Grady Allen v. Zurich Insurance Company

We find that the evidence in this case is

sufficient to an inference of intent agents

to distribute. The grams seized 498

of heroin with approxi- a wholesale value of

mately $500,000.6

We carefully reviewed the record applicable they pertain law as to Harri- contentions,

son’s and find no error. Ac-

cordingly, Harrison’s conviction is affirmed.

Grady ALLEN, Appellant, COMPANY,

ZURICH INSURANCE

Appellee.

No. 80-1665.

United Appeals, States Court of

Fourth Circuit.

Argued April 6, 1981.

Decided Jan. purity 6. The purity heroin seized had a value. of street-use heroin is 52.8% 2-5%. granted judgment n. o. v. for Zurich

on basis that the evidence established as matter of law was employee a that Allen of Zurich’s insured so that Zurich was not in liability liable under an exclusion policy. On we affirm appeal, Allen’s v., judgment district court’s n. o. but on grounds. other

I August assisting In was Allen Zu- insured, installing in Scruggs, rich’s Carl a home, home when the which Scruggs mobile shifted, placed blocks, fell, had on and Allen crushed Allen’s hand. later sued Scruggs in a state court South Carolina on negligence theory inju- a to recover for his “while in employment ries of the De- ” fendant, Carl H. .... Scruggs, Com- plaint, Scruggs, Allen v. No. 76-CP-23-92 (Greenville, C.P.). County S.C. Ct. Scruggs a

defended reservation of rights general clause in a automobile liabili- policy ty proceeded issued to The case him. trial part charge and as of his to the jury, the trial judge instructed that “[t]he allegation plaintiff first material which the was an employee must establish is that he defendant, owing defendant with the duty a of care to him.” Tr. at Allen v. (Greenville, Scruggs, No. 76-CP-23-92 C.P.). County jury Ct. returned a ver- $37,000, for dict Allen of has paid. McCall, Greenville, Jr., Duke K. C. S.

