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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Amos v. Allstate Insurance Company (05/23/2008) sp-6267

Amos v. Allstate Insurance Company (05/23/2008) sp-6267, 184 P3d 28

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,


) Supreme Court No. S- 12396
Appellants and Cross-Appellees, )
) Superior Court No. 3PA-02- 914 CI
v. ) Consolidated with
) Superior Court No. 3AN-01- 7223 CI
ALLSTATE INSURANCE COMPANY ) Superior Court No. 3PA-01- 1100 CI
) No. 6267 May 23, 2008
Appellees and Cross-Appellants. )
                               )   Supreme Court No. S-12415
          Appellant and Cross-Appellee, )
     v.                        )
and BETH LANCASTER,            )
         Appellees and Cross-Appellants.     )

and JOE TATUM,                 )   Supreme Court No. S-12465
          Appellants and Cross-Appellees,    )
     v.                        )
and CASEY AMOS,                )
         Appellees and Cross-Appellants.     )

          Appeal  from the Superior Court of the  State
          of  Alaska, Third Judicial District,  Palmer,
          Eric Smith, Judge.

          Appearances:  Steven D. Smith, Anchorage, for
          Appellants and Cross-Appellees Casey Amos and
          John   Tice.   Alfred  Clayton,  Jr.,  Bliss,
          Wilkens  &  Clayton, Anchorage, for Appellant
          and Cross-Appellee Allstate Insurance Company
          and    Beth    Lancaster.    C.R.   Kennelly,
          Anchorage,  for Appellants Bertha,  Jack  and
          Joe Tatum.

          Before:    Fabe,  Chief  Justice,   Matthews,
          Eastaugh, and Carpeneti, Justices.   [Bryner,
          Justice, not participating.]

          MATTHEWS, Justice.

