EAGLE STAR INSURANCE COMPANY v. Deal

• Decision Date: 08 February 1972
• Docket Number: No. F-71-C-13.,F-71-C-13.
• Citation: 337 F. Supp. 1264
• Parties: EAGLE STAR INSURANCE COMPANY, Ltd., Plaintiff, v. Jo C. DEAL, Executrix of the Estate of Phil L. Deal, Deceased, et al., Defendants.
• Court: U.S. District Court — Western District of Arkansas

337 F. Supp. 1264

EAGLE STAR INSURANCE COMPANY, Ltd., Plaintiff, v. Jo C. DEAL, Executrix of the Estate of Phil L. Deal, Deceased, et al., Defendants.

No. F-71-C-13.

United States District Court, W. D. Arkansas, Fayetteville Division.

February 1, 1972.

Supplemental Opinion February 8, 1972.

COPYRIGHT MATERIAL OMITTED

E. C. Gilbreath of Jones, Gilbreath & Jones, Ft. Smith, Ark., for plaintiff.

James W. Gallman of Ball & Gallman, Fayetteville, Ark., for Mrs. Deal.

R. H. Mills, Springdale, Ark., for Gary R. Hungate & G. Bowerman.

James E. Evans, Springdale, Ark., for Maxine Hill.

H. Franklin Waters of Crouch, Blair, Cypert & Waters, Springdale, Ark., for Betty Roark.

W. W. Bassett of Putman, Davis & Bassett, Fayetteville, Ark., for Miles O. Letsch.

Wright, Lindsey & Jennings, Little Rock, Ark., for Lumbermen's Mut. Cas. Co.

OPINION

JOHN E. MILLER, Senior District Judge.

On April 9, 1971, the plaintiff, Eagle Star Insurance Company, Ltd., filed its complaint against the defendants named above, seeking judgment of this court declaring the rights, duties, and other legal relations between it and the named defendants, under and pursuant to 28 U.S.C.A. § 2201 et seq.; and that the court declare, decree and hold that the plaintiff has no duty to defend any lawsuit that might be filed by the personal representatives of Janet Mize, Mrs. Mary S. Hungate, Mrs. Shirley Lucille Roark, Donna Colleen Letsch and Janet Gay Bowerman, and no duty to pay any judgment which may be entered in favor of the representatives of said decedents against the Estate of Phil L. Deal, deceased; and that the court should declare, order and decree that there is no liability coverage under the policy issued by plaintiff with reference to any claims for injury, death, mental anguish, or any other rights, claims or causes of action, that anyone might be entitled to as a result of the death of the said persons.

That the plaintiff is an English insurance company, duly authorized to do business in the State of Arkansas; that defendants are citizens of Arkansas and residents of the Western District thereof, and the amount in controversy exceeds the sum of $10,000, exclusive of interest and costs.

The plaintiff alleged that on or about June 26, 1970, it issued and delivered its aircraft insurance policy No. ES-47468 for a term of one year from June 26, 1970, to June 26, 1971, to Phil L. Deal, covering a certain 1969 Beechcraft Bonanza; that on March 6, 1971, the said Phil L. Deal was traveling from Fayetteville, Arkansas, to Harrison, Arkansas, to "take care of patients who had appointments scheduled in Harrison on said date"; that the said Phil L. Deal took with him five women heretofore named, and that as the said Phil L. Deal, pilot of the airplane, was making his approach to land said aircraft at Harrison Municipal Airport, the aircraft crashed, killing Dr. Deal and all five of the persons heretofore named.

That the above described policy provided under "EXCLUSIONS":

"This policy does not apply:

"4. under Coverages A, B or D to bodily injury to, sickness, disease or death of any employee of the insured while engaged in the duties of his employment or to any obligation for which the Insured or any Company as his Insuror may be held liable under any Workmen's Compensation Law."

The plaintiff further alleged that the defendant, Lumbermen's Mutual Casualty Company, had issued its workmen's compensation policy to Dr. Deal, that the deceased persons were killed while in the course and scope of their employment, and that the workmen's compensation carrier would be liable for workmen's compensation under the laws of the State of Arkansas, and that there is no coverage under the policy issued by the plaintiff with reference to any claims by the personal representatives of the estates of the deceased.

That under Item 6 of the policy, coverage is only provided under paragraph (a) for "Pleasure and Business," which does not include the transportation of employees.

That if the court determines and holds that the deceased were employees of some other person or corporation other than Phil L. Deal at the time of their deaths, then the plaintiff alleges that the said Deal or if such other person or corporation does exist were and are included under the definition of "Insured" under paragraph III of the policy, that there would be no coverage with reference to any claims of the representatives of the estates of the five deceased persons for the reason that the deceased were "employees of Phil L. Deal or such other person or organization legally responsible for the use of the aircraft."

