Opinion ID: 1209086
Heading Depth: 2
Heading Rank: 2

Heading: Liability of Insurance Adjuster Stanford

Text: Arthur Stanford was the branch manager of Underwriters Adjusting Company in Anchorage. Underwriters Adjusting is a subsidiary of Continental Corporation and functions as the claims department of Continental Insurance Company, another subsidiary of Continental Corporation. Continental assigned the adjustment of the Warbelow claim against B & R to Stanford. B & R's complaint in the instant case included the following allegation relevant to Stanford: Defendant Stanford failed to adequately investigate the Warbelow claim, failed to inform plaintiff of the facts which he had determined, and failed to fully inform defendant Continental or the attorney employed by it of the facts of the case. These acts were done with gross and wanton disregard for the interests of Bayless and Roberts, Inc. and in breach of a fiduciary duty. The evidence adduced at trial on this issue fell into two categories. First, plaintiffs introduced proof that, although Stanford knew of the inconsistency in Roberts's testimony on November 13, 1972, and was informed by Gantz on December 9, 1972, that the deposition presented a real problem, he did not inform B & R of the conflict of interest and potential policy defense. Second, Stanford testified that, although prior to the Roberts deposition Continental had authorized him to settle the case for $10,000, he had never communicated this fact to Gantz nor had he ever offered that amount during the course of the case. At the close of the evidence, Stanford moved for a directed verdict on the issue of his liability to B & R, and the trial court denied the motion. Stanford contends on appeal that he had no duty to B & R under his contract with Continental which would subject him to personal liability. He relies on two California cases which stand for the proposition that, since a claims adjuster is not a party to the contract of insurance, he is not bound by the implied covenant of good faith and fair dealing and thus owes no duty to comply with that covenant. Gruenberg v. Aetna Insurance Co., 9 Cal.3d 566, 108 Cal. Rptr. 480, 487, 510 P.2d 1032, 1039 (1973); Iverson v. Superior Court, 127 Cal. Rptr. 49, 51 (Cal. App. 1976). In Iverson, the insured sued his insurance company's claims supervisor for failure to accept a settlement within policy limits. The Iverson court held that, although an unreasonable failure to settle would constitute a breach of the insurer's contractual duty of good faith and fair dealing, the claims supervisor owed no contractual duty of good faith to the insured. 127 Cal. Rptr. at 51. The Iverson court, however, specifically distinguished that situation from one in which an agent of the insurer committed a tort against the insured. The court held that the agent's liability would depend upon the plaintiff's theory of recovery: [Plaintiff] argues that an employee is always liable for his own torts regardless of whether his employer is also liable. The argument ignores the proposition that the employee is liable only if his conduct is tortious breach of duty. Iverson did not breach a duty of good faith owed by him. No other tort is alleged by [plaintiff], it having apparently abandoned its untenable claim that the pleading incorporates a cause of action for fraud. Id. (citation omitted). Thus, under Iverson's reasoning, Stanford could not be held liable for a breach of the fiduciary duty of good faith arising out of the insurance contract, but he could be held liable for negligence arising out of a breach of the general tort duty of ordinary care. This conclusion is consistent with our decision in Austin v. Fulton Insurance Co., 498 P.2d 702 (Alaska 1972). In Austin, we recognized that an insurance agent could be held liable for his negligent failure to insure the plaintiff's house against earthquake damage: The law is well established that in the event of negligence by a disclosed agent acting within the scope of his authority the agent may be held personally liable to a third party. Id. at 704 (footnote omitted). We conclude that there was evidence from which the jury could reasonably find that Stanford had not exercised ordinary care in respect to B & R. [10] Where the evidence, viewed in the light most favorable to the non-moving party, is such that reasonable people could differ in their judgment, the question is one for the jury to decide. See Holiday Inns of America, Inc. v. Peck, 520 P.2d 87, 92 (Alaska 1974). We therefore affirm the decision of the superior court denying Stanford's motion for a directed verdict.