Arrow Const. Co., Inc. v. Camp

• Decision Date: 04 March 1992
• Docket Number: No. 91-135,91-135
• Citation: 827 P.2d 378
• Parties: ARROW CONSTRUCTION CO., INC., Appellant (Plaintiff), v. Leslie W. CAMP, Appellee (Defendant).
• Court: Wyoming Supreme Court

Page 378

827 P.2d 378

ARROW CONSTRUCTION CO., INC., Appellant (Plaintiff), v. Leslie W. CAMP, Appellee (Defendant).

No. 91-135.

Supreme Court of Wyoming.

March 4, 1992.

William L. Hiser of Brown, Erickson & Hiser, Rawlins, for appellant.

Gary R. Scott of Hirst & Applegate, Cheyenne, for appellee.

Before URBIGKIT, C.J., and THOMAS, CARDINE, MACY and GOLDEN, JJ.

CARDINE, Justice.

Arrow Construction Company, Inc. (Arrow) sued Leslie W. Camp (Camp) for breach of contract and negligence for Camp's procurement of a policy of health insurance for Arrow's employees, which policy was canceled because Arrow was ineligible for coverage. Arrow appeals the trial court's entry of summary judgment for Camp.

We affirm.

Appellant states the issues as follows:

"I. Does an employer, who agrees to provide group health insurance coverage to its employees, pursuant to an employment contract, have a cause of action against the insurance agent, with whom the employer contracted to procure such insurance, when the insurance agent, through his negligence or breach of contract, fails to procure such insurance?

"II. If the answer to No. I is yes: does the employer's purchase of an individual policy, on behalf of an employee, in an attempt to mitigate the losses incurred by that employee, which were to have been covered by the group policy the agent was to procure, affect the employer's cause of action?

"III. If the answer to No. II is yes: are there material issues of fact relating to the terms of the employment contract, the insolvency of the company issuing the individual policy, the issuance and terms of the individual policy and other damages suffered by the appellant which preclude summary judgment in this case?"

The facts from this abbreviated record are extracted from uncontroverted statements in the pleadings and from exhibits attached to appellee's motion for summary judgment. Where appellee failed to provide evidence to refute allegations contained in appellant's complaint, we have adopted these unrefuted allegations. Petersen v. Campbell County Memorial Hospital Dist., 760 P.2d 992, 995 (Wyo.1988).

Appellant Arrow is a Wyoming corporation whose principal place of business is in Rawlins. Arrow provides health insurance coverage for its supervisory personnel as part of their compensation package. Arrow does not have a written contract of employment or a written contract obligating it to provide insurance to these employees. Until October 15, 1988, Arrow had a group health insurance policy in effect with Continental Life and Accident (Continental). Sometime in 1988, Arrow's president, Michael Blaine Hickman (Hickman), became concerned about the increase in the premiums on the Continental policy. Shortly before the expiration date of the policy, he contacted appellee Camp, an insurance agent licensed to do business in Wyoming.

Camp agreed to search for a less expensive group health insurance policy to replace the Continental policy. Camp and Hickman discussed Arrow's health insurance needs, its number of employees, and type of business. Also discussed was the pre-existing medical condition (cancer) of one of Arrow's supervisory employees, Jerry H. Pittenger. Appellant claims that Camp agreed to obtain a policy which would cover Mr. Pittenger's pre-existing condition. Camp denies making such an agreement. This disputed fact was not material as to prevent entry of summary judgment.

Camp recommended a policy through the First Farwest Group Insurance Trust (First Farwest). Someone (the record is not clear who) filled out a "Request for Participation" in the First Farwest plan which Hickman signed on October 5, 1988. This document stated that seven of the eight eligible Arrow employees would be enrolled in the plan. On October 17, 1988, First Farwest notified Arrow that its coverage had been approved effective October 1, 1988.

Relying on the new First Farwest coverage, Arrow allowed its coverage with Continental to lapse on October 15, 1988. First Farwest provided coverage to Arrow's covered employees from October 1, 1988, through December 31, 1988. During this time period, Arrow paid premiums to First Farwest; and Mr. Pittenger filed a claim, at least a portion of which First Farwest later paid.

In early November 1988, First Farwest notified Arrow that it was canceling its policy effective December 31, 1988. The reason given was that the plan under which Arrow was enrolled allowed coverage only for an employer with no more than 15 to 20 employees. Arrow had more than 15 to 20 employees, although it provided health insurance only to its supervisory personnel. Arrow also learned at this time that First Farwest had filed for bankruptcy.

