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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Ennen v. Integon Indemnity Corporation (1/20/2012) sp-6637
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, email
corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
JACOB ENNEN, )
) Supreme Court No. S-13832
Appellant, )
) Superior Court No. 3AN-08-04378 CI
v. )
) O P I N I O N
INTEGON INDEMNITY
)
CORPORATION,
) No. 6637 - January 20, 2012
GMAC INSURANCE
)
MANAGEMENT CORPORATION,
)
CRAIG ALLEN, and ALLEN LAW
)
GROUP,
)
)
Appellees. )
)
)
INTEGON INDEMNITY )
CORPORATION and ) Supreme Court No. S-13922
GMAC INSURANCE )
MANAGEMENT CORPORATION, )
)
Cross-Appellants, )
)
v. )
)
JACOB ENNEN, CRAIG ALLEN, )
and ALLEN LAW GROUP, )
)
Cross-Appellees. )
)
----------------------- Page 2-----------------------
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Craig Stowers, Judge.
Appearances: W. Michael Moody, Atkinson, Conway &
Gagnon, Anchorage, for Appellant/Cross-Appellee Ennen.
Daniel T. Quinn and Marc G. Wilhelm, Richmond & Quinn,
P.C., Anchorage, and John A. Bennett and Stuart D. Jones,
Bullivant Houser Bailey P.C., Portland, Oregon, for
Appellees/Cross-Appellants Integon Indemnity Corp. and
GMAC Insurance Management Corp. Thomas A. Matthews
and Kenneth G. Schoolcraft, Jr., Matthews & Zahare, P.C.,
Anchorage, for Appellees/Cross-Appellees Craig Allen and
Allen Law Group.
Before: Carpeneti, Chief Justice, Fabe, Winfree, and
Christen, Justices. [Stowers, Justice, not participating.]
FABE, Justice.
WINFREE, Justice, dissenting in part.
I. INTRODUCTION
Jacob Ennen was seriously injured while he was a passenger in Gordon
Shanigan's car. Shanigan's insurer, Integon Indemnity Corporation (Integon), paid
$50,000 to cover Shanigan's possible liability to Ennen. Under Alaska insurance
statutes, Ennen would also likely have been entitled to underinsured motorist benefits
under Shanigan's policy. However, Integon's policy was inconsistent with these
statutes, and Integon told Ennen that he was not entitled to any additional money. Six
years later, some time after Integon learned that its underinsured motorist provision
violated Alaska insurance statutes, Integon paid Ennen underinsured motorist benefits
plus interest and fees. Ennen sued Integon for bad faith. Integon filed a third-party
complaint against Ennen's attorney, Craig Allen.
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Before trial, the superior court dismissed Integon's claims against Allen on
the ground that allowing Integon to implead Ennen's attorney would violate public
policy. The superior court held that because Ennen did not own the insurance policy,
Integon did not owe him a duty of good faith and fair dealing. Accordingly, the superior
court concluded that Ennen had no cause of action for bad faith. But, in the event this
ruling were to be reversed on appeal, the superior court made an alternate finding that
while Integon had committed the tort of bad faith, Ennen had suffered no damages as a
result. We reverse on both counts. The superior court was justifiably cautious about
extending the bad faith cause of action to a new class of plaintiffs, but we conclude that
Ennen, as an insured, is eligible under our existing case law to bring a cause of action for
bad faith. We also conclude that Ennen established facts that would entitle him to
damages. We affirm the dismissal of Integon's third-party claim against Allen on the
alternative ground that Allen was not a proximate cause of Ennen's harm.
II. FACTS AND PROCEEDINGS
On November 7, 2000, Gordon Shanigan drove his car off of the Seward
Highway, seriously injuring his passenger, Jacob Ennen. Shanigan was killed in the
accident. Ennen was 18 years old and resided in Wasilla. Shanigan and Ennen had left
a party earlier that evening, but only after overcoming attempts by other partygoers to
prevent Shanigan from driving. A blood test documented that Shanigan had consumed
alcohol and marijuana was found in the vehicle. Ennen required multiple intensive
surgeries, including brain surgery, and physical and cognitive therapy.
Shanigan had an automobile insurance policy with Integon Indemnity
Corporation, a subsidiary of GMAC Insurance Management Corporation (GMAC).
This policy provided liability coverage "for bodily injury or property damage for which
any insured becomes legally responsible because of an auto accident." Believing that
Shanigan would be liable to Ennen, Integon paid Ennen the $50,000 limit for bodily
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injury liability. In exchange, Ennen released Integon from any claims against it or
Shanigan's estate.
Integon's policy also had a provision for underinsured motorist (UIM)
benefits. The policy provided that Integon would pay damages to an "insured[,] caused
by an accident[,] which such insured is legally entitled to recover from the owner or
operator of an . . . underinsured motor vehicle." The policy defined "insured" as
including "[a]ny person occupying your covered auto with the permission of the named
insured." As Shanigan's passenger, Ennen was thus an "insured" under the policy. The
policy also provided that "[u]nderinsured motor vehicle means a land motor vehicle or
trailer of any type to which a liability bond or policy applies at the time of the accident
but the limits of that bond or policy are . . . [l]ess than the limit of liability for this
coverage." Though this policy had been approved by Alaska's insurance regulators, it
violated two Alaska statutes. Alaska Statute 28.22.101(e) and AS 28.20.440(b)(3) both
require that automobile insurance policies issued in Alaska provide for uninsured and
underinsured motorist coverage in the amount of $50,000 per person and $100,000 per
accident. Integon's policy violated AS 28.22.101(e) and AS 28.20.440(b)(3) because
the policy would only pay UIM benefits if the underinsured vehicle had liability
coverage that was less than the UIM coverage in an insurance policy (here, $50,000 per
person and $100,000 per accident). Both Integon and Ennen now agree that this
limitation was unlawful. In this case, because Shanigan's liability coverage (provided
by Integon) was exactly the same as the UIM coverage available to Ennen pursuant to
Alaska statute, under the policy's language Ennen was not entitled to UIM benefits.
Though the policy was legally incorrect, Ennen's attorney, Craig Allen, concluded that
Ennen did not have a claim to any benefits beyond $50,000 in liability coverage based
on the policy's language.
