State Farm Mut. Auto. Ins. Co. v. Tarantino

• Decision Date: 28 February 1977
• Docket Number: No. 12686,12686
• Citation: State Farm Mut. Auto. Ins. Co. v. Tarantino, 561 P.2d 744, 114 Ariz. 420 (Ariz. 1977)
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois Corporation, Appellant, v. Gabriel V. TARANTINO, Appellee.
• Court: Arizona Supreme Court

Page 744

561 P.2d 744

114 Ariz. 420

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois Corporation, Appellant, v. Gabriel V. TARANTINO, Appellee.

No. 12686.

Supreme Court of Arizona, In Division.

Feb. 28, 1977.

Hofmann, Salcito & Hover by Leroy W. Hofmann, Phoenix, for appellant.

Anderson & Holloway, Frederick M. Aeed by Paul W. Holloway, Phoenix, for appellee.

HAYS, Justice.

The defendant below, State Farm Mutual Automobile Insurance Company, is appealing from the trial court's granting the plaintiff's motion for summary judgment in an action for a declaratory judgment. The Arizona Supreme Court has jurisdiction pursuant to rule 47(e)(5) of the Rules of the Supreme Court, 17A A.R.S.

The facts are not in dispute. On May 11, 1969, the plaintiff-appellee, Gabriel Tarantino, a police officer for the city of Phoenix, was involved in an auto accident while in pursuit of a reportedly stolen vehicle. The driver of the other car involved in the collision was one Rufus Jacobs who was arrested for drunk driving and driving without a license. As a result of the accident, the appellee suffered an injury to his knee for which he was treated soon thereafter. The knee was swollen and discolored for several days but the swelling and discoloration soon subsided. According to Tarantino the knee continued 'clicking and popping' and was uncomfortable.

It was learned shortly after the accident that neither the owner nor the driver of the other car carried liability insurance at the time of the accident. Tarantino was insured by State Farm and his policy provided for uninsured motorist coverage; however, a claim was not immediately made and State Farm was not notified of the accident until some time later.

In 1970 Tarantino's knee 'locked up' while he was walking down some stairs, thereby necessitating surgery. The first operation was in July of 1970 and a second was performed about six months later. When the knee did not improve, a third operation was performed in 1972.

Following the first operation, a workmen's compensation claim was filed and was allowed. In November of 1973, Tarantino's attorney filed a formal claim with State Farm under the uninsured motorist coverage of his policy, informing them for the first time of the May 11, 1969 accident. State Farm refused to pay alleging a breach of the policy relating to Tarantino's failure to notify State Farm of the loss 'as soon as practicable.' State Farm's claim of breach was founded on the following provisions of the policy:

'Policy Conditions

'Notice. In the event of an accident or loss, written notice containing particulars sufficient to identify the insured and also reasonably obtainable information respecting the time, place and circumstances of the accident, and the names and addresses of injured persons and available witnesses, shall be given by or on behalf of the insured to the company or any of its authorized agents As soon as practicable. . . .

'6. Medical Reports; Proof of Claim--

As soon as practicable the person making a claim . . . shall give to the company written proof of claim, including full particulars of the nature and extent of the injuries, treatment, and other details entering into the determination of the amount payable.' (Emphasis added).

Following State Farm's refusal to pay, Tarantino filed suit in the Superior Court of Maricopa County asking for a declaratory judgment that the policy provisions be decreed null and void as contrary to the public policy of this state. State Farm filed an answer and moved the court for summary judgment on the grounds that the failure of the insured to provide timely notice of the loss constituted a breach of the policy and relieved the insurer of liability. Tarantino filed a cross-motion for summary judgment arguing that the contract provisions requiring notice 'as soon as practicable' are against the public policy of this state as stated in A.R.S. § 12--548 which, pursuant to a recent judicial decision, allows claimants up to six years within which to bring suit as provided by the uninsured motorist provisions of a written insurance contract. Transnational Ins. Co. v. Simmons, 19 Ariz.App. 354, 507 P.2d 693 (1973).

