## Facts

- Phillip R. Caldera and his wife bought a new Mercury from Holmes Tuttle Lincoln-Mercury, Inc. through its salesman, Harry Rozany.
- During negotiations, Caldera requested “full coverage insurance,” and the salesman assured him he was “getting it.”
- The dealer procured coverage for fire, theft, comprehensive, and collision, but did not obtain public liability and property damage insurance for Caldera’s operation of the car.
- About three weeks after purchase, Caldera was involved in an accident injuring Willie Mae Johnson and Fletcher Jones and damaging Johnson’s car.
- Johnson and Jones obtained tort judgments against Caldera, which remained unsatisfied.
- Johnson and Jones then sued the dealer, alleging they were intended third-party beneficiaries of an oral agreement to procure liability insurance and seeking damages equal to their unsatisfied judgments.
- A jury returned a verdict for plaintiffs as requested, and the trial court entered judgment; the dealer appealed.

## Issues

1. Whether persons injured by the insured’s driving may sue as intended third-party beneficiaries of an oral agreement to procure automobile liability and property damage insurance.
2. Whether the evidence supported a sufficiently definite and enforceable agreement that “full coverage” included public liability and property damage insurance.
3. Whether the proper damages for breach of a promise to procure liability insurance may equal the plaintiffs’ unsatisfied tort judgments (within the contemplated coverage limits).

## Decision

- The appellate court affirmed the judgment for Johnson and Jones.
- The evidence supported the jury’s finding that the dealer agreed to procure “full coverage” including public liability and property damage insurance.
- The agreement was enforceable despite lack of specific dollar limits because the contemplated “usual term” and minimum legal limits supplied definite content.
- Johnson and Jones were intended beneficiaries as members of the class protected by liability insurance (persons injured by the insured’s negligent driving) and could sue directly for breach.
- Damages properly equaled the amounts of plaintiffs’ unsatisfied tort judgments, as the loss corresponded to the protection the promised insurance would have provided.

## Legal Principles

- An intended third-party beneficiary may sue to enforce a contract even if the beneficiary was unknown to the parties and unaware of the contract when it was made.
- A promise to procure automobile “full coverage” may be found, based on context and factfinding, to include public liability and property damage coverage rather than only first-party coverages.
- A contract may be sufficiently definite when customary terms and statutory minimum limits provide objective standards for duration and coverage limits.
- For breach of a promise to obtain liability insurance, damages may be measured by the amount the promised insurance would have paid on claims against the insured, including unsatisfied judgments within the contemplated limits.

## Conclusion

The court upheld a verdict allowing accident victims to recover directly from a car dealer that failed to obtain promised liability insurance, treating the victims as intended third-party beneficiaries and awarding damages equal to their unpaid tort judgments within the insurance coverage contemplated by the parties.


Johnson v. Holmes Tuttle Lincoln-Mercury, Inc., 325 P.2d 193 (Cal. Ct. App. 1958)