          The main question presented in this appeal is whether a
river boat driven by Jack Tatum was insured when it collided with
a  river  boat  driven  by John Tice.  The accident  occurred  on
August  9,  2000, in a narrow bend of the Little  Susitna  River.
Tatum  was alone in his boat; Casey Amos was a passenger in Tices
boat.  All three men were injured in the collision.
          Jack Tatum co-owned his boat with his brother Joe.  The
boat  had  been  insured  under a boat owners  policy  issued  by
Allstate  Insurance Company to Joe Tatum and his wife  Bertha  in
1999.   The  policy  was purchased at the Stan  Tebow  Agency  in
Palmer  and  included property, liability, and  medical  payments
coverage.   The boat owners policy was subject to  a  short  rate
table  under  which  the entire premium for  the  annual  premium
period is earned if the policy is in effect for a minimum of five
months during the annual period.
          In  the  year  2000 the Tatums were to pay  the  annual
premium  of  $289 in six installments, including a $3.50  payment
fee for each installment, beginning on April 6.  Allstate did not
receive  the payment that was due on June 6, 2000.   On  June  16
Allstate  mailed to Joe and Bertha Tatum notice that  the  policy
would  be  cancelled for nonpayment on July 15 unless payment  in
the  minimum amount of $99.84 was received before then.  When  on
June  19 Allstate received a payment of $51.67, Allstate  sent  a
notice  to  the Tatums that acknowledged receipt of this  amount,
and  stated that the policy would still be cancelled on  July  15
unless an additional $51.67 was received.
          Allstate  received no additional payments until  August
14,  2000.  On that day Bertha Tatum visited the Tebow Agency  in
order to make a payment.  She did not mention the accident.1  She
was  told that the payment for reinstatement of the policy  would
be $51.67 and wrote a check for that amount.  In exchange, Bertha
Tatum  was  handed a document captioned Conditional Receipt  that
          our  acceptance of this payment does not  (a)
          reinstate the policy, or (b) afford  coverage
          for  any accident, occurrence, or loss  which
          took place before this receipt was issued.  A
          refund  will be provided if coverage  is  not
          reinstated.  Notification will be provided if
          the coverage is reinstated.
The  next  day, on August 15, 2000, Allstate mailed  to  Joe  and
Bertha  Tatum a reinstatement notice stating that the policy  was
cancelled  effective July 15, 2000, and reinstated on August  15,
          On  August  26, 2000, Allstate received  and  cashed  a
check  from  Joe  and Bertha Tatum for $54.09.   This  check  was
numbered  722  and  was  referred  to  as  such  in  the  ensuing
litigation.  It was dated July 10, 2000, signed by Bertha  Tatum,
and  written  on the Tatums Warren Federal Credit Union  account.
The  jury  found  that this check was actually mailed  after  the
August 9 accident.
          On   September  6  Bertha  Tatum  personally  delivered
another  check  in the amount of $49 to the Tebow  Agency.   This
payment was the balance of the annual premium.  On that same  day
Allstate received its first notice of the accident.3
          The   file  was  assigned  to  Allstate  employee  Beth
Lancaster.  On September 11, 2000, Lancaster wrote Joe and Bertha
Tatum, stating that according to Allstates records the policy was
in cancellation status as of the date of the accident.  Lancaster
noted  that the Tatums had advised her that the payment had  been
mailed  on  time and that this claim was being investigated.   On
October 9, 2000, Allstate mailed a letter to Joe and Bertha Tatum
stating  that the policy had been cancelled as of the  August  9,
2000 accident and that Allstate would not pay claims arising  out
of the accident.
          The  Tatums  remained in contact with  Allstate  in  an
effort to attempt to convince Allstate that check number 722  was
timely  mailed.  On January 23, 2001, Bertha Tatum faxed  to  the
Tebow  Agency  what  purported to be  checks  number  721and  723
written  on  the Warren account.  Check 721 showed  that  it  was
written  on  June 8, 2000, and check 723 indicated  that  it  was
written on July 10, 2000.  One could infer from these checks that
check 722 was therefore written on or before July 10.  During the
ensuing litigation Allstate learned that the copies of the checks
that  had been faxed to its agent had been altered with the dates
and  other information changed.  Ultimately both the jury and the
court  concluded that the checks supplied by Joe and Bertha Tatum
had been falsified.
          Meanwhile,  Casey  Amos and John  Tice  hired  attorney
Steven  Smith to represent them in personal injury claims against
Jack  Tatum.  Amoss suit against Tatum was filed in May 2001  and
Tices  was  filed  in October of the same year.  Tatum  consulted
counsel  who  advised  him that filing for  bankruptcy  might  be
advisable  in  light of Allstates position that the accident  was
not  covered.   Alternatively, counsel suggested that  bankruptcy
might  be  avoided if Amos and Tice would accept a confession  of
judgment and an agreement to proceed against Allstate based on an
assignment  of  any  claim  that Jack Tatum  might  have  against
Allstate  for declining coverage.  Smith, on behalf of  Amos  and
Tice,  refused  to accept a confession of judgment and  suggested
instead  that  Jack Tatum simply allow default  judgments  to  be
taken  against him.  This proposal was agreed to.  After hearings
at  which  only  each  plaintiff testified,  the  superior  court
entered  default  judgments in favor of  Amos  and  Tice.   Amoss
judgment amounted to $100,000 and Tices was more than $1,000,000.
Jack  Tatum had not tendered the defense of the suits to Allstate
and Allstate had received no notice of them.
          In  July  2002  Jack  Tatum filed a  complaint  against
Allstate and Beth Lancaster.4  This complaint forms the basis for
the  case  presently  under  review.   Tatum  alleged  breach  of
contract,  negligence, and bad faith, and asked for  compensatory
damages including the amount of the two judgments entered against
him  and punitive damages.  Allstate answered, denying breach  of
contract,  negligence, and bad faith, and asserted  a  number  of
affirmative defenses.
          In November 2002 Allstate took the depositions of Jack,
Joe,  and Bertha Tatum.  Jack was represented by counsel but  Joe
and  Bertha  were not.  Allstate questioned the Tatums concerning
representations  that  they had made  on  their  application  for
insurance.   Allstate  had already notified  the  Tatums  of  its
position  that  the  accident  was not  covered  because  of  its
cancellation  for late payment.  But Allstate had  not  told  the
Tatums that it was interested in developing facts that might show
that  material  misrepresentations were made on  the  application
that could result in the policy being declared void ab initio.