(Leatherwood, Walker, Mann, against Todd & Allen brought then suit Zurich to Greenville, C., brief), appellant. S. on for liability poli- collect automobile alleged complaint that he cy in the Columbia, George Lewis, (Turner, E. S. C. joint defense, were In venturers. Padget, Columbia, C., Graham Laney, & S. Zurich claimed that it was not liable be- brief), appellee. Allen Scruggs’ employee cause at the BRYAN, Judge, Before Circuit policy expressly Senior time and the PHILLIPS, Judges. HALL and coverage bodily injury Circuit excluded to any trial, employee. At Allen testified that he PHILLIPS, JAMES Circuit DICKSON thought Scruggs’ employee had he was in Judge: 1975, but he now their rela- characterized diversity Grady tionship working together. Scruggs sup- In this Allen case sued Company plied equipment, many Zurich Insurance to recover of their solicited personal injury judgment jobs, activity leading amount of a earli- directed the however, paid percent- obtained a against injury. er Allen Zurich’s in- job than a liability policy. Following age salary, sured under a each rather he form, favor, regu- in received a he had no district never W-2 hours, up working picked is, lar and he other course, There judicial power under service work for himself on the side. Dur- Fed.R.Civ.P. 50 to grant direct verdict or cross-examination, ing admitted for, n. against, o. v. as well as he before the Carolina had testified South having proof burden on the Industrial in December Commission dispositive issues on the basis legal of a February deposition before assessment the evidence. Davis Frozen January the state in that he court was Foods, Inc. v. Railway, Norfolk Southern Scruggs’ and employee paid weekly was (4th 1953)(directed F.2d 839 Cir. verdict salary in time of cash at the of his $250 plaintiff); Grannis, for United States injury. testimony Portions of that were 1949) (same); F.2d Cir. see also evidence admitted into in action. Summers, Federal Insurance v.Co. however, Scruggs, testified Allen that was (1st 1968) (directed 975-76 Cir. verdict employee, not his but a contract laborer. for defendant with burden considered but August An 1975 letter from to the denied). power But the is by controlled County, Anderson C. of Department S. So- stringent standard so that its exercise is but Services, cial Scruggs’ corroborated rarely appropriate. The standard is in crit- testimony, was admitted into evidence. respects ical different from and more de- permitted The court the district case to manding applicable than that grant to the go jury to the which returned a verdict for of directed verdict against proponent. the Allen. then judgment Zurich moved for well explained Judge As by McLaughlin: notwithstanding the on two [Tjhough a motion for directed verdict in grounds: (1) employee Allen’s status as an of the proponent favor of an issue is cast adjudicated affirmatively of was in the in same form when as made the the proceeding state court Allen is and defending party, requires it the judge to (2) bound that determination the the body test of evidence for its in- only reasonable inference drawn to be from sufficiency to support finding, but rath- presented the evidence at is that trial for its overwhelming er effect. He must was Scruggs’ employee acting within say only be able to there is the scope employment of his he when sufficient evidence to finding, the injured. The district court granted the mo- though even other evidence could support ground.1 tion on second appeal contrary finding, as well a but additional- followed. ly that there is insufficient evidence for permitting any finding. different II ultimate genu- conclusion that there is no solely Zurich defended basis issue of depends ine fact not on a failure Scruggs’ that Allen was employee, acting in prove at enough least so that the con- scope course and of employment his inferred, troverted fact can be but rather injury time of his liability depends making impossible any other expressly was therefore excluded equally strong inferences once the fact in coverage from the policy. of its This was is at issue least inferable. defense affirmative as to which Zurich Mihalchak v. Dredging American proof. had the of burden The district court (3d 1959) (footnote F.2d omit- correctly treated it as such. When the ted); see Grannis, also United States returned a verdict district F.2d subsequent grant judgment court’s n. o. v. was therefore Applying entered in favor of the to the standard evidence in case, having the burden proof on the we do appropri- not think was sole dispositive issue. grant judgment ate to n. o. v. for Zurich on respect ground, 1. With to the first the district was no collateral because Al- judicata employee held that there was no res bar status len’s as an was not a material necessarily because in action sounded tort and issue in the determined state action. III, the federal suit was an action ex contractu and See Part infra. dispositive basis. The issue was wheth- ment was furnished by Scruggs was not time Allen er at critical really dispute. Resolution of the critical scope acting the course and employee agency requires issue evaluation all the controlling Under employment. South factors, however; no one of them is deter- general law the test whether one Carolina law; minative as a matter of and for this is person employee another reason, its ordinarily resolution is one for employer. “control It not the the trier of fact. See id. Comment c. exercised, wheth- actual control then We must bear in point mind the critical authority er there exists the here persuasion burden was not particular work control and direct or upon Allen to establish that he was not undertaking, or manner means Scruggs’ employee, ” but upon Zurich to es accomplishment.... its Bates v. Le- tablish that he was. To hold 25, 34-35, gette, 239 S.E.2d was entitled to as a matter of law we must find not only that was there suffi most, court, recognized This like has evidence, cient manifestly so credible that it bearing right four factors on the crucial believed, must be finding that (1) of control. are direct evidence These Allen Scruggs’ employee, was but also that to, of, control, right (2) of the or exercise there was insufficient evidence from which (3) payment, furnishing method of of rationally could any made (4) equipment, right to and fire. finding. other See v. Mihalchak American Watkins, 30, v. Chavis S.C. S.E.2d Dredging Co., 266 F.2d at 877. This we 648, (1971). do, and we therefore conclude that Under this test the evidence was in sub- the district granting judg court erred in conflict, particularly respect stantial with not, ment n. o. this v. on basis. This does essentially evaluative element of the however, end the matter. right to testimony control. Allen’s own major this element respects was in blatant- ly self-serving, through legal shot with Ill characterizations, inconsistent, internally alternatively judg- contends that in flat with conflict his own earlier proper ment n. o. was v. because Allen is self-serving testimony and statements made legally estopped by the judg- state court in contexts where his interests in nature ment to contest the fact that he was relationship diametrically were dif- indicated, employee. As in that contradictions, ferent. But inconsistencies alleged state court action Allen expressly present questions self-interest of credi- that he was the time of “in the bility probative weight and of jury, for the employment ... Scruggs.” allega- of entitled, perfectly which was example, tion was submitted to the state court jury utterly to all of legal discount char- one plaintiff as that the “must establish” in acterizations relationship of the critical By order to recover. of a return having value, probative leaving no for con- in favor of Zurich says that this issue only sideration raw historical facts favor, necessarily was determined Allen’s bearing upon whether had the it resulting judg- that was essential to the

