Opinion ID: 1721762
Heading Depth: 1
Heading Rank: 3

Heading: Wanton Failure to File a Supersedeas Bond

Text: Finally, the defendant claims the trial court erred in submitting to the jury the claim set out in count two of the complaint, that the insurer wantonly breached a duty to file a supersedeas bond while the first appeal was pending. The parties agree that there was no contractual duty to file a supersedeas bond. The insured claims, however, that because of the insurer's wrongful conduct in not settling the claim and in appealing the judgment based on the jury verdict, it undertook a duty to protect the insured and wantonly failed to do so. He cites the following from Farmers Insurance Exchange v. Henderson, 82 Ariz. 335, 313 P.2d 404 (1957), in support of that proposition. In the event good faith obliges the company to terminate the litigation by settlement, its failure to do so renders it liable as between the insured and insurer for the full amount of the judgment.... The company cannot be allowed to require Henderson to pay or supersede a judgment which it wrongfully imposed upon him. It could not seek shelter under this provision of the contract when its wrong created the necessity for supersedeas. The company would have no right under such conditions to require Henderson to pay protection. If it wrongfully created the situation, the company must protect Henderson if it desires to appeal. This question should be presented to the jury in harmony with these principles. 82 Ariz. at 341, 313 P.2d at 408. The only claim the court considered in Henderson was the claim of a wrongful failure to settle. The discussion the insured points to arose in the context of deciding whether the insured had a viable cause of action for failure to settle until such time as he paid the underlying judgment. [3] The court noted authority to the contrary, but rejected the position that there was no cause of action, because the insured was subject to levy and execution while the case was on appeal and had therefore been injured. Henderson presented a somewhat novel factual circumstance. The insured was found liable at trial. The insurer took an appeal and did not file a supersedeas. While the case was on appeal, the judgment creditor executed the judgment and had the insured's property sold. The original judgment was then reversed. The insured alleged that the insurer had wrongfully refused to settle the claim. However, because the original judgment in excess of the policy limits was vacated, the only damage plaintiff suffered flowed from the execution on the judgment. After a lengthy discussion of the status of the law of wrongful failure to settle in Arizona, the central issue was what, if any, liability the insurer had as a result of the execution. The insurer argued it had no liability because the insurance contract specifically said that it did not have to secure a supersedeas bond. The court agreed that no contractual liability existed, but said that the contract did not create a bar to liability where its tortious conduct in failing to settle led to execution on the insured's property. The court held that the loss brought about by the execution was a recoverable element of damages in the failure-to-settle claim, but held that the claim of damages for humiliation, mental pain, suffering, and anguish incurred by the Hendersons as a result of the execution was not recoverable. [4] Thus, contrary to our plaintiff's assertion, Henderson does not stand for the proposition that a separate cause of action exists for failure to file a supersedeas bond, but rather for the proposition that injury as a consequence of the execution of the underlying judgment was a recoverable element of damages for the wrongful-failure-to-settle claim. We agree that any loss brought about by execution of the judgment would be recoverable in damages. It is a loss that logically flows from the failure to settle. However, just as in any tort action, every element of damages does not give rise to a separate cause of action. An automobile accident may create liability for losses, including hospital bills, caused by the wrongful conduct of the defendant in causing the accident, but the failure of the defendant to promptly pay the hospital bills does not give rise to a separate cause of action for wrongful failure to pay hospital bills. We have found no other authority to support recognizing such a claim as a separate cause of action under facts such as these. Therefore, the trial court erred in submitting to the jury the separate claim for wanton-failure-to-file a supersedeas bond to the jury. Because the trial court erred in submitting the wanton-failure-to-settle claim and the wanton-failure-to-file-supersedeas claim to the jury over the defendant's specific objections, the general verdict cannot stand. King Mines Resort, Inc. v. Malachi Mining & Minerals, Inc., 518 So.2d 714 (Ala.1987). Therefore, a new trial on the negligent-failure-to-settle claim is required. REVERSED AND REMANDED. HORNSBY, C.J., and JONES, ALMON, SHORES and KENNEDY, JJ., concur. ADAMS, J., concurs specially. MADDOX and STEAGALL, JJ., concur in part and dissent in part.