          As  the litigation progressed, Amos, Tice, and Joe  and
Bertha  Tatum  were  added as parties.  Amos  and  Tice  asserted
claims  directly  against Allstate as partial assignees  of  Jack
Tatum.   Allstate  added a counterclaim against  the  Tatums  for
material misrepresentations in the application for insurance  and
for  fraud  in the claims process.  Allstate sought as  relief  a
declaration   that   the  policy  was   void   ab   initio,   or,
alternatively, void because of fraud on the part  of  the  Tatums
during  the  processing  of the claim.  Allstate  also  sought  a
declaration  that there was no coverage for the  August  9,  2000
accident  based on the cancellation of the policy effective  July
15,  2000.   Once  joined,  Joe and Bertha  Tatum  counterclaimed
against Allstate for bad faith, malicious prosecution, and  abuse
of process.
          A  number  of  motions for summary judgment  were  made
during  the pretrial proceedings.  Most relevant to our  decision
          here is Jack Tatums motion for partial summary judgment of March
26,  2003,  seeking a ruling that the policy  was  in  effect  on
August  9,  2000,  because of Allstates  acceptance  of  payments
subsequent  to  the accident.  With respect to this  motion,  the
court  ruled that Allstate waived any claim that the premium  was
not  paid  on time because Allstate accepted the premium  payment
and  the policy did not contain a provision allowing for a  lapse
in coverage.  The court explained:
               The parties focus on acceptance of check
          722  as the relevant one for waiver purposes.
          But given the case law, the focus must be  on
          the  partial payment on August 14 of  $51.67,
          for  it was that payment that reinstated  the
          policy.  Indeed, given the subsequent billing
          and   payment  history,  Allstate   basically
          accepted  that  payment as the  payment  that
          should have been made on July 15.  After they
          made their May payment, the Tatums had to pay
          four  more premiums:  June, July, August  and
          September.   The June payment was  not  made,
          and  so  two payments had to be made by  July
          15.   Bertha  made one such payment;  whether
          she  made the second one on time (check  722)
          is in dispute.  Assuming for present purposes
          that  check 722 did not arrive in July,  then
          only  the  June payment had been made  as  of
          July  15.   There  were three more  payments:
          August  14, August 26, and September 6.   The
          latter  payments  were  made  after  Allstate
          notified   the   Tatums  that  two   payments
          remained  due.   Those  payments  accordingly
          must be deemed to be the August and September
          premiums,  which entails that the  August  14
          payment  was  a  late  payment  of  the  July
               Allstate  relies  on the  fact  that  it
          conditioned  receipt and  acceptance  of  the
          August  14  payment  upon  a  lapse  in   the
          premium,  but that condition cannot have  any
          force  or  effect  for at least  two  related
          reasons.  First, the case law indicates  that
          the  condition must be in the policy  itself.
          Second, by seeking to impose a lapse  in  the
          policy  when  accepting the payment  when  no
          provision authorizing such a lapse appears in
          the  policy, Allstate has effectively amended
          the policy; and this it may not do.
               The  case  law speaks in terms  of  both
          waiver and estoppel.  Whichever term is used,
          the  fact  remains that having  accepted  and
          cashed  the  August 14 payment, Allstate  may
          not  now argue that the policy lapsed.   This
          conclusion   is   buttressed   by   Allstates
          subsequent  behavior,  for  Allstate   cashed
          check 722 on August 26 and credited it to the
          remaining  amount  that  was  due,   and   it
          accepted  a  final payment  on  September  6.
          Allstate  thereby  was  fully  paid  on   the
          premium, which was to provide an entire  year
          of coverage.  Allstate cannot properly accept
          that  full  payment, but only impose  a  one-
          month lapse in coverage that is not contained
          in the policy.
               The  court  recognizes  that  the  short
          table indicates that Allstate is entitled  to
          keep  the entire premium once the policy  has
          been in effect for 148 days.  But again,  the
          policy does not authorize Allstate to require
          a  lapse  in the policy.  The short table  is
          best  read  instead  as a  statement  to  the
          policy holder as to what refund he or she can
          expect should the policy be canceled for  the
          three reasons set forth in the policy.
               The  court also is cognizant of the case
          law  holding  that an insurance  company  can
          decline  to  cover a loss which  is  incurred
          between  the  termination and payment  dates.
          See, e.g., Dolan v. Utica Mut. Ins. Co.,  650
          F.  Supp.  851  (D. Mass 1986).   But  it  is
          virtually impossible to square this  doctrine
          with the general rule disfavoring lapses in a
          policy  if  the  payment  is  unconditionally
          received.  After all, the only reason why the
          issue of a lapse arises is because there  was
          a  loss  during  the period  of  the  alleged
          lapse.   If  the company could always  refuse
          coverage  during the lapse,  there  would  be
          absolutely no point to the well-settled  rule
          against  allowing a lapse upon  unconditional
          receipt  of  the  late  payment.   The  court
          accordingly  declines  to  apply   the   rule
          articulated in Dolan.  (Footnote omitted.)
               In  sum, by receiving and accepting  the
          August  14  payment, as well as  cashing  the
          August  26 and September 6 payments, Allstate
          may  not  now contend that the policy  lapsed
          between  July  15 and August  15,  2000.   It
          therefore could not properly deny coverage of
          the  accident on the grounds that the  policy
          had  lapsed.  There being no facts in dispute
          on  this  issue,  plaintiff  is  entitled  to
          partial summary judgment on this score.
          Earlier,  in support of the proposition that provisions
authorizing a lapse in coverage for nonpayment must be set  forth
in  the  body of the insurance policy, the court cited a treatise
on insurance as follows:
               In   the   absence  of   a   controlling
          statutory  or  contract  provision   to   the
          contrary, the general rule is that an insurer
