A.H. By and Through White v. Arizona Property and Cas. Ins. Guar. Fund

• Decision Date: 29 October 1996
• Docket Number: CA-CV,No. 1,1
• Citation: 943 P.2d 738,189 Ariz. 378
• Parties: A.H., a minor, By and Through her, guardian ad litem, David D. WHITE, Plaintiff-Appellant, v. ARIZONA PROPERTY AND CASUALTY INSURANCE GUARANTY FUND, a subdivision of the Department of Insurance of the State of Arizona, Defendant-Appellee. 96-0049.
• Court: Arizona Court of Appeals

Page 738

943 P.2d 738

189 Ariz. 378

A.H., a minor, By and Through her, guardian ad litem, David D. WHITE, Plaintiff-Appellant, v. ARIZONA PROPERTY AND CASUALTY INSURANCE GUARANTY FUND, a subdivision of the Department of Insurance of the State of Arizona, Defendant-Appellee.

No. 1 CA-CV 96-0049.

Court of Appeals of Arizona Division 1, Department D.

Oct. 29, 1996 As Amended Jan. 24, 1997 Reconsideration Denied Jan. 24, 1997 Appellee's Petition for Review Denied and Appellant's Petition forReview Granted in Part Sept. 16, 1997.

[189 Ariz. 380] Solomon, Relihan & Blake, P.C. By Frank M. Sandler, Kevin J. McAlonan, Phoenix, for Plaintiff-Appellant.

Shimmel, Hill, Bishop & Gruender, P.C. By Scott J. Richardson, Glenn B. Hotchkiss, Phoenix, for Defendant-Appellee.

OPINION

SULT, Presiding Judge.

On November 2, 1990, A.H. ("appellant"), a minor, was injured in an accident involving her mother's car and a car driven by Thomas Sroka. Both appellant's mother and Sroka were negligent in causing the accident. Old Hickory Casualty Insurance Company ("Old Hickory"), domiciled in Louisiana, insured appellant's mother with liability and underinsured motorist policy limits of $15,000 per person. Great Plains Insurance Company ("Great Plains"), domiciled in Nebraska, insured Sroka with liability policy limits of $15,000 per person. Appellant obtained a final judgment declaring that her total damages were $65,000, for which Sroka was 60% at fault ($39,000) and appellant's mother was 40% at fault ($26,000).

After the accident, a Nebraska court declared Great Plains insolvent. Pursuant to Arizona Revised Statutes Annotated ("A.R.S.") sections 20-661, et seq., the Arizona Property and Casualty Insurance Guaranty Fund ("the Fund") succeeded Great Plains. The Fund paid appellant the $15,000 limit on the Great Plains policy for Sroka's liability. ¹

On August 19, 1991, an Old Hickory claims adjuster offered appellant the $15,000 liability policy limit to settle appellant's claim against her mother. On August 22, 1991, three days after Old Hickory's settlement offer, a Louisiana court placed Old Hickory in conservatorship, entering an injunction which prohibited Old Hickory and its officers, directors, agents, and employees, and anyone professing to act on its behalf, from "disposing of any of the property or assets of [Old Hickory] and from the transaction of the business of [Old Hickory] except with the concurrence of the Commissioner of Insurance until further written order from this Court." On October 17, 1991, the Louisiana court entered a consent order which, inter alia, incorporated the prohibitions of the injunction.

Nineteen days after the August 22 injunction, appellant attempted to accept Old Hickory's settlement offer for her mother's liability policy limits. Appellant's counsel contacted the same Old Hickory claims representative who had made the offer. Following a discussion, counsel communicated an acceptance of the offer.

On March 15, 1994, appellant filed this action against the Fund, seeking enforcement of her settlement agreement with Old Hickory. ² The matter first went to arbitration, where appellant was granted summary judgment and awarded the $15,000 policy limit on her mother's liability coverage, as well as attorneys' fees, costs, and prejudgment interest. The Fund appealed the arbitrator's decision to superior court. The Fund also filed an amended answer containing a counterclaim seeking a declaration that A.R.S. section 20-673(B) (1990) prevented appellant from recovering further from the Fund under both the liability and the underinsured motorist coverage on the Old Hickory policy. Appellant filed a reply to the counterclaim as well as her own "Compulsory Counterclaim," seeking the $15,000 policy limit for her mother's underinsured motorist coverage, in addition to the $15,000 liability coverage.

Both parties filed motions for summary judgment. After oral argument, the trial court found for the Fund, holding that: (1) there was no enforceable settlement agreement between appellant and Old Hickory, and (2) section 20-673(B) required that appellant's previous recovery of $15,000 from the Fund under the Great Plains policy be offset against any recovery due from the Fund under the liability and underinsured motorist coverages of the Old Hickory policy. The court also awarded the Fund $10,108 in attorneys' fees and costs. Appellant timely appealed.

