Blake v. Nationwide Insurance Co.

Blake v. Nationwide Insurance Co. (2005-176); 180 Vt. 14; 904 A.2d 1071

2006 VT 48

[Filed 26-May-2006]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 2006 VT 48

                                No. 2005-176


  Clifton Blake                                  Supreme Court

                                                 On Appeal from
       v.                                        Windham Superior Court


  Nationwide Insurance Company                   February Term, 2006


  Karen R. Carroll, J.

  Thomas C. Bixby of McCarty Law Offices, P.C., Brattleboro, for
    Plaintiff-Appellant.

  John A. Serafino of Ryan, Smith & Carbine, Ltd., Rutland, for
    Defendant-Appellee.


  PRESENT:  Reiber, C.J., Dooley, Johnson, Skoglund and Burgess, JJ.  

        
       ¶  1.  DOOLEY, J.   Plaintiff Clifton Blake appeals the superior
  court's grant of summary judgment for defendant Nationwide Insurance
  Company ("Nationwide").  Plaintiff argues that Nationwide had a duty to
  defend the insured's employee, Clifford Riddle, in the underlying
  negligence action and that Nationwide's failure to defend should estop it
  from asserting that injuries caused by Riddle's negligence were not covered
  by the policy.  Plaintiff also claims that the superior court: (1)
  erroneously granted Nationwide summary judgment based on the finding that
  plaintiff's injuries occurred in the course of his employment; (2) made
  procedural errors in awarding summary judgment; (3) erroneously refused to
  compel Nationwide to produce its file in discovery; and (4) erroneously
  dismissed his count alleging that Nationwide acted in bad faith.  We hold
  that defendant had no duty to defend and, therefore, is not estopped from
  denying coverage under the employment exclusion.  We also hold that the
  court properly granted summary judgment, denied the motion to compel
  discovery, and dismissed the bad faith claim.  We affirm.

       ¶  2.  Plaintiff and Clifford Riddle, both Jamaican migrant farm
  workers, were involved in a motor vehicle accident on July 17, 1997. 
  Riddle was driving a truck owned by their employer, Donald Harlow, and
  plaintiff was a passenger in the truck when it struck a tree. (FN1) 
  Plaintiff sustained severe injuries as a result.  The truck was insured
  under a policy issued to Donald and Madeline Harlow by defendant
  Nationwide.  The policy contains specific exclusions for "bodily injury to
  others for which any insured may be held liable under a workmen's
  compensation, unemployment compensation, disability benefits, or similar
  law" and "bodily injury to an employee of any insured, while the employee
  is engaged in activities of employment."  As a result of his injuries,
  plaintiff received workers' compensation benefits from the Harlows'
  workers' compensation insurer.
   
       ¶  3.  Plaintiff sought legal counsel to explore other ways to recover
  for his injuries, and on September 16, 1998, plaintiff's counsel sent a
  letter to the Harlows informing them that his office would be representing
  plaintiff in plaintiff's claim regarding the "work-related automobile
  accident," and that they should forward the letter to both their workers'
  compensation and automobile insurance carriers.  After a follow-up letter
  threatening suit, a Nationwide claims agent responded on April 27, 1999,
  stating that plaintiff's injury was not a covered loss under the auto
  insurance policy Nationwide issued to the Harlows because plaintiff was
  covered by workers' compensation insurance. 
   
       ¶  4.  On December 2, 1999, plaintiff brought suit against the Harlows
  and Clifford Riddle to recover for injuries sustained in the accident. 
  Apparently the Harlows had initially sought a defense, but Nationwide
  denied their claim under one of the exclusions listed above. (FN2)  In any
  event, plaintiff dismissed the claims against the Harlows and when Riddle
  did not appear, obtained a default judgment and eventually a damage award
  against him in the amount of $3,887,193.72.  Riddle never sought a defense
  from Nationwide, and Nationwide provided no defense to him.  Thus,
  Nationwide was not involved in the underlying litigation.
   
       ¶  5.  After securing the default judgment and before the assessment
  of damages, plaintiff notified Nationwide that it had breached its
  obligation to defend Riddle.  Nationwide responded that the claim had been
  denied prior to litigation because "this policy does not cover bodily
  injury to an employee of any insured, while the employee is engaged in
  activities of employment."  Following the damage assessment, plaintiff
  notified Nationwide that it was obligated to pay the judgment and that he
  would seek punitive damages if Nationwide failed to pay.  Apparently,
  Nationwide did not respond to this letter, and this suit ensued on March
  15, 2003. 
   
