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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Burnett v. Government Employee Insurance Company (1/27/2017) sp-7149

Burnett v. Government Employee Insurance Company (1/27/2017) sp-7149

          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  


                     THE SUPREME COURT OF THE STATE OF ALASKA                                   

CHARLES  E.  BURNETT,                                            )  

                                                                 )     Supreme  Court  No.  S-15715  

                              Appellant,                         )  


                                                                 )     Superior Court No. 4FA-12-02365 CI  

          v.                                                     )  


                                                                 )     O P I N I O N  


GOVERNMENT EMPLOYEES                                             )  


INSURANCE COMPANY,                                               )  


                                                                 )     No. 7149 - January 27, 2017  

                              Appellee.                          )  



                       ppeal  from  the  Superior  Court  of  the  State  of  Alaska,  


                    Fourth Judicial District, Fairbanks, Michael P. McConahy,  



                    Appearances: Kenneth P. Jacobus, Kenneth P. Jacobus, P.C.,  


                    Anchorage,  for  Appellant.                    Michael  J.  Hanson,  Call  &  


                    Hanson, P.C., and Barry J. Kell, Kell & Associates, P.C.,  


                    Anchorage for Appellee.  


                    Before: Stowers, Chief Justice, Fabe, Winfree, Maassen, and  


                    Bolger, Justices.  


                    WINFREE, Justice.


                    MAASSEN, Justice, with whom FABE, Justice, joins, dissenting.



                    A driver lost control of his truck and crashed into a cabin, causing property  


damage - including a heating fuel spill -and personal injuries to the cabin owner. The  


cabin owner brought suit against both the driver and the driver's insurance company,  

----------------------- Page 2-----------------------

alleging in part that the insurance company subsequently took charge of and negligently                                                                                                 

handled the fuel spill cleanup on the cabin owner's property. The superior court granted                                                                                                         

the insurer summary judgment, concluding as a matter of law that the insurer could not                                                                                                                      

owe the cabin owner an actionable duty. The cabin owner appeals, arguing that our case                                                                                                                   

law does not preclude a duty in                                                     this context.                     We agree with the cabin owner and                                                   

therefore reverse the superior court's grant of summary judgment.                                                                        

II.              FACTS AND PROCEEDINGS               

                A.               Facts  

                                 In   November   2011   a driver                                         lost control of his                              truck  and crashed                             into  

                                                                                             1   An attached heating oil tank was damaged and  

Charles Burnett's cabin in North Pole.                                                                                                                                                                     

fuel spilled onto and under the cabin.  Burnett suffered bodily injuries, including lung  


problems from breathing fuel fumes.  


                                 GovernmentEmployeesInsuranceCompany (GEICO),thedriver'sinsurer,  


hired a contractor to performan environmental site assessment under Alaska Department  


of  Environmental  Conservation  (DEC)  standards  "and  to  coordinate  the  necessary  


cleanup of the spill."  The contractor prepared a cleanup plan, but DEC initially did not  


approve it.  Burnett then asked GEICO representative Katie Johns for money to allow  


him to arrange the cleanup, but Johns told him GEICO would handle the spill cleanup.  


Burnett made this request at least one more time, but GEICO again denied it.  Johns told  


Burnett that she had to protect her insured from potential liability to the State of Alaska  


and that Burnett should not attempt to clean up the fuel spill because GEICO would do  


 so.  No cleanup work was done in 2012.  Over time the fuel migrated under Burnett's  


cabin, making it uninhabitable and complicating Burnett's respiratory health issues.  




                                 We view the facts in Burnett's favor because he is the non-moving party.  


Maness v. Daily, 307 P.3d 894, 900 (Alaska 2013).  

                                                                                                      -2-                                                                                                       7149  

----------------------- Page 3-----------------------

GEICO's contractor cleaned up the fuel spill sometime in October 2013, nearly two                                                                                                                                                

years after the accident.                                          

                  B.                 Proceedings  

                                     While the fuel cleanup                                            was pending                            Burnett sued                          both   the driver                            and  

GEICO.   Burnett alleged that GEICO had prevented him from cleaning up the fuel, had                                                                                                                                              

 stated it would take care of the cleanup, and then had not done so in a timely manner.                                                                                                                                                        

After the fuel cleanup was complete, GEICO made a payment to Burnett under the                                                                                                                                                     

driver's policy in exchange for Burnett dismissing his claim against the driver; Burnett's                                                                                                                         

claim against GEICO remained open.                                                                        GEICO then moved for summary judgment on                                                                                   

Burnett's claim against it - relying on                                                                         O.K. Lumber Co. v. Providence Washington                                                   

Insurance Co.                             to argue "that a liability insurer owes no duty of good faith and fair                                                                                                                  

                                                                                          2 - contending that as a matter of law it owed Burnett  

dealing to a third-party claimant"                                                                                                                                                                                      

no duty to act reasonably in handling the property cleanup.  


