Farmers Insurance Group v. Reed

SHEPARD, Justice,

dissenting:

I joined the dissent of Justice Bakes to the 1984 Opinion No. 176. I continue to adhere to that position, that dissent reading as follows:

I see this case as a continuation of this Court’s inconsistency in dealing with common law intra-family immunity. The majority correctly reasons that:

“If there is intra-family immunity in Idaho in the context of automobile accidents, then the household exclusion clauses are valid. If there is no intra-family immunity shield, the household exclusion clauses are invalid statutorily and as against public policy.” Ante at 552.

This is true because there would be no “liability imposed by law,” I.C. § 49-233, which must be insured against if the common law of Idaho does not “impose” liability for negligence as between family members. If the common law in Idaho does not “impose” liability for negligence as between family members, then the household exclusion clause is not contrary to Idaho’s statute mandating liability insurance for motor vehicles. Therefore, the resolution of this case depends entirely on whether common law parent-child immunity exists under Idaho law.

Prior to 1975 the common law doctrine of intra-family immunity was the law in Idaho, not that it was specifically adopted by a prior Idaho case, but the immunity was part of the general common law. This implication is found in Rogers v. Yellowstone Park Co., 97 Idaho 14, 539 P.2d 566 (1975), which refused the “retention of interspousal immunity,” id. at 17, 539 P.2d 566 and phrased the opinion as “abrogating the doctrine of interspousal immunity,” id. at 25, 539 P.2d 566 (emphasis added). I dissented from Rogers because I considered the public policies underlying intrafamily immunity to have continued validity. I also suspected that this Court’s abrogation was based partly upon the fact that liability insurance was present. Next came the case of Pedigo v. Rowley, 101 Idaho 201, 610 P.2d 560 (1980), which upheld intra-family immunity between a parent and child for an action of negligent supervision. I dissented from Pedigo because of its inconsistency with the prior precedent of Rogers. The public policy and arguments *855underlying interspousal immunity are the same as the public policy underlying parental immunity. If the law does not recognize those policies and arguments in inter-spousal immunity, then the same should not have been recognized in parent-child immunity. The special concurrence of Chief Justice Donaldson in Pedigo attempted to counter the dissent by drawing a distinction between the spousal and parental relationships. However, no mention is made of that distinction in today’s opinion which discusses both spousal and parental immunities as one “inter-family immunity,” apparently conceding that the underlying policies are the same.

In Pedigo, there was no liability insurance involved as far as the record discloses. Now comes this case, in which liability insurance is behind the alleged tortfeasor (brother of the victim), and the Court conveniently finds no immunity, as it did in Rogers. There is some authority supporting the result reached in the majority opinion. Most of those cases, which abrogate household exclusions in liability policies, do so in a straightforward manner by abolishing the doctrine of parental-child immunity. However, statements in the majority opinion such as:

“The last exception (now recognized in many states) allows intra-family suits in automobile negligence actions where liability insurance is present." (Emphasis added), ante at 551, “[Intra-family immunity] will not apply ... to shield insurance companies in automobile negligence actions.” (Emphasis added), ante at 551,
“But today, the presence of mandatory automobile liability insurance completely undercuts that rationale in this area.” (Emphasis added), ante at 552,

reveal the true basis for the majority’s opinion — that is, the defendant is covered by liability insurance, so there is no immunity. This conclusion is further supported by the fact that the majority opens the immunity door only “to the extent of coverage under the automobile liability insurance.” Ante at 552.

“Viewed in this way, the majority opinion appears for what it really is, a thinly disguised assault upon liability insurance carriers.” Rogers v. Yellowstone Park Co., 97 Idaho 14, 25, 539 P.2d 566, 577 (1974) (Bakes, J., dissenting). At least the Montana Supreme Court, in Transamerica Insurance Co. v. Royal, 656 P.2d 820 (Mont.1983), the case upon which we based our decision to grant rehearing, as the majority notes ante at 551, made its decision on a more judicious rationale than the presence of a “deep pocket.” The Montana court recognized that the validity of the policy exclusion turned upon the question of whether or not Montana recognized the doctrine of parental immunity, not the reverse — that parental immunity turned upon whether or not there was insurance. The Montana court succinctly stated:

“If we recognize parental immunity, then the exclusion clause is valid; and vice versa, if parent-child immunity does not exist, then the exclusion clause must be invalid____”

The Montana court then concluded:

“We hold that a parent is not immune from suit brought by his child under the age of emancipation in cases involving parental negligence in the operation of a motor vehicle. Consequently, we must hold that a family exclusion clause is void and unenforceable [under Montana’s equivalent of I.C. § 49-233].” 656 P.2d at 824.

