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08/19/93 STATE FARM FIRE & CASUALTY CO. v. EUGENE

August 19, 1993

STATE FARM FIRE & CASUALTY CO., APPELLANT
v.
EUGENE C. METCALF AND WILLIAM E. METCALF, MINORS, BY THEIR GUARDIAN AD LITEM, DANIEL P. WADE, AND TOM CLINE, PERSONAL REPRESENTATIVE OF THE ESTATE OF LANCE LEE METCALF, DECEASED, RESPONDENTS AND MARY BLOOD, DEFENDANT



APPEAL FROM THE CIRCUIT COURT OF DOUGLAS COUNTY. Honorable Al F. Turner, Judge

Respondent's Motion for Rehearing Overruled. Motion for Transfer Denied September 9, 1993.

Parrish, Crow, Shrum

The opinion of the court was delivered by: Parrish

State Farm Fire & Casualty Company (State Farm) appeals from a summary judgment that included an award of damages in favor of Eugene C. Metcalf and William E. Metcalf (claimants). The trial court declared that State Farm had issued a policy of automobile insurance that applied to an automobile accident in which Sharon K. Metcalf was killed and that the limits of liability provided by that policy were $25,000 per person, including death, and $50,000 per occurrence. The trial court further found for State Farm on two counts of a counterclaim brought by claimants (Counts I and II) and for claimants on a third count of the counterclaim (Count III). The trial court awarded damages in Count III in the amount of $975,000 "because of State Farm's bad faith refusal to defend and settle . . . wrongful death claims against State Farm's insured." This court affirms in part, reverses in part and remands.

Lance Lee Metcalf and Sharon K. Metcalf, claimants' parents, were killed in an automobile accident on May 30, 1990. The automobile in which they were riding, and which was operated by Mr. Metcalf, left a roadway, went down a steep embankment, and came to rest approximately 75 feet away from the roadway. Mr. Metcalf was the named insured in two policies of automobile insurance issued by State Farm.

The following chronology relates to legal proceedings that occurred after the automobile accident:

Date Description

August 17, 1990 State Farm filed a petition to

require administration for the

Estate of Lance Lee Metcalf in

order that an action for

declaratory judgment could be

brought to determine validity

of the household exclusion part

of State Farm's automobile

liability insurance policy.

Thomas Cline was appointed

personal representative for the

Estate of Lance Lee Metcalf.

September 12, 1990 State Farm filed an action

seeking declaratory judgment

regarding automobile insurance

policies that named Lance Lee

Metcalf as insured.

October 11, 1990 Claimants filed a wrongful death

action against the Estate of

Lance Lee Metcalf seeking

damages for the death of Sharon

K. Metcalf.

October 15, 1990 Thomas Cline, Personal

Representative of the Estate of

Lance Lee Metcalf, sent a letter

to State Farm notifying State

Farm that the personal

representative had been served

with summons and petition in

the wrongful death action. The

personal representative's letter

tendered defense of the suit to

State Farm. It also advised

State Farm, "The estate will not

accept any reservation of

rights, and demands that the

company immediately honor its

contractual obligations . . .

afford coverage for the claims

being asserted, and afford the

defense required by the policy."

November 5, 1990 State Farm ...


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