Fetch v. Quam

• Decision Date: 07 March 2001
• Docket Number: No. 20000256.,20000256.
• Citation: 623 N.W.2d 357,2001 ND 48
• Parties: Greg FETCH, Personal Representative of the Estate of Waylin Fetch, Plaintiff and Appellant, v. Kelly M. QUAM, Defendant, v. American Hardware Mutual Insurance Company, Intervenor and Appellee.
• Court: North Dakota Supreme Court

623 N.W.2d 357

2001 ND 48

Greg FETCH, Personal Representative of the Estate of Waylin Fetch, Plaintiff and Appellant, v. Kelly M. QUAM, Defendant, v. American Hardware Mutual Insurance Company, Intervenor and Appellee.

No. 20000256.

Supreme Court of North Dakota.

March 7, 2001.

Deborah J. Carpenter, Carpenter Law Offices, Bismarck, ND, for plaintiff and appellant.

David E. Reich, Pearce & Durick, Bismarck, ND, for intervenor and appellee.

KAPSNER, Justice.

[¶ 1] As personal representative of the estate of Waylin Fetch, Greg Fetch appeals the district court's summary judgment for American Hardware Mutual Insurance Company ("American Hardware") and order dismissing Fetch's complaint that American Hardware breached an implied covenant of good faith and fair dealing with Fetch. We affirm.

I

[¶ 2] On May 31, 1988, Waylin Fetch was driving a motorcycle which collided with a pickup driven by Kelly Quam, resulting in a fractured vertebra in Fetch's neck. Fetch hired an attorney within days of the accident. In March 1989, American Hardware, the insurance provider for Fetch's father whose policy covered Fetch, settled the property damage claim on Fetch's motorcycle. In April 1990, American Hardware received notification that Fetch was now represented by a different attorney. Fetch commenced a personal injury lawsuit against Quam in November 1990, seeking $450,000 damages. Quam was uninsured at the time of the accident and did not answer the complaint. In December 1990, American Hardware filed a motion to intervene, as a provider of uninsured motorist coverage to Fetch under his father's insurance policy.

[¶ 3] In August 1991, Fetch filed a motion to amend the complaint against Quam to add a bad faith claim against American Hardware for "unreasonably and arbitrarily denying coverage to [Fetch] and by intervening in this lawsuit and defending [Quam], with whom they have no contractual or other relationship."

[¶ 4] In September 1991, the district court determined Quam was in default and allowed Fetch to amend his complaint, but severed the bad faith action against American Hardware until Fetch's claim against Quam was resolved. The court also limited American Hardware's appearance to the questions of whether there was negligence on the part of Quam and the extent and amount of damages resulting from the accident. Since Quam was in default, the district court decided contributory negligence would not be in issue at the hearing, because it is an affirmative defense which is waived if not raised by an answer.

[¶ 5] Waylin Fetch died from leukemia in October 1991. His brother and personal representative, Greg Fetch, was substituted as plaintiff in the lawsuit.

[¶ 6] In March 1994, after the restricted default hearing, the district court entered judgment for Fetch against American Hardware in the amount of $125,000 for Fetch's injuries, pain, and suffering and $10,697 for Fetch's medical costs. On appeal, we reversed and remanded in Fetch v. Quam, 530 N.W.2d 337 (N.D. 1995), concluding American Hardware was an intervenor of right and should have been allowed to show comparative fault by Fetch. On remand, a jury found Fetch 40% at fault for the accident and Quam 60% at fault. The jury awarded Fetch $30,000 in damages. After allocation based on fault, judgment was entered for $18,000, and American Hardware paid the judgment within six weeks.

[¶ 7] Fetch filed a motion in April 1999 to reinstate the severed bad faith claim against American Hardware, arguing American Hardware breached its implied covenant of good faith and fair dealing by unreasonably and arbitrarily denying coverage to Fetch and by intervening in Fetch's lawsuit against Quam and defending Quam. The district court permitted Fetch to proceed and set the trial date for July 2000. In May 2000, American Hardware moved for summary judgment, which the district court granted and dismissed Fetch's bad faith complaint. The district court ruled American Hardware's intervention was not evidence of bad faith because this Court had already determined the intervention was proper. The court rejected Fetch's bad faith claim that American Hardware failed to deliver a copy of the insurance policy for a period of days and failed to negotiate a settlement in good faith. The district court held, as a matter of law, an insurance company is not guilty of bad faith for denying a claim when the claim is fairly debatable or if there is a reasonable basis for denying the claim or delaying payment. The court found that over the years American Hardware had made offers of settlement in line with the verdict. In addition, the court determined Fetch did not present any information suggesting American Hardware improperly denied coverage, investigated in bad faith, or fraudulently induced Fetch to delay filing a motion for default judgment against Quam; moreover, the trial court noted, those arguments were anticipated by American Hardware and effectively refuted. Fetch appeals.

