Porter v. Empire Fire & Marine Ins. Co.

• Court: Arizona Court of Appeals
• Writing for the Court: HATHAWAY; KRUCKER, J., and WILLIAM C. FREY
• Citation: Porter v. Empire Fire & Marine Ins. Co., 467 P.2d 77, 12 Ariz.App. 2 (Ariz. App. 1970)
• Decision Date: 02 April 1970
• Docket Number: CA-CIV,No. 2,2
• Parties: James T. PORTER, Appellant, v. The EMPIRE FIRE AND MARINE INSURANCE COMPANY, a Nebraska corporation, Appellee. 779.

Page 77

467 P.2d 77

12 Ariz.App. 2

James T. PORTER, Appellant, v. The EMPIRE FIRE AND MARINE INSURANCE COMPANY, a Nebraska corporation, Appellee.

No. 2 CA-CIV 779.

Court of Appeals of Arizona, Division 2.

April 2, 1970.

Rehearing Denied May 4, 1970.

Review Granted June 2, 1970.

William T. Healy, Tucson, for appellant.

Lesher & Scruggs, by Robert O. Lesher, Tucson, for appellee.

HATHAWAY, Judge.

Can Porter recover against his own carrier under the uninsured motorist coverage when, after settlement with others, an insufficient $2,500 remains of the negligent driver's insurance? This question was decided against the appellant when the trial court granted the appellee's motion to dismiss the appellant's lawsuit for breach of an implied covenant of an insurance policy.

The appellant and four other persons were injured as a proximate result of the negligence of one Joseph B. Fitch in the maintenance and/or operation of his automobile which was insured by the Employers Group with limits up to $20,000 for the accident. A settlement offer was made by the Employers Group and accepted by the five injured persons as follows:

1. Thomas E. Kittner     $ 6,250.00
                2.  Fredrick M. Groenke     6,000.00
                3.  Thomas A. Hopkins       2,750.00
                4.  James T. Porter         2,500.00
                5.  Anthony Cozzini         2,500.00
                

After the settlement payment, Porter was left with $7,500 in unsatisfied damages.

Before the settlement was entered into, Porter's attorney notified appellee of the accident and proposed settlement and demanded that appellee satisfy his remaining damages under the uninsured motorist provision of the policy issued by appellee. Appellant took the position the Fitch was only a partially-insured motorist with respect to appellant's injuries. The appellee denied coverage and therefore refused to approve or disapprove the proposed settlement. The appellant subsequently settled with the Employers Group in an effort to obtain some satisfaction for the damages suffered.

The appellant filed this suit on May 14, 1969. The appellee denied liability and alleged:

1. That Fitch was not an uninsured motorist under the uninsured motorist provision of the appellant's policy with the appellee;

2. That the appellant could not recover because he had violated an exclusion of said policy by settling without the written consent of the appellee;

3. That the appellant could not recover because he had failed to adhere to the arbitration provision of the policy.

The appellee's motion to dismiss the appellant's complaint on the grounds that it failed to state a claim for relief was granted on June 24, 1969. The appellant contends that the superior court committed reversible error when it granted the appellee's motion to dismiss. The argument centers around the intriguing proposition that although Fitch had insurance in the amount required by the Arizona Financial Responsibility Act, where it had to be divided among five injured persons he was only a partially-insured motorist with respect to the appellant's injuries. Appellee responds that Fitch met the requirements of the Act and appellee is not obliged to alleviate appellant's hardship occasioned by the inadequacy of Fitch's insurance.

The principal purpose of the Arizona Financial Responsibility Act is:

'* * * the protection of the public using the highways from financial hardship which may result from the use of automobiles by financially irresponsible persons.' Schecter v. Killingsworth, 93 Ariz. 273, 280, 380 P.2d 136, 140 (1963)

Uninsured motorist coverage is meant to provide some financial recompense to innocent persons who receive injuries, and to the dependents of those who lose their lives through the wrongful conduct of an uninsured and Financially irresponsible motorist who cannot be made to respond in damages. 12 Couch, Insurance 569 § 45:623 (2d ed. 1964); Moore v. Hartford Fire Insurance Company, 270 N.C. 532, 155 S.E.2d 128 (1967). Our uninsured motorist statute provides:

'On and after January 1, 1966, no automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle, shall be delivered or issued for delivery in this state, with respect to any motor vehicle registered or principally garaged in this state, unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in § 28-- 1142, under provisions filed with and approved by the insurance director, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom. This coverage shall at the time the policy is issued be called to the attention of the named insured who shall have the right to reject such coverage. * * *' A.R.S. 20--259.01

The uninsured motorist statute expresses a '* * * strong legislative policy in favor of uninsured motorist coverage.' Maryland Casualty Company v. Wilson, 6 Ariz.App. 470, 472, 433 P.2d 650, 652 (1967). Arizona courts have generally responded unhesitantly to effectuate that policy through an attitude of liberal interpretation gauged to protect automobile accident victims. Geyer v. Reserve Insurance Company, 8 Ariz.App. 464, 447 P.2d 556 (1968).

The term 'uninsured motorist' is not defined in the statutes. On February 24, 1970, one day before oral argument in the present appeal, the terms was defined by an Arizona court. Department B of Division One of the Court of Appeals had occasion to define 'uninsured motorist' in Harsha v. Fidelity General Insurance Company 11 Ariz.App. 438, 465 P.2d 377, filed February 24, 1970. There, the court said that an insured could not recover for unsatisfied damages against the uninsured motorist carrier since he had available the Full statutory minimum under the liability policy of the tortfeasor, holding that when one meets the minimum limits of the Financial Responsibility Act, that person is 'insured.'

The instant appeal presents an important factual distinction from Harsha. Harsha did not involve a multiple injury situation, and not only did the appellant there receive substantially the full amount of recovery under the tortfeasor's insurance policy ($9,500 on a $10,000 policy), the full minimum amount of coverage was available to said appellant. Such is not the case in our multiple injury situation; Porter could recover only $2,500 of such insurance, and had damages exceeding that amount. Thus, here, the injured victim was not afforded the minimum statutory protection. So, even though his insurer has received its premium attributable to this coverage, the insurer was permitted to deny liability on the basis that Porter received Some recovery, no matter how small, from the negligent party.

In Kraft v. Allstate Insurance Company, 6 Ariz.App. 276, 431 P.2d 917 we noted that 'uninsured motorist' insurance coverage is designed to close gaps in the Act and to protect those injured by financially irresponsible motorists. In Geyer we quoted from Peterson v. State Farm Mutual Automobile Insurance Company, 238 Or. 106, 393 P.2d 651 (1964):

'In other words, the legislative purpose in creating compulsory uninsured motorist coverage was To place the injured policyholder in the same position he would have been in if the tortfeasor had had liability insurance.' (Emphasis added) 8 Ariz.App. at 466, 447 P.2d at 558.

There is no dearth of cases treating out-of-state automobiles as uninsured motorists where the amount of insurance carried by the owner did not satisfy the minimum coverage under the state's...