*1 278
CINDY Individually, JUEDEMAN,
CINDY JUEDEMAN, Conservatrix of the Estate of
ERICH BURKSTRAND and
CHARLES MESSLER, Appellant, Plaintiff and v.
NATIONAL FARMERS UNION PROPERTY
AND CASUALTY COMPANY,
corporation,
Respondent.
Defendant and
No. 91-491.
16,
Submitted on briefs Jan.
1992.
23,
Decided June
1992.
St.Rep.
544.
For Lawrence A.Anderson and Howard F. Great Falls. Clarke, Respondent: Smith, Walsh,
For Dennis P. Clarke and Gregoire, Great Falls. Opinion
JUSTICE WEBER delivered the of the Court. Juedeman, Burkstrand, Cindy brought Plaintiff mother of Erich individually, suit and as Erich Burkstrand conservator of estate of Casualty Property Company National Farmers Union and (Farmers Union) 33-18-201, prohibits for bad faith under § practices. Eighth unfair claims settlement Judicial District Court, County granted summary judgment Cascade in favor of the defendant, Farmers Union. Plaintiff We affirm. appeals. appeal
The issues on are restated as follows: properly grant 1. Did the District Court defendant’s motion summary judgment “leveraging” in plaintiff’s on claim of violation 33-18-201(13), MCA? § Did defendant’s motion for properly grant
2. the District Court in violation for failure to settle plaintiffs claim summary judgment on 33-18-201(6), MCA? of § Burkstrand, in a truck involved eleven, passenger
ageAt Erich The vehicle was driven accident, severely injured. a one vehicle by Farmers Bennyhoff was insured Bennyhoff, deceased. by Robert $100,000 bodily injury per coverage of provided Union which dispute does not $300,000 Farmers Union per occurrence. person $100,000 maxi- bodily injury claim exceeded Burkstrand’s payable under mum amount motion for grant defendant’s properly District Court
Did the “leveraging” claim of violation on summary judgment 33-18-201(13), MCA? § in unfair claims settle- engaged Farmers Union
Plaintiff contends Erich $100,000 offer for conditioning its settlement practices ment agreement injury upon Juedeman’s bodily Burkstrand’s claim of loss of consortium. Bennyhoff’s from a future 33-18- leveraging prohibited this is Plaintiff contends *3 MCA, 201(13), provides: which general frequency as to indicate person may, with such
No any following: practice, do business (13) claims, reasonab- liability if has become promptly settle Fail to in order policy coverage clear, portion ofthe insurance ly under one of the insurance portions under other to influence settlements policy coverage.... M.R.Civ.P, appropriate 56(c), summary judgment is Rule
Under the movant material fact and genuine exists no issue of where there Here, we conclude that a matter of law. judgment to is entitled in favor of Farmers summary judgment properly granted trial court Union. her contention supporting no factual basis presented
Juedeman contrary, engaged leveraging. in On Farmers Union maxi- willing to settle for the Union was that Farmers record shows of all claims exchange in for a release policy coverage mum amount of the trial court injury coverage. Since bodily fell under that which arose loss of consortium that Juedeman’s previously declared $100,000 bodily Erich’s loss, limited to her claim was out of Erich’s declaratory this does not contest coverage. plaintiff While injury 33-18-201(13),MCA, by ruling, Farmers Union violated § she insists bodily injury a release of conditioning upon of Erich’s payment claim loss of consortium. Juedeman’s individual for Leveraging under plaintiff’s interpretation. disagree
We 33-18-201(13), MCA, of two requires manipulation an insurer’s § of a prompt must settlement coverages. The insurer withhold coverage, in order to reasonably liability clear claim under one Here, bodily arising coverage. a claim out of another Erich’s influence fall within injury claim and Juedeman’s claim for loss of consortium Here, Union offered to settle both policy coverage. the same Farmers falling claims under that for the maximum amount allowed Thus, properly we hold the court found that Farmers properly granted Union did not violate § summary judgment. defendant’s motion for
II properly grant Did the District Court defendant’s motion for claim failure settle in summary judgment on to violation 33-18-201(6), MCA? Next, good Union failed make a faith plaintiff contends Farmers to fair attempt prompt insisting to effectuate settlement Juedeman Bennyhoff’s 33-18-201(6), provides: estate. Section MCA. may, No person frequency general with such as to indicate a practice, following: business do (6) Neglect fair, in attempt good prompt, to faith to effectuate equitable settlements of claims has become reasonably clear.... case, plaintiff Bennyhoff’s
In this to release from refused liability in return In a letter dated payment limits. 16,1984, July plaintiff’s attorney Bottomly Richard stated: have ‘We steadfastly give any parties exchange refused to a full release to Burkstrand, for the and we will not now do so.”This letter plaintiff’s unwillingness demonstrates to settle. substance,
In agreement this Court has held that without *4 release, Farm Thompson there is no offer for settlement. v. State (1973), 207, 219-220, 161 Mont. 505 P.2d Mutual Automobile Ins. Co. 423, 430. Here, prevented conduct Farmers Union from plaintiff’s effectuating prompt, equitable fair and settlement. rejected a claim ofinsurance bad
Finally, previously this Court has delay payment. caused the faith where the conduct Claims, 445, 451, 453, 740 Spadaro v.Midland Inc. 227 Mont. 1105, 1109, 1110. here, Similarly, P.2d Juedeman’s refusal to release Bennyhoff’s delayed owing the insurer’s of claims to Accordingly, plaintiff Erich. has no faith bad Farmers Union. hold Farmers Union did not and
We violate § properly granted summary the trial court defendant’s motion for judgment.
