ORDER
I. Introduction
On March 30, 2012, Plaintiffs Valerie Forsman and Lloyd Gruber (collectively “Plaintiffs”) filed their Complaint and Class Action Claims against United Financial Casualty Company and Progressive
II. Background
A. Factual Background
Plaintiffs allege they each carried collision coverage with United Financial when they were each involved in automobile accidents with at-fault, third-party drivers. (Compl., doc. 5, ¶¶ 3-4.) Plaintiff Forsman alleges her accident damaged her automobile in an amount exceeding $10,000 and Plaintiff Gruber alleges his accident damaged his automobile in an amount exceeding $1,100. (Id.) According to the Complaint, the damage to Plaintiffs’ respective
Both Plaintiffs allege they made claims under their respective collision coverage with United Financial, and their claims were denied pursuant to the “duplicate recovery” provision under the collision coverage of the policy, which provides:
Payments for loss covered under Collision Coverage, a Comprehensive Coverage, Fire and Theft with Combined Additional Coverage are subject to the following provisions:
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c. duplicate recovery for the same elements of damages is not permitted.
(Id.) Plaintiffs allege that neither of them were compensated for all of their damages and costs of recovery (including attorneys fees) by settlement with the at-fault insurers. (Id. at ¶ 5.)
The relevant provision regarding what is included under the policies’ Collision Coverage states: “Subject to the Limits of Liability, if you pay the premium for Collision Coverage, we will pay for loss to your insured auto and its equipment when it collides with another object or overturns.” (Doc. 21-2, Ex. 2 at 14.)
B. Procedural Background
On March 20, 2012, Plaintiffs filed their Complaint and Class Action Claims in the Montana Eleventh District, Flathead County. On September 13, 2012, the case was removed to federal court. On January 25, 2013, Plaintiffs filed a Motion for Partial Summary Judgment, (doc. 15), and United Financial filed a 12(c) Motion for Judgment on the Pleadings, (doc. 20). On March 1, 2013, United Financial filed a Rule 56(d) motion, requesting this Court permit it to conduct discovery related to Plaintiffs’ partial summary judgment motion to the extent the Court considers or relies on facts concerning whether Plaintiffs were “made whole” under Montana law or whether they subjectively expected to receive coverage. (Doc. 27).
III. Legal Standards
A. Rule 12(c)
A Rule 12(c) motion for judgment on the pleadings is the functional equivalent of a Rule 12(b)(6) motion to dismiss for failure to state a claim, except it is filed after the answer. See Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc.,
B. Rule 56(d)
Federal Rule of Civil Procedure 56(d) provides: “If a nonmovant shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition, the court may: (1) defer considering the motion or deny it; (2) allow time to obtain affidavits or declarations or to take discovery; or (3) issue
C. Summary Judgment
“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis of its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett,
IV. Analysis
A. Rule 12(c) Motion
1. This Court may properly consider the insurance policy and attached orders without converting United Financial’s 12(c) motion for judgment on the pleadings into a motion for summary judgment.
“Judgment on the pleadings is limited to material included in the pleadings.” Yakima Valley Memorial Hosp. v. Wash. St. Dept of Health,
Here, the insurance policy and its language form the basis of Plaintiffs’ claims and, as such, meets the requirements for a document incorporated by reference. Similarly, the Court may take judicial notice of attached orders. As a result, this Court may consider those documents without converting United Financial’s 12(c) motion into a motion for summary judgment.
