A. D. Luster, A's Fishhouses, Inc. v. Retail Credit Company

575 F.2d 609
CourtCourt of Appeals for the Eighth Circuit
DecidedJune 7, 1978
Docket77-1634
StatusPublished
Cited by45 cases

This text of 575 F.2d 609 (A. D. Luster, A's Fishhouses, Inc. v. Retail Credit Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
A. D. Luster, A's Fishhouses, Inc. v. Retail Credit Company, 575 F.2d 609 (8th Cir. 1978).

Opinion

STEPHENSON, Circuit Judge.

This appeal is from a jury verdict for plaintiff, A. D. Luster, in a libel action arising out of statements in a fire and mercantile report compiled by defendant Retail Credit Company. 1 Jurisdiction rests upon diversity of citizenship and the amount in controversy. We affirm in part and reverse in part.

Plaintiff was engaged in the operation, ownership and management of specialty restaurants known as A’s Fishhouses, Inc. 2 On February 26, 1975, one of plaintiff’s restaurants located in Jonesboro, Arkansas, was severely damaged by fire. On the date of the fire the restaurant was insured by St. Paul Insurance Company through plaintiff’s producing agent, Gatz Insurance Agency of Jonesboro.

After the fire St. Paul Insurance Company requested that the producing agent find other coverage. Robert Davidson of the Gatz Agency was unsuccessful in placing coverage with other standard rate companies. The Gatz Agency contacted the Robert Newell Brokerage firm in Little Rock in an attempt to secure coverage from a surplus line company which insures high risk businesses. Newell in turn contacted Bowes and Company in Dallas, Texas, a *612 surplus line intermediary, who agreed to accept the coverage of the restaurants. Thereafter, Bowes and Company requested a fire and mercantile report from defendant Retail Credit Company concerning plaintiff and his business.

Defendant, through its employee N. J. McMillon, compiled a fire and mercantile report on plaintiff and his business. The report indicated plaintiff had suffered a fire loss at his restaurant in Jonesboro, it was not expected to be reopened, arson was suspected, the author had been unable to locate plaintiff, his business had been on the decline, and he was delinquent on an indebtedness at the bank. (See the full report at note 6, infra.) The report was false in many material respects.

According to McMillon’s own testimony the report was compiled solely on the basis of his conversations with three individuals. McMillon talked with an employee at the bank who told McMillon “it was his understanding that they did not plan to reopen the business.” McMillon also testified that this source also told him that there had been unusual circumstances surrounding the fire and a search was out for one particular person. The bank employee denied discussing anything with McMillon other than plaintiff’s loan with the bank.

McMillon’s second source was a postal employee who told him that plaintiff’s business was seemingly on the decline and “he had quit eating there because of some deterioration in the food and service.” McMil-lon’s final source was a former customer who said “he had quit eating there due to getting some food which was not to his liking,” and “that his knowledge and opinion was that the business had been on the decline for some time.”

McMillon testified that he tried to contact plaintiff or his wife at their residence but they were not home. He further testified that he did not contact either the fire department or the police department in an effort to confirm the statements made in the report that an investigation was being made concerning the fire, nor was any attempt made to contact plaintiff’s C.P.A. to confirm the financial aspects of the report.

The defense of conditional privilege was available to defendant because the report was made by a mercantile agency to a customer having an interest in the matter. The court so instructed. In order to render a verdict for the plaintiff the jury had to find that the report was made with malice. The court, in its instruction to the jury, defined malice as the doing of a wrongful act with actual ill will or evil intent “or in the impersonal sense, as the doing of an act without just cause or excuse, with such a conscious indifference or reckless disregard as to its results or effects upon the rights or feelings of others as to constitute ill will.” Defendant does not object to the court’s instruction or the jury’s finding on this issue. There is ample evidence to support the jury’s finding of malice in an impersonal sense. Dun & Bradstreet, Inc. v. Robinson, 233 Ark. 168, 345 S.W.2d 34, 38-39 (1961).

The report was transmitted to defendant’s branch office in Memphis, Tennessee, for transcription and subsequently was forwarded to Bowes and Company, plaintiff’s insurer. Upon receipt of the report on April 14, 1975, Bowes and Company immediately called Robert Newell of the Newell Agency and advised Newell of the contents of the report and stated that they were mailing notice of cancellation for any coverage extended to plaintiff and his business.

Plaintiff first learned of this report when he was notified by Gatz Insurance Agency that his insurance was going to be cancelled due to the contents of the Retail Credit report. On April 28,1975, plaintiff contacted defendant’s branch office in Memphis and informed defendant that the report was false and very damaging to him and his business. On that same date defendant Retail Credit instituted an immediate reinvestigation. Later the same day new information obtained was conveyed to Bowes and Company by telephone and a written report was sent the following day. As a result, Bowes and Company changed its plan to cancel the insurance, and coverage to A’s Fishhouses was continued, but at a rate *613 higher than previously had been agreed upon. Thereafter, plaintiff’s business gradually declined until he ceased to do business in January 1976.

Trial was commenced on December 6, 1976. The jury returned a verdict for plaintiff, A. D. Luster, awarding him $50,-000 in compensatory damages and $100,000 in punitive damages.

The first issue raised by defendant Retail Credit, which is reasserted in different form throughout its brief and argument, is that the trial court erred in holding that the defendant could- be liable for all republications of the report which were reasonably foreseeable. Specifically, defendant objected to the admission of testimony concerning unauthorized republications; to the admission of testimony by plaintiff concerning damages which were the result of unauthorized republications; and the giving of a jury instruction which allowed the jury to find defendant liable for unauthorized republications if they found that such republications were reasonably foreseeable, while refusing defendant’s requested jury instruction which stated that defendant could not be liable for unauthorized republications.

Defendant Retail Credit’s contract with Bowes and Company provided that the information supplied was to be kept confiden-,ial and not released to any third person, except persons that might have a duty to pass upon the risk being insured. 3 The trial court admitted testimony which showed that the contents of the report were revealed to persons who did not have such a duty. The court allowed Davidson from the Gatz Insurance Agency to testify as to statements made by Newell as to the contents of the report and as to Davidson’s discussions with the General Adjustment Bureau personnel concerning the contents and interpretation of the report.

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Bluebook (online)
575 F.2d 609, Counsel Stack Legal Research, https://law.counselstack.com/opinion/a-d-luster-as-fishhouses-inc-v-retail-credit-company-ca8-1978.