Green v. General Acc. Ins. Co. of America

• Decision Date: 24 November 1987
• Docket Number: No. 16886,16886
• Citation: 1987 NMSC 111,106 N.M. 523,746 P.2d 152
• Parties: Jerry GREEN, Plaintiff-Appellee, v. GENERAL ACCIDENT INSURANCE COMPANY OF AMERICA, Defendant-Appellant.
• Court: New Mexico Supreme Court

Page 152

746 P.2d 152

106 N.M. 523

Jerry GREEN, Plaintiff-Appellee, v. GENERAL ACCIDENT INSURANCE COMPANY OF AMERICA,

Defendant-Appellant.

No. 16886.

Supreme Court of New Mexico.

Nov. 24, 1987.

[106 NM 524] Weinbrenner, Richards, Paulowsky & Sandenaw, David McNeill, Jr., Las Cruces, for defendant-appellant.

Pickett & Holmes, Lawrence M. Pickett, Las Cruces, for plaintiff-appellee.

OPINION

RANSOM, Justice.

This is a suit by Jerry Green to recover benefits under a homeowner's policy insuring against theft of property in his home. Judgment for Green was entered against his insurer, General Accident Insurance Company of America (General Accident).

Green's home was burglarized on two occasions, January 25 and September 17, 1982. In the first burglary Green suffered a loss of $26,750, for which sum judgment was entered. In the second burglary, the stolen property included four silver and turquoise belt buckles valued at $2,525. Judgment was entered for $958.25 on the court's finding that the silver and turquoise buckles were non-scheduled jewelry insured for a maximum of $500 for loss by theft. The sum of $458.25 for additional loss was not in dispute.

The insurance policy required that the insured promptly notify the insurer of a loss and furnish a sworn proof of loss to the insurer within sixty days after the loss occurred. The policy barred suit for recovery unless all requirements of the policy were complied with and suit brought within twelve months after any loss. Further, the policy made invalid any waiver of provisions unless in writing. No written waiver of any policy provision was granted to Green.

General Accident contests the court's conclusion that General Accident, by its own acts, waived any notice, proof of loss, contractual time limitations, or written waiver defenses, and that it is estopped from denying the benefits sought. It argues that none of the court's findings reflect any action by General Accident which reasonably could be regarded as waiving any of its contractual rights.

The twelve months time-to-sue provision is dispositive of the September 17 loss, but not of the January 25 loss. Consequently, we limit to the January 25 loss our discussion of notice, proof of loss and written waiver considerations.

With respect to both notice of loss and proof of loss, the court appears to have found and concluded that Green had substantially complied with those requirements. This, together with the conclusion of waiver, is dispositive of notice and proof of loss issues. In Robinson v. Palatine Ins. Co., 11 N.M. 162, 66 P. 535 (1901), the Court ruled that substantial compliance with the terms of an insurance policy as to notice and proof of loss is all that is required. When notice and proof of loss are given, even if they are not sworn to, and an adjuster is sent to investigate the loss, unless a verification or further information is demanded, the objection that notice and proof of loss are not verified is waived. Id. at 176, 66 P. at 537.

Immediately after the theft on January 25, Green notified the insurance agent, Isidro Gonzales, by personally telling him of the incident and by setting out the loss by way of a letter. Enclosed with this letter of March 15, 1982, were the sheriff's report, the appraisal of jewelry referenced in the report, and a list of additional items that were taken. The list included the fair market value of each item as determined by Green. Gonzales testified that he was completely satisfied that Green had complied with customary practice for reporting information about a theft.

Green sent Gonzales the letter of March 15 within the sixty days required by the insurance contract for submitting sworn proofs of loss. In May, Green also gave a statement to John Gohrick, an independent adjuster representing General Accident, but Gohrick never presented the statement for Green's signature. Finally, in October, Green submitted to General Accident a notarized document labeled "sworn statement in proof of loss" which had been provided by Gohrick in September. General Accident responded by informing Green that this "purported" proof of loss was unacceptable but would be retained pending further investigation. During the initial months of the investigation Green was never told that his proof of loss needed verification. Moreover, General Accident's representatives' failure to furnish Green with a formal proof of loss form until eight months after being notified of the loss was inconsistent with an intention to demand exact compliance. See Western Farm Bureau Mut. Ins. Co. v. Lee, 63 N.M. 59, 62, 312 P.2d 1068, 1070 (1957).