       ¶  6.  Plaintiff's complaint alleged that Nationwide's policy
  covered Clifford Riddle as a permissive user of the Harlows' automobile at
  the time of the accident.  It alleged the underlying litigation and the
  default judgment of $3,887,193.72 and stated that "despite having ample
  knowledge of the claim [Nationwide] has failed to defend and/or make any
  payments on the judgment."  It alleged that Nationwide was obligated to pay
  the judgment and had acted in bad faith in not doing so.  It sought the
  amount of the underlying judgment plus compensatory damages for
  Nationwide's actions in bad faith, punitive damages, and attorneys' fees. 

       ¶  7.  Nationwide moved to dismiss the action for failure to state a
  claim because there was no privity of contract between plaintiff and
  Nationwide and because coverage was excluded as Riddle was acting in the
  course of his employment when the accident occurred.  Plaintiff countered
  with a motion to enforce the underlying judgment, arguing that Nationwide's
  failure to defend Riddle in the underlying action estopped it from
  defending in the instant action.  In support of this motion, plaintiff
  attached correspondence between plaintiff's counsel and claims adjusters
  for Nationwide. 

       ¶  8.  It became clear from these initial filings that plaintiff was
  pursuing two theories of Nationwide's liability.  The first and primary
  theory was that Nationwide was obligated to pay the underlying judgment,
  whether or not there was coverage under the policy, because it breached its
  duty to defend Riddle in the underlying action without seeking a
  declaratory judgment on the issue of coverage.  The second theory was that
  there was coverage under the policy because the exclusions on which
  Nationwide relied did not apply.  The superior court denied the motion to
  enforce under the first theory, relying on the correspondence attached to
  the plaintiff's motion.  In essence, the court granted Nationwide's motion
  to dismiss the first theory.  The court denied the motions on the second
  theory, ruling that it could not be decided on a motion to dismiss without
  factual support.
   
       ¶  9.    We note that the motions the court decided were plaintiff's
  attempts at preemptive strikes to obtain early decisions on the merits
  without trial and without the factual development necessary for a trial or
  even a motion for summary judgment.  The court could have decided that all
  of the claims in the motions were premature, as it did with respect to
  plaintiff's second theory, but it decided to rule against plaintiff on the
  merits of his main claim.  Plaintiff could not complain about this
  disposition because he brought it on himself by filing the motion and
  supporting letters.  Nationwide might have claimed that the motion for
  enforcement was really one for summary judgment because of the attached
  factual material, see Lueders v. Lueders, 152 Vt. 171, 172, 566 A.2d 404,
  405 (1989), but instead took advantage of plaintiff's motion for a
  successful preemptive strike of its own.  Whatever procedural
  irregularities are behind the court's decision have been waived.

       ¶  10.  In ruling on the first theory, the superior court concluded
  that even if plaintiff's estoppel theory was valid, it would not apply in
  this case because Nationwide had no reason to believe there was a dispute
  over coverage:

    From Blake's own submissions, it appears that Nationwide informed
    Blake of its position that his injuries were not covered because
    he was the insured's employee - a plausible position, certainly -
    no later than April 1999.  Yet, it does not appear that there was
    any further communication between Blake and Nationwide until April
    2001, after a default judgment against Riddle had been entered. 
    Moreover, even then, Blake provided no factual or legal
    explanation of why he believed the exclusion did not apply. 
    Estoppel is an equitable doctrine, and when an insurer states a
    non-frivolous position regarding non-coverage, it would not be
    equitable to invoke estoppel because it failed to pursue a
    declaratory judgment, when the party disputing non-coverage did
    nothing to let the insurer know that a viable dispute existed and
    a declaratory judgment action was needed. 

  The court added that "we certainly do not want to encourage insurers to
  seek a declaratory judgment every time they deny coverage, even if there is
  no viable dispute."  
   
