Morris v. Farmers Ins. Exchange

• Decision Date: 22 March 1989
• Docket Number: No. 87-187,87-187
• Parties: Marion Ray MORRIS, Leopoldo Sanchez and Dorothy Sanchez, Appellants (Defendants), v. FARMERS INSURANCE EXCHANGE, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

Page 1206

771 P.2d 1206

Marion Ray MORRIS, Leopoldo Sanchez and Dorothy Sanchez, Appellants (Defendants), v. FARMERS INSURANCE EXCHANGE, Appellee (Plaintiff).

No. 87-187.

Supreme Court of Wyoming.

March 22, 1989.

David A. Hampton of Honaker & Hampton, Rock Springs and Robert J. Reese of Reese & Mathey, Green River, for appellants.

John I. Henley of Vlastos, Brooks & Henley, P.C., Casper, for appellee.

Before CARDINE, C.J., and THOMAS, URBIGKIT, and MACY, JJ. and BROWN, J., Retired. ^*

URBIGKIT, Justice.

Marion Morris called his neighbor, Leopoldo Sanchez, out into the street between their houses and, almost without words shot him near dead with a .357 magnum pistol. This appeal is from a summary judgment in the insurance company declaratory judgment lawsuit, which followed an initial negligence and intentional tort injury action. The insurance company contested the homeowners' insurance liability and duty to defend coverages, and the decision was adverse to the injured party by application of the policy exclusion for intentional conduct.

We reverse.

Issues raised by appellants, Leopoldo and Dorothy Sanchez, in conflict with the insurance company, Farmers Insurance Exchange (Farmers Insurance) as appellee, assert that the district court erred in (1) denial of a duty to defend their insured Morris as the defendant in the liability action; and (2) granting summary judgment, holding that Farmers Insurance had no obligation to provide liability coverage under its insurance policy which would afford indemnity in the event that Sanchez should recover in the initial proceeding.

FACTS

On August 8, 1985, Sanchez, following a home Bible study meeting, saw a friend to his street curb parked car, and then, as the car departed, received a call from across the street from Morris reported as, "Hey, Leo, I want to talk to you." Sanchez turned across the street and walked toward Morris, who was standing in his yard. On approach of the two parties, Morris raised a .357 magnum pistol and shot Sanchez in the face. ¹

Surviving the bullet wound, and then having apparently concluded that Morris had homeowner's insurance liability coverage, Sanchez and his wife, filed suit on May 1, 1986 against Morris, alleging negligence and assault and battery, with additional claims for infliction of emotional and mental distress to both husband and wife, and for punitive damages. The allegations also characterized Morris' action as one of willful, reckless, and wanton disregard. Responsive to that first litigative proceeding, after undertaking the defense under a reservation of rights, Farmers Insurance, pursuant to the homeowners' policy, commenced this declaratory judgment proceeding. This second lawsuit was instituted against Morris as well as both Leopoldo and Dorothy Sanchez to obtain authentication of the intentional conduct coverage exclusion provided in the policy. Farmers Insurance requested in the prayer that:

[T]he Court declare as follows: (1) that coverage for the injuries alleged in the complaint and amended complaint of Leopoldo and Dorothy Sanchez does not exist under the insurance policy issued to Defendant Morris by Plaintiff Farmers Insurance Exchange; (2) that a duty to defend Defendant Morris does not exist with regard to the action initiated by the complaint and amended complaint of Leopoldo and Dorothy Sanchez; * * *.

Sanchez counterclaimed, with the prayer including a request that the insurance policy be declared to provide liability coverage and a duty to defend Morris in the pending liability action which they had filed.

In the summary judgment proceeding, segments of depositions of participants and affidavits of psychologists were tendered by both Farmers Insurance and Sanchez. ² At factual issue was the subject of the implicit intention of Morris to shoot or to scare, or whether he drunkenly and accidentally caused the injury to his neighbor. The degree of intoxication of Morris was clearly in controversy, with Sanchez contending that intoxication existed which made Morris incapable of forming the specific intent, and Farmers Insurance arguing for sobriety.

After review of the facts in detail in a fifteen page opinion letter, the trial court in dispositive order provided:

[P]laintiff be granted summary judgment against the defendants, for the reasons that there are no genuine issues of any material fact and that plaintiff is entitled to judgment as a matter of law.

JUDGMENT IS THEREFORE entered on behalf of plaintiff, Farmers Insurance Exchange, and against defendants; it is declared and is the judgment of the Court that plaintiff herein, Farmers Insurance Exchange has no obligation or duty to either defend or indemnify defendant Marion Ray Morris with regard to the claims alleged and action initiated by the complaint and/or amended complaint of Leopoldo Sanchez and Dorothy Sanchez, which arose from the shooting injury to Leopoldo Sanchez, which occurred on or about August 8, 1985.

The Sanchez counterclaim was denied with prejudice.

