Coastal Plains Feeders, Inc. v. Hartford Fire Ins. Co.

• Citation: 545 F.2d 448
• Decision Date: 13 January 1977
• Docket Number: No. 75-3482,75-3482
• Parties: COASTAL PLAINS FEEDERS, INC., Plaintiff-Appellee Cross Appellant, v. HARTFORD FIRE INSURANCE CO. et al., Defendants-Appellants Cross Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 448

545 F.2d 448

COASTAL PLAINS FEEDERS, INC., Plaintiff-Appellee Cross Appellant, v. HARTFORD FIRE INSURANCE CO. et al., Defendants-Appellants

Cross Appellees.

No. 75-3482.

United States Court of Appeals, Fifth Circuit.

Jan. 13, 1977.

John E. Lunsford, Lawrence B. Clark, Birmingham, Ala., for defendants-appellants cross appellees.

Duke, Booth, Kaufman & Rothfeder, Albert W. Copeland, Richard H. Gill, Montgomery, Ala., for plaintiff-appellee cross appellees.

Appeals from the United States District Court for the Middle District of Alabama.

Before RIVES, ^* GEWIN and MORGAN, Circuit Judges.

LEWIS R. MORGAN, Circuit Judge:

Plaintiff-appellee Coastal Plains Feeders, Inc. ¹ operates a commercial feed lot near Samson, Alabama where it holds cattle for their owners and fattens them for market. Defendant-appellant insurance companies ² issued "floater" policies to Coastal Plains insuring the cattle it held against loss by "theft, but excluding escape or mysterious disappearance." In this diversity action ³ Coastal Plains sued the companies on the insurance contracts to recover the value of 512 cattle that vanished from its feed lot. Coastal Plains also sought an additional $50,000 compensatory and $100,000 punitive damages for the insurance companies' allegedly tortious refusals to pay the claims.

The district court dismissed Coastal Plains' latter claims for failure to state a cause of action under Alabama law. After trial a six person jury found for Coastal Plains on the contractual claims in the amount of $172,657.48. The district court entered judgment for that amount plus $9,064.54 interest.

The insurance companies appeal the judgment, arguing (1) that the district court incorrectly instructed the jury as to the elements that Coastal Plains had to prove to recover; (2) that there was insufficient evidence of theft to present a jury question on liability; and (3) that there was insufficient evidence of the cattle's value to support the damage award. Coastal Plains cross appeals, complaining that the district court erred in dismissing its claims for compensatory and punitive damages for the companies' refusal to pay on the policies. For the reasons stated herein, we affirm the district court in all respects.

I. FACTS.

Coastal Plains put on evidence showing that in late 1973 and early 1974 it held about 7,000 cattle in its feeder pens near Samson. On December 21, 1973 Lawrence Systems, Inc., which issued warehouse receipts for the cattle held by Coastal Plains, made a rough head count indicating that no cattle were missing from the Samson lot. Lawrence records also showed that it could account precisely for the cattle belonging to each owner who withdrew cattle from the lot before December 23, 1973. Each owner's cattle were inventoried into separate pens by exact head count. When an owner withdrew his cattle, the number withdrawn plus the number of deaths ⁴ plus the number previously withdrawn always added up to the number that the owner had delivered. In addition, some owners counted their own cattle at the lot, and before December 23 none found any shortages.

In late January of 1974 Coastal Plains became concerned because the amount of feed the cattle were consuming was abnormally low. Its nutritional and veterinary consultants found nothing wrong with the feed or cattle, however, and the drop in consumption was attributed to rainy weather. When consumption continued to be low through February, some owners became worried. On March 10 Coastal Plains conducted an exact head count of all the cattle at the lot. This count revealed, and the parties stipulated, that 512 cattle were missing.

Searches of the surrounding countryside, investigation by law enforcement officers, and offer of a $5,000 reward turned up neither hide nor hair of the missing cattle. Some light was shed on their disappearance, however, by three members of a family who lived on a lonesome dirt road leading to the back pens of the feed lot. They testified that on a number of occasions between December and March they saw an unmarked empty double-decker ("possum belly") cattle truck going up the road toward the lot at dusk without headlights. They also heard a heavy diesel truck return down the road in the early hours of morning. None of them ever saw such a large truck on the road before or since.

The back pens to which the dirt road led were not locked, and the heaviest loss of cattle was from those pens. The night watchman, who quit in February, could not see or hear anything happening at the back pens. Two men could load as many as 70 cattle into the kind of truck the family saw in a short time. Coastal Plains' fences were in good repair, and it had never had a problem with cattle straying or escaping.

