Ammerman v. Farmers Ins. Exchange
| Decision Date | 25 July 1967 |
| Docket Number | No. 10574,10574 |
| Citation | 19 Utah 2d 261,430 P.2d 576 |
| Parties | d 261 Edward Wilson AMMERMAN, by his guardian ad litem, LaVerne Bruce Ammerman, and Eddie Soliz, Plaintiffs and Respondents, v. FARMERS INSURANCE EXCHANGE Defendant and Appellant. |
| Court | Utah Supreme Court |
Don J. Hanson, Salt Lake City, for appellant.
Kipp & Charlier, McKay & Burton, Salt Lake City, for respondents.
This case is a sequel to Soliz v. Ammerman, 1 in which the plaintiff recovered a judgment for $15,282 for injuries and damages resulting from an automobile collision at the intersection of Second West and 200 North Streets in Salt Lake City in June of 1962. Ammerman's insurer (defendant Farmers Insurance Exchange) had engaged in unsuccessful negotiations to settle that action and had defended Ammerman at the trial, and after the adverse jury verdict and judgment had paid the plaintiff Soliz the amount of its policy limit of $10,000.
This suit was instigated by Soliz against the defendant insurance company to recover the $5,280 balance of his judgment in addition to the $10,000 it has paid him. He bases his claim here on the allegation that in the prior case the company exercised bad faith in failing to protect Ammerman when it rejected Soliz's offer to accept $9.000 to settle his claim against Ammerman before trial. His position is that if that offer had been accepted it would have left Ammerman free of any further concern or liability on the claim. Just why Soliz should have such solicitude for Ammerman's welfare would normally arouse one's curiosity, except for the obvious cupidity involved. It is part of a pivotal problem presented in this case by defendant's contention that Soliz was improperly permitted to be a party plaintiff. In order to get to the heart of this issue it is essential to look through superficialities to analyze the practical realities of the situation.
The payment by defendant of the amount of its policy is the only payment that has been made on the judgment. Ammerman, the one who would be injured by defendant's alleged wrong in refusing to settle, has not suffered any out of pocket loss. Although his name appears as a co-plaintiff, he has not manifested any active interest or concern with this case. It was instituted by the attorneys who represented Soliz against Ammerman in the prior action. Ammerman's attorney appeared only at the beginning of the trial and then departed. Ammerman himself has not appeared either in the lower court or here. There is no indication that the attorney's for Soliz, who presented the case both in the lower court and on appeal, represent anyone other than Soliz. These facts seem to indicate quite definitely the correctness of the defendant's contention that the moving force in initiating and carrying on the present action is the plaintiff Soliz. It is therefore appropriate that we direct attention to the issues as they exist between the real parties in interest, Soliz and the defendant.
In assessing the claimed right of Soliz to take this cause of action for himself the first problem presented is that at the time of the alleged wrong by the defendant company it had no privity of contract with Soliz and therefore owed him no duty, so there could be no breach thereof. 2 Moreover, it is difficult to see how it caused him any damage. He is in the anomalous position of saying to the defendant: You have done me wrong by rejecting my offer to accept $9,000 in settlement. As a result, I obtained $10,000 and a judgment for $5,280. Inasmuch as he actually received more than he would have from the settlement, as between himself and the insurance company, he does not show any damage, which is usually considered to be an essential element of a cause of action. 3
Soliz seeks to avoid the requirement of proving damage by urging that even though not damaged himself, as Ammerman's creditor, he is in effect a third-party beneficiary of Ammerman's claim against the defendant insurance company. But that position still confronts him with this dilemma: either the cause of action is vested in him or it is not. If it is not, he has no basis upon which to sue. If the cause of action is his, then he is met with the difficulty discussed above concerning his damage.
Co-ordinate to the problem just discussed in impelling the conclusion we have reached is the proposition that Soliz, merely because he is Ammerman's creditor, cannot appropriate to himself a tort claim Ammerman may have against the defendant insurance company. The policy does provide that:
Whenever judgment is secured against the insured * * * (bodily injury--property damage) * * * an action may be brought against the company on the policy and subject to its terms and limitations, by such judgment creditor * * *
If the action were on the policy it would be subject to its limitations, i.e., the $10,000 face of the policy, which has been paid. But the cause of action for bad faith, though arising because of the policy, is not, strictly speaking, an action on the policy. Its effect is to override the provision limiting coverage, and it is properly regarded as a separate cause of action for a wrong done to the insured by violating a fiduciary duty owed him. 4
The general rule is that a judgment creditor has no right to appropriate a tort claim of his debtor. It is not the policy of the law to encourage litigation. Even if a party has been wrongfully injured there may be any number of personal reasons why he woudl prefer to let the matter drop than to bring a lawsuit. The privilege of deciding whether to do so should be up to him and not up to some third party to inject his interest into the matter.
For the foregoing reasons we can see no sound basis upon which Soliz could maintain this suit. Consequently the trial court was in error in overruling the defendant's objection to him as a party plaintiff. Furthermore, in the present status of this case it would seem manifestly unfair to permit the judgment to stand undisturbed as to the nominal plaintiff Ammerman who has not actually been in the action. If so, Soliz could benefit therefrom and accomplish indirectly what he could not do directly and thus circumvent the rules hereinabove discussed which prevent him from taking and maintaining this cause of action for himself. 5
In view of the fact that the proceedings both in the district court and on appeal have been concerned only with the rights of the plaintiff Soliz by reason of which it has been found necessary to remand this action sustaining the defendant's objection to him as a party plaintiff, and because other contentions made are on appeal, certain further observations are...
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