Christianson v. Conrad-Houston Ins.

• Decision Date: 21 February 2014
• Docket Number: No. S–14305.,S–14305.
• Parties: Todd CHRISTIANSON, individually and d/b/a Great Alaska Lawn and Landscaping, Inc., Appellant, v. CONRAD–HOUSTON INSURANCE, Appellee.
• Court: Alaska Supreme Court

318 P.3d 390

Todd CHRISTIANSON, individually and d/b/a Great Alaska Lawn and Landscaping, Inc., Appellant,

v.CONRAD–HOUSTON INSURANCE, Appellee.

No. S–14305.

Supreme Court of Alaska.

Feb. 21, 2014.

Kevin T. Fitzgerald, Ingaldson, Maassen & Fitzgerald, P.C., Anchorage, for Appellant.

Thomas A. Matthews and Kenneth G. Schoolcraft, Jr., Matthews & Zahare, P.C., Anchorage, for Appellee.

Before: FABE, WINFREE, and STOWERS, Justices, and EASTAUGH, Senior Justice.^*

OPINION

EASTAUGH, Senior Justice.

I. INTRODUCTION

When Keith Jones sued Todd Christianson for severe personal injuries Jones suffered while working for Christianson's landscaping business, Christianson tendered his defense to his general liability insurer. It did not accept his tender. It instead sent him a letter that told him he should defend himself and that discussed an exclusion for claims of employees. Christianson then began to incur defense expenses. No insurer on the policies obtained by Christianson's insurance broker, Conrad–Houston Insurance (CHI), ever defended him in Jones's lawsuit. Nearly four years after receiving the insurer's letter, Christianson sued CHI for malpractice. After conducting an evidentiary hearing, the superior court applied the discovery rule and dismissed the malpractice lawsuit because it was filed after the applicable three-year statute of limitations had run. The superior court ruled that because the insurer's letter put Christianson on inquiry notice he might have a claim against CHI, the statute of limitations had begun to run more than three years before Christianson sued CHI. Because the superior court did not clearly err and committed no legal error, we affirm.

II. FACTS AND PROCEEDINGSA. Facts

Todd Christianson owns and has owned a number of past and current Alaska businesses.¹ He incorporated Great Alaska Lawn and Landscaping (GALL) in 1992, but it was involuntarily dissolved in 2002. He started Titan Topsoil, Inc. in 1995, and started Titan Enterprises LLC in 2002. Titan Enterprises performed many of the same services GALL had performed. At all times, Christianson was the sole owner of both Titan entities. We refer to the two Titan entities collectively as “Titan.”

In 2003 Christianson approached Mike Dennis, an agent at CHI, and sought insurance. A different brokerage firm had obtained insurance for Christianson's businesses in 2002. Christianson later testified that when he talked to Dennis, he “was looking for complete insurance on all my commercial entities that needed insurance.” He testified that he expected the broker to “get the information, find out about my business and make sure I'm covered.” He asserts in his appellate reply brief that he expected CHI to obtain insurance covering “all liabilities and potential liabilities” for his landscaping business. It appears that CHI understood that it was primarily responsible for obtaining insurance covering Titan. Christianson admitted when his deposition was taken that he owned entities that he did not insure through CHI. But he also testified that he provided Dennis with information about GALL, titles and registration on his vehicles, and “all [his] past [commercial insurance] policies,” including GALL's. CHI's Titan file included a list of vehicle registrations; the file listed at least two vehicles registered to GALL, including the truck pertinent here. CHI knew when the insurance was placed that Christianson's business used a piece of equipment known as a hydroseeder or hydromulcher. We refer to it here as a “hydroseeder” for consistency with the superior court decision we are reviewing.

CHI obtained three policies insuring Titan: a workers' compensation policy from AIG, a general liability policy from Great Divide Insurance Company, and an auto policy from Cascade National Insurance Company. The three policies took effect in April and May of 2003. Christianson was an insured under the two liability policies.

Keith Jones was an employee of Titan. In June 2003 Jones was severely injured in a work-related accident with the hydroseeder being used by Titan. The hydroseeder was owned by GALL, but was “on loan” to Titan. It was mounted on a truck most recently registered to GALL. Because GALL's assets were subject to a federal tax lien at the time, Christianson had not transferred them to Titan. Titan reported the accident to CHI, and Titan's workers' compensation insurer, AIG, was notified. AIG then provided workers' compensation benefits to Jones.

