Frey v. Independence Fire and Cas. Co.

Frey v. Independence Fire and Cas. Co.
1985 OK 25
698 P.2d 17
Case Number: 59091
Decided: 04/02/1985
Modified: 04/02/1985
Supreme Court of Oklahoma

CARL PHILLIP FREY, III, GAYLA D. FREY; AND TRACI FREY, A MINOR, BY AND THROUGH HER FATHER AND NEXT FRIEND, CARL PHILLIP FREY, III, APPELLANTS,
v.
THE INDEPENDENCE FIRE AND CASUALTY COMPANY, AN OKLAHOMA INSURANCE CORPORATION, APPELLEE.

Appeal from the District Court, Oklahoma County, William R. Saied, J.

Certiorari to the Court of Appeals, Div. 2

¶0 In an action against the insurer to recover a loss under uninsured motorist coverage of automobile policy, the District Court, Oklahoma County, William R. Saied, Judge, rendered summary judgment for the insurer. The Court of Appeals reversed and certiorari was granted.

THE COURT OF APPEALS' OPINION IS VACATED AND THE TRIAL COURT'S JUDGMENT AFFIRMED.

Jim W. Lee, Lee, Beuch & Davis, Oklahoma City, for appellants.

Rex K. Travis, Oklahoma City, for appellee.

OPALA, Justice.

[698 P.2d 19]

¶1 Certiorari presents two questions: (1) Did the insured timely raise the issue whether the insurer, because of its denial of the insured's claims, was precluded, by waiver or estoppel, from relying on the insured's breach of the so-called trust agreement clause of his uninsured motorist coverage? and (2) Did the insured's "covenant not to sue", given the tortfeasor before suit was brought under the uninsured motorist coverage, destroy the insurer's subrogation rights and hence bar recovery under the doctrine announced in Porter v. MFA Mutual Ins. Co.?

¶2 The insured, his wife and child were injured in a car accident with an underinsured tortfeasor. After accepting the tortfeasor's settlement offer, the insured executed a "covenant not to sue". Because the settlement is said not to have covered the total amount of his claims, the insured brought an action against his insurer to recover under the uninsured motorist coverage. The insurer moved for summary judgment, contending that the insured's breach of the policy's so-called trust agreement - by execution of a covenant not to sue the tortfeasor - had destroyed the insurer's subrogation rights. The insured filed neither a response nor objections to the motion. The trial court rendered summary judgment for the insurer. This appeal was then brought by the insured who was successful in the Court of Appeals. Certiorari was granted on insurer's petition.

¶3 The estoppel theory was first injected into the case when the insured attached several letters to his brief-in-chief on appeal. One of the letters was from the insured to the insurer. In it he advised the insurer of the tortfeasor's settlement offer. Another letter was the insurer's reply in which it denied liability and refused to participate in any settlement negotiations. The decision of the Court of Appeals doubtless was rested on the evidentiary material attached to the insured's brief. The appellate opinion here under review appears to hold that (1) the insurer must suffer the loss, as a matter of law, because the letter-attachments reveal the insurer's refusal to participate in the settlement with the tortfeasor and (2) the "covenant not to sue" was not a "general release" and hence the suit was not barred by the Porter doctrine.

¶4 On certiorari insurer argues that: (1) because the estoppel issue, relied on by the Court of Appeals, was raised for the first time on appeal, its consideration was improper; (2) the Court of Appeals dealt with an issue not previously decided by this court, i.e., whether a covenant not to sue the tortfeasor, without reserving any rights to the insurer, destroys the insurer's subrogation claim; and (3) whether the Court of Appeals decided the case contrary to Porter. We granted certiorari and now affirm the trial court's judgment.

