Myers v. Workmen's Auto Ins. Co.
| Decision Date | 23 July 2004 |
| Docket Number | No. 28552.,28552. |
| Citation | 95 P.3d 977,140 Idaho 495 |
| Parties | Jessica MYERS, Plaintiff-Respondent, v. WORKMEN'S AUTO INSURANCE COMPANY, a California corporation, Defendant-Appellant. |
| Court | Idaho Supreme Court |
Cooper & Larsen, Pocatello and Bobbi K. Dominick, Boise for appellant. Gary L. Cooper and Bobbi K. Dominick argued.
Pedersen and Jackson, Twin Falls for respondent. Kenneth L. Pedersen argued.
Jessica Myers (Myers) sued her insurance company, Workmen's Auto Insurance Company (Workmen's Auto), for breach of contract based on the alleged failure of Workmen's Auto to settle or otherwise defend against two lawsuits which were filed against Myers as a result of an auto accident. Following trial, the jury awarded Myers both nominal and punitive damages. Workmen's Auto appeals.
On March 24, 1998, Myers was involved in an auto accident with another vehicle driven by Joyce Phillips (Phillips). Phillips was insured by Allstate Insurance Company (Allstate) and Myers was insured by Workmen's Auto. As a result of the accident, two separate lawsuits were filed against Myers. Phillips filed the first suit on March 22, 2000, to recover damages sustained from the accident (Phillips suit). Allstate subsequently filed the second suit against Myers on March 24, 2000, seeking reimbursement of Phillips' first-party medical benefits (Allstate suit). According to the terms of Myers' auto insurance policy, Workmen's Auto was obligated to "pay damages for `bodily injury' or `property damage' for which any `insured' becomes legally responsible because of an auto accident." The policy further provided that Workmen's Auto "will settle or defend, as we consider appropriate, any claim or suit asking for these damages."
On April 7, 2000, Allstate sent a letter to Workmen's Auto, along with a courtesy copy of the summons and complaint which it intended to serve upon Myers. In a letter dated April 25, 2000, Aldo Cammarota, a Workmen's Auto Senior Claims Adjuster, acknowledged receipt of Allstate's letter but informed Allstate that Workmen's Auto was "unable to settle [Allstate's] claim until [Phillips'] bodily injury claim is resolved." Mr. Cammarota added that he would be asking Phillips' attorney "to provide his client's full settlement package so that we may attempt to evaluate and resolve this claim short of litigation."
On July 24, 2000, Myers was served with a summons and complaint in the Allstate suit. The summons stated that Myers had twenty days from the date of service to respond or judgment may be entered against her. Myers immediately contacted her insurance agent who faxed the summons and complaint to the Workmen's Auto claim department on August 2, 2000. Despite its contractual obligation to do so, Workmen's Auto did not retain counsel to represent Myers in the Allstate suit. A default judgment in the amount of $5,755.60 was entered against Myers on August 31, 2000.
Once the default judgment was entered against Myers, Allstate attempted, unsuccessfully, to recover the judgment from Workmen's Auto. In a letter dated September 6, 2000, Allstate informed Workmen's Auto regarding the judgment and offered to accept payment in the sum of $5,130.60, if paid within fifteen days of the date of the letter. Attached to the September 6, 2000, letter was a copy of the default judgment entered against Myers. Workmen's Auto did not respond. On September 25, 2000, Allstate sent Workmen's Auto a second letter to inform the company that if it refused to settle the case within ten days from the date of the letter, it would "initiate action to revoke the license of your insured, Jessica Myers, and [would] also ... fil[e] a complaint with the Department of Insurance for the State of Idaho regarding [its] failure to resolve this matter." Again, Workmen's Auto did not respond.
On September 19, 2000, Myers was served with a summons and complaint in the Phillips suit. As with the Allstate suit, Myers promptly faxed copies of these documents to Workmen's Auto on October 3, 2000.
Frustrated by the repeated refusal of Workmen's Auto to respond to its attempts at reaching a settlement, Allstate focused its collections efforts against Myers. On October 31, 2000, Allstate sent a letter to the Idaho Transportation Department, along with a certified copy of the default judgment entered against Myers. In the letter Allstate requested, pursuant to I.C. § 49-1204, that Myers' driving privileges be suspended until the judgment was paid in full. The letter indicated that courtesy copies were sent to both Myers and Workmen's Auto. Myers' driving privileges were subsequently suspended in accordance with Allstate's request.
