Amica Mut. Ins. Co. v. Schettler
| Citation | 768 P.2d 950 |
| Decision Date | 12 January 1989 |
| Docket Number | No. 870488-CA,870488-CA |
| Court | Court of Appeals of Utah |
| Parties | AMICA MUTUAL INSURANCE COMPANY, Plaintiff and Respondent, v. Carl F. SCHETTLER, Defendant and Appellant, Carl F. SCHETTLER, Third-Party Plaintiff and Appellant, v. James M. BLACK and Barbara J. Black d/b/a Black, Nichols & Guiver; R. Lamar Guiver; and National Automobile Theft Bureau, Third-Party Defendants and Respondents. |
Before BILLINGS, JACKSON and ORME, JJ.
This case is before this Court as a consolidation of three appeals, Docket Nos. 870488-CA, 880032-CA, and 880038-CA. Generally, appellant Carl F. Schettler ("Schettler") appeals from a summary judgment dismissing his counterclaim and third-party complaints on the merits. Schettler also appeals the entry of his default as a sanction for failing to comply with court-ordered discovery and the awarding of compensatory and punitive damages to respondent, Amica Mutual Insurance Company ("Amica"). Finally, he appeals the trial court's refusal to set aside the default judgment. Schettler requests this Court to reverse all of the trial court's orders. We affirm the trial court's summary judgment order, entry of default judgment against Schettler, and refusal to set aside Schettler's default, but except to the extent of $6,925, we vacate the general damage award and the punitive damage award, and remand for further proceedings consistent with our opinion.
In July, 1981, a 1980 Dodge owned by Schettler and insured by Amica was damaged in an accident. As a result of the accident, Schettler's automobile was taken to Pioneer Dodge in Salt Lake City for repair. After repairs were completed, Schettler submitted a final bill to Amica, which Amica paid in full directly to Schettler.
In May, 1982, Schettler removed the automobile from Pioneer Dodge without Pioneer's authorization and without paying for the repair work. Several weeks later, Pioneer hired an independent tow service to recover possession of the automobile from Schettler's home in Salt Lake City.
On June 9, 1982, Schettler reported his automobile stolen to the Salt Lake County Sheriff's Department. Based on a conversation with Schettler, the reporting deputy listed no suspects in his police report.
Subsequently, Pioneer Dodge and Schettler exchanged several letters which indicated Pioneer had the automobile, and Schettler knew of this fact. On June 11, 1982, Schettler's attorney wrote a letter to Pioneer Dodge offering to negotiate payment for the repairs made by Pioneer. In another letter, the manager of Pioneer Dodge instructed Schettler to pick up his automobile by June 15, 1982, or Pioneer would assess storage costs. In a letter dated June 17, 1982, Pioneer notified Schettler that due to his failure to make payment, the automobile would be sold at a public auction. However, Schettler contends that both of Pioneer's letters were returned unclaimed due to an incorrect address.
Additionally, Pioneer Dodge's manager testified at Schettler's criminal trial that within "one or two days" after retaking possession of the automobile, he received a telephone call from Schettler wherein Schettler identified himself as "Carl" and asked whether or not Pioneer Dodge had his automobile. Pioneer's manager responded, "Carl, you know we have your car." Schettler responded by hanging up.
On June 22, 1982, Schettler submitted a written claim to Amica for the loss of his automobile. On July 9, 1982, Amica issued a check in the amount of $6,925 in satisfaction of the total loss claimed by Schettler for his "stolen" automobile. Schettler accepted and negotiated the check as a complete settlement of his claim. In return, Schettler gave Amica the title to the 1980 Dodge.
Amica, by notice dated October 26, 1982, advised Schettler that his insurance would be cancelled for nonpayment of premiums effective November 8, 1982. No extension was requested by Schettler, and his contract of insurance with Amica was terminated on or about November 10, 1982.
On December 29, 1982, Detective Mortensen of the Salt Lake County Sheriff's Department notified Amica that the department had located Schettler's automobile and that Pioneer Dodge was selling the automobile at a public auction. The detective informed Amica that the sheriff's office had begun a criminal investigation as a result of the discovery.
Detective Mortensen also contacted third-party defendant, National Automobile Theft Bureau ("NATB"), a nation-wide service for locating stolen automobiles. NATB was notified because following Schettler's stolen automobile claim, Amica sent a written report to inform NATB that Schettler's automobile had been reported stolen.