On September 14, 2004 Jones filed a personal liability lawsuit against the manufacturer of the hydroseeder (Bowie Industries, Inc.) and Christianson individually and doing business as GALL. Titan was not a defendant. As to Christianson, the lawsuit alleged negligence in transferring the hydroseeder to Titan, loaning a defective hydroseeder to Titan, making modifications to the hydroseeder that contributed to its defects, and failing to warn Jones of the inherent dangers involved in operating the machinery. Christianson contacted his lawyer, and Christianson's defense in Jones's personal injury claim was tendered to Titan's general liability insurer, Great Divide.

Great Divide replied to the tender by letter dated September 24, 2004. The letter was addressed to Christianson and Titan; it stated that Great Divide was investigating the claim and that, in the interim, Christianson would have to file an appropriate response to Jones's lawsuit and pay for his own defense. The letter stated that should Great Divide determine that it did have a duty to provide coverage or a defense, Christianson would be reimbursed for the reasonable fees and costs of his defense. The letter then referred to and quoted the policy's exclusion of coverage for claims of bodily injury to an employee of the insured. The letter stated that “[s]hould it be determined or confirmed through the investigation ... that Keith Jones was an employee of Titan Enterprises, LLC ... at the time of the incident, Great Divide Insurance Company may refuse to defend or indemnify you for this matter.” Although Great Divide did not then, or ever, agree to defend Christianson or reimburse his defense costs with respect to the Jones lawsuit, the letter asserted that Great Divide was reserving all its rights under its policy.

Christianson soon began personally incurring legal fees in defending himself in the Jones lawsuit.

In March 2006, about 18 months later, Great Divide sent Christianson a letter denying coverage and filed a complaint in federal court seeking a judgment declaring that its policy did not cover Christianson for Jones's claims. In November 2006 Dennis's deposition was taken in Great Divide's declaratory judgment action. Dennis took CHI's Titan file to the deposition and agreed that it contained a list of vehicle registrations that Dennis would use “to create an application with.” Dennis also testified that if Christianson was using GALL vehicles in his Titan business, CHI should have told Christianson to register them to Titan. He agreed that auto coverage listing only Titan as an owner might well exclude liability coverage for GALL. Asked whether, because some of the vehicles appeared to be owned by GALL, CHI attempted to make sure GALL was an insured, he answered, “no.”

The Jones personal injury trial was scheduled to begin in August 2007. In March 2007 Christianson tendered defense of the Jones lawsuit to Titan's auto insurer, Cascade National.² In July 2007 the federal court declared that Great Divide's policy did not cover Jones's claims against Christianson. That same month, Christianson tendered his defense in Jones's personal injury lawsuit to CHI. CHI declined the tender. In October Cascade National, the auto insurer, filed a declaratory judgment complaint against Christianson; in November Cascade National obtained a declaration of no coverage.

The Jones personal injury trial eventually commenced in February 2008. Christianson and GALL prevailed at trial. The superior court entered a directed verdict for Christianson and the jury returned a verdict for GALL. This court later reversed the defendants' judgments.³

B. Malpractice Lawsuit Against CHI

Christianson sued CHI on August 6, 2008. His complaint alleged that CHI and Dennis breached their professional duty of care in exposing him to the costs of litigation and the risk of an uninsured judgment, and therefore caused him “to spend money in his own defense.” It also alleged that Christianson had incurred over $100,000 in attorney's fees in defending against Jones's claims and the insurers' declaratory judgment actions. CHI's answer denied liability. In 2010 CHI moved for summary judgment, arguing that Christianson's malpractice action was barred by AS 09.10.053 because the statute of limitations began to run more than three years before Christianson sued CHI in August 2008. CHI argued that the statute had begun to run no later than October 2004, after Christianson was sued, was informed that it was questionable whether the insurance policies CHI had obtained for Titan would cover the Jones lawsuit, and began incurring attorney's fees. Christianson's opposition argued that a genuine issue of material fact existed as to when he discovered the elements of his claim against CHI. Christianson did not contend that the doctrine of equitable tolling applied.

Before deciding CHI's summary judgment motion, Superior Court Judge Frank A. Pfiffner held an evidentiary hearing to determine when the statute of limitations began to run. The court heard the testimony of Christianson and his lawyer, reviewed exhibits that included passages from Dennis's deposition, and read Christianson's deposition. The court granted CHI's summary judgment motion after making findings of fact about the contents and effect of the September 24, 2004 letter and what information Christianson would have learned had he then made an inquiry. The court made the following findings about the letter and its effect:

O...