II

[¶ 8] Summary judgment is a procedure for promptly and expeditiously resolving a controversy, without a trial, if the evidence shows there is no genuine issue as to any material fact, or the inferences to be drawn from undisputed material facts, and if the evidence shows any party is entitled to a judgment as a matter of law. See Mandan Educ. Ass'n v. Mandan, Pub. Sch. Dist. No. 1, 2000 ND 92, ¶ 6, 610 N.W.2d 64

; see also N.D.R.Civ.P. 56(c). Summary judgment is also appropriate if only questions of law are involved or if the law is such that resolving disputed facts will not change the result, because the facts in issue are not material facts. Umpleby v. State, 347 N.W.2d 156, 159 (N.D.1984). Issues of fact may become issues of law if reasonable persons could reach only one conclusion from the facts. Mandan, at ¶ 6. The evidence presented must be viewed in the light most favorable to the party opposing the motion, who must be given the benefit of all favorable inferences which reasonably can be drawn from the evidence. Id. Whether the trial judge properly granted summary judgment is a question of law which is reviewed de novo. Garofalo v. Saint Joseph's Hosp., 2000 ND 149, ¶ 6, 615 N.W.2d 160.

[¶ 9] The party seeking summary judgment bears the initial burden of showing there is no genuine dispute regarding a material fact. Grinnell Mut. Reinsurance Co. v. Farm & City Ins. Co., 2000 ND 163, ¶ 18, 616 N.W.2d 353. In response, the party opposing the motion may not simply rely on unsupported and conclusory allegations or denials in the pleadings but must set forth specific facts showing there is a genuine issue for trial. Id.; see also N.D.R.Civ.P. 56(e). The opposing party must present competent admissible evidence, by affidavit or other comparable means, which raises a question of material fact. Grinnell, at ¶ 18; see also Norwest Mortgage., Inc. v. Nevland, 1999 ND 51, ¶ 4, 591 N.W.2d 109

(determining affidavits which contain conclusory statements, unsupported by specific facts, are insufficient to raise a material factual dispute). If appropriate, the opposing party must draw the court's attention to relevant evidence in the record by setting out the page and line in the evidence raising the material fact issue, because neither the trial court nor appellate court has a duty to search the record for evidence opposing the motion for summary judgment. Smith v. Land O'Lakes, Inc., 1998 ND 219, ¶ 10, 587 N.W.2d 173.

III

[¶ 10] Fetch argues the trial court erred in granting American Hardware's motion for summary judgment because there was a genuine issue about material facts, as the record shows American Hardware acted in bad faith by denying insurance coverage in an effort to hinder Fetch's filing of a claim; intervening in the lawsuit between Fetch and Quam, which created a conflict of interest; investigating in bad faith by procuring witnesses against its own insured; delaying action on the claim in an attempt to avoid liability; refusing to pay Fetch's medical bills until ordered to do so; failing to negotiate a settlement in good faith; and serving untimely a motion for summary judgment. Fetch asserts these actions by American Hardware were so numerous as to establish they were pervasive in American Hardware's handling of Fetch's insurance claim.

A

[¶ 11] Fetch argues there is a material factual dispute that American Hardware acted in bad faith by unreasonably and arbitrarily denying Fetch had insurance coverage for his motorcycle and by failing to give Fetch a copy of the policy until he was out of the hospital, which hindered Fetch in filing his claim for personal injuries and property damage. Fetch also contends American Hardware acted in bad faith by refusing to pay Fetch's medical bills after a court determination of liability and damages until ordered to do so.

[¶ 12] An insurer has a duty to act fairly and in good faith in its contractual relationship with its policyholders. Hanson v. Cincinnati Life Ins. Co., 1997 ND 230, ¶ 29, 571 N.W.2d 363. This duty of good faith imposed on an insurer, which has its genesis in the contractual relationship between the insurer and its policyholders, is implied by law to include a duty of fair dealing in paying claims, providing defense to claims, negotiating settlements, and fulfilling all other contractual obligations. See generally Midwest Cas. Ins. Co. v. Whitetail, 1999 ND 133, ¶ 9, 596 N.W.2d 341

; Hanson, at ¶ 29; Dvorak v. Am. Family Mut. Ins. Co., 508 N.W.2d 329, 331-32 (N.D.1993); N.D.C.C. § 26.1-04-03 (listing unfair methods of competition and defining unfair or deceptive practices in the insurance business including unfair claim settlement practices if performed with a frequency indicating a general business practice).¹ The gravamen of the test for bad faith is whether the insurer acts unreasonably in handling an insured's claim. Hanson, at ¶ 29. Whether an insurer has acted in bad faith is ordinarily a factual question to be determined by the...