A & S Trucking Co., Inc. v. First General Ins. Co.

• Decision Date: 19 December 1990
• Docket Number: No. 07-CA-59168,LEND-LEASE,07-CA-59168
• Citation: 578 So.2d 1212
• Court: Mississippi Supreme Court
• Parties: A & S TRUCKING COMPANY, INC. v. FIRST GENERAL INSURANCE COMPANY v., a DIVISION OF NATIONAL CAR RENTAL SYSTEM, INC.

Page 1212

578 So.2d 1212

A & S TRUCKING COMPANY, INC. v. FIRST GENERAL INSURANCE COMPANY v. LEND-LEASE, a DIVISION OF NATIONAL CAR RENTAL SYSTEM, INC.

No. 07-CA-59168.

Supreme Court of Mississippi.

Dec. 19, 1990.

Rehearing Denied May 29, 1991.

Thomas Morris, Levi Boone, III, Ellis Turnage, Morris & Turnage, Cleveland, for appellant.

Thomas W. Tardy, III, Julie E. Chaffin, Thomas, Price, Alston, Jones & Davis, for appellee.

John H. Barnett, III, Jerome L. Lohrmann, Jackson, cross-appellee/cross-appellant.

Before HAWKINS, P.J., and ANDERSON and PITTMAN, JJ.

PITTMAN, Justice, for the court:

STATEMENT OF THE CASE

What began as a simple transaction to rent three truck-tractors by A & S Trucking Company of Cleveland, Mississippi, has turned into litigation which appears to be a case of first impression in this jurisdiction.

The Plaintiff below, Lend-Lease, a Division of National Car Rental System, Inc., brought the action below to obtain the proceeds of a policy of insurance purchased by A & S Trucking Co. of Cleveland, Mississippi. The insurance had been purchased by A & S, as required by the lease which provided for the lease of three vehicles to A & S from Lend-Lease. The insurance was purchased from First General Insurance Company through two intermediaries, one a sales agent in Cleveland, Mississippi The original action was filed on October 28, 1985, by Lend-Lease, against A & S, Rimmer-Child Insurance Agency, (the local insurance agent), First General Insurance Co. (the insurer), and Interstate Truck Underwriters, Inc. (the insurance underwriter), and sought actual damages for the loss of a truck rented to A & S, and actual and punitive damages against the agent, the underwriter, and First General.

and one an underwriter for truck insurance.

Rimmer-Child (the agent) and Interstate Trucking (the underwriter), were dismissed as parties by order of the circuit court rendered before trial. Those dismissals have not been appealed to this Court.

The issue of punitive damages was decided by Summary Judgment in favor of First General and against A & S and Lend-Lease on August 10, 1987.

After an August 13, 1987 bench trial, the circuit judge found for the Plaintiff below, Lend-Lease, on the issue of liability for the value of its lost truck-tractor, in the amount of $49,250.00.

The final judgment and other issues were appealed as follows:

A & S Trucking appeals only as to First General and the denial of actual and punitive damages.

First General appeals only as to Lend-Lease and the claim on policy for the value of the truck-tractor.

Lend-Lease appeals only as to First General and the denial of punitive damages, pre-judgment interest and attorney's fees.

The error(s) assigned by each are as follows:

a. A & S Trucking:

WHETHER AN INSURED IS ENTITLED TO PUNITIVE DAMAGES WHEN THE INSURANCE CARRIER DENIES COVERAGE BASED ON REASONS IN DIRECT CONTRADICTION OF THE INSURANCE POLICY, AND WHEN THE CARRIER PERFORMS A GROSSLY INADEQUATE INVESTIGATION OF THE CLAIM.

b. First General:

THERE IS NO COVERAGE UNDER THE TERMS OF THE POLICY.

PUNITIVE DAMAGES ARE NOT RECOVERABLE.

ATTORNEY FEES ARE NOT RECOVERABLE.

PREJUDGMENT INTEREST IS NOT RECOVERABLE.

LEND-LEASE HAS NO STANDING TO BRING THIS LAWSUIT SINCE IT IS NOT A NAMED INSURED OR OTHER PROPER PARTY PLAINTIFF.

c. Lend-Lease:

THE TRIAL COURT ERRED IN GRANTING TO FIRST GENERAL INSURANCE COMPANY PARTIAL SUMMARY JUDGMENT ON THE ISSUES OF BAD FAITH AND PUNITIVE DAMAGES.

THE TRIAL COURT ERRED AND (sic) DENYING PLAINTIFF PRE-JUDGMENT INTEREST AND ATTORNEY'S FEES.

STATEMENT OF FACTS

On February 28, 1985, Lend-Lease entered into a rental agreement with A & S Trucking Co., provided that A & S was to lease three Kenworth tractors from Lend-Lease. The terms of the lease obligated A & S to obtain and maintain liability and collision insurance on the three tractors. A & S obtained the insurance on February 22, 1985, by adding the three Kenworth tractors onto an existing policy which had been issued by First General, through an underwriter, Interstate Truck Underwriters, Inc., and through a local agent, Rimmer-Child Insurance Agency. As further assurance of coverage, Lend-Lease obtained a certificate of insurance from Rimmer-Child, which listed the three Kenworth tractors as the insured objects.