          which receives, accepts, and retains past-due
          premiums,   assessments,   or   dues,    paid
          subsequent  to the expiration  of  the  grace
          period,  if  any,  renews  the  contract  and
          waives   the   forfeiture   for   nonpayment,
          provided such acceptance is unconditional and
          the   material   facts  are  known   to   the
In  explanation  of  the relevance of this  language,  the  court
          The  case  law cited in Couch indicates  that
          the relevant conditions must be set forth  in
          the   policy.   Compare,  e.g.,   Mixson   v.
          Allstate, 388 So. 2d 608 (Fla. App. 1980) (no
          provision  for lapse in policy), with  Gurley
          v.  State  Farm,  428 N.E.2d 916  (Ill.  App.
          1981) (policy stated that no lapse if payment
          made within 10 days after termination date).
          Although  the  courts ruling mooted the issue  of  when
check  722 was mailed, the court recognized that its ruling  that
Allstate  could not deny coverage on the ground that  the  policy
had lapsed was one of first impression in Alaska and it might  be
reversed  on appeal.  To avoid the need for a new trial  in  that
event,  and  because a jury trial was necessary on other  issues,
the  court  ruled  that the trial jury should  also  address  and
decide issues related to check 722.
          In  a  later  pre-trial  order  the  court  ruled  that
Allstate had breached its duty to the Tatums by deposing them  in
2002  concerning  questions  in  the  application  for  insurance
without  first notifying them that it was interested in  claiming
that the application contained material misrepresentations.  As a
remedy  the court ruled that Allstate was precluded from claiming
that   the   policy  was  void  ab  initio  based   on   material
misrepresentations in the application.
          At  the  conclusion of the trial, the  jury  entered  a
special  verdict that determined that Bertha Tatum  mailed  check
722  after  the accident and Allstate received it on  August  26,
2000.   The jury also determined that Allstate was first notified
of  the accident on September 6, 2000, and first gave notice that
it  would  not cover the accident on October 9, 2000.   The  jury
found that Lancaster was not negligent and that Allstate did  not
act  in bad faith.  The jury also determined that Bertha and  Joe
Tatum had made material misrepresentations by providing falsified
documents to Allstate and that the default judgments obtained  by
Amos  and  Tice  were collusive and obtained by a  fraud  on  the
court.   Further,  the jury determined that the  amounts  of  the
          default judgments were not reasonable and that reasonably Amos
should  have  received  $20,000 and  Tice  should  have  received
nothing.   Finally, the jury found that Jack Tatum  had  suffered
damages of $5,000.
          Tice  and  Amos moved for judgment notwithstanding  the
verdict.  The court granted their motion in part, overturning the
special  verdict  insofar as it held that the  default  judgments
were the product of fraud and collusion, and as to the reasonable
amount of the judgment that Tice should have received.  The court
changed the jurys zero determination to an award of $35,389.49.
          Allstate was thus ordered to pay $5,000 to Jack  Tatum,
$20,000  to  Amos,  and  $35,389.49  to  Tice,  plus  prejudgment
interest.   With respect to attorneys fees and costs,  the  court
ruled that Jack Tatum, Tice, and Amos were not prevailing parties
as  against  Allstate.   The court ruled that  Allstate  was  the
prevailing  party as against Joe and Bertha Tatum and  that  Beth
Lancaster  (separately) was the prevailing party as against  Jack
Tatum,  Tice,  and  Amos.  With respect to  Lancasters  fees  and
costs,  the  court  limited them to those matters  that  directly
involved her, noting that it would be unfair and inappropriate to
award  fees  that really were incurred by Allstate  in  defending
[the] case.  Using these limitations, the court awarded Lancaster
fees  of  $8,495.  Allstate was awarded attorneys fees of $14,736
against  Joe and Bertha Tatum.  This represented an enhanced  fee
of  fifty  percent of actual fees  thirty percent  is  the  norm6
because the court found that Joe and Bertha Tatums fraud  led  to
unnecessary work.
          All parties appeal.
          We   here  summarize  the  parties  points  on  appeal,
reframing and combining points where it seems appropriate  to  do
          On appeal Allstate contends
     (1)   that  the  court  erred in ruling  that  Allstate  was
precluded  from reinstating the cancelled policy with  a  gap  in
     (2)   that the court erred in refusing to declare the policy
void   ab  initio  because  of  misstatements  in  the  insurance
application; and
     (3)    that   the   court   erred   in   granting   judgment
notwithstanding  the verdict as to the jurys  findings  that  the
default judgments were the product of fraud and collusion.
          Amos and Tice contend
     (1)  that Allstate should be liable for the entire amount of
the  default  judgments,  not merely  the  amounts  found  to  be
reasonable; and
     (2)   that  they were prevailing parties as against Allstate
and  therefore were entitled to an award of attorneys fees  under
Civil Rule 82.
          Joe and Bertha Tatum contend
     (1)   that issues concerning check 722 should not have  been
submitted to the jury;
     (2)   that their counterclaims for malicious prosecution and
abuse of process should not have been dismissed;
     (3)   that they were entitled to actual reasonable attorneys
fees; and
     (4)   that  Lancaster should not be regarded as a prevailing
party since it was her action that precipitated the breach.
          Jack Tatum contends that Allstate should be liable  for
the whole amount of the default judgments.
     A.   There Was No Coverage for the August 9 Accident.
          We  turn  first to Allstates contention that the  court
erred in ruling that Allstate was precluded from contending  that
the  policy  was not in effect on the day of the  accident.   The
superior  court  ruled  on  this claim  as  a  question  of  law,
acknowledging that if its ruling on the applicable  law  was  not
accepted on appeal, certain facts would be relevant.  As the case
is  now presented, those facts have been determined by the  jury.
Thus  the  question  before this court is whether  based  on  the
established  facts Allstate should be precluded  from  contending
that the policy was cancelled on July 15 and reinstated on August
15  and  that  there was therefore no coverage for the  August  9
accident.  As presented, this claim is a question of law which we
review  de novo, adopting the rule of law that is most persuasive
in light of precedent, reason, and policy.7
          Allstates  position  on  this  issue  starts  with  the
proposition  that the policy was properly cancelled on  July  15.
