Mark, Inc. v. Maguire Ins. Agency, Inc.

• Decision Date: 12 January 1994
• Docket Number: I,RENT-A-CA,No. 18232,18232
• Citation: 518 N.W.2d 227
• Parties: MARK, INC., d/b/a BUDGETndividually and as Assignee of Rushmore Leasing, Inc. and Carolyn Mollers, Plaintiffs, v. MAGUIRE INSURANCE AGENCY, INC., d/b/a MAGUIRE INSURANCE GROUP, Defendant, and PROVIDENCE WASHINGTON INSURANCE COMPANY, Defendant, Third-Party Plaintiff and Appellant, v. BLACK HILLS AGENCY, INC. and Dakota Claims Service, Third-Party Defendants and Appellees. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 227

518 N.W.2d 227

MARK, INC., d/b/a BUDGET RENT-A-CAR, Individually and as

Assignee of Rushmore Leasing, Inc. and Carolyn

Mollers, Plaintiffs, v. MAGUIRE INSURANCE AGENCY, INC., d/b/a MAGUIRE INSURANCE

GROUP, Defendant, and PROVIDENCE WASHINGTON INSURANCE COMPANY, Defendant, Third-Party Plaintiff and Appellant, v. BLACK HILLS AGENCY, INC. and Dakota Claims Service,

Third-Party Defendants and Appellees.

No. 18232.

Supreme Court of South Dakota.

Considered on Briefs Jan. 12, 1994.

Decided June 8, 1994.

Ronald R. Kappelman, Rapid City, for appellant.

Wayne F. Gilbert of Johnson Huffman, Rapid City, for appellee Black Hills Agency, Inc.

Mark Marshall of Bangs, McCullen, Butler, Foye & Simmons, Rapid City, for appellee Dakota Claims Service.

SEVERSON, Circuit Judge.

ACTION

This is an appeal by third-party plaintiff, Providence Washington Insurance Company (Providence), from a grant of summary judgment dismissing a third-party complaint against third-party defendants Black Hills Agency, Inc. (Black Hills) and Dakota Claims Service. We affirm.

FACTS

At the time of loss, Mark, Inc., d/b/a Budget Rent-A-Car was in the business of leasing vehicles to the public. An insurance policy issued by Providence was procured to cover damage to the vehicles owned by Mark, Inc. The policy contained a $1000 per vehicle, per occurrence deductible for hail damage.

Maguire Insurance Agency, Inc. (Maguire) was the general agent for Providence and was responsible for underwriting risks, determining appropriate rates for premiums, adjusting losses, settling claims and paying or denying losses. A broker agreement existed between Maguire and Black Hills. Black Hills was an independent contractor and was paid a commission for each policy it sold. Black Hills procured the policy between Providence and Mark, Inc.

During the summer of 1991, three hail storms hit Rapid City, South Dakota, on May 11, June 9, and June 18. After each storm, Mark, Inc. notified Black Hills that hail damage occurred. Black Hills, in turn, hired Dakota Claims Service to appraise the losses. Dakota Claims Service proceeded to appraise the losses at the convenience of Mark, Inc., when the vehicles were returned at the end of a lease.

To avoid duplication of claims Maguire requested that Black Hills defer sending claims notices until it received appraisals from Dakota Claims Service. In appraising the losses, Dakota Claims Service put May 11, the day it opened the account, on all of the reports. Neither Dakota Claims Service nor Black Hills notified Maguire or Providence of the three hail storms, nor did they attempt to pinpoint the location of the vehicles during each hail storm.

Providence received eleven (11) damage appraisals on June 29, 1991 from Black Hills and paid Mark, Inc. $7,750.76. On September 5, 1991, Providence received thirteen (13) more damage appraisals and paid Mark, Inc. an additional $9,396.47. On December 19, 1991, Black Hills sent Providence fifty-three (53) damage appraisals and on January 7, 1992 fifty-four (54) more damage appraisals were sent. Mark, Inc. brought suit to recover the hail damage losses from the appraisals submitted December 19, 1991 and January 7, 1992 which Providence refused to pay.

Mark, Inc. amended its complaint and added Maguire to the suit. Providence then brought a third-party action against Black Hills and Dakota Claims Service for indemnity, maintaining that they were negligent in failing to notify Providence of the number and severity of hail storms. The trial court granted Black Hills' and Dakota Claims Service's motions for summary judgment, holding they owed no legal duty to Providence which they did not perform.