2. Attorneys fees and costs are not recoverable under the policies’ Collision Coverage.
Plaintiffs first contend their claims were improperly denied absent recovery for attorneys’ fees and costs. United Financial contends Plaintiffs’ claims were properly denied on the grounds that attorneys’ fees and costs of recovery are not covered under Plaintiffs’ collision policies because they are not sudden, direct, and accidental loss or damage, nor are they
Montana follows the general rule “that a party in a civil action is not entitled to attorney fees absent a specific contractual or statutory provision.” Mt. W. Farm Bureau Mut. Ins. Co. v. Brewer,
Here, Defendants did not breach its duty to defend. Rather, Plaintiffs pursued recovery from the insurance companies of the at-fault drivers and then approached their own insurance company, Defendants, to ask for recovery for the expenses of that endeavor. Although Montana has recognized recovery for attorneys’ fees and costs in the first instance, it has not in the second.
Plaintiffs made their claims in this case under their Collision Coverage, which state: “Subject to the Limits of Liability, if you pay the premium for Collision Coverage, we will pay for loss to your insured auto and its equipment when it collides with another object or overturns.” (Doc. 21-2, Ex. 2 at 14.) When applying the defined terms, the policy provides coverage for “sudden, direct and accidental loss or damage” to “[a]ny auto specifically described on the Declarations Page.” (See United Fin.’s Br., doc. 21 at 8.) Nothing in Plaintiffs’ Collision Coverage provides recovery for attorneys’ fees and costs. As a result, attorneys’ fees and costs are not recoverable damages and were properly denied.
3. Plaintiffs’ claims for collision damages for which they have already been compensated were properly denied under the policies’ duplicate recovery provision.
United Financial denied Plaintiffs’ claims under their Collision Coverage for collision damages on the grounds that Plaintiffs have recovered all of their collision damages from the insurers of the at-fault third parties. According to the Complaint, the damage to Forsman and Gruber’s automobiles was “paid by the at-fault driver’s insurance company.” (Doc. 5 at ¶¶ 3, 4.) However, the Complaint goes on to allege “[n]either Forsman nor Gruber were compensated for all of their damages and their costs of recovery (including attorneys fees) by settlement with that at-fault insurers.” (Id. at ¶ 5.)
Located under the “Limit of Liability” section of the policy, the duplicate recovery clause states: “Payments for loss covered under the Collision Coverage, Comprehensive Coverage, Fire and Theft with Combined Additional Coverage are subject to the following provisions: * * * * duplicate recovery for the same elements of damages is not permitted.” (Doc. 21-2, Ex. 2 at 17.)
Although this Court must view the facts in the light most favorable to Plaintiffs, the Complaint clearly states that Plaintiffs have recovered for their collision damages. Because the outstanding damages alleged by Plaintiffs are not collision damages (i.e., claims for attorneys’ fees and costs of recovery), Plaintiffs can prove not set of facts in support of their claim that would entitle them to relief. As a result, Plaintiffs fail to make a plausible claim that they have been denied any “recoverable” damages under their insurance policies.
Plaintiffs further contend, however, that the duplicate recovery clause at issue is not valid as it is ambiguous and amounts to de facto subrogation in violation of Montana public policy. Plaintiffs are incorrect on both points.
a. The duplicate recovery provision is not ambiguous.
When interpreting an insurance policy, the Court must “read the policy as
Plaintiffs contend the duplicate recovery provision is ambiguous because it does not specify that it includes recoveries from third party sources and it is not listed in the “Exclusions” section of the policy. Plaintiffs first argument for ambiguity is that “duplicate recovery” could refer to either: (1) two identical payments made by Defendants under their collision policies; or (2) a payment made by a third party and an identical payment made by Defendants. United Financial contends the “duplicate recovery” provision’s inclusion of either situation merely makes it broad, not ambiguous.
In Giacometti, plaintiffs argued that a provision excluding coverage that applied “generally to operations of a horse racing track” should be found ambiguous.
Similar to the situation in both Giacometti and Bay Cities, the policy provision in question provides no support for a finding of ambiguity based upon Plaintiffs’ interpretation. According to Black’s Law Dictionary, “duplicate” is defined as “[t]o copy exactly” or “[t]o double; to repeat.” At 577 (Bryan A. Garner, ed., 9th ed. 2009). “Double recovery” is then defined as “[a] judgment that erroneously awards damages twice for the same loss” or “Recovery by a party of more than the maximum recoverable loss that the party has sustained.” Id. at 1389.