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Integon later learned that it had been improperly handling Alaska UIM
claims. In 2007 Integon paid Ennen's UIM benefits plus prejudgement interest. On
January 11, 2008, Ennen filed a complaint in superior court against Integon, GMAC, and
Integra Insurance Services, alleging bad faith. On April 14, 2008, Integon filed a third-
party complaint against Allen and his law firm, arguing that he was responsible for some
of any damages suffered by Ennen. On March 20, 2009, Integon made an offer of
judgment of $300,000. Ennen declined. On April 1, 2009, the superior court dismissed
Integon's complaint against Allen, holding that it would violate public policy to allow
a defendant to implead the plaintiff's attorney for malpractice.
The case was tried without a jury for eight days in June and July 2009.
During the trial, Integon filed two motions for a directed verdict under Alaska Rule of
Civil Procedure 50. On February 2, 2010, the superior court issued an "Order and
Decision on Defendants' Motions for Directed Verdict and Findings of Fact and
Conclusions of Law." The superior court concluded that because Ennen was not a "first-
party insured" on Shanigan's policy, he had no cause of action for bad faith against
Shanigan's insurer. But the superior court made alternate factual findings to apply in the
event this ruling were to be reversed on appeal. The superior court found that Integon
had recklessly, though not willfully, disregarded its obligations under Alaska law.
However, the superior court found that Ennen had not suffered any damages and
accordingly awarded neither compensatory nor punitive damages. The superior court
awarded Integon $10,000 in Rule 68 attorney's fees.
Ennen appeals the ruling that he has no cause of action and also argues that
he was entitled to damages. Integon appeals, arguing that it did not act in bad faith and
that it deserved additional attorney's fees.
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III. STANDARD OF REVIEW
We apply our independent judgment when reviewing a superior court's
interpretation of statutes.1 We review rulings on questions of fact under the clearly
erroneous standard.2 "We may affirm the superior court on any basis appearing in the
record."3
IV. DISCUSSION
A. Ennen, As An Additional Insured, Has A Cause Of Action For Bad
Faith Against Integon.
In State Farm v. Nicholson, we held that an insured's action against its
insurer for breach of the implied covenant of good faith and fair dealing sounded in tort.4
David and Noreen Nicholson had a homeowner's insurance policy with State Farm and
made a claim after a water main broke.5 State Farm initially denied coverage but
eventually agreed to cover the loss, although at a level less than satisfactory to the
Nicholsons.6 The Nicholsons sued for bad faith, arguing that "bad faith handling of
insurance claims should . . . be recognized" as a tort.7 We noted that courts in other
jurisdictions had previously recognized such bad faith tort claims in two contexts. First,
1 Hertz v. Carothers, 784 P.2d 659, 660 (Alaska 1990).
2 Dunn v. Dunn, 952 P.2d 268, 270 (Alaska 1998).
3 Far N. Sanitation, Inc. v. Alaska Pub. Utils. Comm'n, 825 P.2d 867, 869
n.2 (Alaska 1992).
4 State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152, 1156-57 (Alaska
1989).
5 Id. at 1153.
6 Id. at 1153-54.
7 Id. at 1154.
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some courts had recognized a tort of bad faith when an insurer mishandled a claim made
by the insured after a third party had sued the insured (a liability or third-party claim).8
Second, some courts, starting with the California Supreme Court in 1973, had recognized
a tort of bad faith when an insurer mishandled a claim made by parties like the
Nicholsons, where the insureds sought coverage for damage to themselves or their
property (an indemnity or first-party claim).9 In Nicholson, we recognized the latter
cause of action.10 We held that while not every breach of a contract could give rise to a
tort claim, the "special relationship between the insured and insurer in the insurance
context" justified the existence of a tort cause of action.11 We also stated that the "tort
of bad faith in the insurance context can be traced to the covenant of good faith and fair
dealing, a contractual duty implied in all insurance policies."12
But in O.K. Lumber Co. v. Providence Washington Insurance Co., we held
that a tort victim could not sue the tortfeasor's insurer for bad faith.13 O.K. Lumber, a
company operating a building supply store in Fairbanks, suffered two accidents. First,
drilling activity by a company insured by Providence Washington caused O.K. Lumber's
8 Id. at 1155; see also 3 Alaska Administrative Code (AAC) 26.300(10)
(2010) (" '[T]hird-party claimant' means any person asserting a claim against any other
person."); BLACK 'S LAW DICTIONARY 873 (9th ed. 2009) ("liability insurance").
9 Nicholson, 777 P.2d at 1155-56 (citing Gruenberg v. Aetna Ins. Co., 510
P.2d 1032 (Cal. 1973)); see also 3 AAC 26.300(5) (" '[F]irst-party claimant' means a
person asserting a right to payment under his or her own coverage."); BLACK 'S LAW
DICTIONARY 873 (9th ed. 2009) ("indemnity insurance").
10 Nicholson, 777 P.2d at 1155-56.
11 Id. at 1156.
12 Id. at 1154.
13 759 P.2d 523, 526 (Alaska 1988).
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plant to burn down.14 Second, a tractor trailer insured by Providence Washington
collided with a pickup truck owned by O.K. Lumber.15 O.K. Lumber sued Providence
Washington for its alleged mishandling of these two claims, seeking special and punitive
damages.16 We framed the issue as "whether the insurer's duty of good faith and fair
dealing benefits anyone other than the named insured."17 We held that no such duty
existed, quoting the Rhode Island Supreme Court for the proposition that the
"relationship between the claimant and an insurance carrier for a third party alleged to
be liable is an adversary relationship giving rise to no fiduciary obligation on the part of
such insurance carrier to the claimant."18
This case asks whether the rule announced in O.K. Lumber bars an
additional insured from bringing a cause of action for bad faith. In Nicholson, we held
that a policyholder may bring a claim for bad faith against an insurer. In O.K. Lumber,
we held that a third party suing a policyholder could not bring a claim for bad faith
against the policyholder's insurer. This case presents the question whether an insured
who is not the actual policyholder may bring an action for bad faith.19
14 Id. at 524.
15 Id. at 525.
16 Id.
17 Id.
18 Id. at 525-26 (quoting Auclair v. Nationwide Mut. Ins. Co., 505 A.2d 431,
431 (R.I. 1986)).
19 See BLACK 'S LAW DICTIONARY 879 (9th ed. 2009) (defining "insured" as
"[a] person who is covered or protected by an insurance policy"); 3 LEE R. RUSS &
THOMAS F. SEGALIA, COUCH ON INSURANCE § 40:25 (3d ed. 2005) ("At the named
insured's request, an insurance company may permit other individuals or entities to be
(continued...)
