O'Malley v. U.S. Fidelity and Guar. Co.

• Decision Date: 18 October 1985
• Docket Number: No. 85-4138,85-4138
• Parties: Paul V. O'MALLEY, et al., Plaintiffs-Appellants, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Defendant-Appellee. Andre C. FARISH, Plaintiff-Appellant, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, et al., Defendants-Appellees. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 494

776 F.2d 494

Paul V. O'MALLEY, et al., Plaintiffs-Appellants, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Defendant-Appellee.

Andre C. FARISH, Plaintiff-Appellant, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, et al.,

Defendants-Appellees.

No. 85-4138

Summary Calendar.

United States Court of Appeals, Fifth Circuit.

Oct. 18, 1985.

John R. Kingsafer, Mulhearn & Mulhearn, John Ernest Mulhearn, Jr., Natchez, Miss., for plaintiffs-appellants.

Watkins & Eager, James L. Carroll, Virginia T. Munford, Jackson, Miss., for defendant-appellee.

Appeal from the United States District Court for the Southern District of Mississippi.

Before GEE, RANDALL and DAVIS, Circuit Judges.

PER CURIAM:

Appellants Andre C. Farish, Paul V. O'Malley and Douglas Talbot appeal from a ruling of the district court, 602 F.Supp. 56, denying them recovery under insurance policies issued by Appellee United States Fidelity and Guaranty Company. Because of the reasons discussed below, we affirm the judgment of the district court.

I.

Appellant Farish owned a building known as the "Under the Hill Club" which was insured under an extended coverage policy issued by Appellee United States Fidelity and Guaranty Company ("U.S.F. & G."). Appellants O'Malley and Douglas leased a building in which they ran a sandwich shop, "The Bowie Knife," the contents of which were insured by U.S.F. & G. Both the Under the Hill Club and the Bowie Knife were located in the old historic section of Natchez, Mississippi, known as Natchez Under the Hill. This area lies on the east bank of the Mississippi River and below a tall, near vertical, bluff, on top of which sits the town of Natchez itself. The businesses of Farish, O'Malley and Talbot (collectively "O'Malley") occupied restored, brick buildings which lay against the base of the bluff.

On March 29, 1980, at about 3:35 p.m., a huge section of the bluff, estimated to be approximately fifty feet wide by twenty feet high by ten feet deep, and weighing 800,000 to one million pounds, broke loose and slid with accompanying trees and other debris down the bluff, into and through the two buildings, destroying them and their contents and killing two people. U.S.F. & G. denied recovery, claiming no coverage and citing a water damage exclusion in the policies. U.S.F. & G. argued that excessive rainfall had weakened the bluff, causing it finally to collapse in a mudslide. O'Malley contended that high winds blowing on trees growing on the bluff had lossened their root structure, triggering the mudslide. If the cause of the mudslide and resulting loss were windstorm, it would have been covered by the insurance policies.

Filed first in state court, the cases were consolidated and removed to federal district court, where they were tried without a jury. After viewing evidence and hearing testimony, the district court decided that the sole cause of the mudslide was the excessive rain which had penetrated and soaked the ground of the bluff, weakening it and causing it to collapse. The district court found that the policies in question excluded losses "caused by, resulting from, contributed to or aggravated by ... water below the surface of the ground ..." and concluded that the loss incurred by O'Malley was excluded by the policies. The district court refused to rule on O'Malley's claim that U.S.F. & G. had acted in bad faith by failing to investigate and pay for the losses properly. The district court bifurcated the trial, receiving evidence and testimony only on the issue of whether or not the losses were covered by the policies. As noted above, O'Malley failed to prevail on this initial issue of coverage. The court found that Mississippi law would not allow recovery for a bad faith tort alleged to have been committed by an insurance company when the insured failed to prevail on his claim for loss under the policy. The court therefore refused to hear evidence of bad faith.

O'Malley raises six grounds of appeal. First, O'Malley contends that the district court's findings of fact, concluding that water damage was the sole cause of the mudslide, are clearly erroneous. O'Malley also finds fault with the court's construction of the insurance policies: O'Malley claims that coverage existed for his loss. O'Malley additionally objects to the bifurcation of the coverage and bad faith issues, contending that the district court committed error in refusing to permit him to pursue his bad faith claim against U.S.F. & G. O'Malley points out alleged error in the district court's discovery and evidentiary rulings. O'Malley complains that the court should not have denied him discovery of a file involving an earlier mudslide loss on April 22, 1979. The court also should have admitted an engineering report into evidence and permitted cross-examination with reference thereto. Finally, O'Malley asserts that the district court committed error by denying him a jury trial. We disagree with these contentions. We will not turn to a discussion of each.

