Sloviaczek v. Estate of Puckett

• Citation: 98 Idaho 371,565 P.2d 564
• Decision Date: 06 June 1977
• Docket Number: No. 12111,12111
• Parties: W. G. SLOVIACZEK and Sandra Sloviaczek, Individually, W. G. Sloviaczek and Sandra Sloviaczek as Personal Representatives of the Estate of Michael D. Sloviaczek, the Estate of Michael D. Sloviaczek, W. G. Sloviaczek and Sandra Sloviaczek as Personal Representatives of the Estate of Taunja Sloviaczek, the Estate of Taunja Sloviaczek, Plaintiffs-Appellants, v. The ESTATE of Dean Russell PUCKETT, Ada County Treasurer as Personal Representative of the Estate of Dean Russell Puckett, Daniel Puckett, Safeco Insurance Co. of America, Horace Mann Mutual Insurance Co., Defendants-Respondents.
• Court: United States State Supreme Court of Idaho

Page 564

565 P.2d 564

98 Idaho 371

W. G. SLOVIACZEK and Sandra Sloviaczek, Individually, W. G. Sloviaczek and Sandra Sloviaczek as Personal Representatives of the Estate of Michael D. Sloviaczek, the Estate of Michael D. Sloviaczek, W. G. Sloviaczek and Sandra Sloviaczek as Personal Representatives of the Estate of Taunja Sloviaczek, the Estate of Taunja Sloviaczek, Plaintiffs-Appellants, v. The ESTATE of Dean Russell PUCKETT, Ada County Treasurer as Personal Representative of the Estate of Dean Russell Puckett, Daniel Puckett, Safeco Insurance Co. of America, Horace Mann Mutual Insurance Co., Defendants-Respondents.

No. 12111.

Supreme Court of Idaho.

June 6, 1977.

David L. Whitney, of Alexanderson, Davis, Rainey & Whitney, Caldwell, for plaintiffs-appellants.

Phillip M. Barber, of Elam, Burke, Jeppesen, Evans & Boyd, Boise, for respondent Safeco.

John P. Howard, of Quane, Smith, Howard & Hull, Boise, for respondent Horace Mann. DONALDSON, Justice.

The parties are in agreement as to the facts of the case. The appeal is brought by appellants, Mr. and Mrs. Sloviaczek, to recover damages for the wrongful deaths of their children. Those deaths occurred in a collision between an automobile owned by one B. H. Young in which those children were riding, and an uninsured automobile driven by an uninsured driver, Dean Russell Puckett. The Young automobile was insured by Safeco.

Three other insurance policies are in issue in this appeal. Safeco had issued a policy to Michael Sloviaczek, one of the deceased children, and Horace Mann Mutual Insurance Company had issued two policies to W. G. Sloviaczek. All of the policies, including the policy on the Young automobile, included uninsured motorist coverage in the minimum amount required by the Idaho Motor Vehicle Safety Responsibility Act $10,000 per person or $20,000 per accident. The Sloviaczek children were included in the uninsured motorist coverage of all of the policies. All of the policies also included an identical "other insurance" proviso. In relevant part it reads as follows:

"Other insurance: with respect to bodily injury to an insured while occupying an automobile not owned by the named insured, the insurance under uninsured motorists shall apply only as excess insurance over any other similar insurance available to such insured and applicable to such automobile as primary insurance, and this insurance shall then apply only in the amount by which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance." (emphasis added)

Safeco paid $20,000 to Mr. and Mrs. Sloviaczek under the uninsured motorist provision of Young's policy. Safeco also paid $2,783.24 under the medical and funeral expense provisions of the Young policy. The $20,000 was the maximum recovery allowed under the primary policy. It did not entirely compensate the Sloviaczeks for all of the actual damages they sustained as a result of the wrongful deaths of their children. They brought this action seeking compensation to the extent of damages actually sustained under the uninsured motorist coverage of Michael Sloviaczek's Safeco policy and Mr. Sloviaczek's Horace Mann policies. They contend that the policies should be "stacked" with the result that the aggregate amount recovered under the four insurance policies could exceed the limits on any single policy and equal the amount of damages incurred. Respondent Safeco counterclaimed to have the medical and funeral expenses that it paid to the Sloviaczeks deducted against the $20,000 uninsured motorist coverage paid under Young's policy.

The District Court of the Fourth Judicial District denied both claims. Safeco does not appeal the lower court's refusal to offset medical and funeral expenses. The Sloviaczeks, however, appeal the court's refusal to allow recovery in excess of the $20,000 maximum provided by the Young insurance policy.