right to (Second) control. Restatement See ment, principles under relevant of Agency 220, (1957). of Comment m Be- § estoppel pre- collateral be now should yond this the evidence of the method of contesting cluded from so fact estab- payment could, and the to fire de- (Second) lished. Judg- See Restatement of upon pending credibility determinations and (1980); ments Johnston-Crews Co. § probative assessments weight, of lead to Folk, (1922). conflicting S.E. 15 We Only inferences. the evi- furnishing properly dence of the can course affirm a district equipment essentially though no conflict and no need for court’s entered credibility; equip- basis, assessments of that the upon erroneous & Ex- Securities change Corp., Chenery Commission v. 318 tionship the privity ordinarily would 80, 88, 454, 459, U.S. S.Ct. 87 L.Ed. 626 exist between insurer and insured for this (1943); Corp. Ringer, Eltra purpose. urges Allen also that the issue of 1978), urges and Zurich his employment status was not essential to we that here on the basis should do the judgment action, in the state so that estoppel. collateral predicate critical of col- estoppel missing. lateral See Restate- While contention is not without (Second) Judgments ment Com- § force, sufficiently we are about a concerned (1980). ment h For reasons we will later number problems applying collateral develop, impressed by we are not this last estoppel particular circumstances contention, but are sufficiently we con- of this case that we decline to do so. There cerned problems other we think question is the whether issue was actu estoppel collateral is not appropriately ap- ally litigated in the state action. This does plied But here. neither does this end the conclusively appear from our record. matter. might that, From our record it be concluded though jury, submitted the issue had Closely estoppel, related collateral actually been contested on trial. See dissimilar in respects, critical is another (Second) Judgments Restatement principle preclude conclude should e Comment The burden is on the Allen dispositive on the In issue. certain party asserting collateral to estab circumstances a party may properly pre be predicates, lish its of course in cluded as a matter law adopting from presenting cludes adequate legal an position record for in conflict one with earlier purpose. the taken the same or litigation. related estoppel” “Judicial is invoked in these cir There is also a question whether Zu prevent cumstances to party the from rich is party entitled as a to the federal “playing courts, fast and loose” the with action to the benefit estoppel. of collateral protect to the integrity essential depend This upon would the whether doc judicial process. Virginia See United mutuality estoppel trine of still holds in Bank/Seaboard v. National B. F. Saul Real Carolina, law respecting South whose Trust, 185, Estate Investment 641 F.2d 190 conclusiveness of its judgments own we (4th 1981); Co., Cir. v. Scarano Central R. apply, 1738, whether, must 28 U.S.C. or § 510, 203 (3d 1953); F.2d Duplan 512-13 Cir. alternatively, Zurich properly could be held Corp. Deering Milliken, Inc., v. F.Supp. 397 privity to be in Scruggs thereby with 1146, (D.S.C.1974). 1177 entitled to the benefit of the state court judgment. point theOn first we been judi circumstances under which second, directed authority; to no and on cial estoppel may appropriately be invoked Allen has possi raised at least the are probably colorable any general not reducible to bility of a conflict of interest between Zu of principle, they formulation may be 2 might rich and ques draw in found where neither estoppel collateral nor justice according tion the equitable to their rela- estoppel, see Scarano v. Central reply appeal, points (1980). In 2. brief on this For two we reasons think matter Zurich, properly out in the state court action appeal. de- be considered fending Scruggs policy off, relevance, assuming under its aon reser- First its the record on rights, presumably position vation of appeal took the would allow its fair considera- (against allegation) tion, Allen’s specific that Allen was not since circumstances of Zu- This, says Allen, employee. puts Zu- Furthermore, developed. rich’s defense are not poor position urge equitable rich in a Allen’s standing we doubt Allen has to raise in this estoppel change positions relitigate or litigation any question of a conflict of interest true, question in this action. If also would relating between Zurich and obviously upon privity question, bear as- former’s defense of the state court action. suming it has still relevance under Caro- South That would seem a matter between insurer and lina collateral doctrine. See Restate- insured. (Second) Judgments ment d Comment