ISSUES

1. Did the trial court err in holding that the agreement settling appellant's claim for her mother's liability coverage was unenforceable?

2. Did the trial court err in holding that A.R.S. section 20-673(B) requires that any recovery from the Fund, under either mother's liability coverage or underinsured motorist coverage, be reduced by the $15,000 the Fund has already paid to appellant pursuant to the Great Plains policy?

3. Did the trial court err in awarding the Fund attorneys' fees pursuant to A.R.S. section 12-341.01?

DISCUSSION

I. Settlement

The Fund is required to honor settlement agreements reached by an insurer before insolvency. Betancourt v. Arizona Property & Casualty Ins. Fund, 170 Ariz. 296, 299, 823 P.2d 1304, 1307 (App.1991). In the present case, however, although Old Hickory had made an offer of settlement before it was declared insolvent, the trial court found that, at the time appellant attempted to accept Old Hickory's offer, the injunction prevented Old Hickory from disposing of assets and transacting business without the concurrence of the insurance commissioner. The court then found that because the insurance commissioner never concurred in the settlement, the attempted acceptance was ineffective and no enforceable agreement arose.

Appellant presents two theories in support of her argument that the trial court erred. She first argues that in Guarisco v. Haskins, 640 So.2d 575 (La.App.1994), a Louisiana appellate court found enforceable a settlement agreement between Old Hickory and another policy claimant entered into while the same injunction was in effect. Appellant urges that since Louisiana was enforcing Old Hickory settlement agreements without regard to the injunction, we should do likewise.

As the Fund points out, however, the Guarisco court never mentioned the Louisiana injunction. For all we know, the injunction may not have been an issue, the insurance commissioner may have concurred in the settlement, or perhaps the party opposing the settlement never spotted the issue. For these reasons, Guarisco is of no assistance in resolving the instant case.

Appellant next attacks the trial court's finding that the insurance commissioner never concurred in the settlement. Appellant asserts that the injunction required the insurance commissioner to take possession of Old Hickory's business and conduct its affairs. Because the same agent that had made the original offer was still in the office when appellant accepted the offer, appellant argues that the trial court should have presumed that the agent was acting with the commissioner's consent or at least have found a triable issue on this point. ³

The Fund, however, produced an affidavit from Robert Carter, an employee of the Louisiana Department of Insurance. Carter is the estate manager assigned to Old Hickory, acting "on behalf of the Louisiana Commissioner of Insurance who has been appointed to liquidate the assets of Old Hickory." In his affidavit, Carter averred that he was personally familiar with the legal proceedings initiated by the insurance commissioner against Old Hickory. He further averred that the commissioner had never concurred in the settlement with appellant.

Appellant produced no evidence controverting Carter's affidavit. She instead attacks its admissibility. She claims that the affidavit, which was served as part of the Fund's motion for summary judgment, was the first official notice of the Fund's intent to use Carter as a witness at trial. She argues that Carter's testimony would not be admissible at trial, however, because the Fund failed to timely disclose Carter as a witness. See Ariz.R.Civ.P. 26.1(c) (the court shall exclude at trial any evidence not timely disclosed). Because Carter's testimony is inadmissible at trial, she reasons, the court should not have considered his affidavit in ruling on the Fund's motion for summary judgment. SeeAriz.R.Civ.P. 26.1(c).

The Fund responds that Rule 26.1(b) requires that a party make an initial disclosure of witnesses the party expects to call at trial. If "new or different information is discovered or revealed," only then is a party required to amend such disclosure to reveal a new witness. Here, the Fund claims that it offered the Carter affidavit after appellant suggested in her motion papers that the insurance commissioner had concurred in the purported settlement. Since this was the first time that appellant made lack of concurrence by the commissioner a disputed issue, the Fund argues that the disclosure of Carter was timely.

We agree with the Fund. Cf. Allstate Ins. Co. v. O'Toole, 182 Ariz. 284, 896 P.2d 254 (1995). Moreover, we note that if the timing of the disclosure prejudiced appellant, she had a ready remedy via a motion for continuance under Rule 56(f), Arizona Rules of Civil Procedure. Appellant concedes this but argues that she did request a continuance from the trial judge in order to depose Carter. However, appellant argues, the trial judge improperly denied the motion.

In Lewis v. Oliver, 178 Ariz. 330, 873 P.2d 668 (App.1993), rev. denied, cert. denied, 513 U.S. 929, 115 S.Ct. 319, 130 L.Ed.2d 280 (1994), we set forth the requirements for a proper Rule 56(f) motion:

[T]he moving party must present an affidavit informing the court of: (1) the particular evidence beyond the party's control; (2) the location of the evidence; (3) what the party believes the evidence will reveal; (4) the methods to be used to obtain it; and (5) an estimate of the amount of time the...