We should not let the existence or non-existence of liability insurance determine whether there is parent-child immunity in Idaho. Therefore, I respectfully dissent.

The majority gives several examples of “inequities” which might occur when certain passengers are not covered by liability insurance, depending upon whether a household member is driving the automobile. These perceived inequities are present in every accident involving uninsured or under-insured motorists, and they would be substantially lessened by the presence of automobile medical coverage for the family members which is quite often purchased with the liability coverage. *856This coverage is further supplemented by major medical health and accident coverage which many heads of households obtain through employment or from another source. The majority’s implication that, unless the household exclusion clause is voided the family members will be stripped of all coverage, is not correct.

The law does not require households to insure for all injuries to its members. Until the law does so require, the basic inequities referred to by the majority will continue to exist. If insurance is purchased for a specific situation, the member will be covered; if not purchased, there will be no coverage. The presence or absence of insurance coverage should not bear on whether intra-family immunity should be applied by this Court.

The majority interprets I.C. § 49-233, which requires the owner to insure against injury suffered “by any person” so broadly that most exclusions, including the household exclusion, are contrary to the statute. The insurance policy in the present case contains other exclusions disallowing liability coverage to: anyone injured intentionally by the owner or driver; employees or fellow servants in certain situations; partners of the insured; those injured while the automobile is used in the “automobile business”; and those injured while the automobile is used in a “racing or speed contest or in any practice or preparation thereof.” All of these people who might be injured would qualify as “any person” under the majority’s interpretation. Additionally, there would be no common law immunity to bar liability being “imposed by law.” Therefore, most, if not all, of the exclusions contained in the insurance policy could be voided using the same analysis by which the majority voids the household exclusion clause. The legislature was undoubtedly aware of these common exclusions, including the household exclusion, at the time compulsory liability insurance was required by statute. There is nothing in the legislative history or the statute itself which suggests that the legislature intended such a drastic result as the voiding of these policy exclusions. Many of the exclusions have been accepted by long use and are supported by rational reasons. They may all have been swept away by the majority opinion today.

The majority has another problem with its statutory construction. The statute in question only mandates liability insurance in the amount of $25,000 for a single accident and $50,000 for multiple claims. Even if the household exclusion clause is to be abrogated because it conflicts with the statute, it should only be abrogated to the extent of the first $25,000-50,000 of coverage. The act specifically states, in I.C. § 49-1521(g), that:

“(g) Any policy which grants the coverage required for a motor vehicle liability policy may also grant any lawful coverage in excess of or in addition to the coverage specified for a motor vehicle liability policy and such excess or additional coverage shall not be subject to the provisions of this act. With respect to a policy which grants such excess of additional coverage the terms ‘motor vehicle policy’ shall apply only to that part of the coverage which is required by this section.” (Emphasis added.)

The additional coverage beyond the $25,-000-50,000 coverage is not “subject to the provisions of [the] act,” and therefore the household exclusion cannot be construed as inconsistent with the coverage beyond the $25,000-50,000 statutory requirement. The additional coverage ought to be subject to the policy exclusions, and many cases so hold. See Arceneaux v. State Farm Mutual Automobile Ins. Co., 113 Ariz. 216, 550 P.2d 87 (1976); DeWitt v. Young, 229 Kan. 474, 625 P.2d 478 (1981); State Farm Mutual Auto Ins. Co. v. Shelly, 394 Mich. 448, 231 N.W.2d 641 (1975); Estate of Neal v. Farmers Ins. Exchange, 93 Nev. 348, 566 P.2d 81 (1977).

The enforcement of a household exclusion clause in other insurance contexts is now questionable as a result of today’s opinion. Consider the household exclusion clause contained in a homeowner’s liability insurance policy. The arguments and pub-*857lie policy are the same. The so-called inequities are the same. Consider the two neighborhood children who alternately play at each other’s houses. By enforcing the clause, each will fall in and out of coverage, depending on whether he or she is playing at the neighbor’s house or at home. That is not such a compelling inequity upon which basis the clause must be voided. The liability policy was purchased in order to insure against injuries to others who are not members of the family. If the head of the household wants coverage for his own family members, then that particular first party coverage should be purchased in addition to liability coverage.