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The superior court ruled that "Ennen . . . has no contractual relationship
with the defendants" and accordingly "[t]here is no implied covenant of good faith and
fair dealing between defendants and Ennen." The superior court acknowledged that we
might recognize a new cause of action for a party, like Ennen, who was an unnamed
insured. But the superior court held that until we did so it was bound by its interpretation
of existing precedent.
1. Alaska cases
We have previously recognized the rights of additional unnamed insureds
to insurance contracts. We have specifically stated that "an unnamed party may have
rights as an implied beneficiary of an insurance contract."20 In Simmons v. Insurance
Company of North America, for example, we recognized the rights of insureds other than
the policyholder.21 Teisha Simmons, the daughter of James Walldow, was injured in a
car accident.22 James Walldow and Carol Mills ran a school bus operation; the bus was
insured in Mills's name.23 Mills's policy provided for coverage of an individual
19(...continued)
added as an additional insured on the named insured's insurance policy. Often this is
accomplished pursuant to a specific endorsement expressly naming the individual or
entity as an additional insured on the policy. A policy may also contain a blanket
additional insured endorsement which provides coverage to a limited category of
individuals or entities without having to be expressly identified.").
20 Stewart-Smith Haidinger, Inc. v. Avi-Truck, Inc., 682 P.2d 1108, 1112
(Alaska 1984).
21 17 P.3d 56, 61-62 (Alaska 2001).
22 Id. at 58.
23 Id. at 58-59 (bus insured under Mills's name doing business as Happy
Puppy Enterprises).
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insured's family members.24 We held that Simmons could sue for reformation and could
argue that it was the parties' intention to include Walldow on the insurance contract.25
Because we recognized in Simmons the right of an additional insured to sue for
reformation, we now conclude that it would be incongruous to limit other contract rights
to policyholders only.
We explicitly applied the "beneficiary" reasoning used in Simmons in Loyal
Order of Moose, Lodge 1392 v. International Fidelity Insurance Co.26 Lodge 1392,
based in Fairbanks, contracted with a construction firm to build a new facility.27
International Fidelity Insurance acted as surety.28 The construction firm failed to perform
to the Lodge's satisfaction, and the Lodge sued the surety for bad faith in tort.29 We
framed the issue as being whether Alaska "recognize[s] the tort of bad faith in the
principal and surety context of a commercial construction claim."30 We held that there
was such a cause of action, referencing Nicholson and O.K. Lumber:
In our view the relationship of a surety to its obligee - an
intended creditor third-party beneficiary - is more
analogous to that of an insurer to its insured than to the
relationship between an insurer and an incidental third-party
beneficiary. CompareNicholson, 777 P.2d at 1157 with O.K.
24 Id. at 59.
25 Id. at 60, 63-64.
26 797 P.2d 622, 628 (Alaska 1990).
27 Id. at 623.
28 Id.
29 Id. at 624-26.
30 Id. at 626.
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Lumber v. Providence Washington Ins. Co., 759 P.2d 523,
526 (Alaska 1988).[31]
We thus explained the distinction between Nicholson and O.K. Lumber as based on third-
party beneficiary law.
We have recognized that an intended third-party beneficiary of a contract
has the right to enforce the contract: "We will recognize a third-party right to enforce
a contract upon a showing that the parties to the contract intended that at least one
purpose of the contract was to benefit the third party."32 It follows that an intended third-
party beneficiary of an insurance contract should be able to bring a cause of action for
bad faith against the insurer. If an intended third-party beneficiary can enforce every
31 Id. at 628.
32 Smallwood v. Cent. Peninsula Gen. Hosp., 151 P.3d 319, 324 (Alaska
2006). We follow the approach of the Restatement (Second) of Contracts on third-party
beneficiary law:
(1) Unless otherwise agreed between promisor and
promisee, a beneficiary of a promise is an intended
beneficiary if recognition of a right to performance in the
beneficiary is appropriate to effectuate the intention of the
parties and either
(a) the performance of the promise will
satisfy an obligation of the promisee to pay
money to the beneficiary; or
(b) the circumstances indicate that the
promisee intends to give the beneficiary the
benefit of the promised performance.
(2) An incidental beneficiary is a beneficiary who is not an
intended beneficiary.
Rathke v. Corr. Corp. of Am., 153 P.3d 303, 310 (Alaska 2007) (quoting RESTATEMENT
(SECOND) OF CONTRACTS § 302 (1981)).
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other right in an insurance contract, it would be an aberration if the beneficiary could not
also enforce this right.
An intended beneficiary can sue to enforce an insurance contract. An
incidental beneficiary, such as a tort victim injured by the insured, on the other hand,
cannot enforce the contract between the insured and insurer.33 The tort victim is a
beneficiary of the defendant's insurance contract in the sense that the contract makes it
more likely that there will be money for the tort victim to collect. But the tort victim
only benefits from the existence of the insurance contract indirectly: The insured did not
purchase the policy with the intention to benefit the tort victim; rather, the insured
purchased the policy to protect the insured from tort liability.34 Thus, the tort victim is
only an incidental beneficiary.
The distinction between intended and incidental third-party beneficiaries
divides those parties who have a cause of action for bad faith and those who do not. The
policyholder of an insurance contract and intended third-party beneficiaries of an
insurance contract, such as additional insureds, have a cause of action for bad faith;
incidental third-party beneficiaries do not. Courts in other jurisdictions agree, holding
that insurers owe a duty of good faith and fair dealing to intended third-party
beneficiaries.35
33 See Ellis v. City of Valdez, 686 P.2d 700, 704 (Alaska 1984).
34 See Smallwood, 151 P.3d at 324 (holding that determining whether a
beneficiary is intended or incidental "should . . . focus[] on the intent of the promisee").
35 See Donald v. Liberty Mut. Ins. Co., 18 F.3d 474, 479 (7th Cir. 1994);
Donaldson v. Liberty Mut. Ins. Co., 947 F. Supp. 429, 432-33 (D. Haw. 1996); Nahom
v. Blue Cross & Blue Shield of Ariz., 885 P.2d 1113, 1117 (Ariz. App. 1994) (holding
that where "the contract itself [indicates] an intention to benefit" a third-party
beneficiary, the beneficiary has a right to recover); Cancino v. Farmers Ins. Grp., 145
(continued...)
