Openshaw v. Allstate Ins. Co.

• Decision Date: 06 May 1971
• Docket Number: No. 10474,10474
• Citation: 94 Idaho 192,484 P.2d 1032
• Parties: Richard Creed OPENSHAW and Hope Openshaw, husband and wife, Judy Wilson and Howard Ward, Plaintiffs-Appellants, v. ALLSTATE INSURANCE COMPANY, a Corporation, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 1032

484 P.2d 1032

94 Idaho 192

Richard Creed OPENSHAW and Hope Openshaw, husband and wife, Judy Wilson and Howard Ward, Plaintiffs-Appellants, v. ALLSTATE INSURANCE COMPANY, a Corporation, Defendant-Respondent.

No. 10474.

Supreme Court of Idaho.

May 6, 1971.

Kramer, Plankey & Meehl, Twin Falls, for plaintiffs-appellants.

Marcus & Marcus, Boise, for defendant-respondent.

McFADDEN, Justice.

This action was instituted by assignees of an insured against his insurance company seeking damages against the insurer. The plaintiffs-appellants herein are Richard Creed Openshaw and his wife, Hope Openshaw, Judy Wilson and Howard Ward. These are the same parties who as plaintiffs instituted a negligence action against Gordon and Marine Adams alleging Gordon's negligence as the cause for their injuries and the death of a child of Mr. and Mrs. Openshaw; later they amended the complaint to include the alleged negligence of Marine Adams as a cause of their injuries. The action arose out of an automobile collision between the Openshaw vehicle, in which the four plaintiffs and the Openshaw child were riding, and a truck owned and operated by Gordon Adams. In the action, tried to a jury, judgment was entered for the plaintiffs against Gordon Adams for approximately $99,000.00 while judgment was entered in favor of Marine Adams. The judgment in favor of Marine Adams was appealed, which judgment was affirmed. Openshaw v. Adams, 92 Idaho 488, 445 P.2d 663 (1968).

Allstate Insurance Company (referred to herein as Allstate), the defendant-respondent in the instant action, was the liability insurer of Gordon Adams on the vehicle he was operating at the time of the collision. ¹ The insurance policy had a $10,000-$20,000 maximum for personal injuries, i. e. $10,000 liability for each person injured up to $20.000 for each occurrence. Allstate has paid the $20,000 maximum on the judgment against its insured. Allstate also had issued another policy which covered liability on the vehicle operated by Marine Adams with a policy limit of $40,000.

In the instand action the plaintiffs alleged that Gordon Adams had assigned to the plaintiffs the claim sued on, which claim was stated in four counts against Allstate. The plaintiffs sought damages for the alleged negligence and bad faith of Allstate in failing to settle the damage claim the plaintiffs had against Gordon and Marine Adams for their alleged negligence and, instead, allowing the case to go to judgment. In their complaint, the plaintiffs sought recovery of the unpaid balance on the Openshaw v. Adams judgment of $79,000, plus attorneys fees.

Allstate answered the plaintiffs' complaint and moved for summary judgment. The trial court, after considerting the affidavits, exhibits and depositions submitted by the respective parties, granted Allstate's motion and entered summary judgment against appellants.

Appellants appealed from the summary judgment and from the order subsequent to judgment denying appellants' objections to findings of fact, conclusions of law and entry of summary judgment. In their appeal, appellants have made five assignments of error, basically dircted to the determination by the district court that there were no genuine issues as to any material fact and further to the holding of the trial court that summary judgment should be entered for Allstate.

To resolve the issues presented by this appeal it must first be determined whether any claim for relief is stated by the appellants' pleadings and whether the supporting affidavits, exhibits and depositions of the parties resolve the cause as a matter of law, or whether there remain for resolution genuine issues as to any material fact.

Our attention has not been called to any previous decisions of this court dealing with the issue of the liability of an insurance company for the alleged failure to settle a claim against its insured because of either its negligence or its bad faith in its representation of its insured following a claim being made against its insured. The law seems well settled in other jurisdictions that relief can be granted against insurance companies for recover of amounts in excess of policy limits under appropriate factual situations.

Generally it can be said that an insurance company which contracts to defend its insured following a claim by a third party against the insured, is under a duty either to exercise 'good faith' or to exercise due care (be free from negligence) in defending the action against its insured, and in considering offers to compromise the claim for an amount within the policy limits. 14 Couch on Insurance 2d, § 51:130 et seq., p. 626. Annot: 40 A.L.R.2d 168.

'In a large number of the more recent cases the two tests of 'good faith' and 'negligence' have tended to coalesce, with many of the courts which have in terms rejected the 'negligence' test agreeing, nevertheless, that the insurer's negligence is a relevant consideration in determining whether or not it exercised the requisite good faith.' 14 Couch on Insurance 2d, § 51:135, p. 630.

Under the facts as hereinafter discussed, it becomes apparent that this court need not at this time determine which of the rules, i. e. 'good faith,' 'due care,' or hybrid combination, will be applied, for it is our opinion that under the record here, the undisputed facts do not authorize relief under any of these theories.

It is the position of the appellants that Allstate was negligent, and failed to act in good faith in its representation of the Adamses, the insureds, in settlement negotiations between the appellants and the Adamses. The follwoing description of the events following the accident explains the basis for appellants' position.

The collision of the Gordon Adams pickup truck with the Openshaw vehicle occurred on April 1, 1965. Prior to November 25, 1965, when suit was instituted by the four plaintiffs against Gordon Adams and his wife, investigation of the accident was conducted by Allstate through claim adjusting firms, one in Salt Lake City, Utah, and another in Twin Falls, Idaho. An employee of the Salt Lake firm, Mr. McFarland, contacted the Openshaws in Salt Lake City, where they had gone following the accident, and offered to them $9,000 in settlement of all their claims against Gordon Adams; that offer was declined. At that time, this adjuster was authorized to pay $10,000 in full settlement of that claim. He explained in his deposition he advised the Openshaws of the limitations of the policy, i. e. $10,000 and $20,000 for bodily injury, and that there were other claims in Idaho still to be settled, i. e. the claims in Idaho still to be settled, i. e. the claims of Judy Wilson and Howard not satisfied, and if they had any alternative proposal to make, he would convey it to Allstate for consideration. He also stated that he advised them at one time he thought it would be to their best interest not to retain the services of an attorney.

After the initial...