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Rogan v. Auto-Owners Insurance Co.8/13/1991
LeBaron showed Kyle Lanette's letter of October 24, 1983. This was the first time Kyle had seen the letter. Although he had reviewed a rough draft, he did not review the final draft sent to LeBaron & Carroll. Milo testified that Kyle's concern at the meeting was whether there was a chance the Mack was covered, since the premium had not yet been returned.
On February 8, 1984, Milo received a message from Diane Zorabrinski, an underwriter at Auto-Owners, that the Parker Concrete endorsement sheet was being processed and that at the present time there was no coverage for the 1971 Mack tractor. The endorsement sheet was being processed in response to a January 26, 1984, deletion request from Julie Crane. Crane, a customer service representative at LeBaron & Carroll, testified that she had discovered Lanette's written request to delete the Mack tractor, and noticed that it had not been acted upon. The automobile policy declaration sheet issued February 13, 1984, showed, for the first time, that the 1971 Mack trailer had been deleted. Previous declaration sheets issued on January 20, 1984, and February 1, 1984, showed coverage for a 1971 Mack trailer.
Auto-Owners sent Joseph Hinsberg to investigate the accident. With respect to coverage, Hinsberg concluded:
It is my opinion that there was a communications gap between the agent and the insured and the insured had no intention, ever, to cancel his Bodily Injury coverage on his 1971 Mack Tractor. Mr. Parker also stated that he had never received any cancellation notice from Auto-Owners stating that he was cancelled and he would never have driven that 1971 Mack Tractor had it been cancelled.
Auto-Owners sent a letter to the Parkers on April 14, 1984, denying coverage for the accident. Auto-Owners gave two reasons for its denial: (1) Largo was pulling a trailer with the Mack tractor that was neither owned by Parker Concrete nor insured by Auto-Owners and, pursuant to exclusion eleven of the insurance policy, this eliminated coverage; and (2) prior to the accident, LeBaron & Carroll, at the Parkers' written request, requested Auto-Owners to delete the 1971 Mack tractor from the policy.
PROCEDURAL HISTORY
On February 3, 1986, Larry Foster and Ruth Fry, two of the motor home plaintiffs, filed suit against the Parkers in Gila County for damages suffered as a result of the accident. The parties executed a covenant not to execute in which the Parkers agreed to allow judgment to be taken against them and in favor of Fry, Foster and the Rogans. In return, the Parkers assigned any potential claim they had against Auto-Owners and LeBaron & Carroll to the motor home plaintiffs. See Damron v. Sledge, 105 Ariz. 151, 460 P.2d 997 (1969). The Parkers answered the complaint stating they had no objection to judgment being entered against them. A brief trial on damages was held, and, on September 9, 1986, the trial court entered judgment in favor of the motor home plaintiffs for $900,000.00. Auto-Owners was informed of the judgment in December 1986. Neither the plaintiffs nor the Parkers ever informed Auto-Owners of the Gila County lawsuit prior to the entry of judgment.
On April 15, 1987, the motor home plaintiffs and the Parkers filed suit against Auto-Owners and LeBaron & Carroll alleging bad faith, intentional misrepresentation, fraud, negligence, gross negligence and estoppel in the denial of insurance coverage to the Parkers. In their second amended complaint, the plaintiffs named the Largos as additional plaintiffs. The trial court granted the plaintiffs' motion for partial summary judgmen
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