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Integon challenges the relevance of third-party beneficiary law by pointing
to a passage from O.K. Lumber in which we noted: "O.K. Lumber argues that a third
party claimant may sue for breach of this covenant, either because it is a third party
beneficiary of the covenant or because public policy so dictates. We disagree."36
Integon argues that this language means that we already rejected a distinction based on
third-party beneficiary law. This is not accurate. O.K. Lumber, an incidental
beneficiary, argued that third-party-beneficiary law supported finding that it had a cause
of action for bad faith.37 But incidental beneficiaries never have the power to enforce
contract rights. In O.K. Lumber, we therefore had no occasion to address, and did not
decide, whether intended beneficiaries have a cause of action for bad faith. Our decision
in Loyal Order of Moose, decided two years after O.K. Lumber, confirms this
interpretation. In Loyal Order of Moose, we characterized the holding in O.K. Lumber
as limited to "incidental third-party beneficiar[ies]."38
35(...continued)
Cal. Rptr. 503, 506 (Cal. App. 1978); Hendren v. Allstate Ins. Co., 672 P.2d 1137, 1140-
41 (N.M. App. 1983); Escalante v. Sentry Ins., 743 P.2d 832, 837-38 (Wash. App. 1987),
overruled on other grounds by Ellwein v. Hartford Accident & Indem. Co., 15 P.3d 640,
647 n.10 (Wash. 2001). But see Braesch v. Union Ins. Co., 464 N.W.2d 769, 776 (Neb.
1991), overruled on other grounds by Wortman ex rel. Wortman v. Unger, 578 N.W.2d
413, 417 (Neb. 1998); Kleckley v. Nw. Nat'l Cas. Co., 526 S.E.2d 218, 219-20 (S.C.
2000).
36 O.K. Lumber Co. v. Providence Washington Ins. Co ., 759 P.2d 523, 525
(Alaska 1988).
37 Id.
38 Loyal Order of Moose, Lodge 1392 v. Int'l Fid. Ins. Co., 797 P.2d 622, 628
(Alaska 1990).
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2. Other jurisdictions
The positions on this issue taken by other jurisdictions, particularly those
jurisdictions on which we have relied in our previous decisions on bad faith, support
finding that an additional insured, like Ennen, has a potential cause of action for bad
faith.
State Farm v. Nicholson, the decision in which we created the cause of
action for bad faith against insurers, cited to California's caselaw on this issue.39
California was the first state to create the tort of bad faith against an insurer.40 Nicholson
expressly based its holding on the California Supreme Court's opinion in Gruenberg v.
Aetna .41 In Nicholson, we quoted extensively from Gruenberg as well as from other
courts that had followed Gruenberg in adopting the cause of action for bad faith.42
In O.K. Lumber, we also relied on California's decisions, citing to Murphy
v. Allstate Insurance Co.,43 another California insurance bad faith case decided three
39 State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152, 1155 (Alaska
1989).
40 Gruenberg v. Aetna Ins. Co., 510 P.2d 1032 (Cal. 1973) (holding that an
insured has a cause of action when her insurer mishandles her claim for damage to
herself or her property); Comunale v. Traders & Gen. Ins. Co., 328 P.2d 198 (Cal. 1958)
(in bank) (holding that an insured has a cause of action for bad faith if an insurer
mishandles a claim by a third party against the insured); Douglas R. Richmond, An
Overview of Insurance Bad Faith Law and Litigation, 25 SETON HALL L. REV . 74, 77-78
(1994).
41 Nicholson, 777 P.2d at 1155.
42 Id. at 1155-56.
43 553 P.2d 584 (Cal. 1976).
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years after Gruenberg.44 Murphy had sued Pollard for the wrongful death of her young
son.45 Pollard was insured by Allstate.46 After negotiations between Murphy and
Allstate faltered, Murphy sued Allstate "alleging breach of the duty of good faith to its
insured."47 The California Supreme Court explained that while there is an implied
covenant of good faith and fair dealing between the insurer and insured, that duty did not
extend to an "injured claimant."48 We relied on Murphy to support the statement that
"the duty of good faith and fair dealing benefits only the insured and does not give rise
to a cause of action in favor of a third party claimant."49
In explaining the insurer's obligation to act in good faith, the California
Supreme Court in Murphy cited to another insurance bad faith case decided one year
earlier, Johansen v. California State Automobile Association Inter-Insurance Bureau.50
In Johansen, the California Supreme Court held that an additional insured could bring
an action for bad faith against the insurer. Muriel Johansen was injured by the negligent
driving of Gary Dearing, the minor son of Joyce Dearing.51 Joyce Dearing had an
automobile insurance policy with California State Automobile Association Inter-
44 O.K. Lumber Co. v. Providence Washington Ins. Co., 759 P.2d 523, 526
(Alaska 1988).
45 Murphy, 553 P.2d at 586.
46 Id.
47 Id.
48
Id. at 588.
49 O.K. Lumber, 759 P.2d at 525-26.
50 538 P.2d 744 (Cal. 1975).
51 Id. at 745-46.
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Insurance Bureau (CSAAIB).52 CSAAIB was recalcitrant about settling, and Johansen
eventually sued the Dearings, obtaining a judgment well in excess of policy limits.53
Gary Dearing, the additional insured minor,54 then assigned his rights to Johansen, who
sued CSAAIB for bad faith.55 Johansen had been assigned the rights of an additional
insured and was therefore acting as an additional insured. The court thus noted that "the
rights at issue here are those of Gary Dearing, the insured," and the court's "inquiry . . .
focus[ed] on the nature of the relationship between the defendant insurer and its insured,
[Gary] Dearing."56 The court then held that Johansen did have a cause of action for bad
faith "sound[ing] in both contract and tort."57 The treatise Insurance Bad Faith
Litigation, which we cited in Nicholson,58 points to Johansen as an example of the rule
that an additional insured may sue for bad faith:
Ordinarily, a defendant cannot be sued for bad faith under an
insurance policy unless the defendant was a contracting
party. . . . But the duty of good faith extends to any insured
entitled to benefits under the policy. . . . In Johansen v.
California State Automobile Association Inter-Insurance
Bureau . . . [t]he fact that [Gary] Dearing was not a
52 Id. at 746.
53 Id. at 746-47.
54 The statement of facts in Johansen does not clarify Dearing's status as an
insured, but it was fully explained in a later opinion. Cancino v. Farmers Ins. Grp., 145
Cal. Rptr. 503, 504-05 n.2 (Cal. App. 1978).
