Traill v. Felder

• Decision Date: 12 August 1971
• Docket Number: Civ. No. A-41-69.
• Citation: 330 F. Supp. 560
• Parties: Ronald Gilbert TRAILL, Individually and on behalf of Certain Underwriters at Lloyd's, London, signatory to Lloyd's and British Companies Policies Numbered AN 2823, AN 2824, AN 2825 and AN 2773 et al., Plaintiffs, v. Joseph FELDER et al., Defendants.
• Court: U.S. District Court — District of Alaska

330 F. Supp. 560

Ronald Gilbert TRAILL, Individually and on behalf of Certain Underwriters at Lloyd's, London, signatory to Lloyd's and British Companies Policies Numbered AN 2823, AN 2824, AN 2825 and AN 2773 et al., Plaintiffs, v. Joseph FELDER et al., Defendants.

Civ. No. A-41-69.

United States District Court, D. Alaska.

August 12, 1971.

Delaney, Wiles, Moore, Hayes & Reitman, Inc., Anchorage, Alaska, for plaintiffs.

Mike Stepovich, Fairbanks, Alaska, for defendants Felder & Fischer, d/b/a Barrow Air Service.

William V. Boggess, Fairbanks, Alaska, for defendant Allen J. Shontz.

J. L. McCarrey, Jr., Anchorage, Alaska, for defendant Wien Consolidated Airlines.

Merdes, Schaible, Staley & DeLisio, Fairbanks, Alaska, for defendant Kay B. Loll.

Groh, Benkert & Greene, Anchorage, Alaska, for defendant Lillian C. Grothius.

William M. Erwin, Anchorage, Alaska, for defendant Dell Dodge.

William G. Ruddy, Juneau, Alaska, for defendant Estate of George Wilson.

Rice, Hoppner, Blair & Associates, Fairbanks, Alaska, for defendant Bohrer.

Thomas E. Fenton, Fairbanks, Alaska, for defendant Estate of Robert J. Fischer.

MEMORANDUM OF DECISION AND ORDER

PLUMMER, Chief Judge.

On April 14, 1969, plaintiffs, companies issuing insurance to Joseph Felder and Robert J. Fischer, d/b/a Barrow Air Service, (hereinafter referred to as the insured) brought this action seeking a declaration that they have no obligation to defend any suits brought in state court by defendants against the insured, or to pay any judgment rendered therein as a result of the crash of the insured's aircraft on November 21, 1968.

On August 21, 1970, plaintiffs moved for summary judgment on the ground that the aircraft was being operated in violation of the conditions of the policies at the time of the crash.

In its memorandum of decision and order of December 10, 1970, the court found that A.S. 02.05.130 (1962)¹ was a financial responsibility law or other law applicable to aircraft with respect to financial responsibility or liability arising out of the ownership, maintenance or use of aircraft. The court further found that Condition 6 of the insurance certificates² expressly contracted the insurers to comply the insurance certificates to any financial responsibility law. Thus the court held, in Conclusion of Law No. 7, at p. 11, as follows:

"Exclusion 4 and the endorsement effective October 16, 1968 are void and unenforceable insofar as they attempt to deny payment of any final judgment recovered against the carrier Barrow for bodily injuries to or death of any person resulting from the negligent operation, maintenance or use of 1960 Aero Commander N3810C for the reason that they are contrary to the terms of Condition 6 contained in the policy, are contrary to the laws and regulations of the State of Alaska and contrary to public policy."

In their motion for clarification of memorandum³ of decision and order of January 8, 1971, plaintiffs assert that even if A.S. 02.05.130 (1962) is a financial responsibility law, the plaintiff insurers should not be bound to pay any final judgment against any named assured in excess of the minimum coverage limits required by the statute and the regulations issued pursuant thereto.⁴

The issues raised in the "motion for clarification" are within the scope of the relief requested in the amended complaint for declaratory judgment, which seeks a declaration that plaintiffs "have no obligation to the defendants * * * to defend any action brought against said defendants or to pay any judgment rendered therein. * * *" (Emphasis added).

On June 30, 1971, plaintiffs filed a supplemental memorandum in support of their motion, which abstracted and called the court's attention to the deposition testimony of John F. Throne and Richard Buestad, Joseph Felder and Irving Igtanloc. Defendants have objected to the admissibility of these depositions.

Portions of the Felder and Igtanloc depositions cited to the court go to the possibility of contributory negligence, which is irrelevant to the issue of coverage raised in this declaratory judgment action. The testimony of Throne and Buestad, neither of whom was an agent of plaintiffs, is irrelevant to the issue of plaintiffs' knowledge of Alaska financial responsibility laws. Their testimony is relevant to the policies and practices of the Alaska Transportation Commission and was considered for this purpose, subject to all evidentiary objections properly preserved by the parties. In this respect, their testimony was cumulative with and tended to corroborate the documents contained in the files of the Alaska Transportation Commission (hereinafter referred to as the Commission).

