Kenney Mfg. Co. v. Starkweather & Shepley, Inc.

• Decision Date: 15 June 1994
• Docket Number: No. 93-64-A,93-64-A
• Citation: 643 A.2d 203
• Court: Rhode Island Supreme Court
• Parties: KENNEY MANUFACTURING CO. v. STARKWEATHER & SHEPLEY, INC., et al. ppeal.

Page 203

643 A.2d 203

KENNEY MANUFACTURING CO. v. STARKWEATHER & SHEPLEY, INC., et al.

No. 93-64-Appeal.

Supreme Court of Rhode Island.

June 15, 1994.

Mark C. Hadden, Michael Sarli, Gidley, Sarli & Marusak, Providence, for plaintiff.

John M. Boland, Boyer, Reynolds & DeMarco, C. Russell Bengtson, Patricia Buckley, Carroll, Kelly & Murphy, Providence, for defendant.

OPINION

WEISBERGER, Acting Chief Justice.

This case comes before us on appeal by the defendant Starkweather & Shepley, Inc. (Starkweather), from the denial of its motion for a directed verdict and the entry of judgment against it after a jury verdict in Superior Court. The plaintiff, Kenney Manufacturing Co. (Kenney), also conditionally appeals the entry of a directed verdict for the codefendant Insurance Company of North America (INA). For the reasons stated herein, we sustain Starkweather's appeal in regard to the directed-verdict issue and do not reach the new-trial issue. In addition we affirm the entry of a directed verdict in favor of INA.

Because Kenney advances separate and distinct theories of liability against the two defendants, we shall consider its claims against Starkweather separately from those against INA. The specific facts relevant to each defendant and theory of liability will be developed as necessary herein.

I Claims against Starkweather

Kenney insured its yacht, the Fleetwing, under a standard marine insurance policy that covered all coastal and inland water travel between the coast of Maine and Long Island Sound adjoining New York. The policy specifically excluded coverage for the biannual Marion-to-Bermuda Yacht Race (Bermuda Race). Any travel outside the stated territory, including travel in the Bermuda Race, was considered extra-territorial and required purchasing an additional rider to the policy.

In 1985 a Kenney crew sailed the Fleetwing in the Bermuda Race, during which the vessel sustained considerable damage. When Kenney filed a claim for the damage with Starkweather, its insurance broker, coverage was denied on the grounds that the Bermuda trip involved extraterritorial travel and that no rider had ever been obtained. Kenney adamantly disagreed, claiming that it had requested a rider from Starkweather before entering the race and that Starkweather must have failed to procure it from the insurance carrier. Thereafter, Kenney brought this action, alleging negligence and breach of contract on the basis of Starkweather's failure to secure the rider for Kenney.

At trial Kenney presented the deposition testimony of its former vice president and treasurer, John Touhy (Touhy), ¹ who claimed that before the Bermuda Race he had made a telephone call to Starkweather for the purpose of requesting coverage from Don Marcum (Marcum), Kenney's account manager at Starkweather. However, the switchboard operator who answered his call indicated that Marcum was not in at the moment, and she transferred him to an unidentified woman with whom Touhy spoke and left a message.

Although Touhy represented in his answers to interrogatories that during the conversation with the woman he "advised Starkweather and Shepley that Fleetwing would be entered in the Bermuda Race and asked that coverage be afforded," when this issue was explored during Touhy's deposition, he candidly admitted that he "did not specifically ask [the unidentified woman] to place the coverage." He stated that he "told the [woman] that I was calling [Marcum] because I needed coverage or to make sure I had coverage, really, for the Bermuda race, we were going into the Bermuda race." In response to this statement the woman said to Touhy, "[Marcum] is not in," or words to that effect, and "I will have him contact you." At a later juncture in his deposition, Touhy again recounted his discussion with the woman, recalling that he "asked for Don Marcum and spoke to whomever it was and said, 'I, the boat, our boat, was going to Bermuda, entering the race, and I wanted to discuss it.' "

According to Marcum's testimony, he never received any message from Touhy regarding the 1985 Bermuda Race. Consequently he never returned Touhy's call or contacted its underwriter to procure any rider.

Touhy also testified that he did not attempt to contact Marcum again at a later date to inquire concerning why his previous call had not been returned or to ascertain whether any coverage was in place or whether additional information was needed by Starkweather or its underwriter.

