Foremost Ins. Co. v. Putzier

• Court: Idaho Supreme Court
• Writing for the Court: DONALDSON; BAKES, McFADDEN and BISTLINE, JJ., and HARGRAVES
• Citation: Foremost Ins. Co. v. Putzier, 100 Idaho 883, 606 P.2d 987 (Idaho 1980)
• Decision Date: 21 February 1980
• Docket Number: Nos. 12800,12823,s. 12800
• Parties: FOREMOST INSURANCE COMPANY, Plaintiff, Counter-Defendant, Cross-Defendant and Respondent, v. Harold PUTZIER and Bob Crandall, Defendants, Counter-Claimants, Cross-Claimants and Appellants, and Antonio R. Guanche, Defendant, Counter-Claimant, Cross-Claimant and Respondent, and O. K. Swenson, Darrell Clark, Brent Hunter, Lee J. Brindley, Twin Falls Jaycees, Inc., and Marion Swenson, Defendants, Cross-Defendants and Respondents, and Stanley Associates, Cross-Defendant, Cross-Claimant and Respondent, and Virginia Dane, Personal Representative of the Estate of Dudley C. Dane, deceased, Virginia Dane, and Sheriff Paul Corder, Cross-Defendants and Respondents, and Robert C. KNIEVEL, also known as Evel Knievel, and Snake River Canyon Enterprises, Inc., Defendants, Counter-Claimants Cross-Defendants, Cross-Claimants, Third Party Plaintiffs and Appellants, v. FIDELITY MARKETING CORPORATION and Cardell W. Smith, Third Party Defendants, Cross-Defendants and Respondents.

Page 987

606 P.2d 987

100 Idaho 883

FOREMOST INSURANCE COMPANY, Plaintiff, Counter-Defendant, Cross-Defendant and Respondent, v. Harold PUTZIER and Bob Crandall, Defendants, Counter-Claimants, Cross-Claimants and Appellants and Antonio R. Guanche, Defendant, Counter-Claimant, Cross-Claimant and Respondent and O. K. Swenson, Darrell Clark, Brent Hunter, Lee J. Brindley, Twin Falls Jaycees, Inc., and Marion Swenson, Defendants, Cross-Defendants and Respondents and Stanley Associates, Cross-Defendant, Cross-Claimant and Respondent and Virginia Dane, Personal Representative of the Estate of Dudley C. Dane, deceased, Virginia Dane, and Sheriff Paul Corder, Cross-Defendants and Respondents, and Robert C. KNIEVEL, also known as Evel Knievel, and Snake River Canyon Enterprises, Inc., Defendants, Counter-Claimants Cross-Defendants, Cross-Claimants, Third Party Plaintiffs and Appellants, v. FIDELITY MARKETING CORPORATION and Cardell W. Smith, Third Party Defendants, Cross-Defendants and Respondents.

Nos. 12800, 12823.

Supreme Court of Idaho.

Feb. 21, 1980.

Susan Porter-McClard of Webb, Burton, Carlson, Pedersen & Paine, Twin Falls, for Putzier and Crandall.

James T. Jones, Jerome, for Knievel and Snake River Enterprises.

John A. Doerr and Kevin F. Trainor, Twin Falls, for Foremost Ins. Co.

DONALDSON, Chief Justice.

This action arose in connection with the events surrounding the September 9, 1974 attempt by Robert C. Knievel, a/k/a Evel Knievel, to jump the Snake River Canyon near Twin Falls, Idaho on a jet powered motorcycle. As a prerequisite to his use of the land required for the event, Knievel and Snake River Enterprises, Inc. (the entity by which Knievel undertook the event) were required to secure a land use permit from the State of Idaho and a license from Twin Falls County.

Paragraph 8 of the State Department of Lands Temporary Land Use Permit (defendant Knievel's exhibit 3) provided:

"8. The permittee is required to maintain comprehensive public liability insurance covering his operations under the permit in the following minimum amounts:

(a) $300,000.00 for bodily injury to any one person and $1,000,000.00 for any one occurrence.

(b) $100,000.00 for property damage for any one occurrence.

(c) The permittee shall cause the State of Idaho, Jerome County, Ray Lickley and the L L Breckenridge Co. to be named as additional insureds under this policy and shall submit a certificate from an insurer on or before August 20, 1974, that such insurance has been obtained, is in force, and that the insurer will give the State of Idaho ten days notice prior to cancellation or modification of such insurance. Additional insureds shall not be responsible for payment of premiums."

