Hettwer v. Farmers Ins. Co. of Idaho, No. 17831

CourtIdaho Supreme Court
Writing for the CourtJOHNSON; BAKES; BISTLINE; Johnson's; BISTLINE; Donaldson
Citation118 Idaho 373,797 P.2d 81
PartiesJames and Tamala HETTWER, Plaintiffs-Appellants, v. FARMERS INSURANCE COMPANY OF IDAHO, dba Farmers Insurance Group, Defendant-Respondent.
Docket NumberNo. 17831
Decision Date22 May 1990

Page 81

797 P.2d 81
118 Idaho 373
James and Tamala HETTWER, Plaintiffs-Appellants,
v.
FARMERS INSURANCE COMPANY OF IDAHO, dba Farmers Insurance Group, Defendant-Respondent.
No. 17831.
Supreme Court of Idaho.
May 22, 1990.
Dissent on Denial of Rehearing Sept. 25, 1990.

Child & Fisher, Coeur d'Alene, for plaintiffs-appellants. Jeffrey A. Child argued.

Knowlton, Miles & Merica, Lewiston, for defendant-respondent. Kent J. Merica argued.

JOHNSON, Justice.

This case was styled as a bad faith insurance case.

Mr. Hettwer was injured when an automobile he was driving was involved in an accident with an automobile driven by Kara K. Hermstead. The Hettwers sued Kara and her parents, Richard and Marilyn Hermstead alleging that Kara Hermstead's negligence was the cause of the accident. The Hettwers joined Farmers Insurance Company of Idaho (Farmers) as a defendant, alleging that (1) Farmers insured the Hermsteads under an automobile liability policy at the time of the accident, (2) the Hettwers had presented claims to Farmers for payment under the Hermsteads' policy, and (3) Farmers had intentionally and tortiously denied or delayed payment on these claims.

Farmers moved for summary judgment dismissing the action against Farmers. After the motion for summary judgment was filed, the Hettwers moved to amend the complaint. In the proposed amended complaint the Hettwers alleged that Farmers was also their insurer under a contract of automobile insurance and that Farmers had denied and delayed payments on claims made under that contract.

The trial court granted the motion of Farmers for summary judgment, stating that a tort victim may not sue a tortfeasor's insurer directly unless one of the factors enumerated in Bean v. Allstate Insurance Co., 285 Md. 572, 403 A.2d 793 (1979) exists. At the same time the trial court denied the motion to amend of the Hettwers, stating that misjoinder would occur if the amendment were allowed. The Hettwers appealed the summary judgment granting dismissal, but did not appeal the denial of the motion to amend. We affirm the dismissal of the claim against Farmers as the insurer of the Hermsteads.

The Hettwers assert that we should extend the principle we announced in White v. Unigard Mutual Insurance Co., 112 Idaho 94, 730 P.2d 1014 (1986), to this case. We conclude that this extension would be erroneous.

In White we held "that there exists a common law tort action, distinct from an action on the contract, for an insurer's bad faith in settling the first party claims of its

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[118 Idaho 374] insured." Id. at 100, 730 P.2d at 1020. Here we have a third-party claim by an injured party against the insurer of the party who was alleged to have been negligent in causing the injuries. The Hettwers argue that Rawlings v. Apodaca, 151 Ariz. 149, 726 P.2d 565 (1986), cited by this Court in White, supports the extension of White to the facts here. We disagree.

In Rawlings, the owners of a dairy farm who had sustained fire damage to their property sued their neighbors whom they alleged had started the fire. They also sued their insurance company under a homeowners policy, alleging breach of the obligation of good faith and fair dealing. The insurer paid the dairy farm owners the limits of their homeowners policy, but failed to furnish them with a copy of the investigation report concerning the cause of the fire and failed to advise them of the liability policy the insurer had issued to the neighbors. The Supreme Court of Arizona stated that the question presented was "whether an insurer violates the covenant of good faith and fair dealing when, for the purpose of protecting its own interests, it acts improperly to impede its insured's recovery of the uninsured portion of the loss." Id. 726 P.2d at 569. The action was a first-party claim by an insured against its own insurer for failure to act in good faith.

Here, the claim of the Hettwers against Farmers that was dismissed was the third-party claim, not a first-party claim. Therefore, neither White nor Rawlings is applicable. Whether the Hettwers have a valid first-party claim against Farmers is not presented to us in this appeal.

