Gudenau & Co., Inc. v. Sweeney Ins., Inc., S-1347

• Decision Date: 08 May 1987
• Docket Number: No. S-1347,S-1347
• Citation: 736 P.2d 763
• Court: Alaska Supreme Court
• Parties: GUDENAU & CO., INC., Appellant, v. SWEENEY INSURANCE, INC., Appellee.

Page 763

736 P.2d 763

GUDENAU & CO., INC., Appellant, v. SWEENEY INSURANCE, INC., Appellee.

No. S-1347.

Supreme Court of Alaska.

May 8, 1987.

Peter W. Giannini, Law Offices of Giannini & Associates, Anchorage, for appellant.

Gary A. Zipkin and Debra J. Brandwein, Guess & Rudd, Anchorage, for appellee.

Before RABINOWITZ, C.J., and BURKE, MATTHEWS, COMPTON and MOORE, JJ.

OPINION

MATTHEWS, Justice.

On a motion for summary judgment the superior court dismissed appellant Gudenau & Company's (Gudenau) counterclaim, ruling that it was barred by the statute of limitations. Because Gudenau raised significant questions of fact concerning appellee's ability to invoke the statute of limitations defense, we reverse the dismissal of Gudenau's counterclaim and remand the case for trial.

I.

Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." Alaska R.Civ.P. 56(c). The court does not attempt to weigh the evidence nor evaluate the credibility of witnesses on a motion for summary judgment. Instead, the evidence and all reasonable inferences that may be drawn from it will be viewed in the light most favorable to the party opposing the motion for summary judgment. Zeman v. Lufthansa German Airlines, 699 P.2d 1274, 1280 (Alaska 1985). We therefore assume that the facts set forth in Gudenau's affidavit are true and capable of proof. See 10A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 2727, at 125-28 (1983).

Appellant Gudenau purchased an "all risk" insurance policy for a crane through appellee Sweeney Insurance (Sweeney), an insurance broker. Sweeney allegedly assured Gudenau that the policy would cover any type of damage except that incurred while operating the crane on ice or muskeg. In fact, Sweeney procured the standard all-risk policy which contains a number of exclusions, including loss caused by "latent defect" and "structural, mechanical, or electrical breakdown." ¹

The crane collapsed during use on September 15, 1982, due to a structural defect in the crane's mounting. Gudenau reported the loss to Sweeney and Sweeney notified the insurance carrier, Marine Corporation of America, of Gudenau's loss. Following an investigation of the accident, Marine denied the claim under the policy's structural defect exclusion clause. Gudenau received a copy of the denial on November 15, 1982.

Gerald Gudenau promptly confronted Sweeney. He allegedly received assurance that the loss was covered by the policy. Sweeney indicated the insurance carrier had mistakenly denied the claim and promised to ask Marine to reconsider its denial. ²

Sweeney, however, took no action on Gudenau's claim. Sixteen months passed before Gudenau sought reconsideration through the assistance of another insurance broker. On June 8, 1984, Gudenau received notice that its claim had been reconsidered by Marine and denied.

By July of 1984 Gudenau believed that it had a viable cause of action against Sweeney for insurance broker malpractice. Gudenau offered to refrain from bringing a malpractice suit if Sweeney would agree to drop an unrelated claim of approximately equal value that it held against Gudenau. Gudenau claims that Sweeney agreed to the proposed set-off. ³

Sweeney breached the alleged accord and satisfaction by bringing suit against Gudenau on the unrelated claim in January of 1985. On March 4, 1985, Gudenau counterclaimed for breach of warranty, based on Sweeney's failure to procure the type of insurance coverage which Gudenau had requested. Sweeney moved to dismiss the counterclaim, pleading that the statute of limitations had expired in September of 1984, two years from the date of the crane accident. Gudenau agreed that Alaska's two-year statute of limitations governed this action, ⁴ but argued that the limitations period had been tolled or that Sweeney was estopped from relying upon it. The superior court granted Sweeney's motion for summary judgment and dismissed the counterclaim.

II.

The statute of limitations ordinarily begins to run on the date on which the plaintiff incurs injury. W. Keeton, D. Dobbs, R. Keeton, D. Owen, Prosser and Keeton on The Law of Torts § 30, at 165 (5th ed. 1984). Older cases applied this rule literally to bar any action initiated more than two years after the plaintiff or his insured property was tortiously damaged. For example, in Austin v. Fulton Ins. Co., 444 P.2d 536, 539 (Alaska 1968), we held that the plaintiff's claim for negligent failure to procure complete insurance coverage arose, and the limitation period began, on the date when an earthquake destroyed the insured property.

