Wortman v. Safeco Insurance Company of America, LR 63 C 60.

• Citation: 227 F. Supp. 468
• Decision Date: 03 October 1963
• Docket Number: No. LR 63 C 60.,LR 63 C 60.
• Parties: E. T. WORTMAN, as Father and Next Friend of John Wortman, a Minor, Plaintiff, v. SAFECO INSURANCE COMPANY OF AMERICA, Defendant.
• Court: U.S. District Court — Eastern District of Arkansas

227 F. Supp. 468

E. T. WORTMAN, as Father and Next Friend of John Wortman, a Minor, Plaintiff, v. SAFECO INSURANCE COMPANY OF AMERICA, Defendant.

No. LR 63 C 60.

United States District Court E. D. Arkansas, W. D.

October 3, 1963.

W. A. Eldredge, Jr., of Smith, Williams, Friday & Bowen, Little Rock, Ark., for plaintiff.

Sam Laser, of Cockrill, Laser, McGehee & Sharp, Little Rock, Ark., for defendant.

YOUNG, District Judge.

On November 5, 1962, John Wortman's father, E. T. Wortman—nominal plaintiff in this case—entered into a contract with the defendant which included an "uninsured motorist" clause, which covered John Wortman.

On November 23, 1962, John Wortman¹ was involved in an accident with a Mrs. H. O. Walker—an uninsured motorist —who, it is alleged, negligently caused the collision which damaged him.

Tommy Smith's estate filed a suit in the Circuit Court for Pulaski County, Arkansas, joining both Mrs. Walker and John Wortman as defendants. This case is set for trial on November 12, 1963.

On May 16, 1963, after Safeco and Wortman failed to reach a settlement, this case was filed in Federal District Court for the Eastern District of Arkansas, alleging that Safeco was bound under its contract to indemnify Wortman for injuries caused by an uninsured motorist.

On June 17, 1963, Safeco filed a motion to dismiss under Rule 12(b) of the F.R.Civ.P. for lack of jurisdiction and failure to state a claim.

On July 5, counsel for John Wortman submitted a memorandum brief in opposition to the motion to dismiss. In a covering letter counsel explained that he does not want to try his cause of action "in an atmosphere which will be attendant to the trial of a tort case for the wrongful death of a young man when the real adversary to my clients' claim is not even a named party defendant." But, he fears that if he does not file a cross-complaint, and the Circuit Court case goes to judgment, Safeco will plead that Circuit Court case as a complete bar, presumably under the Arkansas Compulsory Counterclaim Statute (Ark.Stat.Ann. § 27-1121).

DEFENDANT'S MOTION TO DISMISS

Defendant's first contention is that before jurisdiction can attach in Federal Court there must be diversity of citizenship and over $10,000.00 on controversy, and that in the case at bar the matter in controversy does not exceed $10,000.00, since the amount of the policy does not exceed $10,000.00. Defendant recognizes Ark.Stat. § 66-3238, which provides for penalty and attorney's fees where the plaintiff collects from an insurance company the sum sued for, but it contends that such penalties and attorney's fees are not to be added to the liability limit in determining jurisdiction in cases involving an "uninsured Automobile Endorsement." The defendant is wrong. In Missouri State Life Ins. Co. v. Jones, 290 U.S. 199, 54 S.Ct. 133, 78 L.Ed. 267 (1933), the United States Supreme Court held that attorney's fees, under an Arkansas statute almost identical to § 66-3238, should be added to the amount sued for, in order for the jurisdictional amount to be determined. I can see no reason why an "Uninsured Automobile Endorsement" should be viewed in a different light.

The next contention is that the pertinent part of the endorsement² itself requires the insuror pay only that amount which "the insured shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile * * *" and that as yet the plaintiff's damages have not been determined, and further, that such a determination is a condition precedent to the prosecution of this case against the defendant.

The problem that we must face in this case is a new one. Very few cases have been reported that shed light upon the subject, and with regard to this particular point, this court as well as counsel have been unable to find any primary authority which is directly in point. See also Annot., 79 A.L.R.2d 1252 (1961), entitled Rights and liabilities and "uninsured motorists" coverage, and Robert L. Jones, Jr., Problems Involved In Uninsured Motorist Coverage, 15 Ark.L.Rev. 219 (1961), which—although in accord with plaintiff's position—cites no authority for the particular question of law now before this court.

The problem in Arkansas becomes even more complicated due to the fact that the endorsement provides for arbitration to determine liability and damages, and it is clear that the Arkansas law makes such a clause unenforceable and void. Ark.Stat.Ann. § 66-3233 (Supp.1959). Since arbitration is the method set out in the contract to determine liability and damages, we are left with the uninviting duty of finding a substitute.³

It appears that both the defendant and plaintiff may be bound by the findings of fact in the Pulaski County Circuit Court, and if this plaintiff recovered a judgment against the uninsured motorist there, he would be entitled to a...