       ¶  11.  Nationwide then moved for summary judgment on the second
  theory, asserting that the workers' compensation and employment-related
  policy exclusions to its coverage applied such that plaintiff's injuries
  were not covered by the Harlows' policy.  The superior court initially
  denied the motion but reconsidered when Nationwide filed Donald Harlow's
  affidavit, which stated that plaintiff was injured in the course of his
  employment with the Harlows.  Nationwide argued that Harlow's affidavit
  established that plaintiff was working at the time of the accident, and
  thus plaintiff's injuries fell under the employment-related exclusion to
  the policy.  Plaintiff did not produce any evidence to contest the
  affidavit.  The superior court granted Nationwide's motion for summary
  judgment on April 22, 2005, finding there was no genuine issue as to the
  fact that plaintiff's injuries occurred in the scope of employment. 
  Plaintiff appeals from the judgment and the denial of the motion to
  enforce. (FN3)
        
       ¶  12.  The first issue is whether Nationwide had a duty to defend
  Riddle in the underlying action.  Plaintiff relies upon our general
  description of the duty to defend:

      We have often explained that an insurer's duty to defend is
    broader than its duty to indemnify. . . .  Generally, the
    insurer's duty to defend is determined by comparing the
    allegations in the complaint of the underlying suit to the terms
    of coverage in the policy. . . .  If any claims are potentially
    covered by the policy, the insurer has a duty to defend.

  City of Burlington v. Nat'l Union Fire Ins. Co., 163 Vt. 124, 127, 655 A.2d 719, 721 (1994) (citations omitted).  Plaintiff points out that the
  complaint fell within the coverage of the policy and any claim that
  exclusions applied was arguable until finally settled by the court in its
  summary judgment decision.  Further, he argues that Nationwide could have
  brought a declaratory judgment action to resolve any coverage issue, which,
  he posits, was exactly what we required in Smith v. Nationwide Mutual
  Insurance Co., 2003 VT 61, 175 Vt. 355, 830 A.2d 108. 

       ¶  13.  Although in many cases the presence of a duty to defend can be
  determined by comparing the coverage provisions of the policy with the
  allegations in the complaint, this is not such a case because the relevant
  policy exclusions involve factual questions not covered in the complaint,
  namely, whether the accident occurred in the scope of employment.  The
  insurer is entitled to independently examine whether the policy exclusions
  apply and deny coverage under an applicable exclusion.  In doing so, it
  bears the risk that its coverage decision is wrong and it will be liable
  for a judgment in a case in which it did not participate.  See Cincinnati
  Ins. Co. v. Vance, 730 S.W.2d 521, 522 (Ky. 1987) (holding that insurer may
  choose not to defend putative insured at its own peril, but may be liable
  for judgment if court determines there was policy coverage).  Its decision
  not to defend, however, does not expose it to liability if its coverage
  determination was correct.  See Serecky v. Nat'l Grange Mut. Ins., 2004 VT
  63, ¶ 13, 177 Vt. 58, 857 A.2d 775 (holding that insurers who justifiably
  denied coverage did not waive right to dispute coverage by failure to
  defend or participate in underlying action).  
   
       ¶  14.  Plaintiff argues that it is debatable whether the policy
  exclusion for injury to an employee "while . . . engaged in activities of
  employment" applies.  We do not find this argument supported by the limited
  record before us.  Nationwide consistently denied coverage, first in an
  August 15, 1997, letter to the Harlows, and thereafter when the Harlows
  were sued by plaintiff.  Neither the Harlows nor Riddle contested this
  denial.  Plaintiff was receiving workers' compensation benefits, which
  strongly suggests the injury was work-related.  Indeed, even plaintiff's
  counsel, in a letter to the Harlows predating the complaint, referred to
  the incident as a "work-related automobile accident."  In response to
  plaintiff's claim that Nationwide breached its duty to defend, a Nationwide
  claims agent reiterated its position and invited plaintiff's counsel to
  submit authority to the contrary.  Plaintiff never responded to that
  invitation.  Plaintiff's silence is telling because the applicability of
  the exclusion is based upon the nature of the injured party's conduct at
  the time of the accident.

