Lujan v. Gonzales, 794

• Decision Date: 21 July 1972
• Docket Number: No. 794,794
• Citation: 1972 NMCA 98,501 P.2d 673,84 N.M. 229
• Parties: Manuela LUJAN, Administratrix of the Estate of John F. Lujan, Deceased, Plaintiff-Appellee, v. Reynaldo GONZALES and Reynaldo Gonzales, Jr., Defendants and Third-Party Plaintiffs-Appellees, v. ALLSTATE INSURANCE COMPANY, Third-Party Defendant and Plaintiff in Intervention-Appellant, v. Reynaldo GONZALES, Jr., Defendant in Intervention-Appellee.
• Court: Court of Appeals of New Mexico

Page 673

501 P.2d 673

84 N.M. 229

Manuela LUJAN, Administratrix of the Estate of John F.

Lujan, Deceased, Plaintiff-Appellee, v. Reynaldo GONZALES and Reynaldo Gonzales, Jr., Defendants and Third-Party Plaintiffs-Appellees, v. ALLSTATE INSURANCE COMPANY, Third-Party Defendant and Plaintiff in Intervention-Appellant, v. Reynaldo GONZALES, Jr., Defendant in Intervention-Appellee.

No. 794.

Court of Appeals of New Mexico.

July 21, 1972.

Appellant's Rehearing Motion Denied Aug. 10, 1972.

Intervention-Appellee's Rehearing Motion Denied Aug. 11,

1972.

Certiorari Denied Sept. 26, 1972.

LeRoi Farlow, Farlow & Lill, Albuquerque, for third party defendant-appellant

Thomas L. Bonham, Domenici & Bonham, Albuquerque, for plaintiff-appellee.

N. Tito Quintana, Albuquerque, for defendants and third party plaintiffs-appellees.

OPINION

WOOD, Chief Judge.

Decedent Lujan died from injuries received in an automobile accident. Lujan's vehicle was struck by a pick-up owned by Reynaldo Gonzales, the father, and driven by Reynaldo Gonzales, Jr. Suit was filed against both the father and the son. The father was subsequently dismissed as a defendant. The liability of the son (Gonzales) was admitted.

At the time of the accident, Gonzales was the named insured in a liability policy issued by Allstate (Allstate Insurance Company). A liability policy issued to the father by Farmers (Farmers Insurance Group) covered the truck. A dispute arose as to whether Gonzales was covered under the Allstate policy. The dispute was included in the wrongful death action by appropriate pleading and the issues in this dispute were tried, and judgment entered, prior to trial of the damage issue between Lujan and Gonzales. After the damage issue in the wrongful death claim was tried, a judgment was entered in favor of Lujan against Gonzales and in favor of Gonzales against Allstate. Allstate's appeal is directed to both judgments.

The issues involve: (1) sufficiency of the notice of appeal; (2) insurance coverage; (3) duty to defend; (4) bad faith of Allstate; (5) attorney fees as damages; (6) propriety of the amount of damages; and (7) damages for a dilatory appeal. Sufficiency of the notice of appeal.

Attorney Quintana, on behalf of Gonzales, asserts Allstate's notice of appeal is not effective to appeal the portion of the judgment which awarded Gonzales judgment for damages against Allstate. See § 21--2--1(5)(5), N.M.S.A. 1953 (Repl.Vol. 4).

The notice of appeal specifically identifies the judgment resulting from the first trial where Allstate's liability to Gonzales was determined. It also specifically identifies that portion of the second judgment which awarded damages to Lujan. It does not specifically identify the portion of the second judgment which carries forward Allstate's liability to Gonzales by naming the monetary amounts of that liability. However, the intent to appeal this aspect is clear. Accordingly, we hold the notice of appeal to be sufficient and that Gonzales has not been misled. Baker v. Sojka, 74 N.M. 587, 396 P.2d 195 (1964); compare Mabrey v. Mobil Oil Corporation, (Ct.App.), No. 838, decided March 31, 1972.

Insurance coverage.

The father owned a Chevrolet pick-up which was insured by Farmers Insurance Group. The son owned a Ford car which was insured by Allstate. The son was driving his father's pick-up when the accident occurred.

The Allstate policy insured the son with respect to a non-owned automobile. A non-owned automobile was defined to include an automobile '. . . not owned by the named insured or any relative. . . .' However, a relative was defined as '. . . a relative of the named insured who is a resident of the same household.' If the father and son were residents of the same household, the Chevrolet pick-up would be a vehicle owned by a 'relative' and the coverage for a non-owned automobile would not apply. Thus, Allstate's coverage of the son, while operating the Chevrolet pick-up, depends on whether the father and son were residents of the same household. See Anaya v. Foundation Reserve Insurance Company, 76 N.M. 334, 414 P.2d 848 (1966).