On November 14, 2000, Workmen's Auto retained an attorney to represent Myers in both lawsuits. The attorney filed a notice of appearance in the Phillips suit. Subsequently the attorney filed a notice of substitution of counsel on December 12, 2000, in the Phillips suit. Substituted counsel advised Workmen's Auto in a letter dated the same day that, "[T]he likelihood of having the [Allstate] case set aside at this stage is uncertain because of the lapse of time." The letter stated,
Meanwhile, the impact of the default judgment and subsequent license suspension was beginning to impose significant burdens upon Myers and her family. According to Myers, by January 2001, she was separated from her husband, the mother of two children and three months pregnant with a third child. As a result of the default judgment and subsequent license suspension, she was forced to risk criminal sanctions for driving on a suspended license or find alternative means of transportation for herself and her family. Additionally, the August 31, 2000, default judgment entered against Myers was now a matter of public record. On January 23, 2001, Myers sent a letter by certified mail to Workmen's Auto in which she informed Workmen's Auto concerning her license suspension and pleaded for immediate action to be taken on her behalf. Despite her pleas, Workmen's Auto did not pay the default judgment or otherwise act to restore Myers' driving privileges.
Since the August 31, 2000, default judgment was entered against Myers, Workmen's Auto had made no attempt to work with Allstate toward a resolution of the matter. Consequently, Allstate filed a complaint against Workmen's Auto with the Idaho Department of Insurance on February 27, 2001, detailing the difficulty it had experienced in attempting to settle its claim with Workmen's Auto. Allstate requested the Department suspend Workmen's Auto's authorization to transact business in the State of Idaho because it seemed "that would be the only way that Workmen's Auto [could] be forced to pay attention to judgments which [had] been entered against their insured."
On February 28, 2001, the attorney for Myers filed a motion to set aside the default judgment. However, the motion was not set for hearing. Counsel submitted neither an affidavit nor brief in support of the motion. Consequently, the motion was never addressed or ruled upon by the trial court and the default judgment entered against Myers remained in full effect.
In a letter dated March 20, 2001, Workmen's Auto responded to a letter it received from the Idaho State Department of Insurance. In the letter, Mark Gonzalez, a Workmen's Auto Regional Claims Manager, stated the following:
We received a courtesy copy of a lawsuit filed by The Law Offices of Maguire & Kress on behalf of Allstate Insurance Company for the PIP payments made to Ms. Myers on August 18, 2000. We were in the process of negotiating the bodily injury settlement with Ms. Phillips when we were notified of the lawsuit from Allstate Insurance Company. We spoke to The Law Offices of Maguire & Kress and indicated we are still in the process of negotiating the bodily injury claims with the attorney for Ms. Phillips and we would not be able to settle the underlying PIP claim without a settlement of the bodily injury claim.
Mr. Gonzalez's statement concerning the date Workmen's Auto received notice of the Allstate suit appears to be a misrepresentation of the facts since the record indicates that Workmen's Auto received a courtesy copy of the summons and complaint from Allstate in a letter dated April 7, 2000. This letter also confirmed the policy of Workmen's Auto of not settling a claim when another claim relating to the same accident had not been presented for settlement.
On April 25, 2001, Myers filed suit against Workmen's Auto alleging two causes of action. The first was a breach of contract claim based on the failure of Workmen's Auto to fulfill its contractual duty of settling or otherwise defending against the two lawsuits filed against Myers. The second cause of action, which was dismissed by Myers prior to trial, was a claim for bad faith. On May 16, 2001, Workmen's Auto paid the default judgment and requested that Myers' driving privileges be restored. Workmen's Auto also settled the Phillips suit in March 2002.
On February 4, 2002, Myers filed a motion to amend her complaint to add a prayer for punitive damages pursuant to I.C. § 6-1604. Myers amended her motion on February 13, 2002. A hearing was held and the district court granted Myers' motion to amend on March 4, 2002. However, the trial court's ruling was conditioned on Myers' ability to present sufficient evidence during trial to warrant submitting the issue of punitive damages to the jury. Consequently, the district court revisited the issue of punitive damages prior to submitting the issue to the jury and determined that Myers should be allowed to proceed with her claim for punitive damages.
Following trial, the jury returned a verdict in favor of Myers and awarded her $735.00 in nominal damages and $300,000.00 in punitive damages. The district court denied post-trial motions filed by...
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