*1
495
aside
We thus affirm the trial court’s
setting
orders of extension and
prior
dismissing
prejudice Appel
under
lants’
a dismissal
Rule
without
4(i)
complaint. Ordinarily,
However, under
346 Ark.
Affirmed. MEDMARC CASUALTY INSURANCE COMPANY v. FIEALTHCARE, INC., Inc., FOREST Regional Management, Fund, The Arkansas Property Casualty Guaranty Thurman, and the Estate of Eula Deceased 03-1318 199 S.W.3d58 Court of Arkansas
Supreme 2, 2004 delivered December Opinion denied [Rehearing January 13, 2005.] *2 P.L., Gramovot; Watts, Takacs, I. and Gramovot by: Larry Donovan, P.A., David M. for Donovan & by: appellant. Tilley, Steel; Burnell, PLLC, and Latham & William Bob by: Larry Jim Burwell, Waide, Latham, and for G. Todd Whit appellee. Brooks, P.A., Brian Wilkes & G. by: appellee McHugh, Eula Thurman. Estate of Brown, Robert L. MedMarc Ca- appellant, Justice. Insurance from an order
sualty grant- Company, appeals Healthcare, to the Forest appellees, ing partial Inc., Inc. and and (“Forest and Management, Regional”), Regional MedMarc’s claims The Arkansas & Casu- dismissing against Property Fund and the Estate of Eula Thurman. At issue was alty Guaranty MedMarc’s action a as to the seeking declaratory judgment rights to a entered obligations against parties respect a suit. MedMarc Forest and Regional nursing home-negligence whether it had under asserts two on (1) any obligation points appeal: and the law to of the unallocated its any policy applicable pay verdict; if it did have whether trial court (2) any obligation, to erred in arbitrarily allocating twenty-five percent and remand for a MedMarc’s We reverse proper policy period. allocation. Healthcare, a
Eula Thurman was a resident nursing 20, home, 20, 1997, until 1999. from December September insurance Insurance coverage PHICO Company provided 17, 1997, 1, 1999,1 Forest and from October April for Forest and Re- while MedMarc insurance coverage 2000.2 The MedMarc from gional and com- both liability coverage hospital professional provided mercial After her death on September general coverage. filed a lawsuit Ms. Thurman’s estate alleging negligence, death, and breach of contract medical malpractice, wrongful Forest and against Regional.' case, the trial in the earlier Thurman counsel for
During had instruction that would jury requested have allowed the between the two apportion carriers based on the dates of the various (MedMarc PHICO) insurance Counsel for the Thurman estate policy periods. objected *3 instruction, to the the trial and court refused to it on give grounds trial, that it would the confuse the Ms. jury. Following $350,000 Thurman’s estate awarded in was for damages ordinary $500,000 in for medical and negligence, $5,000 damages malpractice, in for breach of contract. March On damages final was filed the circuit court. judgment by Though appeal sides, was taken both both later dismissed the by parties respective appeals. 15, 2003,
On MedMarc filed its for January complaint it, which is the of this In declaratory judgment subject appeal. MedMarc stated that Forest and had that it Regional requested pay all or a of the final in the Thurman case. It portion judgment claimed that it was incumbent on Forest and to Regional prove under the and that because coverage no allocation was policy, made its insurance no by jury, policy provided coverage of the It asserted that a any part judgment. alternatively retrospec- tive allocation be made so that it would know its current liability under the insurance contract. 18, 2003, On filed a motion for Regional June motion, and allocation. In their
partial summary judgment 1 In of PHICO Insurance in February Company placed by liquidation Commonwealth Court of to Ark. Code Ann. Therefore, 23-90-101 Pennsylvania. pursuant seq., (Repl. et 2004), the Arkansas Fund has assumed certain of Property Casualty Guaranty PHICO’s responsibilities. coverage, A review the record of reveals that of MedMarc’s Ms. period Thurman remained a resident of Forest but was admitted for treatment area in-patient on several occasions. hospitals that at least some of the verdict claimed jury’s Regional under the MedMarc
Thurman case was covered They policy. carried the burden of further contended that MedMarc proving verdict should be allo- which of the Thurman precisely portion Med- cated to which insurer. Forest and Regional requested Marc be allocated of thirty liability percent judgment. 22, 2003, MedMarc filed its and cross- On July response motion for and allocation. In its response, that Forest and failed to MedMarc asserted Regional prove of the bases for the Thurman were covered any by allocation, MedMarc With to MedMarc contended policy. respect that Forest and had the ultimate burden of proving what verdict was for covered its exactly damages In an alternative MedMarc maintained that policy. argument, should the circuit court make a allocation of the retrospective verdict, it should allocate for no more than five percent MedMarc. In its motion for summary judgment, MedMarc contended that it had no obligation any pay Thurman because Forest could not estab- judgment, lish under its coverage policy.
