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Gullett v. St. Paul Fire & Marine Ins. Co.

July 16, 1971


Kiley and Cummings, Circuit Judges, and Campbell, Senior District Judge.*fn1

Author: Kiley

KILEY, Circuit Judge:

This is a diversity suit to recover for damage to plaintiffs' building insured against loss by defendant insurance company. Judgment for $15,000 was entered on the jury's verdict*fn2 and defendant has appealed. We affirm.

Plaintiffs' brick veneer and concrete building in Elizabethtown, Hardin County, Illinois, was occupied by a United States Post Office. About three feet slightly "up" from the north side of the building and running parallel to it was an eighty-two year old retaining wall made of "large rocks or boulders." It was approximately seventy-eight feet long, two and a half feet thick, and twelve feet high. Behind this wall to the north and abutting against it was an embankment of earth level on top and about the same height as the wall. On January 29, 1969, around 11:15 p.m., rocks from portions of the wall crashed into the building causing serious damage.

The vital jury question was whether the damage to the building was caused by "falling objects" or "collapse of building" and thus covered by the terms of a rider to the policy;*fn3 or whether it was caused by a "landslide or any other earth movement" and excluded from coverage.*fn4 On defendant's motion, the court submitted a special verdict asking the jury to decide these questions.*fn5 The jury answered that the damage was caused by falling objects or collapse of building; that it was not caused or aggravated by, was not contributed to, and did not result from a landslide or any other earth movement; and returned its verdict for plaintiff.


Defendant moved at trial for directed verdict at the close of plaintiffs' evidence, and again at the close of all the evidence. The court denied the motions and also denied defendant's subsequent motion for judgment notwithstanding the special verdict. The defendant contends that the rulings were erroneous and argues that the only reasonable inference from the evidence is that the loss was caused by a landslide moved by surface or underground water and accordingly excluded under the policy. We disagree.

The Circuits are in conflict as to whether a state or a federal standard applies to test rulings on motions for directed verdicts or judgments notwithstanding verdicts in diversity cases.*fn6 The disagreement stems from the substance-procedural dichotomy of Erie R.R. v. Tompkins, 304 U.S. 64, 82 L. Ed. 1188, 58 S. Ct. 817 (1938).

This court has traditionally applied the state standard. Wieloch v. Rogers Cartage Co., 290 F.2d 235, 237-38 (7th Cir. 1961). That policy was reaffirmed several months ago in Illinois State Trust Company v. Terminal R.R. Assoc., 440 F.2d 497 (1971). Illinois substantive law controls this action, and the pertinent law was changed in 1967 in Pedrick v. Peoria & E.R.R., 37 Ill.2d 494, 229 N.E.2d 504 (1967), where the court stated:

37 Ill.2d at 510, 229 N.E.2d at 513-14.

Thus, under the current Illinois rule*fn7 the district court's denial of appellant's motions was correct unless upon all of the evidence viewed in its aspect most favorable to the plaintiffs the testimony favoring the defendant is so overwhelmingly against plaintiffs that a verdict for them cannot stand. The crucial fact question at trial was whether the rocks fell first from disintegration of mortar and pressure of the earth and the earth then pushed the rocks, or whether the earth, moved by rain water, forced the wall to collapse and the collapse caused the rocks to crash onto the building.

The record contains non-expert testimony that the rock wall was somewhat above plaintiffs' building; that there was an "above normal" rainfall two or three days before the event with "considerable" water issuing between the rocks in the wall; that there was about a six inch bulge in the center of the length of the wall starting halfway up and going to the top; that plaintiffs had spoken to defendant's representative Rutherford about their fear of "the wall falling on us" and the response was that the rider would be added to the policy to "take care of it if the wall fell;" and that portions of the wall fell on the building.

There is no substantial contrariety in the expert testimony for both parties about the condition of the rock wall. Examination of the eighty-two year old rock retaining wall, after the event, showed the wall had weakened; the mortar sealing the large rocks had deteriorated in the "area that failed;" there were openings between rocks especially at the top where the mortar was "in pretty bad shape . . . washed out . . . and in some places . . . patched . . . on the outside with plaster." The wall had "very little strength;" all that held the rocks in place was their own weight, and it would not, in an engineering sense, qualify as a retaining wall.

Defendant argues that the overwhelming evidence is that "surface water" played some part in causing the wall to fall. There is testimony that rain water in the street a block below plaintiffs' building was about a foot deep; that the two or three day rainfall was "above normal;" that the earth behind the wall was wet and damp; and that the rain added weight against the wall. In light of the ejusdem generis rule,*fn8 we do not consider this testimony as proof of "surface water," as that term is used in exclusion (2). Furthermore, with respect to "water underground" in exclusion (4), the testimony ...

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