Corlett v. Smith

• Decision Date: 26 July 1988
• Docket Number: Nos. 8766,10309,s. 8766
• Citation: 107 N.M. 707,1988 NMCA 67,763 P.2d 1172
• Parties: Jere CORLETT, Personal Representative of the Estate of Harry S. Bishop, Deceased, Plaintiff-Appellee, v. Larry SMITH, Personal Representative of the Estate of Hadroudj Djeandi Bishop, Deceased, Defendant-Appellant.
• Court: Court of Appeals of New Mexico

Page 1172

763 P.2d 1172

107 N.M. 707

Jere CORLETT, Personal Representative of the Estate of Harry S. Bishop, Deceased, Plaintiff-Appellee, v. Larry SMITH, Personal Representative of the Estate of Hadroudj Djeandi Bishop, Deceased, Defendant-Appellant.

Nos. 8766, 10309.

Court of Appeals of New Mexico.

July 26, 1988.

[107 N.M. 708] James E. Thomson, Santa Fe, for plaintiff-appellee.

Carl J. Butkus, Terry R. Guebert, Civerolo, Hansen & Wolf, P.A., Albuquerque, for defendant-appellant.

OPINION

MINZNER, Judge.

Defendant Larry Smith (Smith), personal representative of the estate of Hadroudj Bishop (wife), originally appealed a jury award of $93,000 for wrongful death in favor of plaintiff Jere Corlett (Corlett), personal representative of the estate of Harry S. Bishop (husband). See Corlett v. Smith, 106 N.M. 207, 740 P.2d 1191 (Ct.App.1987). The complaint for wrongful death alleged that wife negligently operated her motor vehicle in the garage of the residence and that carbon monoxide traveled into the bedroom where husband was sleeping, causing his death.

BACKGROUND.

Prior to trial, Smith moved to dismiss the complaint, alleging the claim had not been properly presented within the time limits established by NMSA 1978, Section 45-3-803. At the hearing on that motion, no record was made. The trial court denied the motion.

In our prior opinion, we concluded that Corlett bore the burden of establishing the timely presentation of his claim. Because there was no record, it was not established whether the claim ultimately depended upon the existence of liability insurance, including either a household policy or automobile insurance policy insuring against the negligence of wife. The trial court's order denying Smith's motion to dismiss did not disclose the basis for the decision. After oral argument, this court issued a formal opinion remanding the case for a determination of whether "specific insurance protection exists so as to bring the wrongful death claim of husband's estate within the statutory exception contained in [NMSA 1978,] Section 45-3-803(C)(2)." See Corlett v. Smith, 106 N.M. at 211, 740 P.2d at 1195.

Although we ordered the trial court to enter an amended judgment, a more appropriate procedure would have been to remand only for additional findings of fact. See Russell v. University of N.M. Hosp./BCMC, 106 N.M. 190, 740 P.2d 1174 (Ct.App.1987). In substance, there is only one appeal.

On remand, the trial court filed amended findings and conclusions and entered an amended judgment in favor of Corlett. Specifically, the trial court found:

4. On the date of death and for all material time prior, for the purpose of this action, there were two existing policies of insurance * * * that contained provisions for the protection of [wife] against claims for bodily injury under the liability portions of each policy. Both policies of insurance were in effect at the time of death of [husband].

5. Each * * * had limits of liability for damages up to $300,000.00.

The court concluded that "[s]pecific insurance protection exist[ed] so as to bring the wrongful death claim of [husband] within the statutory exception contained in Section 45-3-803(C)(2)."

By order of this court, Smith filed a second notice of appeal from the amended judgment. We consolidate both appeals, and we affirm.

ISSUES.

In the original appeal, Smith raised six issues. Smith argued that:

I. The trial court lacked subject matter jurisdiction because Corlett failed to comply with Section 45-3-803, which requires timely filing of all claims made against an estate;

II. Corlett was required by NMSA 1978, Section 37-2-1 to prove husband predeceased wife, and did not do so;

III. Corlett failed to present substantial evidence of the cause of husband's death; and

IV. Corlett failed to present substantial evidence that wife was negligent.

Smith also contended the trial court erred in:

V. Permitting testimony and argument to the jury on loss of household services; and

VI. Refusing to allow Smith to present evidence of property the statutory beneficiaries would receive under husband's will.

In his appeal on remand, Smith raises several issues that are related to the argument that the trial court lacked subject matter jurisdiction. We discuss those issues first and under that heading.

DISCUSSION.

I. DID THE TRIAL COURT ERR IN REFUSING TO DISMISS THE CASE FOR LACK OF SUBJECT MATTER JURISDICTION BECAUSE CORLETT FAILED TO COMPLY WITH NMSA 1978, SECTION 45-3-803, WHICH REQUIRES TIMELY FILING OF ALL CLAIMS MADE AGAINST THE ESTATE?