Plaintiffs premise their second ambiguity argument on the fact that the “duplicate recovery” clause is located under the “Limit of Liability” section rather than the “Exclusions” section of the policy. A similar argument was addressed by the Montana Supreme Court in Newbury, where it determined that a policy was not ambiguous simply because the exclusionary provision was not included on the declarations page.
Here, the “duplicate recovery” provision falls under the “Limit of Liability” section of the insurance policy and the subsection specifically references “loss covered under Collision Coverage....” (Doc. 21-2, Ex. 2 at 17.) The Collision Coverage section of the policy includes a similar cross reference, stating, “Subject to the Limits of Liability, if you pay the premium for Collision Coverage, we will pay for loss to your insured auto and its equipment when it collides with another object or overturns.” (Id. at 14 (emphasis added).) As a result, the “duplicate recovery” clause is not ambiguous when considering the provision in the context provided by the policy as a whole, even if it does not appear in the exclusions section.
Based on the foregoing, the policy’s “duplicate recovery” provision is not ambiguous.
b. The “duplicate recovery” provision does not amount to de facto subrogation.
Plaintiffs claim the language Defendants relied upon in denying coverage conflicts with the public policy against subrogation before the insured has been made whole and should be disregarded. According to Plaintiffs, to be made whole they must recover all of their damages and costs of recovery (including attorneys’ fees). United Financial contends the “made whole” doctrine does not apply in this case because the clause at issue is a valid double-recovery exclusion and the denial of insurance benefits was neither subrogation nor de facto subrogation.
Subrogation is an equitable doctrine designed to compel the ultimate payment of an obligation by the person “who in justice, equity and good conscience should pay it.” Skauge v. Mt. Sts. T. & T.,
The parties here take a diverging view of the nature of the “duplicate recovery” clause. Plaintiffs insist it is a de facto subrogation clause in violation of Montana’s public policy, while United Financial contends it is merely a valid exclusionary clause. If this clause is a de facto subrogation clause, there is clear Montana case law that supports a finding that it is in violation of public policy. On the other hand, if it is merely an exclusionary clause, there is also case law supporting a conclusion that it is not in violation of public policy. Having considered the nature of the provision and relevant case law, the “duplicate recovery” provision is an exclusion and not de facto subrogation.
In Newbury, the Montana Supreme Court reviewed a similar provision contained in an automobile insurance policy.
The Newbury provision is substantially similar to the clause in the present case. Specifically, both provisions are found in automobile insurance policies and both provisions involve payments by a primary party other than the insurer. Similarly, in Bolin, the plaintiffs policy expressly stated in both her medical payments coverage and her underinsured motorist coverage that no “duplicate payments for the same elements of loss” would be paid under those coverages. Id. at *5. Bolin’s total loss was calculated to be $42,000. Id. Bolin had already received $30,000 Bodily Injury limits from the tortfeasor, $10,000 Med Pay limits from Hartford Insurance, and $5,000 Med Pay limits from Allstate, the defendant. Id. Based on these payments, Allstate contended that Bolin had been fully compensated for all recoverable damages. Id. Bolin contended, on the other hand, that “Allstate’s practice of taking credit for other personal, portable, first party insurance benefits when adjusting its insured’s claims constitute^] defacto subrogation and [was] therefore contrary to Montana law.” Id. After determining Montana case law demonstrates a history of recognizing double recovery clauses, the district court held that Allstate’s actions did not violate public policy. Id. at *7.
