Kobbeman v. Oleson

SD 20 KOBBEMAN, Plaintiff Dominic J. Appellant, OLESON, Kahler, Inc., a

David Sr. C. Corporation, Kahler Dakota

South d/b/a Ap Agency, Defendants arid

pellees.

No. 19915. Dakota.

Supreme Court South Sept. on Briefs

Considered 25, 1998.

Decided Feb.

company, but Kobbeman believed his dam- ages exceeded that amount. He took an assignment of the tortfeasor’s cause of action against agents his in exchange insurance for any judgment a covenant not to on execute might Kobbeman him. obtain Kob- agents beman then sued the failure to procure additional insurance. The trial court granted summary judgment agents for the holding the tortfeasor had sustained loss insurance, for lack of nor added could he ever incur virtue of the cove- nant, thus no valid cause of action had ac- plaintiff crued. Is an in which a agrees any on to execute ob- tained tort action ineffec- tive because the covenant relieves the tort- any obligation pay damages? feasor of As a full covenant was not release and left open litigation, the tortfeasor uphold assignment, because the but statute of expired on Kobbeman’s claim tortfeasor, against the we affirm summary

Facts 5, 1990, September On [¶2.] Raul Daniel met with David Oleson Kahler Insur- Agency ance purportedly ask Oleson to secure a liability policy umbrella with limits of million cover Raul his $1 son, family, including Christopher. his Whether the conversation related to increas- ing existing limits on an policy, homeowner rather securing then a new umbrella policy, dispute. remains in Raul wrote a check to Kahler for pro- what he believed to be the premium policy, rated on an umbrella but the agency applied payment increase existing policy Raul’s homeowner limits. 7, 1993, July [¶ 3.] On Daniel injured Dominic in a Kobbeman motor vehi- Swedlund, Paul S. G. Verne Goodsell of Farm, cle accident. State the Daniels’ motor Gunderson, Palmer, Nelson, Rap- & Goodsell carrier, vehicle concluded Christo- City, plaintiff id appellant. pher paid was at fault and Kobbeman its Rexford A. Hagg, Klapprodt Kevin W. $100,000. policy Having limits of been ad- Whiting, Hagg Haag, Rapid City, & for de- vised Kobbeman’s claimed might fendants appellees. amount, exceed that Raul contacted Kahler policy about umbrella and learned Oleson KONENKAMP, Justice. exchange had not obtained one. for a injury [¶ After automobile not to on execute accident, them, Dominie obtained collected the December limits from gave the tortfeasor’s insurance the Daniels to Kob- request. City applicants Oleson cause of of their beman ¶ Schwebach, 4, 10, 1997 SD Kobbe- Colton On and Kahler.1 December Larsen, 769, 771; Rumpza Kahler suit Oleson man ¶ policy. He 551 N.W.2d Trammell the umbrella SD to obtain for failure secured v. Prairie States not first fact, agent not com- (S.D.1991)(duty Kobbeman did of insurance Christopher; specified by until after in procure insurance of kind suit mence July, sured). expired in duty, limitations had Upon of a breach of this the statute judg- summary moved for Defendants is the amount the insur measure of of the cove- contending that virtue paid on behalf of the insured er would have expiration of the and the not to execute coverage nant been obtained. See had the desired applicable to the motor limitations statute of v. Home Federal Sav. & generally Heinert accident, Christopher could suffer Falls, vehicle 444 718 Loan Ass’n Sioux N.W.2d of an essential element Larsen, 209, and thus (S.D.1989); Kenyon 205 Neb. v. missing. The circuit (1980); cause of action 759, Virginia First 286 764 NW.2d ap- granted the motion. court Wells, 691, 224 v. 299 Sav. & Loan Ass’n Va. protected by person peals, asking whether (1983); 370, Pickhover v. Smith’s S.E.2d 372 assigna- agreement not to execute has (Utah 664, Mgmt. Corp., 771 P.2d 670 Ct. agents against insurance cause of action ble Dudek, v. 59 App.1989); Nat. Bank Wheaton procure requested allegedly who failed 970, 487, 490, Ill.App.3d 17 Ill.Dec. 376 effec- and whether 633, (1978); v. Insur N.E.2d 636 Greenfield period. tively waived the Inc., 803, 97 Cal.App.3d 19 ance (1971). 164, 169 of Review Standard familiar for re our standard 4.] Under [¶ negli actions founded on 6.] Civil [¶ summary judgments, we decide viewing damages as an essen gence require or fraud exist of material fact genuine issues whether Pullen, McGladrey & tial element. Lien v. correctly ap whether the law ed and (S.D.1993); 421, United Fire 509 N.W.2d 423 emerges support plied. any legal If basis Services, Inc., v. P C Ins. 488 & Cas. Co. & ruling, we will affirm. De trial court’s (S.D.1992)(“South 661, Dakota N.W.2d 666 Gibson, South Dakota v. Ins. Co. Smet of pled rea requires damages be with law ¶ 98, 99; 102, 5, 552 N.W.2d Garrett 1996 SD Family certainty.”); S.W. Croes sonable 833, BankWest, Inc., 459 837 v. N.W.2d Admin., 55, 446 Bus. N.W.2d Trust v. Small 1990); Pickering, 434 N.W.2d Pickering v. (S.D.1989). damages most tort Without 57 15-6-56(c). (S.D.1989); 758, With 760 Evergreen hold no nucleus. claims undisputed, our review material facts Co., 250 Bank & Trust Farms v. First Nat. the trial determining whether limited to (1996)(“Dam 728, 860, 735 Neb. 553 N.W.2d correctly applied the law. Contract court plaintiffs any other element of ages, like law. State interpretation question is a action, pled proved, and must be cause of Vostad, 520 Mut. Auto. Ins. Co. v. Farm plaintiff evidence is on to offer the burden (S.D.1994). 273, Summary judg 275 N.W.2d alleged dam prove plaintiffs sufficient to dispose of preferred process to ment is a Valley Ass’n. v. Iowa Lake ages.”); Sun Horne v. Cro unmeritorious claims. legally (Iowa 1996); Anderson, 551 N.W.2d 65, ¶ 5, 50, zier, 565 N.W.2d 1997 SD Russell, 289, N.W.2d 295 v. Poulsen Catrett, 317, 327, Corp. v. 477 U.S. Celotex 1981). (Iowa 265, 91 L.Ed.2d 106 S.Ct. omitted). (citations (1986) Assignment of Tort Action [¶ 7.] Execute Not to Analysis Covenant and Decision Dakota, thing “[a] usually South agents [¶ 8.] are Insurance of a of the violation arising action out type amount of to obtain the obligated injuries. anyone other than Chris- contends that 1. No one topher for Kobbeman's would have' been liable