                                     The superior court granted GEICO summary judgment because - based  


on O.K. Lumber - "as . . . [the driver's] liability insurer, GEICO owe[d] no actionable  


duty  to  Burnett"  and  "[i]n  the  absence  of  a  duty,  GEICO  can  have  no  liability  to  


Burnett." Burnett appeals, arguing that O.K. Lumber does not preclude a duty by GEICO  


in this context and that genuine issues of material fact exist regarding whether GEICO  


undertook a duty to handle the property cleanup reasonably.  


III.               STANDARD OF REVIEW  


                                     "We review rulings on motions for summary judgment de novo, 'reading  


the record in the light most favorable to the non-moving party and making all reasonable  


                  2                  759  P.2d  523,  525-26  (Alaska   1988).  

                                                                                                                  -3-                                                                                                                    7149  

----------------------- Page 4-----------------------


inferences in its favor.' "                      The existence of a duty is a question of law which we review                                       

de novo.        4  

IV.          DISCUSSION  


             A.          O.K. Lumber And The Parties' Arguments  


                         In O.K. Lumber a third party claimant sued a liability insurer for failing to  



promptly settle two claims against its insureds.                                          The third party claimant argued that it  


could sue the insurer for breaching the contractually based fiduciary duty between the  


insurer and its insureds "either because it is a third party beneficiary of the [duty] or  



because public policy so dictates."                                We held that neither theory supported allowing the  


third party claimant to bring a cause of action against the liability insurer and expressed  


concern with placing the insurer in "a fiduciary relationship both with the insured and  



a claimant because the interests of the two are often conflicting." 


                         GEICO argues that O.K. Lumber holds "broadly and without limitation"  


that a third party claimant may not bring any claim against an insurer "for allegedly  


wrongful claims handling practices."  GEICO would have us interpret O.K. Lumber to  

hold that there never can be a legal duty between an insurer and a third party claimant  


for any action taken in the insurer's claims settlement role. But the issue in O.K. Lumber  

             3           ConocoPhillips Alaska, Inc. v. Williams Alaska Petroleum, Inc.                                                       , 322 P.3d     

 114, 122 (Alaska 2014) (quoting                                 Witt v. State, Dep't of Corr.                          , 75 P.3d 1030, 1033           

(Alaska 2003)).   

             4           State v. Sandsness, 72 P.3d 299, 301 (Alaska 2003) (citing Beck v. State,  


Dep't of Transp. & Pub. Facilities, 837 P.2d 105, 109 (Alaska 1992)).  


             5           759 P.2d at 524-25.  


             6           Id. at 525.  


             7           Id. at 524, 526.  


                                                                              -4-                                                                      7149

----------------------- Page 5-----------------------

was "whether the insurer's duty of good faith and fair dealing [arising fromthe insurance                                                            

contract] benefits anyone other than the named insured," and the claimant there did not                                                                          

                                                                                                                                              8   We did not  

bring its claim based on a tort independent of that contractual relationship.                                                                                    

decide   whether  the  insurer's  claims  handling  practices  were  actionable  under  


independent tort theories. Burnett therefore argues that even though GEICO did not owe  


him  the  same  contractual  duty  it  owed  its  insured,  GEICO  could  -  and  did  -  


voluntarily undertake a separate legal duty to Burnett that was not inconsistent with its  


duty to its insured.  


             B.           An Insurer's Potential Tort Duty To A Third Party Claimant  


                          Because  O.K. Lumber did not resolve this issue,  we face the question  


whether an insurer's duty to its insured prevents it from having - or taking on - any  


tort duty to a third party claimant during the claims handling process.  GEICO contends  


that it cannot owe Burnett any duty because "a liability insurer cannot owe simultaneous  


duties of good faith and fair dealing to both its insured and a third-party claimant."  


GEICO urges that any damages Burnett incurred as a result of GEICO's actions must be  


attributable to its insured, and therefore any cognizable claimBurnett has must beagainst  


its insured, not GEICO.  Burnett argues that GEICO undertook an independent duty to  


Burnett to reasonably perform the cleanup - a duty that did not conflict with GEICO's  


duty to its insured because proper cleanup "would have benefitted both . . . Burnett and  


[its insured]" - and Burnett's claim is therefore actionable against GEICO.  