Plaintiffs ask this Court to reject the holding in Bolin because the case has been stayed pending the Ninth Circuit’s decision in Gettle and because it was wrongly decided. (Pis.’ Resp., doc. 25 at 6, 25.) Plaintiffs’ first contention is unpersuasive be
As to Plaintiffs’ second contention, Judge Cebull’s reliance and interpretation of Montana law in this area was neither misplaced nor mistaken. Plaintiffs focus on the fact that the cases cited by the district court were all decided before Swanson, which they believe to be the definitive ease in this area. However, Plaintiffs argument is unpersuasive for two reasons. First, the Bolin court merely cited Liedle v. St. Farm,
Second, although Swanson clearly reflects Montana law in the area of subrogation, it is unclear whether the Court in Swanson intended to address de facto subrogation or the made whole doctrine outside of the subrogation context. In Swanson, the Montana Supreme Court stated, “under Montana’s established common law, duplicate payments do not occur until the insured has been made whole for all losses, as well as costs of recovery.”
Here, the double recovery provision in Defendants’ policies does not amount to subrogation. As a legal term of art, subrogation is “[t]he substitution of one party for another whose debt the party pays, entitling the paying party to rights, remedies, or securities that would otherwise belong to the debtor.” Thayer,
Plaintiffs fail to demonstrate how the present clause gives Defendants the authority to “substitute themselves for the insured.” See id.; see also Gettle. Unlike subrogation, Defendants are not attempting to recover any money from the individuals responsible for the loss. Rather, Defendants are attempting to enforce the terms of the insurance policy; that is, to only allow insureds to recover under the collision portion of the policy to the extent they have not already done so and thus prevent them from “profiting” from such a loss. See Scheafer v. Safeco Ins. Co. of Ill., DV-09-111 (Mont. Eighteenth Jud.
Further, Plaintiffs are receiving coverage for the premiums they have paid. See Mitchell v. St. Farm Ins. Co.,
The “duplicate recovery” provision included in Defendants’ insurance policies is an exclusion regarding optional coverage and does not amount to de facto subrogation. Because Plaintiffs admit in the Complaint that they have already been compensated for their collision damages, Defendants properly invoked the policies’ duplicate recovery provision to bar additional recovery of collision damages.
United Financial’s 12(c) motion is granted because Plaintiffs fail to allege any recoverable damages for which they have not been compensated for, the duplicate recovery provision is valid as a matter of law, and the policy language does not provide for recovery for attorneys’ fees and costs.
B. Rule 56 Motion
1. The “duplicate recovery” clause does not violate Montana’s “made whole” rule.
As discussed above, the “duplicate recovery” clause at issue amounts to an exclusion of optional coverage under the policy and not subrogation or de facto subrogation. As such, it does not violate Plaintiffs’ made whole rights.
2. The “duplicate recovery” provision is not ambiguous.
Plaintiffs make three arguments in their motion for partial summary judgment as to why the “duplicate recovery” clause is ambiguous: (1) it does not specify that it includes recoveries from third party sources; (2) it could be interpreted to prohibit recovery where a family member has paid money to fix a damaged vehicle; and (3) it is not listed on the Declarations Page. The first is unpersuasive in the context of United Financial’s 12(c) motion. As for the second, United Financial contends such a reading of the provision ignores the plain meaning of the word “recovery,” which does not include money obtained by gift from someone who is not responsible for the loss. See Steadele v. Colony Ins. Co.,
Regarding Plaintiffs’ third contention, the Montana Supreme Court in Newbury rejected almost an identical argument finding that although the policy in question did not include a reference to the exclusion on the Declarations Page, the policy read as a whole was not ambiguous.
Plaintiffs further contend the clause’s location creates structural ambiguity. In Shook v. St. Farm. Mut. Ins. Co. of Bloomington, Ill.,
Plaintiffs also argue that the “duplicate recovery” provision violates the reasonable expectations of the insured. Plaintiffs contend they expected Defendants to pay for their collision damage and paid valuable consideration for that coverage. (Pis.’ SUF, doc. 19 at ¶¶4, 11.) Plaintiffs maintain Defendants’ subsequent failure to pay their collision damage violated Plaintiffs’ reasonable expectations.
