Down To Cases

Existence of insurance ruled irrelevant to determination of agency relationship

A boat collision resulted in the death of a girl and injuries to her sister. The girl's estate filed a wrongful-death action against the driver of the other boat, while the mother also sought damages for injuries sustained by the surviving daughter. Each claim asserted that the driver was negligent in the accident and that he was acting as an agent of a bass-fishing club at the time.

The defendant was a director of the club's western North Carolina district. As such, he oversaw the administration of tournaments in the district. He wasn't an employee of the club, however, and received no salary nor had full-time duties.

The accident took place during the bass-fishing club's national championship tournament. The defendant was the event's principal organizer. He arranged for sponsorships, as well as for food and lodging for contestants. However, once the tournament began, the defendant participated only as a contestant and had paid a registration fee. He had no duties related to tournament registration, received no compensation, and did not participate as a club official during the weighing of the caught fish at the end of each day of the tournament. Furthermore, he was not authorized to answer any questions that arose during the contest concerning the rules and procedures of the tournament. Rather, the club's national director was in charge.

After the contest fish were weighed at the end of one day of the tournament, the national director asked the defendant and another person to return the fish to the lake. After releasing the fish, the defendant returned to a dock where his wife was waiting. The two then got into the defendant's personal boat and departed for an access point where their boat trailer was located. While they were en route to the access point, they collided with the boat containing the sisters.

At the conclusion of a 10-day trial, the jury found that the defendant's negligence was the sole cause of the accident and awarded substantial damages to the plaintiffs. The jury, however, concluded that the defendant did not act as an agent for the bass-fishing club, a decision the plaintiffs appealed.

In the appeal, the plaintiffs contended that the trial court erred in sustaining the bass-fishing club's objections to two proffers made by the plaintiffs outside of the presence of the jury. One was that the defendant had had no personal insurance applicable to the accident. The other concerned how much insurance the club had. During the trial, the plaintiffs sought to introduce answers to interrogatories disclosing the club's insurance coverage, and to also introduce a copy of its insurance policy. The plaintiffs argued the existence of the insurance policy “goes to the issue” of whether the defendant was in fact the club's agent.

On appeal, the plaintiffs contended that the “mere fact the alleged principal obtained insurance which covered 'executive officers and directors' was evidence enough to weigh and influence the jury's decision on this issue.” The definition of an insured in the club's policy included the organization's executive officers and directors “but only with respect to their duties as your officers and directors.”

The appeals court said that in North Carolina the existence of liability insurance is not admissible to show a party acted negligently or wrongfully, although it is admissible for other purposes, including proving the existence of an agency relationship. The court held, however, that “while plaintiffs' first proffer is encompassed in their first assignment of error, it is not argued in their brief, and is therefore deemed abandoned.”

Even had the plaintiffs properly argued this matter, whether on not the defendant had his own insurance is irrelevant to the issue of agency, the court said. Furthermore, the court added, the amount of coverage provided by the club's insurance policy, standing alone, in no way establishes that the defendant was the club's agent. “Such evidence could only serve to induce the jury to decide the case on improper grounds…and was properly excluded by the trial court,” the appeals court said.

The next issue was whether the trial court abused its discretion in excluding the evidence about the defendant's status. The issue was not whether the defendant was a director of the bass-fishing club; the uncontradicted evidence was that he was. Rather, the court said, the issue to be decided by the jury was whether the defendant was acting as a director or agent of the club at the time of the boat collision.

The court said neither the existence of the insurance policy nor its terms made the existence of agency more or less probable. The insurance policy was not relevant to the issue of agency, and therefore the trial court properly excluded this evidence.

While the club's policy stated that directors are insured, the court noted that coverage was subject to the express limitation: “but only with respect to their duties as your officers and directors.” This limitation eliminates any possible relevance of the insurance policy to the issue of agency, the court said. “Instead, this provision merely restates the issue to be decided by the jury.” The appeals court upheld the trial court's decision to sustain the bass-fishing club's objection.

The plaintiffs also said the trial court erred in denying their motion for judgment, notwithstanding the verdict, and for a new trial. The appeals court disagreed, saying that the plaintiffs failed to argue in their brief that the trial court erred in denying their motion for a new trial, and that contention was deemed abandoned.

The appeals court also said the trial court acted properly in denying the plaintiff's motion for judgment. There was ample evidence from which the jury could have found that the defendant's activities on behalf of the fishing club terminated once he got into his personal boat with his wife and departed for their boating trailer.

Williams vs. Bell, No. COA03-1538 (N.C.App. 01/04/2005) 2005.NC. 0000005 (www.versuslaw.com).

Forcible-entry exclusion upheld in auto-theft claim

The insured in this Alabama case and his family were at a Christmas gathering at a restaurant. At the end of the party, his wife moved the insured's minivan to the front of the restaurant to pick up the family. She left the minivan running and unlocked while she went inside to get the family. Before she returned, the minivan was stolen. It later was recovered, after it had been wrecked and abandoned.

The insured reported the incident to his carrier and requested payment under his policy for the $4,747 in damage, less the $500 deductible. The insurer refused to pay, based on policy language excluding theft of a covered vehicle if “forcible entry” was not required to access it. The insurance policy did not define “forcible entry.”

In the subsequent litigation, a trial court entered a summary judgment for the insured, finding that the exclusion did not apply because it was ambiguous. There was an appeal.

The appellate court found that the ordinary meaning of “forcible” is to use “force.” It noted that at his disposition the insured testified that he understood “forcible entry” to mean “somebody forcing his way into the vehicle.”

“Thus, 'forcible entry' was reasonably understood both by the carrier and by the insured to include the use of force to gain access to his minivan,” the appellate court said. “In this case, the insured's wife left the minivan unattended, unlocked, with the key in the ignition, and with the motor running. Under those circumstances, 'forcible entry' was not required to gain access to the minivan, and (the insured) admitted that no one forced his way into the minivan because '(his wife) started the car.'”

The appellate court concluded that the forcible-entry exclusionary provision applied in this case and that the trial court erred by denying the carrier's summary-judgment motion on the coverage issue and by entering a summary judgment in favor of the insured.

Safeway Insurance Co. of Alabama vs. Herrera, No. 1031115 (Ala. 02/ 18/2005) 2005.AL.0000074 (www.versuslaw.com).

Readers can contact Don Renau via e-mail at drenau@thepoint.com.