Abbie Uriguen Oldsmobile Buick, Inc. v. U.S. Fire Ins. Co.
Decision Date | 03 July 1973 |
Docket Number | No. 11226,11226 |
Citation | 511 P.2d 783,95 Idaho 501 |
Parties | ABBIE URIGUEN OLDSMOBILE BUICK, INC., a corporation, Plaintiff-Appellant, v. UNITED STATES FIRE INSURANCE COMPANY, Defendant-Respondent. |
Court | Idaho Supreme Court |
Paul M. Beeks, of Kramer, Plankey, Smith & Beeks, Twin Falls, for appellant.
R. B. Rock, of Moffatt, Thomas, Barrett & Blanton, Boise, for respondent.
This case results from an insurance company's denial of policy coverage for punitive damages. The insured brought this action seeking recovery of attorneys fees incurred as a result of the company's prospective denial of the punitive damage claim. Summary judgment was entered in favor of the company. We reverse.
The first question presented herein is whether an insurance company is obligated, under a blanket automobile liability policy, to provide coverage of punitive damage claims arising out of an automobile accident; or whether, conversely, public policy in Idaho precludes such coverage. The second issue is whether the company's prospective denial of coverage against the punitive damage claim was a breach of the insurance contract which entitled the insured to retain his own counsel and thereafter recover his attorneys fees.
On May 27, 1970 one George Green, Jr. was driving an automobile owned by Abbie Uriguen Oldsmobile, Inc. Joe Uriguen was a passenger in the car. The automobile was involved in an accident in which two persons were severely injured.
Those injured brought suits against Green, Joe Uriguen, doing business as J & U Auto Sales, and Abbie Uriguen Oldsmobile, Inc. alleging that Green was operating the automobile 'in a negligent, heedless and reckless manner while under the influence of intoxicating liquor'; that Green was driving the automobile with the permission of the Abbie Uriguen Corporation; and that the Uriguen Corporation had 'full knowledge of the fact that the defendant George Green, Jr. was driving under the influence of intoxicating liquor at the time he was given permission to drive said automobile.'
Joe Uriguen's relationship to this accident is obscure, to say the least, since he is alleged to be a resident of Cassia County, Idaho and operating an automobile sales business in the City of Burley in Cassia County, while Abbie Uriguen Oldsmobile, Inc., is alleged to be a corporation with its principal place of business in Twin Falls, Idaho. Joe Uriguen is not alleged to be an owner of the automobile but only a passenger; however, it is alleged that the automobile was being used for 'business purposes' of Joe Uriguen.
We note that the two law suits by the injured persons arose out of substantial injury to them because the record reveals that the law suits were settled for $39,500. The record is somewhat ambiguous regarding the amount of the claim for punitive damages asserted in those actions; it is either $50,000 or $150,000.
Uriguen Corporation tendered the defense of the two suits to its liability insurance carrier, defendant-respondent U. S. Fire Insurance Co., Inc. U. S. Fire's attorney wrote Uriguen Corporation that while U. S. Fire would provide a full defense to the two law suits it would not cover any awards of punitive damages. The letter states:
(Emphasis supplied)
Uriguen thereafter retained its own legal counsel to guard its interests regarding the punitive damage claims. Correspondence was exchanged between attorneys for U. S. Fire and Uriguen Corporation. A motion to dismiss and strike the allegations of the complaint relating to punitive damages was denied. Counsel for U. S. Fire wrote:
'This is to inform you that we will continue to diligently defend your client, but, in the event punitive damages are awarded, it will be necessary for Mr. Uriguen to pay those out of his own pocket since they will not be paid by his liability insurance carrier.
Later, counsel for U. S. Fire wrote counsel for Uriguen Corporation:
'Pursuant to our telephone conversation of today, you will find enclosed herewith a copy of a letter dated August 6th which we have today received from counsel for plaintiff in the above matter.
'If you have any thoughts on how best to conduct the case from this point, we would be happy to discuss it with you at a mutually convenient time.'
Later still, counsel for U. S. Fire wrote counsel for Uriguen Corporation:
U. S. Fire settled both suits in November of 1971. That settlement did not specifically set forth any allocation between actual or punitive damages but merely released all defendants 'of and from all claims, demands, actions or causes of action, judgments, costs, both known and unknown which the undersigned have or may hereafter have on account of, or in any way growing out of a certain accident * * *.'
