Foster v. Johnstone

¶1dissenting.

¶2This litigation arose out of a motor vehicle accident in which Deborah Baldwin, driving a pickup owned by her father Jack Foster, collided with a vehicle driven by Grayhl Otto, who sustained substantial injuries. Baldwin was evidently at fault, since settlement was made with Otto for $210,000. Of that amount, various other insurance carriers paid a total of $165,000, and the Baldwins and the Fosters personally paid the remainder. The Baldwins owned a pickup truck which was insured with Prudential, and that policy carried a driving-another-car coverage. Prudential denied coverage, on the basis that the Baldwins’ policy excluded coverage where the insureds were driving non-owned vehicles which were regularly used by them and/or used for business purposes.

¶3The Fosters and Baldwins brought this action for the damages sustained by them through refusal of Prudential to provide coverage and for punitive damages. The trial took two days and consisted almost exclusively of evidence presented by plaintiffs. Defendants’ only evidence was that of an underwriter for Prudential, who sought to testify only as to the meaning of certain insurance policy terminology, which testimony was excluded by the trial court. Thereafter the jury was instructed and two verdict forms were submitted to the jury requiring their finding on alternate theories of liability, i.e., policy coverage and estoppel. The jury found in favor of plaintiff and against defendants on both theories, i.e., policy coverage and estoppel, and awarded compensatory damages. The jury further found punitive damages in the amount of approximately $72,000. Upon motion for a new trial, the trial court, not having the benefit of this Court’s late opinion in Cheney v. Palos Verdes Investment Corp., 104 Idaho 897, 665 P.2d 661 (1983), relied upon the case of Cox v. Stolworthy, *6994 Idaho 683, 496 P.2d 682 (1972), and reduced the amount of punitive damages by approximately $50,000.

¶4Defendant Prudential appeals from the jury verdict and from the judgment entered thereon, and plaintiffs cross-appeal from the order of the trial court reducing the amount of punitive damages.

¶5Appellant Prudential complains of the form of the special verdicts utilized by the court, but, in my view, the objection voiced by appellant at the court conference did no more than to allow the trial court to utilize, in its discretion, either the special verdict forms drafted by the court or the special interrogatories drafted by defendant Prudential. I find no abuse of that discretion in the submission of the court-drafted forms of verdict to the jury. The form of the verdict, whether general or in special interrogatories, is a matter within the trial judge’s discretion and, absent abuse of that discretion, is not a ground for reversal. Garrett v. Nobles, 102 Idaho 369, 630 P.2d 656 (1981); C.C. Anderson Stores Co. v. Boise Water Corp., 84 Idaho 355, 372 P.2d 752 (1962); Ellis v. Ashton & St. Anthony Power Co., 41 Idaho 106, 238 P. 517 (1925). While the special interrogatory forms submitted by defendant Prudential might have made the jury decision more clear, and therefore it might have been preferable, as above-stated, I find no abuse of discretion in that regard.

¶6Since the jury found in favor of plaintiff on both alternatives, i.e., policy coverage and estoppel, if either theory is sustainable, the verdict of the jury as to compensatory damages should stand. I think there is clearly adequate evidence to support the jury’s verdict entered on the theory of estoppel. The evidence, taken most favorably to the plaintiffs, indicates that an agent of Prudential represented to the Baldwins that the insurance coverage on their pickup truck would cover them while driving any other vehicle. The Baldwins relied upon that representation to their detriment and, as is usual, the actual policy containing the alleged exclusions was not issued for some time thereafter. Following the accident, two other representatives of Prudential advised the Baldwins that there was coverage for non-owned vehicles under their policy. Hence, I would affirm the jury verdict and the judgment entered thereon on the theory of estoppel.

¶7As to the majority’s opinion regarding alleged policy coverage and the alleged ambiguity of the exclusionary clauses, it is my opinion that, while well intentioned, it only further obfuscates the law of insurance in Idaho regarding ambiguities in insurance policies. I believe the case at bar is an excellent illustration of the problems which arise.