Subsequent to the addition of the three Kenworths on A & S's policy of insurance, a course of events began which triggered the instant action. According to the testimony of numerous witnesses, including Jerry Shoen, a lease salesman working for Lend-Lease and Jerry Jeffress, the district manager for Lend-Lease, the Kenworth Lend-Lease's complaint states:

trucks were used for a short time, on a trial basis. Once A & S determined that the Kenworths were satisfactory, they were returned to Lend-Lease, for clean-up, and to have the decals and lettering from the previous lessee removed, to have the proper A & S logo stenciled on each vehicle, and to have the vehicles recertified in the name of A & S. In the interim, other trucks were delivered to A & S for their use, including three Peterbilt tractors:

"That while awaiting delivery and preparation of the leased tractors, A & S Trucking Company, Inc. rented on a substituted temporary basis three (3) Peterbilt tractors, including Peterbilt tractor bearing Plaintiff's identification number of 274083."

As fate would have it, on March 19, 1985, the Peterbilt tractor was involved in an accident, while driven by an employee of A & S. The truck was a total loss. First General paid the liability claim under the liability portion of the policy without question. The first indication of a problem came when First General, through the underwriter, denied collision coverage for the accident, thus shifting the burden to pay for the destroyed vehicle to A & S, with no indemnification from First General.

After the demand for coverage under the policy went unheeded, Lend-Lease initiated the instant action claiming against A & S the value of the tractor; against Interstate (the underwriter), First General (the insurer) and Rimmer-Child (the agency), for the value of the tractor at the time of loss, plus towing and interest, and for $1,000,000.00 in punitive damages. The allegations of punitive damages were justified by the failure of the insurer, underwriter and agent to "without just cause or arguable reason, arbitrarily den(y) coverage and willfully refuse to pay Plaintiff's just claim."

The Defendants all filed general denials as answers. After discovery was had, motions for summary judgment were filed, as were responses and cross-motions for summary judgment.

After a hearing, the circuit court below ruled for Lend-Lease on the issue of liability on the underlying claim. That is, that First General owed Lend-Lease for the loss to Lend-Lease's Peterbilt tractor which was wrecked while in service with A & S Trucking. The circuit court ruled:

That the aforementioned Peterbilt was not a temporary substitute as defined under the liability portion of the policy of insurance in that same was never withdrawn from normal use as required under the terms of the policy of insurance.

That First General Insurance Company is liable to Plaintiff for the amount of damage done to the aforementioned Peterbilt under the terms of the policy of insurance.

On January 16, 1987, the issue of punitive damages was tested, as First General filed a motion for partial summary judgment on the issue of punitive damages. In July of 1987, Interstate (still a party at that time) likewise filed a motion for summary judgment, wishing to be dismissed for failure to state a claim, as did Rimmer-Child (the agent). The court below granted those motions, dismissing Interstate and Rimmer-Child. The dismissal was not appealed and those issues are not before us.

On August 10, 1987, the lower court granted First General's motion for partial summary judgment on the issue of punitive damages, precluding the recovery of any but contractual claims against First General. The lower court ruled that the policy of insurance was ambiguous and, because of the ambiguity, there being no prior cases in this jurisdiction on point, the court found no malice or reckless disregard in the denial of coverage and that a legitimate or arguable reason to deny coverage and litigate the issue existed, negating Lend-Lease's and A & S's claim for punitive damages.

Thereafter, a bench trial was held on the issue of additional damages, such as wrecker and storage fees, costs of court and pre-judgment interest. In his final order, the circuit judge ruled that Lend-Lease was entitled to a recovery against A & S and First General, jointly and severally, in the amount of $49,250.00 (A & S did not appeal this portion of the verdict as to the The instant appeal followed.

loss on the tractor). Recovery for towing and storage costs and prejudgment interest, medical expenses, attorneys' fees, lost profits, and other losses to A & S was denied.

DISCUSSION OF THE ISSUES

There is one overriding issue in this appeal. It is the issue raised by First General relating to the scope of coverage of its policy issued to A & S.

The trial judge is responsible for reviewing all the evidence before it in order to determine whether the issue of punitive damages should be submitted to the jury (or in this instance by the circuit judge as trier of fact). Bankers Life & Cas. Co. v. Crenshaw, 483 So.2d 254, 269 (Miss.1985). On appeal, this Court reviews the briefs and all recorded evidence to determine the propriety of the trial judge's decision regarding submission to the jury. Blue Cross & Blue Shield of Miss. v. Campbell, 466 So.2d 833, 842 (Miss.1984). The highway we travel in deciding bad faith cases is a well-marked one. Mut. Life Ins. Co. of N.Y. v. Estate of Wesson, 517 So.2d 521, 527-528 (Miss.1987); Andrew Jackson Life Insurance Co. v. Williams, 566 So.2d 1172 (Miss.1990). Only when an insurer has acted with malice or gross...