II.

The findings of fact of the district court must be left undisturbed unless determined to be clearly erroneous under Fed.R.Civ.P. 52(a). A finding is "clearly erroneous" when "although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948). Where there are two permissible views of the evidence, the fact finder's choice between them cannot be clearly erroneous. United States v. Yellow Cab Co., 338 U.S. 338, 342, 70 S.Ct. 177, 179, 94 L.Ed. 150 (1949). In addition, as the Supreme Court has recently observed,

[W]hen findings are based on determinations regarding the credibility of witnesses, Rule 52 demands even greater deference to the trial court's findings; for only the trial judge can be aware of the variations in demeanor and tone of voice that bear so heavily on the listener's understanding of and belief in what is said.

Anderson v. City of Bessemer City, North Carolina, --- U.S. ----, 105 S.Ct. 1504, 1512, 84 L.Ed.2d 518 (1985) (citing Wainwright v. Witt, --- U.S. ----, 105 S.Ct. 844, 83 L.Ed.2d 841 (1985)).

We now turn to the question whether the district court's findings in the instant case are clearly erroneous as defined above. The court found that the mudslide was not proximately caused or proximately contributed to by windstorm. The court noted further:

Even if there were a strong wind (which the Court has found did not exist) and even if it is assumed the wind exerted some causative force on the mudslide (which the Court has found not to be the case) such windstorm was not the dominant and efficient cause of the losses incurred.

Record Vol. 3 at 888.

In support of its conclusion, the district court cited several factors. First, official weather records showed no unusual or damaging winds on March 29, 1980. Second, U.S.F. & G. and the Natchez office of the adjusting firm assigned to the instant case received no other local windstorm claims for March 29, 1980. The court placed emphasis upon the testimony of Steve Stevens, the "only unaligned witness who testified." Record Vol. 3 at 885. Stevens stated that earlier in the day he had been on the river checking oil wells and had noted high winds. He testified that he did not observe any high winds at the time of the mudslide, although he admitted that the bluff protected Natchez Under the Hill from southeast winds such as those alleged to exist on March 29, 1980. Finally, the court mentioned the expert witnesses employed by both sides, witnesses, who, predictably enough, presented conflicting opinions. The court chose to follow the reasoning of U.S.F. & G.'s witnesses. Their testimony, supported by photographs, indicated that excessive moisture and not wind caused the mudslide: "the fracture plane, the area from which the slide moved, was relatively smooth, indicating that the trees slid with the slide rather than having been pulled out from the bluff by the wind." Record Vol. 3 at 886.

O'Malley questions the court's interpretation of Stevens' testimony, adding that Jerry Straham, the only witness in a position to perceive the force of the wind on top of the bluff, testified that there "was a lot of strong winds." Record Vol. 5 at 83. O'Malley also disputes the relevance of official weather reports taken hours before the time of the mudslide, ten or twelve miles away from Natchez Under the Hill. In addition, O'Malley contends that companies other than those involved in the instant case might have received windstorm claims on the day in question. Finally O'Malley asserts the primacy of his expert witness' testimony.

After reviewing the record, we cannot say that the findings of the district court are clearly erroneous. Credible evidence was presented from which the court could have concluded that there was no strong windstorm on March 29, 1980. Three expert engineers testified that in their professional opinions, rainfall--not wind--caused the collapse by saturating the soil. Even O'Malley's expert admitted that this water was significant in the failure of the bluff. As noted above, where there are two permissible views of the evidence, the fact finder's choice between them cannot be clearly erroneous. Yellow Cab Co., 338 U.S. at 342. Jerry Strahan, the witness upon whose testimony O'Malley in large part relied, was employed by Appellant Talbot as general manager and is now his business partner. All other witnesses presented by O'Malley were similarly aligned with him through work or blood ties. The district judge had the advantage of observing the witnesses and passing on their credibility. The district court thus was well within its right in emphasizing the testimony of Stevens, as the "only unaligned witness who testified." As noted by the Supreme Court, "[w]hen findings are based on determinations regarding the credibility...