¶8There is no question but what Mrs. Baldwin was driving a “non-owned vehicle.” The vehicle was owned by Foster. While, as indicated in the majority, the term “regular use” by a non-owned vehicle may be relatively simple language, as is the phrase “non-owned automobile while maintained or used by any person while such person is employed in any other” business of the insured, nevertheless, they cannot be applied in the abstract based only on the policy language. A trier of fact must determine whether the circumstances do or do not bring those exclusionary phrases into effect. Hence, in my view, to that extent, the phrases are ambiguous. Particularly so since earlier in the policy Prudential contracts “to pay on behalf of the insured all sums which the insured [the Baldwins] shall become legally obligated to pay as damages ... arising out of the ownership, maintenance or use of the owned automobile [Baldwins’ pickup] or any non-owned automobile [the Foster vehicle] ...” (Emphasis supplied.)

¶9Here the question of coverage under the initial non-owned vehicle coverage or exclusion under the “regular use” or “any other business or occupation of the insured” was submitted to the jury with what, in my view, were adequate and sufficient instructions. I cannot determine why the trial court’s determination of ambiguity has any dispositive effect. If the court had held that the exclusionary phraseology was not ambiguous, it would nevertheless have had *70to submit to the jury the questions of whether the facts and circumstances of this case called into effect that exclusionary language. That is exactly what the trial court did in the instant case, and hence I see no error.

¶10The facts regarding circumstances that would or would not give rise to the effectiveness of the exclusionary clause, as indicated by the evidence, are as follows: The Fosters and the Baldwins were engaged in an informal partnership business for the spreading of manure. Each family used a pickup truck in the conduct of that business. For approximately three weeks, Mrs. Baldwin had assisted her father Mr. Foster in the manure spreading operation because Mr. Baldwin was working elsewhere. On the day in question, Mrs. Baldwin had again assisted her father in the manure spreading operation and had terminated work at the end of the day. As a favor to her father, she then drove his truck from the work site toward his home so that he could service the truck over the weekend. It was during that trip that the accident occurred. In my mind, therefore, several questions arose which were necessary for determination by the jury. Was Mrs. Baldwin a regular user of the truck? While she may have been a regular user of the truck during work in the fields, was her trip after the work day a regular occurrence? Since the work and the work day had terminated, was her performance of a personal favor for her father in delivering the Foster truck to the Foster residence a part of her business or occupation? In view of the fact that the plaintiffs presented the only evidence on these issues, the jury very probably found that the exclusionary language was not applicable under the circumstances presented here and hence found for the plaintiffs on the policy coverage issue.

¶11I am certain in my belief that a new trial will not change the outcome of this case, and because I believe the jury award was not, as a matter of law, erroneous, I would affirm the verdict and judgment for compensatory damages.

¶12The majority opinion attempts to distinguish Moss v. Mid-America Fire and Marine Insurance Co., 103 Idaho 298, 647 P.2d 754 (1982), on the basis that in Mossthe policy was commercial and in the instant case the policy is a family one. That distinction, I believe, is one without a difference. The sole point is the meaning of the words “regular” and “frequent” in any given insurance policy under the existing circumstances. It is for the jury to decide, and here the jury did so decide for plaintiffs. Even assuming, as held by the majority, that error was committed on the issue of policy coverage, nevertheless, the jury verdict and judgment should be affirmed on the separate and independent ground of estoppel.

¶13As to plaintiffs’ cross-appeal, as above-noted, the reduction of the verdict of punitive damages was based on a standard set forth in Cox v. Stolworthy, supra,which I view as clearly erroneous in light of our recent decision in Cheney v. Palos Verdes Investment Corp., supra. Hence, I would reverse the trial court’s order reducing the award of punitive damages and remand for reconsideration pursuant to our decision in Cheney.

¶14dissenting.

