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Himes v. Safeway Insurance Company3/27/2003
ticipate in a damages determination, any judgment will be vacated that does not allow the insurer to intervene. Mora v. Phoenix Indem. Ins., 196 Ariz. 315, 996 P.2d 116 (vacating judgment entered where damages were not stipulated to by the parties); Anderson v. Martinez, 158 Ariz. 358, 762 P.2d 645 (App. 1988) (vacating a judgment entered against an insured based on a stipulated amount, but not a stipulated judgment, when insurer was not allowed to intervene). Himes contends that a stipulated judgment, as here, is different. But, as Safeway argues, "it is a distinction without a difference." In terms of the standard and burden of proof, it makes no difference that the amount of damages or the judgment itself is stipulated to or left open to the court. Andersen, Mora and Morris, dealing with a stipulated amount, an unspecified amount, and a stipulated judgment respectively, attest to this. In any of these scenarios, the amount is not binding until the insurer has had the opportunity to contest the evidence upon which stipulated amount, stipulated judgment, or non-stipulated request was or will be based.
Himes argues, however, that Morris approves the procedure employed by the trial court (immediately entering the judgment prior to a reasonableness hearing) as Morris stated that "a judgment" must be modified if the amount is not reasonable. 154 Ariz. at 121, 741 P.2d at 254. In Anderson, the trial court expressly recognized that the judgment being entered without the insurer's participation would result in the judgment having no binding effect. 158 Ariz. at 361, 762 P.2d at 648 ("I don't see that the damage figure in this case is binding at all on the insurance company, in that I don't think that the plaintiff has got much of a case against the insurance company, that this would be the damage figure that would come out of a hard-fought trial.") Despite the recognition that the judgment would still be subject to modification, Anderson determined that " hile Morris concludes that an insurer may later challenge a settlement, it does not hold that an insurer must wait to litigate the issues." Id. at 363, 762 P.2d at 650 (emphasis in original). The court reasoned that it "would serve the purpose of judicial economy to permit the insurer to take this opportunity when all of the parties are involved and can present evidence to the court on the issue at one hearing." Id.
The principle from Anderson is sound. To allow for a "post-judgment hearing" to modify the amount of judgment is counter-productive when, as here, the plaintiff may immediately institute a garnishment action on the judgment. As Anderson notes, it furthers judicial economy to have the reasonableness determination take place prior to entry of judgment as such a rule will preclude separate garnishment actions (such as that here) when the judgment is still subject to a reasonableness test and all parties are present in the trial court. We recognize that Himes has already instituted a garnishment action based on the judgment entered. We note, however, that this subsequent garnishment action was initiated in the face of the trial court's direct ruling that the judgment at issue was still subject to post-judgment modification. Accordingly, we vacate the judgment entered with entry of judgment to follow the reasonableness hearing on remand. VI.
Safeway further contends that no judgment in favor of Himes is appropriate here because the Damron/Morris agreement whereby Botma agreed to stipulate to judgment was an illegal contract and void as against public policy. Himes denies illegality but argues alternatively that any illegal portion is severable.
The settlement agreement entered into between appellees and Botma
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