       ¶  15.  Nor do we agree with plaintiff that Nationwide had a duty to
  seek a declaratory judgment on coverage.  Plaintiff relies for this
  argument on Smith v. Nationwide Mutual Insurance Co., a case in which the
  insurer commenced a defense but discontinued it under a cooperation clause
  because the insured would not allow counsel selected by insurer to appear
  for him in the underlying litigation.  2003 VT 61.  We held that the
  insurer failed to demonstrate that the insured breached his contractual
  duty to assist in the defense and also failed to demonstrate prejudice from
  the insured's conduct.  Id. ¶ 28.  We also observed that one option the
  insurer could have used to address its disagreement with insured was to
  file a declaratory judgment action to determine its obligations under the
  circumstances.  Id. ¶ 18.  Smith did not hold that an insurer must file a
  declaratory judgment in all noncooperation situations; the declaratory
  judgment was one of a number of options.  See id. (discussing "several
  viable options" available to Nationwide under the circumstances, including
  intervention and settlement).
   
       ¶  16.  This case involves the insurer's duty to defend and not the
  insured's duty to cooperate.  If a declaratory judgment action were
  required in this case, it would be required in every case in which an
  insurer denied coverage, irrespective of whether the grounds were contested
  or even contestable.  The litigation from such a rule would be significant,
  and virtually all of it would be unnecessary.  Again, we reiterate that an
  insurer who refuses to defend runs the risk that it will be exposed to a
  default or negotiated judgment much larger than if it vigorously defended
  in situations where its coverage decision is found to be erroneous. 
  Because of this risk, "preemptive suits to determine coverage obligations
  have become a common approach of insurers in Vermont."  Id. ¶ 24.  We see
  no need to turn the strong incentive to bring such an action into a mandate
  in all cases of denial of coverage.  See Vance, 730 S.W.2d  at 523 ("[W]e
  disagree with the proposition that allegations of a complaint against a
  putative insured compel a defense even where no coverage exists, or that an
  insurance company that rightfully elects to deny coverage and provide no
  defense is thereafter estopped from litigating the coverage issue.").

       ¶  17.  For the above reasons, we conclude that Nationwide had no duty
  to defend Riddle in the underlying action.  Because of this conclusion we
  do not reach two other issues raised by the parties.  We do not reach
  Nationwide's argument that plaintiff lacks standing to bring this action,
  particularly where neither the Harlows nor Riddle sought a defense for
  Riddle either explicitly or impliedly. (FN4)  We also do not reach
  plaintiff's primary argument that if Nationwide breached its obligation to
  defend, it is estopped from relying upon the coverage exclusions and must
  pay the default judgment. (FN5)

       ¶  18.  This brings us to plaintiff's second theory that there is
  coverage for plaintiff's injuries from the accident under Nationwide's
  policy.  On this theory, plaintiff argues that the court should not have
  granted summary judgment against him because "there are several genuine
  issues of material facts in dispute" and because the court committed
  procedural errors in ruling on the motion. 

       ¶  19.  The superior court ruled that plaintiff could bring this
  direct action against Nationwide to establish coverage if he fit within 8
  V.S.A. § 4203(3).  That section provides that if the insured is insolvent
  or bankrupt, the injured party may bring a direct action against the
  insurer. (FN6)  See id.  As a result, plaintiff alleged that Riddle was
  insolvent.  Although Nationwide contested the application of the statute,
  its main defense was that there was no coverage because of the
  applicability of the two exclusions set forth above.  See supra, ¶ 2. 
  Nationwide eventually filed an affidavit of Donald Harlow that stated the
  accident occurred while plaintiff and Riddle were transporting berries and
  cardboard cartons from the farm fields to the sugarhouse and, therefore,
  "during the course of and in the scope of their employment."  The court
  relied upon the affidavit in granting summary judgment for Nationwide based
  on the exclusion for injuries occurring "while the employee is engaged in
  activities of employment":

         The claim that the accident occurred within the scope of
    employment was asserted via the fact that worker's compensation
    benefits had been paid.  At this time, however, the Court has
    available an affidavit which shows that this issue cannot be in
    dispute.  Plaintiff has not provided the Court with any evidence
    to dispute the information in Mr. Harlow's affidavit other than to
    argue that the worker's compensation benefits were paid without
    requirement of a formal claim.  

         Therefore, the Court finds that the Nationwide policy's
    exclusion of claims made by employees who were injured while
    acting within the scope of their employment applies to this case,
    that there is no genuine issue as to this material fact, and that
    Defendant is entitled to judgment as a matter of law.
     