                          As a general matter we see no reason an insurer's contractual duties to an  


insured necessarily should negate completely different common law tort duties it may  


have to a third party claimant. It would be odd to provide common law immunity for an  


insurer's tortious acts against a third party claimant simply because they occurred during  




                         Id. at 525.  

                                                                                 -5-                                                                               7149  

----------------------- Page 6-----------------------


the claims handling process.                                                              But we also see no reason an insurer should be protected                                                                                       

 from the consequences of affirmatively undertaking a new and independent duty to a                                                                                                                                                                               

third party claimant as a part of its claims handling process - and then wrongfully                                                                                                                                                

repudiating or improperly performing that independent duty - or be allowed to foist                                                                                                                                                                     

 onto its insured the entire legal responsibility for its actions when the liability does not                                                                                                                                                               

 stem from the insured's acts.                                                          10  

                                         We are not alone in adopting this latter view. Howton v. State Farm Mutual  


Automobile Insurance Co.  involved an insurer's express agreement with third party  


 claimants to pay for the repair of the claimants' vehicle at the insurer's expense without  


prejudice to the claimants' right to claim personal injury damages.11  After the claimants  


had the car repaired the insurer refused to pay the full amount and conditioned partial  


                                                                                                                                                                                          12  The Alabama Supreme  

payment on the claimants releasing all accident-related claims.                                                                                                                                                                            


 Court acknowledged a general rule that a third party to a liability insurance contract  


 cannot  bring  a  direct  action  against  an  insurer,  but  clarified  that  no  Alabama  case  


 supporting that rule involved an insurer "independent of its insured and its obligation to  


                     9                   See, e.g.                 ,  Stafford v. Westchester Fire Ins. Co. of N.Y.                                                                                             , 526 P.2d 37, 43                            

 (Alaska 1974) (holding that "intentional torts committed [by workers' compensation                                                                                                                                        

 insurers] in connection with the investigation of claims . . . are not to be protected" by                                                                                                                                                                              

 exclusive remedy statutes),                                                      overruled on other grounds by                                                              Cooper v. Argonaut Ins. Cos.                                                           ,  

 556 P.2d 525 (Alaska 1976).                                        

                     10                  "[A] claimant may  become entitled to  bring  a direct action  where the  


 insurer has taken on a new and independent obligation to the victim . . . ."  7A COUCH  


           INSURANCE    104:6, at 104-22 (3d ed. 2013).                                                                                                  We express no opinion whether or                                                                     


under what circumstances an insured might share liability for its insurer's conduct in this                                                                                                                                                                


                     11                  507 So. 2d 448, 448 (Ala. 1987) (per curiam).  


                     12                 Id.  

                                                                                                                               -6-                                                                                                                     7149

----------------------- Page 7-----------------------

pay its insured's liability, alleged to have contracted directly with the third party or to                                                         


have committed a tort directly against the third party."                                                                                      

                                                                                                  To apply the general rule under  


the case's circumstances would "permit the insurer to commit otherwise actionable  

                                          14   The court held that the general rule prohibiting direct action  



wrongs with impunity." 

against  an  insurer  did  not  apply  if  the  insurer  undertakes  a  new  and  independent  


obligation to the injured third party in efforts to settle the third party's claim.15  


                        This compelling reasoning supports our decision today: A liability insurer  


can owe a tort duty to a third party claimant when the insurer's claims handling actions  


affirmatively create a new and independent duty to the claimant.  


            C.          Summary Judgment Analysis In This Case  


                        To survive GEICO's summary judgment motion - based on lack of duty  


- Burnett must raise a genuine factual dispute whether GEICO affirmatively undertook  


an independent duty to clean up Burnett's property.16  


                                                                                                    Before considering Burnett's  


argument, it is useful to consider GEICO's contractual duties to its insured and its  

            13         Id.  at  450.  

            14         Id.  

            15         Id.  at  450-51.  

            16          The  existence  of  a  duty  is  a  question  of  law,  but  we  must  examine  a  case's  

 factual  context  to  determine  whether  a  duty  exists.   Hurn  v.   Greenway,  293  P.3d  480,  

