Wyoming Insurance Guaranty Ass'n v. Allstate Indemnity Co.

CARDINE, Justice.

The Wyoming Insurance Guaranty Association (WIGA) was called upon to step into the shoes of Laramie Insurance Company by assuming the obligations of its automobile liability insurance policy when Laramie Insurance Company became insolvent. The vehicle involved in this accident was insured by Laramie Insurance Company. Ms. Herring was driving this non-owned vehicle with permission of the named insured. Ms. Herring was driving this non-owned vehicle with permission of the named insured. Ms. Herring was also an insured under a separate automobile liability insurance policy on an owned automobile with the appellee, Allstate Insurance Company (Allstate). WIGA sought to require Allstate to defend and indemnify in the lawsuit filed. Allstate refused. The district court entered judgment in favor of Allstate.

We affirm.

WIGA expounds this summary of the issues:

Did the trial court err in finding that Allstate Indemnity Company and Allstate Insurance Company (Allstate) was not the responsible insurer, not obligated to cover the loss in Eigenberger v. Herring and not required to indemnify the Wyoming Insurance Guaranty Association for sums paid in settlement and defense of that action?

Allstate restyles the issue with this query:

Did the trial court correctly rule that appellee Allstate Indemnity Company and Allstate Insurance Company (“Allstate”) shoulders no obligation to indemnify the Wyoming Insurance Guaranty Association (“WIGA”) for any liability, damages or expenses arising from the action entitled Christine A. Eigenberger v. Melina Herring, Civil No. 23150, in the Second Judicial District In and For Albany County, State of Wyoming?

The stipulated facts are:

The facts in this case are not in dispute. On or about August 31, 1989 at about 9:00 p.m., Melina Lee Herring was involved in an accident with Christine A. Eigenberger at the corner of Ninth Street and Ivinson Avenue, Laramie, Wyoming. Eigenberger was traveling north on Ninth Street on a bicycle when she entered the intersection. At the same time, Herring was traveling south on Ninth Street in an 1982 Buick Electra owned by F. Otto Bolin and Leslie Gay Bolin, residents of Douglas, Wyoming. Herring was a permissive user of the Bolin vehicle at the time of the accident. An accident occurred when Herring attempted to turn East onto Ivinson. The bicycle and vehicle collided.

Eigenberger filed a Complaint seeking $112,300.00 in damages from Herring in Civil Action No. 22844 in the District Court, Second Judicial District, County of Albany, State of Wyoming. A copy of the complaint is attached hereto as Exhibit “A” and incorporated herein by reference. Eigenberger’s Complaint alleged that Herring was negligent in failing to yield the right of way to Eigenber-ger when Herring completed the left turn onto Ivinson, thereby causing the accident and injuries to Eigenberger. Herring filed an answer denying negligence and, alternatively, alleging comparative negligence.

At the time of the accident, the Bolin vehicle was insured by Laramie Insurance Company, Policy No. LPA 11921, with liability limits of $100,00.00 each person and $300,000.00 each accident. A copy of the insurance policy with declarations page is attached as Exhibit “B” and incorporated herein by reference. The Laramie Insurance Company was declared insolvent pursuant to Wyoming Statutes § 26 — 41—103(a) (iii) by a court of competent jurisdiction in Civil Action No. 22800, Second Judicial District, County of Albany, State of Wyoming on February 14, 1990. A copy of the Order Appointing Receiver and Directing Liquidation and Declaring Insolvency is attached hereto as Exhibit “C” and incorporated herein by reference. Pursuant to its statutory duty, Wyoming Statutes § 26-4-101 et seq., Plaintiff Wyoming Insurance Guarantee Association (hereinafter referred to as “WIGA”) agreed to defend and indemnify Herring.

During the course of said defense, Plaintiff WIGA learned that Herring was insured under Allstate Policy No. 017-171-172, 10/25, FC9-645479 issued to John and Janet Herring with liability limits of $100,000.00 each person, $300,-000.00 each occurrence. A copy of the insurance policy with declarations page is attached hereto as Exhibit “D” and incorporated herein by reference. WIGA sent notice of the suit to Allstate with a request that Allstate defend the action. Allstate declined. There is no issue regarding the adequacy or timeliness of the notice. WIGA first made its demand for $14,912.48 by letter dated September 10, 1990. A copy of said letter is attached hereto as Exhibit “E” and incorporated herein by reference.

