Westrick v. State Farm Insurance

• Decision Date: 23 November 1982
• Court: California Court of Appeals Court of Appeals
• Parties: Joseph WESTRICK et al., Plaintiffs and Appellants, v. STATE FARM INSURANCE et al., Defendants and Respondents. Civ. 65137.

Page 214

187 Cal.Rptr. 214

137 Cal.App.3d 685

Joseph WESTRICK et al., Plaintiffs and Appellants, v. STATE FARM INSURANCE et al., Defendants and Respondents.

Civ. 65137.

Court of Appeal, Second District, Division 5, California.

Nov. 23, 1982.

Perona & Langer and Wayne M. Robertshaw, Long Beach, for plaintiffs and appellants.

Portigal & Hammerton and Barry L. Allen, Santa Ana, for defendants and respondents.

ASHBY, Associate Justice.

Appellants Joseph Westrick and his son Vincent appeal from a directed verdict in favor of Doug Crawford, Joseph Westrick's insurance agent, and State Farm Insurance (State Farm), his insurance company.

In their complaint, appellants claimed that Jim Crawford, Doug Crawford's father and also a State Farm agent, negligently failed to inform Joseph Westrick that a welding truck which later became involved in an accident was not covered under Westrick's existing insurance policy. Appellants prayed for declaratory relief to establish coverage under the policy, and in the alternative, for damages under theories of negligent misrepresentation, negligence and estoppel. The trial court decided to dispose of the equitable issues first and heard evidence from all parties. During this presentation, appellants' counsel stipulated that Joseph Westrick's insurance policy did not in fact cover the six-wheel welding truck, ¹ and thereafter proceeded on his negligence theories alone. After both sides rested, the trial judge declared that he had found no factual issues requiring determination by a jury: resolving all conflicts in appellants' favor, respondents as a matter of law owed no duty to warn Joseph Westrick of the lack of coverage. Appellants assert they The parties testified to the following facts. Joseph Westrick stated he had been insured with State Farm since 1964. When Doug Crawford became his insurance agent in 1975, Westrick owned two vehicles, a 1970 Cadillac and a 1964 Volvo, both of which were insured with State Farm.

presented sufficient evidence of respondents' negligence to warrant a jury trial.

In May 1977, Westrick considered the purchase of a military-type jeep pickup truck for use in his agricultural real estate business. State Farm agents had previously mentioned the 30-day automatic coverage clause of his policy. Westrick called Doug Crawford, described the vehicle he planned to purchase as a four-wheel pickup truck, and asked whether his policy would cover the truck during the drive from the seller's place of business to Westrick's home. Doug Crawford responded that the truck would be covered for 30 days, but Westrick should "let him know just as soon as possible." Westrick did not, however, purchase the jeep truck.

In early July 1977, Westrick purchased a welding business for his son Vincent, who was living with his parents at the time. As part of the welding business, Westrick bought a 1965 Dodge pickup truck and a 1948 Ford one and a half ton welding truck. On July 18, he called Doug Crawford's office to secure insurance for the vehicles. Doug Crawford, however, was not there and Jim Crawford, Doug's father and also a State Farm agent, answered the phone. Westrick related the conversation as follows: "Well, I asked for Doug Crawford, and [Jim] informed me that Doug was fishing and had the day off, and I informed him that I had purchased a welding business, and that there were two vehicles involved, and I gave the year of the Dodge truck, and I gave him the tonnage, and then I told him about the '48 Ford ton and a half welding truck that I wanted insurance coverage, and I offered him the serial numbers and the license plates, and he said that wouldn't be necessary. Doug will be in the following day, and I said, well, inform Doug that I'll be in."

On the same night, Joseph Westrick informed Vincent he had insurance and could drive the welding truck next day on the job. On July 19, Vincent drove the truck out of the business yard and at 2:30 p.m. was involved in an accident. The truck was not in fact insured.

Doug Crawford could not recall any conversation about automatic coverage on a jeep pickup truck. He stated that before the accident, he did not know if automatic coverage applied to commercial vehicles and would have had to call his home office to find out. He also did not know whether State Farm would have been willing to insure a 1948 Ford truck. He admitted, however, that he had power to bind coverage on a pickup used in the agricultural real estate business. He further testified that he and his father worked in the same office and used the same phone number, but serviced different clients. Since the Crawfords had no employees, father and son answered each other's calls in the other's absence and routinely wrote insurance or handled claims for the other's clients. Doug Crawford thought his father's conversation with Joseph Westrick took place on the 19th of July instead of the 18th, and he did not learn of the call until the 20th.