After  the policy was cancelled Allstate contends that it  had  a
right  to either reinstate or refuse to reinstate the policy  and
that  if  it  reinstated the policy it could do so on  any  terms
mutually agreed to.  According to Allstate, [b]ecause the  policy
did  not  obligate  Allstate to reinstate the  policy  under  any
circumstance,  Allstate was free to impose  conditions  upon  any
request for reinstatement, just as the Tatums were free to reject
the  conditions  and look elsewhere for insurance  coverage.   It
follows,  Allstate  argues, that the  condition  imposed  by  the
conditional  receipt  and the reinstatement  notice   that  there
would  be  no  coverage  between  July  15  and  August  15   was
effective.   The appellees, on the other hand, generally  support
the rationale of the trial court.8
          For  the reasons that follow we conclude that Allstates
position  is  correct.  Under AS 21.36.220(a)(1) an  insurer  may
cancel  an insurance policy for nonpayment of premiums by mailing
written  notice  of cancellation to the named  insured  at  least
twenty days before the effective date of cancellation.  Allstates
policy  provides  that it may be cancelled  for  nonpayment  upon
mailing  notice of cancellation to the insured at least ten  days
before  the  date  of cancellation.  Coverage terminates  on  the
effective  date and hour stated on the cancellation notice.   The
letters  from Allstate of June 16 and June 19, both stating  that
the policy would be cancelled on July 15, 2000, complied with the
method  of  cancellation set out in the statute and  the  policy.
Therefore the policy was cancelled as of July 15, 2000.
          Once  Allstate had cancelled the policy, did acceptance
of   subsequent  premiums  necessarily  mean  that  coverage  was
reinstated  retroactively to July 15 or  could  Allstate  specify
another  date as the effective date of reinstatement?  The  trial
courts  answer  was that retroactive reinstatement was  Allstates
          only option once it decided to reinstate the policy.  The courts
reason  for this conclusion was that without a provision  in  the
policy authorizing a gap in coverage, a gap may not be required.9
The court based this conclusion on its interpretation of case law
from other states.
          We think the court has read too strictly what the cases
have  required.   A  good summary of what may be  regarded  as  a
consensus  view  of  the  decision law is  the  statement  quoted
earlier  in  this opinion taken from Couch on Insurance.10   This
statement makes it clear that an unconditional acceptance of past
due  premiums reinstates coverage, presumably with no  time  gap.
But  this  statement  implies that the  acceptance  of  past  due
premiums  may  be  conditioned on an effective date  for  renewed
coverage  that leaves a gap in coverage.  The case law  that  the
superior court relied on is in accordance with this view.
          For  example, in Mixson v. Allstate Insurance Co.,  the
court  made it clear that it was the unconditional acceptance  of
the  late payment that constituted a waiver of the insurers right
to  contend the policy has lapsed.11  Another case cited  by  the
superior  court, Gurley v. State Farm Mutual Automobile Insurance
Co.,12  likewise does not support the constraint on reinstatement
imposed  by the superior court.  In Gurley a renewal premium  was
due  on  October  7.  When it was not paid the insurer  sent  the
          a  notice  which stated that his  policy  had
          expired  on  October 7, 1974, at  12:01  a.m.
          The  notice  further  provided  that  payment
          within   10   days   after  expiration   date
          reinstates  this policy as of the  expiration
          date for six months, if paid thereafter,  you
          will  be advised if payment has been accepted
          for reinstatement.[13]
The  insured  made  the  payment more than  ten  days  after  the
expiration  date,  and the insurer gave an unconditional  receipt
for the payment, but the court held in accordance with the notice
that  the  payment  beyond  the  ten-day  grace  period  did  not
reinstate  the  policy retroactively.  The only two  other  cases
cited by the superior court also recognize the rule that when  an
insurer  notifies its insured that acceptance of a  late  payment
will  cause  the expired policy to be reinstated with  a  gap  in
coverage,   and   the   notice  is   given   either   before   or
contemporaneously with the tender of the late payment, the notice
will   be  effective.14   There  are  a  number  of  other  cases
recognizing this rule.15
          In  the present case, the conditional receipt given  to
Bertha  Tatum when she tendered the premium check on  August  14,
2000,  stated  that  acceptance of the  check  would  not  afford
retroactive coverage.  The conditional receipt also provided that
acceptance of the payment would not reinstate the policy and that
notice  would be given if coverage was reinstated.  The next  day
Allstate issued notice of reinstatement that defined the  gap  in
coverage as beginning at 12:01 a.m. July 15, 2000, and ending  at
12:01 a.m. on August 15, 2000.16  There seems to be no reason why
          the conditional receipt and the reinstatement notice should not
be enforced in accordance with their terms.
          The  superior  court, however, suggested  one  possible
reason why such enforcement might be inappropriate.  Pointing  to
Allstates  later acceptance of premium checks on  August  26  and
September  6, 2000, the court observed that Allstate was  thereby
fully  paid for an entire year of coverage and acceptance of  the
whole  premium for one year should estop Allstate from contending
that  the policy had lapsed for a month.17  The case law in  many
jurisdictions holds that an insurer waives its right to insist on
a  gap  in  coverage  as  a condition of reinstatement  when  the
insurer  holds  onto premiums paid by the insured  for  the  time
period for which the insurer denies coverage.18  If acceptance of
the  full  premium for one year were inconsistent with  providing
coverage  for only eleven months in this case, there would  be  a
plausible argument in favor of an estoppel.19  Estoppel  requires
an  assertion of a position by word or deed and when successfully
invoked  precludes the party making the assertion from  taking  a
position  inconsistent with it.20  But there was no inconsistency
here  because under the policy the full premium is earned in  any
year  in which the policy is in effect for five months or more.21
Thus  Allstates acceptance of the full premium did not  serve  to
communicate a position that was inconsistent with a one-month gap
in coverage.
          For  these  reasons, the superior courts decision  that
the  insurance  was  in effect on the day  of  the  accident  was
erroneous.  As a result, the judgment against Allstate should  be
reversed.   As  this conclusion moots Allstates other  points  on
appeal,  we  turn  at  this point to the  appeals  of  the  other