       ¶  20.  When reviewing a trial court's grant of summary judgment, we
  apply the same standard as the trial court.  Serecky, 2004 VT 63,   12.  We
  will affirm summary judgment if there are no issues of material fact and
  the moving party is entitled to judgment as a matter of law.  Id.; V.R.C.P.
  56(c).  Plaintiff argues that this standard was not met because "there were
  issues regarding maintenance of the vehicle and whether or not alcohol was
  a factor in the collision."  We fail to see how these issues would
  undermine the court's conclusion that the accident occurred while plaintiff
  and Riddle were "engaged in activities of employment."  In any event, to
  the extent these issues were raised by plaintiff, they were based upon
  "mere allegations."  See V.R.C.P. 56(e); Alpstetten Ass'n, Inc. v. Kelly,
  137 Vt. 508, 514, 408 A.2d 644, 647 (1979) (explaining that a party
  opposing summary judgment may not rest upon "mere allegations," but must
  come forward with affidavits or other evidence raising a factual dispute). 
  We agree with the superior court that plaintiff failed to demonstrate any
  issue of material fact and that the affidavit showed that Nationwide was
  entitled to judgment as a matter of law.

       ¶  21.  Plaintiff makes two additional arguments for why the summary
  judgment decision was wrong: (1) the court failed to give plaintiff a
  hearing before granting the motion; and (2) the court failed to render a
  reasoned opinion with clear findings of fact.  The short answer to the
  first claim is that "[i]n any case, the court . . . may dispose of the
  motion without argument." V.R.C.P. 78(b)(2).  With respect to the second
  claim, the function of the court in considering a motion for summary
  judgment is not to make findings on disputed factual issues.  See Fritzeen
  v. Trudell Consulting Eng'rs, Inc., 170 Vt. 632, 633, 751 A.2d 293, 296
  (2000) (mem.) ("It is not the function of the trial court to find facts on
  a motion for summary judgment . . . .").  While a trial court's recitation
  of the undisputed facts is often helpful for appellate review of a grant of
  summary judgment, they are not necessary, particularly in a case like this
  where the factual basis of the court's judgment is identified.  We find no
  procedural error in the adjudication of the motion for summary judgment.
   
       ¶  22.  Finally, plaintiff raises two additional issues.  First, he
  argues that the court committed error by not giving him access to
  Nationwide's claims file in discovery.  Plaintiff sought an order to grant
  him access to the file after the court had ruled that he could not enforce
  the default judgment against Nationwide without proving there was coverage. 
  The court ruled that the file was irrelevant to the remaining issue of
  whether plaintiff was acting within the scope of his employment when the
  accident occurred.  We agree that the grounds for the discovery order no
  longer existed.  See Concord Mut. Ins. Co. v. Madore, 2005 VT 70, ¶ 15,
  178 Vt. 281, 882 A.2d 1152 (concluding defendants' claim that court erred
  in denying them discovery was moot where request related to issue that was
  immaterial to policy exclusion).  Second, plaintiff claims the court erred
  in dismissing his count that Nationwide acted in bad faith in its actions
  with respect to plaintiff and Riddle.  Since we have found that Nationwide
  did not breach its duty to defend Riddle and properly denied coverage under
  the employment exclusion in the policy, there is no basis for a bad faith
  claim.  Serecky, 2004 VT 63,   27.  

       Affirmed.

                                       FOR THE COURT:



                                       _______________________________________
                                       Associate Justice


------------------------------------------------------------------------------
                                  Footnotes


       Clifford Riddle and Donald Harlow are not involved in this appeal.

       The record in this case does not contain any detail of the interaction
  between Nationwide and the Harlows or the circumstances under which the
  Harlows were dismissed from the underlying litigation.

FN3.  Nationwide argues that the scope of this appeal should be limited to
  issues raised in the summary judgment decision of April 22, 2005, because
  V. R. A. P. 3(d) requires an appellant to "designate the judgment, order,
  or part thereof appealed from," and plaintiff designated only the summary
  judgment entry and not earlier decisions or the final judgment.  We have
  stated that "[c]ourts liberally construe the requirements of Rule 3."  In
  re Shantee Point, Inc., 174 Vt. 248, 259, 811 A.2d 1243, 1253 (2002)
  (stating that so long as notice of the appeal is timely filed, an error in
  compliance with Rule 3 affects the validity of the appeal only if it
  prejudices another party).  The United States Supreme Court, discussing
  Federal Rule of Appellate Procedure 3(c), which has nearly identical
  language as the Vermont Rule, commented that "imperfections in noticing an
  appeal should not be fatal where no genuine doubt exists about who is
  appealing, from what judgment, to which appellate court."  Becker v.
  Montgomery, 532 U.S. 757, 767 (2001).  Here, Nationwide is not prejudiced
  by allowing plaintiff to appeal from the final judgment and the earlier
  decisions since it was given sufficient notice of the issues on appeal and
  had the opportunity to fully brief them.  Moreover, it is clear that
  plaintiff intended to appeal from all the decisions including the final
  judgment, and should not be penalized for a technical mistake where no
  prejudice resulted.  Thus, we reject Nationwide's argument.