Jim Crawford recalled that his conversation with Joseph Westrick took place on July 19. He understood that Westrick's purpose was to inquire about insurance for the trucks, and admitted he could have issued a binder on behalf of his son provided the vehicles met the company's underwriting standards. However, he never discussed whether the trucks were or could be insured and made no further inquiries because Westrick wanted to talk to Doug, not to him.

Richard Mortimer, an insurance broker who gave expert testimony on appellants' behalf, testified that according to the standard of care in the insurance industry, an agent in Jim Crawford's situation receiving Westrick's call had a duty to inquire whether the vehicles were covered under the existing policy and to warn the insured not to drive them until insurance was procured.

Mortimer himself would have issued a binder on the 1948 truck if the client had presented brake and license certifications.

Finally, Robert Knutsen, a State Farm underwriter, testified that his company generally insured six-wheel vehicles, but declined to insure Westrick's welding truck when Doug Crawford called him about it sometime in July of 1977.

DISCUSSION

On appeal from a directed verdict, we view the evidence and all reasonable inferences therefrom in the light most favorable to appellants. (Better Food Mkts. v. Amer. Dist. Teleg. Co., 40 Cal.2d 179, 182, 253 P.2d 10.) Here, a jury could have found that in May of 1977, Doug Crawford told Westrick a jeep pickup truck to be used for commercial purposes would be automatically insured under his policy. When Westrick called the agency in July of 1977 to obtain insurance for his new commercial vehicles, Jim Crawford understood the purpose of the call, but simply ignored the situation, told Westrick that specific identification of the vehicles "wouldn't be necessary," and referred him to his son. Westrick was unaware of the specific policy provision excluding six-wheel vehicles from coverage and relied on Jim Crawford's expertise. Since he had not been told anything to the contrary, he reasonably believed that his new trucks, just as the pickup truck, were automatically insured for 30 days, and gave his son permission to drive the welding truck on the job. Had he known the truck was not covered, he would not have allowed Vincent to use it until insurance had been obtained. We hold that this evidence, if believed by a jury, would have sustained a finding of Doug Crawford's ² negligence; the directed verdict was therefore improper.

Respondents maintain they were entitled to a directed verdict because (1) Westrick never requested insurance; (2) even if he did, he requested it of Doug Crawford instead of Jim, and did not rely on Jim Crawford as his agent; (3) an insurance agent cannot be liable for an insured's lack of coverage unless the agent has first expressly promised to procure the coverage; and (4) Westrick's reliance on the automatic coverage clause was in any case unreasonable.

Respondents' first contention regarding Westrick's failure to request insurance is not sustained by the record. Westrick testified that he told Jim Crawford "about the '48 Ford ton and a half welding truck that [he] wanted insurance coverage [for] ...." We believe he communicated his request with sufficient clarity. Moreover, Jim Crawford admitted that he understood Westrick was calling about insurance for his trucks. Drawing all reasonable inferences in appellants' favor, it is obvious that Westrick requested coverage for his vehicles. (See Better Food Mkts. v. Amer. Dist. Teleg. Co., supra, 40 Cal.2d 179, 182, 253 P.2d 10.)

Next, respondents assert that appellant intended Doug Crawford, not Jim, to respond to his request, and knew no action would be taken until Jim was available. Westrick's testimony of his conversation with Jim Crawford paints a different picture, however. When Westrick heard Doug Crawford was absent, he began to describe the business and his vehicles to Jim and refrained from furnishing more detailed information only after Jim Crawford indicated "that wouldn't be necessary." If believed, this testimony indicates Westrick's reliance on Jim Crawford's knowledge and expertise in Doug's absence.

Moreover, Jim and Doug Crawford were each other's agents by mutual agreement, each having the power to fully respond to requests for insurance by the other's clients. (See Civ.Code, § 2299.) "As against a principal, both principal and agent are deemed to have notice of whatever either has notice of, and ought, in good faith and the exercise of ordinary care and diligence, to communicate to the other." (Civ.Code, § 2332; Northern Natural Gas Co. v. Superior Court, 64 Cal.App.3d 983, 992, 134 Cal.Rptr. 850.) At this stage of the proceedings, we cannot say appellants' cause of action is defeated as a matter of law because he could not rely on Jim Crawford's expertise or...