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Hans Construction Co. v. Phoenix Assurance Co.

decided: June 25, 1993.

HANS CONSTRUCTION COMPANY, INC., PLAINTIFF-APPELLANT,
v.
PHOENIX ASSURANCE COMPANY OF NEW YORK, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Southern District of Mississippi. D.C. DOCKET NUMBER CA-S89-0198(G). Mag. John M. Roper

Before Politz, Chief Judge, Davis and Jones, Circuit Judges.

Author: Politz

POLITZ, Chief Judge:

Hans Construction Company, Inc. appeals an adverse summary judgment. Finding no error, we affirm.

Background

On June 17, 1987 a crane owned by Hans Construction Co. was damaged in the process of dismantling an asphalt plant. Hans' equipment, including the crane, was covered under an Inland Marine Transit Floater Policy issued by Phoenix Assurance Company of New York. The policy did not cover damage caused by overloading the equipment.

Upon receiving notice of the accident, Phoenix assigned Adjusting Services Unlimited to investigate the claim. John Dominick, an ASU adjuster, interviewed the Hans crane operator, Mike Greer. Greer stated that the crane was lifting a bucket conveyor weighing about 52,000 pounds at the time of the accident. Considering the extent of the boom, the angle, and the radius of the load, the maximum load should have been about 50,000 pounds. Neither Dominick, nor any other adjuster, ever independently determined the actual weight of the bucket conveyor when the crane failed.

ASU requested and was granted authority by Phoenix to hire an engineer to inspect the crane and determine the cause of the accident. Two experts, Dr. Courtney Busch and Robert Fleishmann, examined the crane; both determined that the damage was caused by an overload. In addition, at Hans' request, a representative of the manufacturer examined the crane and also opined that the damage was caused by an overload. He concluded that the crane could not be repaired -- the boom and outrigger sections would have to be completely replaced.

Disagreeing with the Conclusions of the experts, Hans hired John Taylor of Non-Destructive Testing Services to examine the crane. Taylor found imperfections in the welds. Taylor's report was sent to Busch whose opinion remained the same. Busch noted that Taylor did not address the fact that the primary failure of the crane was in the base metal, not the welds. Based upon the experts' opinions that the crane was overloaded, Phoenix invoked the policy exclusion and denied Hans' claim.

Hans sued Phoenix under the policy, alleging denial of the claim in bad faith. Hans sought contract, extra-contractual,*fn1 and punitive damages. The district court granted summary judgment in favor of Phoenix on all claims except the claim for coverage under the policy. The parties consented to trial of the remaining claim before a magistrate Judge.

Prior to trial, the Mississippi Supreme Court announced its decision in Universal Life Insurance Co. v. Veasley,*fn2 in which the plaintiff was permitted to recover mental anguish damages resulting from the insurance company's failure to pay a claim, even though the failure was the result of simple negligence, not conduct warranting punitive damages. Hans moved the district court for reconsideration of its prior summary judgment on the extra-contractual damages claim in light of Veasley ; the district court found that because the insurance company had an arguable basis for denying the claim, the extra-contractual damages claim was properly denied. The parties settled the policy coverage claim and final judgment was entered dismissing the case.

Hans timely appealed. He argues that the district court erred in granting summary judgment in favor of Phoenix on the claim for punitive damages and the claim for other extra-contractual damages.

Analysis

Standard of ...


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