Uriguen Corporation then brought the instant action seeking to recover its attorneys fees on the theory that U. S. Fire violated I.C. § 41-1839 when it prospectively denied any liability for any award which might be made for punitive damages. 1 The district court entered summary judgment for U. S. Fire on the grounds that I.C. 41-1839 did not apply; that Uriguen was not in any sense obliged to retain additional legal counsel, and, that the entire issue of U. S. Fire's obligation to cover punitive damage claims was mooted by the settlement of the two suits against Uriguen.
At the time of the accident Uriguen Corporation was covered by a U. S. Fire policy containing the following pertinent provision:
'The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of
Coverage C. bodily injury or
Coverage D. property damage
to which this insurance applies, caused by an occurrence and arising out of the ownership, maintenance, or use, including loading or unloading, of any automobile . . .'
We note that such policy provision is identical with policy provisions in cases which we will discuss herein. This case focuses on U. S. Fire's prospective denial of any coverage of a punitive damage award. We consider first Uriguen's assertion that the trial court erred in adopting U. S. Fire's contention that public policy forbids insurance coverage of punitive damage awards.
This is a question of first impression in Idaho. There are only a few cases dealing with this question in other jurisdictions and the courts have sharply divided regarding public policy on insuring against punitive damages.
Idaho follows the majority view that the public purpose behind punitive damages is both to punish and to deter. Cox v. Stolworthy, 94 Idaho 683, 496 P.2d 682 (1972); Boise Dodge, Inc. v. Clark, 92 Idaho 902, 453 P.2d 551 (1969); Jolley v. Puregro Co., 94 Idaho 702, 496 P.2d 939 (1972). We note, however, that none of such cases are applicable to the situation at bar since all were based on deliberate and intentional acts of the tortfeasor. For example in Jolley the acts were 'deliberate, wilful, malicious and intentional and for the sole purpose of harassing.'
There is authority that punitive damage awards are covered by automobile liability insurance. For example, in 7 Appleman, Insurance Law and Practice, § 4312 (1972 Supp.) it is stated:
...
To continue reading
Request your trial-
Hettwer v. Farmers Ins. Co. of Idaho
...between the parties, and hence must be construed most strongly against the insurer. Abbie Uriguen Olds. Buick, Inc. v. United States Fire Ins. Co., 95 Idaho 501, 511 P.2d 783 (1973); Stephens v. New Hampshire Ins. Co., 92 Idaho 537, 447 P.2d 14 (1968); Scharbach v. Continental Cas. Co., 83 ......
-
Moss v. Mid-American Fire and Marine Ins. Co.
...between the parties, and hence must be construed most strongly against the insurer. Abbie Uriguen Olds. Buick, Inc. v. United States Fire Ins. Co., 95 Idaho 501, 511 P.2d 783 (1973); Stephens v. New Hampshire Ins. Co., 92 Idaho 537, 447 P.2d 14 (1968); Scharbach v. Continental Cas. Co., 83 ......
-
First Nat. Bank of St. Mary's v. Fidelity & Deposit Co.
...S.W.2d 582 (1969); Greenwood Cemetery v. Traveler's etc. Co., 238 Ga. 313, 232 S.E.2d 910 (1977); Abbie Uriguen Olds. Buick, Inc. v. United States F. I. Co., 95 Idaho 501, 511 P.2d 783 (1973); Continental Insurance Companies v. Hancock, 507 S.W.2d 146 (Ky.1974); Colson v. Lloyd's of London,......
-
Hartford Cas. Ins. Co. v. Powell
...Cas. Ins. Co. v. Daniel, 246 Ark.849, 440 S.W.2d 582 (1969) (vicarious liability)); Idaho (Abbie Uriguen Oldsmobile Buick, Inc. v. United States Fire Ins. Co., 95 Idaho 501, 511 P.2d 783, 789 (1973) (adopting the Lazenby approach)); Kentucky (Continental Ins. Cos. v. Hancock, 507 S.W.2d 146......
-
Punitive damages: when, where and how they are covered.
...or exemplary damages unless specifically included." Idaho Abbie Uriguen Oldsmobile Buick Inc. v. United States Fire Insurance Co., 511 P.2d 783 (Idaho 1973) (punitive damages were covered by automobile policy; coverage did not violate public United States Fidelity & Guaranty Co. v. Open......
-
SPECIFIC PERFORMANCE: ON FREEDOM AND COMMITMENT IN CONTRACT LAW.
...Supp. at 1241). (193) Bayview Loan Sen-icing, LLC v. Alessi & Koenig, LLC, 5 F. Supp. 3d 1218, 1220 (D. Nev. 2014) (citing Watkins, 511 P.2d at 783); see also Miller v. LeSea Broadcasting, Inc., 87 F.3d 224, 230 (7th Cir. 1996). New Zealand's Court of Appeals has taken a similar positio......