ISSUE

DID BLACK HILLS OR DAKOTA CLAIMS SERVICE OWE PROVIDENCE OR MAGUIRE A LEGAL DUTY WHICH WOULD SUPPORT A CLAIM FOR INDEMNITY?

A party is entitled to summary judgment on questions of law "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." SDCL § 15-6-56(c); Weiszhaar Farms v. Live Stock State Bank, 467 N.W.2d 752, 754 (S.D.1991). The court must view the evidence most favorably to the non-moving party and resolve reasonable doubts about the facts in its favor. Koeniguer v. Eckrich, 422 N.W.2d 600 (S.D.1988). The moving party must clearly show that no genuine issue of material fact exists. Weiszhaar Farms Inc., 467 N.W.2d at 754.

The party opposing a motion for summary judgment must establish the specific facts which show that a genuine, material issue for trial exists. Anderson v. Production Credit Ass'n, 482 N.W.2d 642, 644 (S.D.1992). Mere allegations are not sufficient to preclude summary judgment. Weiszhaar Farms, Inc., 467 N.W.2d at 754.

Negligence is the breach of a duty owed to another, the proximate cause of which results in an injury. Laber v. Koch, 383 N.W.2d 490, 492 (S.D.1986) (citations omitted). Summary judgment is proper in negligence cases if it is determined as a matter of law that no duty exists. Clauson v. Kempffer, 477 N.W.2d 257, 258 (S.D.1991) (citing Erickson v. Lavielle, 368 N.W.2d 624, 627 (S.D.1985)).

This Court has previously recognized a cause of action for economic damage resulting from professional negligence beyond the strictures of privity of contract. Mid-Western Elec. v. DeWild Grant Reckert, 500 N.W.2d 250, 254 (S.D.1993); Limpert v. Bail, 447 N.W.2d 48, 51 (S.D.1989). Whether a duty exists depends on the foreseeability of injury. Mid-Western Elec., 500 N.W.2d at 254.

The only evidence Providence presented of a legal duty on the part of Black Hills or Dakota Claims Service, consisted of an affidavit by Maguire's claims supervisor, which stated, "good and professional claims handling procedures dictate that the location of the vehicles be established at the time of the alleged loss." No specific facts or evidence were presented that such a duty to report the number and severity of hail storms or the location of the vehicles existed as a result of the engagement of Dakota Claims Service as an appraiser.

SDCL 15-6-56(e) requires the opposing party to be diligent in resisting a motion for summary judgment, and mere general allegations and denials which do not set forth specific facts will not prevent the issuance of a judgment.

Home Fed. Sav. & Loan v. First Nat. Bank, 405 N.W.2d 655, 658 (S.D.1987) (quoting Hughes-Johnson Co. v. Dakota Midland Hospital, 86 S.D. 361, 364, 195 N.W.2d 519, 521 (1972)).

There is no evidence in the record of a history of reporting the number or severity of hail storms by Black Hills and Dakota Claims Service. There is also no evidence that Providence requested such a report from them. In addition, other than the conclusions in the affidavit of Maguire's claims supervisor, there is no evidence as to what skill and care were ordinarily exercised by others in the insurance profession.

It is uncontroverted that Dakota Claims Service was hired simply to appraise or list the damage to the vehicles. It had no duty to monitor and assess risks since that was Maguire's duty as the adjuster.

Black Hills, as the broker, was the middleman between the insured and Providence and Maguire. Black Hills' duties as set forth in the broker agreement, included selling insurance policies. As an adjunct to that duty, Black Hills submitted the appraisals and claims notices to Maguire. A New Jersey court, finding no authority to impose a duty of notification on a broker, held that the insurance broker was not required to notify the primary insurance carrier that an excess carrier existed. Western World Ins. Co. v. Allstate Ins. Company, 140 N.J.Super. 338, 356 A.2d 83, 86 (N.J.Super.Ct.Law Div.1976), modified, Western World Ins. Co. v. Allstate Ins. Co., 150 N.J.Super. 481, 376 A.2d 177, 180 (N.J.Super.Ct.App.Div.1977). Likewise, we have found no evidence or authority which would support a legal duty on the part of Black Hills to notify Providence of the circumstances of the loss.

Providence's complaint seeks indemnity for any amount it becomes obligated to pay to Mark, Inc. "Indemnity is a remedial measure which is invoked to secure the right of the first party to be reimbursed by the second party for the discharge of a liability which, as...