1167 Co., 512-13, R. nor any require 203 F.2d irrelevant, assertion of a legally albeit in- theories, consistent, ments of election of remedies or position seldom, ever, should if Merrill, see Eads Hide & Wool v. Co. 252 judicial lead to the estoppel, 1958), see, F.2d Cir. apply. would e.g., States, Gleason v. United 458 F.2d Its justification essential function and (3d 1972), Cir. disagree with Allen’s prevent the use of “intentional self-contra contention that position his earlier in the obtaining diction ... as means of unfair there, state court action end, in the advantage provided in a forum for suitors legally duty irrelevant. The neg- of care in seeking justice.” Co., Scarano v. Central ligence R. actions is not determined in vacu- obviously This contem always um. It arises from the particular plates something permissible other than the relationship of and alleged victim tort- practice, allowed, freely of simulta very feasor. There is specific duty neously advancing in the same action incon care employer owed to employee that is then, sistent claims or defenses can necessarily duty same that would judicial control, appropriate be evalu subsist in the same general setting factual tribunal, ated as such joint venturers, same thus between independent con- allowing internally tractors, consistent deci final or certainly complete strangers. sion to be reached. Depending upon situation, See Fed.R.Civ.P. may well That, 8(e)(2). obviously, is not what in higher duty be a than would out arise Though perhaps volved here. not necessari any of those other relationships in same ly confined to situations where the factual context. generally See Restate- asserting contrary position the earlier (Second) Agency ment §§ prevailed, it is obviously appropriate more general principle of tort and in that situation. See United States agency applies Carolina, see, law in South Webber, (3d 1968); F.2d 381 Parker e.g., Tucker v. Hill Holly Lumber Sager, (D.C.Cir.1949); 174 F.2d 657 Bu (1942), S.E.2d and was States, der F.Supp. (E.D. v. United specifically applied in Allen’s state Mo.1971). That is the situation here. action judge who submitted allegation bearing persuaded On total balance arewe upon his to obviously recover. Allen that, the though principle ap is one to be thought it sufficiently important in his caution, plied properly applied with it is state court action a to make deliberate alle- who, a party here. Here is as the record gation relationship that the was that of shows, conclusively successfully has earlier employer and employee any rather than of legal position asserted respecting a his em a number of others from which different ployment relationship with another that is might and lesser duties of care have arisen. completely position at odds with the position asserted.3 The in taken the We state are satisfied that this is case in a advisedly action was taken sufficiently and inured which it important to the to Allen’s benefit there. While the earlier of the integrity federal courts4 their fact, appears particular 3. As enterprise a matter of it blowing uncontradicted this of hot and demands, only directly that Allen not had taken cold the earlier a as occasion contrary position respecting relationship the in Although diversity case, 4. this is a consider action, the state court he had taken the application judi that federal law the controls position contrary same in one administra- estoppel, protection c*a* since it relates to proceeding pur- tive where that also suited his integrity judicial process, the of the federal and, pose cooperation, Scruggs’ with a still We think that neither 28 U.S.C. the full § purposes different one when it suited their both statute, Tomp faith and credit nor Erie R. R. v. yet in connection with another state adminis- kins, 304 U.S. 58 S.Ct. 82 L.Ed. 1188 trative matter. Whether or not these adminis- (1938), requires inquiry possible into the exist proceedings independently trative would conflicting ence of state ru^e- provided predicates judi- the former, question As the to the is not the they estoppel, cial further the convic- judgment be effect to accorded the state as res judicial given tion that no further aid should be judicata estoppel, or collateral a matter to judicial be lent to processes equivocal, should not this acknowledging that made he the plain example of “intentional self-contradic- responses explana- to him. attributed His obtaining as a unfair simply plainly tion ... means tion was that he had ” R. advantage... . Scarano Central in way answered the he did because of his ignorance precise For reason5 we af- this of the definition of the judgment of the district court “employee.” firm the term judgment to the granting n. o. v. defendant point presuma- On the this Federal Zurich. bly upheld having proved him as the truth explanation by testimony AFFIRMED. his as well that, upon to other evidence the effect BRYAN, ALBERT V. Senior Circuit engaged any when with in under- Judge, dissenting: and, indeed, taking, he awas co-worker the same time he had a somewhat similar think, majority, precipitate The I are too separate and related but business of his despica- to Allen of the accuse convict Against proof proffered own. Zurich ble “playing conduct of fast and loose” with except no evidence to cross-examine Allen characterizing the his Court first ad- upon in first his answers case. vantage working relationship with Scruggs as an later employee and maintain- Indeed, majority concede benefit, ing, to his he also vacating n. o. v. Allen’s favorable charged employee. The initial instances are adjudication stand as an allegations in his State court com- employee. Allen was an With this verdict plaint personal against foregoing undisturbed evidence in damages, and in also his statements before mind, accept majority’s difficult to Commission, Carolina South Industrial recovery denial Allen and to do so on he Scruggs’ employ- the effect that “judicial estoppel.” thesis of Inciden- ee. subsequent charged instance is his hinted, tally, no such averment was even testimony in the immediate suit in Dis- advanced, much less trial trict policy, Court recover the Zurich arguments or its written oral denying employee. that he was appeal. arguments All urged briefed or that,

