Libbey-Owens-Ford Company v. Insurance Company of North America

DAVID A. NELSON, Circuit Judge,

concurring.

I agree that we must affirm the judgment in favor of the insurance company, but I reach that conclusion by a somewhat different route.

It seems to me that the insured party, LOF, probably did preserve its argument that the policy’s wear and tear exclusion was inapplicable. LOF objected to the failure to give its requested jury instructions, and Requested Instruction No. 4 would have directed the jury “to disregard all of the terms and provisions of the Policy which mention exceptions, or exclusions of coverage.” The instruction would then have gone on to say in so many words that “[tjhose terms and provisions do not apply in this case.”

In addition to objecting to the trial court’s failure to charge that none of the policy’s exclusions was applicable, LOF lodged a general objection to the instructions that were given insofar as such instructions were inconsistent with those that had been requested. And LOF then tugged at the hem of the trial court’s robe as hard as it needed to, in my view, when it made the following very specific objection to the content of the court’s instructions: “First, we object to the inclu*431sion of the Court’s instruction on wear and tear, which we contend is not a theory that ought to be in the case.” (Emphasis supplied.)

LOF’s real problem is not that it failed to preserve this contention, but that the contention has no merit. The applicability of the wear and tear exclusion was clearly a question for the jury, and the framework in which the trial court’s instructions presented the question clearly passed muster under the language of the insurance contract.

The trial court identified three issues in the relevant portion of its charge. First, the jury was told, LOF bore the burden of proving “direct physical loss and damage to the # 1 float glass furnace.... ” This instruction was proper under paragraph 5 of the policy. Second, the jury was told, the insurance company bore the burden of proving its affirmative defense — the defense that the loss was the result of “wear and tear, deterioration, rust, corrosion or erosion_” This instruction was proper under the exclusion contained in paragraph 7(d). Third, the jury was told, the affirmative defense was subject to an exception (as to which the burden of proof rested on LOF) for wear and tear “caused directly by physical damage....” This instruction was likewise proper under paragraph 7(d) of the policy.

The jury was then told that its verdict should be for plaintiff LOF if it found that LOF had proved direct physical damage and that the insurance company had failed to prove its affirmative defense. If the jury found that the affirmative defense had been proved, on the other hand, it was told that its verdict should be for the defendant.

The trial court’s three-step instructions were not simply a matter of marching up the hill and down again. The jury could well have found that although the detachment of the breastwall constituted direct physical damage to LOF’s property, it also constituted wear and tear not itself caused by physical damage. LOF tried to show that the breastwall would not have become detached if careless repairmen had not physically damaged the supporting steelwork, but the jury was entitled to find — and presumably did find — that the detachment of the breastwall constituted wear and tear caused by the operation of the furnace rather than by negligent répair work.

I say that this is “presumably” what the jury found; the qualification is necessary because the special verdict form allowed the jury to decide in favor of the defendant on the basis of only two interrogatories. “If your answer [to Interrogatory No. 2, which asked whether the problem with the breast-wail was caused by wear and tear] is Tes,’ ” the jury was told, “it will not be necessary for you to answer any of the remaining interrogatories.” Perhaps it would have been better if the verdict form had asked the jury to answer a third interrogatory: whether the wear and tear was caused by physical damage. LOF did not request that such an interrogatory be included, however,' and in view of the jury instructions described above, I am comfortable with the conclusion that by answering Interrogatory No. 2 in the affirmative, the jury was saying that the defendant should win on its affirmative defense; the defendant should win, in other words, because the damage that was found to have occurred constituted wear and tear not caused by physical damage to the steelwork.

LOF argues on appeal that the wear and tear exclusion was inapplicable to loss caused directly by physical damage. The policy did, to be sure, afford LOF coverage for wear and tear caused directly by physical damage, but we have no reason at all to suppose that the jury considered the wear and tear on the south breastwall to have been caused by anything other than the normal operation of the furnace. The jury’s finding of direct physical loss for purposes of paragraph 5 cannot be equated with a finding of causation for purposes of paragraph 7(d).