The opinion of the court was delivered by: WOODS
1. Arkansas Power & Light Company is a corporation organized and existing pursuant to the laws of the State of Arkansas with its principal place of business located in Pulaski County, Arkansas.
2. The Home Insurance Company is a foreign corporation existing by virtue of the laws of the State of New Hampshire and is duly qualified to do business in the State of Arkansas.
3. Arkansas Power & Light Company is the successor in interest to Arkansas Missouri Power Company by reason of a merger of the two corporations occurring on January 1, 1981; and by reason of that merger, Arkansas Power & Light Company is the proper party to institute this action.
4. This action is between citizens of different states and involves an amount in controversy in excess of $10,000.00 exclusive of interest and costs.
5. Arkansas Power & Light Company, as well as Arkansas Missouri Power Company prior to the merger, were wholly owned subsidiaries of Middle South Utilities, Inc.
6. Prior to December 31, 1967, Middle South Utilities did not provide combined system-wide liability insurance coverage for all of its operating subsidiaries. Each subsidiary was responsible for procuring and maintaining its own insurance coverage.
7. On or about December 31, 1967, Middle South Utilities, Inc. chose to combine all of the subsidiaries' liability insurance coverage under one policy.
8. In seeking quotes and bids on the combined insurance coverages, Middle South Utilities, Inc. permitted Rebsamen and Associates, of Little Rock, Arkansas, and Charles Harper, an employee of said corporation, to participate in the bidding process.
9. Through Mr. Harper and Rebsamen Insurance, Middle South Utilities purchased an Excess Liability Insurance Contract with the Home Insurance Company providing combined liability coverages for itself and all of its operating subsidiaries.
10. Upon renewal, the Home Insurance Company issued an excess liability policy, #HEC-4165911, for a policy period of January 1, 1972 through January 1, 1975; this policy provided excess liability coverage in the amount of $4,900,000.00 in excess of a self-insured retention of $100,000.00.
11. In January, 1976 the policy was renewed again by policy number HEC-9006949 for a policy period of January 1, 1976 through January 1, 1977 with a self-insured retention of one million dollars. The excess liability policy was renewed again for January 1, 1977 through January 1, 1978 with the same self-insured retention of $1,000,000.00.
12. Paragraph 7 of the excess liability policies defines "occurrence" as one happening or series of happenings arising out of or caused by one event taking place during the terms of this contract.
13. HEC 4165911 was issued January 1, 1972 and was effective through January 1, 1975. This policy provided for a self-insured retention of $100,000 with coverage extending to claims up to $5,000,000.
15. In July of 1974 ARKMO had in its employ an apprentice lineman named Billy Sanders. On July 18, 1974, while in the course of his duties as an ARKMO lineman, Billy Sanders came in contact with an energized 7,200 volt electrical distribution line.
16. On October 1, 1981 Sanders settled his Workers' Compensation Claim by Joint Petition with the Home Insurance Company.
17. On July 14, 1977 Sanders filed a lawsuit in the Circuit Court of Mississippi County, Arkansas against Arkansas Missouri Power Company.
18. In essence, the complaint filed by Sanders alleged that Arkansas Missouri Power Company breached a contract to employ him and pay him his full salary. The complaint prayed for damages as a result of the breach of contract.
19. On March 23, 1979 the Circuit Court of Mississippi County, Arkansas dismissed the complaint filed by Sanders finding that the Arkansas Workers' Compensation Act was not a bar to Sanders' action, but that Sanders' complaint did not state sufficient facts to establish valid consideration for an enforceable contract.
20. Sanders appealed the lower court decision to the Arkansas Court of Appeals, and on January 9, 1980 the Arkansas Court of Appeals reversed the lower court decision. The Appellate Court found sufficient facts pled in the complaint to establish a jury question on the issues of promissory estoppel and detrimental reliance.
21. On April 12, 1982 the action filed by Sanders against Arkansas Missouri Power Company was tried in the Circuit Court of Mississippi County, Arkansas, and the jury returned a verdict for Sanders in the amount of $1,099,043.77.
22. The evidence at the trial in support of the damages incurred by Sanders was based upon the testimony of an economist who calculated the amount of lost wages from the date of the breach of the contract to the date of future retirement.
23. The liability instructions given by the court at the trial were based on contract theory, detrimental reliance and promissory estoppel. The damage instructions given by the court at trial were based upon the value of salary and benefits lost in the past and the value of salary and benefits reasonably certain to be lost in the future.
24. On or about August 2, 1982, the judgment entered in favor of Sanders in the Mississippi County litigation was settled and released in consideration of the payment of the sum of $700,000.00 by Arkansas Power and Light Company as the successor corporation to Arkansas Missouri Power Company.
25. Soon after the complaint was filed by Sanders in July, 1977, a representative of Arkansas Missouri Power Company sent to Rebsamen Insurance Company a copy of the complaint along with the recommendations of Ark-Mo's attorney who was handling the case. Rebsamen Insurance ...