That demands have been made upon the Estate of Phil L. Deal by the representatives of the estates of the decedents with reference to liability claims on behalf of said deceased, and a demand has been made upon plaintiff by defendant Mrs. Jo C. Deal, Executrix, to provide a defense with reference to said claims and to pay any judgment that might be obtained by the representatives of the deceased against the Estate of Phil L. Deal.

Lumbermen's Mutual Casualty Company filed its answer, to which the Executrix of the Estate of Phil L. Deal filed a reply and a cross-complaint, but on July 13, 1971, the cause was pretried with all parties being represented by their attorneys of record, and the court dismissed all claims and causes asserted against or by defendant Lumbermen's, without prejudice, including the plaintiff's complaint and the cross-claim against Lumbermen's of the Executrix of the Deal Estate.

In paragraph XV of the answer of the Executrix of the Deal Estate to the complaint, she alleged that the decedents "were solely employees of Ozark Lab Company, an Arkansas corporation, wholly owned by Philip L. Deal, and that Philip L. Deal, as president of such corporation, is a third party within the meaning of the Arkansas Workmen's Compensation Act so that the claims for wrongful death derived through their personal representatives are claims not covered by a policy insuring the employee risk of Philip L. Deal for his own employees and, therefore, such Act does not afford an exclusive remedy to such claimants and none of the exclusions asserted by plaintiff, to-wit: Exclusion 4, Item VI, Insured-Paragraph III, or any other part of the policy issued by plaintiff are applicable to defeat coverage for this defendant and this defendant is entitled to be defended by plaintiff against such claims and is entitled to payment by plaintiff of any judgment that may be rendered against her as executrix of the estate of Philip L. Deal, deceased."

The personal representatives of the deceased filed separate answers, in which they denied each and every material allegation contained in the complaint except that Phil L. Deal was an orthodontist and that on March 6, 1971, was piloting the aircraft covered by plaintiff's insurance policy and was transporting the deceased as passengers when the aircraft crashed.

That the deceased were not employees of Dr. Deal within the meaning and definition of that term as used and defined in the Arkansas Workmen's Compensation Act; that Exclusion 4, appearing in plaintiff's policy is "an ambiguous insurance exclusionary clause * * * and should be strictly construed against the plaintiff insurer so as to afford coverage and allow recovery."

That on March 6, 1971, and prior thereto, Dr. Deal was an executive officer and/or employee of the Arkansas corporation, Ozark Lab, Inc., and as such is and was a third party within the meaning of Arkansas law and all exclusions urged by plaintiff as set forth in the complaint are inapplicable to defeat coverage.

That the purpose of the plaintiff's suit for declaratory judgment is to deprive the defendant of certain benefits of the insurance policy issued by plaintiff in favor of Dr. Deal and pursuant to provisions of Ark.Stat.Ann., § 66-3239, the defendant is entitled to a reasonable attorney's fee and costs of the defense of this action in the event plaintiff is unsuccessful in its suit.

The prayer of each of the answers is that the plaintiff's complaint be dismissed, or in the alternative that this court declare coverage under plaintiff's policy in favor of the Estate of Dr. Deal, and that plaintiff be held liable to pay any judgment or judgments that might be rendered in favor of each defendant against the Estate of Dr. Deal subject to the applicable policy limits, and that plaintiff be required to defend the Estate of Deal against any action or actions brought or to be brought against the Estate of Deal seeking damages on account of the wrongful death of the deceased, and that the attorney for each of the deceased be allowed a reasonable attorney's fee and their costs.

Prior to August 9, 1971, the representatives of the estates of the deceased passengers filed actions in the Circuit Court of Washington County, Arkansas, against Jo C. Deal, as Executrix of the Estate of Phil L. Deal, alleging negligence on the part of the deceased Phil L. Deal, and praying judgment against the estate for damages.

On November 5, 1971, the plaintiff filed an amendment to the original complaint, in paragraph II of which it alleged that because Phil L. Deal purchased a workmen's compensation policy for his employees, the deceased, that they are now estopped to deny that they were employees of Deal at the time of their deaths. In paragraph III it was alleged that Deal would also be considered an employer under the Arkansas Workmen's Compensation Act, and therefore workmen's compensation would be the exclusive remedy of the estates of the deceased.

The representatives of the deceased filed answers to the amendment to the complaint specifically denying the allegation therein contained, and reasserting their claims against the Estate of Dr. Deal.

On November 16, 1971, Mrs. Deal, as Executrix of the Estate of her deceased husband, filed her answer, in which she denied the allegations of paragraph II of the amendment to the...