property obligation language out to the of an find 43-42-2; by the legally obligat transferred owner.” SDCL tortfeasor remains Harris, 50, see v. 36 S.D. also Sherman Royal ed on Lancaster (1915)(tort assignable), N.W. 925 over- America, Or. Co. ruled, Kidd, grounds on other Simons v. (1986). (1950). By as- S.D. N.W.2d 840 Here, provided course, thing assignors signing a part: grant than greater rights they possess. Bank, agree Gilbert v. Nat’l United and covenant not to Kobbemans (S.D.1989); Hampton, Barnes v. Neb. any judgment execute obtained (1977); 252 N.W.2d represent Smith the Daniels. The Kobbemans (Iowa Brown, 1994); prosecute their is to intent the as- Appleman, 6B Law and Practice signed causes In- Kahler (1979). 4271, § at 138 fundamental Oleson, “[I]t Agency, any or surance Dave other that a must in the valid cause exist However, agent. to agency the extent pre- assignor assignee an insured before can prohibited prov- are the Kobbemans from Berrington vail insurer.” up ing their in that Williams, 130, Cal.App.2d 244 52 ability Kobbemans must have the to do so (First) 772, (1966); 776 Restatement of Con- underlying in an the Dan- 167(1932). § tracts iels, if required so a court. requested policy If the been [¶ 9.] provisions, judgment With these even if a purchased, presumably it would have re him, was obtained but not levied quired amount, pay insurer to an within Christopher still might adversity endure the policy limits, the would have been insured Moreover, litigation. stip- legally obligated pay damages. to Free as nothing ulates about docketed Ins., man v. Schmidt Real Estate & 755 F.2d judgment create would a hen his real (8th Cir.1985). 137 con Some courts property required by as SDCL 15-16-7. He protected by clude insureds covenant not to might also suffer diminishment his credit obligation pay anything execute have rating. Christopher’s remedy ostensible if injured parties; have consequently, insurers attempts Kobbeman breaks his covenant and duty pay liability policies. under their a judgment against to enforce him would be Gibson, Oregon Or.App. Ins. Mut. Co. v. 88 Paynter, to sue for breach of contract. 593 (1987)(tortfeasor P.2d uncondi P.2d tionally insulated from had no valid considering gamut 11.] After [¶ deci- Freeman, claim assign); F.2d at in response arrangements, sions to these (citations omitted). applied If we this rea agreement find ourselves in with those courts case, soning present if re even upholding assignments of a of action in cause quested obtained, policy umbrella had been exchange for a covenant not to execute in the covenant not to dis execute would have procure requested instances failure in- 'charged any obligation. covered deci Some Lawlor, surance. Red Giant Oil Co. v. go step finding sions agree further these (Iowa 1995). Concerns that such inherently ments unenforceable as collusive. Freeman, agreements intrinsically are collusive will not F.2d at dis 139. Other cases control because insurers have available to tinguish between a and a release defenses, panoply execute, including them not to cover- holding type of cove fraud, contract, age, nant in and collusion. Id. at 533. “We question merely here “is legally release, why see any and not a fail to should make such that the tort difference who liability remains sues insurer —the insured and a breach of contract Indeed, assignee.” action lies in favor or the insured’s Id. of the insured if the injured party assignee prove have to judgment.” seeks to collect his “would State Farm Mut. insurer Paynter, Auto. Ins. Co. v. and the would have a to assert (Ct.App. might 122 Ariz. defense that have had if the 1979). approach purchased most pragmatic requested.” looks insurance had been C.J., ask, injured assignments such must (Heaney, Freeman, F.2d at judgment against the tortfea- party obtain a prove assignees dissenting). Requiring so, if damages, and when of collu- sor to establish the risk “in full reduces their case assign- must the be obtained? sion, effect to the justifies giving Campione claims.” negligence ment of the Prejudgment Assignment [¶ Wilson, 661 N.E.2d 422 Mass. (1996). potential damages 14.] Whatever al types of settlements pro These failure to suffered from the injured parties and remedy both to requested low a umbrella remained cure the deprived of insurance wrongfully tortfeasors unknown at the time of the Co., 528 N.W.2d at Oil coverage. Red Giant actuality, Kobbeman held an Kobbeman.2 Here, to execute was the covenant not chose in ac “anticipatory assignment of a ... not a re agreement “merely Widiss, A.I. tion.” R.E. Keeton & Gray v. also Grain (1988). Id. at see lease.” § at 291 Is a Law 4.1 Mut. 871 F.2d Dealers required proof to establish an excess amount (“Covenants (D.C.Cir.1989) to execute from failure to obtain insurance? of. loss releases, liabil legal as the than are different faith failure to analogously, bad Somewhat against those who have ity in force remains eases, jurisdictions uphold post- most settle covenants, total represents release whereas a assignments thing of a in action in Christopher’s tort liability.”). from freedom a for a covenant not to execute on exchange might still be liability because he continued Gray, 871 F.2d at 1133 n. judgment. See despite the covenant obligated pay to legally Co., Transamerica Ins. 30 Cal.3d Samson v. Larson, 564 In v. not to execute. Clock 32, 220, Cal.Rptr. 45 178 (Iowa 1997), 436, plaintiff, as 438 (1981)(absent collusion or unreasonableness insured, brought against suit assignee of the obtaining judgment “an insured breaches in insurer, claiming agent and an insurance company when he duty to the insurance coverage. provided greater they should have company to the assigns rights against Co., the Iowa Distinguishing Red Giant Oil not injured plaintiffs in return for covenant controlling factor Supreme Court held execute”); § 1410 46A CJS to agreement: the nature of the (1993)(“A must be obtained judgment valid pay legally obligated to insured is still [A]n a cause of action against insured before not to execute when there is a covenant injured person against in arises favor of full when there is a But company, judgment until the insurance by liability further owed there is no release rendered, injured is against the insured insured, company to its the insurance potential right only an inchoate person has re- has no to the insured therefore v. Farmers company.”). Critz against the Cf. company which cover 788, Cal.Rptr. 41 Cal.App.2d Group, 230 injured party. can be up 401, and release (1964)(assignment 404 judgment obtained includes,a though no held even A which Id. at 438. settlement (as value determined against insured because opposed to a not to execute covenant insurer). Bendall v. release) Contra of a bad faith of exchange for an in (N.D.Ala.1981). White, 793, F.Supp. 795 agent, 511 the tortfeasor’s of action cause America, Royal in- Ins. Co. requested also to obtain allegedly failed who Wolff 233, (S.D.1991)(applying Ne surance, 235 intrinsically nor neither collusive is given judgment consent damages. we braska law—invalid lack of Next ineffective for been had the insurance ee would have been expectation or the mea- "Whether the reliance is, used, the amount of the loss. equal procured, that promisor's will sure is loss, required the amount measure would be reliance at least if the insured’s the amount of position [the] which put promisee in the in opportunity other insurance is to obtain lost Farnsworth, promise not had the promisee would have been Allan Contracts counted.” E. is, made, 2.19, 1990). of the loss—if it is (2d the amount expectation § "The been at 101 ed by forbearing promisee required put that the relied assumed be the amount measure would Id. at n. procure insurance elsewhere.” position promis- promisee in which the in the 638

