Summary 2010 WY 101

Summary of Decision issued July 20, 2010

Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court.

Case Name: Sorensen v. State Farm Auto. Ins. Co.

Citation: 2010 WY 101

Docket Number: S-09-0174

Original Proceeding, Petition for Writ of Review, District Court of Natrona County, the Honorable David B. Park, Judge

Representing Sorensen: R. Todd Ingram of Clapp, Ingram & Olheiser, PC, Casper, Wyoming.

Representing State Farm: Billie Ruth Edwards of Edwards & Johnson, LLC, Cheyenne, Wyoming.

Facts/Discussion: Sorensen co-owned a vehicle with Jean Larramendy III. Larramendy Jr. was driving it when he collided with another vehicle being driven by State Farm’s insured. The Sorensen/Larramendy vehicle was uninsured at the time. State Farm filed a complaint against Larramendy III, Larramendy Jr. and Sorensen. State Farm alleged that Sorensen violated Wyoming law by failing to maintain insurance on her vehicle, its insureds sustained damages as a result and it was subrogated to its insureds’ right to recover the damages from Sorensen. The Court was asked to decide whether a party who alleges that he sustained damages in a collision caused by the driver of an uninsured vehicle has, in addition to his cause of action against the negligent driver, a cause of action in tort against the vehicle’s owner for negligently failing to maintain liability insurance.
The duty alleged to have been owed was that of Ms. Sorensen to members of the general public to maintain liability insurance on her vehicle. In order to withstand dismissal of its complaint, State Farm had to establish that: Sorensen was under a duty of care to protect its insureds from being unable to obtain compensation for their damages caused in the collision through an insurance policy covering her vehicle; she breached the duty by failing to maintain liability insurance; State Farm’s insureds suffered the damages alleged and Sorensen’s breach of duty to maintain liability insurance proximately caused the insureds’ damages. Giving the words in the statute their plain and ordinary meaning, § 31-4-103 requires vehicle owners to maintain liability insurance on their vehicles. Nothing in the plain language suggests that in enacting the provision the legislature intended to impose a new tort duty owed by vehicle owners to the general public to maintain insurance.
Before a statute can be said to establish a standard of care, there must be a duty to which the statutory standard of care can be applied. The Court considered whether such a relationship exists between members of the public and a vehicle owner that the law will impose a duty actionable in negligence on the latter to maintain insurance for the protection of the former. The Court considered the Gates factors to determine whether the parties’ relationship in the present case was such that the law ought to impose a duty on Sorensen for the benefit of State Farm’s insureds. The Court concluded it was not foreseeable that Sorensen’s failure to maintain liability insurance would result in State Farm’s insured’s being struck by a negligent driver and being unable to obtain compensation for their damages from him. Next, the Court considered the closeness of any connection between the damage State Farm alleged its insureds sustained and Sorensen’s failure to maintain liability insurance. The property damages to the insured’s vehicle were closely connected with the driver’s failure to exercise reasonable care in operating Sorensen’s vehicle and not with her failure to maintain insurance. The parties do not dispute that the insureds sustained damages to their car in the collision with Sorensen’s vehicle. Serious misconduct may increase the scope of the persons who are entitled to protection afforded by the imposition of a duty. The prevalence of uninsured motorist coverage reduces the chances of damages that may result from lack of insurance. Criminal sanctions are more likely to prevent future harm than a tort duty to maintain liability insurance. Although there may positive consequences from recognizing a tort duty to maintain insurance actionable in negligence, the Court was not convinced they outweighed the negative consequences of imposing tort liability on one individual for the more direct negligence of another. There is insurance available to cover the risk involved. Absent a duty, there is no actionable negligence claim.

Conclusion: The Court’s determination that § 31-4-103 does not give rise to a cause of action in negligence for failure to maintain liability insurance is based primarily on the conclusion that neither the statute nor the common law impose a tort duty on vehicle owners owed to the general public. Because there is no duty, there is no actionable claim for negligence, and a discussion of the issue of proximate cause is not required. Wyoming follows the economic loss rule which bars recovery in tort when a plaintiff claims purely economic damages unaccompanied by physical injury to persons or property. Therefore, as in Hundemer, to the extent the injury State Farm alleged was its insureds’ inability to recover under an insurance policy issued to Sorensen, the injury is purely economic and is prohibited under the economic loss rule.

Reversed.

C.J. Kite delivered the decision.

Link: http://tinyurl.com/2d998zn .

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