Triple U Enterprises v. New Hampshire Ins. Co.
Citation | 576 F. Supp. 798 |
Decision Date | 11 August 1983 |
Docket Number | No. CIV. 83-5070.,CIV. 83-5070. |
Parties | TRIPLE U ENTERPRISES, INC., a corporation; L.R. Houck and Jerry Houck, Plaintiffs, v. NEW HAMPSHIRE INSURANCE COMPANY, a corporation, Defendant. |
Court | U.S. District Court — District of South Dakota |
Joseph M. Butler, Bangs, McCullen, Butler, Foye & Simmons, Rapid City, S.D., for plaintiffs.
Gary H. Richards, Richards, Hood & Brady, Spearfish, S.D., for defendant.
This diversity action comes before the Court on cross motions for summary judgment. Plaintiffs contend that Defendant breached its contract of insurance by refusing to defend and by refusing to provide coverage. Defendant asserts that it breached no duty to defend because Plaintiffs' claim is not covered under the insurance policy. This Court holds that Defendant breached its contract of insurance by wrongfully refusing to defend and that Plaintiffs are entitled to summary judgment on that issue.
Plaintiff, Triple U Enterprises, Inc., is a South Dakota corporation, of which Plaintiffs L.R. Houck and his son, Jerry Houck, are officers and shareholders, engaged in the farming and ranching business. The Defendant, New Hampshire Insurance Company, is a corporation organized and existing under the laws of a state other than South Dakota. The Defendant is engaged in the business of selling insurance with its principal offices located outside South Dakota.
On February 23, 1976, Plaintiffs entered into a contract of liability insurance with Defendant, entitled "Farmer's Comprehensive Personal Liability Endorsement" (Triple U policy).1 The policy was for an original term of three years from February 23, 1976, to February 23, 1979, and was renewed for an additional three-year term from February 23, 1979, to February 23, 1982.2 The policy provided in pertinent part as follows:
On September 12, 1978, and March 23, 1979, Plaintiff, Triple U Enterprises, Inc., (Triple U) sold 650 head of buffalo to Adolph, LaVern and Ward Hepper (Heppers) for purposes of breeding.3 It is alleged that the buffalo were infected with brucellosis and were not fit for breeding. On May 19, 1980, Heppers brought suit against Triple U, alleging damage as a result of Triple U's breach of the two sales contracts.
Specifically, the original complaint,4 which Heppers filed in the Hughes County, South Dakota, Sixth Circuit Court, alleged in paragraph 3 of the first cause of action that:
Further, in paragraph 3 of the second cause of action, it was alleged that:
Finally, Plaintiffs demanded judgment of Defendant as follows:
Upon receipt of the complaint, Triple U, through L.R. Houck, tendered the defense to Defendant. The Defendant refused to defend, claiming there was no coverage under the insurance policy for the allegations contained in Heppers' complaint.9 It is not disputed that the insurance policy was in full force and effect at the time of the two sales transactions.10
At the trial, which began on April 11, 1983, Heppers presented the following itemization of their damages for each of the two sales transactions.
Ward Hepper Herd 9-12-78 Purchase Dewey County Ranch TOTAL DAMAGE Cost of Original Herd $284,900 Three years expected calf crop 466,787 ________ Total Value and Income $751,687 Less Net Sale Proceeds $ 83,343 Less Unpaid Portion of Purchase Contract 93,333 ________ ($176,676) __________ Total Loss $575,011 Adolph Hepper Herd 3-23-79 Purchase Corson County Ranch TOTAL DAMAGE Value of herd if disease free $349,050 Value of diseased herd (156,179) _________ Loss of Value $212,871 Loss on meat sold and on storage 128,507 Loss profits - lost calf crop 69,948 Incidental Expenses 46,170 Less unpaid portion of purchase contract (108,733) _________ TOTAL DAMAGES $347,763
The jury returned a general verdict for Heppers on their claim against Triple U for breach of warranty in the amount of $286,232. Additionally, the jury found that L.R. Houck and Jerry Houck were not liable for deceitful misrepresentations. Subsequently, Plaintiffs requested that Defendant provide insurance coverage and pay the judgment entered against them in state court. Defendant again refused to provide coverage.
Plaintiffs, Triple U, L.R. Houck and Jerry Houck, brought the action at bar, alleging that Defendant breached its duty under the insurance contract by wrongfully refusing to defend the state court suit brought by Heppers, and by wrongfully denying coverage for that portion of the state court complaint relating to breach of express and implied warranties. Plaintiffs assert that that portion of the state court complaint seeking damages to property other than the buffalo that were sold, fall within the Triple U policy coverage provisions. Further Plaintiffs maintain that as a proximate result of Defendant's breach of the insurance contract, Plaintiffs suffered $286,732 damages, the amount of the jury verdict, plus costs and expenses incurred in connection with the defense of the state court suit in the amount of $55,000. Finally, Plaintiffs contend that Defendant's refusal to defend and to provide coverage is vexatious and without reasonable cause, entitling Plaintiffs to...
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