483   (Alaska   2013)   ("When   determining   the   existence   of   a   duty   of   care,   summary  

judgment  is  appropriate  where  'the  only  reasonable  inference  from  the  undisputed  facts  

is  that  one  party  owed  another  no  duty  whatsoever  -  or  owed  a  duty  clearly  and  vastly  

narrower  in   scope  than  the  one  that  the  other  party  asserts.'  "   (quoting Arctic   Tug   &  

Barge,  Inc.  v.  Raleigh,  Schwarz  &  Powell,  956  P.2d   1199,   1203  (Alaska   1998)));  see  

 also,  e.g.,   Williams  v.  Municipality  of  Anchorage ,  633  P.2d  248,  251-52  (Alaska  1981)  

 (reversing   grant   of   summary   judgment   because   there   was   a   genuine   issue   of   fact  

 concerning  whether  a  duty  was  undertaken  when  municipal  employee  supplied  ladder,  

 installed  it,  and  instructed  injured  party  on  its  use).  

                                                                          -7-                                                                  7149

----------------------- Page 8-----------------------

practical choices with respect to the fuel oil spill. Under the relevant policy GEICO had                                                                                                            

agreed to "pay damages which an insured becomes obligated to pay" due to property                                                                                                       

damage.   GEICO also had agreed to defend "any suit for damages payable under the                                                                                                                    

terms of the policy" and had reserved the right to "settle any claim or suit." The property                                                                                              

damage policy limit was $50,000.                                                   

                                An insurer's                    duty to             its insured                 generally   is determined by                                        the policy   

                       17  But the insurance contract also creates an implied duty of good faith and fair  


dealing,  which  we  have  characterized  as  a  requirement  "that  neither  party  will  do  


anything  which  will  injure  the  right  of  the  other  to  receive  the  benefits  of  the  


agreement."18   The duty of good faith and fair dealing may require an insurer to attempt  


to settle a claim if there is a great risk of recovery beyond the policy limit.19                                                                                                          GEICO  


rightfully relies heavily on its good faith and fair dealing duty to its insured to explain  

its actions in this case.  


                                GEICO recognized that its insured had liability exposure to both Burnett  

and the State of Alaska for the fuel oil spill, with only a $50,000 policy limit.  GEICO  


had the option of sitting back and letting Burnett and DEC handle the cleanup, defending  


property damage and environmental claims brought against its insured by Burnett and  


DEC, settling those claims or paying judgments - up to its policy limit - that might  


be entered against its insured, and taking the risk that its insured might be exposed to  


liability in excess of the policy limit. GEICO also had the option of affirmatively taking  


                17              Williams v. GEICO Cas. Co.                                          , 301 P.3d 1220, 1225 (Alaska 2013) (citing       

 West v. Umialik Ins. Co.                                 , 8 P.3d 1135, 1138 (Alaska 2000)).                                 

                18             Jackson v. Am. Equity Ins. Co., 90 P.3d 136, 142 (Alaska 2004) (quoting  


Guin v. Ha, 591 P.2d 1281, 1291 (Alaska 1979)).  


                19             Id. (quoting Crisci v. Sec. Ins. Co., 426 P.2d 173, 176 (Cal. 1967)).  


                                                                                                   -8-                                                                                           7149

----------------------- Page 9-----------------------


control  of  all  or  parts  of  the  cleanup  to  ensure  that  it  was  performed  in  the  most  


economical manner protecting its insured from liability in excess of the policy limit.  It  


is clear that GEICO chose this latter option, and we do not fault GEICO for doing so.  


But that option necessarily exposed GEICO to all of the liability risk associated with  


managing an environmental cleanup project.  And to follow through with that option  


GEICO necessarily had to reach some kind of agreement with Burnett to do the work -  


GEICO surely had no right to boldly trespass on Burnett's property to perform cleanup  


work simply because it had a separate duty of good faith and fair dealing to its insured.  


At the summary judgment stage details of the putative cleanup agreement between  


GEICO and Burnett and the duties arising from that agreement - if it existed - were  


relevant, not GEICO's duties to its insured.  