in exchange requiring for covenant not execute- The rationale of the cases collusion). through judgment precedent faith and as a condition obtained bad insured’s cause an insurer forums, prejudgment In some as becomes manifest when we deal with the signments of an insured’s claims bad faith case. issue We are See, disapproved.3 e.g., have been State here not with the fact concerned Gandy, Farm Co. v. Fire & Cas. S.W.2d established, damages being clearly but the (Tex.1996); Smith v. State Farm certainty the amount thereof as well. Co., Cal.App.4th Mut. Auto. Ins. Doser, Cal-Rptr. (1992)(“[w]e Cal.Rptr.2d recognize disallowing assign considerations for decisions look not to tim- [¶ 16.] Other prior judg ing, ments of a faith language bad but to the of the covenant not stipulated judgment execute. “Whether the ment” — sufficient); Wright execute not v. Fire made of a judg- existence or a Cos., Cal.App.4th man’s Fund Ins. ment to into is not come existence determina- (1992)(“A Cal.Rptr.2d on tive of or not assignee the insured’s merits, however, always required may is not maintain an action the insurance Lancaster, company.” insurers have been default bound 726 P.2d at 374. See Restaurant, stipulated judgments under certain circum also Inc. v. Antal’s Lumber- stances.”); Co., Doser Mut. Ins. men’s Middlesex Mut. Cas. 680 A.2d (D.C.1996)(the Cal.App.3d debt “for which an insurer (1980)(insured’s assignment conveys nothing becomes is liable fixed at the time of loss insured). unless though compensation entered even amount ascertained.”). party’s “[T]he suit not be is third still to bad faith cases, injured until party the action between the refusal mandating post- to settle a rule and the judgment assignment insured ... liabili imperative [and] concluded is more be- ” ty cause, instances, of the insured is first determined.... in most no cause of action Cos., v. Fund judgment Moradi-Shalal Fireman’s Ins. solidifies until against is rendered hand, Cal.Rptr. Cal.3d an On the in insured. other failure to (1988)(settlement P.2d procure eases, is an insuffi claims reason- underlying cient ably long conclusion the action— arise before a We con- clude, there must a judicial assignments be conclusive determi of causes of action insurance, nation of procure the insured’s before judgment the failure to a party proceed critical, third in action against establishing can an loss is timing a but its. is insurer); Doser, the at not.4 question, 120. A difficult ripe more one not (1987) support Kobbeman cites argu- Helmbolt v. LeMars Mutual its Co., Inc., judgment ment that no need obtained in the 1987)(there "potential must exist re underlying brought action and case that this was sponsibility judgment”). for an excess Our hold appropriate within the statute of limitations. ing in that Helmbolt an insured need not reduce any never discussed statute of limita- Steinmetz judgment against a claim tortfeasor a before rationale, Although tions. it uses a different it entitlement to underinsured motorist benefits we, upheld, assignment as do with a covenant company, from the insured’s own insurance is agent not to execute in the case of an insurance part upon statutory based in the mandate of procure requested who failed to insurance. Fur- With 58-11-9.5. its unusual facts and no thermore, judgment, in a whether Steinmetz as here, cognate statutory provisions direct us opposed stipulation, required to a mere was unique Helmbolt must be confined to its circum challenged. establish insured’s the loss was not (SDCL "Nothing stances. in the above statutes Perhaps simplistic response it is to ask in to the 9.6) requires 58-11-9.5 and an insured to reduce judgment dissent’s assertion that no need be ob- against judgment prior claim a tortfeasor to against assignor, granting tained the does not the payment Helmbolt, of underinsurance benefits.” any judgment of a covenant not to execute on legislature N.W.2d at 59. "Had the intended presuppose judgment will be obtained? None- require judgment prior payment of under- theless, states, including Washington, in most at coverage, insured it would have could have least a consent is obtained in the un- said so." Id. derlying See cases in case. collected McLellan v. Inc., Agency, 4. The dissent cites ex rel. Palmer Atchison Ins. 81 Hawaii Steinmetz Inc., Hall-Conway-Jackson, Wash.App. (Ct.App. 1996)(applying "judg- P.2d here, separate man insists his ease Christo- judg- whether for consideration pro- adversary pher full should be allowed to take its course without obtained Gandy, 925 the statute assignment suffice.5 See because waived ceedings will an old quandary. This is are limitations defense.6 We unaware S.W.2d about alien- Long presiding Holmes’ concern in ago, circuit court in action involved “the diffi- against Christopher directly ation ruled of choses case us, culty transferring a mere ... when question. this In the case before howev- sprung which er; fact from expiration period the situation of of the limitations Holmes, could also be transferred.” argued summary judgment was at the hear- (Dover 1991)(1881). Law, ing, spe- Common but it is the court unclear whether event, long ultimately as one ob- In so cifically granted considered this issue when underlying in the action to tains a summary judgment. Regardless, validity proceeding trial loss before purported establish the with its waiver claim, it is not on the crucial wheth- squarely of the statute of limitations is before judgment precedes er the or follows the as- us. prob- come to the final signment. Now we 19.] Our examination of the [¶ having of limitations lem: the statute With it to reveals be indistinct on whether the expired, ever obtain a valid can Kobbeman period truly waived. Kobbe- limitations Christopher?

