Court Opinion

ID: 9491908
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:27:25.473522+00
Date Added: 2024-06-11T17:55:00.640943
License: Public Domain

JOHN R. GIBSON, Circuit Judge,
concurring in part and dissenting in part.
I concur with Part I of the court’s opinion which affirms the judgment for H & H in the amount of $84,158.40 for the loss of cargo.
With respect to Part II of the court’s opinion, I have no quarrel with the court’s conclusion that there was no agreement by Vanliner to pay consequential damages, but I dissent from that portion of Part II that holds that H & H’s claim for consequential damages on the tort claim fails for lack of evidence, and to all of Part III of the court’s opinion in which this issue is further developed.
This court, in the past, has spelled out, in somewhat greater detail than today, the standards governing our review of a decision on a motion for judgment as a matter of law. We begin with our familiar four-part expression of the rule. Evaluating a judgment as a matter of law requires the court to: (1) resolve direct factual conflicts in favor of the non-movants; (2) assume as true all facts supporting the non-movant which the evidence tended to prove; (3) give the non-movant the benefit of all reasonable inferences; and (4) deny the motion if the evidence, so viewed, would allow reasonable jurors to differ as to the conclusion that could be drawn. See Ryther v. RARE 11, 108 F.3d 832, 844 (8th Cir.1997) (en banc), cert. denied, — U.S. —117 S.Ct. 2510, 138 L.Ed.2d 1013 (1997); White v. Pence, 961 F.2d 776, 779 n. 4 (8th Cir.1992) (citing Dace v. ACF Indus., Inc., 722 F.2d 374, 375 (8th Cir.1983)). The question of whether there is sufficient evidence to support a jury verdict is a legal one. White, 961 F.2d at 779. The evidence must be analyzed in the light most favorable to the prevailing party, and the court must not engage in weighing or evaluation. See id. Only when there is a complete absence of probative facts to support the conclusion reached does a reversible error appear. See Lavender v. Kurn, 327 U.S. 645, 653, 66 S.Ct. 740, 90 L.Ed. 916 (1946).
These cases demonstrate the need for a more thorough examination of the trial record than the court engages in today. I will set forth the facts under the standards articulated above so as to provide a fuller basis for determining whether the evidence supports the jury’s verdict.
In my view, this evidence supports reasonable inferences of affirmative misconduct and a denial of coverage without a good faith defense — misconduct that was oppressive and characterized by ill will. These inferences would have satisfied the instructions *1128given on bad faith and sustained the jury’s verdict in favor of H & H on the issue.
Sharon Hay, the owner of H & H, testified that she applied for contingent cargo coverage. Ralph Haymond, an experienced insurance agent in the trucking industry, stated that contingent cargo coverage was common in the industry and that different companies had different ways of extending contingent cargo coverage.
The application named both H & H Trucking and H & H Brokerage as insureds. William Woodruff, the underwriter on the policy, testified that the application requested contingent cargo insurance. He was inexperienced in this area, unsure of what to do, and went to Orlan McClain, his supervisor. McClain explicitly told him that Vanliner would provide contingent cargo coverage so long as the broker was named as an insured and the revenue from the brokerage company was included in the calculation of policy premiums. The policy application provided general information on H & H Brokerage and listed its brokerages’ revenue as increasing from $850,000 to $1,000,000 in the year in question. The total revenue on which premium calculations were to be based was $2.8 million, which included both the brokerage figure and the trucking figures. Woodruff admitted that H & H requested, and the policy was issued for, contingent cargo insurance. McClain denied knowledge of the conversation with Woodruff and denied that Vanliner issued such coverage. He described the Vanliner policy as a small fleet policy and the standard motor cargo liability coverage as commercial inland marine coverage. This is a generic type of coverage that covers goods that are not in one place and could cover goods in transit.3
The policy provided coverage for the liability of H & H Brokerage for loss and damage of property “while in the custody or control of the insured (and while in the custody of connecting carriers).”4
Haymond stated that this “custody or control” language covered the goods in question. McClain admitted that physical custody was not necessary for control to be present.
Hay testified that H & H Brokerage had control over the goods being hauled by the other trucker, R & R. “I tell him what to do until he’s delivered and empty.” H & H had the right to pick the trucker, to direct how, where, and when a load would be delivered, and to change the route if need be. H & H told the trucker when to call in, twice a day if necessary, so the customer could be informed and so any change in plans could be communicated. H & H negotiated the price to be charged with the owner of the goods and handled the paper work in connection with the brokered load.
Gail Preston, Vice President of Underwriting and Claims Administration of Vanliner, corroborated much of the above. She agreed that if Woodruff did not know how to do something, he would go to McClain, the underwriting manager she supervised, who had the authority to instruct Woodruff on how to proceed. She testified that Vanliner included the $1,000,000 in brokerage revenue in the premium calculations because it was in the application. Further, she admitted the committee that reviewed applications submitted to Vanliner had no real insurance experience and was primarily concerned with how much money was to be made, particularly with small policies such as H & H’s.
When Preston was asked why the coverage did not cover the loss in question, she answered that the goods were lost while they were outside the custody or control of the insured. When asked why Hay’s testimony about the brokered load did not show control, she answered that Vanliner was looking at “a lot of things about an account,” whether the drivers were adequately qualified and trained, whether DOT regulations were met, whether the equipment is maintained proper*1129ly and training is provided on equipment maintenance, and how the shipment should be loaded and packed. Preston stated that “controlling” means that one has to have the power or ability to ensure that a specific or certain outcome will result, and once the goods are in the custody of someone else they have no way of knowing who the driver is, the quality of the equipment, how the goods are loaded, or whether they are going to a carrier’s yard where they may not be secured. She did not believe that a broker could have any control over the things that she had mentioned. She did not know how a broker could control the security of the yard of another carrier.