Paragraph 3 of the Twin Falls County License provided "3. That the licensee shall obtain a minimum amount of liability insurance of $100,000.00 for the injury or death of a single person, $1,000,000.00 for injury or death resulting from any one accident and property damage of not less than $25,000.00, which policy shall include coverage jointly for Twin Falls County, Idaho."

For the purpose of obtaining the insurance required by the permit and license, Knievel's attorneys entered into negotiations with one Cardell Smith, a vice-president of the Fidelity Marketing Corporation insurance brokerage. In the course of the negotiations Smith dictated a letter to Knievel's attorney through the attorney's secretary. The letter read in part:

"Dear Mr. May:

Effective 8-27-74 Fidelity Insurance Group is writing a comprehensive general liability policy on the following named insured and also the following additional insureds. The named insured: Snake River Canyon Enterprises, Inc., Evel Knievel, individually."

The letter then named several additional insureds, stated that "the policy is a comprehensive general liability covering all named insureds and additional insureds," and set the total premium at $9,600. Under the heading "Coverage" the letter set out the dollar limits and stated "Exclusion on all participants (security guards, motorcycle riders, etc.)." Thereafter, Knievel's attorney sent Smith the following:

"Dear Cordell:

Enclosed is the $9600 check for the insurance policy as we discussed in my office Friday.

It is my understanding the certificate of insurance is being mailed to those who need them today, and that we will receive a letter as to how the claims will be handled and related matters, the first of the week, together with the policy itself. . . ."

These negotiations culminated in the issuance by Foremost Insurance Company to Knievel and Enterprises of an insurance policy, which policy was later superseded by a second policy, effective August 28, 1974. Attached near the middle of the 29 separate pages of the second policy was an exclusion designated G332 which provided:

"It is agreed that the insurance does not apply to bodily injury or property damage arising out of riot, civil commotion or mob action or out of any act or omission in connection with the prevention or suppression of any of the foregoing."

There was conflicting testimony as to whether this was read by or discussed with Knievel's attorneys.

Knievel attempted the jump September 4, 1974. During the preceding day or two, numerous unknown individuals damaged or destroyed the goods and equipment of Harold Putzier and Bob Crandall, each of whom was a concessionaire at the time. Putzier and Crandall filed an action against Knievel and Enterprises to recover compensation for their damages. Knievel's original counsel tendered defense of the action to Foremost pursuant to a provision in the policy. Foremost then instituted an action for declaratory judgment, seeking a declaration that, pursuant to exclusion G332, it was not liable on the policy for the damage incurred by the concessionaires. Named as defendants in the declaratory judgment action were Putzier, Crandall, Knievel, and Enterprises, among others. The two actions were apparently consolidated, but by stipulation of the parties the action was bifurcated and trial was had only on the issues of Foremost's liability under the insurance policy and the allocation of attorney fees. The trial court held the exclusion valid in all respects; that the damage sustained by Putzier and Crandall fell within the exclusion, thereby relieving Foremost of liability for the damage; and that Foremost was liable to Knievel and Enterprises for attorney fees incurred in defending against the property damage claims of Putzier and Crandall, but not for attorney fees incurred in representation on the issue of presence or absence of policy coverage. Knievel and Enterprises bring one appeal from that judgment, as do Putzier and Crandall. The two appeals present similar issues and contentions and are consolidated here. We affirm.

The first issue presented is whether the trial court erred in finding the exclusion valid and applicable, thereby defeating appellants' claim of policy coverage. Appellants initially contend the parties entered into a valid contract for comprehensive general liability coverage prior to the issuance of the policy itself. In their view, the exclusion in the subsequently issued policy was at variance with the contract earlier negotiated, and therefore constituted a modification to which there was no agreement. Respondent Foremost agrees that a contract for liability coverage was negotiated by its agent and Knievel's attorneys. However, the parties are in sharp disagreement on the question whether the riot exclusion was at odds with the coverage for which Knievel bargained. Foremost contends, and the trial court found, that before August 28, 1979 (the effective date of the coverage), all exclusions, including the riot exclusion, were read to Knievel's attorney over the telephone and a general discussion was had concerning the athletic, medical malpractice, and pollution exclusions. A week later, a meeting was had between Foremost's agent and Knievel's attorneys. At this meeting, the insurance agent inquired of one of Knievel's attorneys whether he was familiar with the policy and whether there were any questions concerning it. Knievel's attorney advised that the policy had been reviewed and that he had no questions about it. Discussion was then had on the procedures to be used in processing...