On the circuit court entered its order August Forest’s and motion for granting Regional’s summary partial MedMarc’s motion for denying summaryjudgment. The circuit court concluded that it was proper apportion verdict in the Thurman case and that jury’s twenty-five percent the verdict should be allocated to MedMarc. *4 On MedMarc first that Forest and appeal, argues insureds,
as the have the burden of and the proving coverage burden of the verdict between covered under damages the and those that are not. MedMarc claims that where the burden, insured unable to meet that the insurer is not obligated amount under the pay any policy. respond that under MedMarc’s MedMarc has policy language, clearly for the As the burden of partial coverage judgment. proof allocation, Forest and that MedMarc regarding Regional urge this burden and carries from the Thurman trial testimony the circuit court’s allocation of liability supports damages MedMarc of twenty-five percent. have set forth our standard of
We review for cases previously in which has been summary judgment granted: when is to be a trial court granted by only
Summary judgment
material fact to be
that there are no
issues of
genuine
it is clear
as a matter of law.
the
is entitled to judgment
litigated,
party
Comm’n,
56, 43
345 Ark.
S.W.3d
v.
Civ.Serv.
Blytheville
City
Jackson
has established a
facie
prima
Once the
(2001).
moving party
the
must meet
entitlement to summary judgment,
opposing party
a material issue
and demonstrate the existence of
proof
proof
fact. George v. Jefferson Hosp. Ass’n, Inc.,
We turn then to the first issue which is whether any of the Thurman fall within MedMarc cov part damages policy’s Pursuant to the of MedMarc erage. language policies, coverage that occurred injuries during policy period. was from 1999 until 2000. policy period Based on the it that MedMarc is policy language, appears potentially liable to that Ms. Thurman injuries sustained the time that she resided at Forest during It is for the circuit court to determine policy period. precisely which fall within the MedMarc injuries coverage.
Thus, the issue becomes to what extent is MedMarc liable for the rime awarded in the Thurman case based upon limits of the and the sustained therein. policy’s coverage injuries While MedMarc is correct that in most instances the burden is on the insured to allocation of insurance prove *5 carriers, Windt, that burden be shifted to the insurer. Allan D. may treatise, in his Insurance Claims & Disputes, explains:
500 that it is that a of the is
Assuming proved portion not, covered and a is the next question arises is which should have the burden of party verdict, in order to ascertain the amount of the for which the insurer is Most courts have held that the burden responsible. however, on the insured. An should be made exception, to that rule in those casesin which the circumstances the defense surrounding action underlying were such that the insurer was obligated to one, seek an allocated verdict or advise insured of the need for event, but failed to fulfill that In that obligation. burden of should be on the insurer. persuasion placed Allan D. Insurance Claims & 6:27 Disputes (4th 2001) (footnotes omitted).