     B.   Amos and Tices Appeal Is Moot.
          Amos and Tice argue that Allstate should be liable  for
the  entire  amount of the default judgments taken  against  Jack
Tatum, not merely the amounts found by the jury and court  to  be
reasonable.   But  since we have concluded that Allstates  policy
did  not cover the accident, Allstate is not liable for any  part
of the default judgments.  This argument is therefore moot.
          Amos  and  Tice  also argue that they  were  prevailing
parties as against Allstate and therefore were entitled to court-
awarded  attorneys fees from Allstate.  Again, in  light  of  our
conclusion concerning Allstates appeal, this argument is moot.
     C.   The Tatums Appeal
          1.   Should  the issues concerning check 722 have  been
               submitted to the jury?
          Joe and Bertha Tatums first point on appeal is that Joe
and  Bertha Tatum were not [n]ecessary [p]arties for the [t]rial.
Their  argument  is not that the court erred in joining  them  as
parties but that once the superior court ruled that Allstate  was
estopped  from  claiming  fraud in the  application  process  and
estopped  as well from contending that there was a gap in  policy
coverage,  the issues surrounding check 722 should not have  been
submitted  to  the  jury.   Joe  and  Bertha  Tatum  claim   that
submitting  these issues to the jury was an abuse  of  discretion
          because advisory opinions are usually to be avoided and further
that   it  is  the  function  of  the  court  to  simplify,   not
unnecessarily complicate, the issues for trial.
          In  response Allstate argues that the questions  as  to
when  check  722  was  mailed and whether Joe  and  Bertha  Tatum
committed fraud in trying to convince Allstate that it was mailed
before  the  accident  were  not merely  conditionally  relevant.
Allstate  points to a superior court order issued  subsequent  to
the  courts decision concerning the conditional submission of the
check 722 issues.  The later order recognized that the check  722
issues  would  be relevant to other issues that would  be  tried,
namely,  whether  the Tatums sought to defraud Allstate,  whether
the investigation was negligent, and whether Allstates refusal to
cover was in bad faith.  The court stated in this order:
               Indeed,  having  evaluated  the   matter
          further,  it  is clear to the court  that  in
          fact the jury in all likelihood will have  to
          address   and  resolve  the  factual  matters
          raised by Joe and Bertha Tatum.  Allstate  is
          claiming  that  the Tatums tried  to  defraud
          Allstate by submitting altered checks 721 and
          723    the  jury  cannot  decide  this  issue
          without  determining when those three  checks
          actually were mailed.  Similarly, the date on
          which  Bertha Tatum actually mailed the check
          is  an important element of the competence of
          Allstates  investigation of the  matter,  and
          both  the date the check was mailed  and  the
          date  that  Allstate learned of the  accident
          will   undoubtedly  figure  into  the   jurys
          evaluation   of   whether   Allstate   denied
          coverage in bad faith.
          In  so  ruling the court did not abuse its  discretion.
Similarly,  even if the issues surrounding check 722 were  merely
of conditional relevance, we would not find that the court abused
its  discretion by ordering them tried because doing so held  the
potential  to  avoid  a  second trial and involved  only  limited
additional costs.22
          2.   Did  the court err in dismissing the counterclaims
               for abuse of process and malicious prosecution?
          Joe  and  Bertha Tatums second point on appeal is  that
the  court erred in dismissing their counterclaims for  abuse  of
process   and   malicious  prosecution  against  Allstate.    The
underlying  conduct  they  complained  of  relates  to  Allstates
deposition  of  them  in November 2002.  The superior  court,  as
noted, found that
          Allstate  breached  its duty  to  defend  the
          Tatums  because it did not notify them  prior
          to  the  deposition that the  information  it
          would  seek might be used to void the  policy
          altogether.    That  breach  prejudiced   the
          Tatums  because Allstate was able  to  obtain
          information it later used to void the policy.
          There are two elements to the tort of abuse of process:
an  ulterior purpose and a willful act in the use of the  process
not  proper  in  the regular conduct of the proceeding.  23   The
second  element requires some overt act done in addition  to  the
initiating  of  the  suit. 24  The trial  court  ruled  that  the
deposition  questions concerning the application did not  satisfy
the willful act element of the tort.25  We agree.  For an insurer
to  ask  its insured questions about an application for insurance
without advance warning but after it has denied coverage on other
grounds  is not a sufficient deviation from acceptable litigation
objectives to amount to an abuse of process.26
          With   respect  to  malicious  prosecution,   favorable
termination  of  the  proceeding alleged to  be  malicious  is  a
requirement for any such claim.27  The trial court properly ruled
that this element had not been satisfied.
          3.   The Tatums other points lack merit.
          Joe and Bertha Tatum contend that they should have been
entitled to an award of actual reasonable attorneys fees on their
claims  for  abuse  of  process and malicious  prosecution.   Our
ruling  that  these  claims were properly  dismissed  moots  this
          Joe  and  Bertha Tatums final point on appeal  is  that
Lancaster  should  not have been held to be  a  prevailing  party
because  it  was  her  conduct that caused  Allstate  to  decline
coverage.  This argument is not well developed.  The jury in  its
special  verdict  found that Lancaster was  not  negligent.   The
argument may be that Lancaster was necessarily negligent  because
Allstate  wrongfully  denied coverage.  If  so,  its  premise  is
incorrect  in light of our conclusion that Allstate was justified
in  denying  coverage.  If another argument is intended,  we  are
unable  to determine what it is and it must be considered  waived
for insufficient briefing.28
          Jack  Tatum claims on appeal that Allstate should  have
been  held  liable for the whole amount of the default  judgments
that  he allowed to be taken against him.  This point is moot  in
light  of  our  conclusion  that the policy  did  not  cover  the
          For  the reasons expressed above, the judgment  of  the
superior court in favor of Jack Tatum, Casey Amos, and John  Tice
against Allstate is REVERSED.  In all other respects the judgment
     1     This  fact was contested but the jury so  found  in  a
special verdict that is not challenged on appeal.

