Burton v. State Farm Mutual Automobile Insurance Co.

• Decision Date: 11 September 1964
• Docket Number: No. 20753.,20753.
• Citation: 335 F.2d 317
• Parties: Lola BURTON, as Administratrix of the Estate of William C. Burton, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

335 F.2d 317 (1964)

Lola BURTON, as Administratrix of the Estate of William C. Burton, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee.

No. 20753.

United States Court of Appeals Fifth Circuit.

July 23, 1964.

Rehearing Denied September 11, 1964.

COPYRIGHT MATERIAL OMITTED

Charles E. Davis, Anthony W. Cunningham, Fishback, Davis, Dominick & Troutman, Orlando, Fla., for appellant.

William McHardy Berson, James O. Driscoll, Berson, Barnes & Inman, Orlando, Fla., for appellee.

Before TUTTLE, Chief Judge, and POPE^* and BROWN, Circuit Judges.

JOHN R. BROWN, Circuit Judge:

This case presents for review the propriety of the District Judge's granting of Insurer's motion for summary judgment in a suit by the widow of the Assured as administratrix of the Assured's estate to establish the Insurer's liability for failure to defend suits by third parties against the estate. The facts are these.

On July 3, 1958, the named Assured¹ was involved in an automobile accident in Orange County, Florida. The automobile specifically covered by the policy was totally demolished. The Assured was killed and other persons were killed and injured. These other persons, some individually and others through the personal representatives of their estates, subsequently instituted actions in the Florida State Courts. These suits were brought against "Lola J. Burton as administratrix of the estate of William C. Burton, deceased." Through counsel she notified the Insurer of the actions and fully complied with all the related policy conditions requiring transmittal to the Insurer of pleadings, correspondence and the like. But the Insurer refused to come in and defend. Judgments totaling some $160,000 were entered on March 26, 1962, against "Lola J. Burton as Administratrix of" Assured's estate. The Insurer refused to pay the judgments, and this action in the Federal District Court resulted. The Federal suit was brought by "Lola Burton, administratrix of the estate of William C. Burton, deceased." The complaint plainly asserted a claim for damages totaling $200,000 allegedly arising out of the Insurer's refusal to defend the third-party actions and pay the State Court judgments which resulted.² Included in that figure were claims for attorneys' fees in defense of the State Court third-party suits and in prosecution of this Federal Court suit, and for costs and interest. The District Judge, was apparently convinced that it was a case of all or nothing and if the relief prayed for in the complaint could not now be granted, there was no alternative but to grant the Insurer's motion for summary judgment. He therefore entered judgment for the Insurer denying recovery on all claims except the one for damage to the automobile. This was done on the ground that the widow, "Lola Burton, administratrix of the estate of William C. Burton, deceased," although sued as such was not the duly appointed and legally qualified administratrix of the Assured's estate at the time the State Court third-party suits were instituted and when the judgments in those suits were entered.

The unsuccessful complainant appeals, asserting two things primarily as a basis for reversal. The first is that her subsequent valid appointment as administratrix on December 20, 1962, relates back to validate the judgments entered March 26, 1962, in the State Court third-party suits against her in her representative capacity.³ The second is that the effect of the District Judge's ruling is to sustain an impermissible collateral attack on the judgments in the third-party suits.⁴

In view of our disposition of the case we need not now decide these questions. The District Judge apparently thought that the pleadings limited the scope of available relief, and if that formally sought was not allowable none could be granted. This is not the law. As we have many times said, except in the case of a default judgment, the Court is bound to grant whatever relief the facts show is necessary or appropriate. F.R.Civ.P. 54(c); Smoot v. State Farm Mut. Auto. Ins. Co., 5 Cir., 1962, 299 F.2d 525; Arthur H. Richland Co. v. Harper, 5 Cir., 1962, 302 F.2d 324; Brotherhood of Railway Trainmen v. Central of Georgia Ry. Co., 5 Cir., 1962, 305 F.2d 605; Shull v. Pilot Life Ins. Co., 5 Cir., 1963, 313 F.2d 445. To grant summary judgment dismissing the whole main case could be sustained, not by showing that the relief prayed for was not available, but rather that there was no genuine issue of fact on which any kind or type of relief, complete, final, contingent or interim, could be granted.

The case was decided below and argued here as though this was a suit on the State Court judgments. On that approach the arguments assumed that the crucial thing at stake was the validity of these State Court judgments. The case is a long way from that point. The important thing at this stage is the nature and scope of the Insurer's duty to defend.