judgment against following language: man refers “[T]o prohibit- the extent the Kobbemans are Limitations 3. Waiver Statute [¶ 17.] proving up ed from their the statute limita After Kahler], [Kobbeman the Kobbemans expired tions on his tort ability underly- must have the to do so claim, sep nonetheless Kobbeman ing required Daniels if so Christopher, undoubtedly arate suit by a court.” Even if we to construe were $100,000policy to seek a above effectively provision tolling the limita- already paid. limits Farm had That State period applicable to the case tions pending at the matter still time this Christopher, question remains whether appeal Because the reached us. Kahler such a waiver is valid as it affects period Kobbeman’s expired on ease Oleson. Christopher, contend Oleson Kahler Dakota, agreements longer liable to is no South rights limiting future to enforce one’s are any damages and thus time hand, assignment Though void. See 53-9-6. On the other is ineffective. he does here, jurisdictions, parties he commenced as most to a dispute that may agree period expired, potential or a lawsuit to after limitations Kobbe- lawsuit procure adequate Coyle to Giant and There was no real ment rule" in case of failure reached. circumstances, making covenant not to insurance with So while the trial. in these execute— no from bad faith refusal to settle distinction Coyle judgment binding to is and valid as and purpose finding the this tort is com- Giant, LeMars, cases for as to Red it is not conclusive — final). plete when becomes McLellan Shugart, 316 the insurer. See Miller v. N.W.2d agency also the insurance was not held 729, (Minn.1982) (reaching the same 735 con- "stipulated set forth in bound the amount under circum- clusion as to settlement reached judgment.” here). stances similar to those out certain to deter- Some courts set factors supplemental 6. Kobbeman also insisted in brief whether a consent with a cove- mine that Kahler Oleson admitted Christo and nant not to execute is reasonable. See Chaussee period. pher Our exami waived the limitations Co., 504, Wash.App. Maryland v. 60 803 Cas. nation of the record this admission was where Bertram, 1339, (1991); Griggs 88 P.2d v. reveal'any judicial supposedly ad made fails 163, 347, (1982). 174 N.J. 443 A.2d In Red most, attorney agreed Co., 534, At defendants' mission. N.W.2d at where the Giant Oil assignor 528 arguably constitute waiv assignee agreed stipulated could to a judgment, Supreme See v. Court er of the statute of limitations. Tunender the Iowa wrote: 849, Minnaert, 62, ¶ 24, N.W.2d 1997 SD 563 adjudication is not an But here the only Red on the merits. It is settlement 640 period contemporaneous statutory dispute.” of limitations. Or settlement of a