                    Burnett argues that when GEICO directed him not to clean up the fuel spill  


on his property, stated that it would enter onto his property and do so, and ultimately did  


enter onto his property to do so through its contractor, GEICO undertook a duty to  


complete the cleanup in a reasonable and timely fashion and to act in a manner that  


would not exacerbate the original harm caused by GEICO's insured.  Implicit in this  


argument is that Burnett acquiesced to GEICO's offer to do the cleanup and to GEICO's  


contractor's entry on his property to perform the cleanup. The dissent fails to recognize  


that it is this alleged independent and separate agreement between GEICO and Burnett  


- not some kind of failure or wrongful conduct during GEICO's normal adjusting  


activities  -  that  is  the  foundation  for  Burnett's  potentially  viable  claim.                                         The  


Restatement  (Second)  of  Torts    323  indicates  that  a  duty  arises  when  a  person  


undertakes to render property protection services to another:  


                    One who undertakes, gratuitously or for consideration, to  


                    render  services  to  another  which  he  should  recognize  as  


                    necessary for the protection of the other's person or things, is  


                     subject to liability to the other for physical harm resulting  

                                                                -9-                                                         7149

----------------------- Page 10-----------------------

                             from his failure to exercise reasonable care to perform his                                                              

                            undertaking, if   

                             (a)  his failure to exercise such care increases the risk of such                                                     

                             harm, or   

                             (b)  the harm is suffered because of the other's reliance upon                                                       

                             the undertaking.                   [20]  

Alaska has long embraced this principle,21  and we will not be alone in applying  323 to  


conclude that an insurer has undertaken a duty to a third party claimant.22  


                             Viewed in the light most favorable to Burnett, there is a genuine dispute  


whether GEICO affirmatively undertook an independent duty to Burnett through its  


interactions with him.23  Burnett alleged that "GEICO told [him] specifically not to touch  


the spill, that they would take care of it."  The record supports this allegation:  Johns  


communicated to Burnett on at least two occasions that Burnett should take no action to  


clean up the spill and that GEICO would do so.  Johns also told Burnett that GEICO  


              20             RESTATEMENT  (SECOND) OF  TORTS    323 (A                                                     M. L      AW  INST . 1965).   



                             See, e.g., Adams v. State , 555 P.2d 235, 240 (Alaska 1976) (" 'It is ancient  

learning that one who assumes to act, even though gratuitously, may thereby become                                                                                       


subject to the duty of acting carefully . . . [.]' The concept of voluntary assumption of a  


duty has long been recognized in Alaska . . . ." (quoting Glanzer v. Shepard, 135 N.E.  

275, 276 (N.Y. 1922) (footnote omitted)).                            

              22             See, e.g., Nelson v. Union Wire Rope Corp., 199 N.E.2d 769, 779 (Ill. 1964)  


(finding duty under functionally identical Restatement (First) of Torts  323(1) when  


workers'  compensation  insurer  negligently  inspected  workplace).                                                                                     AS  23.30.263  


prevents asimilar causeofactionin Alaskaby providing workers' compensationinsurers  


immunity from negligent-inspection suits.  


              23             See Christensen v. Alaska Sales & Serv., Inc., 335 P.3d 514, 520 (Alaska  


2014) ("[T]he only questions to be answered at the summary judgment stage are whether  


a reasonable person could believe the non-moving party's assertions and whether a  


reasonable person could conclude those assertions create  a genuine dispute as to a  


material fact.").  


                                                                                        -10-                                                                                  7149

----------------------- Page 11-----------------------

needed to protect its insured from potential liability to the State of Alaska, and shortly                                                                                                                                                     

after the spill GEICO hired a qualified contractor to do a site assessment; fromthese facts                                                                                                                                                                          

it can reasonably be inferred that GEICO knew prompt action was required to prevent   

 further contamination.  Burnett attested that he "expected that GEICO would clean up   

the property posthaste" because GEICO "refused to allow [him] to touch the spill to                                                                                                                                                                                         

remediate   it,"   and   that   as   "time   passed,   the   contamination   migrated   out   across   the  

property."   Burnett's assertions that GEICO would remedy the spill and that the fuel                                                                                                                                                                                 

 spread as a result of its inaction also appear to create genuine issues regarding whether                                                                                                                                                               

Burnett relied on GEICO's undertaking to his detriment and whether GEICO's inaction                                                                                                                                                                       

increased the harm to the property.                                               

                                           Summary judgment establishing as a matter of law that GEICO did not owe                                                                                                                                                     

                                                                                                                                                                           24      On the present record, GEICO  

Burnett a duty of care was not appropriate in this case.                                                                                                                                                                                                   

may owe Burnett an independent duty under  323, and he should have an opportunity  


to try to establish that independent duty at an evidentiary hearing or trial.25  


                     24                    Cf.   Hurn   v.   Greenway,   293   P.3d   480,   483   (Alaska   2013)   ("When  

determining the existence of a duty of care, summary judgment is appropriate where 'the                                                                                                                                                                                

only reasonable inference from the undisputed facts is that one party owed another no                 

duty whatsoever - or owed a duty clearly and vastly narrower in scope than the one that                                                                                                                                                                                 

the other party asserts.' " (quoting                                                                              Arctic Tug & Barge, Inc. v. Raleigh, Schwarz &                                                                                                             

