Wright v. Newman
| Decision Date | 19 October 1984 |
| Docket Number | No. 82-5090-CV-SW-0.,82-5090-CV-SW-0. |
| Citation | 598 F. Supp. 1178 |
| Parties | Carol Rae WRIGHT, Bonnie Lynn Wright, et al., Plaintiffs, v. Daniel Paul NEWMAN, John Scheall, et al., Defendants, v. MISSION INSURANCE COMPANY, Garnishee. |
| Court | U.S. District Court — Western District of Missouri |
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Thomas Strong, Mathew W. Placzek, Strong, Placzek & Wooddell, Springfield, Mo., for plaintiffs.
Spencer J. Brown, Dale L. Beckerman, Deacy & Deacy, Kansas City, Mo., for garnishee.
This is a garnishment proceeding, in aid of execution upon three final judgments totaling $5,775,000 which the court previously entered in favor of the plaintiffs in this matter. At the conclusion of a trial on the merits, the jury empanelled to hear the present aspect of the case returned special verdicts in accordance with Fed.R.Civ.P. 49(a), and the entry of a judgment now awaits only the court's disposition of the essential legal issues presented, as well as any material questions of fact not fully resolved by the jury's findings.
I.
The controversy before the court has its roots in a fatal automobile accident which occurred on the evening of March 4, 1980, near the intersection of U.S. Highway 71 and State Highway 76 in McDonald County, Missouri. Since the facts of that tragedy have been detailed in three prior opinions in this case,1 it is sufficient for present purposes to note only that the accident—in which Tina Wright was killed and Carol and Bonnie Wright severely injured—occurred when an unoccupied Pontiac Firebird, being towed behind a Ford pickup truck driven by defendant Daniel Paul Newman, broke loose from the towing apparatus, crossed the center line of the highway and struck the plaintiffs' auto head-on.
At the time of the collision, Newman was employed by John Scheall who, doing business as Scheall Driveaway System, had been engaged under contract by Ford Motor Credit Co. (FMCC) to transport the recently repossessed Ford pickup from Fayetteville, Arkansas, to Phil Long Ford, Inc., in Denver, Colorado. The Pontiac automobile had been repossessed by General Motors Acceptance Corp. (GMAC), and under an agreement similar to that with FMCC was to be transported by Scheall from Fort Smith, Arkansas, to a destination in Arizona.
Within weeks of the accident, the plaintiffs brought this diversity action in the Western District of Arkansas, ultimately joining as defendants the driver, Daniel Paul Newman, his employer, John Scheall, American Auto Shippers, Inc., an entity under whose certificate of authority Scheall operated as a carrier in interstate commerce, and those persons allegedly having an interest in the subject vehicles, GMAC, FMCC, and Phil Long Ford, Inc.2 On May 13, 1982, the court granted summary judgment in favor of GMAC, FMCC and Phil Long Ford, Inc., and upon a subsequent determination that the remaining matters could be more conveniently litigated in the Western District of Missouri, transferred the case to this court by order dated September 21, 1982.3
On December 15, 1982, plaintiffs and defendants Newman and Scheall entered into a contract of partial settlement whereby Commercial Union Insurance Co. paid to plaintiffs the sum of $300,000, representing the policy limits of insurance coverage afforded those defendants by virtue of Scheall's association with American Auto Shippers, Inc. For their part, the plaintiffs agreed to forego satisfaction of any subsequently-obtained judgments from the personal assets of Newman and Scheall,4 and dismissed without prejudice their claims against American Auto Shippers.
On February 18, 1983, the matter proceeded to trial upon the claims against Newman and Scheall, who had executed written waivers of appearance and right to jury. After two days of testimony concerning plaintiffs' claims, the court—sitting without a jury—entered judgment in favor of the plaintiffs, and against defendants Newman and Scheall jointly and severally, in the aggregate amount of $5,775,000. No relief having been sought with respect to these judgments, they are now for all purposes final.
Shortly thereafter, the plaintiffs served notice and summons of garnishment upon Mission Insurance Co. ("Mission"), in an attempt to satisfy the aforesaid judgments from a Mission insurance policy allegedly affording further coverage for the accident. After joinder of the issues under the procedures of Mo.Sup.Ct.R. 90.13, the denial of separate motions to quash and for summary judgment filed by the garnishee, and the entry of an order permitting plaintiffs to dismiss the garnishment as to judgment debtor Daniel Newman, the matter proceeded to the above-mentioned jury trial.
