Wommack v. United States Fire Insurance Company, F-70-C-24.

• Citation: 323 F. Supp. 981
• Decision Date: 08 March 1971
• Docket Number: No. F-70-C-24.,F-70-C-24.
• Parties: Richard WOMMACK, Mary Lou Wommack, and Michael Wommack, Plaintiffs, v. UNITED STATES FIRE INSURANCE COMPANY, Incorporated, Defendants.
• Court: U.S. District Court — Western District of Arkansas

323 F. Supp. 981

Richard WOMMACK, Mary Lou Wommack, and Michael Wommack, Plaintiffs, v. UNITED STATES FIRE INSURANCE COMPANY, Incorporated, Defendants.

No. F-70-C-24.

United States District Court, W. D. Arkansas, Fayetteville Division.

March 8, 1971.

Putman, Davis & Bassett, Fayetteville, Ark., for plaintiffs.

Barber, Henry, Thurman, McCaskill & Amsler, Little Rock, Ark., for defendants.

OPINION

JOHN E. MILLER, Senior District Judge, Sitting by Designation.

This is a declaratory judgment action commenced September 8, 1970, pursuant to the Federal Declaratory Judgment Act, 28 U.S.C. § 2201, by Richard L. Wommack, Mary Lou Wommack and Michael Wommack, seeking a declaration that a Professional Comprehensive Personal Catastrophe Liability Policy issued by defendant, United States Fire Insurance Company, Inc., provides coverage to the plaintiff Richard L. Wommack to pay such part of any judgment rendered against plaintiffs in pending personal injury actions as exceeds the coverage provided by any other available insurance.

On September 25, 1970, the defendant filed its answer admitting issuance of the policy in question, but denying any obligation to pay under the terms of the policy until the underlying limits set forth in the policy have been paid. On November 23, 1970, with permission of the court, the defendant filed an amendment to its answer in which it alleged that plaintiff Richard Wommack made a material misrepresentation in his application in failing to note ownership of the 1965 Mustang involved in the accident which brought about the present action, and that defendant was not liable because of such misrepresentation.

The court has jurisdiction because of diversity of citizenship and the amount in controversy, 28 U.S.C. § 1332. The plaintiffs are citizens and residents of Arkansas. The defendant is a corporation chartered under the laws of a state other than Arkansas and has its principal place of business in the State of New York.

On August 11, 1969, the plaintiff Richard L. Wommack, an attorney, submitted an application for a "Million Dollar Professional Policy," in which he stated his name, age, address, and "limits desired, one million dollars"; that he was a practicing attorney in Fayetteville, Arkansas. As to the number, type and garage locations of automobiles owned or hired by him and his wife, he listed the following: one Chevrolet station wagon and one Chevelle sedan garaged at residence. The operators under 25 years of age were ages 19 and 16. He also stated that a liability collision policy was cancelled by State Farm for one chargeable and two nonchargeable accidents by son, and that he had no losses in amounts greater than $10,000 during the last five years.

On August 15, the defendant, United States Fire Insurance Company, Inc., issued its policy numbered XCL 55 73 59 to Richard L. Wommack at Fayetteville, Arkansas, to be effective from August 11, 1969, until August 11, 1972.

The pertinent sections of the insurance contract provide:

                                              "INSURING AGREEMENTS
                               "I. COVERAGE—
                                 "To pay on behalf of the insured the ultimate net loss in excess
                               of the retained limit which the insured shall become legally obligated
                               to pay
                                  (a) Personal Liability. As damages because of personal injury
                                  or property damage
                                  (b) Professional Liability. * * *."
                              *   *   *   *   *   *   *   *   *   *
                              "III. LIMIT OF LIABILITY—Retained Limit—
                                "The company's liability as the result of any one occurrence
                              shall be only for the ultimate net loss in excess of the insured's retained
                              limit defined as the greater of
                                   (a) the total of the applicable limits of the underlying policies
                                   listed in Schedule A hereof, and the applicable limits of
                                   any other underlying insurance collectible by the insured; or
                                   (b) an amount as stated in Item 4(D) of the Declarations as
                                   the result of any one occurrence not covered by the policies
                                   so listed or any other insurance
                               and then shall not exceed the amount stated in Item 4 of the
                               Declarations with respect to Coverage 1(a)—Personal Liability
                               * * *."
                               (Emphasis supplied.)
                               (Item 4(D) sets out a retained limit of $250.00.)
                               *   *   *   *   *   *   *   *   *   *
                                 "Part Two. This Declarations page with `Policy Provisions—
                                 Part One' completes the below numbered
                