extend Inc., Travelers United Commercial Third Ave. Eastland der 950 Co. v. Indus. of of 586, 608, (1983). Wolfe, 19, 367, 331 67 S.Ct. America v. U.S. 119 Misc.2d 463 N.Y.S.2d 372 (1947); Kroeger 91 L.Ed. 1687 v. sincerely 434, We are concerned [¶22.] 433, Farmers’ Mut. Ins. 52 S.D. 218 potential if uphold with the for abuse we (S.D.1928)(by contract, express or N.W. 17 supposed waiver of the statute of limitations implied, bringing for an action the time law); Christopher’s beyond the these circumstances. waiv be extended time fixed Inc., Rexnord, having personal consequence Travelers Co. v. 37 er Indem. merest 20, 246, (1978). himself, A.2d 249 See truly impacts Pa.Cmwlth. Oleson and Kahler. Annotation, Validity Carnahan, (waiver also Contractual 284 A.2d at 729 of Limitations, Statute 1 A.L.R.2d Waiver party’s rights). of derogation third To sanc of of (1948). agreement Even waiver tion a waiver of the of tortfeasor’s statute year expiration after a limita reached a of limitations, which in an effect extends upheld period tions has been as enforceable exposure liability, other’s invites future preserve previously time barred claims. Once the of mischief collusion. statute Equities, Bank v. Union Switzerland HS expired, of basis for limitations both Inc., (S.D.N.Y.1978). F.Supp. assignment and dissolved: Christo Agreements extending a period limitations pher longer judg no an could suffer excess have, however, an indefinite future date been (and assignee) long thus he held void T v. and unenforceable. & N PLC grounds er for failure to sue obtain Inc., York, Fred S. James & Co. New of policy. Validating umbrella his waiver would (2nd F.3d Cir.1994)(interpreting stand Christopher’s to sue agents make need law); agreement still New York Hirt under pretext. this is an mere While issue of first (Utah Hirtler, ler v. Dakota, impression in certainly South 1977)(promissory permanent containing note improper was not and his limitations, of waiver statute of as con void attorneys attempt undertaking, trary public policy). legal authority anywhere know of condon ing an arrangement. por such The waiver Ordinarily, of the statute (if tion it can be deemed a personal defense and cannot be waiver) against public is void as be policy asserted for Kroeger, someone else. 52 S.D. it prolonged cause closed con otherwise at N.W. State ex rel. Marsh troversy, solely exposure to extend to others Agric., Nebraska St. Bd. 217 Neb. by artificially perpetuating a need for insur (1984). Yet a waiver coverage. “Although ance Statute usually applicable only persons statute is Limitations is generally viewed as a agreeing County to it. Santa Clara protection defense ‘to afford defendants Vargas, Cal.App.3d claims,’ (1977). against defending ex stale also Most troublesome are waiver presses a public societal interest agreements nonpartici designed to ensnare (citations repose giving to human affairs .... pants. Insurance Co. North America v. omitted). Carnahan, private Because of the combined 446 Pa. A.2d involved, (1971)(parties public and may modify par interests individual to a lawsuit statu tory period entirely modify ties are not to of free waive or limitations but such contract is Co., only good statutory as the defense.” Kassner & Inc. they between themselves and York, may derogation rights City New contract in of of N.Y.2d of (1979). party third privy agree who was not to 389 N.E.2d the N.Y.S.2d ment). Indeed, Christopher longer exposed been As is no “[c]ertain waivers have to liabil against public ity held void as policy expired, because because the statute of limitations they were prospective in not in grant summary judgment.7 nature and we affirm the of misapprehends 7. The legal posture signors’. long dissent exposed, the of So as he remained the potential Christopher’s exposure this case. assignment against to of his cause of action in- the subject assignment. agents was the Contrary his As- valid. surance remained to signees’ rights suggest, uphold are coterminous their as- the what dissent seems to case,

