Cornhusker Agr. Ass'n, Inc. v. Equitable General Ins. Co.
| Decision Date | 15 August 1986 |
| Docket Number | No. 84-608,84-608 |
| Citation | 392 N.W.2d 366,223 Neb. 618 |
| Court | Nebraska Supreme Court |
| Parties | CORNHUSKER AGRICULTURAL ASSOCIATION, INC., a Nebraska Corporation, Appellant, v. EQUITABLE GENERAL INSURANCE COMPANY, a Texas Corporation, Appellee. Stanley C. and Russell L. SCHELKOPF, Appellants, v. EQUITABLE GENERAL INSURANCE COMPANY, a Texas Corporation, Appellee. |
Syllabus by the Court
1. Summary Judgment. A motion for summary judgment shall be granted if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. If there is a genuine issue of fact, summary judgment may not be granted.
2. Summary Judgment: Appeal and Error. In reviewing a summary judgment this court must take the view of the evidence most favorable to the party against whom the motion is directed and give that party the benefit of all favorable inferences which may be drawn from the evidence.
3. Summary Judgment. The party moving for summary judgment has the burden of showing that no genuine issue as to any material fact exists; therefore, that party must produce enough evidence to demonstrate his entitlement to a judgment if the evidence remains uncontroverted, after which the burden of producing contrary evidence shifts to the party opposing the motion.
4. Summary Judgment. Summary judgment is an extreme remedy to be awarded only when the issue is clear beyond all doubt.
Jon H. Berkey and Jonathan A. Braun of Berkey & Braun, Birmingham, Mich., and Daniel E. Bryan of Heinisch & Bryan, Geneva, for appellants.
Kevin Colleran and Terry R. Wittler of Cline, Williams, Wright, Johnson & Oldfather, Lincoln, for appellee.
This is an appeal from the district court for Lancaster County, Nebraska, by the plaintiffs-insureds, Cornhusker Agricultural Association, Inc. (Cornhusker), and Stanley C. and Russell L. Schelkopf (Schelkopfs). Both Cornhusker and the Schelkopfs brought separate actions for breach of express and implied duties to defend and for indemnification by Equitable General Insurance Company (Equitable). Equitable had furnished excess insurance coverage to Cornhusker and personal "umbrella" insurance coverage to the Schelkopfs. The cases were consolidated for disposition.
These two cases involve a dispute over the excess insurance contracts and personal umbrella endorsements. In their pleadings both Cornhusker and the Schelkopfs, as insureds under the excess policies and endorsements, claim that the excess carrier, Equitable, (1) had the duty to provide the insureds a defense in three underlying lawsuits, or, alternatively, (2) under the terms of the excess policies and personal umbrella endorsements, Equitable is required to indemnify the insureds for costs and expense (including consequential damages) incurred by the insureds in defending the underlying litigation.
Cornhusker prays for a judgment of not less than $2,521,856. The Schelkopfs pray for a judgment of not less than $5 million.
The two actions were ultimately decided on cross-motions for summary judgment. On September 14, 1983, the trial court sustained Equitable's demurrer to the second and fourth causes of action in Schelkopfs' first amended petition; and on September 15, 1983, the trial court sustained Equitable's demurrer to the second and fourth causes of action in Cornhusker's fourth amended petition. In each case plaintiffs were given 14 days to file an amended petition "and upon failure to do so, case shall proceed to trial on causes of action I and III."
Our examination of the 1,023 pages of transcript in the record of these cases reveals that no order of dismissal was entered with regard to the second and fourth causes in either case. Plaintiffs' notice of appeal, filed July 25, 1984, states in part that the plaintiffs intend to "appeal ... from the letter ruling granting a portion of Defendant's Demurrer dated September 16, 1983." Appellants' first assignment of error contends that "[t]he Court erred in sustaining Defendant's Demurrer to the Second and Fourth Causes of Action...." No appealable error results from the mere sustaining of a demurrer. We feel, however, that the issues sought to be presented in appellants' first assignment are addressed in the consideration of the cross-motions for summary judgment.
Summary judgment was entered in Lancaster County District Court granting Equitable's motion for summary judgment and denying plaintiffs' (Cornhusker's and Schelkopfs') motions. The plaintiffs now bring this consolidated appeal. We hold that the action of the trial court was correct, and we affirm.
