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Associated Aviation Underwriters v. Wood9/29/2004
rial court (J. Cornelio or J. Harrington) did not decide whether the Gerardo judgments had expired in denying Intervenors' post-judgment motions, based on the foregoing analysis, we conclude that the court erred in failing to award relief under § 12-1838.
D. Other Considerations
We next address whether an award of monetary relief to Intervenors transforms this case into an impermissible direct action by an injured, third-party claimant against a tortfeasor's insurer. The "general rule" is that "in the absence of a contractual or statutory provision to the contrary, an injured person has no direct cause of action against a tortfeasor's insurance company." Nationwide, 166 Ariz. at 517, 803 P.2d at 928. The trial court (J. Cornelio) apparently followed that general rule by denying Intervenors' motion for supplemental relief. But, in doing so, the court overlooked TAA/City's assignment to Intervenors of its right to receive indemnity from AAU. When there has been such an assignment, and a judgment has been rendered against an insured tortfeasor, an injured claimant may bring a direct action against the tortfeasor's insurer. See Gen. Accident Fire & Life Assurance Corp. v. Little, 103 Ariz. 435, 438, 443 P.2d 690, 693 (1968) ("It has long been the law in Arizona, and the law in most if not all jurisdictions that an assignee of a chose in action may maintain suit thereon in his own name."); Ring v. State Farm Mut.
Auto. Ins. Co., 147 Ariz. 32, 35, 708 P.2d 457, 460 (App. 1985) (Arizona is "in line with the vast majority of courts" in allowing an assignee of an insured's rights to proceed directly against an insurer); see also Lee R. Russ, Couch on Insurance § 104:4 (3d ed. 1997). AAU does not argue that the policies issued to TAA/City prohibited such assignment. And, Arizona law clearly does not prohibit such assignments.
Nonetheless, AAU contends the assignment of rights here does not permit Intervenors to bring this action because, at the time the assignment was made, AAU had not breached the insurance contract. But AAU provides no authority for the proposition that an insurer must breach an insurance contract in order for an assignment of rights under that contract by an insured to an injured claimant to be valid. Indeed, Morris itself acknowledged that by reserving its rights to contest coverage, the insurer in that case did not breach any of its policy obligations. 154 Ariz. at 118, 741 P.2d at 251. And yet, in Morris, the assignment of rights by the insureds to the plaintiff John Morris was clearly valid. In short, awarding Intervenors a monetary award pursuant to § 12-1838 does not turn this case into an impermissible direct action.
Although we have concluded that Intervenors are entitled to supplemental relief, we are nonetheless required to remand the case for a determination of the specific damage awards to which the fourteen trial intervenors are entitled. Under § 12-1838, " f the application [for supplemental relief] be deemed sufficient, the court shall, on reasonable notice, require any adverse party whose rights have been adjudicated by the declaratory judgment or decree, to show cause why further relief should not be granted forthwith." But see State ex rel. Bardacke v. New Mexico Fed. Sav. & Loan Ass'n, 699 P.2d 604, 606 (N.M. 1985) (finding that supplemental relief statute similar to Arizona's and order to show cause provision therein "does not apply... where the non-declaratory relief is requested in the original complaint together with declaratory relief"). As AAU points out, Intervenors' proposed judgment that included monetary awards for the fourteen trial intervenors referred to other awards those individuals apparently had re
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