Continental Ins. Companies v. Hancock

• Decision Date: 15 June 1973
• Citation: 507 S.W.2d 146
• Parties: The CONTINENTAL INSURANCE COMPANIES, Appellant, v. Walter E. HANCOCK et al., Appellees.
• Court: United States State Supreme Court — District of Kentucky

Page 146

507 S.W.2d 146

The CONTINENTAL INSURANCE COMPANIES, Appellant, v. Walter E. HANCOCK et al., Appellees.

Court of Appeals of Kentucky.

June 15, 1973.

As Modified on Denial of Rehearing March 22, 1974.

O. Grant Bruton, John R. McCall, Middleton, Seelbach, Wolford, Willis & Cochran, Louisville, Reginald L. Ayers, Bell, Orr, Ayers & Moore, Bowling Green, for appellant.

Paul R. Huddleston, Huddleston & Huddleston, J. Reid Caudill, Marshall Funk Robert D. Simmons, Allender, Simmons & Robertson, Bowling Green, for appellees.

STEINFELD, Justice.

This is an appeal from a declaratory judgment which held the appellant, Continental Insurance Companies, liable for the payment of judgments totaling $74,000.00 plus interest obtained by appellees, Walter Hancock, Larry Chism and O. E. Wilburn against the appellee, Walter Simpson. Continental Insurance Company was the insurer of Walter Simpson.

In October 1967, Hancock, Chism and Wilburn were patrons of a nightclub operated by Simpson in Bowling Green, Kentucky. Chism insulted one of the waitresses in the establishment and was asked to leave by Simpson. Some difficulty developed between the two men and Simpson tore Chism's shirt and forced him to leave the premises. His companions, Hancock and Wilburn, also left but the three remained for a time outside the premises. Simpson later went outside and some further recrimination took place between Simpson and Chism. Simpson went back into the nightclub, there is some testimony he called for help, and presently three of his employees came outside and a fight promptly ensued between the three employees and Hancock, Chism and Wilburn as a result of which Hancock, Chism and Wilburn were each injured. There was testimony that Simpson accompanied his three employees when they came out of the building but Simpson maintains that he was making a telephone call while the fighting was going on and was not aware of it when it started. All of this evidence was elicited in the trial of a lawsuit against Simpson in which Hancock, Chism and Wilburn alleged that they were wilfully assaulted by Simpson and his employees or in the alternative that Simpson was grossly negligent in failing to adequately protect the patrons of his establishment from harm.

Simpson was insured by Continental Insurance Companies which was obligated by the policy to pay all sums which Simpson should become legally obligated to pay by reason of an accident resulting in bodily injury which was neither expected nor intended from the standpoint of the insured.

The policy contained a limit of liability of $25,000.00 for each person and $50,000.00 for each occurrence. The jury awarded compensatory damages to Hancock in the amount of $12,500.00, to Chism in the amount of $7,500.00 and to Wilburn in the amount of $10,000.00, or a total of $30,000.00 in compensatory damages.

The jury awarded punitive damages to Hancock in the amount of $17,000.00, to Chism in the amount of $10,000.00 and to Wilburn in the amount of $17,000.00 or a total of $44,000.00 in punitive damages.

The policy required that written notice of an occurrence be given to the company or its authorized agents as soon as practicable.

The first written notice of the occurrence was given to the company immediately after the filing of a lawsuit by Hancock, Chism and Wilburn in February 1968.

Upon receipt of notice of the litigation, Continental Insurance Companies notified Simpson that the employees were not covered by the policy; that questions of coverage of Simpson arose from the fact that it was claimed that the injuries were wilful and intentional and were therefore intended or expected from the standpoint of the insured. Coverage was likewise questioned on the ground of lack of notice, that the total claim exceeded policy limits; and that the policy did not provide coverage for punitive damages. Continental offered to defend under a reservation of right to later deny liability for any judgment that might be obtained. Simpson rejected the reservation of rights.

Continental thereafter provided attorneys for the defense of the claim against Simpson and a running battle took place between the company and Simpson with the company maintaining at all times its right to defend under the reservation and Simpson rejecting their right to do so.

The attorneys provided by Continental to represent Simpson in the defense of the tort claim filed an action for declaration of rights against Simpson on behalf of Continental in which Continental sought to have declared its non-liability for the payment of any judgment which might be rendered in the tort action by reason of its policy defenses.

After the judgment was returned against Simpson in the tort action Continental refused to prosecute an appeal on behalf of Simpson or to supersede the judgment.

Hancock, Chism and Wilburn obtained an order of garnishment against Continental for any funds held by Continental for which it was indebted to Simpson.

The following proceedings then took place in the action for declaration of rights. Continental took the deposition of the court reporter who had reported the trial of the tort action and filed as an exhibit the transcribed testimony of some, but not all, of the witnesses in the tort litigation. The trial court ordered that the common law action by Hancock, Chism and Wilburn against Simpson, which had already been tried and judgment entered, be consolidated with the action for declaration of rights. Consolidation was objected to by Continental but the objection was not pursued on this appeal. Simpson then moved for a summary judgment upon the records of the consolidated cases. Hancock, Chism and Wilburn moved for a judgment on the merits as to all outstanding questions.

Simpson moved that his motion for summary judgment be brought on for hearing on March 6, 1970, or as soon thereafter as counsel could be heard. Continental moved that the hearing for summary judgment be continued until March 20 and an order was entered which stated:

'These consolidated cases stand submitted for judgment upon the records of both cases; nevertheless, counsel for all parties are hereby given additional time to and including the 20th day of March, 1970, at the hour of 10:00 A.M., within which they may file written briefs or appear for oral argument of the issues.

'Furthermore, counsel for all parties may file counter-affidavits at any time prior to the final hearing on the 20th day of March, 1970.'

On March 10, 1970, Continental moved for summary judgment and the parties filed affidavits and exhibits in support of their motions for judgment. The parties seem to have treated the case as if it was being fully tried by the court. On March 19, 1970, the trial judge entered a thirty-page typewritten findings of fact, conclusions of law and judgment disposing of the case in the manner in which cases tried by the court without the intervention of a jury are usually concluded. It is that judgment which is the subject of this appeal.

At the outset we are confronted with appellees' motion to dismiss the appeal. The motion is grounded upon the assertion that appellant failed to file the complete record of both of the consolidated actions in this court and failed to file a statement of points as required by CR 75.04. A second ground for dismissal of the appeal is that the appellant is represented on this appeal by the same attorneys who represented the conflicting interests of the defendant in the trial of the tort action below.

CR 75.04 requires a statement of points only in the event that the entire record on appeal is not designated. The designation of record filed in this appeal designated the entire record in both the tort action and the action for declaration of rights. No statement of points was required to be filed.

Appellees argue that a conflict of interest existed between appellee, Simpson, and the Continental Insurance Companies in that Continental was seeking to avoid liability on its policy by reason of policy defenses and that the attorney furnished by Continental to represent appellee, Simpson, in the defense of the tort claim was at all times securing...