After Amica received notice the automobile had been located, it contacted third-party defendant, Black, Nichols & Guiver 1 ("Black & Guiver"), its local adjusting agency, to investigate the matter.
Eventually, Schettler was arrested and charged with insurance fraud. On October 3, 1984, the Fifth Judicial Circuit Court conducted a preliminary hearing and determined that probable cause existed that Schettler had committed insurance fraud and, therefore, bound Schettler over for a criminal trial. A jury subsequently found Schettler not guilty.
On April 26, 1985, Amica filed this action to recover the $6,925 paid to Schettler for the loss of his automobile plus punitive damages. In its amended complaint, Amica alleged fraud, misrepresentation, breach of contract, and conversion against Schettler based on the facts set forth above.
In response to Amica's complaint, Schettler filed a counterclaim against Amica and identical third-party complaints against Black & Guiver and NATB based on theories of insurer bad faith, malicious prosecution, abuse of process, defamation, intentional infliction of emotional distress, and negligence.
On November 3, 1986, the trial judge entered its order granting Amica's, Black & Guiver's, and NATB's motions for summary judgment dismissing Schettler's counterclaim and third-party complaints. The trial judge also granted Amica's motion to strike various affidavits apparently submitted in opposition to the motions for summary judgment. 2
On November 4, 1986, Schettler moved for summary judgment on Amica's complaint. This motion was denied on January 5, 1987.
On November 6, 1986, Amica filed a motion to compel production of documents and answers to interrogatories, originally requested in March of 1986. Amica's earlier discovery requested personal state and federal tax returns, personal and business financial records, flooring agreements, correspondence, business reports, copies of tape recordings, personal and business net worth statements, and balance sheets. Amica claimed that most of the documents were relevant to the recovery of punitive damages.
On December 1, 1986, Schettler served Amica with his response to Amica's request for production of documents principally consisting of an application for extension of time to file his 1984 federal tax return, four personal financial statements prepared for various financial institutions, and one residential property appraisal of Schettler's home.
In its order dated January 5, 1987, after finding Schettler's response unsatisfactory, the court directed Schettler to fully respond to Amica's discovery request within two weeks. Schettler made no further response. Consequently, on January 28, 1987, Amica moved for sanctions pursuant to Rule 37(b) of the Utah Rules of Civil Procedure for Schettler's failure to comply with the court's discovery order.
Schettler did not file a response to Amica's motion for sanctions. On February 23, 1987, the trial court struck Schettler's answer to Amica's complaint and entered his default on the grounds that no justifiable excuse was offered by Schettler for his failure to comply with the court's discovery order. In its February 23 order, the court preserved the original March 10 trial date but limited the issue to the damages to be awarded Amica on its complaint.
On February 25, 1987, Amica withdrew its original demand for a jury trial, and requested a fact-finding hearing on the issue of damages pursuant to Rule 55(b)(2) of the Utah Rules of Civil Procedure. Amica contended the entry of default vitiated the need for a jury trial. Schettler disagreed and on March 3, 1987, demanded a jury trial on the issue of damages.
On March 10, 1987, the trial court denied Schettler's jury demand, and instructed the parties to submit affidavits on the issue of damages. Amica submitted its memorandum, supporting affidavits, and excerpts from depositions to support its request for damages. Amica's response consisted of over 200 pages which included the affidavit of Ronald Rosenthal, Amica's representative, substantiating that the attorney fees paid to date on the case were $79,548.10.
In response to Amica's affidavits, Schettler submitted his memorandum in opposition and one affidavit by Phil Hansen, his current attorney, asserting that attorney fees were not recoverable as damages and that the punitive damages and attorney fees claimed were excessive.
The following evidence was also before the trial court at the time it considered both the entry of default as a sanction and the amount of general and punitive damages: (1) Schettler's attorney, Ed Flint, misrepresented himself to Pioneer Dodge's manager as an attorney for an insurance company in a dispute with Schettler; (2) a court reporter testified that Schettler attempted to intimidate witnesses Mr. and Mrs. Reuel Ware at their depositions by threatening litigation on a prescriptive easement if they testified; (3) attorney, Ed Flint, attempted to intimidate witnesses Mr. and Mrs. Smith to prevent them from giving their depositions in the case; (4)...
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