Nowell v. Dawn-Leavitt Agency, Inc.
Decision Date | 12 August 1980 |
Docket Number | DAWN-LEAVITT,No. 1,CA-CIV,1 |
Parties | Wanda NOWELL, Plaintiff-Appellant, v.AGENCY, INC., a corporation; and William Dawn and Carol Dawn, his wife, Defendants-Appellees. 4321. |
Court | Arizona Court of Appeals |
Gust, Rosenfeld, Divelbess & Henderson by James M. Koontz, and Frederick G. Gamble, Phoenix, for plaintiff-appellant.
Moore, Jennings, Kepner, Scheffing & Hart by Craig R. Kepner and Jack R. Cunningham, Phoenix, for defendants-appellees.
The plaintiff-appellant, Wanda Nowell, acting as her own general contractor, constructed a residence on the south slope of Camelback Mountain. She purchased a standard "homeowner's" policy from Transamerica Insurance Company through the appellee, Dawn-Leavitt Agency, Inc. Some three years later a torrential rainstorm occurred in the area which sent water, mud and rocks over and through a diversion wall which she had built, and through the house, resulting in substantial damage. After appellant discovered that her standard homeowner's policy did not provide coverage for damage by flooding, she commenced this action against the appellee agency and William Dawn, a shareholder-employee, who serviced appellant's account. The complaint charged negligence and breach of contract arising from failure to procure for appellant flood insurance coverage. During the course of discovery it became clear that the gravamen of appellant's action was the failure by appellees to advise her that there was no such coverage in her standard homeowner's policy, but that such coverage was available by rider for an extra premium. The trial court granted appellees' motion for summary judgment and appellant has taken this appeal.
Appellant is a former schoolteacher and licensed real estate salesperson who had, prior to the loss in question, constructed three houses for herself. She commenced doing business with the appellee insurance agency upon the recommendation of a relative who worked there. She utilized the services of the agency to purchase "course of construction" and homeowner's insurance policies. She purchased her automobile insurance through another agent or agency and there is no indication that she purchased any other insurance through appellees. Her contacts with the appellee agency were mostly by telephone, and were generally confined to either ordering a policy for one of the three residences or making a claim after some damage had been sustained. She frequently talked on these occasions to secretarial or other employees of the agency rather than to William Dawn.
On one occasion during the construction of the Camelback residence she did speak with Dawn and sought his advice with respect to persons employed at the construction site. Dawn advised her to purchase a policy of workmen's compensation insurance. She declined this suggestion. Upon the occasion of her ordering the homeowner's policy for the Camelback residence, she inquired of William Dawn as to what would be involved in insuring her jewelry if it were to be kept in the house. Dawn responded that this would entail separate and additional coverage which was quite expensive. Appellant elected not to obtain this extra coverage and placed her jewelry in a safe-deposit box instead.
It is clear that "flood insurance", as such, was never discussed in connection with appellant's order for "living-in" insurance for the Camelback residence. It is important to note that "flood insurance" is a generic term for not only damage from flooding from waters, but also from landslide and mudslide, which would include, according to Dawn's testimony, damage from falling rocks. Dawn testified that such coverage is available by additional rider, but that it is expensive, costing perhaps an additional premium of $1,500 per year. Appellant's testimony indicates that she had a thrifty attitude towards the purchase of insurance. She testified that she told Dawn that she "wanted to have the very best policy, but * * * cut off everything that * * * could possibly [be] cut off."
Appellant factually bases her claim that Dawn should have advised her in regard to flood insurance coverage upon three circumstances. First, when she called Dawn to cancel her course of construction policy and to acquire a homeowner's policy, she asked for "the best policy they had". Secondly, there was an article published in a local newspaper concerning the difficulties encountered by appellant and her son in constructing the Camelback Mountain residence. The article referred to the problem of rain and erosion and also referred to the fact that during the course of construction an 800-pound boulder rolled down the mountain and destroyed some of the framing for the house. Dawn testified in his deposition that he had seen (but not read) this rather striking article which was accompanied by pictures of the hillside residence. We have carefully read Dawn's testimony in regard to his having seen this article, and bearing in mind the familiar principles that we must view the evidence in the light most favorable to appellant and give her the benefit of reasonable inferences, we have rejected appellees' contention that there is no basis for a conclusion that Dawn saw the article at the time appellant was making her application. Appellant thirdly cites the fact that Dawn testified that if he had seen the residence he would have recommended purchase of flood insurance and the further fact that both of the applications for insurance coverage on the property contained recitals that an employee of the agency had visited the property.
The fundamental legal question posed by this appeal is whether there is a cause of action for an insurance agent's failure to advise or impart information to a purchaser, as distinguished from a failure by the agent to procure insurance ordered by the principal. Appellees contend that there should be no duty to inform, and argue in their brief as follows:
"...
It has been the long-established rule that it is the insurance consumer's responsibility to educate himself concerning matters of insurance coverage. This rule finds expression in the case of Hill v. Grandey, 132 Vt. 460, 321 A.2d 28 (1974), at page 34:
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