Only Leopoldo and Dorothy Sanchez appealed, Morris did not.

DUTY TO DEFEND

We are cognizant that a controversy concerning a duty to defend may be a proper subject of a declaratory judgment action even if a prior suit is pending. Mathis v. Auto-Owners Insurance Company, 387 So.2d 166, 168 (Ala.1980); Fidelity & Casualty Co. of New York v. Envirodyne Engineers, Inc., 122 Ill.App.3d 301, 77 Ill.Dec. 848, 850-51, 461 N.E.2d 471, 473-74 (1983), insurer can seek a declaratory judgment to decide a factual issue relevant to the duty to defend, if the issue is not "crucial to the determination of the underlying lawsuit." Here, however, appellants argue that as a third-party beneficiary they can raise the issue on appeal to seek reversal of the summary judgment entered against Morris. Although the argument is academically constructed with some ingenuity, we find logic or precedent lacking that one litigant can appeal an opposing litigant's denied insurance carrier obligation for defense. ³

The general rule is that only a person who is aggrieved by a judgment can take an appeal from it. * * * Essentially the rule is one of standing. Just as the requirement of standing requires that one have a legally recognized interest before one is permitted to bring suit to protect that interest, so too must a person have an interest adversely affected by the judgment to be able to appeal the judgment.

R. Martineau, Modern Appellate Practice, Federal and State Civil Appeals § 5.2 at 72 (1983) (footnotes omitted). See Parr v. United States, 351 U.S. 513, 516, 76 S.Ct. 912, 915, 100 L.Ed. 1377, reh'g denied 352 U.S. 859, 77 S.Ct. 21, 1 L.Ed.2d 69 (1956).

The United States Supreme Court enunciated in Karcher v. May, 484 U.S. 72, ----, 108 S.Ct. 388, 392, 98 L.Ed.2d 327, 334 (1987):

[W]e have consistently applied the general rule that one who is not a party or has not been treated as a party to a judgment has no right to appeal therefrom. United States ex rel. Louisiana v. Jack, 244 U.S. 397, 402, 37 S.Ct. 605, 607, 61 L.Ed. 1222 (1917); Ex parte Leaf Tobacco Board of Trade, 222 U.S. 578, 581, 32 S.Ct. 833, 56 L.Ed. 323 (1911); Ex parte Cockcroft, 104 U.S. (14 Otto) 578, 579, 26 L.Ed. 856 (1882); Ex parte Cutting, 94 U.S. (4 Otto) 14, 20-21, 24 L.Ed. 49 (1877).

Dispositively, the United States Supreme Court held that the controversy over the New Jersey moment of silence statute "ended when the losing party--the New Jersey Legislature--declined to pursue its appeal." Karcher, 108 S.Ct. at 395.

Although Morris and Sanchez were named in the caption of the declaratory judgment action, they were not both treated as parties to the judgment with respect to the duty to defend. Clearly, appellants are not real parties in interest on the defense-duty controversy where they are not adversely affected by the judgment. It is irrelevant to them who fuels Farmers Insurance's litigative resistance. This issue is similar to one faced by the Court of Appeals of Georgia in Wilmington Cabinet Co., Inc. v. Autry, 169 Ga.App. 93, 311 S.E.2d 519 (1983). In that case, a property owner sued both the contractor and subcontractor for fire losses allegedly caused by improper installation of the kitchen vent hood. At the close of trial, the contractor was granted a directed verdict, and subsequently the jury returned a verdict in favor of the property owner. The subcontractor tried to argue that the directed verdict for the contractor was improper. That court held that since this was not a joint cause of action, the subcontractor had no standing to complain of the directed verdict against another defendant. Wilmington Cabinet Co., Inc., 169 Ga.App. 93, 311 S.E.2d at 522. Like that case, Sanchez here has no capacity to appeal the summary judgment against Morris and in favor of Farmers Insurance on the duty to defend the claim.

INDEMNITY

Appellants posture this present argument on two bases: procedure and substantive law. In procedural context, they contend that this action was premature in litigating the same issues included in the principal case before the first proceeding is terminated. Secondly, they claim that a factual issue was created relative to the application of the policy exclusion so that summary judgment was improvident or unjustified as a substantive legal decision.

1. Prematurity

We note at the outset that a declaratory judgment action can be beneficial as frequently used when the effect of insurance contracts are questioned. Poling v. North American Life and Casualty Co., 593 P.2d 568 (Wyo.1979); Mountain West Farm Bureau Mutual Insurance Co., Inc. v. Hallmark Insurance Co., 561 P.2d 706, 711 (Wyo.1977); Comment, The Declaratory Judgment and the Insurance Contract, 46 Yale L.J. 286 (1936). Consequently, we confine our decision to the facts of the case at hand where a declaratory judgment is instituted by an insurance company after the injured party's action was started and remains undetermined.

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