Ohio Cas. Ins. Co. v. Rynearson
| Citation | 507 F.2d 573 |
| Decision Date | 02 December 1974 |
| Docket Number | No. 73-1736,73-1736 |
| Parties | The OHIO CASUALTY INSURANCE COMPANY, Plaintiff-Appellee, v. Max D. RYNEARSON, etc., Defendant and Third-Party Plaintiff-Appellant, v. PORTER AND BOSTON, INC., Third-Party Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Stanley D. Lytal, Fort Wayne, Ind., for appellant.
John T. Hume, III, William M. Osborn and Grace M. Curry, Indianapolis, Ind., for appellee.
Before SPRECHER and TONE, Circuit Judges, and PERRY, Senior District Judge. 1
This is an appeal by defendant-appellant, Max D. Rynearson, etc. ('Rynearson'), from a judgment of the District Court which granted a motion for summary judgment in favor of plaintiff-appellee, the Ohio Casualty Insurance Company ('Ohio Casualty'), upon its complaint for declaratory judgment, denied Rynearson's cross-motion for summary judgment, and dismissed Rynearson's third-party complaint against defendant-appellee, Porter and Boston, Inc. ('Porter and Boston').
There are two issues: (1) Did the District Court err in granting summary judgment for Ohio Casualty? (2) Did the District Court err in dismissing Rynearson's third-party complaint against Porter and Boston?
The District Court made findings of fact summarized as follows:
On or about June 28, 1968, Ohio, Casualty issued a liability insurance policy to Max D. Rynearson, d/b/a Hamilton Shores. Under the terms of the insurance contract, Ohio Casualty agreed to pay on behalf of Rynearson all sums which he may become legally obligated to pay as damages because of bodily injury or death to others arising out of premises located 3/4 mile southeast of the city limits of Goshen, Indiana on the west side of U.S. Highway 33, Elkhart Twonship, Elkhart County, State of Indiana, which premises were used as a drive-in restaurant. On or about May 4, 1969, Chris W. Yoder, a tenant of the restaurant, was fatally electrocuted while working in the restaurant. On either May 4th or 5th, 1969, Rynearson became aware of Yoder's electrocution and death, but failed to notify Ohio Casualty or its agents of the occurrence until March 19, 1971. Ohio Casualty had no knowledge of said occurrence until March 19, 1971. On March 17, 1971, Sadie W. Yoder, Administratrix of the Estate of Chris W. Yoder, deceased, filed a lawsuit against Rynearson in which she alleged that Yoder's death was the proximate result of careless and negligent conduct on the part of Rynearson. The aforementioned liability policy defined an 'occurrence' as follows: 'An occurrence means an accident including injuries, Exposure to conditions which results during the policy period in bodily injury or property damage, neither expected nor intended from the standpoint of the insured.' The also contained the following clause relating to the duty of the insured in the event of occurrence, claim or suit: In the event of an occurrence, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the insured to the company or any of its authorized agents as soon as practicable. The named insured shall promptly take at his expense all reasonable steps to prevent other bodily injury or property damages from arising out of the same or similar conditions, but such expense shall not be recoverable under this policy.
The policy was in effect during the period June 28, 1968 to June 28, 1969. The policy specifically described the aforementioned restaurant in the description of hazards section as follows: Rynearson had prior experience in liability insurance matters by virtue of the following:
(a) From 1956 until 1958 he was a Claims Adjuster for State Farm Mutual Insurance Company.
(b) From 1959 until 1964 or 1965 he was a Claims Adjuster for State Farm Mutual Insurance Compay and during this period of time he was promoted to Claims Superintendent in charge of other Claims Adjusters.
(c) For approximately one year to one-and-a-half years during 1965 and 1966, Rynearson was Claims Manager for National Union Insurance Company.
(d) Rynearson has been a practicing lawyer since 1965 or 1966.
(e) Since 1956, Rynearson has had extensive experience in handling liability claims under the terms and conditions of liability insurance policies.
In an affidavit in support of his motion for summary judgment, Rynearson stated that he did not report the occurrence in question to any representative of Ohio Casualty until a lawsuit had been filed, for the following reasons:
A. Rynearson leased the premises in question to Chris W. Yoder, deceased.
B. Yoder asked for and received permission to make miscellaneous changes, including electrical changes, in the restaurant.