55 Johansen, 538 P.2d at 747.
56 Id.
57 Id. at 750 (internal quotation marks omitted).
58 State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152, 1154-55 (Alaska
1989).
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contracting party was regarded as immaterial, given his status
as an insured entitled to benefits.[59]
After Johansen, the lower California courts confirmed that an additional insured could
sue an insurer for bad faith.60 In Cancino v. Farmers Insurance Group, for instance, the
California Court of Appeals concluded that theJohansen decision required it to hold that
an additional insured has a cause of action for bad faith.61 Thus, by the time we cited
California case law in Nicholson and O.K. Lumber, it was well established in California
that an additional insured could sue for bad faith.
We agree with the California Supreme Court that whether an insured is a
policyholder or an additional insured makes no difference. Both policyholders and
additional insureds are "insured," and as such are entitled to bring causes of action for
bad faith.
3. An "adversarial" relationship between Shanigan and Ennen
does not prevent Ennen from having a cause of action for bad
faith.
Integon argues that the relationship between Ennen and Integon is
adversarial and that there can be no fiduciary duty between them. Integon reasons that
it stood in two sets of shoes. First, it represented Shanigan, whom it protected from
claims by Ennen. Second, Integon represented Ennen as Shanigan's passenger. Integon
59 WILLIAM T.BARKER & RONALD D.KENT,NEW APPLEMAN INSURANCE BAD
FAITH LITIGATION § 7.03[1] (2d ed. 2010). Note that this treatise is an updated version
(with a slightly revised title) of the treatise WILLIAM M. SHERNOFF, SANFORD M. GAGE
& HARVEY R. LEVINE, INSURANCE BAD FAITH LITIGATION (1984), which we cited in
Nicholson, 777 P.2d at 1154-55.
60 See Cancino v. Farmers Ins. Grp., 145 Cal. Rptr. 503 (Cal. App. 1978);
Nw. Mut. Ins. Co. v. Farmers Ins. Grp., 143 Cal. Rptr. 415 (Cal. App. 1978).
61 Cancino, 145 Cal. Rptr. at 505-06.
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argues that because Shanigan and Ennen were adverse parties, Integon could not owe
duties of good faith to both. Integon, pointing to language from O.K. Lumber, argues
that this adversarial relationship precludes Ennen from having a cause of action for bad
faith: "An insurer could hardly have a fiduciary relationship both with the insured and
a claimant because the interests of the two are often conflicting."62 Integon is correct that
where the driver of a vehicle becomes liable to a passenger, there will be a tension
between the insurer's role as protector of the driver against suits by the passenger and
the insurer's role as the insurer of the passenger. Indeed, it is possible to say that this
tension will exist whenever a policyholder becomes liable to an additional insured and
the policy provides underinsured benefits because the additional insured will be able to
make claims under the policy both as a tort claimant against the policyholder and as an
additional insured.
We agree with Integon that when it comes to Ennen's liability claim, Ennen
and Shanigan are adversarial parties: Ennen was seeking recovery for damage that
Shanigan allegedly caused him. Under O.K. Lumber, Ennen could not bring a cause of
action for bad faith against Shanigan's insurer for failing to pay Ennen's liability claim.63
But the situation is different for Ennen's UIM claim. As to a UIM claim, the insurer's
two roles are separate. The insurer's role as the insurer to an adversary in the context of
liability claims does not affect the insurer's role as the insurer to the passenger in the
context of the passenger seeking UIM benefits. As one commentator has noted, "the fact
that the insurer may in some instances take the same position as the
uninsured/underinsured motorist with respect to the motorist's liability and the insured's
62 O.K. Lumber Co. v. Providence Washington Ins. Co., 759 P.2d 523, 526
(Alaska 1988).
63 Id. at 525-26.
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damages, does not (in most jurisdictions) negate the duty of good faith and fair
dealing."64 The Seventh Circuit Court of Appeals' decision in Craft v. Economy Fire &
Casualty Co. explained in detail why an adversarial relationship between an insurer and
a party claiming UIM benefits does not preclude an insurer from owing a duty of good
faith and fair dealing to both its named insured and a party claiming UIM benefits.65
That court concluded:
[T]here is nothing inherent in the nature of uninsured
motorist protection that is inconsistent with a requirement
that the insurance company attempt in good faith to reach
agreement with its insured and that any attempt to force the
insured to settle for less than his claim be predicated on a
bona fide dispute as to the amount of liability.[66]
Other courts have also applied the tort of bad faith in the UIM context.67 Accordingly,
we conclude that Ennen's adverse position to Shanigan on Ennen's liability claim does
not preclude Integon from owing Ennen a duty of good faith on Ennen's UIM claim.
B. The Superior Court Ruling That Integon Acted In Bad Faith Was Not
Clearly Erroneous.
The superior court made alternate findings. In the event that Ennen was
determined to have a cause of action for bad faith, the superior court found that Integon
acted in bad faith. Specifically, the superior court found that while Integon did not
engage in an "intentional" scheme to "deceive and deny UIM claims," Integon's conduct
was "grossly reckless." The superior court found that Integon acted recklessly at both
64 BARKER & KENT, supra note 59, at § 6.02[2][c].
65
572 F.2d 565, 568 (7th Cir. 1978).
66 Id.
67
See, e.g., LeFevre v. Westberry, 590 So. 2d 154, 159 (Ala. 1991); Voland
v. Farmers Ins. Co. of Ariz., 943 P.2d 808, 811 (Ariz. App. 1997).
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the "front end" (Integon's submission of a legally improper policy to the Alaska Division
of Insurance) and the "back end" (Integon's wrongful denial of UIM claims after the
policy was approved by the Division of Insurance). The court stated that Integon
"exhibited a shocking level of indifference and reckless disregard for the information
they undisputably had in their possession concerning the state of Alaska insurance law,
concerning national industry standards, and concerning their own organizational
knowledge, standards, and practices."
We have explained that the tort of bad faith "requires that the insurance
company's refusal to honor a claim be made without a reasonable basis."68 Integon
concedes that it did not recognize that Ennen was owed UIM benefits. It acknowledges
that it made "a series of mistakes" but argues that its mistakes were neither intentional
nor evidence of "reckless indifference." Integon argues that its conduct was only
negligent.
