There are several insurance issues here. The court holds, for example, that when you sue your agent for not selling you enough insurance you can get damages for emotional distress. It also holds that third-party beneficiaries have a cause of action under the Consumer Fraud Act.
The plaintiffs’ auto policy had fairly large liability limits. But it had minimal UM/UIM, so when their daughter was seriously injured in an accident they sued their insurance agent for not advising higher limits. The claim, denied by the agent, was that he told them they didn’t need more because they had plenty of health insurance. The defendants moved for summary judgment on the emotional-distress and consumer-fraud issues, which the trial court granted. They also moved for summary judgment based on the fact that the plaintiffs had signed the UM/UIM selection form that explains what is covered, including pain and suffering; the trial court denied it. The jury found for the plaintiff; the trial court denied the plaintiffs’ Rule 49(c) motion at trial but later granted a new trial on all issues. The plaintiffs appealed.
On emotional distress the trial court, though evidently sympathetic to the claim, pointed out that the plaintiffs’ loss was economic – the money they could have had if they’d had more insurance – and that damages for emotional distress are allowed only when the tort “burdened a personal, as opposed to an economic interest.” But our courts have said (Taylor 1996; Rawlings 1986) that the insurer-insured relationship – and therefore, apparently, also the insurer-agent relationship – involves intangible things like peace-of-mind and security. The evidence supported the finding, says the Court of Appeals, that the plaintiffs could have suffered emotional distress from “the loss of their reasonable expectations and peace of mind.” The court reverses and remands on that issue.
As to consumer fraud, the statute (44-1522) requires reliance on a misrepresentation and the intent that others rely on it. Since the parents, not the daughter, bought the insurance, the trial court concluded that she had no standing to bring the claim. The Court of Appeals reverses, holding that the broad language of the statute requires only that “a consumer have a relationship to the transaction.” The statute requires an intent that “others” rely on a misrepresentation but doesn’t say who those “others” are. The court also notes that the statute says “whether or not any person has in fact been misled, deceived, or damaged thereby.”
The plaintiffs also argued that the court should have granted their 49(C) (defective verdict) motion. (This is one that, since it must be made on the fly, a trial lawyer should know by heart; but the first time we made one neither the judge nor opposing counsel understood what we were doing.) The plaintiffs’ damages depended on the amount of UM/UIM coverage they would have purchased but for the agent’s alleged misrepresentation. Three different levels of coverage were available; at first the jury was asked to indicate which of the three the plaintiffs would have bought but at some point the parties agreed to “leave . . . open” that part of the verdict and, apparently, just get a general verdict. The plaintiffs made their motion when the jury returned a verdict for far less than any of those amounts. The Court of Appeals affirms the denial of the motion, for reasons that aren’t entirely clear. It summarily agrees with the trial court that the jury couldn’t have been re-instructed without commenting on the evidence – viz., the three levels of coverage that the evidence said the plaintiffs could have picked from. The opinion says that the verdict was “within the instructed range” but doesn’t say what the instruction was, what the range was, or what it was based on.
But the amount of the verdict apparently had nothing much to do with the evidence – it was about 10-20% of what should have been awarded if anything was – and so the trial court concluded that it must have resulted from sympathy, prejudice, or a compromise between liability and damages. The plaintiffs wanted new trial on liability only; the trial court granted it on all issues, finding them inextricably intertwined. The opinion rules that this was within the court’s broad discretion, especially considering the possibility that the verdict was a liability/damages compromise (it seems that the liability case wasn’t compelling but that the plaintiffs were such as to evoke great sympathy).
The plaintiffs also made an argument about their $1,000,000 umbrella policy, which apparently didn’t, but allegedly would have if the agent had advised it, cover UM/UIM. (We’re reading between the lines to figure out some of the facts of this case. The court seems to have tried to make this necessarily-lengthy opinion as short as possible, a thought we certainly applaud, but it may have overreacted a bit.) The UM and UIM coverages would have had a combined single limit. The plaintiffs argued that this limit was invalid, at least absent an “unambiguous offset provision,” and that since the coverages are separate they would have received two payments of $1,000,000, one for each coverage. (The opinion doesn’t explain why the daughter would have been entitled to both.) But the language of the policy was, we’re told, plain, umbrella policies don’t have to cover UM/UIM anyway, and there is a “dearth of support” for the plaintiffs position, so the court rules the combined single limit valid.
On a cross-appeal the agent argues that his motion about the UM/UIM selection form should have been granted. The court explains that it is reviewing this denial of summary judgment in order to avoid piecemeal litigation. Signing the form protects the agent from arguments about whether he offered the coverages. But the question here was not whether a sufficient offer was made but whether the agent misled the plaintiffs about the coverage and thereby caused them to select less of it. The court therefore affirms.
(link to opinion)
Arizona Appellate Blog 