Case Title: Burns Rathole, Inc. v. Inter-Mountain Agency, Inc.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1992-04-17T00:00:00Z

Document:
Burns Rathole, Inc. v. Inter-Mountain Agency, Inc.1992 WY 45829 P.2d 823Case Number: 91-142Decided: 04/17/1992Supreme Court of Wyoming
BURNS 
RATHOLE, INC., Appellant (Plaintiff),

 
 
v.

 
 
INTER-MOUNTAIN 
AGENCY, INC., Appellee (Defendant).

 
 
Appeal 
from the DistrictCourtofLincolnCounty, the Honorable Kenneth G. Hamm, 
Judge, Ret.

 
 
Robert 
J. Pickett of Pickett and McKinney, Rock Springs, for appellant.

 
 
W.W. 
Reeves of Reeves, Murdock, Lewis & Gifford, Casper, for appellee.

 
 
Before 
URBIGKIT, C.J., and THOMAS, CARDINE, MACY, and GOLDEN, 
JJ.

 
 
URBIGKIT, 
Chief Justice.

 
 

[¶1.]     Appellant Burns 
Rathole, Inc., a Wyoming corporation engaged in oil field service work, sued 
appellee Inter-Mountain Agency, Inc., a Wyoming insurance agency, for failing to 
provide insurance coverage for which the drilling contractor claims it had paid. 
The trial court ruled for appellee with a finding that Inter-Mountain Agency had 
informed Burns Rathole and that Burns Rathole thus knew that it did not have 
physical damage insurance coverage on a piece of motorized drilling equipment 
subsequently destroyed by fire. This appeal, within contractual concepts, 
addresses the claim of an insurance agency obligation to provide multi-peril 
coverage.1

 
 

[¶2.]     We 
affirm.

 
 

[¶3.]     Burns Rathole raises 
the following issues for our review:

 
 
ISSUE 
I.

 
 
Did the 
Trial Court err in not recognizing the legal principle that Appellee is liable 
for damages where appellee sought and received compensation for services but 
failed to perform the services compensated for.

 
 
ISSUE 
II.

 
 
Did the 
Trial Court err in not recognizing the legal principle that the appellee agent 
had the duty to give notice to the appellant of its failure to obtain the 
applied for insurance coverage?

 
 
ISSUE 
III.

 
 
Is the 
Appellee estopped from denying that Appellant did not have in accordance with 
its application?

 
 

[¶4.]     Although Burns Rathole 
identifies three issues on appeal, our dispositive inquiry is sufficiency of the 
evidence to support the trial court's determination that Burns Rathole knew it 
did not have physical damage insurance coverage on its drilling rig prior to the 
fire.

 
 
I. 
FACTS

 
 

[¶5.]     In January 1986, Gerald 
Burns (Burns), owner and operator of Burns Rathole, Inc., contacted 
Inter-Mountain Agency (Inter-Mountain) to secure physical damage and liability 
insurance coverage for all Burns Rathole vehicles including the drilling rig in 
question. A United States Fidelity & Guaranty Company (USF&G) insurance 
application was completed and signed by Burns and he paid $ 10,000.00 for 
desired coverage which included physical damage for drilling vehicles and 
equipment. Application binder coverage was initially extended by USF&G in 
February, 1986, to provide both liability and physical damage insurance. Soon 
thereafter, however, USF&G's investigation of Burns Rathole's employee 
driving records revealed that several--even including Burns--were unacceptable. 
Consequently, USF&G notified Inter-Mountain that the Burns Rathole insurance 
coverage would be terminated on March 12, 1986. Inter-Mountain, in turn, 
notified Burns Rathole of the cancellation.

 
 

[¶6.]     On the same day that 
the USF&G insurance was canceled, Burns completed a new application for 
"assigned risk plan" insurance through the Western Association of Automobile 
Insurance Plans. It appears from the record that "assigned risk" insurance was 
the only type of commercial insurance available due to the high risks of 
insuring drivers with multiple violations for speeding and driving while under 
the influence. Although the "assigned risk plan" application form included a 
statement that physical damage coverage was only available for "private 
passenger, motorcycles and light commercial vehicles" and despite an 
Inter-Mountain employee's prediction that physical damage coverage was not 
available under the plan, Burns' application nonetheless requested such coverage 
for two drilling rigs and other heavy-duty equipment. Burns Rathole also sought 
higher liability limits than those set forth on the application form. Burns 
Rathole made a $ 4,000.00 payment to Inter-Mountain to accompany the "assigned 
risk" insurance application and coverage was eventually secured from National 
Surety Corporation.2 However, Burns Rathole's actual 
coverage under National Surety's "assigned risk plan" reflected a different 
deductible and lower liability protection than that applied for and did not 
provide for physical damage to commercial vehicles. National Surety mailed a 
copy of the policy to Inter-Mountain in June, 1986. An Inter-Mountain employee 
then hand-delivered the policy to Burns who was also reminded orally that there 
was no physical damage coverage on the two drilling rigs owned and operated by 
Burns Rathole. Inter-Mountain was unsuccessful in its continued efforts to 
secure supplemental physical damage coverage for the drilling rigs from 
other insurance sources.