The filing provisions in Section 45-3-803(A) and (B) apply only to claims against the estate; claims that will be paid by insurance are not considered to be claims against the estate. Sommermeyer v. Price, 198 Colo. 548, 603 P.2d 135 (1979) (En Banc). "[T]he [insurance] proceeds are not available to the general creditors or beneficiaries of the estate. Moreover, the claims of the plaintiffs to be satisfied by the insurance proceeds do not affect the interests of the beneficiaries under the estate and thus present no obstacle to an orderly and exact administration of the estate." Id., 198 Colo. at 552, 603 P.2d at 138.

A failure to file within the statutory period bars only the right to enforce any liability of the estate beyond the limits of the insurance policy. The action itself is not barred. Kent Ins. Co. v. Estate of Atwood, 481 So.2d 1294 (Fla.App.1986). Although a liability insurance contract is an asset of the estate, it creates a contractual right which vests only when the liability claim against the insured ripens into judgment. Tank v. Peterson, 214 Neb. 34, 332 N.W.2d 669 (1983). Thus, Corlett was free to pursue his claim against the estate if he sought a judgment that he ultimately might collect from the insurance company. Cf. Torrez v. State Farm Mut. Auto. Ins. Co., 705 F.2d 1192 (10th Cir.1982) (cause of action for wrongful failure to settle claim within policy limits did not accrue until wrongful death judgment against tortfeasor's estate was final).

Smith argues that the trial court was ordered on remand to determine the actual insurance coverage possessed by wife. He contends that the suit must therefore be dismissed, because the insurance company was an indispensable party to a determination of coverage but was not joined. See SCRA 1986, 1-019(B). Smith also contends that Corlett did not present enough proof to make a prima facie showing of insurance coverage at the hearing on remand; that the district court erred in construing the contracts of insurance; and that the district court invaded the province of this court by some of its findings.

In this case, both policies contained a provision that no suit would lie against the company unless the amount of the insured's obligation to pay had been finally determined by judgment against the insured after actual trial or by written agreement. Under these circumstances, we cannot conclude that the insurance company claims an interest in the subject of the action. Cf. R. 1-019(A)(2).

Section 45-3-803(C)(2) waives the timely filing requirement of subsections 803(A) and (B) for "any proceeding to establish liability of the decedent * * * for which he is protected by liability insurance." (Emphasis added.) The statute does not mention any determination of the nature or extent of any future liability of the insurance company. If the existence of protection for the purposes of Section 45-3-803(C) does not require a definitive statement of (1) whether the insurance company will eventually have to pay a claim, (2) the nature of the coverage, or (3) the extent of the actual coverage, then complete relief may be granted without the presence of the insurance company. Cf. R. 1-019(A)(1). Coverage may, however, be determined at this point, if the insurance company is a party. See In re Estate of Daigle, 634 P.2d 71 (Colo.1981) (En Banc).

We hold that, for the purposes of the Probate Code, "protection" should be considered the potential right to payment of a claim against the insurance company. A determination of whether potential coverage exists can be made in the absence of the insurance company. This interpretation will not impede the efficient and orderly administration of the estate of the insured because, on these facts, it is clear that the claim has been made in order to establish liability rather than to collect against the estate.

The policies themselves were entered into evidence; they show limits of $300,000 and contain provisions that arguably cover wife's liability. This supports a finding of potential coverage, which supports the trial court's conclusion that the insurance exception applied. We do not address defendant's argument that plaintiff failed to make a prima facie showing of coverage, because only a showing of protection was necessary. See Uniform Probate Code Sec. 3-803(c), 8 U.L.A. 355 (1983) comment ("Tort claims normally will involve casualty insurance of the decedent * * * and so will fall within [this] exception.").

Smith also objects to certain of the trial court's findings as exceeding the scope of the mandate to the extent these findings determine coverage. We note that in reviewing all issues of indispensable parties raised for the first time on appeal, an appellate court may properly require suitable modification as a condition of affirmance. Cf. Kroblin Refrigerated Xpress, Inc. v. Pitterich, 805 F.2d 96 (3d Cir.1986) (an appellate court must consider the fact that a judgment binding on the parties has already been reached after extensive litigation). This furthers the interests of the courts and the public in complete, consistent, and efficient settlement of controversies.

Even if a finding of fact or conclusion is erroneous, if it is unnecessary to the court's decision, the mistake is not a basis for reversal. Newcum v. Lawson, 101 N.M. 448, 684 P.2d 534 (Ct.App.1984). Only findings by the trial court of ultimate...