Glockel v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 08 February 1985
• Docket Number: No. 84-072,84-072
• Citation: 219 Neb. 222,361 N.W.2d 559
• Parties: Thomas H. GLOCKEL, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a Foreign Corporation, Defendant.
• Court: Nebraska Supreme Court

Page 559

361 N.W.2d 559

219 Neb. 222

Thomas H. GLOCKEL, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a Foreign Corporation, Defendant.

No. 84-072.

Supreme Court of Nebraska.

Feb. 8, 1985.

Syllabus by the Court

1. Insurance: Statutes. The method of, and reasons for, canceling an automobile liability insurance policy of the type defined in Neb.Rev.Stat. § 44-514 (Reissue 1984) is exclusively controlled by Neb.Rev.Stat. §§ 44-515 to 44-521 (Reissue 1984).

2. Insurance: Statutes. As a general statute, Neb.Rev.Stat. § 44-358 (Reissue 1984) does not control procedures for the specific types of policies defined in Neb.Rev.Stat. § 44-514 (Reissue 1984).

Peter J. Peters, P.C., Warren C. Schrempp and Peter J. Hoagland, and Wallace Hopkins, P.C., and Steven M. Watson of Marks, Clare, Hopkins, Rauth & Cuddigan, Omaha, for plaintiff.

Joseph K. Meusey and Joseph E. Jones of Fraser, Stryker, Veach, Vaughn, Meusey, Olson, Boyer & Bloch, P.C., Omaha, for defendant.

KRIVOSHA, C.J., and BOSLAUGH, WHITE, HASTINGS, SHANAHAN, and GRANT, JJ.

GRANT, Justice.

The U.S. District Court for the District of Nebraska, pursuant to Neb.Rev.Stat. § 24-219 (Cum.Supp.1984), has submitted to us certain certified questions of law.

The facts underlying the controversy giving rise to the questions were recited to us by the district court, as follows:

Plaintiff, Thomas H. Glockel (hereinafter referred to as Glockel), applied to defendant, State Farm Mutual Automobile Insurance Company (hereinafter referred to as State Farm), for an automobile liability insurance policy on April 29, 1980. Glockel signed the application and paid $54.98 for the first 2 months' coverage. In his application Glockel listed one traffic violation, a stop sign infraction in October of 1979. State Farm's agent bound coverage on April 29, 1980, and, on or about the same day, forwarded the application to State Farm's regional office in Lincoln, Nebraska. The policy was issued to Glockel and his father.

The facts certified by the forwarding court further state:

Four days later, on May 3, 1980, Glockel was involved in an automobile accident that caused extremely serious injuries to one Leon Skank. At some point, the Lincoln underwriting office discovered that Glockel's Nebraska motor vehicle record revealed two traffic violations instead of just one. On May 7, 1980, Glockel gave a recorded statement to a State Farm investigator admitting that he had received "two or three" speeding tickets in Council Bluffs, Iowa between June and August of 1979. State Farm thereafter convened a "claim committee" to evaluate the status of Glockel's policy. The claim committee determined that Glockel had made a material misrepresentation concerning his driving record. In a June 9, 1980, letter addressed to plaintiff Glockel and his father, State Farm advised that, because of Thomas Glockel's misrepresentations, it was rescinding the binder of insurance and declaring it void at its inception. State Farm also returned Glockel's $54.98 premium payment.

Kandis K. Skank, as Conservator for her husband, Leon, filed suit in the District Court of Douglas County, Nebraska, against Thomas Glockel alleging negligence in the May 3, 1980 operation of his motor vehicle. Her attorneys sent written offers to Glockel's attorney to settle the lawsuit for the $15,000 limit of Glockel's policy. Glockel's attorney communicated the offers to State Farm and demanded settlement. State Farm rejected the offers and refused to settle on the basis of its June 9, 1980 letter of rescission. The jury returned a verdict against Thomas Glockel substantially in excess of the policy limits.

Glockel's complaint in the United States District Court alleges negligence and bad faith by State Farm for refusing to settle the underlying lawsuit within the $15,000 policy limit. Mr. Glockel seeks a judgment against State Farm for the $15,000 insurance coverage and the amount by which the state court judgment exceeds the policy limit, plus interest and attorneys' fees. He further requests damages for mental and emotional distress, unfavorable publicity, and injury to his credit and reputation. State Farm, by affirmative defense, alleges that Glockel misrepresented material facts regarding his driving record in his application for insurance and that, under Nebraska law, State Farm may therefore rescind the policy and declare it void ab initio.

