Western Cas. & Sur. Co. v. City of Santa Fe

• Decision Date: 15 December 1972
• Docket Number: No. 9377,9377
• Citation: 84 N.M. 409,504 P.2d 17,1972 NMSC 84
• Parties: WESTERN CASUALTY AND SURETY COMPANY, Plaintiff-Appellant, v. CITY OF SANTA FE et al., Defendants-Appellees.
• Court: New Mexico Supreme Court

Page 17

504 P.2d 17

84 N.M. 409

WESTERN CASUALTY AND SURETY COMPANY, Plaintiff-Appellant, v. CITY OF SANTA FE et al., Defendants-Appellees.

No. 9377.

Supreme Court of New Mexico.

Dec. 15, 1972.

[84 NM 409] Montgomery, Federici, Andrews, Hannahs & Morris, Sumner G. Buell, Santa Fe, for plaintiff-appellant.

George A. Graham, Jr., Truth or Consequences, for Arthur Giron.

Harry S. Connelly, Jr., Special Asst. City Atty., for City of Santa Fe, Santa Fe.

Anthony J. Albert, Santa Fe, for Ernie Rael.

OPINION

OMAN, Justice.

This is a suit brought by plaintiff, Western Casualty & Surety Company, hereinafter called Western, against the defendants, City of Santa Fe, Arthur Giron and Ernie Rael, hereinafter referred to as the City, Giron and Rael, respectively. The complaint contained four separate causes of action. The trial court held against Western on all four causes, and it has appealed. We affirm in part and reverse in part.

Western was the City's insurer under a combined general liability and motor vehicle policy. Giron was employed by the City as a detective on its police force. At about 11:00 p.m. on April 11, 1968, Giron, acting in the course of his employment, while endeavoring to arrest Rael, shot him. Rael was then twenty years of age. The wound inflicted upon Rael was apparently relatively minor. Giron promptly reported the shooting to the City, but the City gave no notice thereof to Western until September 25, 1968, upon claim being made by Rael through his attorney against the City.

Rael filed suit against the City and Giron on April 11, 1969, seeking damages on the theory that the shooting was the result of recklessness and carelessness on the part of Giron. The court file in that cause fails to show the date when a copy of this complaint was served on the City or Giron, but at the end of the complaint it is stated: 'Plaintiff (Rael) will amend.' On April 25, 1969, Rael filed an amended complaint in which he added a second cause of action. Recovery was sought against the City in the first cause of action on the basis of an alleged negligent shooting, and against Giron in the second cause of action on the ground of an alleged willful or intentional shooting. The court file also fails to reflect when a copy of this amended complaint was served on the City or Giron.

On May 5, 1969, an answer was filed to the original complaint by Giron and the City, and this was done on their behalf by attorneys employed by Western.

On May 12, 1969, these attorneys, acting on behalf of Giron and the City, requested of the court an extension of time until June 2, 1969, within which to file answer to the amended complaint. An order granting this request was entered on May 13, 1969.

On May 27, 1969, the attorneys wrote Giron, calling to his attention the amended complaint and the nature of the claims made in each cause of action thereof and advising that Western, as the insurer for the City:

'* * * has taken the position that there is no coverage for you individually when the claim is one for an intentional tort. Further, there certainly is no coverage of their claim for punitive damages. Therefore, besides there being no coverage under the policy, there is no duty to defend this litigation in your behalf. Thus, you will have to obtain your own attorney to protect your interest.' On May 28, 1969, the attorneys filed answer to the amended complaint on behalf of the City. Giron promptly employed an attorney who entered his appearance on behalf of Giron on May 29, 1969. This attorney answered the amended complaint for Giron on May 29, 1969, and has represented him in both that suit and in the present suit at all times since then.

