Title: Aetna Cas. & Sur. Co. v. Steele
Citation: 373 So. 2d 797
Docket Number: 51313
State: Mississippi
Issuer: Mississippi Supreme Court
Date: July 25, 1979

373 So. 2d 797 (1979) AETNA CASUALTY AND SURETY COMPANY v. Carl STEELE. No. 51313. Supreme Court of Mississippi. July 25, 1979. *798 Bryant &amp; Stennis, Roger T. Clark, Gulfport, for appellant. Cumbest &amp; Cumbest, John L. Hunter, Pascagoula, for appellee. Before ROBERTSON, P.J., and BROOM and LEE, JJ. LEE, Justice, for the Court: Carl Steele filed suit in the Circuit Court of Jackson County against Aetna Casualty and Surety Company of Hartford, Connecticut [Aetna] and A.D. Brantley, d/b/a Barr Insurance Company, for actual damages, resulting from loss of a pickup truck alleged to be covered by collision insurance, and for punitive damages because of refusal to pay insurance coverage. The case was tried before Honorable B.J. Landrum, special judge, sitting without a jury. At the conclusion of the plaintiff's case, A.D. Brantley was discharged, on motion for directed verdict, and at the conclusion of all the evidence, the trial judge entered judgment for Steele against Aetna in the sum of thirty-one hundred dollars ($3,100.00), agreed value of the truck, twenty-five hundred sixty dollars ($2,560.00), attorney's fees, and thirty-five thousand dollars ($35,000), punitive damages. Aetna appeals from the judgment. Did the trial court err in holding that the policy of insurance provided collision coverage for the wrecked truck of appellee? Appellee had in force a policy of insurance covering three (3) vehicles owned by him. A 1971 Chevrolet El Camino and a 1972 Ford LTD were covered with liability insurance. A 1975 Datsun station wagon was covered with both liability and collision insurance. Late in the afternoon on Friday, September 23, 1977, appellee purchased a 1975 Ford pickup truck from Sellers Auto Sales in Lucedale. Steele immediately telephoned his insurance agent to notify him of the purchase, but the agency was closed. That night, he wrecked the truck which resulted in a total loss to it. On the following Monday, appellee informed Sellers Auto Sales of the accident. Mr. Sellers telephoned A.D. Brantley at Barr Insurance Agency and advised him of the sale and wreck, and told him that there had been a trade-in on the 1975 pickup truck (there had not been). A report of the purchase and accident was forwarded by Brantley to the local manager for Aetna, and she subsequently sent it to her superior, *799 who had authority to allow or disallow all type claims in the district. Finally, Aetna denied the claim on the ground that the pickup truck was not covered under the policy. Part I of the policy provides liability, medical payments and uninsured motorist coverage, and states the following definitions: Part II of the policy provides for physical damage and states the following definitions: The appellant contends that Part I and Part II of the policy actually consist of two (2) policies and that all vehicles were required to be covered by physical damage insurance in order for there to be coverage on the pickup truck. Under the same reasoning, had liability accrued against Steele on account of the collision and one vehicle had not been covered by liability insurance, appellant's position would be there was no liability coverage on the newly-acquired vehicle. In such situations, the policy would be practically meaningless as to any type coverage on a newly-acquired vehicle. The applicable part of the policy applying to the situation here is Subsection (c)(2), which simply and clearly states the following: If the provision of the policy is ambiguous, it should be construed most strongly against the insurer as stated in Peerless Insurance Co. v. St. Laurent, 247 Miss. 134, 141, 154 So. 2d 135, 138 (1963) as follows: *800 In Collins v. Government Employees Ins. Co., 168 So. 2d 415 (La. App. 1964), the Louisiana Court had a similar factual situation (replaced vehicle instead of newly-acquired) and the same policy provisions for consideration. The plaintiff had two automobiles, one of which was covered by liability, medical payments, and comprehensive fire, theft, etc., but no collision. The other car was provided with the same coverage plus fifty-dollars ($50.00) deductible collision. Plaintiff traded in a 1955 Chevrolet and purchased a 1963 Chevrolet. The new automobile was damaged by collision four (4) days later, the insurer was notified the day after the accident, and coverage was denied. The plaintiff contended that the policy did not expressly state what coverage was effective, and that the policy provisions afforded full coverage on all insurance stated therein. The defendant contended that the policy should be interpreted as a separate policy on each of the vehicles and that there was no coverage on the 1963 Chevrolet. The Louisiana Court said: The appellant here, defining "owned automobile" under Part II of the policy, adopted the definition contained under Part I. It excepted under Part II "a trailer owned by the named Insured." Appellant could have limited coverage under Subsection (c)(2), it chose not to do so but enlarged the coverage by using the word "insures." The facts are uncontradicted that the newly-acquired pickup truck was a private passenger vehicle, purchased during the policy period, that appellant insured all vehicles owned by appellee, and that appellant was notified within thirty (30) days [three (3) days after the collision] that he desired the physical damage coverage. We are of the opinion that the trial judge correctly found that the vehicle was covered as to physical damage under the provisions of the policy and that he properly entered judgment for appellee in the sum of $3,100.00. Did the court err in awarding appellee punitive damages and attorney's fees? The rule in Mississippi is settled that punitive damages are not recoverable for a breach of contract unless such breach is attended by intentional wrong, insult, abuse, or such gross negligence that amounts to an independent tort. New Hampshire Insurance Co. v. Smith, 357 So. 2d 119 (Miss. 1978). Attorney's fees are not recoverable as an element of damages unless the infliction of punitive damages is justified. Cooper v. United States Fidelity &amp; Guaranty Co., 186 Miss. 116, 188 So. 6 (1939). If the appellant had a legitimate, allowable or arguable reason not to pay the claim of appellee, then punitive damages will not lie. Standard Life Ins. Co. v. Veal, 354 So. 2d 239 (Miss. 1978); Lincoln National Life Ins. Co. v. Crews, 341 So. 2d 1321 (Miss. 1977). In the Louisiana case of Collins, supra, the Court further said: As stated in Collins, referring to Collard v. Globe Indemnity Company, 50 So. 2d 838 (1st Cir. App. 1951), wherein the standard policy limited coverage by the following phrase, "but only to the extent the insurance is applicable to all such previously owned automobiles," the coverage was clearly stated, and by deleting such phrase, it appears that companies intended to enlarge coverage. Appellant contends that Subsection (c)(2) under the definition of an "owned automobile" establishes that there was no coverage for the pickup truck because appellee did not have physical damage coverage under Part II of the policy on all of his automobiles. It may be reasonably argued that definitions under the liability coverage Part I, Subsection (c)(2) insures all private passenger, farm and utility automobiles owned by the named insured which are covered by liability insurance and likewise it can be reasonably argued that definitions under the physical damage Part II insures all private passenger, farm and utility automobiles owned by the named insured which are *802 insured for physical damage. Therefore, we hold that there was an arguable reason not to pay the claim of appellee, and, under the rule and cases cited hereinabove, punitive damages and attorney's fees are not proper. The trial judge erroneously awarded such damages in favor of appellee. We affirm the judgment of the trial judge in the amount of $3,100.00, actual damages, and reverse and enter judgment here in favor of appellant as to punitive damages and attorney's fees. This case was considered by a conference of the justices en banc. AFFIRMED IN PART, REVERSED AND RENDERED IN PART. PATTERSON, C.J., SMITH and ROBERTSON, P. JJ., and SUGG, WALKER, BROOM, BOWLING and COFER, JJ., concur.