendant defended the suit but failed to advise her of the risks involved, including the possibility of a judgment in excess of the policy limits. She further claims that she and her son were misled by the defendant, through its agents, who led them to believe that suit could not be settled within the limits of the policy. Judgment was rendered in the Kentucky District Court in the amount of $37,410.17 against all of the defendants named in the suit on January 16, 1969. After payments were made by codefendants in the Federal Court and the payment of $10,000.00 by the defendant in this Court, plaintiff was left personally owing the co-defendants' insurance company, Liberty Mutual Insurance Company, the sum of $8,255.08, which is still outstanding as a result of the defendant's wrongful actions.

Plaintiff claims that she and her son were forced to expend certain sums to attend the trial and make arrangements for themselves regarding the case and that as a result of their personal liability now outstanding their credit and reputation has been damaged, placing them on the verge of bankruptcy. She also claims that she has been forced to employ attorneys to handle her affairs as a result of the defendant's actions and has sustained considerable expense as a result thereof.

Plaintiff alleges that the defendant's conduct in failing to settle within its policy limits and failing to properly inform and communicate with plaintiff amounted to a conscious doing of a wrong and a breach of a known duty through a motive of interest and that said conduct was in the nature of fraud.

Plaintiff further charges that defendant's actions were wanton and grossly negligent and in bad faith and in disregard of her rights and were in violation of T.C.A. § 56-1105. Plaintiff sues for the 25% penalty provided for in said statute for defendant's bad faith refusal to settle without reasonable cause.

Defendant has moved to dismiss and urged in support thereof four separate grounds.

It is asserted in the first ground that the Court lacks jurisdiction because the controversy is not between citizens of different states in that Elmer Brownlee Burnette, Jr. is a citizen of the State of Ohio, the State of which defendant is also a citizen. This ground is without merit. Jurisdiction depends upon the personal citizenship of the parties to the record "and not upon the citizenship of the parties whom they represent." The record shows that named plaintiff is a resident of Tennessee and that the defendant is a resident of Ohio. Deposit Guaranty Bank and Trust Co., Administrator of the Estate of Norman Miller v. Burton, 380 F.2d 346 (C.A. 6). See Rule 17(a) F.R.Civ.P.

It is contended in ground No. 2 that Elmer Brownlee Burnette, Jr. is an indispensable party to this action and cannot be made a party without depriving this Court of jurisdiction. This ground also is without merit. The Kentucky judgment appears to have been a joint and several judgment. Charlotte Burnette and her son are liable to Liberty Mutual Insurance Company jointly and severally for the entire amount of the judgment in the District Court. The suit is for the use and benefit of Elmer Brownlee Burnette, Jr. and in the event of recovery, the Court can protect the rights of the defendant against any future claims of Elmer Brownlee Burnette, Jr. See: Provident Trademen's Bank and Trust Co. v. Patterson, 390 U.S. 102, 88 S.Ct. 733, 19 L.Ed.2d 936 (1968).

It is contended in ground No. 3 that the complaint fails to state a claim against defendant upon which relief can be granted in that plaintiff or plaintiffs are not the real parties in interest within the meaning of T.C.A. § 20-101, but that the real party in interest is Liberty Mutual...