The policy contained the traditional defense coverage.⁵ As we have said before, the obligation of the Company under this standard provision⁶ is distinct and separate. American Fidelity & Cas. Co. v. Pennsylvania Threshermen & Farmers' Mut. Cas. Ins. Co., 5 Cir., 1960, 280 F.2d 453; National Surety Corp. v. Wells, 5 Cir., 1961, 287 F.2d 102.⁷ As we indicated in the American Fidelity & Casualty Company case, it is distinct and separate "in the sense that the duty to defend does not depend upon the payment to a damage claimant or the rendition of a judgment declaring the assured's legal obligation to pay." 280 F.2d 453, at 458. When rightly considered and construed, "the effect of the policy is that the insurer undertakes to defend claims of the type for which it would have to make payment." Ibid.

On that approach what is the test for determining whether the claim is "of the type for which the Insurer would have to make payment"? Does the duty to defend depend on the facts ultimately established in the damage suit? Or does it ordinarily depend on what the third party claimant contends?

For us the moving hand of Florida makes the Erie choice here simple and inescapable. Aligning Florida with the majority a late, if not the latest, writing Court, Ford Motor Co. v. Mathis, 5 Cir., 1963, 322 F.2d 267, 269, spells it out plainly.

"The rule seems established everywhere that a public liability carrier\'s duty to defend the insured in an action brought against him is to be determined from the allegations of the complaint, declaration, or other statement of the cause of action, filed in such action against the insured. See New Amsterdam Casualty Company v. Knowles, Fla.1957, 95 So.2d 413, and the annotation in 50 A.L.R.2d 465, page 504." Bennett v. Fidelity & Casualty Co., Fla.Ct. App.1961, 132 So.2d 788.

See the comprehensive discussion in 7A Appleman, Insurance Law and Practice § 4682 (1962); and the full treatment of the subject by Judge Pope in The Travelers Indemnity Co. v. State Farm Mutual Auto. Ins. Co., 9 Cir., 1964, 330 F.2d 250.

The comment in III Risjord & Austin, Automobile Liability Insurance Cases, case 3112,⁸ disagreeing with a decision which in effect determined the duty to defend on what was finally ascertained to be the true facts after the defense was all over, puts it well:

"If the petition stated a cause of action against the Assured, we think that the insurer was obligated to defend him, whatever the true facts may have been."

Did the complaint state a cause of action against the Assured? If so, what is the remedy for the Company's breach of its "absolute duty"? National Surety Corp. v. Wells, 5 Cir., 1961, 287 F.2d 102, 104.

Under the policy, the Company undertook

"(1) To pay all damages which the insured shall become legally obligated to pay because" of (A) personal injuries (death) and (B) property damage "caused by accident arising out of ownership, maintenance or use, * * * of the automobile."

There is no question about the State Court suits being against the "insured." The policy definitions state "under coverages A personal injury, B property damage * * * the unqualified word `insured' includes (1) the named insured * * *."⁹ William C. Burton, husband of Appellant here, was the named insured. He was the owner and driver of the "private passenger automobile * * described in the policy declarations," and this was the automobile involved in the accident which resulted in the State Court suits.

More important, the broad definition of "Insured," note 9, supra, extends coverage for personal injury and property damage claims to "(4) * * any person or organization legally responsible for the use thereof by an insured as defined under the three subsections above." When this is read with the balance of the policy, and particularly the provisions respecting notice of an accident or likely claim,¹⁰ it is obvious that the policy covers, and was clearly intended to cover (1) the named Assured and, in the event of his death (2) his estate or personal representatives against whom claims surviving under applicable law may be collected or recovered.

These State Court third-party suits on their face showed that three things were presented: (1) the negligent operation of the described insured automobile, (2) negligent operation thereof by the named Assured causing the damages sought, and (3) the death of the named Assured and the asserted existence of his estate.

Thus the third-party suits charged as plainly as words can a claim for which the Assured would be liable if proved. And, of course, the Insurer knew of those suits. It is uncontradicted on this record that the Insurer received copies of every pleading, motion or other document filed in each of the State Court suits. It is also uncontradicted that the widow complied with all policy conditions relating to notice, cooperation with the Insurer and the like.

It is difficult to comprehend the position of the Insurer. With notice of the accident and the pendency of suits which on the face of...