Court Opinion

ID: 9550104
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:29:31.98082+00
Date Added: 2024-06-11T15:11:51.764650
License: Public Domain

SUTIN, Judge (specially concurring in part, and dissenting in part). A. The Notice of Appeal was not Sufficient upon Which to Review the Final Judgment of June 9, 1971. Two separate judgments were entered in this case: (1) On March 26, 1970, the trial court entered judgment against Allstate on a third party complaint brought by defendant Gonzales. This judgment provided that Allstate had a duty to defend Gonzales in the claim filed by plaintiff for damages, and Allstate also had a duty to pay Gonzales attorney fees for representation up to the date of the judgment. Allstate, thereafter, refused to defend. (2) On June 9, 1971, the trial court entered judgment in two parts: (a) judgment for plaintiff against Gonzales; (b) judgment by Gonzales over against Allstate for the amount of damages awarded plaintiff, interest, costs, and an additional sum of $12,000 attorney fees for Gonzales’ attorney. On July 6, 1971, the following notice of appeal was filed: NOTICE IS HEREBY GIVEN, . . . that defendants, Reynaldo Gonzales Jr., and Allstate Insurance Company hereby appeals from the Jtidgment for the plaintiff against these defendants entered on June 9, 1971 and also appeals from the Judgment entered against Allstate Insurance Company on the Third party Complaint entered March 26, 1970 to the Supreme Court of New Mexico. [Emphasis added], Gonzales raised the jurisdictional defect that the notice of appeal did not include 2(b) supra, to wit, that part of the judgment of June 9, 1971, by which Gonzales was awarded judgment over against Allstate. Allstate did not reply to this contention. Section 21-2-1(5) (5), N.M.S.A.1953 (Repl.Vol. 4) provides in part: . . . The notice of appeal shall specify the parties taking the appeal and shall designate the judgment, or part thereof appealed from. [Emphasis added], (1) There was no Notice of Appeal from 2(h) supra. It is evident that a judgment may have more than one part. Being jurisdictional, an appellant has a duty to indicate or set apart in the notice whether the appeal is from the entire judgment or a part of it. The notice of appeal, supra, mentions only that part of the judgment for the plaintiff against the defendant Gonzales. It does not mention or refer to that part of the judgment awarded Gonzales over against Allstate. Gonzales was misled. Why did this mislead Gonzales? (1) Gonzales would never agree to an appeal of a judgment in his own favor. (2) Gonzales never consented that Allstate take this appeal. (3) Allstate was an adversary of Gonzales throughout this lengthy, complicated litigation. (4) The intent to appeal this part of the judgment is totally absent in the notice of appeal. (5) Upon what basis Allstate claimed to be attorney for Gonzales on this appeal is a secret. Since notice of appeal was not given, that part of the judgment which awards Gonzales judgment over against Allstate, including the additional sum of $12,000 attorney fees must be affirmed. Mabry v. Mobil Oil Corporation, (Ct.App. March 31, 1972); see Hayes v. Hagemeier, 75 N.M. 70, 400 P.2d 945 (1963). I dissent from that part of the majority opinion which remands the cause for trial on the amount of the attorney fees awarded Gonzales’ attorney. (2) Allstate had no Right to Appeal 2(a) supra. This court has a duty to determine whether it has jurisdiction of an appeal. Hayes v. Hagemeier, supra. Allstate, as attorney for Gonzales, filed the joint notice of appeal for Gonzales and Allstate. The notice states it “appeals from the judgment for the plaintiff against these defendants.” Allstate was not a defendant. There was no judgment for the plaintiff against Gonzales and Allstate. The judgment for plaintiff was against Gonzales only. Since Allstate refused to defend Gonzales, and did not appear in the hearing before the jury, and never represented Gonzales, it had no right to appeal on Gonzales’ behalf. On the morning of June 9, 1971, the day judgment was entered Allstate appeared in court for a hearing on motions filed by Gonzales’ attorney. During the argument, Allstate said: “Well, I think the judgment on the verdict should be entered. Whether or not there’s an appeal from that, I don’t know, I don’t have anything to do with that.” The court: “I know you don’t.” It is obvious that Allstate had nothing to do with verdict of plaintiff against Gonzales. On June 11, 1971, two days after judgment was entered, Allstate entered its appearance as third party defendant and plaintiff in intervention. .On July 6, 1971, Allstate entered its appearance on behalf of Gonzales in association with attorneys who represented Allstate in the preceding trial in which judgment was entered March 26, 1970. The record does not show any authority of Allstate to represent Gonzales on this appeal. Gonzales had his own attorney. I find nothing which makes Allstate an aggrieved party under Rule 5 [§ 21-2-1(5) (1), N.M.S.A.1953 (Repl.Vol. 4)] with the right to appeal the judgment of plaintiff against Gonzales. It did not “have a personal or pecuniary interest or property right adversely affected by the judgment in question.” Home Fire and Marine Insurance Company v. Pan American Petroleum Corporation, 72 N.M. 163, 381 P.2d 675 (1963). It was not aggrieved or prejudiced by a matter in which it did not participate, Ruidoso State Bank v. Brumlow, 81 N.M. 379, 467 P.2d 395 (1970), and refused to participate. Since the notice of appeal was not sufficient to grant a review, this court lacks jurisdiction to hear the appeal as to the judgment of June 9, 1971. B. The Judgment of March 26, 1970, Miist be Affirmed for Failure of Allstate to Defend Under a Reservation of Rights. Allstate issued to Gonzales an “Allstate Crusader Policy.” The introduction states that it was designed to give the policy holder “the broadest auto insurance protection in history.” A design of this kind when scratched in operation is one of the elements which direct states to seek “No-Fault Insurance.” Allstate agreed to “defend any lawsuit, even if groundless, false or fraudulent, against any insured for such damages which are payable under the terms of this policy, but may make such settlement of any claim or suit as it deems expedient.” It intentionally refused to conform to this provision. New Mexico has not yet adopted a rule on the duty of the insurer to defend. A rule should be formulated for the protection of both the insured and the insurer. Courts in this country have made “a fortress out of a dictionary” in arriving at different rules. Annot. 