Michigan Abrasive Co., Inc. v. Poole
| Decision Date | 10 December 1986 |
| Docket Number | No. 85-7782,85-7782 |
| Citation | 805 F.2d 1001 |
| Parties | MICHIGAN ABRASIVE COMPANY, INCORPORATED, Plaintiff, v. Anne D. POOLE, Defendant-Counterclaim Plaintiff-Third-Party Plaintiff-Appellee, Ben C. Poole, et al., Defendants. Michigan Abrasive Company, Inc., Michigan General Corporation, Inc., Counterclaim-Defendants, Third-Party Defendants, Marsh & McLennan, Inc., Counterclaim-Defendant, Third-Party Defendant-Appellant. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
William D. Cobb, Jr., Cowles & Thompson, G. Roland Love, Dallas, Tex., William B. Fernambucq, Huie, Fernambucq & Stewart, Birmingham, Ala., for Marsh & McLennan, Inc.
Ferris S. Ritchey, Jr., Ritchey & Ritchey, P.A., Birmingham, Ala., for Anne D. Poole.
Appeal from the United States District Court for the Northern District of Alabama.
Before HILL and FAY, Circuit Judges, and MORGAN, Senior Circuit Judge.
This case involves a diversity action between Anne D. Poole, (hereinafter Poole), a sublessee of an industrial project, and Marsh & McLennan, Inc., (hereinafter appellant)--an insurance brokerage firm. Poole brought a third-party complaint against appellant seeking damages under several theories including negligent failure to procure insurance and breach of contract. The jury returned a general verdict in favor of Poole and the United States District Court for the Northern District of Alabama entered judgment in Poole's favor. Appellant now seeks reversal of the district court's denial of appellant's motion for judgment notwithstanding the verdict and alternatively for a new trial. For the reasons that follow, we affirm.
In 1977, the Industrial Board of the City of Florence, Alabama, issued and sold $1,800,000 in bonds to finance the construction of a light industrial project located in tract "J" of the Florence--Lauderdale Industrial District. The project consisted of a plant building and adjacent structures, two storage buildings and two office buildings. In January of 1977, the project was leased to Michigan Abrasive Company, a wholly owned subsidiary of the Michigan General Corporation. Pursuant to an oral agreement, appellant acted as the insurance broker for Michigan General and wrote a manuscript policy insuring Michigan General's subsidiaries including Michigan Abrasive.
In February of 1981, Michigan Abrasive subleased the project to Anne Poole, the President of Ajax Industries. Poole simultaneously subleased the project to Ajax.
Under the terms of the Michigan Abrasive--Poole sublease, Poole was obligated to secure fire insurance covering the plant, all improvements and leased equipment. 1 Poole, however, elected to exercise an option in the sublease compelling Michigan Abrasive to maintain the required insurance and designate Poole as a named insured in consideration for annual prepayment of the premiums. 2 In February of 1981, Ajax tendered a check in the amount of $5,040 to Michigan General for insurance which, unknown to Poole, covered the real property only. The check was endorsed over to appellant and deposited in a trust account on February 18, 1981.
Pursuant to a request by Michigan General, appellant issued an endorsement on September 9, 1981, listing Ajax as an additional named insured. In addition, appellant received the portion of the Michigan Abrasive--Poole sublease specifying the property to be insured and the terms of the option.
A fire destroyed the main plant building on November 8, 1981. Ajax received $841,377.13 for the loss of the building. Because appellant procured insurance solely covering the real property, Poole was not indemnified for the destroyed leased equipment valued at approximately $194,000.00. Contrary to the terms of the Michigan Abrasive--Poole sublease, Poole was never designated as a named insured under the policy.
In January of 1982, Michigan Abrasive brought suit against Poole and others seeking, inter alia, damages caused by Poole's inability to make rental payments after the fire. Poole counterclaimed, seeking damages for Michigan Abrasive's failure to maintain the requisite insurance, failure to have Poole designated as a named insured, and mishandling of the premium. Poole also brought a third-party complaint against appellant seeking to recover for the loss of the leased equipment, for business interruption, and for loss of rent under a variety of legal theories.