Civil Action No. 22844 was settled pri- or to trial with a payment of $10,000.00 by WIGA to Eigenberger. A copy of the Release of All Claims and Order of Dismissal are attached hereto as Exhibits “F” and “G” respectively and incorporated herein by reference. WIGA incurred $4,912.48 as costs of defense. The settlement amount and attorney’s fees paid to Pence and MacMillan by WIGA in defense of Civil Action No 22844 are reasonable. The sole issue to be determined is whether WIGA or Allstate was required to defend and pay the loss in Civil Action No. 22844. If Allstate was required to defend and pay, Judgment in the amount of $14,912.48 plus seven percent (7%) prejudgment interest from September 10, 1990 should be entered against Allstate. If WIGA was required to defend and pay, Plaintiffs Complaint should be dismissed.

WIGA was created to assure that a policy holder would be protected in the event of the insolvency of an insurer. W.S. 26-31-101, -117 (1983); 19A John A. Apple-man, Insurance Law and Practice § 10801 (1982); 2A Ronald A. Anderson, Couch on Insurance 2d § 22:27 (Rev. ed. 1984). Operating funds are generated by member assessments. W.S. 26-31-107 (1983). The duties and powers of WIGA are set out in W.S. 26-31-106 (1983):

(a) The association shall:

(i)Be obligated to the extent of the covered claims existing prior to the determination of insolvency and arising within thirty (30) days after the determination of insolvency, or before the policy expiration date if less than thirty (30) days after the determination, or before the insured replaced the policy or causes its cancellation, if he does so within thirty (30) days of the determination, but the obligation includes only that amount of each covered claim which exceeds one hundred dollars ($100.00) and is less than one hundred thousand dollars ($100,-000.00), except that the association:

(A) Shall pay the full amount of any covered claim arising out of a worker’s compensation policy; and

(B) Is not obligated to a policyholder or claimant in an amount exceeding the insolvent insurer’s obligation under the policy from which the claim arises.

(ii) Be deemed the insurer to the extent of its obligation of the covered claims and to that extent has all rights, duties and obligations of the insolvent insurer as if the insurer were not insolvent;

(iii) As provided in W.S. 26-31-107 assess insurers’ amounts necessary to pay the association’s obligations under paragraph (i) of this subsection, subsequent to an insolvency, the expenses of handling covered claims subsequent to an insolvency, the cost of examinations under W.S. 26-31-112 and any other expenses authorized by this chapter;

(iv) Investigate claims brought against the association and adjust, compromise, settle and pay covered claims to thé extent of the association’s obligation and deny all other claims;

(v) Notify any persons as the commissioner directs under W.S. 26-31-109(a)(iii);

(vi) Handle claims through its employees or through one (1) or more insurers or other persons designated as servicing facilities, whose voluntary accepted designation is subject to the commissioner’s approval;

(vii) Reimburse each servicing facility for association obligations it pays and for expenses incurred while handling association claims; and

(viii) Pay any other association expenses authorized by this chapter.

(b) The association may:

(i) Appear in, defend and appeal any action on a covered claim or on a claim brought against the association;

(ii) Employ or retain any persons necessary to handle claims and perform other association duties;

(iii) Borrow funds necessary to effect the purposes of this chapter in accord with the plan of operation;

(iv) Sue or be sued;

(v) Negotiate and become a party to contracts necessary to carry out the purpose of this chapter;

(vi) Review settlements, releases and adjustments to which the insolvent insurer or its insureds were parties to determine the extent to which the settlements, releases and judgments may be properly contested;

(vii) Refund to the member insurers in proportion to the contribution of each member insurer, that amount by which the association’s assets exceed its liabilities as the board of directors determines;

(viii) Perform any other acts necessary to carry out the purpose of this chapter, [emphasis added]

Another provision of the act is also essential to resolution of the issues posed for our consideration, W.S. 26-31-111 (1983):

(a) Any person having a claim against an insurance policy other than a policy of an insolvent insurer which is also a covered claim, shall first exhaust his right under the policy. Any amount payable on a covered claim under this chapter shall be reduced by the amount of any recovery under the insurance policy, [emphasis added]

No person has a claim against the Allstate policy until the Laramie Insurance Company limits are first exhausted. The Allstate policy specifically provides that its insurance “with respect to a temporary substitute automobile or a non-owned automobile shall be excess insurance over any other collectible insurance.” {See p. 468, infra.) The existence of WIGA makes the Laramie Insurance co-policy collectible. Since this claim settled for less than the Laramie Insurance policy limits, there was never an obligation upon Allstate to defend or pay.

