Ennen v. Integon Indemnity Corp.
2012 Alas. LEXIS 15
Alaska2012Background
- Ennen, a passenger, was seriously injured in a 2000 collision where Shanigan drove intoxicated; Shanigan died in the crash.
- Integon paid the $50,000 liability limit to Ennen, believing Shanigan would be liable; Ennen released Integon from further claims.
- Integon’s UIM benefits language unlawfully limited recovery, violating Alaska statutes requiring $50,000 per person and $100,000 per accident.
- Ennen learned in 2007 that Integon had improperly handled UIM claims and later received UIM benefits with interest; Ennen sued Integon for bad faith.
- Integon filed a third-party complaint against Ennen’s attorney, Allen, which the trial court dismissed as public policy, and the case proceeded to bench trial.
- The superior court ultimately held Ennen could sue as an insured for bad faith, found bad faith but awarded no damages, and dismissed Allen as a proximate cause, with a separate ruling on equitable estoppel and damages on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ennen can sue Integon for bad faith as an additional insured | Ennen is an insured claim beneficiary and thus may sue for bad faith | OK Lumber limits bad faith claims to certain relationships; Ennen is an incidental beneficiary | Ennen may bring bad faith claim as an insured (additional insured under policy) under Alaska law. |
| Whether Integon acted in bad faith in handling UIM claims | Integon knowingly violated Alaska UIM statutes and misled Ennen | Mistakes were negligent but not reckless or intentional | Yes, Integon acted in bad faith; record supports reckless disregard for law and policy obligations. |
| Whether the statute of limitations bars Ennen’s bad faith claim | Equitable estoppel and discovery rule tolling apply | Discovery rule and estoppel do not apply | Equitable estoppel bars the statute of limitations defense; discovery rule issues remanded for consideration. |
| Whether Allen’s conduct was a proximate cause of Ennen’s damages | Allen’s malpractice contributed to damages; allocation of fault possible | Allen’s conduct was not a proximate cause given Integon’s independent duty and bad faith | Allen’s conduct not a proximate cause; affirmed alternative ground for Allen in Integon’s favor; damages deemed attributable to Integon. |
Key Cases Cited
- State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152 (Alaska 1989) (recognizes bad faith action for insureds against insurer; discussion on third-party vs. insured rights)
- O.K. Lumber Co. v. Providence Washington Ins. Co., 759 P.2d 523 (Alaska 1988) (incidental beneficiary rule; insurer’s duty limited to insured, not third parties)
- Loyal Order of Moose, Lodge 1392 v. Int'l Fid. Ins. Co., 797 P.2d 622 (Alaska 1990) (confirms interpretation of third-party beneficiary status in bad-faith claims)
- Johansen v. California State Automobile Association Inter-Insurance Bureau, 123 Cal.Rptr. 288, 538 P.2d 747 (Cal. 1976) (additional insured may sue insurer for bad faith; contract and tort bases)
- Murphy v. Allstate Insurance Co., 132 Cal.Rptr. 424, 553 P.2d 586 (Cal. 1976) (insurer’s duty in bad faith not extending to insured’s third party claimant; contrasted with Johansen)
- Gruenberg v. Aetna Ins. Co., 108 Cal.Rptr. 480, 9 Cal.3d 566, 410 P.2d 1032 (Cal. 1973) (early California authority on insurance bad faith)
- Cancino v. Farmers Ins. Grp., 80 Cal.App.3d 335, 145 Cal.Rptr. 503 (Cal. App. 1978) (post-Johansen confirmation of additional insured bad faith rights)