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Guaranteed Warranty Corp. v. State

Court of Appeals of Arizona, Division One, Department A

March 25, 1975

No. 1 CA-CIV 2444


 [***328]   [*88]  OPINION

The appellee-plaintiff State of Arizona, through Millard Humphrey, Director of Insurance, sought an injunction in the Maricopa County Superior Court to enjoin the appellant-defendant Guaranteed Warranty Corp., Inc., from acting as an insurer without a valid license. The trial court, after hearing the case on a stipulated set of facts, granted a decree of permanent injunction against the activities of Guaranteed Warranty and this appeal followed. Upon stipulation of the parties the enforcement of the permanent injunction has been stayed pending the outcome of this appeal.

The Director instituted the present action, seeking to enjoin Guaranteed Warranty from selling certain "Warranty Agreement" contracts. It is the Director's contention that the sale of such contracts involves the sale of insurance and that Guaranteed Warranty is subject to the regulation [**2]  of Title 20 of the Arizona Revised Statutes which regulates the conduct of insurance business within the State of Arizona. The pertinent portion of § ] 20-206 reads:

"No person shall act as an insurer and no insurer shall transact insurance in this state except as authorized by a subsisting authority granted to it by the director . . . ."

Guaranteed Warranty agrees that no insurer can sell insurance in this state without a license from the director of insurance. It is Guaranteed Warranty's position  [***329]   [*89]  that the contracts they sell are warranties and not insurance. Guaranteed Warranty further contends that its contemplated future sale of installation and maintenance contracts are contingent service contracts and are not insurance subject to regulation by the state.

All of the necessary facts to decide this case were stipulated to by the parties and the facts were incorporated into the findings of fact and conclusions of law by the trial judge. The stipulated facts necessary for this appeal are:

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533 P.2d 87 *; 1975 Ariz. App. LEXIS 549 **; 23 Ariz. App. 327 ***

GUARANTEED WARRANTY CORP., INC., an Arizona Corporation, Appellant, v. STATE of Arizona ex rel. Millard HUMPHREY, Director of Insurance, Appellee

Subsequent History:  [**1]  Rehearing Denied April 23, 1975. Review Denied June 3, 1975.


Warranty, picture tube, television set, television, contracts, insurer, replace, warranty contract, manufacturer's, dealer, manufacturing defect, installation, purchaser

Insurance Law, Industry Practices, General Overview, Torts, Defenses, Assumption of Risk, Contract Formation, Business & Corporate Compliance, Sales of Goods, Title, Creditors & Good Faith Purchasers, Contracts Law, Warranties