Hatridge v. Aetna Casualty & Surety Company

• Decision Date: 02 September 1969
• Docket Number: 19349.,No. 19348,19348
• Citation: 415 F.2d 809
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: Barbara Ann HATRIDGE, Appellant, v. AETNA CASUALTY & SURETY COMPANY, Appellee. Gene Rodney HATRIDGE, Barbara Ann Hatridge and Herman L. Reid, Appellants, v. AETNA CASUALTY & SURETY COMPANY, Appellee.

415 F.2d 809 (1969)

Barbara Ann HATRIDGE, Appellant, v. AETNA CASUALTY & SURETY COMPANY, Appellee.

Gene Rodney HATRIDGE, Barbara Ann Hatridge and Herman L. Reid, Appellants, v. AETNA CASUALTY & SURETY COMPANY, Appellee.

Nos. 19348, 19349.

United States Court of Appeals Eighth Circuit.

September 2, 1969.

Bernard Whetstone, Little Rock, Ark., for appellants.

Dennis L. Shackleford, of Shackleford & Shackleford, El Dorado, Ark., for appellee; John M. Shackleford, Jr., El Dorado, Ark., on the brief.

Before BLACKMUN, MEHAFFY and HEANEY, Circuit Judges.

BLACKMUN, Circuit Judge.

These diversity cases present interesting questions of federal jurisdiction. The appeals, although separate, are related. We treat them in one opinion. The facts are not in dispute.

1. On the morning of November 24, 1964, a bus turned over in Arkansas. It was owned by Ford, Bacon & Davis Construction Corporation and at the time was being driven by Herman Reid in the course of his employment with Ford. Gene Rodney Hatridge and James Q. Bryan were passengers on the bus at the time of the accident. Each was injured. There was outstanding a comprehensive liability policy issued by The Aetna Casualty and Surety Company to Ford. This provided Ford coverage for bodily injury liability with respect to owned motor vehicles including the bus. The policy, however, had definitional exclusions. Among these was one to the effect that the insurance did not apply "to any employee with respect to injury to * * * another employee of the same employer injured in the course of such employment in an accident arising out of the maintenance or use of an automobile in the business of such employer."

2. In March 1966, in the Circuit Court of Union County, Arkansas, Mr. Bryan and his wife obtained a default judgment, based on negligence, against bus driver Reid in the amount of $75,000 for Bryan and $10,000 consortium loss for Mrs. Bryan. Aetna had been given timely notice of the pendency of that state court action but did not defend it.

3. In June 1966 the Bryans sued Aetna in federal court for the Western District of Arkansas to recover the amount of the judgment against Reid plus interest, statutory penalty and fees. This suit was based on Arkansas' direct action statute, Ark.Stat.Ann. § 66-4001 (1966 Repl.) and on § 66-3238 which allows 12 per cent damages and attorneys' fees for nonpayment of an insured loss. The Bryans took the position that Reid was an omnibus insured under Aetna's policy to Ford.

4. In July 1966, in the Circuit Court of Union County, Arkansas, Mr. Hatridge and his wife, Barbara Ann Hatridge, also obtained a default judgment, based on negligence, against bus driver Reid in the amount of $50,000 for Hatridge and $10,000 consortium loss for Mrs. Hatridge. Aetna had been given timely notice of that suit and refused to defend it.

5. In the federal suit instituted by the Bryans, Aetna, after the submission of interrogatories, answers thereto, affidavits and offers of proof, moved for summary judgment. Chief Judge Harris granted that motion. The Bryans appealed. This court affirmed, holding that, as a matter of law, the quoted definitional exclusion served to relieve Aetna of any liability to the Bryans because the bus at the time of the accident was being used in Ford's business and because both Reid and Bryan were then in the course of employment by Ford. Bryan v. Aetna Cas. & Sur. Co., 381 F.2d 872 (8 Cir. 1967). This court's opinion for that appeal was filed September 6, 1967.

6. One week later, on September 13, Mrs. Hatridge instituted an action against Aetna under § 66-4001 in the Circuit Court of Union County, Arkansas, seeking $9,999.99, or one cent less than the amount of her judgment against Reid.¹ Her complaint recites that she

"now irrevocably and unconditionally waives all of her right to recover on any count, including, but not limited to, the principal amount of the Judgment, costs, interests, penalty, attorneys fees, or any other possible claim whatsoever in excess of $9,999.99."

7. On September 28 Aetna removed Mrs. Hatridge's action to the United States District Court for the Western District of Arkansas.

8. On the same day Aetna filed its answer in Mrs. Hatridge's suit and, joining Mr. Hatridge and Reid as third party defendants, its "Counter Claim and Cross-Claim" for a declaratory judgment that Reid was not an insured under its policy and that Aetna was not liable for the Union County judgment. Mrs. Hatridge moved to remand; Mr. Hatridge and Reid moved to dismiss the "Counter Claim and Cross-Claim."