Summary is on a “case within a practice which case” basis. covenant not assignment 'with a The [¶ 28.] method for transfer- was a tenable

to execute plaintiff in which the can The manner against the insurance of action ring a cause transpired in what should have establish requested cover- failure to obtain agents recreate, to i.e. underlying action is However, expiration of the with the age. litigate, an action which was never tried. limitations, the stat- the waiver of statute recreating underly- procedure This void, longer faced Christopher no being ute suit, is known as a suit within a ing action judgment. The of an excess possibility trial, an action within an a trial within a when the assignment became ineffective case, a case within a to name but to exist. it transferred ceased cause of action designations. objective The few of the what the result would have to establish Affirmed. [¶ 24.] been had the case been filed.... MILLER,. C.J., AMUNDSON and [¶ 25.] Thus, malpractice plaintiff legal in a JJ., GILBERTSON, concur. only prove four ele- ease has not to cases, may negligence basic to but ments SABERS, J., dissents. [¶ 26.] prove factors: be asked to three additional SABERS, (dissenting). Justice 2) 1) valid, was that the claim have in a favorable that would resulted I dissent. [¶ 27.] attorney’s judgment had not been for assignment of an insurance This is an 3) error, the amount of the such, malpractice it is deter- case. As and that the was collectible. legal the same manner as a mined in case, malpractice is on a “case which Rice, Haberer v. It within a case” basis. (citations omitted). 1994) to appropriate limita- statute of within to carried with it the burden Kobbeman necessary tions, reduce it it was not to 1) prove damages sustained because necessary judgment, and it is 2) liabil negligence, Daniel’s and Defendants’ prove the “case within a case.” Obvi- ity failing procure to Daniel necessary ously, it was not for Kobbe- prove damages therefrom. To Daniel’s name sue Defendants Daniel’s man to latter, request he must show that Daniel any judgment Daniel’s obtain because that the loss would have ed the assigned to cause of action had been Kagele against. the risk insured been within him. Wash.App. & Cas. v. Aetna Life (“[A]s (1985) a condition assignment of an insur- This is an case; such, recovery against the insurer precedent [in malpractice it is deter- ance action], injured party would legal assigned mal- same manner as a mined action penalty. Client has a cause of not to execute. with its covenant equal whatever applicable Accountant for Once the statute of injury might Client in penalties action be assessed Kobbeman’s however, Christopher expired, assigns action his cause of the future. Client liability. any potential part assignment, He Assignee. Client forever relieved As agents statutory penal- as he could no indefinitely had no case agrees waive the Later, any damages. longer The cause of suffer ty the deadline deadline. assessment None- became worthless. he theless, therefore expires, have penalties so Client would assess the as- However, wishes us to construe because Client the hook. been off extending Christopher’s signment waiver deadline, as a Assignee continue waived the beyond expiration exposure of the statute even after Accountant limitations, keeping the viable. thus exist. would have ceased to basis for suit public pol- say arrangement an violates We such Ex- wrong with this should be obvious: What is icy. purely penalties posure becomes to additional except by could suffer loss Client artificial. problem, take the dissent's the let us To illustrate stratagem allows for Such his own infliction. analogy: malpractice liability solely for the sake of prolongation of filing the deadline on a tax misses a Accountant party. damages against a third payment producing exposing Client to a late return thus Therefore, was prove have the claim within the cover- because the trial looked court at the covenant had on Steinmetz’ n age policy.”). of the the effect personal liability right rather the than on this action is on a Since tried “case possessed by to sue Steinmetz when she basis, within case” it was within a Palmer, assigned right the we conclude appropriate the statute of limitations and it is trial that the court erred when it concluded necessary not to reduce Kobbeman’s claim to as a matter of that law Steinmetz was not judgment within that It is timeframe.8 nec damaged summary judg- and thus awarded case, prove case essary to the within but Conway. ment to there no need for a at this time. is pocket payment that no out of The fact added). (Emphasis personal liability made and incurred be Additionally, majority opinion the [¶30.] cause of the covenant not to execute did not ignores “assignment” the In statutes. the law, mean, a matter was not as of that Daniel statute, unliquidated absence of a claim damaged. See Steinmetz ex rel. Palmer v. damages arising for of assigna- out tort is not Inc., Hall-Conway-Jackson, Wash.App. Assignments § ble. 6A CJS at 642-43 (1987): (1975).9 permit South Dakota’s is to assignee’s The rights are coextensive with parties assign these causes of action. See assignor those of the at time the the of 43^2-1, “thing SDCL which defines a in assignment. ... At the time of settle- right money action” “a recover or other ment, a claim [insured] [insur- personal property by judicial proceeding.” damages [injured party] er] owed to See also 43-42-2: resulting negligence from in [insurer’s] A thing arising action out the of viola- failing proper obtain the insurance. right tion property of of out of or [injured party’s] agree- consideration of obligation may be the own- transferred execute, not to sue or [insured] as- Upon er. of passes the death the it owner signed [injured party] right her to sue personal representatives to his except Palmer, assignee, [insurer]. as the took provided by the where cases law it rights those at held Steinmetz the time passes to his devisees successor