Powell, 956 P.2d 1199, 1203 (Alaska 1998))).                                                                              

                     25                    We  note  that  the  dissent  misapprehends  the  posture  of  this  case  and  


misapplies summary judgment rules.  The superior court granted summary judgment in  


 favor of GEICO  on the theory that GEICO could owe Burnett no duty whatsoever as a  


third  party  liability  insurer.                                                                 The  dissent  agrees  that  an  insurer  may  undertake  an  


independent duty to a third party claimant while adjusting a claim; thus it appears the  


entire court agrees that the superior court's ruling was overbroad, because GEICO could  


have accepted a new and independent duty to Burnett during the adjustment process.  


The question then becomes whether GEICO did so. For purposes of defeating GEICO's  


 summary judgment motion, all Burnett had to show was some admissible evidence  



                                                                                                                                   -11-                                                                                                                             7149

----------------------- Page 12-----------------------

V.        CONCLUSION  

                    We REVERSE the superior court's grant of summary judgment to GEICO  


and REMAND for further proceedings consistent with this opinion.  


          25        (...continued)  


leading a reasonable person to conclude there was a dispute on that point.  Christensen,  


335 P.3d at 520.  The dissent's contention that "there is nothing in this case on which to  


find that such a duty was ever assumed" improperly views the facts in the light most  


favorable to GEICO rather than to Burnett.  Cf. id. And contrary to the dissent's position  


that we should simply decide the entire case on the present record, Burnett is not required  


to prove his case at the summary judgment stage.  Id.  Having demonstrated a factual  


dispute underlying the duty question that was sufficient to defeat summary judgment,  


Burnett will be required to prove his case at trial.  

                                                             -12-                                                       7149

----------------------- Page 13-----------------------

MAASSEN, Justice, with whom FABE, Justice, joins, dissenting.                                                             

                              I dissent.           While I agree with the court's observation that a liability insurer                                                          

can assume a "new and independent" duty to a third party claimant while adjusting a                                                                                                          

                                                                                                                                                                                 1 there  

claim, as we recognized in                                O.K. Lumber v. Providence Washington Insurance                                                                Co.,   

is nothing  in  this case on  which  to  find  that such  a duty was ever  assumed.                                                                                                   The  


plaintiff's allegations, taken as true, simply show an insurer acting - reasonably or  


otherwise - in the course of its contractual duty to minimize its insured's exposure to  


liability.   Allowing the possibility of a "new and independent" duty on these facts  


expands the law in a direction it does not need to go, and it is likely to unnecessarily  


complicate insurer-defended cases in the future.  


                             As is evident from the court's factual summary, all the actions GEICO  


allegedlytook that delayedthecleanup and exacerbated Charles Burnett's harmoccurred  


between November 2011, when the accident occurred, and 2014, when Burnett released  


the insured driver "[a]fter the fuel cleanup was complete."2  During that entire time -  


from notice of the claim through settlement and release - GEICO indisputably had a  


fiduciary  duty,  based  on  contract,  to  act  in  the  best  interests  of  its  insured  by  


investigating Burnett's claim and then either settling or defending against it.3                                                                                              GEICO  


had no coexistent duty to Burnett in either contract or tort that compelled it to address  


               1              "[T]he third party claimant has a cause of action against an insurer that                                                                                

perpetrates an independent tort against it."                                                     759 P.2d 523, 525 (Alaska 1988) (citing                         

Cont'l Ins. Co. v. Bayless &Roberts, Inc.                                                , 608 P.2d 281, 287-88 (Alaska 1980));                                               see  Op.  

at 6    .  

               2              Op. at 2-3.  


               3              O.K.Lumber,759P.2d at 525 ("Thefiduciaryrelationship inherent in every  


insurance contract gives rise to an implied covenant of good faith and fair dealing. Thus,  


an insurer has an obligation to investigate claims . . . ." (citations omitted)).  