¶15My position in this case is much the same as it was in Moss v. Mid-America Fire Insurance Co., 103 Idaho 298, 647 P.2d 754 (1982), wherein I was the middleman not convinced by the plurality opinion of Justices Shepard and Donaldson, nor by the other plurality opinion of Justices McFadden and Bakes. Writing separately, I mentioned that the insured testified that he asked the local agent’s opinion, and was given it. 103 Idaho at 304, 647 P.2d at 758. Unlike that case, however, in this case the insured purchased the policy upon a representation by the agent, as Judge MeClintick put it at the hearing on motion for new trial, that there would be coverage when *71driving non-owned vehicles.1 This theory did not creep into the case, but was pleaded in Paragraph VI of the Second Cause of Action pleaded in the complaint.2

¶16In arguing the motion for new trial defendant’s counsel saw it differently than did the court:

“It’s a simple matter as set forth in the pretrial memorandum that estoppel is simply not a viable cause of action here. It should have been fraud. It should have been plead as fraud, and they should have had to prove their case by clear and convincing evidence.”

¶17An instruction was given which presented this theory to the jury:

“JURY INSTRUCTION NO. 19

“If you find that Plaintiffs, Rodney Scott Baldwin and Deborah Lynn Baldwin, were induced to enter into a contract of insurance in reasonable reliance on promises of or agreements with the soliciting representative of the insurance company, thereby leaving the insured person or property otherwise unprotected, and the company profits from that change of position, the insurance company is estopped to deny the liability for which it actually contracted by raising provisions from its own printed policy form and you must rule in favor of the Plaintiffs.”

¶18On appeal the defendant continues to urge that this was error. It seems to me that defendant continues to believe that the agent’s representations must have been made knowingly false. However, while a false statement knowingly made is essential to a fraud theory, it is not required to create an estoppel. The agent may actually believe that which he states to be so, and it is only required that it be a statement made within his ostensible authority. Martin v. Argonaut Insurance Co., 91 Idaho 885, 434 P.2d 103 (1967). What is further required to establish liability is a reliance on the part of the party purchasing the insurance which is reasonable. The above instruction given by the court was derived from the language used by this Court in a unanimous opinion, Lewis v. Continental Life And Accident Co., 93 Idaho 348, 351, 461 P.2d 243, 246 (1969). In that case the Court set forth the facts of a case from the South Carolina Supreme Court, declared that court’s reasoning correct, and agreed with it:

¶19*72“Our holding is buttressed by the recent decision of the Supreme court of South Carolina in the case of Spencer v. Republic National Life Insurance Company [243 S.C. 317, 133 S.E.2d 826 (1963) ]. The facts in that case are literally exactly on point with this one insofar as the question of initial coverage is concerned. In that case, a county changed group insurers to avail itself of a lower premium rate, but only after the new insurer promised to cover all employees then covered under the county’s old plan. The insurers were changed on February 1, 1961. The deceased employee in that case entered the hospital on January 14, 1961, and died on February 2, 1961. The policy, like the Continental policy in this case, included a standard ‘actively at work’ provision which the company attempted to use as a bar to the decedent’s beneficiary’s recovery. The Supreme Court of South Carolina said, in holding that the insurance company could not impose such a condition,

‘Under the undisputed evidence, the appellant was clearly estopped from relying upon the “actively at work” clause contained in both the application and the subsequently delivered policy. The proposal submitted by Thornton [the insurance company’s representative] to Florence County was approved by the appellant and there is no question before us as to the authority of Thornton in the premises. Thornton, in good faith, represented to the county that all employees would be immediately covered from the date of the issuance of the policy, which representation was, in good faith, acted upon by Florence County to the detriment of its employees, Mrs. Spencer in particular, when in reliance upon the representations, the coverage in existence was allowed to expire, on the assurance that the new coverage would fully and immediately replace it.’ (Emphasis supplied).” 93 Idaho at 352-53, 461 P.2d at 247-48 (footnote omitted).