To once is orally be noted at when interro- have been abandoned. Under Carolina, gated trial law upon these contradictions at of South which controls in the Court, case,1 District Allen was evasive or Federal court in this removed clearly see, speak, 1979) (inappropriate 28 U.S.C. does 650 n.18 Cir. where Lavine, e.g., (2d sufficiently developed). Winters v. 574 F.2d 46 issues not 1978), given but the effect to be in federal court attempt legal/factual establish opines majority dispositive 1. The that the con position directly conflicting with one earlier “protection integrity cern is the judicial tribunal, taken in another whether judicial process,” federal concludes state or federal. point. Federal law alone controls this Erie R. latter, we As to think in the final 64, Tompkins, 817, R. 304 v. U.S. 58 S.Ct. 82 analysis, Byrd Ridge Coop., v. Blue Rural Elec. however, (1938), progeny, 1188 L.Ed. and its 525, Inc., 893, U.S. 78 2 356 S.Ct. L.Ed.2d 953 preeminent teach factors to be (1958), would dictate of the federal weighed “discourage in the balance are the recognized any rule here rather than conflict- forum-shopping ineq ment and avoidance of ing, “outcome rule determinative” state of the Hanna v. uitable administration Plumer, laws.” might be found. 460, 468, 1136, 1142, 380 U.S. 85 S.Ct. (1965). Although poli 8 the Federal L.Ed.2d Although ground specifically 5. this was not cy by majority is noted not without some appeal, raised either in the trial court or on we force, yield it must when the choice of a Feder are that under the satisfied circumstances its contrary to al rule necessitates a result relationship directly close contested is- attaining applicable rule. See may properly rely sue of collateral York, Guaranty 99, Trust Co. v. 326 U.S. upon it as an alternative basis for affirmance. 1464, S. Ct. 89 L.Ed. 2079 Miller, generally Wright See A. C. & Federal Coopera- (1973); Byrd Ridge Practice & Procedure: Civil v. Blue Rural Electric cf. Inc., 893, tive, Indemnity Yale National S.Ct. L.Ed.2d F.2d 356 U.S. po- may prejudice without take inconsistent actions, in different as is now

sitions AIRLINES, TEXAS INTERNATIONAL charged INC., Zurich.2 The to Allen insurance Plaintiff-Appellee company preclude Cross-Appellant, be allowed removing action Federal forum. ASSOCIATION OF FLIGHT ATTEND- perti- Additionally, the record discloses ANTS, Defendant-Appellant nent inconsistencies Zurich’s behavior. Cross-Appellee. Having unsuccessfully first defended No. 80-2268. Scruggs in the Court action on its State Appeals, United States Court of that Allen not an plea employee, Fifth Circuit. company now seeks to its

insurance avoid liability pay own Allen’s claim because he Feb. 1982. employee. equities

was an With the in such

parity, poor presents singularly case for proposed

candidate reversal Hicks, Gillespie, Agee, P.C., James & Hal grounds. Dallas, Tex., Gillespie, K. defendant-ap- for injustice startling For me a here. done pellant cross-appellee. fault, work, at without re- While Prashker, City, Herbert New York hand-crushing through ceived blow anoth- plaintiff-appellee, cross-appellant. neglect, monetary er’s and now award suffering theory is stricken under a GEE, REAVLEY, Before GARZA and heard, trial, upon which he was never at Judges. Circuit or sense appeal my otherwise. offends justice. PER CURIAM: of the district court is af-

firmed on the basis of the memorandum Bue, opinion Judge Carl Jr. O. See Airlines, Texas International Inc. v. Associ- Flight Attendants, ation of 498 F.Supp. 437 (S.D.Tex.1980).

AFFIRMED. (1958), contrary position. following pertinent is not to this MacFarlane makes they Supreme There the stressed that did Court statement: “not think the of a different likelihood result argument made in Much is of the fact that strong require practice so as to the federal ... allegations complaint some yield rule in to the state the interest of against earlier defendant in an action are uniformity of Id. outcome.” 78 S.Ct. positions with the inconsistent now taken case, however, pro- In the instant [plaintiff Such can be of MacFarlane]. require posed Federal rule would a different plaintiff, little comfort. The fact that a outcome; uniformity out- “interest lawsuits, may po- different take inconsistent directly jeopardized. come” sitions does not as a matter law bar the recovery. right to Supreme The Court South Carolina recent- opinion at 840. continues to 264 S.E.2d hostility ly displayed its towards the doctrine merely suggest such inconsistencies espoused majority. MacFarlane questions credibility present to be resolved Manly, (S.C.1980). 264 S.E.2d 838 The court jury.

Case Details

Case Name: Grady Allen v. Zurich Insurance Company

Court Name: Court of Appeals for the Fourth Circuit

Date Published: Jan 8, 1982

Citation: 667 F.2d 1162

Docket Number: 80-1665

Court Abbreviation: 4th Cir.