Here, a review of the record reveals that it was Med- Marc that with a defense and hired for them in the Thurman lawyers case. affidavit According Zuber, filed by of Forest and Eugene then-CEO then-president president “MedMarc had the to and did right control the defense in the Thurman case.” This control also continued as to the Mr. Zuber adds in a ensuing appeal. supple mental affidavit defense “[ijnsurance counsel contacted me and . . . advised that Forest and should dismiss their from the Thurman case. Mr. Zuber added that it cross-appeal” MedMarc that was controlling process.
We conclude that MedMarc indeed assumed the burden of once it took over the apportioning defense in the Thurman trial. The Tenth Circuit Court of has made this Appeals clear: abundantly matter,
As an initial we note that an insurer who undertakes the defense of a suit its insured must meet against standard of high Hoch, conduct. Duke v. 468 F.2d (5th Cir. 1972); &Gay Co., 710, 714-16 Inc.v.St. Paul Taylor, Fire & Marine Ins. F. 550 Supp. (W.D. 1981). Okla. The to control the right carries with it litigation Co., certain duties. Traders& Gen. Ins. Co. v.Rudco Oil & Gas F.2d Cir. 1942). One of these is the not to duty prejudice insured’s rights by fading request special interroga tories or a verdict in order special clarify coverage damages. See &Gay 550 F. Taylor, 716. reason for this Supp. is that asserted, when are grounds some of which are covered by not, insurance and some of which are a conflict of interest arises *6 If the burden apportioning and the insured. the insurer between the to rest on and non-covered were covered between damages defense, insured, the insurer could is not in control who to failing merely by from responsibility obtain for itself escape Duke,468 F.2dat interrogatories. verdict or special a special request the to see to it that damages in the best 979. The insurer is position therefore, allocated; the incentive to do so. it should be given are Co., F.3d 1498-99 Foods, Cas. Inc. Continental Magnum 1994). Cir. (10th carrier that when the insurance Added to this is point insured, to when of its it is
assumes the defense obligated appeal that the insured’s interests to believe there are reasonable grounds D. Insurance Claims & will be furthered. See Allan Disputes mentioned, who it was MedMarc 4:17 As 2001). already case. Thurman made the decision to drop appeal for Forest and note that MedMarc’s counsel We the trial did an instruction from judge apportion request instruction, However, estate the Thurman verdict. opposed it: the circuit refused to give judge an instruction. I We have proffered Defense Counsel: talked about it on the issue of divid- don’t think we’ve — as be- jury damages ing letting apportion the time for the Insurance tween period [PHICO] Honor, remember, Your had You they Policy. Funds into and the Arkansas gone Guaranty liquidation, know taken that over and so for the fund to has guaranty is, it would be to find that the how much there jury the amount of damages occurring during apportion which lasted until 1 of policy period up [PHICO] have tendered an instruction which would and we — those allow apportion 1 of ’99 and after 1 of that occurred before April ’99, time that Mrs. Thurman was in the facility. Honor, that, Your our on position
Plaintiff’s Counsel: one, it be This is number would entirely inappropriate. before the There’s no evidence an issue that’s not jury. and it would be con- these before the jury, policies them and make no sense to when they get fusing time breakdown. Of concern is the period con- bigger flict that this raises between the insurance company — — insured, defendant, who and the who is who these are to be attorneys supposed representing. I’m not that one. It’s too going give The Court: You can make confusing. your proffer. *7 MedMarc’s counsel then Forest, on behalf of proffered, as Defendant’s Exhibit interrogatory apportion damages between MedMarc and PHICO based on time of The issue coverage. of the failure to instruction give was not apportionment appealed, but, that was again, MedMarc’s decision. While the circuit court did allocate the judgment case, it no basis for its provided to MedMarc apportioning of the for the twenty-five percent Thurman liability We judgment. believe that and basis providing for reasoning particular allocation in the form of of fact and conclusions findings of law is See, essential. Little Rock e.g., Wastewater Util. v. Larry Moyer Inc., 902 S.W.2d Trucking 760 (1995) (remanded for reconsideration where order no gave explanation of application Rule 11 case, A sanctions). allocation in this while proper perhaps difficult, Indeed, is not other certainly impossible. courts have said it See, Hoch, can be done. Duke v. 468 F.2d e.g., 984 Cir. (5th 1972) that if allocation of (finding required what is covered not, insurance and what is by trial on judge remand “will be in the of as position best he can the establishing allocation which the would have made had it been tendered to do so” and that if opportunity impossible meaningful allocation to be made based on the additional transcript, evidence should be introduced and rebutted Because by we parties). conclude that a allocation is proper and because the necessary circuit court no reason for allocating twenty-five percent MedMarc, we reverse and remand the matter with directions for the circuit court to proceed allocation in accordance with this opinion.