Arrow could have renewed its policy with Continental but pre-existing conditions would not have been covered. Arrow complained to the State Insurance Commissioner about First Farwest's conduct in canceling its policy. The Insurance Commissioner persuaded First Farwest to continue coverage for Mr. Pittenger. Arrow obtained coverage for its other supervisory employees through Blue Cross, Blue Shield commencing effective April 1 or May 1, 1989 (the exact date is unclear from the record).

Arrow paid First Farwest premiums of about $300.00 per month from January 1989 until Pittenger's death. Mr. Pittenger died in November 1989. First Farwest has never paid any of Mr. Pittenger's claims for this time period, and Arrow never received a written policy for the individual coverage from First Farwest. Hickman stated he believed the claims were not paid because First Farwest had filed bankruptcy. At the time Hickman was deposed in February 1991, he estimated that these unpaid claims amounted to between $10,000.00 and $20,000.00.

At some point early in 1989, Arrow began sending Mr. Pittenger's wife $250.00 per month in order to assist her with Mr. Pittenger's unpaid medical bills. Arrow continues to send this amount each month. Mrs. Pittenger has not threatened Arrow with legal action because of the failure of First Farwest to pay her husband's claims.

On September 6, 1990, Arrow filed this action in district court against Camp seeking damages for breach of contract to procure insurance and negligent failure to obtain adequate group coverage. Camp moved for summary judgment, which the trial court granted on April 29, 1991. The court reasoned that summary judgment was proper because (1) having no legal obligation to pay Mr. Pittenger's medical bills, Arrow had not suffered loss, and (2) assuming Arrow did suffer damage, these damages were caused by the insolvency of First Farwest, for which Camp could not be held liable. Arrow took timely appeal from the trial court's order.

Our standard of review of the trial court's entry of summary judgment for Camp is as follows:

" 'We review a summary judgment in the same light as the district court, using the same materials and following the same standards. Summary judgment is proper only when there are no genuine issues of material fact and the prevailing party is entitled to judgment as a matter of law.' " Clark v. Industrial Co. of Steamboat Springs, Inc., 818 P.2d 626, 628 (Wyo.1991) (citations omitted) (quoting Zmijewski v. Wright, 809 P.2d 280, 282 (Wyo.1991)).

Also,

" '[a] motion for summary judgment places an initial burden on the movant to make a prima facie showing that no genuine issue of material fact exists and that summary judgment should be granted as a matter of law. Rule 56(c), Wyoming Rules of Civil Procedure. Once a prima facie showing is made, the burden shifts to the party opposing the motion to present specific facts showing that a genuine issue of material fact does exist. We analyze challenges to a grant of summary judgment by reviewing the record in a light most favorable to the party opposing the motion giving him all favorable inferences that can be drawn from the facts. Conclusory statements or mere opinions are insufficient, however, to satisfy an opposing party's burden.' " TZ Land & Cattle Co. v. Condict, 795 P.2d 1204, 1208 (Wyo.1990) (citations omitted) (quoting Boehm v. Cody Country Chamber of Commerce, 748 P.2d 704, 710 (Wyo.1987)).

We have held that an insurance broker or agent who undertakes, for compensation, to procure insurance for another and who through fault or neglect fails to do so, will be held liable for any damage resulting from his failure to exercise reasonable care. Hoiness-LaBar Ins. v. Julien Const. Co., 743 P.2d 1262, 1273 (Wyo.1987), quoting Hursh Agency, Inc. v. Wigwam Homes, Inc., 664 P.2d 27, 32 (Wyo.1983). The measure of damages in such an action is "that amount which would have been recovered had the insurance been furnished as agreed." Action Ads, Inc. v. Judes, 671 P.2d 309, 312 (Wyo.1983).

It is undisputed that Camp undertook for compensation to provide Arrow with employment coverage for Arrow's employees and that the policy he provided was not proper for Arrow. However, the party who brings a suit for failure to provide insurance must also prove resulting damages. Arrow's complaint asserts no direct harm personal to itself. Instead, Arrow theorizes that had Camp obtained a valid group health insurance policy, Mr. Pittenger would have received insurance proceeds sufficient to cover his $15,000.00 in outstanding, unpaid medical bills. To the objection that these damages are Mr. Pittenger's and his estate is the proper party to bring an action for them, Arrow responds that it is a proper party for two reasons. First, Arrow claims, Pittenger was a third-party beneficiary of Arrow's contract with Camp, which makes Arrow eligible to sue on the contract in his behalf. Second, Arrow argues, this suit is brought as an action for indemnification for its own liability for failing to provide health insurance to Pittenger under the terms of his employment contract with Arrow. We shall address Arrow's second argument first, as it was the primary theory of relief pled at the trial court level.

Arrow...