On December 2, 1969, a pre-trial conference was held in the suit filed by Rael against Giron and the City. At that conference Rael filed a motion for leave to file a second amended complaint. At that time the case had not been set for trial. However, it appears the trial court denied the motion. Subsequently, by order filed on January 20, 1970, leave was granted Rael to file a second amended complaint, which was filed on January 26, 1970. By the first cause of action, recovery was sought from the City on the basis of negligence and recklessness. By the second cause of action, compensatory damages were sought from Giron on the grounds of negligence and recklessness. By the third cause of action, punitive damages were sought from Giron on the grounds of recklessness and 'negligence reflecting * * * indifference for the rights of others.'

The City's answer to this second amended complaint was filed on January 29, 1970, and Giron's Answer thereto was filed on February 11, 1970.

On April 10, 1970, upon a motion by the City, the order of January 20, 1970 was stricken, but Rael was again given permission to file a second amended complaint. It appears the second amended complaint filed on January 26, 1970 and the answers thereto are the pleadings in which the issues in that suit are defined and presently before the trial court.

The City sought a dismissal of the first amended complaint on the grounds of untimely notice by the City and 'that the actions by the defendant Giron were not of such a nature to be within the coverage provided by the policy,' or, in the alternative, a summary judgment on the ground that the City is immune from suit by reason of its sovereign immunity, since it had no insurance coverage.

The trial court ultimately denied the motion insofar as it sought dismissal or summary judgment in favor of the City on the ground of sovereign immunity; denied the motion as to Giron on the ground 'that there is a genuine issue of material fact'; and refused to rule upon the question of timely reporting of the shooting accident on the ground that the motion by the City on this premise was improper. Thereupon Western filed the present suit for declaratory judgment which is before us on this appeal.

In its first point relied upon for reversal, Western claims error on the part of the trial court in holding (1) Western is estopped to deny Giron coverage under the policy of insurance issued to the City; (2) Western waived all policy defenses against Giron; and (3) Western is obligated to defend Giron in the tort action brought by Rael. It is apparent that Western must prevail on this point unless it is estopped to deny Giron coverage under the policy issued to the City.

The decision of the trial court is consistent with Western's claim that Giron is not a named insured in the policy, and the trial court's decision in this respect is correct. Giron's requested finding, that Western insured the City 'and its employees on April 11, 1968,' was denied by the trial court; Rael's requested conclusion that the policy covered 'Giron for any liability arising out of the claim presented by Rael' was also denied; the trial court announced orally 'that the policy does not extend coverage to the individual employee'; and the only basis upon which the trial court sought to extend coverage under the policy to Giron was that of estoppel. No cross-appeal has been taken by Giron or the other defendants. Thus, the question is whether coverage under the policy can properly be extended to Giron on the theory of estoppel. Unquestionably the majority view, and what we consider to be the better view, is that the doctrine of estoppel cannot be invoked to create a contract of insurance. 16A Appleman, Insurance Law and Practice, § 9090 (Rev.Vol.1968) and cases therein cited. See also 1 A.L.R.3d 1147, § 3 (1965) and cases therein cited. Here, as already stated, there was no contract of insurance between Western and Giron.

The trial court also erred for another reason in holding Western estopped from denying the existence of a contract of insurance with Giron. He did not rely and act upon any conduct by Western to his prejudice. The facts are above outlined, and it is apparent that Giron was not prejudiced by the fact that the attorneys employed by Western made answer on his behalf to a complaint which had already been superseded by an amended complaint; by the fact that they secured on his behalf an extension of time within which to file answer to the amended complaint; by the fact that in the letter of May 27, 1969, the attorneys made reference only to an intentional tort; or by any other act or conduct by Western or its representatives. As above stated, Giron employed an attorney on or before May 29, 1969, and has at all times since been represented by that attorney. Compare the facts in this case and the result we here reach on the issue of estoppel with the facts and the results reached on this issue in Looney v. Allstate Insurance Company, 392 F.2d 401 (8th Cir. 1968) and in State Farm Mutual Automobile Ins. Co. v. Gonzales, 83 N.M. 296, 491 P.2d 513 (1971).

Since Giron was not an insured under the policy and the trial court erred in holding Western was estopped to deny him coverage thereunder, there can be no question of waiver by Western of any of its rights under the policy insofar as Giron is concerned and no question...