of- assignment. ... The fact Stein- of fice. metz out pay pocket did not of her own subjected Harris, not and was In Sherman v. 36 S.D. 153 N.W. (1915), of the because covenant is immaterial.... grounds by overruled on other majority opinion 7 of majority’s example, any assignee Footnote misses the suing Under the point incorrectly because that it assumes is appropriate within the statute of limitations necessary exposure somehow extend Daniel’s stands to lose the "basis for suit" because it beyond expiration of the statute of limita- "ceases to exist” date on the of statute limita- tions, public policy. which claims violates It is law, expired. tions would have If were the necessary assigned not the suit because on suits, brought assigned proper all within the stat- malpractice cause of action for insurance limitations, subject ute of be would to defen- commenced well within statute of limitations. foot-dragging dants' and ultimate dismissal. A Since Oleson and Kahler were sued on the as- example better is as follows: signed cause of well within the statute of (D) $1,000. (C) Debtor owes Creditor C as- limitations, only necessary prove prop- it is (A). signs Assignee the claim to A sues D on er resulting procure from the failure to assigned cause of action within well insurance. necessary statute It is not limitations. for A Therefore, majority opinion's accountant ex sue to also D in name C's on the ample improperly manufactures "an indefinite necessary debt. Nor is it for C D to sue before waiver” that does not exist in case. this Assignee brings assignment. simply or after It matter example implies accountant proof assigned of the claim D. assigned expiration cause after limitations, clearly statute which would rule, any general right arising As a of action preclude prosecution action. Gilbert v. Bank, assigned, including out of a contract United Nat'l 1989) assigned of action for for a breach of con- (dismissing claims basis of untimeliness, tract, prior though judgment). lack even the contract is not itself as- Here, timely § signable. Assignments filed the law suit. Why obviously require an Kidd, 840 and Defendants. 73 S.D. Simons unnecessary duplicative act? Even eases by- and (1950), action for deceit 1) by majority opinion recognize that by cited the Sher- damages suffered Sherman 2) assignee prove damages must hi's in the Wade, the man, right his by who and See, e.g., Campione ap- suit the insurer. The defendant’s to Sherman. of action Wilson, 422 Mass. 661 N.E.2d of v. the cause peal based on (1996): all, the assigned at which action could be Apparently affirmatively. answered court defendants, To recover the there- assignor’s dam- at issue was whether not fore, in addition to the essential proving judgment before the ages must reduced to be negligence elements of their claim however, it is clear assigned; be action could them, plaintiffs will have to establish assignor assignee and damages to both that (at fault for least be- O’Donnell’s accident by trial court after the ascertained were question comparative fault cause the assignment: may dispute may be in and affect the findings made of fact and conclu- damages), they prove The court measure of and must law, appears from which it damages sions of which their the extent to exceed- damage to the amount of plaintiff coverage by suffered American. ed the afforded action, $1,000 the first cause of and agree- under We do not consider the settlement damage Wade suffered any points, that the said W.V. probative ment as on of these amount under the claim set damages. Placing to the particularly $200 in cause of action. responsibility proving forth the third plaintiffs the their in full the risk of assigned claims reduces In Helmbolt v. LeMars Mutual In collusion, justifies giving and effect to the . Co., Inc., 404 N.W.2d surance assignment negligence claims. We 1987), court ruled that an insured was negligence plaintiffs’ conclude that to reduce a claim a tort- required not claims should not have been dismissed. payment judgment prior to of un- feasor to (Citations omitted); by benefits the insurer. The footnote Miller v. derinsurance & cf. opinion by (Colo.Ct.App.1995) majority distinguishes Byrne, Helmbolt 1) upon statutory man stating (agreeing it is based with trial court that settlement 58-11-9.5, length which not of SDCL does not reflect an arm’s determina date judg plaintiffs a claim to claim require an insured to reduce tion of the worth 2) prior payment of underinsurance settlement amount should be therefore Likewise, pro damages -2 43-42-1 & measure of bad benefits. conclusive money in a action and right that a to recover faith breach of insurance contract vide 3) proceeding may by required prove her judicial assignee be transferred would be owner, retrial); yet right neither dictate that the v. Law damages Red Giant Oil 1995) (Iowa did, lor, (putting judgment. they If must be reduced 1) prove they longer providing injured party then would burden on money, policy, right of a to recover but claim was covered 2) Helm- in the rather an the settlement which resulted states, requires prudent); ac “Nothing bolt the statutes was reasonable and Ins., claim a tort- Estate & an insured to reduce a cord Freeman v. Schmidt Real J., judgment prior payment (Heaney, dissenting) of un- feasor to 755 F.2d (“Of course, any would benefits.” 404 N.W.2d insured derinsurance “thing in the insurer Similarly, nothing prove in the action” have judgment, requires mentions or so would have a to assert defense statutes contrary authority. if might is not have had the insurance had been Helmbolt simple safe purchased requested. This law, there is Not is there prevent any collusive settle guard would absolutely require litigation and no reason to ment.”). and Daniel between Kobbeman majority opinion, certainly [¶33.] almost be dis- As noted when would becomes ‘debt’ for which an insurer puted relitigated “[T]he between Kobbeman though at the time of loss even is fixed liable compensation is still