                                   XCL 55 73 59
                                 "Name Insured: R. L. Wommack
                                 "Policy Period: 8-11-69 to 8-11-72
                              *   *   *   *   *   *   *   *   *   *
                -----------------------------------------------------------------------------
                    "4.  Limit of Liability—as Insuring Agreement III.
                -----------------------------------------------------------------------------
                        (A) Coverage 1(a)—Personal Liability—with
                        respect to any one occurrence                         $1,000,000.00
                        ---------------------------------------------------------------------
                        (B) Coverage 1(b)—Professional Liability—
                        with respect to any one occurrence                    $1,000,000.00
                        ---------------------------------------------------------------------
                        (C) Limit in the aggregate during the policy
                        period under Coverage 1(b)                            $1,000,000.00
                        ---------------------------------------------------------------------
                        (D) Retained limit                                    $      250.00"
                -----------------------------------------------------------------------------
                      *   *   *   *   *   *   *   *   *   *
                      ML 7.0.13        "ENDORSEMENT
                       "It is agreed that Condition M. Maintenance of Underlying Insurance
                     is amended to read as follows:
                            "It is warranted by the insured that the underlying limits
                         of liability for comprehensive personal liability, automobile
                         liability and professional liability listed in Schedule A shall be
                         maintained in force as collective insurance during the currency
                         of this policy. In the event of failure by the insured
                         so to maintain such limits, or to meet all conditions and warranties
                         subsequent to loss under policies providing these limits,
                         the insurance afforded by this policy shall apply in the same
                         manner it would have applied had such limits been so maintained
                         in force."
                     *   *   *   *   *   *   *   *   *   *
                          "Schedule A—Schedule of Underlying Policies
                ---------------------------------------------------------------------
                "Carrier, Policy           Type of
                 Number & Period           Policy         Applicable Limits
                ---------------------------------------------------------------------
                (b) See End. ML 7.0.13    Automobile     Bodily Injury Liability
                                          Liability      $100,000.00 each person
                                                         $300,000.00 each occurrence
                                                         Property Damage Liability
                                                         $10,000.00 each occurrence"
                ---------------------------------------------------------------------
                

Plaintiffs have filed a motion for summary judgment supported by the affidavit of Richard L. Wommack, and defendant has filed a cross motion under Rule 56, Fed.R.Civ.P.

An examination of the pleadings and exhibits thereto, together with the affidavit, establishes that there is no genuine issue as to any material fact. The parties admit that there is no genuine issue of any material fact, and thus the case is one for disposition on the motions now before the court.

On April 17, 1970, the plaintiff Michael L. Wommack, son of the other plaintiffs, was involved in a multi-car accident near Springdale, Arkansas. Michael L. Wommack was under the age of eighteen at the time of the accident. On the 28th of April, 1970, the plaintiffs were named defendants in three actions arising out of the accident heretofore mentioned. The cases are Nos. F-70-C-6, F-70-C-7 and F-70-C-8, Fayetteville Division. The plaintiffs herein alleged the negligence of Michael L. Womack and the liability of Richard L. Wommack and Mary Lou Wommack by virtue of statutorily imputed negligence under Ark.Stat.Ann. § 75-315 (1969 Supp.).¹

In the affidavit of plaintiff Richard L. Wommack, attached as Exhibit A to plaintiffs' motion for summary judgment, Mr. Wommack stated:

(a) On April 25, 1969, the Northwestern National Casualty Company issued its policy naming him as the insured and designating a 1969 Chevrolet 8-cylinder automobile as the owned automobile. The bodily injury liability limits in that policy are $100,000 for each person and $300,000 for each occurrence. The policy was in force and effect at the time of the accident.

(b) Also, there was a Northwestern National Casualty Company automobile liability policy in effect at the time of the accident which covered a 1970 Chevrolet Monte Carlo, used chiefly by his wife, and a 1963 Chevrolet convertible used chiefly by his son Michael. The policy limits were $100,000/$300,000 for both cars.

(c) The three cars above mentioned were the only ones operated out of his household.

(d) Also, on April 25, 1969, the Northwestern National Casualty Company issued its policy DA 425-Y-10828S referred to as the small policy, in which he was named insured and designated a 1965 Ford Mustang 2-door hardtop as the insured automobile. The bodily injury liability limits on this policy were $10,000 for each person and $20,000 for each accident. This automobile was the one which was involved in the accident of April 18, 1970, for which he and the other plaintiffs have been sued....