In connection with these facts, as set out above, we are premising our opinion on the facts as set out by the forwarding court. Pursuant to Neb.Rev.Stat. § 24-221 (Cum.Supp.1984), we accept the facts as set out in the certification request.

We, of course, make no determination or inference as to any of Glockel's allegations nor State Farm's defenses, but only direct this opinion to answering the legal questions presented to us. Those questions are:

1. Whether the exclusive method of terminating an automobile liability insurance policy is controlled by [Neb.Rev.Stat. §§ 44-515 to 44-521 (Reissue 1984) ].

2. Whether, because of the provisions of § 44-515(1)(b) ], an automobile liability insurance policy can only be cancelled for "material misrepresentations" once a policy of insurance has been issued.

3. Whether [Neb.Rev.Stat. § 44-358 (Reissue 1984) ] is inapplicable to an automobile liability insurance policy.

(Emphasis in original.)

For reasons hereinafter set out, and with the qualifications hereinafter specified, (1) the first question is answered Yes, because Neb.Rev.Stat. §§ 44-515 to 44-521 (Reissue 1984) specifically provide for the cancellation of certain automobile liability insurance policies covering a specific limited class described therein; (2) the second question is answered No (possibly due to the somewhat ambiguous framing of the question, which was apparently adopted by the federal court from Glockel's motion filed in that court), because § 44-515(1)(b) also allows cancellation for other reasons; and (3) the third question is answered Yes, because Neb.Rev.Stat. § 44-358 (Reissue 1984) is inapplicable to the specific type of automobile liability insurance policies defined in Neb.Rev.Stat. § 44-514 (Reissue 1984), while § 44-358 does apply to all other types of liability policies, including automobile liability insurance policies not defined in § 44-514.

QUESTION NO. 1

With regard to the first question presented, we note that the question refers to §§ 44-515 to 44-521. Our answer herein is predicated on the fact that the question must be broadened to include § 44-514 because that section sets out, with particularity, the meaning of the word "policy" as used in §§ 44-515 to 44-521. Pursuant to the terms of § 44-514, the word "policy" is sharply limited to mean only an automobile liability policy (1) providing all or part of coverage for "bodily injury and property damage liability, medical payments, and uninsured motorists coverage," (2) delivered or issued for delivery in Nebraska, (3) insuring a natural person or related persons resident of the same household, and (4) insuring only specified types of vehicles ("private passenger or station wagon type") not used as "a public or livery conveyance for passengers, nor rented to others," or "any other four-wheel motor vehicle of the pickup, panel, or delivery type which is not used in the occupation, profession, or business of the insured." Section 44-514 further specifically provides that §§ 44-514 to 44-521 do not apply to (1) assigned risks coverage, (2) any policy covering more than four automobiles, (3) any policy covering "garage, automobile sales agency, repair shop, service station, or public parking place operation hazards," or (4) any policy issued specifically to cover personal or premises liability of an insured even though such policy provides incidental liability coverage for certain automobile uses.

We have set out herein the details of types of "automobile liability policies" covered by §§ 44-514 to 44-521 to show how limited a class of policies these statutes were designed to cover. Glockel's counsel argue that when the Legislature enacted §§ 44-514 to 44-521, the Legislature intended that the cancellation procedure contained therein should be the sole method of terminating the specific types of automobile liability policies described therein. The provisions also set forth specific reasons for which a policy of the type described in § 44-514 can be canceled. Glockel suggests that, since insurance statutes should be construed liberally in favor of the insured, the cancellation procedure set out in §§ 44-514 to 44-521 must be viewed as the exclusive method of termination.

State Farm's position is that Neb.Rev.Stat. § 44-379.01 (Reissue 1984) also provides a specific method of cancellation of an automobile policy and that § 44-379.01 as well as § 44-358 controls the overall method of cancellation of all insurance policies, including those defined in § 44-514. From consideration of these other statutes (§§ 44-379.01 and 44-358), State Farm argues in its brief that § 44-516 applies only to cancellation and not to rescission of an automobile liability policy, and defines cancellation as a termination of the policy, while rescission is defined as meaning the avoiding of the insurance policy ab initio. Glockel argues in his brief that an automobile liability policy can only be canceled prospectively pursuant to § 44-516(1) and that after the occurrence of a loss such a policy may not be rescinded. The terms "rescission" and "cancellation" are not defined in any statute, nor is the word rescission used in any of the named statutes.

The great difficulty in answering the certified questions is that we cannot review the matter as an appeal from a specific judgment or ruling of a trial court (in this case the U.S. District Court), but instead we are answering legal questions in the abstract, based on a particular statement of facts forwarded to us by the trial court. Therefore, while ...