 
 

[¶7.]     On July 13, 1987 a fire 
destroyed one of Burns Rathole's two drilling units. Upon notification of the 
fire, Inter-Mountain advised Burns Rathole that the drilling rig was not insured 
for physical damage under the National Surety policy. Inter-Mountain did, 
however, file an unsuccessful claim of loss with National Surety on behalf of 
Burns Rathole. Following claim denial, Burns Rathole filed suit against 
Inter-Mountain, National Surety, and Fireman's Fund for damages resulting from 
physical damage to the drilling rig.

 
 

[¶8.]     Following a court trial 
in March 1991, against the renaming defendant/appelleeInter-Mountain, the trial court requested 
written final arguments. The trial court then in decision ruled that prior to 
the fire, Inter-Mountain had informed and Burns Rathole knew that it did not 
have physical damage coverage on its drilling rigs. The trial court issued two 
separate opinion letters which summarized in narrative fashion the trial court's 
findings and conclusions. Judgment was entered in favor of Inter-Mountain on May 
14, 1991 and this timely appeal followed.

 
 
II. 
STANDARD OF REVIEW

 
 

[¶9.]     Though Burns Rathole 
phrases the issues on appeal primarily in terms of trial court error, the 
dispositive question is whether sufficient evidence exists to support the trial 
court's ruling in favor of Inter-Mountain. Consequently, we examine the record 
using our standard of review for sufficiency of the 
evidence:

 
 
In 
considering the sufficiency of the evidence, this court assumes that the 
evidence in favor of the successful party is true, leaves out of consideration 
entirely the evidence presented by the unsuccessful party that conflicts with 
the successful party's evidence and gives the evidence of the successful party 
every favorable inference that may be reasonably and fairly drawn from 
it.

 
 

Matney 
v. Webster, 808 P.2d 212, 214 (Wyo. 1991) (citing Goss v. 
Goss, 780 P.2d 306, 315 (Wyo. 1989)). See also Barnhart Drilling 
Co., Inc. v. Petroleum Financing, Inc., 807 P.2d 411 (Wyo. 1991); Stanbury v. Larsen, 803 P.2d 349 
(Wyo. 1990); and ANR Production Co. v. 
Wyoming Oil and Gas Conservation Com'n, 800 P.2d 492 (Wyo. 
1990).

 
 
III. 
DISCUSSION

 
 

[¶10.]  In his decision letter of April 23, 1991, 
the trial judge summarized his impressions of the evidence and his evaluation of 
the witnesses' credibility:

 
 
I am of 
the opinion that * * * [Burns Rathole] not only knew it was not covered but was 
so informed by [Inter-Mountain].

 
 
The 
application of 3/12/86, signed by G.A. Burns, shows on its face that physical 
damage for commercial trucks was not available. Mr Burns knew from past 
experience that Burns Rathole had no coverage for physical damage. It had none 
through [a previous insurer]. It apparently had such coverage with USF&G 
from February 1, 1986 to March 12, 1986 when that coverage was terminated by 
USF&G because the facts concerning its prior insurance history were not as 
represented on its application for coverage with USF&G. Mr. Burns admitted 
he supplied USF&G with false information to obtain the desired coverage.3

 
 
Mr. 
Burns stated he was not aware that the policy was canceled. However, the fact 
remains that the coverage was terminated on March 12, 1986 and Mr. Burns 
promptly signed the application to National Surety on that date, and the only 
reasonable conclusion to be drawn from the fact that he did sign the application 
on the same date as the effective date of the cancellation was that he knew of 
that cancellation.

 
 
Mr. 
Burns denies that he was informed by Inter-Mountain that [Burns Rathole] had no 
coverage, his denial supported by the testimony of [a former Inter-Mountain 
employee discharged for signing the name of the wife of one of Inter-Mountain's 
owners without authorization and for personal benefit]. Testifying to the 
contrary [were two Inter-Mountain employees, one of whom is a part-owner of 
Inter-Maountain], who also testified that Inter-Mountain had tried to obtain 
physical damage coverage without success.

