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Clark Equipment Co. v. Arizona Property and Casualty Insurance Guaranty Fund2/11/1997
WEISBERG, Judge
Appellant Arizona Property and Casualty Insurance Guaranty Fund (the Fund) appeals the trial court's judgment and award of costs and attorneys' fees entered in favor of Clark Equipment Company (Clark). We affirm.
FACTUAL AND PROCEDURAL HISTORY
On October 7, 1983, Richard Chavez was seriously injured in an accident involving a forklift manufactured by Clark. Chavez brought suit against Clark in Maricopa County (Chavez claim). On June 20, 1984, Lawson Dossey died as the result of an accident involving a Clark front-end loader. Dossey's survivors brought suit against Clark in Pima County (Dossey claim).
Both claims were covered under a liability insurance policy issued to Clark by CIGNA, which initially undertook the defenses. In May 1986, though, after Clark had exhausted the full amount of its aggregate coverage for the 1983/1984 policy year, CIGNA refused to provide any further coverage for the claims or for their defense.
Clark then looked to its next layer of liability coverage, which was provided by Integrity Insurance Company (Integrity). Clark notified Integrity of the Chavez and Dossey claims and complied with all conditions necessary to trigger Integrity's obligation as insurer. As part of its obligation, Integrity agreed to assume the defense costs.
However, on March 24, 1987, the New Jersey Superior Court declared Integrity to be insolvent and placed the company in liquidation proceedings. On March 31, 1987, the Arizona Department of Insurance notified the Fund of Integrity's insolvency and "formally invoked Arizona's Property and Casualty Insurance Guaranty Fund law, A.R.S. § 20-661, et seq., in order to provide protection to Arizona residents who may have claims against this foreign insurer." The Fund appointed Frontier Adjusters (Frontier) to act as the Arizona claims administrator for the Integrity insolvency.
On September 21, 1987, Clark filed proofs of claim for the Chavez and Dossey claims with Integrity's New Jersey liquidator. Amended proofs of claim were filed October 5, 1987 and March 23, 1988. The proofs of claim reflected that the Dossey claim was closed but that the Chavez claim was not. Although the filing of a proof of claim with an insurance company's liquidator is deemed to be notice to the Fund, Ariz. Rev. Stat. Ann. (A.R.S.) § 20-665(C)(4), neither the Fund nor Frontier received actual notice of the claims at that time.
After Integrity's insolvency, Clark independently litigated both the Chavez and Dossey claims, paying its own defense and settlement costs. Clark obtained a favorable defense verdict after a jury trial of the Chavez claim. That judgment, however, was reversed by this court and remanded for a new trial. Prior to the new trial, Clark settled the claim for $510,000.00, which it considered to be a favorable settlement since Chavez had undisputed damages in excess of $10,000,000.00. Clark's unreimbursed defense costs related to the Chavez claim equalled the sum of $124,472.00. In addition, Clark had settled the Dossey claim for $15,000.00, and paid related unreimbursed defense costs in the amount of $5,078.00. On February 16, 1988, the Fund received actual notice of the Chavez and Dossey claims from a letter written to it by Clark's in-house counsel, Timothy Wright. Pursuant to the letter, Clark sought reimbursement of its defense and settlement costs for both the Chavez and Dossey claims. On April 20, 1988, Frontier adjustor Ben Maple wrote to Wright and asked for a summary of collateral source payments on the two claims, as well as the relevant policies, declarations, and endorsements. Clark forwarded both the CIGNA and Integrity policies to Frontier o
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