Reversed and remanded. J.,
Glaze, concurs. J.,
Thornton, dissents. Ray Thornton, Justice, Because I dissenting. believe that Forest and Medmarc, rather than had the
503
case, and because
from the Thurman
of
the verdict
burden
allocating
burden,
dissent.
I must
to meet this
failed
respectfully
they
an insurance
a
is covered
a
When
portion
an insurance
is not covered by
and a
See
the burden of allocating
judgment.
the insured bears
policy,
Co.,
F.2d
Insurance
268
v.
Mutual Automobile
Morris Western States
&
Assurance
General AccidentFire
1959);
Corp.
Cir.
(7th
Life
Clark,
Aetna Insurance Co. v. Waco
placed. treatise, insurance which Windt’s provides: Most courts have held that the burden verdict] [of however, to that is on the insured. An should be made exception, *8 rule in those in which the cases circumstances surrounding defense of the action that the was were such insurer underlying to seek an allocated verdict or advise the insured of the obligated one, event, need In but that obligation. failed fulfill burden of should be on the insurer. persuasion placed Allan D. Insurance Claims 6:27 2001) Disputes § added). (emphasis on the I would conclude
Relying forgoing legal principles, that Medmarc did not fail fulfil its to Forest and obligations Medmarc did for Forest and Regional. provide representation the Thurman trial. its Regional during During representation, Medmarc notified Forest and of their need adequately Regional for an verdict. Medmarc disclosed to apportioned Specifically, Forest and the need to allocate in a letter Regional Martin, from of Uni-Ter Claims Services president Corpora- Jim tion, to In Roger Glasglow, Regional’s attorney. letter, wrote, Mr. Martin verdict quite important any “[I]t form used trial to allocate awarded requires jury which took within the Medmarc injuries, place those, and which took outside of that . . . period, place period Medmarc will not be which took responsible injuries, place outside of its policy Medmarc period.”1 Additionally, adequately to receive an allocated attempted verdict by requesting appor-
tionment
instruction. Because Medmarc informed Forest and
verdict,
the need for an
Regional
and because
apportioned
Medmarc
instruction that would
requested
have allowed for
apportionment
Medmarc fulfilled
judgment,
its obliga-
tions to Forest and
Regional.
burden of
Accordingly,
appor-
the verdict did not
tioning
shift from Forest and
Medmarc.
Because the burden of
from the
Thurman case rested on Forest and
and because Forest
burden,
failed to meet this
I would conclude that the
trial court erred when it
granted
motion for
Regional’s
partial
when it
summary judgment
allocated twenty-five
of the Thurman
percent
verdict to the Medmarc policy period.
I would reverse and
Accordingly,
remand this case to the trial
remand,
court.
I would instruct the trial
Upon
court to enter an
order granting
in favor of
summary judgment
Medmarc. See Wilson
McDaniel,
I dissent. respectfully Earl PATRICK v. STATE of Arkansas
John CR 03-696 199 S.W.3d74 Court of
Supreme Arkansas *9 2, 2004 delivered Opinion December 1 It should be noted that while Medmarc’s extended from policy period until 1, 2000, Mrs. Thurman resided at Forest for that time. only forty days