9. On October 10, 1967, Aetna on its part instituted a federal court action in the Western District of Arkansas against Mr. and Mrs. Hatridge and Reid for a declaration of rights under the policy. The Hatridges and Reid moved to dismiss that suit on the ground that its subject matter was identical to that of her suit against Aetna. Aetna moved for summary judgment under Rule 56, Fed.R.Civ.P., supporting its motion with affidavits, and asserting that there was no genuine issue as to any material fact. The defendants responded asserting only that Aetna's motion was premature.

10. Chief Judge Harris, with consent, heard the cases together. Counsel for the Hatridges conceded that on the merits, and until an Arkansas state court had ruled contrarily, the federal district court was "completely controlled by the Bryan decision." After the hearing the court filed one memorandum opinion concerning both matters. It concluded to grant Aetna's motion for summary judgment in its case, to deny Mrs. Hatridge's motion to remand her case, and to dismiss her case with prejudice. Aetna Cas. & Sur. Co. v. Hatridge, 282 F.Supp. 604 (W.D.Ark.1968).

11. Judgments were entered accordingly. In Mrs. Hatridge's case she appeals; this is our No. 19,348. In Aetna's case all three defendants appeal; this is our No. 19,349. With counsel conceding that Mr. Hatridge is concluded by this court's decision in Bryan, only Mrs. Hatridge, of the three appellants, has filed a brief in No. 19,349.²

The appeal in Aetna's declaratory judgment action (No. 19,349).

The federal Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202, adopted in 1948, did not create new federal jurisdiction. It merely added a remedy. Consequently, the usual jurisdictional requirements must be met in order to have declaratory relief under the Act. Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 493, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942); Home Ins. Co. of New York v. Trotter, 130 F.2d 800, 803 (8 Cir. 1942); Hardware Mut. Cas. Co. v. Schantz, 178 F.2d 779, 780 (5 Cir. 1949).

Here diversity of citizenship is established. So, too, is the jurisdictional amount, for Aetna's coverage to Ford, and consequent exposure, was in excess of $100,000, for each person injured in any one accident, and the Hatridge default judgment against Reid, although broken down into two amounts, was for $60,000. See Hawkeye-Security Ins. Co. v. Davis, 277 F.2d 765, 767 (8 Cir. 1960).

This would ordinarily take us to the secondary issue, namely, whether the district court properly exercised its discretion in rendering a declaratory judgment. See, for example, Public Service Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 241, 73 S.Ct. 236, 97 L.Ed. 291 (1952); Zemel v. Rusk, 381 U.S. 1, 19, 85 S.Ct. 1271, 14 L.Ed.2d 179 (1965). As has been noted, the court resolved the discretionary question in favor of its exercise. No claim is made on appeal that its so doing was an abuse of discretion. That issue, therefore, is not before us.

The arguments advanced by Mrs. Hatridge in the declaratory judgment appeal are only that she reduced her claim against Reid to a judgment; that she sues on that judgment in a new cause of action, and no longer as a claim for consortium; and that Aetna is estopped from asserting in the new action any defense it possessed but failed to assert in the original damage action.

Mrs. Hatridge has mistakenly analyzed the legal situation. Her argument would be appropriately directed to Reid if he were the one seeking declaratory relief here. His failure to assert a defense in the suit against him would prevent him from asserting that defense in a proceeding to enforce the judgment Mrs. Hatridge obtained. The cases cited by Mrs. Hatridge so hold. Milwaukee County v. M. E. White Co., 296 U.S. 268, 275, 56 S.Ct. 229, 80 L.Ed. 220 (1935); Indemnity Ins. Co. of North America v. Smoot, 80 U.S.App.D.C. 287, 152 F.2d 667, 669, 163 A.L.R. 498 (1945), cert. denied, 328 U.S. 835, 66 S.Ct. 981, 90 L.Ed. 1611; Dickson v. Wilkinson, 44 U.S. (3 How.) 57, 61, 11 L.Ed. 491 (1845); Dimock v. Revere Copper Co., 117 U.S. 559, 566, 6 S.Ct. 855, 29 L.Ed. 994 (1886); McGill v. Robbins, 231 Ark. 411, 329 S.W.2d 540, 542 (1959).

Her argument would have force here if the default judgment which she obtained were one against Aetna rather than against Reid or if Aetna had appeared in the state court action against Reid and had raised the issue of coverage and had lost it. But Aetna, although requested so to do, did not appear in that action and the issue was not raised and resolved. Aetna is not even mentioned in the default judgment. The fact that Aetna was requested to defend the state court action against Reid and refused so to do does not work an estoppel against Aetna on the issue of coverage when the judgment obtained did not depend upon the resolution of that issue. The Hatridge judgment against Reid was conclusive as to the issue of the negligence of Reid. It was not conclusive as to whether Hatridge was in the course of his employment with Ford at the time of his injury. It is the absence of the latter which would lead to Aetna's liability and it was in no way an issue in the Hatridge-Reid lawsuit.

The cases which Mrs. Hatridge cites do not possess the broad significance she claims for them. These are: Washington Gas Light Co. v. District of Columbia, 161 U.S. 316, 16 S.Ct. 564, 40 L.Ed. 712 (1896) (the def...