The principal contention on appeal is that the court made no finding of fact from which it could conclude that General Accident, by its own acts, waived or was estopped from asserting any defense of contractual time limitations. This Court has upheld insurance contract time-to-sue provisions in general, and has considered no case in which a specific public policy reason has been advanced for not enforcing such a provision. Sanchez v. Kemper Ins. Cos., 96 N.M. 466, 632 P.2d 343 (1981); Wiseman v. Arrow Freightways, Inc., 89 N.M. 392, 552 P.2d 1240 (Ct.App.) cert. denied, 90 N.M. 9, 558 P.2d 621 (1976); and see Diebold Contract Servs., Inc. v. Morgan Drive Away, Inc., 95 N.M. 9, 617 P.2d 1330 (Ct.App.1980). Where the insurer raises the affirmative defense of violation of a time-to-sue provision, it need not show that it was prejudiced by violation of the provision. It need only show the breach. Sanchez, 96 N.M. at 468, 632 P.2d at 345. However, the insurer may be estopped from raising the affirmative defense of a time-to-sue provision. Peoples State Bank v. Ohio Casualty Ins. Co., 96 N.M. 751, 635 P.2d 306 (1981).

"Estoppel arises when an individual has been induced by the conduct of another to do, or forebear from doing, something he would or would not have done but for such conduct." Young v. Seven Bar Flying Serv., Inc., 101 N.M. 545, 547-48, 685 P.2d 953, 955-56 (1984). "The acts and conduct generally held to constitute a waiver of a time-to-sue provision are those acts which would lull the insured into reasonably believing that its claim would be settled without suit. * * * " Peoples State Bank, 96 N.M. at 752-53, 635 P.2d at 307-08.

There is substantial evidence to support a finding that General Accident's conduct did lull Green into reasonably believing that his claim for the loss sustained on January 25 would be settled without suit. None of General Accident's communications with the Greens over the course of the year intimated that the claim would not be settled amicably. In a letter dated November 23, 1982, General Accident told Green "we are sorry that this claim is taking so long" and "we are unable to pay the claim until all the facts surrounding the claim are clarified." This last remark was in reference to General Accident's need to obtain a sworn statement from Carolyn Green months after initiating its investigation. General Accident did obtain Mrs. Green's sworn statement on March 17, 1983, almost two month's after the anniversary of the inception of the loss.

In Peoples State Bank, the Court said that "[w]aiver [of a time-to-sue provision] may be accomplished by slight acts and circumstances, and must be determined by the facts of the case." 96 N.M. at 752, 635 P.2d at 307. An insurer should not be allowed to induce an insured's participation in an investigation past the twelve month time-to-sue provision and then rely on that contractual provision to bar claimant's recovery. This is especially true where, as here, the insurer does not give any indication that it will deny liability but instead tells the insured only weeks prior to the time bar's applicability that "if you will cooperate with us in investigating the facts surrounding the claim, this matter should be ready for resolution."

A suit, pending negotiations to supply further evidence as requested, would have been inconsistent with the acts of the parties and their apparent intention. If General Accident did not have it in mind, before expiration of twelve months, to waive policy restrictions and negotiate further, it is difficult to understand the effect of Carolyn Green's sworn statement. Cf. Miller v. Phoenix Assurance Co., 52 N.M. 68, 191 P.2d 993 (1948); see also Anderson v. State Farm Fire & Casualty Co., 583 P.2d 101 (Utah 1978).

In either April or May of 1982, Green signed a non-waiver agreement in which he agreed that actions by General Accident and its representatives to investigate, settle, deny or defend any claims arising out of the January 25 loss would not waive any rights of Green or General Accident under the insurance contract. However, the evidence in support of a waiver of the stipulations for notice, proof of loss and time to sue also supports a finding that General Accident could not rely on the non-waiver agreement it executed with Green. "A non-waiver agreement itself may be waived by conduct, the same as stipulations in the policies." Miller, 52 N.M. at 73, 191 P.2d at 996.

By its acts and conduct, General Accident could be found to have waived the provisions urged as their affirmative defenses against the January 25 loss. Specifically, the twelve months time-to-sue provision having been waived, it would have been unnecessary that suit be instituted within twelve months next after the loss, or at any other time except within the statute of...