Fisher v. Indiana Lumbermens Mutual Insurance Co.

• Decision Date: 19 April 1972
• Docket Number: No. 71-2378. Summary Calendar.,71-2378. Summary Calendar.
• Parties: C. M. FISHER, Plaintiff-Appellant, v. INDIANA LUMBERMENS MUTUAL INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

456 F.2d 1396 (1972)

C. M. FISHER, Plaintiff-Appellant, v. INDIANA LUMBERMENS MUTUAL INSURANCE COMPANY, Defendant-Appellee.

No. 71-2378. Summary Calendar.^*

United States Court of Appeals, Fifth Circuit.

March 20, 1972.

Rehearing Denied April 19, 1972.

Harry B. Friedman, Texarkana, Tex., for plaintiff-appellant.

Larry L. Gollaher, Dallas, Tex., for defendant-appellee.

Before JOHN R. BROWN, Chief Judge, and INGRAHAM and RONEY, Circuit Judges.

JOHN R. BROWN, Chief Judge:

Following a fire that totally destroyed his house and various items of personal property inside it, C. M. Fisher (Assured) sued Indiana Lumbermens Mutual Insurance Company (Insurer) for recovery of the loss under the terms of a Texas Standard Homeowners Policy¹ written by Insurer. At the close of the evidence the District Court granted Insurer's motion for a directed verdict on the issue of liability for loss of the house and submitted one special interrogatory regarding the actual cash value of the personal property. The jury found that such property was valueless, judgment was entered for Insurer, and Assured appeals.

We affirm that portion of the judgment relating to the loss of the house, since the evidence conclusively establishes that on the date of the fire one of the policy conditions—Assured's occupancy of the house "principally for dwelling purposes"—was not met. However, we reverse on the issue of liability for loss of the personal property because despite timely objection by Assured the District Court improperly instructed the jury on the applicable standard of valuation under Texas law.

The record reveals that Assured's son purchased the policy in his father's name on August 15, 1970 from Insurer's local recording agent. The policy was mailed to Assured, and he made one partial payment on the premium before the insured property burned to the ground on September 2, 1970.

Prior to the fire the house was undergoing extensive alterations and repairs in preparation for its eventual occupancy by Assured. At the time of the fire Assured was actually living in another house several miles away, where he was attempting to farm and raise cattle, and by his own admission he merely intended to move into the new house following its renovation. He could not describe the floor plan and was uncertain whether he even possessed a key to the house. The testimony of the son was to the effect that the unfinished condition of the house was such that no one could have lived in it and that his father was only "figuring" to move in on the date of the fire.

Given these uncontroverted facts we are convinced that the Trial Court correctly concluded that there was no factual issue for the jury involving liability for loss of the house. "It is well settled in this Circuit that in diversity cases federal courts apply a federal rather than a state test for the sufficiency of the evidence to create a jury question." Boeing Co. v. Shipman, 5 Cir., 1969, 411 F.2d 365, 368 (en banc). Under that standard it is not necessary that there be no evidence whatever supporting the position of the party adverse to the movant or that all factual issues be resolved conclusively in favor of the movant. It is enough "if the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict." 411 F.2d at 374. Phrased another way, at a bare minimum "there must be a conflict in substantial evidence to create a jury question." 411 F.2d at 375 (emphasis added).

Despite Assured's strenuous protestations to the contrary there is simply no such conflict here. As in McGowen v. Travelers Insurance Co., 5 Cir., 1971, 448 F.2d 1315, 1317, "all the evidence points one way"—at the time of the fire Assured was not occupying the house "principally for dwelling purposes" but was instead living several miles away while awaiting completion of the repairs. Under such circumstances Texas law clearly prescribes that by the explicit terms of the policy no liability for the loss ever arose. Bryan v. United States Fire Insurance Co., Tex.Civ.App., 1970, 456 S.W.2d 702, error ref. n. r. e.; Transcontinental Insurance Co. of New York v. Frazier, Tex.Civ.App., 1933, 60 S.W.2d 268; Home Insurance Co. v. Currie, 5 Cir., 1931, 54 F.2d 203; cf. British America Assurance Co. v. Miller, 1898, 91 Tex. 414, 44 S.W. 60; United States Fire Insurance Co. of New York v. Rothwell, Tex.Com.App., 1933, 60 S.W.2d 759.