I

TIMELINESS OF THE INSURED'S ESTOPPEL THEORY AS AN ISSUE ON APPEAL

¶5 The insurer contends that the insured's theory of estoppel or waiver was not raised [698 P.2d 20] below nor were the "facts" relied on in the appellate opinion a part of the evidentiary material before the trial court when summary judgment was rendered. In response, the insured asserts that the appellate court did not consider extraneous materials and, furthermore, that the Court of Appeals relied on the Porter doctrine in reaching its conclusion.

¶6 After summary judgment is granted, the objecting party cannot on appeal rely on any fact or evidentiary material that was not before the trial court at the time of its rendition.

¶7 The insured presented below no defense to the insurer's quest for summary judgment. No reply was filed in which estoppel was plead. Nor did the insured submit below any evidentiary material - such as the later-proferred letter-exhibits - which could have qualified for incorporation into the appellate record. The insured cannot supplement the record on appeal by injecting into it material that was not before the trial court at the judgment stage.

¶8 Because estoppel clearly was not raised here as an issue below and hence is not now available as a viable theory on certiorari, we must once again leave unsettled

II

THE EFFECT OF COVENANT NOT TO SUE ON INSURER'S SUBROGATION RIGHTS

¶9 The insurer contends that the insured's settlement with the tortfeasor and execution of the covenant not to sue destroyed its subrogation rights and barred recovery under the uninsured motorist coverage. The insured argues that the covenant not to sue is not a general release but is more akin to a partial release and therefore does [698 P.2d 21] not discharge the insurer from its liability under the policy. Both parties rely on the Porter doctrine to support their positions.

¶10 The terms of 36 O.S. 1981 § 3636 (E),

¶11 Although technically there may be a difference between a covenant not to sue and a general release, the result in this case is the same under both forms of acquittance. No further recovery is possible from the wrongdoer because he no longer can be sued. The form of acquittance that is chosen may become significant when liability is sought to be cast on several joint tortfeasors. A general release of one among several joint tortfeasors operates to release from liability all of them. In contrast, a covenant not to sue will only release the one to whom it is given.

¶12 The covenant not to sue, executed by the insured in this case, released the single tortfeasor from all liability. It reserved no rights to the insurer.

¶13 The Court of Appeals' opinion is vacated and the trial court's summary judgment affirmed.

¶14 SIMMS, C.J., DOOLIN, V.C.J., and HODGES, LAVENDER, HARGRAVE, KAUGER and SUMMERS, JJ., concur.

¶15 WILSON, J., concurs in result.

Footnotes:

1 Okl., 643 P.2d 302, 305 [1982]. In Porter we held that an insured who destroys the insurer's subrogation rights - by settlement with and general release of the wrongdoer - effects a discharge of the insurer from liability under the uninsured motorist coverage.

2 Rule 13, Rules for District Courts of Oklahoma, 12 O.S. 1981, Ch. 2, App., before its amendment, effective November 1, 1984, 55 OBJ 2242, 2245, provided in part:

"* * * b. Within ten days after receipt of notice of the filing of the motion the adverse party or parties may file an objection to the granting of the motion to which he may attach affidavits and other materials containing facts that would be admissible in evidence, but the adverse party cannot rely on the allegations or denials in his pleading. . . . If the motion for judgment is granted, the party or parties filing the objection cannot on appeal rely on any fact or material that is not referred to or included in the objection in order to show that a substantial controversy exists. * * *"

3 Ross v. City of Shawnee, Okl., 683 P.2d 535 [1984]; RST Service Manufacturing, Inc. v. Musselwhite, Okl., 628 P.2d 366, 368 [1981]; Wabaunsee v. Harris, Okl., 610 P.2d 782, 784 [1980]; Culpepper v. Lloyd, Okl., 583 P.2d 500, 502 [1978]; Weeks v. Wedgewood Village Inc., Okl., 554 P.2d 780, 784 [1976]; Northrip v. Montgomery Ward & Co., Okl., 529 P.2d 489, 494 [1974].