     2     The  reinstatement notice provided in  relevant  part:
Your  policy was cancelled effective at 12:01 a.m. Standard  Time
on  July  15,  2000.  Your policy was reinstated  at  12:01  a.m.
Standard Time on August 15, 2000.

     3     This  fact  was  also contested and  resolved  by  the
special verdict.

     4     Allstate  and  Lancaster were  defended  by  the  same
attorneys;   unless  otherwise  indicated  we   refer   to   them
collectively as Allstate.

     5    5 Couch on Insurance  78:43 (3d ed. 2003).

     6    Alaska R. Civ. P. 82(b).

     7     Petrolane Inc. v. Robles, 154 P.3d 1014, 1018  (Alaska

     8    See supra pages 7-9.

     9    See supra pages 8-9.

     10    See supra page 9.

     11    388 So. 2d 608, 609 (Fla. App. 1980).

     12    428 N.E.2d 916 (Ill. App. 1981).

     13    Id. at 918.

     14    See Hennessey v. Dairyland Ins. Co., 904 S.W.2d 73, 76
(Mo.  App. 1995) ([B]ecause the insurer accepted the late premium
without  first  notifying the insured there would  be  a  gap  in
coverage  caused  by late payment, the policy  was  renewed  with
coverage  effective  from the original  renewal  date  without  a
lapse.)  (discussing Mitchell v. Farmers Ins. Exch.,  396  S.W.2d
647,  652  (Mo. 1965)); Hangley v. Am. Family Mut. Ins. Co.,  872
S.W.2d   544,   549   (Mo.  App.  1994)  (Having   accepted   the
policyholders delinquent premium, the insurance company could not
impose  on  the  policyholder an uncommunicated condition,  i.e.,
that  coverage  lapsed during the interval  between  the  payment
deadline and receipt of the check.  Because the insurance company
had accepted the premium without first informing the policyholder
that  there  would be a gap in coverage due to late payment,  the
policy was renewed without a gap in coverage and was in effect on
the  date  of  the  accident.  (emphasis  in  original,  internal
citation omitted) (discussing Mitchell, 396 S.W.2d at 651-52)).

     15     See Pajcic v. Am. Gen. Life Ins. Co., 419 F. Supp. 2d
1380,  1382  (M.D. Fla. 2006) (In the insurance context,  Florida
courts  look to whether an insurers acceptance of a late  payment
was  unconditional, which would constitute waiver, or whether the
acceptance  was conditioned on the performance of something  else
by  the  insured  or  the  insurer, which  would  not  constitute
waiver.);  Am. Nat. Ins. Co. v. Cooper, 458 P.2d 257, 262  (Colo.
1969)  (Under the terms of the policy, the company .  .  .  could
have  required  an  application for reinstatement  and  issued  a
conditional  receipt for the tendered premium.  Had  the  company
followed  this procedure, its contention, that since the accident
occurred prior to the payment of the premiums the insured was not
covered  before  reinstatement, would have had considerably  more
appeal.); Kansas City Life Ins. Co. v. Johnson, 480 P.2d 122, 125
(Colo.  App. 1970) (stating that routine deposit of a late  check
did  not  constitute  waiver by insurer when insurer  immediately
notified the insured that the default existed and instructed  the
insured  that  reinstatement  was  necessary  and  that  if   the
reinstatement were approved, the remittance would then be applied
to the policy premiums.); Hanson v. Cincinnati Life Ins. Co., 571
N.W.2d  363, 368 (N.D. 1997) (stating that there is no waiver  of
an insurers right to treat a policy as lapsed for nonpayment of a
premium if the insurer conditionally accepts and retains  a  late
premium  subject to reinstatement); Sedgwick Claims Mgmt.  Servs.
v.  Hayes, 143 P.3d 567, 568 (Or. App. 2006) (holding that letter
stating  that  lapsed policy would be reinstated does  not  imply
retroactive  coverage  when  letter  itself  noted  the  gap   in

     16    See supra note 2.

     17    See supra page 8.

     18     See  Pajcic, 419 F. Supp. 2d at 1382-83 ([A]n insurer
cannot  permanently  retain the benefits of a  late  premium  and
still deny coverage to the insured . . . .); Travelers Indem. Co.
v.  Dana,  434 So. 2d 48, 48 (Fla. App. 1983) (Where .  .  .  the
insured  was injured after the past-due premium had been paid  to
the  insurer, and there was evidence to support the trial  courts
finding  that the insurer retained the past-due premium  and  was
thus estopped to deny coverage, the judgment for the insured will
be  affirmed.);  Mixson,  388 So. 2d at 609  (An  insurer  cannot
retain  a  past-due  premium and at the same time  claim  that  a
forfeiture of the policy has occurred.); Kende Leasing  Corp.  v.
A.I.  Credit  Corp., 524 A.2d 1306, 1314 (N.J. Super.  App.  Div.
1987) (An insurers retention of premiums covering a period beyond
the  effective  date  of  its notice of  cancellation  (i.e.  the
insurers  failure  to  return  unearned  premiums)  estopped  the
insurer   from   denying  coverage  for  an  accident   occurring
subsequent   to   the   purported  cancellation   date.   (citing
Englishtown Auction Sales v. Mt. Vernon Fire Ins., 271  A.2d  292
(N.J. Super. App. Div. 1970))).

          Other  jurisdictions  have held that  an  insurer  only
waives  its right to insist on a gap in coverage when the insurer
retains  the  premiums and had prior knowledge of the intervening
loss.   See  Van  Hulle v. State Farm Mut. Auto.  Ins.  Co.,  254
N.E.2d  457, 460 (Ill. 1969) (In many jurisdictions waiver  of  a
forfeiture has been upheld under certain circumstances where  the
insurer, with knowledge of an intervening loss, accepts a premium
tendered  for  the purpose of covering the loss. (citing  Alabama
Farm  Bureau  Mut. Cas. Ins. Co. v. Hicks, 133 So. 2d  221  (Ala.
1961);  M.F.A. Mut. Ins. Co. v. Quinn, 259 S.W.2d 854  (Mo.  App.
1953); Seavey v. Erickson, 69 N.W.2d 889 (Minn. 1955); Johnson v.
Phelps County Mut. Ins. Co., 88 N.W. 142 (Neb. 1901); Contl  Ins.
Co.  v.  Chew, 38 N.E. 417 (Ind. App. 1894); Joliffe  v.  Madison
Mut.  Ins.  Co., 39 Wis. 111 (Wis. 1875); Am. Nat.  Ins.  Co.  v.
Cooper, 458 P.2d 257 (Colo. 1969))).