the amount of Restaurant, Inc. v.

ascertained.” Antal’s Co.,

Lumbermen’s Mut. Cas. 680 A.2d (D.C.1996). Since the case Ole- assigned

son and Kahler Daniel, obviously need for there bring a suit in name

Kobbeman to Daniel’s Defendants, and, fact, to do so clearly improper.10

would have been Nor necessary

was it Kobbeman to reduce his prior bringing this does

action. The not to execute not damage does

eliminate the fact liability.

absolve and Kahler of Oleson Co., Maryland

Chaussee v. Cas. 60 Wash. 1339, 1343(1991).

App. Conse

quently, dismissing trial court erred majority repeats opinion case and the Therefore,

the error. should reverse

remand for trial. SD PELLEGRIN,

Warren K. Plaintiff Appellee, PELLEGRIN,

Norma L. Defendant Appellant.

No. 20007.

Supreme of South Dakota. Court on Briefs 1997.

Considered Dec. Feb.

Decided (cid:127) See, 58-23-1; majority opinion’s e.g., 46A citation to CJS tions. Klatt v. Conti- (1993) (S.D.1987). § proposition for the nental a "valid must be obtained in- This case concerns an cause of Furthermore, sured before a cause of action favor of direct arises in not a action. SDCL 58-23- injured person against compa- Legislature the insurance 1 demonstrates that the knows how ny misleading; provide prerequisite ...” is section 1410 discusses that a is a ato lawsuit, companies, "direct actions” and would have written SDCL 43-42-1 prohibited jurisdic- accordingly which are statute in if what it most & -2 that is had intended.

Case Details

Case Name: Kobbeman v. Oleson

Court Name: South Dakota Supreme Court

Date Published: Feb 25, 1998

Citation: 574 N.W.2d 633

Docket Number: None

Court Abbreviation: S.D.