4 Northrip v. Montgomery Ward & Co., supra note 3; Ajax Contractors, Inc. v. Myatt, Okl., 424 P.2d 30, 35 [1967]; McGhee v. McAllister, Okl., 474 P.2d 940 [1970]; Board of County Com'rs of Choctaw Co. v. Schuessler, Okl., 358 P.2d 830, 832 [1961].

5 State ex rel. Dept. of Highways v. Lehman, Okl., 462 P.2d 649, 650 [1969]; In re Hess' Estate, Okl., 379 P.2d 851, 859 [1963].

6 Owens v. Luckett, 192 Okl. 685, 139 P.2d 806, 807 [1943].

7 Eckel v. Adair, Okl., [55 OBJ 2474, Sup.Ct. No. 59, 201, November 27, 1984].

8 Uptegraft v. Home Ins. Co., Okl., 662 P.2d 681, 686 [1983].

9 The terms of 36 O.S. 1981 § 3636 (E) provide:

"In the event of payment to any person under the coverage required by this section and subject to the terms and conditions of such coverage, the insurer making such payment shall, to the extent thereof, be entitled to the proceeds of any settlement or judgment resulting from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury for which such payment is made, including the proceeds recoverable from the assets of the insolvent insurer. Provided, however, with respect to payments made by reason of the coverage described in subsection (C) above, the insurer making such payment shall not be entitled to any right of recovery against such tort-feasor in excess of the proceeds recovered from the assets of the insolvent insurer of said tort-feasor. Provided further, that any payment made by the insured tort-feasor shall not reduce or be a credit against the total liability limits as provided in the insured's own uninsured motorist coverage.

10 Part IV, Section VI(H) of the insured's uninsured motorist coverage provides:

"Trust Agreement. In the event of payment to any person under this insurance: (a) the company shall be entitled to the extent of such payment to the proceeds of any settlement or judgment that may result from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury because of which such payment is made."

11 Porter v. MFA Mutual Insurance Co., supra note 1; Great American Insurance Co. v. Watts, Okl., 393 P.2d 236, 240 [1964]; Commercial Union Fire Insurance v. Kelly, Okl., 389 P.2d 641, 644 [1964]; Annot. 92 A.L.R.2d 102.

12 For example, if A & B are joint tortfeasors and C gives A a general release, B will automatically be released from liability. If C gives A a general release, which includes a reservation of his rights against B, the release operates, in its effect, as a covenant not to sue A.

Brown v. Brown, Okl., 410 P.2d 52, 56 [1966]; Hambright v. City of Cleveland, Okl., 360 P.2d 493, 496 [1961]; Dodson v. Continental Supply Co., 175 Okl. 587, 53 P.2d 582 [1936]; All American Bus Lines v. Saxon, 197 Okl. 395, 172 P.2d 424, 428 [1946]; Harn v. Interstate Bldg. and Loan Co., 77 Okl. 265, 188 P. 343, 345-346 [1920]; Annot. 53 A.L.R. 1420.

13 The relevant provisions of the document titled "covenant not to sue" follow:

"* * * the undersigned . . . hereby covenant and agree that the undersigned shall forever refrain from instituting or prosecuting any claim, demand, action or cause of action . . . on account of any injuries and/or damages of any sort, costs, loss of services and expenses resulting to the undersigned from or in any way growing out of an accident, casualty or event which occurred on or about the 27th day of July, 1979 . . .

* * * * * *

The undersigned do specifically reserve all their rights to make claims for damages and/or collections under contract arising by reason of said accident against any and every other person, firm or corporation not a party to this agreement. * * *"

14 In Keel v. MFA Insurance Co., Okl., 553 P.2d 153 [1976], we invalidated the so-called "consent-to-sue" clause in the UM coverage of the policy - a provision not implicated in this case. The court stated in Keel that proper and timely notice to the insurer of the insured's intent to file suit against the uninsured motorist is all that the insurer may require in lieu of a consent to sue. Keel is entirely consistent with Porter and with the conclusion reached here today.