Forsman v. United Financial Casualty Co., 966 F. Supp. 2d 1091

Background

Plaintiffs Valerie Forsman and Lloyd Gruber held collision coverage with United Financial and filed a putative class action after United Financial denied their collision claims on the ground they had already been paid by at-fault third‑party insurers.
Plaintiffs alleged they were not made whole because settlements did not cover all their losses, including attorneys’ fees and costs, and argued the insurer’s “duplicate recovery” clause is ambiguous, violates Montana’s made‑whole rule (and public policy against pre‑subrogation), and discriminates.
United Financial denied collision benefits citing a policy provision in the Limit of Liability: "duplicate recovery for the same elements of damages is not permitted," and the collision coverage language which does not mention attorneys’ fees or costs.
United Financial moved for judgment on the pleadings under Rule 12(c); Plaintiffs moved for partial summary judgment and United Financial sought discovery under Rule 56(d).
The court considered the policy (incorporated by reference), found the duplicate‑recovery clause is an exclusion of optional coverage (not de facto subrogation), held attorneys’ fees and costs are not covered under Collision Coverage, granted United Financial’s 12(c) motion, denied Plaintiffs’ partial summary judgment, and dismissed the complaint with prejudice.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether attorneys’ fees and costs are recoverable under Collision Coverage	Forsman/Gruber: collision coverage should cover attorneys’ fees/costs incurred pursuing third‑party recovery	United Fin.: policy covers sudden, direct physical loss to insured auto only; no provision for attorneys’ fees/costs	Court: Fees and costs are not covered by the Collision Coverage; denial was proper
Validity/ambiguity of the “duplicate recovery” clause	Plaintiffs: clause is ambiguous (doesn’t specify third‑party recoveries; placement off declarations page)	United Fin.: clause is broad but clear; reads in context of Limits of Liability and Collision Coverage	Court: Clause is not ambiguous when read as whole; ordinary meanings control
Whether clause effects de facto subrogation or violates Montana’s made‑whole rule/public policy	Plaintiffs: denying payment before being made whole is de facto subrogation and unlawful	United Fin.: clause is an exclusion to optional coverage, not subrogation; Montana permits exclusion of optional coverages	Court: Clause is an exclusion, not subrogation; does not violate made‑whole rule or public policy
Claims of bad faith, discrimination, or that coverage is illusory	Plaintiffs: insurer abused discretion, discriminates against insureds who first recover from third parties, and renders coverage illusory	United Fin.: insurer acted under contract terms; exclusion applies to optional coverage; coverage still has value in many scenarios	Court: No breach of implied covenant, discrimination claim fails as a matter of law, and coverage is not illusory

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard for plausible claim)
Cafasso v. U.S. ex rel. Gen. Dynamics C4 Sys., 637 F.3d 1047 (12(c) analogous to 12(b)(6))
Newbury v. State Farm Fire & Cas. Ins. Co. of Bloomington, Ill., 343 Mont. 279 (Mont. 2008) (insurer may exclude optional coverage; policy read as whole)
Swanson v. Hartford Ins. Co. of the Midwest, 309 Mont. 269 (Mont. 2002) (made‑whole principle in subrogation context)
Giacomelli v. Scottsdale Ins. Co., 354 Mont. 15 (Mont. 2009) (ambiguity standard; interpret from layperson perspective)
Mt. W. Farm Bureau Mut. Ins. Co. v. Brewer, 315 Mont. 231 (Mont. 2003) (attorney fees not recoverable absent contract or statute; duty to defend exception)
State Farm Mut. Auto. Ins. Co. v. Gibson, 337 Mont. 509 (Mont. 2007) (illusory coverage doctrine)
Monroe v. Cogswell Agency, 356 Mont. 417 (Mont. 2010) (discussing when coverage is not illusory)
Thayer v. Uninsured Employers’ Fund, 297 Mont. 179 (Mont. 1999) (defining subrogation and related equitable principles)
Steinke v. Safeco Ins. Co. of Am., 270 F. Supp. 2d 1196 (D. Mont. 2003) (discussing pre‑subrogation public policy limits)