II. THE INSURANCE COMPANIES' APPEAL.

A. Instructions on theft and mysterious disappearance. The insurance policies provided that the companies would be liable for the loss of cattle " through theft, but excluding . . . mysterious disappearance." The insurance companies contend that, under Alabama law, Coastal Plains carried both the burden of proving that theft was the cause of the loss, and the burden of proving that mysterious disappearance was not the cause of the loss. ⁵ They further contend that the district court erred in failing to instruct the jury that Coastal Plains carried the latter burden as well as the former. We find it unnecessary to decide whether the burden of disproving mysterious disappearance was on Coastal Plains rather than the insurance companies; for assuming that it was on Coastal Plains, ⁶ the district court's instructions sufficiently apprised the jury that Coastal Plains was required to disprove mysterious disappearance in order to recover. ⁷

The district court did not just tell the jury that Coastal Plains must carry the burden of proving theft to recover under the policy. Rather, it told the jury repeatedly that Coastal Plains must prove that theft, and not mysterious disappearance, was the cause of its loss:

(D)efendants deny that Coastal Plains suffered any loss covered under these insurance policies since Coastal Plains has by the evidence shown nothing more than a mysterious disappearance of cattle and . . . a mysterious disappearance of cattle is not covered or compensable under these policies.

Appendix at 245-46.

(The i)nsurance policies . . . provide that Coastal Plains is insured against theft, but not escape or mysterious disappearance.

Appendix at 247.

The policies of insurance here in question provide insurance for theft, . . . but exclude escape or mysterious disappearance . . . . The burden of proof of theft, as I have told you, is on Coastal Plains, the plaintiff. That burden of proof is to reasonably satisfy you from the evidence that the loss in fact resulted from a theft or thefts.

Appendix at 249. The district court defined "mysterious disappearance" as "disappearance under unknown, puzzling, and baffling circumstances which arouse wonder, curiosity, or speculation, or under circumstances which are difficult or hard to explain." Appendix at 249. ⁸ Thus, although the district court correctly charged that Coastal Plains could prove theft through circumstantial evidence, ⁹ it also made it clear to the jury that Coastal Plains had to prove something more than "mysterious disappearance," so defined, to make out a circumstantial case of theft. This amounted to an instruction that under the policy, Coastal Plains had to "negate mysterious disappearance" to prove "theft."

The district court rejected the insurance companies' request to charge explicitly that Coastal Plains carried two burdens that of proving theft, and that of negating mysterious disappearance on the ground that this could confuse the jury. The court apparently wanted to avoid misleading the jury into thinking that it was logically possible for Coastal Plains to prove theft without negating mysterious disappearance, as it had defined that term. ¹⁰ We think this was a proper concern. The fact that the insurance contracts were drawn in confusing language does not justify instructing the jury in confusing terms especially at the instance of the parties responsible for the source of the confusion. ¹¹ We hold that to inform the jury adequately that Coastal Plains carried the "burden of negating mysterious disappearance" as well as of proving theft, it was necessary only to define " mysterious disappearance" in the generally accepted manner, see text and note at note 8 supra ; and then to emphasize that Coastal Plains would be entitled to recover only if it proved theft, as distinguished from mysterious disappearance so defined.

B. Sufficiency of the evidence of theft. The insurance companies argue that the district court erred in denying its motions for directed verdict and for judgment notwithstanding the verdict, on the ground that Coastal Plains' evidence was insufficient to prove theft of the cattle. The rule in this circuit is that "in diversity cases federal courts apply a federal rather than a state test for the sufficiency of evidence to create a jury question." Boeing Company v. Shipman, 411 F.2d 365, 368 (5th Cir. 1969) (en banc); see generally 5 Moore's Federal Practice P 38.10. Considering "all of the evidence not just that evidence which supports the non-mover's case but in the light and with all reasonable inferences most favorable to the party opposed to the motion(s)," 411 F.2d at 374, we conclude that Coastal Plains made out a sufficiently strong case of theft to get to the jury.

Coastal Plains presented evidence tending to show that the disappearance of the cattle was not due to death, sale or reclamation by owners, straying, or miscounting. We need not decide whether this evidence by itself would support an inference that the cattle were stolen, compare Lovas v. St. Paul Insurance Companies, 240 N.W.2d 53 (N.D.1976) (evidence of theft of hogs held sufficient) with Baugher v. Hartford Fire...