FN4.  Although the Harlows may have sought a defense for themselves at one
  time in the underlying litigation, there is no indication that they
  contested Nationwide's refusal to provide one.

       Many of the cases plaintiff relies on to support his estoppel argument
  are inapplicable because they involve disputes where the insured brought
  suit against the insurer for failure to defend, and thus standing was not
  at issue.  E.g., Amato v. Mercury Cas. Co., 61 Cal. Rptr. 2d 909 (Cal. Ct.
  App. 1997) (addressing action by insured against his automobile insurer
  where insurer refused to defend and default judgment was entered against
  insured).  Plaintiff does not explain how he, a stranger to the insurance
  policy, may assert estoppel against the insurer for failing to defend
  Riddle.  See Farm Bureau Mut. Auto Ins. Co. v. Houle, 118 Vt. 154, 161, 102 A.2d 326, 330 (1954) ("[Defendant] was not one of the parties to the
  contract of insurance so cannot invoke an estoppel against the insurer."). 
  The cases plaintiff cites where a third party brought a complaint against
  an insurer for breach of its duty to defend the insured are equally
  inapplicable because those cases involve instances where  there was at
  least a viable dispute over coverage.  E.g., Lozada v. Phoenix Ins. Co.,
  237 F. Supp. 2d 664, 671 (M.D.N.C. 2003) (finding information provided to
  insurer prior to filing of lawsuit raised facts that, if proven, would
  bring plaintiff's claim within coverage of the policy).

       We also note a split in the case law over whether the insured must
  seek a defense to invoke the duty to defend.  Compare Cincinnati Cos. v. W.
  Am. Ins. Co., 701 N.E.2d 499, 503-04 (Ill. 1998) (holding duty to defend
  arises when insurer has notice of claim and does not require any indication
  that insured seeks a defense), and Home Ins. Co. v. Nat'l Union Fire Ins.of
  Pittsburgh, 658 N.W.2d 522, 532 (Minn. 2003) (stating duty to defend arises
  when insured gives insurer notice of lawsuit and "the opportunity to
  defend"), with Unigard Ins. Co. v. Leven, 983 P.2d 1155, 1160 (Wash. Ct.
  App. 1999) (explaining for duty to defend to arise, insured must ask
  insurer for defense).  There is no indication in this case that Riddle
  asked for a defense or gave notice of the claim to Nationwide.

FN5.  While some states have adopted the rule that equitable estoppel
  bars an insurer from later arguing questions of coverage where the insurer
  failed to defend the insured or seek a declaration regarding coverage in
  the underlying lawsuit, see, e.g., Joslyn Mfg. Co. v. Liberty Mut. Ins.
  Co., 23 F.3d 1212, 1214 (7th Cir. 1994) ("By violating its duty to defend,
  under Illinois law the insurer is estopped to deny policy coverage in a
  subsequent lawsuit by the insured or the insured's assignee.") (internal
  quotations omitted), other states have refused to adopt such a rule, see,
  e.g., Elliott v. Hanover Ins. Co., 711 A.2d 1310, 1313 (Me. 1998) ("An
  insurer that breaches its duty to defend . . . is not estopped from
  asserting noncoverage as a defense in a subsequent action brought by the
  insured or the insured's assignee."); Vance, 730 S.W.2d  at 524 ("[An
  insurer's] decision to deny coverage and the duty to defend . . . does not
  cause an estoppel.").  We do not reach this issue because of our conclusion
  that Nationwide had no duty to defend.

FN6.  Plaintiff raises the issue that the superior court should have found
  Riddle insolvent as a matter of law and ruled that § 4203(3) authorizes
  this direct action by the injured party against the insurer.  In view of
  our disposition, we do not reach this issue.