Vaughn v. Vaughn

• Decision Date: 13 June 1979
• Docket Number: No. 3051-II,3051-II
• Parties: Evelyn D. VAUGHN, Appellant, v. John M. VAUGHN, Defendant, Washington Insurance Guaranty Association, Respondent.
• Court: Washington Court of Appeals

Page 527

23 Wn.App. 527

597 P.2d 932

Evelyn D. VAUGHN, Appellant, v. John M. VAUGHN, Defendant, Washington Insurance Guaranty Association, Respondent.

No. 3051-II.

Court of Appeals of Washington, Division 2.

June 13, 1979.

Frederick B. Hayes, Tacoma, for appellant.

Mark G. Honeywell, Seattle, for respondent.

REED, Acting Chief Judge.

Plaintiff Evelyn D. Vaughn appeals from a judgment in favor of defendant Washington Insurance Guaranty Association (Association). We affirm.

In October of 1974, plaintiff obtained a judgment of $30,000 against her husband, John M. Vaughn, for damages arising out of an automobile accident. ¹ At that time the Vaughns carried automobile liability insurance with Medallion Insurance Company (Medallion). The limits of the liability policy were $15,000. In addition, the Vaughns maintained uninsured motorist coverage with Medallion ($15,000/30,000 limits).

Plaintiff was paid $15,000 on the liability policy in June of 1975. By September, Medallion had declared itself to be insolvent. In January of 1977, plaintiff obtained an ex parte order substituting the Association as the (garnishee) defendant in place of Medallion in her suit to establish that Medallion was liable for the entire $30,000 judgment because it had acted in bad faith in handling the tort action.

On June 30, the Association moved for judgment on the pleadings. ² The trial court held that a claim for "bad faith" damages was not compensable under the Washington Insurance Guaranty Association Act (RCW 48.32) and granted the motion. Plaintiff immediately initiated this appeal. Subsequent to filing the notice of appeal, plaintiff became aware of an alternate theory that she believed might support a judgment in her favor. She filed a motion in this court seeking to have the case remanded so that a motion for reconsideration could be heard by the trial judge. The commissioner properly determined that a remand was unnecessary because the superior court has authority under RAP 7.2(e) to hear "post-judgment motions authorized by the civil rules."

A motion for reconsideration was then filed in Pierce County Superior Court. The motion was denied after the trial judge determined that the "discovery" of a new theory after entry of judgment does not qualify a party for relief under CR 59 (New trial and amendment of judgments). Another notice of appeal seeking review of that order was filed with the clerk of this court.

We will first address plaintiff's argument that a claim for "bad faith" damages is within the scope of the Insurance Guaranty Association Act. Plaintiff urges that the Association, by statute, is required to "step into the shoes" of the insolvent insurance carrier and to assume responsibility for all debts owed to the company's insured or to claimants under the insured's policy. ³ This statement is too broad. Under the Act, the Association is liable only for "covered claims." A covered claim is an "unpaid claim, . . . Which arises out of and is within the coverage of an insurance policy to which (the Act) applies." (Emphasis added.) RCW 48.32.030(4). As the courts of this state have uniformly held that an action by an insured against his carrier for bad faith in handling a claim or suit sounds in tort rather than contract, Hamilton v. State Farm Ins. Co., 83 Wash.2d 787, 523 P.2d 193 (1974); Murray v. Mossman, 56 Wash.2d 909, 355 P.2d 985 (1960), we must conclude that a claim for such damages is not a "covered claim" within the meaning of RCW 48.32.030(4). Our holding in this regard is consistent with that of the Florida District Court of Appeals in Rivera v. Southern American Fire Ins. Co., 361 So.2d 193 (Fla.App.1978). In interpreting language identical to that found in the Washington Insurance Association Guaranty Act, the Rivera court denied a claim for "bad faith" damages in excess of the applicable policy limits on the ground that the Florida Guaranty Act did not make the Florida Guaranty Association vicariously liable for its members' torts.

Finally, an examination of RCW 48.32.060(1)(a) further convinces us that as a matter of law the Association could not be responsible for the amount of the judgment that is in excess of Medallion's policy limits. That statute states in part: "In no event shall the association be obligated to a policyholder or claimant in an amount in excess of the face amount of the policy from which the claim arises." No acceptable rationale for avoiding the mandate of this statute has been advanced by plaintiff and we can find no reason to do so.

As her second argument, plaintiff urges that the trial court erred in refusing to reconsider its judgment in light of her new theory. She argues that because her damages exceeded the limits of the Medallion liability policy she should have been permitted to make a claim against her own uninsured motorist policy and hence against the Association. See e. g., Porter v. Empire Fire & Marine Ins. Co., 106 Ariz. 274, 475 P.2d 258, Modified on...