     19     The  appellees might still need to explain why  their
failure  to inform Allstate of the boat accident prior to  paying
the late premium would not have defeated their claim for estoppel
in  this case.  See, e.g., Van Hulle, 254 N.E.2d at 460 (In  many
jurisdictions  waiver  of  a forfeiture  has  been  upheld  under
certain  circumstances where the insurer, with  knowledge  of  an
intervening loss, accepts a premium tendered for the  purpose  of
covering the loss. (emphasis added)).

     20     See, e.g., Jamison v. Consol. Utils., Inc., 576  P.2d
97, 101-02 (Alaska 1978).

     21    According to Couch, an insurer may waive the forfeiture
of  the entire policy by accepting premiums, reinstating coverage
as  of the date of the receipt of the payment, and returning  the
unearned  premium for the intervening period of  noncoverage.   5
Couch  on Insurance  78:43 (3d ed. 2003).  Because of the  short-
rate  table,  there  was no unearned premium  that  Allstate  was
required to return.

     22    The court weighed these considerations as follows:

               The   issue  of  whether  Allstate   was
          required  to  cover  the  accident  once   it
          received payment from Bertha Tatum,  even  if
          that  payment was late and Allstate  had  not
          learned  of  the accident prior to  receiving
          the  payment,  is one of first impression  in
          Alaska  and  one over which courts  in  other
          states  are split.  If the courts  ruling  on
          this   issue  is  incorrect  and  the  Alaska
          Supreme  Court reverses on this  issue,  then
          the  normal  procedure would be a  remand  to
          hold  an  entirely  new  trial.   Given   the
          narrowness   of  the  issues,   the   limited
          testimony   required,  and  the   substantial
          expense  involved in a remand, it is entirely
          appropriate  to  have  the  jury  deliver   a
          special  verdict on these factual  issues  so
          that  if  the  Court reversed this  court,  a
          remand would not be necessary.
     23     Caudle  v.  Mendel, 994 P.2d 372, 376  (Alaska  1999)
(quoting Koolodge v. State, 757 P.2d 1024, 1026 (Alaska 1988)).

     24    Id.

     25     We  set out here the superior courts ruling  on  this

               Plaintiffs   counterclaims   makes    no
          reference  to  a claim of abuse  of  process.
          However,    given   the   liberal   standards
          regarding  interpretation of  pleadings,  the
          court  will  address  the  issue.   The   two
          elements  of abuse of process are an ulterior
          purpose and a willful act in the use  of  the
          process not proper in the regular conduct  of
          the   proceeding.   Sands  v.   Living   Word
          Fellowship,  34 P.2d 955, 961 (Alaska  2001).
          The  willful act cannot be the filing of  the
          litigation   it  must be  a  claim  that  the
          defendant  misused  process  to  attain  some
          separate ulterior purpose independent of  the
          process  for example, to extort the plaintiff
          and  force him to take some action by the use
          of  the  process as a threat.  Id.  Thus,  in
          Sands,  the  court  rejected  a  claim   that
          publicizing  a  lawsuit  could  not  be   the
          requisite   willful  act  as   it   did   not
          constitute extortion or coercion.  Id.
               Plaintiffs  do not specify the  ulterior
          motive  here   presumably,  given  plaintiffs
          pleadings,  the  motive  was  to  cancel  the
          policy  if at all possible.  The willful  act
          was  deposing Joe and Bertha Tatum  regarding
          their application, without giving them notice
          that  those questions would be asked or  that
          their  policy could be called into  question.
          The  court  ruled that this  portion  of  the
          deposition was improper and that, pursuant to
          Lloyds  v. Fulton, Allstate would be estopped
          from  voiding  the policy ab  initio  due  to
          alleged     misrepresentations     in     the
          application.   The  court did  not,  however,
          specifically term Allstates action one of bad
               The question before the court is whether
          the deposition questions constitute a willful
          act.  The difficulty with plaintiffs claim is
          that  Allstates questions were  not  used  to
          compel plaintiffs to take or to refrain  from
          some action  indeed, Allstate did not attempt
          to  force plaintiffs to do anything.  Rather,
          it  took  what  the court found  to  be  some
          improper   actions  in  the  course   of   an
          otherwise  lawful action,  the  taking  of  a
          deposition.   And any advantage Allstate  may
          have  attempted to gain from those  questions
          has  been  negated by the courts ruling  that
          Allstate   cannot  use  the  information   it
          gleaned  to void plaintiffs policy ab initio.
          As such, even taking all of their allegations
          in   the   pleadings   as  true,   plaintiffs
          therefore  have not made out  a  prima  facie
          case   of   abuse   of  process.    (Footnote
     26     We  reach this conclusion assuming, without deciding,
that  such questions violated the insurers duty of disclosure  to
its insureds.

     27    Caudle, 994 P.2d at 375-76.

     28    Wirum & Cash, Architects v. Cash, 837 P.2d 692, 713-14
(Alaska  1992)  (Where a point is not given more than  a  cursory
statement in the argument portion of a brief, the point will  not
be considered on appeal.).

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