In addition to the above, there was also an abundance of testimony at trial concerning Touhy's procurement of riders for extraterritorial travel for the Fleetwing through Starkweather on two prior occasions--once for a pleasure trip to Bermuda in 1982 and once for participation in the 1983 Bermuda Race. As far as these trips were concerned, Touhy had contacted Starkweather by telephone to request coverage. In both instances a series of conversations between the parties followed in which the itinerary, the names of crew members, the extent of crew experience, and other necessary underwriting information were discussed. Marcum testified that it was standard practice in the insurance industry to require crew information before issuing an offshore policy. Touhy was also informed by Marcum that Starkweather needed to explore various issues with its underwriter before it could extend a commitment for coverage. After gathering the necessary information from Touhy and conferring with its underwriter, Marcum in both instances had contacted Touhy to indicate that commitments for riders would be issued, although the actual riders and bills for the additional premiums were mailed to Touhy several months after the respective voyages.

At the close of all evidence Starkweather moved for a directed verdict, on which the trial justice chose to reserve her decision. The trial justice then charged the jury in regard to Kenney's negligence and contract counts, but she advised the jurors that if they found Starkweather liable under a negligence theory, they were not to consider the contract theory.

The jury returned a verdict in favor of Kenney on the negligence count, awarding judgment in the amount of $59,693.40, and pursuant to the court's instruction, did not consider the contract claim. Starkweather then renewed its motion for a directed verdict and moved conditionally for a new trial. After reviewing the facts, the trial justice denied both motions, finding that "reasonable minds could differ as to what result this case should have reached."

Under our well-settled standard, when

"passing on a motion for a directed verdict, the trial court, and this court on review, must consider the evidence in the light most favorable to the nonmoving party, without evaluating its credibility, and must draw all reasonable inferences in favor of the party against whom the motion is made. * * * If there are issues of fact upon which reasonable persons may differ after such review, the motion for directed verdict must be denied and the jury must decide those issues." Reccko v. Criss Cadillac Co., 610 A.2d 542, 544 (R.I.1992).

However, if the only reasonable conclusion that can be drawn from the evidence is that the plaintiff is not entitled to recover, then the motion must be granted. Hulton v. Phaneuf, 85 R.I. 406, 410, 132 A.2d 85, 88 (1957).

After reviewing the evidence presented at trial and considering it in the light most favorable to Kenney, we are of the opinion that the trial justice erred in denying Starkweather's motion for a directed verdict in respect to both the negligence and the contract counts. We address each count in turn.

A. Negligence Count

Our analysis in every negligence case begins with a consideration of whether a legally cognizable duty runs from the defendant to the plaintiff. Rodrigues v. The Miriam Hospital, 623 A.2d 456, 460 (R.I.1993). The precise issue we face in this case is whether, on the basis of Touhy's conversation with an unidentified employee of Starkweather during which he mentioned the Bermuda Race and requested a return call from a particular agent but did not specifically direct the employee to proceed to procure coverage, Starkweather owed Kenney a duty to procure a rider to cover Kenney's participation in the race.

Kenney proffers two theories to support the imposition of a duty. First, Kenney claims that since Marcum conceded the existence of a duty on cross-examination, a fortiori, a duty exists. Second, citing Tomaszewski v. McKeon Ford, Inc., 240 N.J.Super. 404, 573 A.2d 501 (1990), Kenney argues that a fiduciary relationship existed between Starkweather and Kenney that, in light of past dealings between the parties, gives rise to a duty to procure coverage.

Starkweather argues that the conversation between Touhy and the unidentified female employee did not as a matter of law obligate Starkweather to procure the rider for Kenney. Starkweather supports this position by noting that Touhy requested only a return call, not the procurement of coverage. Furthermore, Starkweather stresses that Touhy did not supply any of the underwriting information that had been required in the past. We agree with Starkweather.

We have recognized that no clear-cut formula for creation of a duty exists that can be mechanically applied to each and every negligence case. Ferreira v. Strack, 636 A.2d 682, 685 & n. 2 (R.I.1994). Under our ad hoc approach we consider all relevant factors, including the relationship of the parties, the scope and burden of the obligation to be imposed upon the defendant, public policy considerations, and notions of fairness.

In this case the record reveals a long-standing relationship between the parties and a pattern of dealings in which procurement of coverage was accomplished in a very informal manner. However, the informality of the parties' business dealings cannot overcome the crucial fact that Touhy never expressly directed Starkweather to procure coverage for the...