She admitted the “custody or control” language had separate components. When describing the difference between the words “and” and “or,” she stated that if the policy said custody “and” control, “you would have both conditions present,” and if the language was custody “or” control, “you have one or the other conditions present.” She could not think of a situation where a named insured could have control without having custody. “No, I can’t. We use the two words together.” When asked the purpose of having a policy that uses the phrase “custody or control” instead of “custody and control,” she stated that she did not write the policy; it had been in use for a number of years, and her interpretation of it is “that the two things go together .... [y]ou can’t have control without custody.” She knew of an earlier policy issued by Kemper Insurance Company to H & H, using the phrase “custody and control.”
The denial letter of December 13, 1995, written by Director of Claims Wayne Barker, stated that R & R Trucking was the hauler of the goods and denied the claim because the goods were never in the “care, custody, or control of H & H Brokerage.”
Barker wrote to H & H’s counsel on February 14, 1996. He again stated that R & R hauled the goods, and further, “As far as contingent motor truck cargo coverage, we have never seen a policy form nor have we ever issued any to my knowledge. Most cargo forms are based on the insured’s liability, and in this instance, Singer Sewing Company has never alleged nor proven any negligence or liability against H & H Trucking or H & H Brokerage.”
These denials were made at a time when Vanliner was experiencing financial difficulty. Indeed, its “A.M. Best Rating” had been dropped. Its reserves in the general freight line of business were inaccurately estimated, and claims were coming in for a higher amount than reserves. This in turn caused, in Preston’s words, “a lot more severe losses.” As a result, in 1995, Vanliner decided they did not want to take on any more general freight risk.
The evidence also indicated that Vanliner was aware of H & H’s reliance on Singer, as its most important customer.
The court’s conclusion that the evidence we have outlined above is irrelevant to the issue of bad faith, and what little probative value it has makes' only for a very weak inference of such conduct, simply fails to consider the evidence in the light of the controlling standards. The comment of the court demonstrates that it is engaging in the weighing or evaluation of inferences. White prevents us from so doing.
When the record we have discussed above is considered in the light most favorable to H & H Brokerage, it is sufficient to support the findings of the jury that there was affirmative misconduct in denying the claim without a good faith defense, and that the misconduct was oppressive in an attempt to avoid liability under the policy. The language of the motor cargo liability provisions, with H & H Brokerage an insured, covered loss and damage of property “while in the custody or control of the insured.” The underwriter, McClain, specifically stated that such coverage had been issued. Hay’s testimony established the control that met this policy requirement. Preston, responsible for both underwriting and claims, testified that the two words “custody and control,” when joined by the word “or,” required that only one of the conditions need be present. She then stated that Vanliner used the words together, and one could not exist without the other. This conflict and others in her testimony, together with the conflict in the basis *1130for the two denial letters and the testimony-concerning the financial difficulties of Vanliner and the status of its review committee, are all sufficient to create either the direct evidence required by the instructions on bad faith, or inferences that could reasonably be derived therefrom, to support the jury’s verdict under the instructions given by the court.
The court’s comment today that the ambiguity of the contract provides a good faith defense for Vanliner, simply does not wash under the jury instructions. Whether extrinsic evidence of the meaning of the contract was admitted is beyond the point. The jury was instructed, first, to determine whether there was a contract for insurance, and, second, if there was, and they found it to be ambiguous or were uncertain of its meaning, to read it against Vanliner, the entity that drafted it. The jury was not required to make specific finding that there were ambiguities in the contract or resolve the conflicts, nor did it do so. The decisions relied upon by the court simply do not support the court’s position that if there is an ambiguity in the contract, reliance on one permissible construction is a good faith defense.
The motor cargo liability policy covering property in the “custody or control” of the insured was not ambiguous. The court today does not attempt to demonstrate more than one meaning for the phrase. Indeed, there can be no better answer to the argument of ambiguity than the statement of Preston that the two words, when coupled with the word “or,” led to a conclusion that one of the two conditions could create coverage. Preston blatantly ignored this plain meaning of the language by stating that Vanliner had always substituted “and” for “or”. This is simply not a permissible reading of the language.
This is a diversity case and perhaps we should not delve into the niceties of such issues under state law. I am compelled to dissent because I believe that the court today either picks and chooses from the record before us, or ignores it entirely, when our obligation is to consider the record in a light most favorable to H & H.
I would affirm the judgment of the district court in all respects.

. Gail Preston, Vice President of Underwriting and Claims Administration, stated that Vanliner wrote the policy and determined what kind of coverage it wanted to write. It belongs to the ISO (Insurance Services Office) which develops insurance policy language that members such as Vanliner can use. The motor cargo liability policy has a notation at the bottom indicating that it was a Vanliner form.

. Much additional discussion about contingent cargo insurance was irrelevant in view of the coverage written by Vanliner.