                                                                                           -13-                                                                                     7149

----------------------- Page 14-----------------------

his damages.                     When it allegedly assumed responsibility for the cleanup and directed                                                                                 

Burnett to stand aside, GEICO was acting in the pursuance of its duty to its insured.                                                                                             

                               The court today finds genuine issue of material fact about whether a new                                                                                        

and different duty arose in GEICO's alleged assurances to Burnett that it would clean up                                                                                                            

the spill, Burnett's alleged reliance on those assurances, and an alleged increase in harm                                                                                                    

                                                                                                         4  "But the question of duty is a matter of  

to the property due to "[GEICO's] inaction."                                                                                                                               

law."5           We can - and as a reviewing court we should - assume that Burnett's factual  


allegations  are  true  and  decide  whether  the  circumstances  as  alleged  created  an  


"independent duty to act."  


                               I do not believe they did.  This is not a case in which the insurer seeks "to  


foist onto its insured the entire legal responsibility for its actions when the liability does  


not stem from the insured's acts," as the court today describes the wrong it seeks to  


avoid.6  The general rule in Alaska is and long has been that "a plaintiff may not sue a  


                                                                                                7    This usually means that the claimant cannot  

tortfeasor's insurance company directly."                                                                                                                                                  


recover directly from the insurer damages that the law allows him to recover from the  


insured tortfeasor. If GEICO did drag its feet and unreasonably allow Burnett's damage  


to  accumulate,  Burnett's  claim  for  the  increased  harm  is  still  against  the  original  


                4              Op. at 10-11.     

                5              Hurn v. Greenway, 293 P.3d 480, 487 (Alaska 2013); see also Whitney v.  


State Farm Mut. Auto. Ins. Co., 258 P.3d 113, 116 (Alaska 2011) ("If there are no  


genuine disputes of material fact, the existence and scope of a legal duty are questions  


of law which we review de novo.").  


                6              Op. at 6.  


                7              Hamilton v. Blackman, 915 P.2d 1210, 1216 (Alaska 1996) (first citing  


Evron v. Gilo, 777 P.2d 182, 187-88 (Alaska 1989); then citing Severson v. Estate of  


Severson, 627 P.2d 649, 651 (Alaska 1981); and then citing WILLIAM   L. P                                                                                                         ROSSER   &  


            AGE KEETON, THE LAW OF TORTS  82, at 586 (5th ed. 1984)).                                                                      


W. P 

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tortfeasor, GEICO's insured.                                      It is     the insured              who caused Burnett's harm, even as the                                          

harm increases after the accident; GEICO's duty to step in and address it is owed to its                                                                                              

 insured. To the extent GEICO's conduct exposes its insured to liability above the limits                                                                                      

 of his        insurance coverage,                           the insured                 is still liable to                  Burnett for               all the damages     

proximately caused by the accident; the excess is an issue between the insured and                                                                                                 

 GEICO, which may be liable to the insured for the excess if its delay in the cleanup was                                                                                          

 indeed unreasonable.                         9  

                             What does it mean if the law is otherwise?  If GEICO is liable to Burnett  


 for its failures during cleanup based on breaches of an "independent duty to act," does  


that mean that the insured tortfeasor is not liable for the same harm?  Or are they jointly  


 liable?  And does this mean that if Burnett had sued only GEICO's insured, the insured  


would be well advised to file a third party claim himself against GEICO as a potential  


joint tortfeasor to whom liability must be apportioned? A prudent defense lawyer might  


well think so.  Needless to say, today's decision complicates the relationship between  


 insurer and insured by giving the insured defendant - usually represented by insurer- 


 appointed counsel - a strong incentive to join the insurer as a co-defendant, alleging  


that it failed in some way to timely address the claimant's harm while the claimant was  


justifiably relying on the insurer to do so.  


               8             Indeed, the damages alleged in Burnett's complaint are all attributable to  


the original spill and the fact that they continued to accumulate.  Burnett's complaint  


 against GEICO is not that it caused him a new and different harm, only that it allowed  


the harm caused by its insured to continue longer than it reasonably should have.  

               9             See  Jackson  v.  Am.  Equity  Ins.  Co.,  90  P.3d  136,  142  (Alaska  2004)  


 ("Breach of the covenant of good faith and fair dealing exposes the insurer to a claim of  


bad faith and may expose it to liability for any excess judgment against its insured.").  