¶20In Martin v. Argonaut, supra,this Court upheld the trial court’s determination that the agent there had the authority to bind the company to the renewal agreement notwithstanding a general non-waiver policy provision. 91 Idaho at 893, 434 P.2d at 111. Both Lewisand Martinrelied on Huppert v. Wolford, 91 Idaho 249, 420 P.2d 11 (1966). In Martinthis Court noted from Huppert:

“[T]he trial court determined, and such finding is supported by competent evidence, that Wolford did not inform Vloedman that he lacked the authority to provide immediate coverage on the logging truck, and no contention is made that Vloedman should have known Wolford lacked such authority.” 91 Idaho at 891, 434 P.2d at 109.

¶21In Lewisthis Court noted from Huppert:

“In Collard v. Universal Automobile Insurance Company [55 Idaho 560, 45 P.2d 288 (1935)] a provision in an auto accident policy which expressly stated that the contract was void if ownership changed was held to have been waived by the gratuitous declaration of the company’s agent, and the company was held liable when the new owner of the car was involved in an accident while on a trip which he took in reliance on the agent’s statements. These holdings have recently been reaffirmed in Huppert v. Wolford [supra]. In that case a representative of an insurance company promised a truck driver that he would become insured for an indeterminate period from the time that he signed an application. The printed application form, however, expressly limited the binder period to fifteen days. The promise made by the company’s representative was held to have estopped the company from barring recovery from it for damages arising out of an accident which had involved the insured truck and which had occurred more than fifteen days after the application had been signed. Huppert, on its facts, is a much stronger case from the insurance company’s standpoint than is this one. In that case the provision which the company sought to raise in *73defense was on a form actually signed by the insured contemporaneously with the parole promise of the insurance agent. In this case Continental is attempting to impose a provision in a printed form which was simply delivered to the county after an agreement had been reached, and which was at variance with that pri- or agreement.” Lewis, 93 Idaho at 351-52, 461 P.2d at 246-47 (footnotes omitted).

¶22The question on the estoppel theory is not whether the policy provisions are or are not ambiguous, but whether the company defendant is even entitled to resort to that language. The given instruction informed the jury that the insured’s reliance must be that of a reasonable person. This was adequate. Jurors are selected in the first place because they are thought to be reasonable, and presently at least, I cannot see that there was any error, in not instructing the jury as to how they should decide such a proposition. “Reasonable” in and of itself is generally recognized as a word of common understanding.

¶23For certain there was no error in not giving defendant’s requested Instruction No. 20, which on cursory examination is found to be couched in language which is more aptly used in fraud and deceit actions — not estoppel.

¶24The opinion authored by Justice Huntley has much good to be said for it. Commendably he attempts to straighten out a difficult area of the law — an area which needs to be straightened out. If I had the controlling vote, the Court would sit on this egg a bit longer and hopefully hatch out an opinion which does clarify the law and commands a unanimous vote. Presently there are portions of the majority opinion with which I do not agree. One in particular is the statement couched in the double negative, and speculative as well, that “It is certainly not the law in Idaho that an insured has no obligation to read his policy, and may with confidence rely on subjective impressions he may have obtained in talking with an agent prior to entering into an insurance contract.” Such statement confuses direct statements of an agent with the hearer’s impressions. I see no relevance here in that rather ambiguous statement, and do not understand either that it is the law in Idaho that an insured is obligated to read his policy — which assumes that he will understand what he reads. Buying insurance is very often like buying any commodity. The purchaser makes known what he wants, pays his money, and rightfully assumes that the finely worded package which he receives is what he bargained for.

¶25Another problem with the opinion of Justice Huntley is the supposition entered into after stating the principle of Lewis, i.e., “supposing,” etc., “it is therefore arguable whether the Baldwins were left ‘unprotected’ ” and “it is doubtful they could have obtained the type of coverage they hoped to receive anywhere in the industry.”

¶26Turning to the separate opinion of Justice Shepard, I submit my belief that the Mosscase has little if any bearing on this case. As to the cross-appeal, the trial court did err in reducing the jury’s verdict assessing punitive damages.

¶27As stated above, my first vote is that this Court as a collegial group retain the case in an effort to achieve unanimity. That failing, on the main appeal, I vote to affirm on the judgment for compensatory damages and, on the cross-appeal, to reinstate the punitive damages.