In order to prevail on their appeal, the Sloviaczeks must establish an independent legal basis for disregarding the "other insurance" provisions of the three insurance policies on which they seek recovery. They urge that Idaho should join the growing number of jurisdictions which when faced with the problem of reconciling conflicting "other insurance" clauses have adopted the Lamb-Weston doctrine. That doctrine holds that conflicting "other insurance" clauses are mutually repugnant and should be rejected in toto. It had its genesis in Oregon Auto Ins. Co. v. United States Fidelity and Guaranty, 195 F.2d 958 (9th Cir. 1952). It was amplified and adopted by the Oregon Supreme Court in Lamb-Weston, Inc. v. Oregon Auto. Ins. Co., 219 Or. 110, 341 P.2d 110 (1952) from which it derives its name. Since then it has been accepted by an impressive number of courts. Globe Indem. Co. v. Capital Ins. & Sur. Co., 352 F.2d 236 (9th Cir. 1965) (Guam); Allstate Ins. Co. v. American Underwriters, Inc., 312 F.Supp. 1386 (N.D.Ind.1970); Vance Trucking Co. v. Canal Ins. Co., 251 F.Supp. 93 (D.S.C.1966), aff'd 395 F.2d 391 (4th Cir.), cert. denied 393 U.S. 845, 89 S.Ct. 129, 21 L.Ed.2d 116 (1968); Continental Cas. Co. v. St. Paul Mercury Fire & Marine Ins. Co., 163 F.Supp. 325 (S.D.Fla.1958); Woodrich Constr. Co. v. Indemnity Ins. Co., 252 Minn. 86, 89 N.W.2d 412 (1958); Arditi v. Massachusetts Bonding and Ins. Co., 315 S.W.2d 736 (Mo.1958); Curran v. State Auto. Mut. Ins. Co., 25 Ohio St.2d 33, 266 N.E.2d 566 (1971) (alternative holding); Sparling v. Allstate Ins. Co., 249 Or. 471, 439 P.2d 616 (1968); Liberty Mut. Ins. Co. v. Truck Ins. Exch., 245 Or. 30, 420 P.2d 66 (1966); Firemen's Ins. Co. v. St. Paul Fire and Marine Ins. Co., 243 Or. 10, 411 P.2d 271 (1966). We find the reasoning underlying the Lamb-Weston doctrine persuasive. We adopt it as the law of Idaho.

"Other insurance" clauses had their origin in property insurance policies. Their purpose was to discourage overinsurance and its presumed inducement of fraudulent recoveries. When insurance companies began to issue automobile liability policies, they included "other insurance" provisions as standard clauses in those policies as well, even though the possibility of overinsurance inducing contrived recoveries was remote. Initially their application was limited. Competition among automobile insurers, however, expanded insurance coverage beyond an insured's own automobile and person. Omnibus provisions that covered a named insured as well as anyone in his household and drive-other-car provisions that extend the coverage beyond the named insured's automobile became common in most insurance policies. This proliferation of coverages caused numerous situations to arise wherein a particular loss would have been covered by more than one insurance policy were it not for the "other insurance" clauses which were also standard items in most insurance policies.

"Other insurance" clauses fall into three general categories pro rata, excess and escape. ¹ Pro rata clauses provide that the insurer will pay its pro rata share of the loss, usually in the proportion which the limits of its policy bears to the aggregate limits of all valid and collectible insurance. Excess clauses provide that the insurer's liability shall be only the amount by which the loss exceeds the coverage of all other valid and collectible insurance, up to the limits of the excess policy. Escape clauses provide that the policy affords no coverage at all when there is other valid and collectible insurance. The effect of each in the event of concurrent coverage is to reduce the insurer's loss.

In cases of concurrent coverage, the problem becomes one of allocating the loss among the respective insurers. The cardinal rule in automobile liability insurance cases is that, regardless of the method of apportionment used, the insured should not receive less coverage than if he were protected by only one of the policies in question. Aside from this universally accepted principle, however, there has been little agreement among the courts. Many cases have reached opposite results under identical factual situations. Because of the disparate language of "other insurance" clauses, moreover, factual variations are legion. This has stimulated a great deal of litigation with accompanying divergent and irreconcilable results.

Prior to Lamb-Weston three general theories had been used by the courts in apportioning the loss the prior in time, specific versus general, and primary tort feasor theories. The prior in time theory, a carry-over from property insurance cases, looks to the effective date of each policy and finds the one with the earliest date primarily liable for the loss. The specific versus the general theory assigns primary liability on the basis of the relative specificity of the policies the insurer whose policy provides the most specific protection against the loss covers it. The primary tort feasor theory places the burden of primary liability upon the insurer whose named insured is the primary tort feasor; the other insurer, under whose policy the primary tort feasor is an additional insured, is liable only for the excess of the loss over the limits of the first insurer's policy. All of these theories have one characteristic in common their application arbitrarily imposes liability on one of the insurers. A circularity problem is usually created when there is more than one "other insurance" clause. ² Each clause refers to and operates upon the availability of "other insurance." Which insurance policy should bear primary liability is a conundrum that courts have tried to solve by applying various artificial theories, none of which are very persuasive. The Court of Appeals of the Ninth Circuit said it well in Oregon Auto Ins. Co. v. United States Fidelity and Guaranty Co., supra.

"We have examined cases in other jurisdictions cited by counsel where closely similar or substantially identical disputes between insurance companies have arisen. These decisions point in...