The two policies supporting intra-family immunity are: (1) preservation of family harmony; and (2) prevention of collusion or fraud. The majority claims that the second policy was “disposed” of in Rogers, even though it was recognized subsequently in Pedigo. The majority eliminates the first policy by stating, “But today, the presence of mandatory automobile liability insurance completely undercuts the rationale in this area.” Ante at 552. The reason family members aré less likely to experience disharmony over the lawsuit is that they will be more likely to agree on liability. A parent is more likely to admit to negligence, whether or not it is true, when the insurance coverage of the parent’s child is involved. This enhances the policy that intra-family immunity should be recognized in insurance cases to deter fraud and collusion.

There will no doubt be innumerable legal and practical problems raised by today’s decision to which the majority has obviously given little or no thought. For example, if as the majority indicates, parent-child immunity is abrogated only “to the extent of coverage under the automobile liability insurance,” then every such action filed by a parent against a child or a child against a parent must first allege and prove the presence of insurance in order to maintain the action. This will inevitably require the joinder of the insurance company in the action and, if coverage is contested, a trial on that issue as a predicate for maintaining the parent-child action. Another example is the parent who is negligently supervising a small child in an automobile by not insisting that the child be restrained in a seatbelt. The parent stops abruptly, attempting to avoid hitting a car ahead, and the unrestrained child is thrown into the windshield and is seriously injured. If the child sues the parent, what would the majority’s decision be? The majority has recognized the validity of Pedigo which would bar the child from suing the parent for negligent supervision because of failure to properly supervise and restrain the child. However, if the parent merely “admits” following too closely to another vehicle, then that type of negligence would not fall under the Pedigo negligent supervision doctrine which retains parent-child immunity, and the child could bring a lawsuit against the parent for following another vehicle too closely if the parent carried liability insurance.3 In this second example, under today’s opinion it would appear that the trial court would have to litigate the question of how much of the injured child’s damages were the result of the immune negligent supervision (failure to restrain), and how much of the damages were sustained by the non-immune negligent driving (following too closely). Also, what will happen if the judgment of the child against the parent exceeds the amount of the liability insurance coverage? Since the parents cannot be the guardians ad litem for the injured child, because of the obvious conflict of interest, any guardian of a child who recovers an amount in excess of the parents’ liability insurance would of necessity have to carry out its fiduciary responsibility to the injured child and execute against the assets of the parents. To*858day’s opinion is inconsistent with Pedigo. This Court should follow the Pedigo case and establish some consistency in the law in this family immunity area.

The effect of the majority decision today is to transmute a policy of liability insurance into a policy of first party insurance not unlike the no-fault insurance concept which has been adopted in some states.4 However, unlike no-fault insurance, the first party coverage created by the Court today permits recovery for pain and suffering and other similar types of damage which under no-fault are not compensable. Several years’ experience under the no-fault insurance plans in those few states which have adopted it has resulted in skyrocketing automobile insurance premiums, even though the no-fault coverage does not compensate for pain and suffering. One can only imagine what today’s opinion will do to the liability insurance premium rates as a result of converting the standard liability insurance policy into a family no-fault policy, which will be the ultimate result of today’s opinion. How can it rationally be contended that the legislature intended such a horrendous result by the mere enactment of I.C. § 49-233 and its requirement that all owners of automobiles operated in the state shall have a liability insurance policy in an amount not less than required by I.C. § 49-1521, i.e., $25,000-50,000.

Today’s opinion makes a shambles of the law of liability insurance and intra-family immunity. Whether intra-family immunity should be retained or abolished ought to be considered on its own merits, not upon its relationship to liability insurance. The problems which the majority opinion today will pose for the trial courts will yet prove the wisdom of the common law the doctrine of intra-family immunity.

. In order for a parent to recover under the liability policy, all that will be necessary is to "admit" that the cause of the accident was the following too closely, rather than the failure to restrain the child, and the liability of the insurance carrier will be fixed. It is difficult to understand how the majority can so lightly conclude that the prevention of collusion or fraud was "disposed of’ in Rogers.

. This is the second time in recent years that this Court has turned a liability insurance policy into a policy of first party insurance. See Foremost Ins. Co. v. Putzier, 102 Idaho 138, 627 P.2d 317 (1981).