The trial court found that at the time of the accident the son was not residing in the home of his father and that the Allstate policy afforded liability coverage on the accident in question. Allstate contends these findings are not supported by substantial evidence; that at best the evidence on the question is equally consistent with both residency and non-residency and, therefore, the evidence does not support a finding of non-residency. See Stambaugh v. Hayes, 44 N.M. 443, 103 P.2d 640 (1940). We disagree.

Allstate admits that the son testified at trial that at the time of the accident he was living with a friend, Mr. Griego. Griego lived at a location which was not the father's residence. Allstate contends that this trial testimony is not credible because the son had made contrary statements which were in evidence. At most, this raised a conflict in the son's testimony. It was for the trial court, as the trier of fact, to resolve these conflicts. Hughes v. Walker, 78 N.M. 63, 428 P.2d 37 (1967).

Allstate contends the only testimony supporting the finding of non-residency is that of the son. This is incorrect. Griego testified the son was living at his house when the accident occurred. Although there are some conflicts in Griego's testimony, these conflicts, the same as the conflicts in the son's testimony, were to be resolved by the trial court.

Further, the father testified that his son was not residing with him at the time of the accident. There are no conflicts in the testimony given by the father.

The testimony of the son, Griego and the father is substantial evidence of the non-residency of the son. In the light of this testimony, we cannot say the evidence is equally consistent with residency and non-residency. The trial court could properly find that the son was a non-resident and that Allstate's policy afforded liability coverage.

Allstate's contentions under this point are based on evidence which would support a finding of residency. In urging this court to accept the evidence on which it relies, and accept its view that the evidence as to non-residency is not credible, Allstate, in effect, asks us to weigh the evidence. We neither weigh the evidence nor decide the credibility of witnesses. That is the function of the trial court. Svejcara v. Whitman, 82 N.M. 739, 487 P.2d 167 (Ct.App.1971).

Duty to defend.

Allstate's insurance policy states: 'Allstate will defend any lawsuit, even if groundless, false or fraudulent, against any insured for such damages which are payable under the terms of this policy. . . .'

The trial court determined that Allstate breached its duty to defend. One of the findings is that Allstate 'refused' to defend. Allstate asserts this finding is not supported by substantial evidence. At the trial of the issues between Gonzales and Allstate, the evidence is undisputed that Allstate had been requested to defend Gonzales; that Allstate had not undertaken the defense and that in May, 1969, Allstate disclaimed 'any liability or obligation' under its policy. This is substantial evidence that Allstate had refused to defend. In so holding, we point out there is no issue as to Allstate's notice of the accident and notice of the suit against Gonzales. See State Farm Mut. Auto. Ins. Co. v. Foundation R. Ins. Co., 78 N.M. 359, 431 P.2d 737 (1967).

The trial court also found that because of Allstate's breach of contract in refusing to defend, Gonzales was required to employ the services of Attorney Quintana. In attacking this finding, Allstate does not assert a lack of substantial evidence that Gonzales was required to employ an attorney. It contends there was no breach of contract.

The claim is:

'There are two basic reasons why Allstate had no duty to defend Reynaldo Gonzales, Jr.: (1) The Allstate policy was excess insurance and the duty to defend rests with the primary carrier. (2) Allstate justifiably refused to defend because of the statements of Reynaldo Gonzales, Jr. in leading the insurance company to reasonably conclude that the policy did not cover Reynaldo Gonzales, Jr. while driving his father's pick up truck because he and his father were residents of the same household.'

Cases cited by Allstate support its claim that the primary duty to defend rests upon the company with primary coverage. See Fireman's Fund Indem. Co. v. Freeport Insurance Co., 30 Ill.App.2d 69, 173 N.E.2d 543 (1961); Pleasant Valley Lima Bean Grow. v. Cal-Farm Insurance Co., 142 Cal.App.2d 126, 298 P.2d 109 (1956); Travelers Indemnity Company v. Dees, 235 F.Supp. 515 (E.D.S.C.1964). That is not the issue here. In this case, Farmers had the primary insurance and it promptly and actively defended the suit against Gonzales.

Allstate, which provided excess insurance, also had a duty to defend. State Farm Mut. Auto. Ins. Co. v. Foundation R. Ins. Co., supra. Allstate contends this duty on its part ceased to exist once Farmers performed its duty to defend. We disagree.

Under Allstate's policy, it had an obligation to pay pursuant to its policy. Allstate's obligation to pay is independent of its obligation to defend. This is demonstated by policy language which provides for a duty to defend groundless, false or fraudulent claims. If the duty to defend exists as to false claims where there would be no obligation to pay, it also exists as to valid claims where payment may be required. Allstate had a duty to defend and a duty to pay the amount of any excess within its policy limits. The fact that Allstate's insurance was excess did not relieve it of its duty to defend. American F. & C. Co. v. Pennsylvania Threshermen & Farmers' Mut. Cas. Ins. Co., 280 F.2d 453 (5th Cir. 1960).

Allstate's duty to defend did not cease to exist because Farmers was defending Gonzales. Allstate had the duty to assist in that defense. Southern Farm Bureau Cas. Ins. Co. v....