50 A.L.R.2d 458, and later case service entitled, “Allegations in Third Person’s Action against Insured as determining liability insurer’s duty to defend.” The horrendous litigation of automobile accident cases and related insurance cases demands that uniform rules of law be established in the United States. Insurance companies will have guidelines to follow. Victims and insureds will be protected. It is a useless gesture to try and study nationwide opinions, law review articles, legal publications and magazines. None of us on courts of review can solve this problem alone. I feel free in a concurring opinion to suggest a rule for New Mexico for insurance companies to defend and to settle. (1) Rule on Duty to Defend. Allstate agreed to “defend any lawsuit, even if groundless.” It must defend any claim for relief filed against an insured in automobile accidents even though (1) the complaint fails to state a claim covered by the policy; (2) there is doubt as to the obligation of the insurer to defend; (3) questions of coverage arise; (4) the insurance is primary or secondary. To protect itself from the bar of waiver or estoppel in a subsequent action on the policy, it may clearly disclaim liability under the policy and give notice to the insured of its reservation of a right to set up the defense of noncoverage. Henry v. Johnson, 191 Kan. 369, 381 P.2d 538 (1963); Pendlebury v. Western Casualty and Surety Company, 89 Idaho 456, 406 P.2d 129 (1965); State Farm Mutual Automobile Insurance Company v. Foundation Reserve Insurance Company, Inc., 78 N.M. 359, 431 P.2d 737 (1967). Compare Pendleton v. Pan American Fire and Casualty Company, 317 F.2d 96 (10th Cir. 1963), 326 F.2d 760 (1964); Albuquerque Gravel Products Co. v. American Employers Insurance Company, 282 F.2d 218 (10th Cir. 1960). Both are cases arising in New Mexico. If such a rule is adopted, the calamity which occurred in this case due to the utter reckless disregard by Allstate of its duties, would probably have been avoided. Based upon this rule, Allstate violated its duty to defend. It is immaterial whether the judgment of March 26, 1970, was correct. Based upon this fact, the LujanGonzales judgment should be affirmed without discussion of alleged error claimed by Allstate on the March 26, 1970, judgment. (2) Rule on Duty to Settle Potential Excess Judgment. Allstate agreed that it “may make such settlement of any claim or suit as it deems expedient.” This language is inapplicable since Allstate refused to recognize the claim or defend the suit. Allstate refused to accept plaintiff’s offer to settle within policy limits. Good faith or bad faith, negligence or due care are irrelevant. Allstate preferred to gamble liability for an excess judgment. We are involved in a suit where the insurer refused to defend and refused to settle. Time does not allow a reading of the welter of cases on the subject to find such a case. My view is that an insurer which refuses to defend or settle within policy limits is strictly liable for any resulting judgment. The public policy involved, the reasons for strict liability, the benefits and detriments involved, the fairness and justice of this rule are set forth in the following cases, law review articles, and authorities cited: Crisci v. Security Insurance Company of New Haven, Conn., 66 Cal.2d 425, 58 Cal.Rptr. 13, 426 P.2d 173 (1967); Lysick v. Walcom, 258 Cal.App.2d 136, 65 Cal.Rptr. 406 (1968); see Dumas v. State Farm Mutual Automobile Insurance Company, 111 N.H. 43, 274 A.2d 781 (1971); Tyler v. Grange Insurance Association, 3 Wash.App. 167, 473 P.2d 193 (1970); Snow, Excess Liability — Crisci and Lysick, 36 Ins. Counsel J. 51 (Jan. 1969); Gallagher, The Problems of Defense Counsel Negotiating Settlement in cases involving a potential excess judgment, 37 Ins. Counsel J. 506 (Oct.1970); Pressley, Insurance; Strict Liability for Insurance Companies in Excess Judgment suits, 23 U. of Fla.L.R. 201 (1970); 43 N.Y.U.L.Rev. 199, Insurance-Excess Recovery, Liability Insurer who refused settlement within the policy limits held liable for excess recovery and mental damages, Annot. 40 A.L.R.2d 168 and Later Case Service, Duty of Liability Insurer to settle or compromise. We now seek a rule in New Mexico. We should follow the trend of the times. The courts recognize that the distinction between negligence and bad faith in insurance settlement cases is most difficult to trace. Courts have difficulty in defining “bad faith,” and some courts have applied both standards. Dumas, supra; Brown v. United States Fidelity & Guaranty Co., 314 F.2d 675 (2nd Cir. 1963). In cases which involve a refusal to defend and settle, we should not make a “fortress out of a dictionary.” We should state a clear, unequivocal rule which gives adequate notice to the insurer and the insured. I specially concur with the results of the majority opinion, except that I dissent for the remand for trial on the amount of the attorney fees awarded Gonzales’ attorney.