Graham v. State Farm Mut. Auto. Ins. Co., No. 28095.

• Court: Idaho Supreme Court
• Writing for the Court: SCHROEDER, Justice.
• Citation: 67 P.3d 90,138 Idaho 611
• Parties: William D. GRAHAM, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant-Respondent.
• Decision Date: 03 April 2003
• Docket Number: No. 28095.

67 P.3d 90
138 Idaho 611

William D. GRAHAM, Plaintiff-Appellant,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant-Respondent

No. 28095.

Supreme Court of Idaho, Boise, December 2002 Term.

April 3, 2003.

Hamilton Michaelson & Hilty, Nampa, for appellant. Terry M. Michaelson argued.

Elam & Burke, PA, Boise, for respondent. Jeffrey A. Thomson argued.

67 P.3d 91

SCHROEDER, Justice

William G. Graham (Graham) seeks a ruling that a tort victim who has obtained a judgment against the tortfeasor can bring a direct action against the tortfeasor's insurance carrier for breach of good faith and fair dealing concerning the insurance carrier's conduct. The district court granted summary judgment in favor of State Farm Mutual Automobile Insurance Company (State Farm) and awarded State Farm attorney fees. Graham also appeals the award of attorney fees.

I.

BACKGROUND AND PRIOR PROCEEDINGS

Sarah Mohr backed out of her driveway in front of Mathew Graham, and they collided. Mathew Graham's car was owned by William Graham and Sarah Mohr's car was owned by Deme and Thomas Mohr. The Mohr's vehicle was insured by State Farm.

Graham made a claim for damages. State Farm denied liability and refused payment. Graham sued in small claims court, lowering the amount of his claim to meet the jurisdictional requirement. The hearing resulted in an apportionment of 70% of the negligence to the Mohrs and 30% to Graham, resulting in a $2,100 judgment and $55 in costs for Graham. State Farm appealed the case, and a trial de novo was held. Graham increased his claim for damages to the amount actually sustained. The jury found in favor of Graham, apportioning 75% of the negligence to Mohr and 25% to Graham who then received $2,602.50.

Graham filed a complaint against State Farm alleging breach of the duty of good faith and fair dealing that State Farm owed him as a third-party judgment creditor. Graham based this claim on the assertion that it cost more money to appeal the insurance case from the small claims court than to pay the judgment. Additionally, only $25 of attorney fees could be recovered from small claims court, underscoring the unreasonableness of State Farm's actions. Graham claims that State Farm appealed the case to punish him for his success, stripping him of the value of the award through mounting attorney fees.

The district court ruled in favor of State Farm on its motion for summary judgment, concluding that in Idaho there is no direct action by a third-party plaintiff against an insurance carrier. The district court also determined that this law has been clearly settled for some time, and that Graham acted unreasonably and without foundation in bringing the motion, especially since State Farm's attorney supplied Graham's counsel with the controlling authorities before the suit, notably the cases of Hettwer v. Farmers Insurance. Co., 118 Idaho 373, 797 P.2d 81 (1990), and Idaho State Insurance Fund v. Van Tine, 132 Idaho 902, 980 P.2d 566 (1999). The district court stated these cases "clearly hold that there is no direct action against a third-party tortfeasor's insurance carrier, and that the injured party is not a third-party beneficiary of the insured tortfeasor's policy." The district court awarded attorney's fees pursuant to Idaho Code § 12-121 and Rule 54(e) of the Idaho Rules of Civil Procedure in the amount of $7,592. This appeal followed.

II.

STANDARDS OF REVIEW

A. The Motion For Summary Judgment

When appealing a motion for summary judgment, this Court uses the same standard used by the district court in disposing of the case. Kelso v. Lance, 134 Idaho 373, 374-75, 3 P.3d 51, 52-53 (2000). Summary judgment is appropriate "if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." I.R.C.P. 56(c). This Court exercises free review as to matters of law. Bouten Constr. Co. v. H.F. Magnuson Co., 133 Idaho 756, 760, 992 P.2d 751, 755 (1999). There are no issues of material fact in this case.

67 P.3d 92

B. The Award Of Attorney Fees

Attorney fees are awarded in the sound discretion of the trial court, and the party refuting the award must show an abuse of discretion by the trial court. Anderson v. Ethington, 103 Idaho 658, 660, 651 P.2d 923, 925 (1982). The test for abuse of discretion concerns whether the trial court correctly perceived the issue as one of discretion, acted within the boundaries of its discretion consistent with the legal standards...