Affirm. TURNAGE, HARRISON, CHIEF JUSTICE JUSTICES GRAYand McDonough concur. dissenting. JUSTICE TRIEWEILER I opinion majority. dissent from the why disagree by To understand conclusions arrived at majority, necessary it is that a complete more recitation of the facts be set forth.
Cindy Juedeman legal guardian mother and of Erich and Burkstrand Charles Messier. 5, 1983, September passengers
On Erich and Charles were in a being Bennyhoff when, vehicle driven Robert because of extremely negligent manner in which the had operated, vehicle been it was driven offthe road and was involved in a violent crash.
Bennyhoff was killed as a result of the crash. Erich and Charles seriously injured. seriously injured were Erich so that he both was permanently paralyzed was from the at all waist down and times since the accident has confined to a been wheelchair. His mother is responsible support. for his care and
The defendant in this question case admitted that there was no Bennyhoff’s Erich, negligence injuries about or for the Charles, passenger and a third individual who was also a Bennyhoff vehicle. Property Casualty Company
National Farmers Union insured Bennyhoff against liability operation Coverage for the of his vehicle. policy required “A”of that the insurer to of the insured on behalf bodily injury all sums which became due because of by any person Bennyhoff’s negligence. sustained as a result of coverage page declaration indicated that maximum available $100,000, injuries individual trader that was the maximum for each occurrence insured trader that $300,000. *5 addition, “A,” In Coverage under the same policy requires the company any alleging bodily injury, to defend suit if allega- even the groundless. However, tions of the suit are policy gives the defen- complete authority any dant to settle against Bennyhoff claims made if company expedient. deems it requirement There was no that Bennyhoff approve any settlement.
The defendant in this case admitted that damages, Burkstrand’s damages and the by passenger incurred a third in Bennyhoff’s vehicle, $100,000 exceeded the coverage of available to each of them. apparently There question was some about whether Messier’s damages would have remaining $100,000 exhausted the coverage of addition, available under the In Cindy damages claimed personally herself injuries result of to her son Erich. 15,1983, On December lawyer Burkstrand’s sent a letter demand- ing the pay defendant limits that were available to ($100,000). Burkstrand time, At that the defendant and attorney were aware that Erich had been paraplegic rendered and was con- wheelchair; fined to a they job were aware that prospects his were significantly reduced; time, that a little over three months accident, following they knew Erich had incurred medical $40,000. bills in Liability excess of was not contested and the defen- dant was well aware that damages Burkstrand’s exceeded the $100,000 coverage of that was available for him.
Whether or not the defendant responded to that letter is unclear. February 3,1984, on attorney again Burkstrand’s wrote to attorney defendant’s and advised him that if the amount of coverage paid available was to his client he would release the defen- dant from further under the injuries. Burkstrand’s
The defendant responded that it only would limits if it received a claim Cindy any release from of may she have had under policy, and a Cindy release from Erich and which released any estate from further liability damages to either time, Cindy them. At that might contended that she be entitled to recovery Coverage “A” of the policy separate person as a addition to the maximum amount that was Erich available to as “a person.” words, In other it was her contention that if Messier’s $100,000, did not amount to she was entitled to recover her damages under that part Coverage “A.” 9, 1984, February
On when the defendant to the responded plaintiff’s settlement demand it was aware that unless it received a Cindy’s estate, which included fully claims and released the defense and it would incur the additional the lawsuit would continue though obligation policy, even separate costs which were a paid coverage it had the amount of available. through the exchange correspondence parties continued uncon- attorney demanded
first half of 1984 in which the defen- available and the coverage ditional included for the estate which dant continued to insist on releases attorney During exchanges, plaintiff’s those Cindy’s separate claim. any by Cindy to the amount agreed to waive Erich, from further and to release the estate was available to *6 However, the defendant continued to insist liability to her son. Coverage “A” any might claim that she have under Cindy relinquish $100,000. exchange payment the of It policy the in for of insurance Bennyhoff personally to insist that she also continued any liability. further estate from position it of defendant’s
Through exchanges, all of these damages and defend obligation in attorney that addition to estate, duty a to secure a release the defendant had injuries for paying policy before limits available However, policy in the and the requirement Erich. there was no such any any authority from Montana or provide defendant has failed to impose obligation. such an jurisdiction other which would rate, light of the fact any theory suspect the defendant’s At 23,1984, filed, it tendered the full amount July after suit was that on any release from to Erich into court without coverage of available That amount was Cindy any preconditions to the tender. and without Erich, attorney, his by the court to subsequently distributed interest in it. other creditors who had an apparently to resolve attempted a case the defendant clearly This is where Coverage “A” under its insurance Cindy’s personal claim to Erich undisputedly due by withholding amounts that were policy n underthe same of coverage. That is a violation as follows: provides general frequency as to indicate may, with such person