Our former practice has been modified by the adoption of the "discovery rule" method for tolling the operation of the statute of limitations. Greater Area Inc. v. Bookman, 657 P.2d 828, 829-30 (Alaska 1982). Today the statute of limitations does not begin to run until the claimant discovers, or reasonably should have discovered, the existence of all elements essential to the cause of action. Hanebuth v. Bell Helicopter, Int'l, 694 P.2d 143, 144 (Alaska 1984).

Gudenau contends that the superior court applied the improper standard of computation--that is, the date of injury or damage instead of the date of discovery. Whether the court applied the correct legal standard is a question of law which we review de novo. Jackson v. White, 556 P.2d 530, 533 n. 8 (Alaska 1976). The superior court found that the statute of limitations began to run on September 15, 1982, the date on which Gudenau's crane was damaged. Although the court did not explain the basis of its finding, it appears that the court incorrectly measured the limitations period by the date of damage rather than the date of discovery. The court should have looked to the date on which Gudenau discovered, or reasonably should have discovered, Sweeney's failure to procure the all-inclusive insurance coverage which it promised to provide.

In the alternative, the superior court may have believed that September 15, 1982, was the latest reasonable date of discovery. Such a finding would be erroneous. The date of discovery is a question of fact which cannot ordinarily be determined by the superior court on a motion for summary judgment. Bookman, 657 P.2d at 830-31. Where reasonable minds could draw different conclusions as to the date of discovery, a genuine issue of material fact exists and summary judgment must be denied. In this case reasonable minds may disagree as to whether September 15, 1982, was the latest reasonable date of discovery.

Sweeney argues that Gudenau should have read its policy and discovered the structural defect exclusion clause before the accident occurred on September 15, 1982. Gudenau claims to have been unaware of the exclusion on or before the date of the accident. For the limited purposes of summary judgment, we accept Gudenau's allegations as true. Insurance policy exclusions do not necessarily have independent meaning for a layperson. The insured is entitled to rely on his broker's professional skill and representations when interpreting the scope of his insurance coverage. ⁵ Viewing the evidence in a light most favorable to Gudenau, we think that it would be reasonable for Gudenau to believe that the coverage in its insurance policy conformed to the all-inclusive coverage that Sweeney promised to obtain. Whether Gudenau actually believed this is a question to be resolved by the trier of fact.

In the alternative, Sweeney insists that a diligent party would discover the limited nature of its insurance coverage when its claim was rejected by its insurer. On November 15, 1982, Gudenau received a letter from Marine which drew the reader's attention to the policy's structural defect exclusion clause, and which denied Gudenau's claim on that basis. We believe that this information would be sufficient to alert a reasonably diligent plaintiff to the existence and scope of the structural defect exclusion. On this point reasonable minds could not differ. Gudenau professes a need for a second examination and denial of its claim, but we do not see how a second, third, or fourth denial would significantly add to a prospective plaintiff's understanding of its insurance policy. The first denial of Gudenau's claim was sufficient to reveal Sweeney's potential breach of warranty. See Sharrow v. Archer, 658 P.2d 1331, 1335 (Alaska 1983). ⁶

Thus, we find that the statute of limitations began to run no later than November 15, 1982, when Gudenau should have discovered the exclusion clause and Sweeney's breach of warranty. Gudenau's suit was filed on March 4, 1985, more than two years after the limitations period began. Gudenau's suit is therefore barred by the two-year statute of limitations, unless there is another legally sufficient reason to toll the statute or to estop Sweeney from relying upon the statute.

III.

Gudenau offers an alternative reason for extending the tolling period to June 1984, to cover the 19 months during which it sought reconsideration of its claim. Gudenau argues that its efforts to obtain reconsideration of the claim constituted the pursuit of an alternative legal remedy sufficient to toll the statute of limitations.

The need for equitable tolling arises when a plaintiff has multiple legal remedies available to him. Courts will not force a plaintiff to simultaneously pursue two separate and duplicative remedies. Where the plaintiff adopts a single course of action which is dismissed or otherwise fails, courts generally allow the plaintiff to pursue a second remedy based on the same right or claim, tolling the limitations period during the pendency of the initial defective action. E.g., Nelson v. Int'l Paint Co., 716 F.2d 640, 645 (9th Cir.1983); Hosogai v. Kadota, 145 Ariz. 227, 700 P.2d 1327,...