“The reasonable expectations doctrine is inapplicable where the terms of the insurance policy clearly demonstrate an intent to exclude coverage.” Newbury,
3. Defendants’ actions pursuant to the “duplicate recovery” provision were not a violation of the implied covenant of good faith and fair dealing.
Plaintiffs argue Defendants have breached the implied covenant of good faith and fair dealing by depriving them of the benefits of extra protection they have paid for under their respective policies. United Financial insists its denial of collision benefits was not an exercise of implied discretion, but rather an action taken pursuant to the express terms of the insurance policy contract.
The implied covenant is implicit in the agreement and can be breached without breaching an express contractual term. Phelps v. Frampton,
Here, the insurance policies in question allow the insurer to deny certain coverages in situations of duplicate recovery. As such, action pursuant to this provision is provided for under the contract and not one of discretion. Thus, Defendants’ denial of coverage under the duplicate recovery clause does not amount to a breach of the implied covenant of good faith and fair dealing.
4. Plaintiffs’ argument that the “duplicate recovery” provision is discriminatory fails as a matter of law.
Plaintiffs contend the “duplicate recovery” provision is discriminatory because it
United Financial first argues Plaintiffs’ discrimination claim is barred by the Unfair Trade Practice Act (UTPA). Section 33-18-242 of the Montana Code contains an exclusive list of the first-party claims that an insured may bring against an insurer. As previously held by this Court, “[discrimination claims are not included in this exclusive list.” Burton v. Mt. W. Farm Bureau Mut. Ins. Co.,
5. The “duplicate recovery” provision does not make coverage for collision damages illusory.
Plaintiffs contend collision coverage is illusory under the “duplicate recovery” provision because it does not apply where there is a liable third-party. United Financial contends that there is value to Plaintiffs’ collision coverage, even with the application of the “duplicate recovery” provision.
The Montana Supreme Court has disapproved “on public policy grounds of policy language which defeatfs] coverage for which valuable consideration ha[s] been paid — i.e., policy language which render[s] the purchased coverage ‘illusory.’ ” State Farm Mut. Auto. Ins. Co. v. Gibson,
As noted by United Financial, there a number of situations in which insureds can recover under the Collision Coverage at issue, even with the duplicate recovery provision. For example, such recovery can occur when an insured first demands payment from United Financial under the policy (as opposed to recovering from an at-fault third party first), where the insured is at fault for the accident, whether the responsible party’s liability limits are less than the damage to the insured’s auto, and where the insured collides with an object rather than another vehicle. {See United Fin.’s Br. in Opp., doc. 26 at 20.) Because Plaintiffs can point to a situation in which coverage may be excluded does not mean the Collision Coverage as a whole is illusory.
V. Conclusion
IT IS ORDERED that United Financial’s Rule 12(c) motion (doc. 20) is GRANTED. Consequently, United Financial’s Rule 56(d) motion (doc. 27) is DENIED AS MOOT.
IT IS FURTHER ORDERED that Plaintiffs’ motion for partial summary judgment (doc. 15) is DENIED.
IT IS FURTHER ORDERED that the Clerk of Court is directed to enter judgment in favor of Defendants. Plaintiffs’ complaint is DISMISSED WITH PREJUDICE.
Notes
. United Financial states that "Progressive” is a non-existent association that has not been served in this case, (see doc. 20 at ¶ 2); however, in the Answer, United Financial admits that it is a wholly owned subsidiary of Progressive Commercial Holdings, Inc., which, in turn, is a wholly owned subsidiary of The Progressive Corporation, (see doc. 6 at ¶ 2).
. Although United Financial does not address Plaintiffs’ ambiguity arguments in the context of the 12(c) motion, the same issue was briefed by both parties in the context of Plaintiffs' Motion for Partial Summary Judgment. (See doc. 15).