1. Integon was not entitled to rely on the approval of its policy by
the Alaska Division of Insurance.
Integon argues it was entitled to rely on the policy's UIM language once
the policy was approved by the Alaska Division of Insurance but cites no authority for
this proposition. Integon's obligation to comply with applicable insurance statutes is
independent of its obligation to submit proposed policies to the Division of Insurance.
Alaska law provides that an insurance policy may not contain a provision inconsistent
with statutory requirements.69 The Division of Insurance may approve a substitute
provision only if it is "not less favorable . . . to the insured or beneficiary than the
68 Hillman v. Nationwide Mut. Fire Ins. Co., 855 P.2d 1321, 1324 (Alaska
1993).
69 AS 21.42.140(b).
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provisions otherwise required."70 The Division of Insurance's approval is a screening
mechanism, meant to catch unlawful insurance policies. Approval by the Division of
Insurance cannot make an unlawful policy lawful. Obtaining Division of Insurance
clearance does not authorize an insurer to issue policies that are not in accordance with
Alaska statutes.
In addition, even though the Division of Insurance failed to notify Integon
that its policy was legally incorrect, Integon had a number of opportunities to correct its
policy. After the policy was approved, many other parties sought UIM benefits from
Integon. Even if Integon was entitled to rely on the policy language, it had ample notice
from other sources that the policy language was unlawful. We conclude that the record
supports the superior court's determination that Integon acted in bad faith.
2. Integon's evidentiary objections
Integon argues that the superior court improperly based its alternative
findings on inadmissible evidence about Integon's behavior toward insureds who were
not parties to Ennen's litigation. The superior court made numerous findings of fact
concerning Integon's handling of other claims besides Ennen's. Ennen characterizes
Integon's argument as that the superior court violated Alaska Rule of Evidence 404(b),
which provides that "[e]vidence of other crimes, wrongs, or acts is not admissible if the
sole purpose for offering the evidence is to prove the character of a person in order to
show that the person acted in conformity therewith."
We conclude that the superior court did not rely on any improper evidence
about third-party claims. The superior court referenced third-party cases to show that
70 Id.
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Integon had notice that it was not paying proper UIM claims.71 This finding supported
the superior court's conclusion that Integon knew of the statutes governing UIM
provisions and that Integon therefore should have known that it was not properly paying
Ennen's claim.
C. The Statute Of Limitations Does Not Bar Ennen's Bad Faith Claim.
Alaska Statute 09.10.070(a) provides that an action in tort must be
"commenced within two years of the accrual of the cause of action." The superior court
held that this statute of limitations did not bar Ennen's action. The superior court's
ruling was based on two grounds: equitable estoppel and the discovery rule. Ennen
argues that either the discovery rule or the doctrine of equitable estoppel "is sufficient
to preclude application of the statute of limitations."
While Integon does challenge the application of the discovery rule, it has
not appealed or addressed the superior court's alternative equitable estoppel ruling. The
superior court held that Integon was "equitably estopped from asserting any statute of
limitations defense." We have stated that "the party seeking to assert [equitable estoppel]
[must] show that the other party made some misrepresentation, or false statement, or
acted fraudulently and that he reasonabl[y] relied on such acts or representations of the
other party, and due to such reliance did not institute suit timely."72 We have also stated
that "equitable estoppel requires more than inaction or silence by a person who has no
obligation to speak or act. . . . Yet there can be circumstances where inaction or silence
71 See, e.g., Alaska R. Evid. 404(b)(1) ("Evidence of other . . . acts . . . is,
however, admissible for other purposes, including . . . proof of . . . knowledge, . . . or
absence of mistake or accident.").
72 Groseth v. Ness, 421 P.2d 624, 632 n.23 (Alaska 1966).
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combined with acts or representations can give rise to an appropriate situation calling for
the application of the estoppel doctrine."73
Ennen argues that Integon has waived its appeal of the superior court's
ruling on equitable estoppel because Integon's cross-appellant's brief does not address
the issue of equitable estoppel. We agree. Integon's cross-appellant's brief, despite
extensively discussing issues relating to the statute of limitations, never mentions
equitable estoppel. Integon's entire argument in its cross-appellant's brief focuses on
application of the discovery rule. Because Integon has not challenged on appeal the
superior court's ruling that equitable estoppel bars the application of the statute of
limitations, its arguments on the discovery rule are irrelevant.
D. The Superior Court's Ruling In Favor Of Allen Can Be Affirmed On
The Alternative Ground That Allen's Conduct Was Not A Proximate
Cause Of Ennen's Damages.
Integon filed a third-party complaint against Craig Allen, Ennen's former
attorney, and the Allen Law Group. Allen represented Ennen when Ennen sought
insurance benefits from Integon, and Integon maintained that Allen should have realized
that Integon's policy language was defective. Integon argued that AS 09.17.080,
providing for apportionment of damages among multiple tortfeasors, allowed Integon to
bring in Allen as a third-party defendant. Allen filed a motion to dismiss, which the
superior court granted. The superior court dismissed Allen from the suit, ruling that,
while AS 09.17.080 "standing alone" permitted Integon's third-party action, allowing
the action would "disrupt the strong public policies" supporting the attorney-client
relationship. Integon cross-appeals, arguing that the superior court was mistaken in
dismissing Allen from the case.
73 Id. at 632 n.25 (internal citations omitted).
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Ennen maintains that any error in dismissing Integon's third-party
complaint against Allen was harmless because there was no prejudice to Integon. In
support of this argument, Ennen first points to the superior court's ruling that Integon
could attribute any fault of Allen to Ennen through agency principles. According to
Ennen, Integon was not prejudiced by the order dismissing its third-party claim against
Allen because the trial court ruled that Allen's fault could be attributed to Ennen, not
Integon, and Integon was therefore only responsible for its own share of the fault.
Whether Allen's fault could be allocated to Ennen under agency principles presents an
interesting question, but it is not properly before us. Neither party has appealed the
ruling, and we do not need to rely on it to conclude that Integon was not prejudiced. But
the superior court also found after a bench trial that even if negligent, Allen was not
legally at fault for Ennen's damages. Allen maintains that this finding entitles him to a
favorable judgment against Integon. We agree.
We can affirm the superior court's judgment on any ground supported by
the record.74 To apportion fault to a party under AS 09.17.080, that party's conduct must
be a legal cause of the plaintiff's harm.75 Thus, legal causation is a prerequisite for
allocation of fault to Allen. The superior court determined in its alternative findings of
74 In re Estate of Fields, 219 P.3d 995, 1003 (Alaska 2009) (quoting
Gilbert M. v. State, 139 P.3d 581, 586 (Alaska 2006)).