The trial court granted Tarantino's motion for summary judgment, decreeing that Tarantino was covered by the policy. State Farm appeals from that judgment.

The appellee, in his response to the appellant's motion for summary judgment, argued that under the circumstances of this case, notice to State Farm four and one-half years after the accident was 'as soon as practicable.' However, in his brief to the court, the appellee has not controverted the issue of breach based on the failure to give timely notice and has apparently abandoned such a position. As a result, we can assume for the purposes of this appeal that the notice issue is conceded by the appellee. Porter v. Empire Fire & Marine Ins. Co., 106 Ariz. 274, 475 P.2d 258 (1970). We are thus presented with but one issue on appeal; Is the requirement that notice be given 'as soon as practicable' void as contrary to the public policy of this state?

The courts have on numerous occasions recognized a somewhat general public policy, founded upon our uninsured motorist statute, A.R.S. § 20--259.01 to afford protection to insureds when they are the innocent victims of the negligence of uninsured motorists. Transportation Ins. Co. v. Wade, 106 Ariz. 269, 475 P.2d 253 (1970). As our Court of Appeals stated in Geyer v. Reserve Ins. Co., 8 Ariz.App. 464, 467, 447 P.2d 556 559 (1968): '. . . Arizona will be nowhere but in the forefront of jurisdictions in making available to automobile accident victims the fullest benefits of insurance coverage.'

Such a policy does have its limits, however, and we are confident that the legislature never intended, in enacting § 20--259.01 to impose absolute liability on insurers whenever an uninsured motorist is involved, nor did they intend to make unenforceable all contractual provisions wherein the liability of the insurer may somehow be limited or totally negated for cause.

Considering the purpose underlying the contractual provision requiring notice as soon as practicable, it is clear that such a provision is in no way in derogation of our state's policies. Such a term is included in contracts of insurance in order to afford the company the opportunity to promptly investigate the facts surrounding the accident, to look into the validity and extent of the alleged injuries and to gather medical information, evidence and other particulars necessary to help them determine, among other things, whether to settle the claim, for what amount, and whether to take the case to court, etc. Such investigation, to be effective, must obviously be done soon after the occurrence while the 'trail is fresh' and not four and one-half years later when the witnesses may be gone, the evidence discarded and the medical memories dim. For us to hold that such a provision requiring prompt notice is invalid and that a claimant has up to six years within which to give such notice, would not only tie the insurer's hands but it might, in effect, invite the filing of fraudulent claims which the insurance companies would be totally unable to question or verify. Clearly, such a position is untenable and one which we refuse to take.

The appellee has relied heavily on the case of Transnational Ins. Co. v. Simmons, supra, which, it is argued, established a 'public policy' of allowing claimants up to six years within which to bring claims under the uninsured motorist provisions of an insurance policy. The appellee contends that 'any provision in the insurance policy of the defendant to the contrary is void as against this stated public policy.'

In Simmons, the Court of Appeals held that the six-year statute of limitations found in A.R.S. § 12--548 is applicable to claims made under the uninsured motorist provisions of an automobile liability policy rather than the two-year period under A.R.S. § 12--542. It is apparently the appellee's contention that because he has been given, pursuant to Simmons and § 12--548, up to six years within which to bring a claim against parties potentially liable in our court system, he also has, as a matter of public policy, up to six years within which to notify the insurance company of any claims he may have and that a provision requiring such notification 'as soon as practicable' is void.

We are unable to agree with such a far-reaching extension of the Simmons decision and we think the appellee's position is wholly untenable. Simmons simply held that a claimant has six years within which '(a)n action . . . shall be commenced and prosecuted . . .' A.R.S. § 12--548. The case deals only with the question of which statute of limitations applies to a situation of this sort. A prompt notice requirement is strictly a matter...