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Midland Risk Management Co. v. Watford6/30/1994
licy shall defeat or void the policy." The language of this section is straightforward. When a statute's language is clear and unequivocal, it is determinative of the statute's construction. Janson v. Christensen, 167 Ariz. 470, 808 P.2d 1222 (1991). In light of the plain language of § 28-1170(F)(1) and the legislature's overriding concern for victims of automobile accidents, we conclude that Midland's liability as to the Watfords became absolute upon the occurrence of the accident.
Our Conclusion is bolstered by the decisions of our supreme court and other courts which have interpreted § 28-1170(F)(1). In Sandoval, supra, the court held that the insurer was liable to the injured third party despite acts by the insured in contravention of the express terms of the insuring policy, specifically, the insured's failure to notify the insurer that he had been served with a complaint for damages arising out of an accident. The court found this general defense precluded by § 28-1170(F)(1). Similarly, the Ninth Circuit Court of Appeals held that that law bars insurance companies from raising defenses of lack of cooperation by an insured, State Farm Mutual Automobile Ins. Co. v. Thompson, 372 F.2d 256 (9th Cir. 1967), and operation of the vehicle by an intoxicated driver. Weekes v. Atlantic National Ins. Co., 370 F.2d 264 (9th Cir. 1966).
Indeed, the Ninth Circuit has addressed nearly the identical issue raised here, concluding that § 28-1170(F)(1) precludes an insurer from raising the defense of fraud under § 20-1109. In Farmers Ins. Exchange v. Rose, supra, the insurance carrier sought a judicial declaration that the policy issued to its insured was void as a result of fraudulent and material misrepresentations by its insured and did not provide coverage to injured third parties arising out of an auto accident caused by the insured. The court held that § 28-1170(F)(1) mandated coverage despite the insured's fraudulent representations regarding his past driving and insurance record. In support of its Conclusion, the court reasoned:
The defense which the company here wishes to assert--fraud in applying for the policy--is different from those held unavailable in the cases referred to above. However, it is difficult to see how the company could be any more prejudiced by a fraudulent statement in an application than it would be by the insured's lack of cooperation, operation of the vehicle by a drunk driver, or failure to notify the company of the commencement of a damage suit. . . . Moreover, the [accident victims] were . . . blameless for [the insured's] fraud . . . stand to suffer as much if the company is permitted to prevail on the fraud defense as they would if it were permitted to prevail on any of these other defenses.
411 F.2d at 272.
Similarly, in Allstate Ins. Co. v. Dorr, 411 F.2d 198 (9th Cir. 1969), the Ninth Circuit affirmed the lower court's finding pursuant to § 28-1170 that the liability of the insurance carrier became absolute upon the injury of the third parties, regardless of the fact that the insured had procured the policy by fraud. The court further concluded that the statute was not unconstitutional in its application.
We think that the economic burden placed by the Arizona statute upon companies which sell liability insurance of paying an occasional claim which they would not, but for the statute, have had to pay, falls easily within the power of a legislature to legislate.
411 F.2d at 201. Although we are not bound by these de
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