The facts are as follows. Cornhusker is a wholly-owned subsidiary of Cornhusker Research, Inc., which is in turn owned by Stanley, Russell, Sterling, and Robert Schelkopf. The Schelkopfs are brothers. Stanley is president and Russell is vice president of Cornhusker. Cornhusker is a corporation organized under the laws of the State of Nebraska, with its principal place of business in Shickley, Fillmore County, Nebraska.
Since 1972, Cornhusker has been in the business of breeding, raising, and selling purebred swine. Cornhusker's farms were accredited by the Nebraska SPF Association. SPF, as used in that title, means specific pathogen free. Animals which are SPF certified should be free of specific diseases. In order to maintain SPF accreditation, strict procedures on the farm must be followed as far as isolating the hogs. No non-SPF hogs may be brought onto the farm, and personnel are to follow strict guidelines regarding showering, changing clothing, and disinfecting areas in which the hogs are located. As part of this program, careful records are maintained about the birth of hogs, and they are weighed at 140 days after birth to verify they are healthy, vigorous hogs. The hogs are weighed by representatives of the Nebraska SPF Association, which also conducts periodic inspections of the farms. Hogs which appear to be diseased may be slaughtered and examined to see if they are infected. The farm's SPF accreditation may be suspended if the herd becomes infected. It may even be necessary to have all of the breeding stock slaughtered if a serious disease outbreak is involved.
One of the diseases which SPF hogs are to be free of is atrophic rhinitis, which is a contagious swine disease. It generally manifests itself by a breakdown in the cellular structure of the nose, which is typified by bloody, crooked noses. As a result of the disease, the animals frequently catch pneumonia and in general do not gain weight as desired. A general discussion of the disease is set out in Ruskamp v. Hog Builders, Inc., 192 Neb. 168, 219 N.W.2d 750 (1974).
In 1968 Cornhusker became involved in the Allied Mills, Inc.'s (Allied), hog-leasing program. Allied was a Delaware corporation with its principal place of business in Chicago, Illinois. Under this program, Allied had the first right to purchase all but 10 of Cornhusker's gilts and all of its boars. Allied would then arrange to lease these animals to farmers, and Cornhusker would deliver the animals directly to the farm. By 1974 Cornhusker's hog operation had become an extensive one, with annual sales of approximately $1.5 million.
In 1974 plaintiffs procured liability insurance coverage to cover their various businesses, including the hog operation. On September 1, 1974, plaintiffs obtained a liability policy from Union Insurance Company, which provided $300,000 of coverage per occurrence, at an annual premium of $4,394. The policy was a standard one, including an obligation on behalf of Union to defend Cornhusker in the event of a liability suit, and was effective from September 1, 1974, to September 1, 1977. Effective January 1, 1975, plaintiffs obtained a $1 million excess liability policy from Equitable in addition to the Union policy. This policy specifically provided that Cornhusker was to maintain $300,000 of underlying coverage. The premium for the initial policy, which covered only 8 months, was $233. This policy was renewed on September 1, 1975, for 1 year, at an annual premium of $1,000. Separate personal umbrella endorsements were added to the excess policy, providing Stanley Schelkopf with $1 million of umbrella coverage and providing Russell Schelkopf with $3 million of umbrella coverage.
In April 1976 Cornhusker sold 345 head of swine to Allied. Pursuant to a contract dated April 27, 1976, Allied leased the swine to Plainview Farms, Inc., a Texas corporation (Plainview). The swine were delivered by Cornhusker in six deliveries from May to October 1976.
After these hogs arrived at Plainview, significant problems developed in the Plainview herd. Plainview claimed the herd began to develop symptoms of atrophic rhinitis, and the farm's population was substantially damaged. Stanley and Russell Schelkopf went to Texas and examined the Plainview herd. The Schelkopfs attributed Plainview's problems to poor management and denied the Cornhusker hogs could have been infected with atrophic rhinitis. When no resolution of the problem could be reached, Plainview filed suit in the circuit court for Jackson County, Missouri (hereinafter referred to as the Plainview-Missouri suit), in November 1977, and also in the U.S. District Court for the Northern District of Texas, Lubbock Division (hereinafter referred to as the Plainview-Texas suit), in May 1978. Both lawsuits sought actual damages in the amount of $519,342, and the suits, in addition, sought punitive damages, as compensation for property damage allegedly incurred, as the result of the "infection" or "contamination" by Cornhusker's swine to Plainview's preexisting swine herd and farm premises. Essentially the same lawsuit was filed in each jurisdiction--Missouri jurisdiction being based on the fact that the...
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