Delaney's Inc. v. Illinois Union Insurance

894 F.2d 1300
CourtCourt of Appeals for the Eleventh Circuit
DecidedFebruary 20, 1990
DocketNo. 89-7032
StatusPublished
Cited by1 cases

This text of 894 F.2d 1300 (Delaney's Inc. v. Illinois Union Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Delaney's Inc. v. Illinois Union Insurance, 894 F.2d 1300 (11th Cir. 1990).

Opinion

HILL, Senior Circuit Judge:

I. INTRODUCTION

In this case, plaintiff-appellants asserted several causes of action against the defendant-appellees arising from the latters’ sale, issuance, and performance under a contract of insurance. The case was submitted to a jury in the form of interrogatories which in turn comprised a special verdict that the district judge used in formulating the judgment. As Judge John R. Brown of the Fifth Circuit Court of Appeals has often stated, when used correctly a special verdict can be a “Doubt Eliminator.” See generally, Brown, Federal Special Verdicts: The Doubt Eliminator, 44 F.R.D. 338. On the other hand, jury interrogatories and special verdicts “ ‘emphasize the absolute necessity that there be first a clear understanding of the precise legal issues for jury resolution ... ’” Id. at 351, quoting R.B. Co. v. Aetna Ins. Co., 299 F.2d 753, 756 (5th Cir.1962). “ ‘[T]he Judge is forced to think, and think hard.’ With the help of counsel, he must begin ‘by anticipating all of the likely, probable answers and then testing these several likely results against the possible existence of conflict.’ ” Guidry v. Kem Mfg. Co., 598 F.2d 402, 407 (5th Cir.1979), quoting Brown, supra at 351.

One of the most troublesome ambiguities present in general verdicts is whether the remedies granted by the jury overlap and whether “there has been a purposeful or inadvertent duplication.” Brown, supra at 346. This case illustrates that when the possible answers in a special verdict are not fully anticipated and probed for consistency, the great “Doubt Eliminator” can become the “Doubt Originator.” The jury in this case answered two separate interrogatories such that defendant-appellee Illinois Union Insurance Company (“Illinois Union”) was assessed punitive damages for misrepresentation and for participating in a conspiracy to defraud the plaintiff. The phrasing of the jury questions presupposed without apparent consideration by the court or the parties that Illinois Union could be guilty of two distinct wrongs. This ambiguity planted the seed of confusion that has haunted this case from that day forward.

After the jury returned its answers in such a form that the possibility of two punitive damage awards against Illinois Union became a reality, the jury was dismissed and the parties were later required to brief and argue the question of whether the verdict comprised an unconstitutional double penalty for the same wrong, or merely two separate penalties for two distinct wrongs. The district court unequivocally rejected the “two wrongs” theory but left at least a glimmer of doubt as to exactly how the remaining award should be interpreted. Confusion spawned confusion.

Defendants appealed the judgment on several grounds and sought to take advantage of the possible ambiguity in the wording of the final judgment. Not to be outdone, plaintiffs attempted to bend the confusion to their own favor without cross-appealing the district court’s rejection of the “two wrongs” theory. Confusion was put to myriad uses.

After this court affirmed the judgment of the district court without an opinion, defendants paid a sum of money to the district court for the plaintiffs in satisfaction of the judgment, at least as they interpreted the amount of punitive damages awarded in the judgment. Plaintiffs claimed they were entitled to more. Confusion came to a head. Or so it seemed.

Both parties went to the district court for clarification. The district court agreed with the defendants’ interpretation of the [1302]*1302judgment and the plaintiffs claim that the district court changed the judgment after it had already been affirmed by this court. Confusion lives on. This appeal of the district court’s clarification order followed.

In the immortal words of the chain gang boss in the movie “Cool Hand Luke,” “What we have here is a failure to communicate.”

We have but one question to “communicate” and answer in this appeal: Did the payment by the defendants of $350,000.00 in punitive damages carry out the jury’s verdict in this case, as interpreted by the district court in its judgment entered on July 10, 1987, and affirmed by this court under our Rule 36-1 on September 13, 1989? We find that defendant Illinois Union should have paid $275,000.00 in punitive damages to the plaintiffs, while defendant Montgomery & Collins Incorporated should have paid $175,000.00, for a total of $450,-000.00 in punitive damages.

A brief review of the facts is in order. In August, 1984, the plaintiff-appellants, whom we shall refer to collectively as “the Delaneys,” were approached by an insurance broker who proposed to secure commercial property insurance for the approximately forty-eight different properties which the Delaneys owned and managed as part of their business. At that time, the Delaneys had insurance coverage with deductible provisions of $2,500.00 or $25,-000.00, depending upon the nature of the loss, for each occurrence of a covered loss. They sought to maintain the same insurance coverage, with identical “per occurrence” deductible provisions.

The Delaneys’ insurance agent sought to obtain a premium quote for such coverage through defendant Montgomery & Collins Incorporated, an insurance brokerage firm in Houston, Texas (“Montgomery & Collins”). Montgomery & Collins in turn sought to place the actual insurance coverage with defendant Illinois Union. Testimony at trial indicated, and the jury effectively found, that both defendants understood that the Delaneys sought insurance coverage with the “per occurrence” of loss deductible provisions described above.

In November, 1984, Montgomery & Collins quoted the Delaneys’ agent the premium at which such coverage could be obtained through Illinois Union. The Dela-neys later accepted this offer. The insurance contract became effective on December 12, 1984, through the issuance of a binder by Montgomery & Collins. The policy itself was to be issued by Illinois Union within the 30-day period for which the binder was effective. On January 12, 1985, the binder was extended, however, for an additional 30 days. Illinois Union had not yet issued the policy.

On January 20, 1985, the Delaneys suffered damage to a number of their properties due to the effect of a hard freeze. Shortly after the Delaneys notified Illinois Union of this loss, a dispute arose between the Delaneys and Illinois Union regarding whether the deductible provisions of the coverage that the parties had agreed upon applied to each “occurrence” of a loss, or whether the deductible applied separately to each of the properties damaged.

Meanwhile, on January 31, 1985, Illinois Union issued the actual insurance policy and the Delaneys, through their insurance agent, contacted both Montgomery & Collins and Illinois Union to reiterate that the terms of the policy agreed upon between the parties provided for a deductible on a “per occurrence,” rather than a “per property,” basis.

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Delaney's Inc. v. Illinois Union Insurance Co.
894 F.2d 1300 (Eleventh Circuit, 1990)

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Bluebook (online)
894 F.2d 1300, Counsel Stack Legal Research, https://law.counselstack.com/opinion/delaneys-inc-v-illinois-union-insurance-ca11-1990.