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

• Citation: 112 Idaho 663,735 P.2d 974
• Decision Date: 03 March 1987
• Docket Number: No. 16032,16032
• Parties: William Otis HANSEN and Lenora Hansen, husband and wife, Plaintiffs-respondents, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-appellant, and Daniel Rodriguez and John Does I through V, Defendants.
• Court: United States State Supreme Court of Idaho

Page 974

735 P.2d 974

112 Idaho 663

William Otis HANSEN and Lenora Hansen, husband and wife, Plaintiffs-respondents, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-appellant, and Daniel Rodriguez and John Does I through V, Defendants.

No. 16032.

Supreme Court of Idaho.

March 3, 1987.

Rehearing Denied April 27, 1987.

Bobbi K. Dominick, of Elam, Burke & Boyd, Boise, for defendant-appellant.

David L. Whitney and Ronald P. Rainey, of Alexanderson, Davis, Rainey, Whitney & Kerrick, Caldwell, for plaintiffs-respondents.

BAKES, Justice.

Appellant State Farm Mutual Automobile Insurance Company (State Farm) appeals from a jury verdict in favor of respondents William and Lenora Hansen in a civil action brought by the Hansens against State Farm seeking to recover under the uninsured motorist provision of certain State Farm insurance policies. State Farm also appeals the district court's order awarding attorney fees to the Hansens in the action below. On appeal, State Farm contends that the district court erred in (1) permitting Hansens to "stack" their uninsured motorist coverage under their three State Farm policies; (2) holding the arbitration clause in the uninsured motorist provision unenforceable and void; and (3) awarding attorney fees pursuant to I.C. § 41-1839. We reverse in part, affirm in part and remand.

On April 16, 1983, William and Lenora Hansen were injured when their car, a 1972 MGB insured with State Farm, was struck by an uninsured vehicle driven by Daniel Rodriguez, who was drunk. The Hansens notified their insurance carrier, State Farm, the day following the accident. A State Farm claims adjuster met with the Hansens within a few days following the accident and made arrangements for payment of damages to their car as well as for any medical expenses incurred for their injuries. These payments were made under the collision and medical payment coverages, and not under the uninsured motorist coverage of the policy covering the 1972 MGB. Hansens also held two other policies with State Farm, covering two other vehicles which they owned. Each of these additional policies also contained uninsured motorist coverage.

On June 28, 1983, the claims adjuster met with respondents' attorney on an unrelated matter, the "Ames" file. At the conclusion of that meeting, the attorney informed State Farm's agent that he was also representing the Hansens on their uninsured motorist claim resulting from the Rodriguez accident. He asserted that Mr. Hansen had lost his job as a result of the injuries suffered in that accident. The record indicates that this was the first time a claim under the uninsured motorist coverage and a claim for lost earnings was asserted by the Hansens against State Farm. ¹ State Farm's agent requested the attorney to provide him with the medical reports and employer reports which would support or verify Mr. Hansen's claim of lost earnings. The claims adjuster further testified that the attorney agreed to supply such information. This testimony is uncontroverted in the record. These reports were never provided despite numerous attempts by the claims agent to contact the attorney for the Hansens. For the next few months, State Farm received and paid, under the medical payment coverage, the medical bills submitted by the Hansens for medical expenses incurred as a result of their injuries from the accident.

On December 9, 1983, without making any previous demand, the Hansens filed suit against State Farm under the uninsured motorist coverage.

During the course of discovery, Mr. Hansen was examined, at State Farm's request, by two doctors. As a result of those examinations, State Farm learned for the first time that Mr. Hansen had a pre-existing arthritic hip condition which had been aggravated as a result of the April 16, 1983, accident. State Farm received the results of these examinations nearly a year following the accident. ² The record also indicates that subsequent to commencement of litigation State Farm obtained reports from Mr. Hansen's employer. The only information in the record on appeal regarding these reports is found in a letter from appellant's counsel to counsel for Hansens. In that letter, appellant's counsel asserts that he was informed by Mr. Hansen's employer that the reason for Mr. Hansen's dismissal was not because of any disabling injury, but was because of his poor performance both before and after his automobile accident. Counsel's assertion in that letter is not controverted by any other evidence in the record, nor is it apparent from the jury verdict that its award to Mr. Hansen was for lost future earnings. ³

Following discovery, and particularly the reports from the medical examinations of Mr. Hansen, State Farm entered into settlement negotiations with the Hansens. State Farm offered to settle the matter for $13,500 in June of 1984. Respondents rejected this offer in August, 1984. Their rejection apparently was based on their belief that Mr. Hansen's injuries were more serious than earlier believed and also that they would be entitled to "stack" their insurance coverage under the three different State Farm policies held by the Hansens on three different vehicles. Hansens counteroffered $30,000, the limits of coverage available if the three policies were "stacked." ⁴ At this point settlement negotiations broke off, and litigation proceeded.