The Maryland Court of Appeals in the Bean case, cited by the trial court in its decision granting summary judgment, was a third-party action. There, the court said: "The narrow question presented in this case is whether one who has recovered a judgment in a personal injury suit stemming from an automobile accident may bring a direct action against his judgment debtor's insurer for the amount that the judgment exceeds the policy limits." 403 A.2d at 793-94. The court in Bean refused to allow a third-party claim against an insurer "in the absence of explicit authorization to that effect." Id. at 796. This holding is consistent with our decisions on the question. Pocatello Indus. Park Co. v. Steel West, Inc., 101 Idaho 783, 791, 621 P.2d 399, 407 (1980); Downing v. Travelers Ins. Co., 107 Idaho 511, 514, 691 P.2d 375, 378 (1984). There is no basis for the Hettwers' third-party action against Farmers.

We affirm the dismissal and find this appeal to be unreasonable and without foundation. We award costs and attorney fees to respondent.

BAKES, C.J., and BOYLE and McDEVITT, JJ., concur.

BISTLINE, Justice, concurring and dissenting in part.

I.

Justice Johnson's opinion gains my concurrence insofar as it affirms Judge Magnuson's dismissal of the Hettwers' third party action against Farmers Insurance. Nevertheless, on a careful perusal of the authority relied on by the Hettwers, including our own White v. Uniguard Mut. Ins. Co., 112 Idaho 94, 730 P.2d 1014 (1986), and our own Chancler v. American Hardware Mut. Ins. Co., 109 Idaho 841, 712 P.2d 542 (1985), I am persuaded that one day this Court, differently constituted one may be certain, will see merit in the Hettwers' contention that their action against Farmers is not so farfetched as others may think.

II.

In my view, based on a number of reasons, it is patently unjust to grant attorneys' fees to Farmers Insurance and against the Hettwers as a penalty, so it is supposed, for taking and pursuing an unworthy appeal. It is noteworthy that Judge Magnuson made no such award at the trial court level, notwithstanding that he was the first to rule that such an action could not be directly maintained against Farmers by the Hettwers, who stood in a third party position. Additionally, and as pointed out in the brief of Farmers Insur [118 Idaho 375] ance

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filed in this Court, at page 17, the Hettwers frankly "admit that there is no authority in Idaho for a direct action by third parties against an insurance carrier." But, as readily recognized by Farmers Insurance in the immediately following sentence, "apparently the [Hettwers] have brought this appeal in hope that this court would expand bad faith causes of action." Farmers Insurance brief at 17. Today the Court penalizes the Hettwers for their expectations.

In response to the Farmers Insurance brief, the Hettwers point out that their position differs from the situations in Pocatello Ind. Park Co. v. Steel West, Inc., 101 Idaho 783, 621 P.2d 399 (1980), and Downing v. Travelers Ins. Co., 107 Idaho 511, 691 P.2d 375 (1984), in that both they, the Hettwers, and the defendant tort-feasor, Mrs. Hermstad, were insured by Farmers Insurance, which relationship the Hettwers opine created a de facto privity sufficient to justify their attempt at bringing about a new tangent to a claim for bad faith failure to engage in settlement negotiations. Counsel for the Hettwers made a respectable and well thought out presentation to Judge Magnuson when confronted by the latter as to counsel's theory of liability at oral argument on Farmers Insurance's motion for summary judgment:

THE COURT: Where does that duty on the part of the insurance company arise in Idaho towards your client on the third-party basis?

MR. CHILD: I'm glad you asked that, your Honor.

THE COURT: I am, too.

MR. CHILD: There is no authority in Idaho that there is such liability on a third-party context. Our argument is that the same public policy arguments that were raised by the court in White v. Uniguard: the fact that you've got a unique personal-type contract as opposed to a commercial-type contract; the adhesionary aspects of the contract in that there's lack of bargaining strength on the insured's part; that we've got standard insurance contract-type terms; that the insured is motivated to enter into this contract out of a feeling towards his own or other's financial well-being; the fact of the nature of the service-type of a contract; those same sorts of public policy considerations apply in what I call a hybrid case here.

I wouldn't be standing here today, your Honor, if Mr. Merica was representing Aetna Insurance Company and we were making a third-party claim there. But the fact is that my client also had a policy of insurance with the same company, Farmers. They were processing their claims through the same claims office, many times through the same individuals. They had a right to expect to be treated fairly and in good faith by their own insurance company.

And here's the rub: Our contention is, not only on their claim on their own policy, but also upon the claim on the Hermstads' policy because of the fact that they were dealing with the same individuals, it just does violence to the public policy concepts in White v. Uniguard, and it does violence to the standards, common sense in the community to expect that when you go into your insurance company they're going to have to deal fairly with you on certain types of claims, but not on others.

R., 21-22 (emphasis added).