Defendant John Scheall, d/b/a Scheall Driveway Services, was engaged as a common carrier in the business of transporting vehicles for hire to various places in the United States. As the term "driveaway" would suggest, the vehicles were transported under their own power or "driven" from place to place, although frequently another, driverless automobile might be towed behind the driven automobile. The drivers of these vehicles were either "professionals" —persons holding chauffeur's licenses whom Scheall employed part time—or were casual applicants who received no compensation but found the arrangement a convenient means of personal travel. While the driveaway service was apparently available to anyone, at least a substantial percentage of Scheall's customers were banks and retail finance companies who used the service for transporting repossessed vehicles, such as the two automobiles concerned in this case.
Scheall had his offices and principal place of business in Denver, Colorado, where he employed one full-time employee, Bill Cook, and one part-time employee, Tony Tobias. Scheall's authority to operate as a carrier in interstate commerce came from American Auto Shippers, Inc., of New York, New York, for whom he was agent. By virtue of this agency, Scheall and his employees received public liability coverage under a policy written by Commercial Union Insurance Co., having limits of $300,000 for bodily injury and $15,000 for property loss. The testimony was to the effect that these coverage limits represented the minimum insurance requirements of the Interstate Commerce Commission.
In November, 1979, Scheall directed his employee Cook to obtain liability insurance coverage in addition to that afforded by Commercial Union. Scheall testified that the growth of his business, and his longstanding concern that the ICC minimums were insufficient, motivated him to seek this increased insurance coverage, specifically $3,000,000 liability and $40,000 collision limits. The evidence indicates that Scheall was at the same time in the process of negotiating a contract with one Smith Energy Corp. to move certain of the latter's oil drilling rigs, and would also need single-trip collision insurance in the amount of $550,000 to cover the value of that equipment. In essentially the same time frame, Scheall was also contemplating the transport of certain busses for the Denver Regional Transportation District ("RTD"), and recalled that additional insurance might have been required for this prospective customer as well.
Since Scheall had not previously dealt with any commercial insurance agent or broker, Cook resorted to the yellow pages of the telephone book. After making three or four other calls, he contacted Denver insurance broker Richard Mooney, who operated in corporate form under the name "Insurance Technology Corp." Cook advised Mooney of Scheall's insurance requirements, i.e., $3,000,000 liability, $40,000 general collision coverage and $550,000 collision coverage for the drilling rigs. Mooney responded that he would "shop around" for the desired insurance.
Sometime later, Mooney met with Scheall at the latter's office. Mooney's recollection of this initial meeting—a recollection not shared by Scheall—was that Scheall announced his intention to start a new driveaway service for commercial vehicles, either as a separate entity or a division of his existing driveaway business. It was in respect of this "commercial" operation, according to Mooney, that Scheall desired the additional insurance, since he already had insurance for his regular driveaway operations through his "parent" or "franchiser" sic. The meeting concluded, and Mooney had no further contact with Scheall until he returned to Scheall's office on November 30, 1979, at which time they completed a written application for insurance with Guaranty National Insurance Co. ("Guaranty").
The testimony concerning that second meeting diverged widely. According to Mooney, Scheall advised him that the drivers to be covered by the new insurance were only three in number, specifically Scheall himself, the office manager, Bill Cook, and one Leonard Weaver. Mooney also recalled Scheall's statement to the effect that the operation would involve an average of only eight to ten trips per month with a maximum of 20 trips per month possible. Scheall, in contrast, and to a degree with the supporting testimony of Cook, testified that it had been his wish to obtain increased insurance for his entire driveaway operation, and since there were necessarily many potential drivers involved, some of whom might be hired at a moment's notice, it was then impossible to list them all. Scheall explained that he nevertheless gave Mooney the three names indicated, upon the latter's insistence that "some" drivers must be listed. It is undisputed, in any event, that only the three persons identified by Mooney were in fact listed on the application.
Although this dispute was further magnified by Mooney's testimony to the effect that he also advised Scheall that only the three drivers...
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