On September 4, 1984, counsel for Hansens filed an amended complaint seeking for the first time to stack the uninsured motorist coverages of the three policies, as well as punitive damages for State Farm's alleged bad faith in refusing to settle Hansens' claims. On October 5, 1984, Hansens moved for summary judgment on the stacking issue. On October 9, 1984, ten months after the action was filed, State Farm for the first time moved to compel arbitration under the arbitration clause of the uninsured motorist provision in the policy covering the 1972 MGB, the car involved in the April, 1983, accident. ⁵

The trial court, after a hearing and briefing on the matter, denied State Farm's motion to arbitrate on grounds that the arbitration provision was unenforceable due to lack of mutual assent. Hansens' motion for summary judgment on the stacking issue was held in abeyance, and the case proceeded to jury trial on February 4, 1985. The only issue litigated was damages. ⁶ The jury returned a $69,000 verdict, $64,000 for William, and $5,000 for Lenora. The verdict for William was reduced to a $30,000 judgment against State Farm by the trial court on State Farm's motion to conform the judgment with the limits of coverage available by stacking the three policies. However, State Farm in its memorandum to the trial court accompanying its motion to amend judgment specifically reserved for appeal the issue of stacking the uninsured motorist coverage under the three separate policies held by Hansens.

Following the verdict and amended judgment, the Hansens also sought an award of attorney fees under I.C. § 41-1839. State Farm objected to any award of attorney fees. The trial court found that attorney fees were recoverable under I.C. § 41-1839, and that the amount requested by Hansens, $10,837.50, was a reasonable amount when considering the factors listed in I.R.C.P. 54(e)(3). State Farm appeals from both the verdict and award of attorney fees.

I

We first address the stacking issue. The trial court permitted stacking of the uninsured motorist coverage in the three policies held by Hansens with State Farm. Each of the three policies contains an express, unambiguous provision which prohibits stacking of coverage under the policies where the alleged loss suffered by the insured occurred while operating a vehicle which he owned but which was not listed as an insured vehicle under the terms of the particular policy upon which coverage is asserted. The "anti-stacking" clause of each of the policies reads as follows:

"There is no coverage:

....

"2. For bodily injury to an insured:

a. while occupying, or

b. through being struck by

a motor vehicle owned by you, your spouse or any relative if it is not insured for this coverage under this policy." (Emphasis added.)

The trial court found that such anti-stacking provisions were void as against public policy. The trial court based its decision in large part on the Court of Appeals decisions in Hammon v. Farmers Insurance Group, 107 Idaho 770, 692 P.2d 1202 (Ct.App.1984), and Dullenty v. Rocky Mountain Fire & Cas. Co., 107 Idaho 777, 692 P.2d 1209 (Ct.App.1984). In those cases, the Court of Appeals held that the anti-stacking provisions such as those found in the Hansen policies were void as against public policy.

However, subsequent to the court's decision in the present case, we overruled the Court of Appeals' Dullenty decision and that portion of its Hammon decision dealing with anti-stacking clauses. In Dullenty v. Rocky Mountain Fire & Cas. Co., 111 Idaho 98, 721 P.2d 198 (1986), we found no public or legislative policy which prohibits the use or inclusion of anti-stacking clauses in uninsured motorist provisions of automobile insurance contracts.

"[W]e find nothing in our statutory scheme of automobile insurance which specifically requires an insurance carrier to extend coverage to an insured occupying an owned vehicle which is not insured by the carrier under a motor vehicle liability policy. We find no public policy implicit in our statutory scheme of automobile insurance which should require such coverage and thus invalidate the exclusionary clause in the instant case." Id., 721 P.2d at 206.

The rationale of our decision in Dullenty is equally applicable to the present case. Each of the three policies held by the Hansens with State Farm unambiguously state that the uninsured motorist coverage applies only to vehicles insured under that particular policy. The policies expressly exclude coverage for any vehicle not insured "under this policy." Thus, the general rule...