75 AS 09.17.080(b) ("In determining the percentages of fault, the trier of fact
shall consider both the nature of the conduct of each person at fault, and the extent of the
causal relation between the conduct and the damages claimed."); Fancyboy v. Alaska
Village Elec. Co-op., Inc., 984 P.2d 1128 (Alaska 1999) (applying the doctrine of
proximate cause to equitable apportionment); see also Lake v. Construction Machinery,
Inc., 787 P.2d 1027, 1031 (Alaska 1990), superseded by statute, Ch. 26, § 36, SLA 1997
("A third party tortfeasor may escape liability by proving that it was not negligent or that
its negligence did not proximately cause the employee's injury.").
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fact that "[t]here is no proximate cause between [Allen's] conduct and Ennen's
damages."
The superior court reasoned in part that Integon had a "separate,
independent, and super[s]eding duty to properly identify Ennen's UIM claim, to properly
evaluate it, and to properly and timely pay it," and that "[a]s such, Allen's malpractice
is not a proximate cause of any harm to Ennen." We review findings of proximate cause
for clear error.76 Integon argues, however, that the superior court was legally mistaken
when it stated that Integon had a "separate, independent, and super[s]eding duty" to
properly deal with Ennen's claim. Integon argues that it owed no duty to Ennen as an
additional insured. But, as we have concluded, Integon did in fact owe a duty of good
faith and fair dealing to Ennen.
The dissent argues that the superior court's causation analysis was premised
on the erroneous conclusion "that Integon had a 'super[s]eding duty' to Ennen
precluding a liability finding on Allen's part."77 It is true that Alaska does not recognize
a "superseding duty" doctrine. But while the superior court did characterize Integon's
duty to deal properly with Ennen's claim as "separate, independent, and super[s]eding,"
its proximate cause analysis was based upon a factual comparison of the two parties'
actions. Although the dissent asserts that the trial court "did not actually compare the
conduct of Integon and Allen,"78 the superior court did make a factual finding contrasting
Integon's "reckless and knowingly indifferent" conduct with Allen's "mere[] . . .
76 State v. Guinn, 555 P.2d 530, 538 (Alaska 1976) (citing State v. Abbott, 498
P.2d 712, 727 (Alaska 1972)) ("The proper standard for review of the finding of
proximate causation is . . . the 'clearly erroneous' standard[.]").
77 Dissent at 31.
78 Dissent at 30-31.
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negligence" and found that "Allen had nothing to do with" Integon's "bad faith claims
practices." The superior court found that, had Integon complied with Alaska law,
Allen's ignorance of the law "would not have been a legal cause of harm to Ennen."
We agree with the superior court's conclusion regarding causation. The
superior court conducted an eight-day trial and heard the evidence regarding Integon's
conduct. Even assuming that Allen was negligent for failing to detect Integon's
deceptive practices - practices the superior court described as "recklessly deceptive"
and "intentionally indifferent" - we conclude that a reasonable fact finder could have
decided that Allen's negligence was not a proximate cause of Ennen's damages.
We have described the proximate cause analysis as an "intangible legal
policy element."79 The cental question is "whether the conduct has been so significant
and important a cause that the defendant should be legally responsible."80
The superior court found that Integon's conduct was "shocking . . . a
practice and pattern of grossly reckless ignorance and incompetence" in violation of
Alaska law. The superior court noted that other claimants had been similarly injured and
that at least one other attorney had also failed to recognize Integon's misconduct. We
79 Vincent by Staton v. Fairbanks Mem'l Hosp., 862 P.2d 847, 851 (Alaska
1993); see also Glen O. Robinson, Multiple Causation in Tort Law: Reflections on the
DES Cases, 68 VA . L. REV . 713, 713 (1982) (proximate cause is "susceptible to endless
philosophical argument, as well as practical manipulation"); William L. Prosser,
Proximate Cause in California, 38 CAL.L.REV . 369, 369, 375 (1950) ("Proximate cause
remains a tangle and a jungle, a palace of mirrors and a maze . . . [it] covers a multitude
of sins . . . [and] is a complex term of highly uncertain meaning under which other rules,
doctrines and reasons lie buried.").
80 Vincent by Staton, 862 P.2d at 851;see also Robles v. Shoreside Petroleum,
Inc., 29 P.3d 838, 841 (Alaska 2001); Conklin v. Hannoch Weisman, 678 A.2d 1060,
1072 (N.J. 1996) (holding that the substantial factor test is best suited "for legal
malpractice cases in which inadequate or inaccurate legal advice is alleged to be a
concurrent cause of harm").
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conclude that the evidence supports the superior court's findings that Integon's conduct
was grossly reckless and that Allen's negligence was not a proximate cause of Ennen's
harm. We therefore affirm the superior court's judgment in favor of Allen and against
Integon on this alternative ground.
E. Ennen Was Entitled To Damages.
The superior court held that Ennen had suffered no injury due to Integon's
delayed payment of UIM benefits. Finding that Ennen had suffered no "emotional or
financial distress," the court awarded no compensatory damages. The court explained
that "[w]hatever financial distress that Ennen suffered because of the belated payment
of his UIM benefits" was only "the lost use of money," which was compensated by
prejudgment interest. Ennen argues that it was erroneous for the superior court "to rule
that Ennen's damages were fully compensated by payment of interest on the UIM
coverage." Ennen maintains that he was entitled to an award of compensatory or
nominal damages. We agree.
Ennen suffered a financial loss as a result of Integon's failure to pay UIM
benefits in 2000. He was deprived of the UIM benefits to which he was entitled under
the policy. We have previously approved compensatory damage awards for financial
deprivations suffered from an insurer's unreasonable withholding of insurance
proceeds.81 Similarly, other jurisdictions award compensatory damages for the financial
hardships suffered when an insurer withholds insurance proceeds in bad faith. In Silberg
v. California Life Insurance Co., an insurer refused to pay medical bills necessary to treat
a workplace injury suffered by the insured.82 The California Supreme Court reversed a
81 State Farm Mut. Auto. Ins. Co. v. Weiford, 831 P.2d 1264, 1270 (Alaska
1992).
82 521 P.2d 1103, 1105 (Cal. 1974).