 
 
How the 
issue is to be determined depends largely on who is to be believed - a man 
sorely in need of money who has provided false information to get coverage for 
his company it never had but for a short period of time, which coverage was 
terminated as soon as the falsity of the information was determined, and a 
disgruntled former employee or two people who testified either as part owners or 
as employees of Inter-Mountain neither of whom had anything to gain or lose 
whether [Burns Rathole] was covered or not. In addition, there is the fact most 
consistent throughout all of the evidence that [Burns Rathole] did not ever have 
physical damage coverage except for the short time with USF&G and that Mr. 
Burns was aware of it at all times in question.

 
 

[¶11.]  In a second decision letter dated April 
30, 1991 and written after submission of the trial transcript and consideration 
of Burns Rathole's rebuttal argument, the trial judge reiterated his prior 
conclusions. Further, he critiqued Burns Rathole's "piecemealing" of exhibits 
and emphasized Burns' testimony that he had simply "taken it for granted" that 
the drilling rigs were covered for physical damage.

 
 

[¶12.]  The evidence in this case clearly 
demonstrates that Burns, as owner and operator of Burns Rathole, knew his 
insurance with USF&G was canceled effective March 12, 1986. From a cursory 
reading of the National Surety insurance application, policy and other related 
correspondence, Burns knew or reasonably should have known that his company's 
heavy equipment was not covered with physical damage protection after March 12, 
1986. Though Inter-Mountain continued to look for the sought-after coverage, 
Burns was never told--nor did he claim to have been told--that such coverage 
had, in fact, been secured elsewhere. Inter-Mountain representatives 
satisfactorily accounted for all amounts paid by Burns for insurance 
protection.

 
 

[¶13.]  In Moore v. Moore, 809 P.2d 255, 
259 (Wyo. 
1991), this court stated that "we do not retreat from our standard that the 
district court is the arbiter of the credibility of witnesses when it is the 
fact finder * * *." We have also said "it is well settled that the credibility 
of witnesses and the weight of their testimony are for the trier of fact to 
determine." Caterpillar Tractor Co. v. Donahue, 674 P.2d 1276, 1286 
(Wyo. 
1983).

 
 

[¶14.]  We agree with the trial court that this 
case essentially boils down to the credibility of the witnesses when viewed in 
the light of documentary evidence submitted at trial. In his second decision 
letter, the trial judge stated:

 
 
Bluntly, 
considering the totality of the circumstances, I did not find Mr. Burns to be a 
credible witness. All too often he remembered those things which might be 
favorable to him and was conveniently confused about, or didn't recall, that 
which affected him adversely.

 
 
IV. 
CONCLUSION

 
 

[¶15.]  After having carefully examined the 
record in this case, we hold that there was sufficient credible evidence for the 
trial court to conclude Inter-Mountain had informed Burns Rathole that physical 
damage insurance coverage on its drilling rigs was unavailable and, further, 
that Burns Rathole knew it did not have such coverage in effect at the time of 
the drilling rig fire. Burns Rathole has failed to demonstrate any insufficiency 
of the evidence to justify appellate court reversal.

 
 

[¶16.]  Affirmed.

 
 
FOOTNOTES

 
 

1Burns Rathole sought the following 
relief: (1) property damage totalling $ 195,000.00; (2) loss of business since 
the fire totalled $ 300,000.00; (3) future loss of business totalling $ 
1,500,000.00; and (4) exemplary and punitive damages in the amount of $ 
4,000,000.00. The prospective carriers, National Surety Corporation and 
Fireman's Fund Insurance Company, although originally sued, were removed from 
the litigation by stipulation and the case proceeded as a contractual action 
based on the failure of the general agency to provide insurance coverage. 
Appellee had previously written business for 
appellant.

 
 

2The Western Association of Automobile 
Insurance Plans assigned the Burns Rathole application to the National Surety 
Corporation, a subsidiary of Fireman's Fund Insurance 
Company.

 
 

3This sentence may be somewhat harsh in 
consideration of the entire record. The subject was addressed in briefing for 
this court and it is possible to reach the subject adequately by a 
characterization of either "failure to disclose insurance application facts" or 
perhaps "intentional concealment" of the unfavorable insurance claim history of 
the business. In the context of the events, non-statement, understatement or 
misstatement equally reach the clearly expectable result that when the facts 
were developed, the prospective insurance carrier denied the application and 
canceled the preliminarily extended coverage derived from the initial binder 
insurance.