C. When Rynearson received notice of the death of Yoder, it was his understanding that Yoder had electrocuted himself by grabbing hold of a 'hot' 220 volt line.
D. At first blush, Rynearson did not think he had any insurance to cover the occurrence because of the existing relationship between himself and Yoder.
E. Only after a search borne of desperation did Rynearson finally discover the endorsement, and then only after a lawsuit had been filed.
On February 5, 1973, Rynearson filed a third-party complaint against Porter and Boston, alleging that he did not notify Ohio Casualty or any of its authorized agents of Yoder's electrocution and death until March 19, 1971 because he thought, due to the following wrongful omissions of Porter and Boston, that he had no insurance coverage:
(a) Porter and Boston negligently failed to advise Rynearson verbally that he ahd coverage for the drive-in restaurant when the policy was delivered.
(b) Porter and Boston negligently failed to advise Rynearson in writing that he had coverage.
(c) By the design of its policy, Ohio Casualty negligently and carelessly, by and through its agent Porter and Boston, afiled to apprise and failed to give Rynearson notice of the coverage afforded him.
Rynearson further alleged that because of the trust placed by him in Porter and Boston, there was created a fiduciary relationship flowing from Porter and Boston to Rynearson, and that Porter and Boston breached that relationship by failing specifically to advise Rynearson of the coverage available to him. Rynearson also alleged that he contracted with Porter and Boston for the purpose of obtaining liability insurance on the drive-in restaurant, and that Porter and Boston breached this contract by failing specifically to advise Rynearson of his specific rights and of the specific fact that such insurance was available to him.
Rynearson strongly contends that the design of the policy misled him into the belief that there was no coverage for Yoder's death. We must reject this contention for several reasons. First, the extension schedule of the policy describes the premises of its coverage in much the same manner as was used to identify the premises of the drive-in restaurant in the lease agreement by which Rynearson leased the restaurant to Yoder. The extension schedule describes the premises as 3/4 of a mile southeast of the city limits of Goshen, on the west side of U.S. 33, Elkhart Township, Elkhart County, Indiana. The schedule also indicates that the coverage is 'a lessor's risk only.' The lease agreement describes the premises as being located on U.S. Highway 33, one-half mile southeast of Goshen, Elkhart County, Indiana. Second, and most important, Rynearson is a practicing lawyer with several years of experience as a claim adjuster, claim supervisor, and claim manager of insurance companies. With his background, Rynearson possessed special knowledge of insurance contracts, a circumstance which causes him to be held to a higher standard of care in giving notice of a loss. See Stuveysant Insurance Co. v. United Public Ins. Co., 139 Ind.App. 533, 543, 218 N.E.2d 379,221 N.E.2d 358, 360 (1966), where the court held that insurance corporations, due to the superior knowledge available to them, should be held to a higher standard of reasonable time to give notice of a loss. To like effect, in McPherson v. St. Paul Fire & Marine Ins. Co., 350 F.2d 563, 567 (5th Cir. 1965), the court said:
. . . The record fails to disclose the existence of any extenuating circumstances which would require a relaxation of the notice requirements. Lack of knowledge of coverage in the circumstances here present does not constitute a valid excuse for failure to give notice J. B. McPherson (the insured) previously had been a licensed general insurance agent for 15 years and was experienced in the insurance business . . ..
Third, although late notice has been excused where the insured was unaware of the existence of a policy, Metropolitan Life Ins. Co. v. Peoples Trust Co., 177 Ind. 578, 584, 98 N.E. 513, 515 (1912), it is not excused where the insured alleges that he was unaware of coverage simply because he failed to read his policy. See General Accident Fire & Life Assurance Corp. v. Prosser, 239 F.Supp. 735, 738 (D.Alaska 1965), where the court said:
Prosser knew about the liability policy that he had but he didn't know it covered the accident. The only reason Prosser did not have this knowledge is the simple fact that for approximately 23 months he did nothing to determine this and apparently didn't even bother to read the policy.
Rynearson contends that 'It does not stretch the imagination to believe that the defendant (Rynearson) after viewing the 'coroner's certificate of death' might well have decided as a reasonable and prudent man to believe that no claim for damages would arise.' Brief of Appellant at 21. We do not agree. First, Rynearson's policy...
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