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trial court's denial of a $75,000 award to cover the distress suffered by the insured due
to the financial difficulties caused by his inability to pay his medical bills.83
At trial Ennen presented evidence of the financial and emotional distress
he suffered. Between 2000, when Ennen suffered his accident, and 2007, when Integon
paid the UIM benefits, Ennen testified that he suffered from not having the insurance
proceeds. He testified that he received public assistance, that at times he was unable to
afford heating oil, and that he was frequently short of food. Here, once it was established
that (1) Integon had committed bad faith in withholding Ennen's insurance proceeds and
(2) Ennen suffered "financial and emotional hardship" from not having the insurance
proceeds, it was error not to award compensatory damages. The superior court reasoned
that prejudgment interest compensated Ennen for this lost time-value of money. But in
Nicholson, we quoted the Texas Supreme Court for one of the justifications of the bad
faith cause of action: "[W]ithout such a cause of action insurers can arbitrarily deny
coverage and delay payment of a claim with no more penalty than interest on the amount
owed."84 Interest alone does not compensate Ennen for his financial hardship and related
distress, and at a minimum he is entitled to nominal damages.85 We therefore remand,
directing the superior court to calculate damages consistent with this opinion.
83 Id. at 1107-08, 1110-11.
84 State Farm Fire & Cas. Co. v. Nicholson, 777 P.2d 1152, 1156 (Alaska
1989) (quoting Arnold v. Nat'l Cnty. Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex.
1987)).
85 See Anchorage Chrysler Ctr., Inc. v. DaimlerChrysler Motors Corp., 221
P.3d 977, 990 (Alaska 2009) (stating that nominal damages are appropriate where a
plaintiff shows "actual loss or injury" but fails to prove "the extent and amount of
damages").
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F. Attorney's Fees
We vacate the superior court's award of attorney's fees for Integon and
remand for a new award of attorney's fees for Ennen under Civil Rule 82.
V. CONCLUSION
For the foregoing reasons, we AFFIRM in part, REVERSE in part, and
REMAND the superior court judgment for proceedings consistent with this opinion.
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WINFREE, Justice, dissenting in part.
I respectfully disagree with the court's resolution of Integon Indemnity
Corporation's (Integon) appeal of the trial court's dismissal of Integon's third-party
complaint against Craig Allen and Allen Law Group (Allen).
Integon filed a third-party claim against Allen for allocation of fault under
AS 09.17.080, asserting Allen was at least concurrently at fault for Jacob Ennen's
(Ennen) damages arising from the failure to promptly pay under-insured motorist
coverage benefits. The trial court dismissed Integon's third-party complaint, setting out
the following question:
This court agrees that the language of AS 09.17.080
would, standing alone, permit [Integon to allocate fault to
Allen]. The question is whether the public policy
considerations that underlie the relationship between a client
and his attorney (or former attorney) outweigh the clear
language and general intent of the statute, such that, on the
limited, narrow facts of this case, the statute will be held not
to apply.
The trial court resolved this question as follows:
The court concludes that it would contravene public policy to
permit [Integon] to bring an apportionment claim against
[Allen] when Ennen himself has not asserted a claim against
Allen. . . . Also of great significance is the fact that [Integon]
may still argue and ask the [factfinder] to apportion the fault
of Allen (if any) to Ennen, under principles of agency and
vicarious liability. (Emphasis in original.)
The court avoids deciding whether this ruling was correct by affirming on
the alternative ground that after a bench trial, the trial court concluded Allen's
professional negligence was not a proximate cause of any damage to Ennen. The
fundamental flaw in the court's decision is describing the trial court's conclusion as a
finding of fact rather than as a conclusion of law. The trial court did not actually
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compare the conduct of Integon and Allen, as required by AS 09.17.080,1 and then find
as a matter of fact that Integon should be allocated 100% of the fault. The trial court
compared legal duties and concluded as a matter of law that Integon had a superseding
duty to Ennen precluding a liability finding on Allen's part:
Had defendants done their job as they should have
(and they agree their performance in not properly and timely
identifying and paying Ennen's UIM claim was negligent),
Ennen's first attorney's lack of knowledge and experience
with Alaska law would not have been a legal cause of harm
to Ennen. The defendants had a separate, independent, and
super[s]eding duty to properly identify Ennen's UIM claim,
to properly evaluate it, and to properly and timely pay it. As
such, Allen's malpractice is not a proximate cause of any
harm to Ennen, at least with respect to Ennen's claim against
defendants.
The trial court's superseding duty analysis was legally incorrect - to the
extent Alaska has even recognized the concept of superseding duty, it must give way to
the legislature's allocation of fault mandate.2 The proximate cause ruling, based on legal
duty, not on a finding of fact, simply does not support the court's alternative affirmance
1 See AS 09.17.080 (providing for fault to be allocated to a party, "the trier
of fact shall consider both the nature of the conduct of each person at fault, and the extent
of the causal relation between the conduct and the damages claimed"); AS 09.17.900
(defining "fault" for AS 09.17.080 as "acts or omissions that are in any measure
negligent, reckless, or intentional towards the person . . . . Legal requirements of causal
relation apply both to fault as the basis for liability and to contributory fault").
2 See Sowinski v. Walker, 198 P.3d 1134, 1149-56 (Alaska 2008) (discussing
transition to pure comparative negligence with pure several liability and overruling prior
dram shop cases that found no fault could be allocated to minor who illegally purchased
alcohol).
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of the trial court's ruling on Integon's third-party complaint against Allen for allocation
of fault.3
I would reach the underlying question whether the trial court correctly
dismissed Integon's third-party claim against Allen. Because the court does not reach
this question, I note only that I have serious doubts whether the dismissal was legally
correct - if the court did not share those doubts, it would not need to rely on an infirm
alternative ground for affirmance of the trial court's ruling.
3 Even if the trial court's proximate cause ruling could be viewed as a finding
of fact, I would conclude that finding was clearly erroneous. Allen's conduct, as out-of-
state counsel representing an Alaskan on matters of Alaska law, was nearly as shocking
as Integon's - I am not as willing as the trial court to excuse Allen's "lack of knowledge
and experience with Alaska law" given Allen's undertaking on Ennen's behalf. And if
Ennen had sued Allen along with Integon, is there any real doubt there would have been
an actual and realistic allocation of fault between those two defendants? I fail to see why
Ennen's failure to sue Allen should change the result.
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