Defendants have also moved for a continuance to allow time for further discovery pursuant to Rule 56(f), Federal Rules of Civil Procedure. It does not appear that further discovery would be useful in the disposition of this matter. Defendants cite two justifications for delay: (1) testimony of other witnesses is necessary to establish plaintiffs' knowledge of the provisions of A.S. 02.05.130 (1962) and the Commission's regulations; (2) testimony of Werner Bohrer will refute plaintiffs' contention that the passengers were aware of policy violations. The latter testimony would go to the issue of contributory negligence, which is irrelevant to the issue of coverage. Further testimony regarding plaintiffs' knowledge of A.S. 02.05.130 (1962) is unnecessary because the issue of whether A.S. 02.05.130 (1962) voids exclusions in excess of minimum financial responsibility requirements is one of law, which may be decided on the basis of the existing record. The motion for continuance is accordingly denied.

On November 22, 1966, the Commission issued Air Taxi Certificate No. 17-66 to Robert J. Fischer and Al Shontz, d/b/a Barrow Air Service, based upon proof of financial responsibility in minimum amounts for one aircraft, Cessna N4507F. The policy, AN 2452, was similar in all material respects to the policy of primary coverage in effect on the date of crash (AN 2824), and was in effect from May 11, 1966 to May 11, 1967. Following two reminders from the Commission to the insured, a second policy providing identical coverage was filed with the Commission. This policy, AN 2653, expired on May 11, 1968.

The only evidence of insurance in the Commission's file after May 11, 1968, and prior to the crash are two telegrams from John F. Throne & Co., the insured's broker. The first telegram is dated May 10, 1968, and was sent to one Michael Kelly with a copy to Joseph Felder. It noted that Cessna N3947G had been added to the existing coverage on Cessna N4507F (AN 2653) "renewing May 11." A copy of this telegram was filed with the Commission, evidently by the insured, on July 8, 1968. The second telegram was sent to Joseph Felder, and added the ill-fated Aero-Commander N-38100 to "existing coverages." It was filed with the Commission, again, presumably by the insured, on October 28, 1968.

It was not until December 1968, after the accident, that the Commission received copies of the four policies which were actually in effect at the time of the crash. Those policies were as follows:

AN 2823—effective May 11, 1968— May 11, 1969 ("Hull Insurance"). AN 2824—effective May 11, 1968— May 11, 1969 ("Aviation Liability Insurance Including Passenger Legal Liability") for minimum amounts required by A.S 02.05.130 (1962) (primary coverage), or $50,000 per passenger. AN 2773—effective January 1, 1968— January 1, 1969 ("Excess Aviation Liability Insurance Including Passenger Legal Liability"). AN 2825—effective June 10, 1968— June 10, 1969 (Additional Excess Liability).

The addition of the last two policies brought the total coverage to $2,400,000, or about 10 times the coverage of the primary policy, which met the minimum requirements established by the Commission. The two policies of excess coverage incorporated the primary policy and were "subject to the same gross rate, terms, conditions and endorsements."

The insured's certificate was issued and kept in effect on the strength of representations of minimum coverage. At no time prior to the accident did the Commission have knowledge of the existence of the excess policies, and at no time was the insured ever informed that coverage in excess of that provided by the primary policy was a prerequisite to continued certification.

This court's decision of December 10, 1970, established that A.S. 02.05.130 (1962) is a compulsory financial responsibility law which renders unenforceable, as between the insurer and injured air carrier passenger, policy exclusions relating to negligent operations by the air carrier. Royal Indemnity Co. v. Olmstead, 193 F.2d 451 (9th Cir. 1951); see generally 1 Couch on Insurance 2d, § 13:9 at 543 (1959). The only issue raised by plaintiffs' "motion for clarification" is whether, under the specific law and policies involved in this litigation, the nullification of exclusions extends beyond the minimum coverage required by the Commission.

Plaintiffs cite seven cases which have limited the nullification of exclusions to the minimum coverage required by automobile financial responsibility laws, allowing the insurer to assert his defenses to avoid liability on any excess coverage. Defendants point out that five of these cases are distinguishable on the ground that the state law expressly excluded excess coverage from the provisions of the financial responsibility law see, e. g., A.S. 28.20.440(g) and/or the policies concerned limited liability incurred solely by reason of a financial responsibility law to the coverage specified in the Act. See Landis, for Use of Talley v. New Amsterdam Casualty Co., 347 Ill.App. 560, 107 N.E.2d 187 (1952) (policy limited recovery to extent provided in financial responsibility act); Hartford Accident & Indemnity Co. v. Kaiser, 242 Or. 123, 407 P.2d 899 (1965) (law excluded excess coverage from provisions of...