DATE OF JUDGMENT: OCTOBER 25, 1995 TRIAL JUDGE: HON. SHIRLEY C. BYERS COURT FROM WHICH APPEALED: LEFLORE COUNTY CIRCUIT COURT
NATURE OF THE CASE: CIVIL - INSURANCE TRIAL COURT DISPOSITION: SUMMARY JUDGMENT GRANTED IN FAVOR OF APPELLEE DISPOSITION REVERSED AND REMANDED - 12/16/97
MOTION FOR REHEARING FILED: 12/31/97 DENIED
Before: McMILLIN, P.j., Hinkebein, And Southwick, JJ. Southwick, J., For The Court:
¶1. The original opinion is withdrawn and the following is substituted. The motion for rehearing is denied.
¶2. Eva Kaplan challenges the grant of summary judgment by the Circuit Court of Leflore County in favor of Harco National Insurance Company. Kaplan claims that the trial court erred in the following respects: (1) granting summary judgment to Harco; (2) finding that Kaplan did not have standing to pursue a direct action against Harco; (3) ruling that the bad faith claims of Russell Peters and Paradise Trucking, Inc. were not assignable; and (4) determining that the actions of Harco did not rise to the heightened level of tortious conduct sufficient to allow a jury to consider whether to assess punitive damages. Finding the trial court in error, we reverse and remand.
¶3. On February 13, 1992 Eva Kaplan was involved in an accident with a tractor-trailer driven by Russell Peters. At the time of the accident, Peters was employed by Paradise Trucking, Inc.; his tractor was leased to them, and it carried the ICC number registered to Paradise. The trailer attached to his tractor was owned by Paradise and insured by Harco for Paradise. After the accident, Peters called Paradise to report the accident. When Peters went to the Paradise offices, he discussed the accident with Duckworth, the insurance agent who obtained the Harco insurance policy for Paradise. Duckworth had a copy of the accident report which he showed to Peters as they discussed the accident. According to Peters, Duckworth warned him not to discuss the accident with anyone, especially lawyers, and told Peters that he would take care of it. Peters testified that no one from Harco has ever contacted him to discuss the accident.
¶4. In March of 1992, Kaplan's attorney contacted Paradise about her claim, and Paradise referred them to Duckworth. Duckworth stated that an adjuster would contact Kaplan's attorney. On July 16, 1992 Peters was served with the suit and reported it to Paradise. Peters also discussed the suit with Duckworth who again told Peters that he would take care of it. No contact was made until receipt of the lawsuit by Harco in August of 1992. Dave Leary, a claims manager with Harco, contacted Kaplan's attorney who advised Leary that unless Harco responded, Kaplan would seek default judgment. Harco failed to respond; therefore, on October 13, 1992, default judgment was entered against Peters and Paradise in the amount of $35,000 plus interest and costs.
¶5. In an effort to collect on the judgment, Kaplan's attorney provided a copy of the default judgment to both Peters and Paradise on December 3, 1992. A copy of the judgment was also furnished to Duckworth and Leary. Throughout the process, Kaplan was unsuccessfully trying to obtain a copy of the policy. When efforts through correspondence failed, Kaplan filed a writ of garnishment to ascertain the existence of the policy. Harco failed to comply with the writ of garnishment and claimed that there was no policy in effect that provided Paradise with liability coverage on February 13, 1992. This claim was later proven to be false based on the existence of the MCS-90 endorsement to the policy.
¶6. The purpose of the MCS-90 endorsement is to protect the public against undercapitalized and underinsured common carriers. The endorsement provides that the insurer will pay any final judgment recovered against the insured from negligence in the operation of commercial motor vehicles. The insurer has to pay the injured party despite a limitation or condition in the policy or endorsement stating otherwise. Additionally, the duty to pay is not contingent on the vehicle being specifically described in the policy.
¶7. Kaplan secured assignments from both Peters and Paradise. These assignments gave Kaplan "any and all rights, choses in action, causes of action or claims of any kind" that Paradise and Peters may have against Harco arising out of the accident. Based on these assignments, Kaplan filed suit against Harco for bad faith on December 15, 1993. Along with the complaint, Kaplan served a request for production of documents, specifically requesting a copy of the policy. Harco failed to respond; therefore, Kaplan filed a motion to compel on February 25, 1994. On or about March 2, 1994 Harco produced a policy, but it was missing the MCS-90 endorsement. A copy of the complete policy was not produced until July 12, 1994 during Duckworth's deposition. This policy contained the MCS-90 endorsement. Based on the endorsement Kaplan amended her complaint.
¶8. The amended complaint set forth a direct cause of action against Harco. After being served with the amended complaint, Harco paid the default judgment entered against Peters and Paradise and sought summary judgment in this action. The trial court granted summary judgment finding that Kaplan did not have standing to pursue a direct action against Harco, that the action for punitive damages for bad faith was not assignable by Peters and Paradise, and that the alleged actions of Harco did not rise to the necessary level of tortious conduct for punitive damages.
¶9. Kaplan argues that the trial court erred in granting summary judgment to Harco. We resolve the present appeal on questions of law, not fact. Thus whether the trial court was right or wrong on its interpretation of the law, and not on its determination of whether there were disputes of material fact, is what we address. These legal issues, as all legal questions on appeal, are ...