                                                                                         -15-                                                                                   7149

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                                      My   primary   concern   with   today's   decision   is   the   lack   of   a   limiting  

principle.    In the course of their duties to their insureds, liability insurers regularly                                                                                                                             

 assume responsibility for scheduling, paying for, or directing some kind of damage-                                                                                                                                      

 control measures. Say an auto insurer promises the claimant that the tortfeasor's medical                                                                                                                                   

payments coverage will pay for the claimant's necessary medical care.                                                                                                                                          The insurer   

 asserts that certain palliative care is unnecessary and refuses to pay for it; the claimant                                              

 alleges that this decision caused his pain to continue longer than it otherwise would have.                                                                                                                                                         

Does the claimant now have a direct tort action against the insurer under Restatement                                                                                                                           

  343 in addition to his claim against the insured?                                                                 

                                      Such   may   well   be   the   result   under   Howton   v.   State   Farm   Mutual  

                                                                            10 the case on which the opinion primarily relies.11   But I find  

Automobile Insurance Co.                                                  ,                                                                                                                                                           

Howton 's dissent more convincing; three justices considered the existing law - which  


 already allowed the claimant to sue the tortfeasor's insurer for harms "for which the  


                                                                                                                                                                                                                 12        And  the  

 insured  is  not  liable"  -  to  be  sufficient  for  the  claimant's  protection.                                                                                                                                                     


 Oklahoma Supreme Court rejected the Howton  rule in McWhirter v. Fire Insurance  


Exchange, Inc., clearly skeptical of the new duty's origins:  


                                                        We recognize one state court which has determined an  


                                      insurance carrier is no less liable under the law for breach of  


                                      its  own  contract  obligations  or  tortious  conduct  than  any  


                                      other   party   where   the   insurer   undertakes   a   new   and  


                                      independent  obligation  directly  with  a  nonparty  to  the  


                                      insurance contract in its efforts to negotiate a settlement of  


                                      the party's claim.  However, the court did not explain where  


                                      this new and independent obligation arises from.  And, but  


                   10                 507 So. 2d 448 (Ala. 1987).                                 

                   11                 Op. at 6-7.        

                   12                 Howton, 507 So. 2d at 451 (Steagall, J., dissenting).                                                            

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----------------------- Page 17-----------------------

                          for  the insurance contract, there would be no reason for the                                                         

                           insurance company to deal with the third party at all.                                                             We  

                           find the case unpersuasive and decline to apply its holding to                                                          


                           our case.  

                                                                                                                             14   The Washington Court  

                           The Florida Court of Appeals felt the same way.                                                                                            


of Appeals followed Howton, but it did so in the narrow context of an "intentionally  


tortious act":  the insurer's intentional misrepresentations about when settlement funds  


would be paid.15  The court affirmed the dismissal of claims for violation of unfair claims  


settlement practices regulations, breach of the duty of good faith and fair dealing, and  


breach of contract.16  


                           I conclude that, given the potential for conflicting duties that was at the  


                                                                            17  any "new and independent" duty to the claimant  

heart of our decision in O.K. Lumber,  


should be based on either (1) conduct or commitments by the insurer after the claims  


against the insured have been  resolved (i.e.,  after  the insurer  has fully satisfied  its  


fiduciary duty to the insured) or (2) a truly "new and independent" duty, that is, one  not  


simultaneously owed to the insured by virtue of the insurance contract (i.e., a duty of  


reasonable care any actor would owe another - when driving, when holding a ladder,  


when lighting a match near a gas leak).  Neither of these conditions exists when the  


claimant's damages, proximately caused by the conduct of the tortfeasor, increase due  


              13            878 P.2d 1056, 1059 (Okla. 1994) (emphasis in original).                                                                

              14           Hazen v. Allstate Ins. Co.                           , 952 So. 2d 531, 539 (Fla. App. 2007) ("[W]e                                      


think the reasoning on this point in Howton is unsound.").  

              15           Dussault ex rel. Walker-Van Buren v. Am. Int'l Grp., Inc., 99 P.3d 1256,  


 1261 (Wash. App. 2004).  


              16           Id. at 1259-60.  


              17           759 P.2d 523, 525-26 (Alaska 1988).  


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----------------------- Page 18-----------------------

to insurer inaction while the insurer is acting in the course of its fiduciary duty to its                                                                                                                                                                                                                                                                                                                      

insured.     Because   the   "new   and  independent"   duty   the   court   recognizes   today   is  

essentially indistinguishable, either temporally or in substance, from the duty GEICO                                                                                                                                                                                                                                                                                                  

was pursuing on behalf of its insured, I would affirm the superior court's grant of                                                                                                                                                                                                                                                                                                

 summary judgment to GEICO.                                                                                                                            

                                                                                                                                                                                                                    -18-                                                                                                                                                                            7149

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