Sullivan v. Allstate Ins. Co.

• Decision Date: 10 July 1986
• Docket Number: No. 16033,16033
• Citation: 723 P.2d 848,111 Idaho 304
• Parties: William P. SULLIVAN and Cleon Sullivan, husband and wife; and Julie A. Sullivan, Plaintiffs-Appellants, v. ALLSTATE INSURANCE COMPANY, a corporation doing business in Idaho, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 848

723 P.2d 848

111 Idaho 304

William P. SULLIVAN and Cleon Sullivan, husband and wife; and Julie A. Sullivan, Plaintiffs-Appellants, v. ALLSTATE INSURANCE COMPANY, a corporation doing business in Idaho, Defendant-Respondent.

No. 16033.

Supreme Court of Idaho.

July 10, 1986.

David A. Manko, Coeur d'Alene, Bruce A. Kaiser, Spokane, Wash., and Darrel W. Aherin, Lewiston (argued), for plaintiffs-appellants.

Samuel Eismann, Coeur d'Alene, and Phillip M. Barber (argued), Hawley, Troxell, Ennis & Hawley, Boise, for defendant-respondent.

SHEPARD, Justice.

This is an appeal from a summary judgment granted in favor of Allstate in an action filed by the Sullivans, which alleged the tort of outrage, willful breach of contract, and bad faith in refusing to settle a claim made under a policy issued by Allstate. We affirm.

On September 22, 1982, Julie Sullivan, a pedestrian, was struck by an uninsured motorcyclist. Julie was then a minor, and an insured under an automobile insurance policy issued to her parents by Allstate Insurance Company, which included uninsured motorist coverage. The Sullivans filed a claim with Allstate which paid $2,000.00 under the medical coverage of the policy but denied any liability under the uninsured motorist section of the policy, asserting that Julie was the proximate cause of her own injuries.

The uninsured motorist provision in the insurance policy contained a clause requiring arbitration in the event that a claimant and Allstate failed to agree as to legal entitlement to recover under the uninsured automobile coverage, and such arbitration provision was stated to be binding on the parties thereto. In April 1984, Julie Sullivan, having attained her majority, sought and obtained an arbitration agreement with Allstate. A hearing was held before three arbitrators who found the total damages to be $292,851.13, found Julie Sullivan to be 35 percent comparatively negligent, and found Allstate should pay its policy limits of $20,000.00. Allstate paid, and the Sullivans accepted the arbitrators' award of $20,000.00.

Meanwhile, on September 4, 1984, while the arbitration process was pending, the instant action was filed against Allstate alleging negligence in Allstate's investigation and handling of the Sullivan claim, that Allstate had exercised bad faith in its responsibilities to the Sullivans, and that the Sullivans had sustained emotional distress by denial of the claim.

Allstate filed a motion for summary judgment, or in the alternative for a stay of the cause pending the outcome of the arbitration proceedings. The district court initially granted the motion for summary judgment, concluding that where an insurance policy requires arbitration in the event of disagreement involving an uninsured motorist claim, an insured is required to pursue arbitration prior to bringing an action against the insurer. We do not disagree. The trial court also concluded that:

"There exists a different relationship between the insured and the insurer in an uninsured motorist insurance situation. In the uninsured motorist context, the uninsured motorist carrier becomes, in effect, the insurer of the uninsured; thereby creating an adversarial relationship between the insured and the insurer in the uninsured motorist policy."

We do not necessarily agree with this conclusion.

Thereafter the Sullivans moved for reconsideration of the order granting summary judgment. On May 23, 1985, argument was presented upon that motion for reconsideration, and counsel for the Sullivans offered in evidence, and the court accepted, the award of the arbitrators which had been executed during mid-May 1985. The court denied the Sullivans' motion for reconsideration and this appeal was taken.

We note initially that summary judgment is properly granted under I.R.C.P. 56(c) when after all the evidence and the reasonable inferences flowing therefrom have been construed in a light most favorable to the party opposing summary judgment, no genuine issue of material fact remains for determination, and the moving party is entitled to judgment as a matter of law. Moss v. Mid-America Fire & Marine Ins. Co., 103 Idaho 298, 647 P.2d 754 (1982); Palmer v. Idaho Bank & Trust of Kooskia, 100 Idaho 642, 603 P.2d 597 (1979). Julie Sullivan, while a pedestrian, was a covered insured under the uninsured motorist provisions of the Allstate insurance policy. Julie Sullivan, while a pedestrian, was struck by an uninsured motorcyclist. Demand was made upon Allstate for the policy limits to cover a portion of the damages sustained by Julie Sullivan, and that demand was refused by Allstate on the basis that Julie Sullivan was the proximate cause of her own injuries. Julie Sullivan sought, and obtained, arbitration under the provisions of the Allstate policy following which Allstate paid the policy limits. The facts are not controverted.

Much of the argument in the instant case involves the relationship between the insured and the insurance carrier under the uninsured motorist provisions of an automobile policy when the insured is damaged by reason of an accident with an uninsured motorist. Some courts hold the view that when an insured files a claim under the terms of an uninsured motorist portion of a policy, the insurance carrier steps into the shoes of the uninsured motorist and becomes the adversary of its own insured notwithstanding the premiums that have been paid for the coverage. In such jurisdictions no liability arises on the part of the insurance carrier until, and unless, an award or judgment is made in favor of the insured and against the uninsured motorist carrier. Thus, those who purchase uninsured motorist coverage must expect to find as an adversary the very insurance carrier to whom they paid a premium. See Quick v. State Farm Mutual...