Opinion ID: 1202759
Heading Depth: 1
Heading Rank: 5

Heading: duty of insurer to defend

Text: The parents assert that the insurance company which issued the policy to the school district had a duty to defend the district and its employees until payment of the limits of the policy via settlements or judgments. The school district and insurance company tendered $300,000.00 to the court and requested that the court apportion the amount to the claimants. The court conducted an evidentiary hearing and found that the policy limit was $300,000.00 and that no other policies existed covering the school district for the alleged losses. [2] The court relieved the school district and insurance carrier from all liability and duty to defend pursuant to 51 O.S. 1981 §§ 158(B), 161(A). [3] The parents contend that the language in the policy which states that the company shall have the right and duty to defend any suit ... requires the insurance company to defend the action until the limit of the company's liability has been exhausted by payment of judgments or settlements. An insurance company has a duty to defend its insured and settle claims in good faith. Christian v. American Home Assurance Co., 577 P.2d 899 (Okl. 1977). An insurer's failure to defend the insured may give rise to an action against the insurer by the insured. Lewis v. Farmers Insurance Co., Inc., 681 P.2d 67, 69 (Okl. 1983). However, we are not concerned in the case before us with such an action brought by an insured against the insurer, but with a third party seeking to hold the insurer liable. In Fidelity and Casualty Co. of New York v. Southall, 435 P.2d 119 (Okl. 1967), we quoted the following with approval. ... it has been held ... that a garnishment proceeding by judgment creditors of the insured will not lie against the insurer on the ground that it was negligent or acted in bad faith in failing to settle the claims against the insured for the reasons that the insured's cause of action sounds in tort and is therefore an unliquidated tort claim and that it is not a chose in action subject to garnishment. (Emphasis added). Id. 435 P.2d at 122. This view appears to be the majority rule, Lisiewski v. Countrywide Insurance Co., 75 Mich. App. 631, 255 N.W.2d 714, 716 (1977), and adopted by our Court of Appeals as well. Cue v. Casualty Corp. of America, 537 P.2d 349 (Okl.App. 1975). An insurance company may have a duty to defend their insured in personal injury actions arising under the dramshop act or as otherwise provided in the insurance contract. Clearly, this contractual obligation is not for the benefit of the injured party. Similarly, the obligation of the insurance company to use good faith in attempting to reach a settlement agreement within policy limits would seem to run only to the insured, not the injured party. Lisiewski v. Countrywide Insurance Co., 255 N.W.2d at 717. A party may assert his own legal rights and interests, but may not assert a claim based on the rights or interests of third parties. Oklahoma Alcoholic Beverage Control Board v. Parkhill Restaurants Inc., 669 P.2d 265 (Okl. 1983). The parents may not complain of the insurance company's duty to defend the school district where the company pays the policy limit to the court for the court's distribution. The orders of the trial court are affirmed. DOOLIN, C.J., HARGRAVE, V.C.J., and HODGES, LAVENDER, ALMA WILSON and SUMMERS, JJ., concur. OPALA, J., concurs in part, dissents in part.