The Hettwers, completely forthright and candid, as they near the conclusion of their final brief, show their awareness that they might not prevail, but that "[e]ven if this Court rules against the Hettwers, it is clear that they have brought an appeal in good faith...

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13 practice notes
  • Elmore v. State Farm Mut. Auto. Ins. Co., No. 24634.
    • United States
    • Supreme Court of West Virginia
    • June 22, 1998
    ...147, 647 A.2d 48 (1994); Messina v. Nationwide Mut. Ins. Co., 998 F.2d 2 (D.C.Cir. 1993); Hettwer v. Farmers Ins. Co. of Idaho, 118 Idaho 373, 797 P.2d 81 (1990); Scroggins v. Allstate Ins. Co., 74 Ill.App.3d 1027, 30 Ill.Dec. 682, 393 N.E.2d 718 (1979); Long v. McAllister, 319 N.W.2d 256 (......
  • Hill v. Am. Family Mut. Ins. Co., Docket No. 36311
    • United States
    • United States State Supreme Court of Idaho
    • January 5, 2011
    ...claims. They are a product of the insurance company's sophistication and bargaining power. See Hettwer v. Farmers Ins. Co. of Idaho, 118 Idaho 373, 377, 797 P.2d 81, 85 (1990) (quotation omitted) (explaining that insurance companies enjoy a significant bargaining advantage over insureds). T......
  • Hill v. Am. Family Mut. Ins. Co., No. 36311.
    • United States
    • United States State Supreme Court of Idaho
    • April 29, 2011
    ...claims. They are a product of the insurance company's sophistication and bargaining power. See Hettwer v. Farmers Ins. Co. of Idaho, 118 Idaho 373, 377, 797 P.2d 81, 85 (1990) (quotation omitted) (explaining that insurance companies enjoy a significant bargaining advantage over insureds). T......
  • Ferguson v. Nationwide Property & Cas., No. M2005-02602-COA-R3-CV.
    • United States
    • Court of Appeals of Tennessee
    • December 15, 2006
    ...Olokele Sugar Co. v. McCabe, Hamilton & Renny Co., 53 Haw. 69, 487 P.2d 769 (1971)); see also, Hettwer v. Farmers Ins. Co. of Idaho, 118 Idaho 373, 797 P.2d 81 In Downing v. Travelers Ins. Co., 107 Idaho 511, 691 P.2d 375 (1984), the plaintiff brought a direct action against the insurer of ......
  • Request a trial to view additional results
13 cases
  • Elmore v. State Farm Mut. Auto. Ins. Co., No. 24634.
    • United States
    • Supreme Court of West Virginia
    • June 22, 1998
    ...147, 647 A.2d 48 (1994); Messina v. Nationwide Mut. Ins. Co., 998 F.2d 2 (D.C.Cir. 1993); Hettwer v. Farmers Ins. Co. of Idaho, 118 Idaho 373, 797 P.2d 81 (1990); Scroggins v. Allstate Ins. Co., 74 Ill.App.3d 1027, 30 Ill.Dec. 682, 393 N.E.2d 718 (1979); Long v. McAllister, 319 N.W.2d 256 (......
  • Hill v. Am. Family Mut. Ins. Co., Docket No. 36311
    • United States
    • United States State Supreme Court of Idaho
    • January 5, 2011
    ...claims. They are a product of the insurance company's sophistication and bargaining power. See Hettwer v. Farmers Ins. Co. of Idaho, 118 Idaho 373, 377, 797 P.2d 81, 85 (1990) (quotation omitted) (explaining that insurance companies enjoy a significant bargaining advantage over insureds). T......
  • Hill v. Am. Family Mut. Ins. Co., No. 36311.
    • United States
    • United States State Supreme Court of Idaho
    • April 29, 2011
    ...claims. They are a product of the insurance company's sophistication and bargaining power. See Hettwer v. Farmers Ins. Co. of Idaho, 118 Idaho 373, 377, 797 P.2d 81, 85 (1990) (quotation omitted) (explaining that insurance companies enjoy a significant bargaining advantage over insureds). T......
  • Ferguson v. Nationwide Property & Cas., No. M2005-02602-COA-R3-CV.
    • United States
    • Court of Appeals of Tennessee
    • December 15, 2006
    ...Olokele Sugar Co. v. McCabe, Hamilton & Renny Co., 53 Haw. 69, 487 P.2d 769 (1971)); see also, Hettwer v. Farmers Ins. Co. of Idaho, 118 Idaho 373, 797 P.2d 81 In Downing v. Travelers Ins. Co., 107 Idaho 511, 691 P.2d 375 (1984), the plaintiff brought a direct action against the insurer of ......
  • Request a trial to view additional results

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