Because WIGA relies almost exclusively upon cases which are concerned with uninsured motorist coverage, we also consider here Wyoming’s statutes which treat the subject of uninsured motor vehicle insurance coverage. W.S. 31-10-101, -104 (1989). W.S. 31-10-102 provides:

For purpose of coverage under W.S. 31-10-101, the term “uninsured motor vehicle,” subject to the terms and conditions of the coverage, includes an insured motor vehicle where the liability insurer thereof is unable to make payment with respect to the legal liability of its insured within the limits specified therein because of insolvency.

Wyoming Insurance Regulations, ch. XXIII, § 4 (1989), provides:

Section 4. “Other” Insurance Clauses. In all instances where the insured holds more than one policy of uninsured motorists insurance or is entitled to recover under more than one policy of uninsured motorists insurance, for which separate premiums have been paid, the extent of this coverage will be the combined coverages under all policies, and actual damages sustained by the insured will be recoverable to the full extent of the combined limits of all such policies. Such recovery, however, will not exceed the minimum requirements for coverage [¹] under Section 31-9-102 — W.S. 1977, as to all other policies except the primary policy. The primary policy shall be construed to mean that policy which provides the coverage for the insured automobile involved in the accident.

The parties agree that the claim at issue is a covered claim as defined in W.S. 26-31-103(a)(ii) (1983) and that WIGA had a general duty to pay the claim because the claim existed prior to the determination of insolvency. W.S. 26-31-106(a)(i). However, WIGA and Allstate disagree as to whether Allstate was required to defend and indemnify under the circumstances of this case.

Allstate contends its policy would have been written differently if it had intended its policy to apply in an instance such as this and that the uninsured motor vehicle statutes, rules and regulations, and case law do not apply in this circumstance. We agree. The policy included these provisions:

Part 1:

Allstate will pay for an insured all damages which the insured shall be legally obligated to pay because of:

1. bodily injury sustained by any person, and

2. injury to or destruction of property,

arising out of the ownership, maintenance or use, including loading and unloading, of the owned automobile or a non-owned automobile.

* Hs * * * *

If there is other insurance

Allstate shall not be liable under this Part 1 for a greater proportion of any loss that the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all collectible insurance against such loss; provided, however, the insurance with respect to a temporary substitute automobile or a non-owned automobile shall be excess insurance over any other collectible insurance.

Part 2:

4. Non-duplication of Benefits; Other Insurance. No eligible injured person shall recover duplicate benefits for the same elements of loss under this or any similar insurance. In the event the eligible injured person has other similar insurance available and applicable to the accident, the maximum recovery under all such insurance shall not exceed the amount which would have been payable under the provisions of the insurance providing the highest dollar limit, and Allstate shall not be liable for a greater proportion of any loss to which this coverage applies than the limit of liability hereunder bears to the sum of the applicable limits of liability of this coverage and such other insurance.

The Allstate policy included “Uninsured Motorist Insurance.” That section of the policy included:

3. “uninsured automobile ” means:

(a) a motor vehicle with respect to the ownership, maintenance or use of which there is, in at least the amounts specified by the financial responsibility law of the state in which the insured automobile is principally garaged, no bodily injury liability bond or insurance policy applicable at the time of the accident with respect to any person or organization legally responsible for the use of such automobile, or with respect to which there is a bodily injury liability bond or insurance policy applicable at the time of the accident but the company writing the same either has denied coverage thereunder or is or becomes insolvent[.]

Section 26-31-106(a)(ii) provides that WIGA was deemed to be the insurer of the insured once Laramie Insurance Company became insolvent. The uninsured motor vehicle statutes, supplementing rules and regulations, and case law cited by WIGA would operate to repeal or override W.S. 26-31-106(a)(ii) if we were to give them the effect contended for by WIGA. The quoted provisions of the Allstate policy which provide coverage when the insured is driving a non-owned automobile apply only where there is no other collectible insurance. We hold that under the factual circumstance presented here W.S. 26-31-106(a)(ii) furnishes a source of collectible insurance.

Affirmed.

URBIGKIT, J., files a dissenting opinion in which THOMAS, J., joins.

THOMAS, J., files a separate dissenting opinion.

1 . W.S. 31-9-102(a)(xi) provides:

(xi) "Proof of financial responsibility” means evidence of ability to respond in damages for liability, resulting from accidents occurring subsequent to the effective date of the proof, arising out of the ownership, maintenance or use of a motor vehicle, in the amount of twenty-five thousand dollars ($25,-000.00) because of bodily injury to or death of one (1) person in any one (1) accident, and subject to the limit for one (1) person, in the amount of fifty thousand dollars ($50,000.00) because of bodily injury to or death of two (2) or more persons in any one (1) accident, and in the amount of twenty thousand dollars ($20,000.00) because of injury to or destruction of property of others in any one (1) accidentj.j