The inevitability of this conclusion is not impaired by Assured's argument that the Trial Court erroneously denied a motion to amend the complaint in order to conform to alleged evidence of waiver and estoppel, the theory being that Insurer's local agent impliedly waived the policy's occupancy requirement because he knew the house was in such a state of disrepair as to render it uninhabitable. Aside from the fact that the motion to amend was made and denied after the Trial Court had already granted Insurer's motion for a directed verdict, thereby negating any implication that the denial constituted an abuse of discretion,² an amendment of the pleadings would have been an exercise in futility in any event because there was no proof that under Texas law Insurer waived or was estopped from asserting the policy condition because of the actions of its agent.

Of course Assured is correct in his contention that "it is now well settled in Texas that a provision in an insurance policy that no condition or stipulation shall be waived except by a written indorsement attached to the policy is ineffectual to prevent a parol waiver of such provisions and conditions by an authorized agent acting within the scope of his authority." Home Insurance Co. of New York v. Roberts, 1937, 129 Tex. 178, 100 S.W.2d 91, 93; see also Aetna Insurance Co. v. Paddock, 5 Cir., 1962, 301 F.2d 807; South Falls Corp. v. Kalkstein, 5 Cir., 1965, 349 F.2d 378. Likewise there is no dispute that in Texas an insurer through its authorized agent may not "deliver a policy with full knowledge of facts upon which its validity may be disputed, and then * * * insist upon these facts as ground for avoidance of liability." Mecca Fire Insurance Co. v. Smith, Tex.Civ.App., 1911, 135 S.W. 688, 689. Nor is there any doubt that the positive misrepresentations of an agent regarding a policy's terms, conditions or coverage may subsequently estop an insurer from reliance upon policy provisions contary to such parol representations. New Hampshire Fire Insurance Co. v. Plainsman Elevators, Inc., Tex.Civ.App., 1963, 371 S.W.2d 69, error ref. n. r. e.; State Farm Fire & Casualty Co. v. Ward, Tex.Civ.App., 1963, 364 S.W.2d 771, Tex.Inc.Code art. 21.14, V.A.T.S.; Western Millers Mutual Insurance Co. v. Williams, 5 Cir., 1956, 231 F.2d 425.

However, none of these decisions support the proposition asserted by Assured—that Insurer waived or was estopped to assert a condition of coverage merely because the agent might have known when the policy was written that the condition did not then exist. Such knowledge, without more, is insufficient in Texas to dictate the judicial nullification of the contractual agreement between Insurer and Assured. Maryland Casualty Co. v. Palestine Fashions, Inc., Tex.S.Ct., 1966, 402 S.W.2d 883; Ford v. Culbertson, 1958, 158 Tex. 124, 308 S.W.2d 855; Hallmark v. United Fidelity Life Insurance Co., 1956, 155 Tex. 291, 286 S.W.2d 133; Southland Life Insurance Co. v. Vela, 1949, 147 Tex. 478, 217 S.W.2d 660. The policy provided in plain and unambiguous terms that coverage would be afforded only if the house were occupied by Insured "principally for dwelling purposes" on the date of the loss. Even if the agent knew when he sold the policy that the house was not and could not then be occupied, he was under no affirmative obligation to refuse to insure it until Assured had moved in or to offer gratuitous predictions regarding the possible consequences of a loss transpiring before that time.

For essentially identical reasons we reject Assured's assertion that he was entitled to have his case heard by a jury on a theory of "constructive occupancy." Coverage was explicitly conditioned upon occupancy, not possession or ownership, and in view of the overwhelming evidence that the house was unoccupied when it burned down Assured was not entitled to have the issue of liability submitted to the jury merely on the off-chance that he might fortuitously prevail as the result of a wholly irrational verdict. Jenkins v. Aquatic Contractors & Engineers, 5 Cir., 1971, 446 F.2d 520; Bruce Construction Corp. v. United States, 5 Cir., 1957, 243 F.2d 873.³

With respect to...