All of the claims between Michigan Abrasive and Poole were settled and dismissed. The third-party claims brought by Poole against appellant went to trial. After all of the evidence was presented, the district court granted appellant's motion for a directed verdict on all counts except the alternate theories of breach of contract and negligence. The jury returned a verdict for Poole and assessed damages at $194,000.00 plus interest for a total of $228,000.00. The district court entered judgment for Poole. Appellant's motion for judgment notwithstanding the verdict was denied. Appellant's alleged grounds for reversal are predicated on the district court's denial of that motion.
In diversity cases, federal law governs the propriety of motions for judgment notwithstanding the verdict. Federal Kemper Life Assurance Co. v. First National Bank of Birmingham, 712 F.2d 459, 464 (11th Cir.1983). The standard regulating these motions is identical to the standard controlling motions for a directed verdict. Johnson v. Bryant, 671 F.2d 1276, 1279 (11th Cir.1982). As this court has observed:
[o]n motions for directed verdict and for judgment notwithstanding the verdict the Court should consider all of the evidence--not just that evidence which supports the non-mover's case--but in the light and with all reasonable inferences most favorable to the party opposed to the motion. 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, granting of motions is proper. On the other hand, if there is substantial evidence opposed to the motions, that is, evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motions should be denied, and the case submitted to the jury. A mere scintilla of evidence is insufficient to present a question for the jury. The motions for directed verdict and judgment n.o.v. should not be decided by which side has the better of the case, nor should they be granted only when there is a complete absence of probative facts to support a jury verdict. There must be a conflict in substantial evidence to create a jury question.
Neff v. Kehoe, 708 F.2d 639, 641-42 (11th Cir.1983) (quoting Boeing Co. v. Shipman, 411 F.2d 365, 374-75 (5th Cir.1969)). Because the same substantive issues as matters of law must be addressed on appeal, reviewing courts must apply the same standard. Neff, 708 F.2d at 641.
Appellant argues that the district court erred in refusing to grant judgment notwithstanding the verdict because "as a matter of law, the Michigan Abrasive--Poole sublease created no obligation to insure Poole's personal property." The property in question consisted of miscellaneous plant equipment used in the manufacturing process such as racks, tables, carts and cabinets, etc. Under the terms of the Michigan Abrasive--Poole sublease, Michigan Abrasive was not obligated under the option to obtain insurance covering personal property. Appellant asserts that the destroyed equipment was purchased by Poole and was not leased pursuant to the Michigan Abrasive--Poole sublease.
Because we find appellant's characterization of the equipment as personalty untenable as a matter of law, we conclude that the district court did not err in refusing to grant appellant's motion for judgment notwithstanding the verdict. Testimony at trial revealed that the bulk of the equipment was originally used by Michigan Abrasive and left on the premises when the project was subleased to Poole. The terms of the primary lease between the Industrial Development Board of the City of Florence and Michigan Abrasive provided that the board would retain title to the project including the plant and leased equipment until the bonds were retired. The bonds had not been retired at the time of the fire. We find that the issue of ownership of the equipment was submitted to and resolved by the jury. After reviewing the record, we conclude there was substantial evidence of such quality and weight that the jury could have reasonably concluded that the destroyed equipment was part of the project subleased by Poole. Appellate courts cannot reweigh evidence concerning questions of fact and substitute their judgment for that of the jury. See Lindsey v. American Cast Iron Pipe Co., 772 F.2d 799, 801 (11th Cir.1985); Hockett v. United States, 730 F.2d 709, 714 (11th Cir.1984). After reviewing the evidence, we are not left with the definite and firm conviction that an error occurred. See Taylor v. Hudson Pulp and Paper Corp., 788 F.2d 1455, 1459 (11th Cir.1986). Appellant cannot avoid the res judicata effect of the jury's findings by recharacterizing the issue as one of law and not of fact.
The district court instructed the jurors that Poole could recover for the destroyed equipment if they found that appellant breached a duty to procure insurance covering the property owed to Poole. The court charged the jury that the duty to provide such coverage could arise either by agreement or by voluntary assumption of the obligation. Questions of duty are controlled by state law. See Walden v. United States Steel Corp., 759 F.2d 834, 838 (11th Cir.1985). Since the jury returned a general verdict, Alabama law requires that this court affirm both of the theories presented to the jury in order to sustain its verdict. Walden, 759 F.2d at 838.
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CHAPTER 6
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