Larocque v. State Farm Ins. Co.

LAROCQUE_V_STATE_FARM_INS_CO.94-316; 163 Vt 617; 660 A.2d 286

[Filed 21-Mar-1995]

                               ENTRY ORDER

                      SUPREME COURT DOCKET NO. 94-316

                            FEBRUARY TERM, 1995

Paula W. Larocque and                }
Michael D. Larocque                  }         APPEALED FROM:
                                     }
                                     }
     v.                              }         Rutland Superior Court
                                     }
State Farm Insurance Company         }
and New Jersey Automobile            }         DOCKET NO. 94-316
Insurance Underwriting Association   }

                     In the above entitled cause the Clerk will enter:

         In 1987, plaintiffs Paula and Michael Larocque were injured in a car
collision with defendants' insured, and pursuant to their obligations under
the insured's automobile insurance policy, defendants assumed the defense of
the subsequent lawsuit.  The parties settled the lawsuit for the policy
limits in 1991, but plaintiffs instituted this action in 1992 alleging that
defendants' failure to settle plaintiffs' claims in an expeditious manner
constituted a breach of defendants' duty to deal with plaintiffs in good
faith, unjustly enriched defendants, and constituted intentional infliction
of emotional distress.  Plaintiffs appeal the Rutland Superior Court's
decision granting defendants' motion for summary judgment.  We affirm. 

         Summary judgment is appropriate when the party against whom judgment
is sought is given the benefit of all reasonable doubts and inferences, but
no genuine issue of material fact exists, and the moving party is entitled to
judgment as a matter of law.  Toys, Inc. v. F.M. Burlington Co., 155 Vt. 44,
48, 582 A.2d 123, 125 (1990); V.R.C.P. 56(c).  This Court applies the same
standard of review on appeal.  State v. Delaney, 157 Vt. 247, 252, 598 A.2d 138, 141 (1991).  Applying this standard here, we conclude that even if
defendants failed to offer plaintiffs a settlement within a reasonable period
of time, plaintiffs have no actionable claim. 

         Plaintiffs first argue that the trial court erred, as a matter of
law, in concluding that defendants did not owe plaintiffs a duty to deal with
them in good faith in offering to settle the underlying action.  Plaintiffs
contend that this duty exists both by statute and at common law, and in the
alternative, that defendants voluntarily assumed this duty through their
practices and procedures. 

         Although the Insurance Trade Practices Act, 8 V.S.A.
4721-4726, provides administrative sanctions for unfair and deceptive
acts within the insurance industry, including for unfair claim settlement
practices, 8 V.S.A.  4724(9), the Act does not create a private right of
action.  See Denis Bail Bonds, Inc. v. State, 159 Vt. 481, 487, 622 A.2d 495,
499 (1993); Wilder v. Aetna Life & Casualty Ins. Co., 140 Vt. 16, 19, 433 A.2d 309, 310 (1981). Accordingly, defendants did not owe any statutory duty
to deal with plaintiffs in good faith in offering a settlement. 

         We are also unpersuaded that any such duty exists at common law.  We
have recognized that a carrier owes a duty to its insured when considering
whether to settle a claim within policy limits.  This duty stems from an
"insurance company's control of the settlement of a claim brought against the
insured," and the necessary conflict of interest that it creates.  Myers v.

 

Ambassador Ins. Co., 146 Vt. 552, 555, 508 A.2d 689, 690-91 (1986).  A
duty to the insured may also arise in the context of a first-party claim, see
Phillips v. Aetna Life Ins. Co., 473 F. Supp. 984, 990 (D. Vt. 1979),
although we have not ruled that such a duty exists.  See Booska v. Hubbard
Ins. Agency, Inc., 160 Vt. 305, 312, 627 A.2d 333, 336 (1993);  Martell v.
Universal Underwriters Life Ins. Co., 151 Vt. 547, 554, 564 A.2d 584, 589
(1989).  Here, the relationship between plaintiffs and defendants is by
nature adversarial, and we find no obligation imposed on defendants to
conform to a particular standard of conduct with respect to plaintiffs. See
Smith v. Day, 148 Vt. 595, 597, 538 A.2d 157, 158 (1987) (defining duty); 
Auclair v. Nationwide Mut. Ins. Co., 505 A.2d 431, 431 (R.I. 1986) (per
curiam) (insurer owes no duty to third-party claimant). 

         Finally, defendants did not voluntarily assume any good faith duty
to plaintiffs by directing in its employee manual that claims were to be
handled in an efficient and cooperative manner. That it attempted to conduct
its business in a way that was responsive to third-party claimants does not
create a legally enforceable duty to do so with respect to a particular
claimant.  Cf. Smith v. Day, 148 Vt. at 598, 538 A.2d  at 158-59 (creation
of strict student code of conduct does not create duty on college when
student violates code and injures plaintiff). 

         Plaintiffs next argue that the trial court erroneously concluded
that defendants' failure to settle the case could not create a claim of
unjust enrichment.  Plaintiffs' theory is that defendants retained the
interest earned on the settlement amount under conditions such that it would
be inequitable not to pay this interest to plaintiffs.  See Center v. Mad
River Corp., 151 Vt. 408, 412 n.2, 561 A.2d 90, 92 n.2 (1989) (unjust
enrichment award requires that defendant retain benefit under circumstances
where it would be inequitable not to compensate plaintiff for its value). 
Defendants were under no obligation, however, to settle expeditiously with
plaintiffs. See Peerless Casualty Co. v. Cole, 121 Vt. 258, 265, 155 A.2d 866, 871 (1959).  Thus, defendants were not unjustly enriched. 

         Plaintiffs' last argument contends that the trial court erred by
concluding that defendants' delay in settling plaintiffs' claims did not
create a claim for intentional infliction of emotional distress.  Intentional
infliction of emotional distress requires conduct that is "`so outrageous and
extreme as to go beyond all possible bounds of decency.'"  Jobin v.
McQuillen, 158 Vt. 322, 327, 609 A.2d 990, 993 (1992) (quoting Restatement
(Second) of Torts,  46 comment d (1965)).  Even if we accept plaintiffs'
allegations, defendants' conduct cannot be said to rise to this level. 

         Affirmed.





     FOR THE COURT:



     _______________________________________
     Frederick W. Allen, Chief Justice


     _______________________________________
     Ernest W. Gibson, III, Associate Justice


 

     _______________________________________
     John A. Dooley, Associate Justice

     _______________________________________
     James L. Morse, Associate Justice

     _______________________________________
     Denise R. Johnson, Associate Justice