No following: any practice, do business (13) claims, liability has if become promptly fail to settle the insurance clear, portion one of reasonably under of portions influence under other settlements in order to coverage added.] coverage [Emphasis .... the insurance (13) when language of subsection majority changes plain The that: it states reasonably of a prompt settlement
The insurer must withhold influence a coverage, in order to liability claim under one clear added.] coverage. [Emphasis arising out of another claim and Erich’s goes then on to reason because majority did not coverage leveraging under the same Cindy’s claim arose (13) (13). However, prohibits subsection under subsection occur the insurance portion a claim “under one of leveraging of portions under other of to influence settlements order added.) exactly That is what policy coverage.” (Emphasis Coverage provided payment “A”that in this case. It was happened Bennyhoff policy. because injury three, four, sustained arguably persons who there are at least accident, separate three a result of this there were damages as The maximum that could be Coverage “A.” portions available 100,000. Cindy conceded that she would paid portion under each was $ injuries, attributable to Erich’s but portion waive claim under separate person payment that she was entitled to contended company “A.”The insurance portion Coverage under a different Erich under his undisputed amount due denied claim under Cindy separate would not release her portion because example of a There could never be a clearer portion. the other *7 (13)than exists in this case. violation ofthe literal terms ofsubsection the District Court majority goes on to reason that because The Cindy declaratory judgment to the effect that subsequently issued a portions of and had no claim under other separate person was not a injury, Erich’s she damages were derived from the which However, therefore, subsection not, making separate claim. was (13) separate Cindy’sclaim under says nothing about the merits of decided, they have should policy. The merits were portion of (13) action. What subsection been, declaratory judgment in the the merits of by the insurer about arbitrary is an decision prohibits arbitrary decision impose an effort to Cindy’sseparate claim and individual clearly due some other that are by withholding amounts in Harris point prior is our decision example A clear ofthis like Erich. 393, 202 Mont. Insurance Co. American General v. Life P.2d 1089. case,
In that $10,000 defendant insurer had issued a life plaintiffs to the $10,000 son. An additional coverage was available if the son died accident. Plaintiff’s son died under circumstances that suggested possibility of suicide.
The plaintiff defendant sent a check for the amount due under the policy, basic but payment conditioned on a release of claims due under portion accidental death of the Plaintiff filed suit for payment portions under both punitive and for damages. After suit (as case) was filed in this defendant mailed the check back to the plaintiff without the restrictive endorsement. jury after a trial a verdict was returned denying recovery under the accidental benefits portion policy, of the $30,000 but awarding in punitive plaintiff. to the This Court sustained punitive damage award 33-18-201(13), under the same MCA, § with which we are concerned in this case. We did so based on the defendant’s refusal to pay an undisputed portion of the policy without a release from liability under disputed portion. The fact jury that a subsequently found that the defendant had no liability under the disputed portion was not determinative. The controlling claim, facts were that one undisputed, was was withheld to leverage resolution ofanother claim that disputed. was exactly That is happened what in this case. only difference betweenUam's and personnel this case is the who participated in this Court’s decision. The author of this decision dissented from the Harris decision disagreement because of his (13) subsection gave rise to an action in tort.
The plain language of § and our decision in Harris, create a cause of action plaintiff for the undisputed facts in this case. I would reverse the District Court’s order granting summary judgment on “leveraging” would remand this case to the District Court for a trial to determine the merits of that claim.
II It is equally clear that the defendant violated plain language 33-18-201(6), MCA, when it refused the limits of available Erich for over seven months because of his refusal to release the liability. from further Liability reasonably immediately clear after defendant com- pleted investigation 1983, By 15, accident. December when demand limits, was first made for ofthe the defendant was aware that Erich’s damages greatly exceeded the amount of
287 coverage complete authority available. It had under the terms of the policy to coverage the amounts of available and there was no obligation language in the policy that it obtain a release of its exchange insured in satisfying undisputed for its obligation. The insurance policy was entered into for the protection of Ben- nyhoff estate, only his but to the extent that the terms of the policy provided protection. such
Section hand, on the other was enacted for the protection persons Erich, of third like and he was entitled to its full protection. Bennyhoff’s
Neither policy defendant, insurance with the nor the statutory protection afforded to plaintiff, provide proceeds that from a undeniably which are due a third party, can be used to leverage party that third releasing into obligations tortfeasor from which exceed coverage the amount of he purchased. However, has that by is the result arrived at majority’s protection erosion of the provided legislature. majority’s opinion The depends on interpretation its of the word (6). “settlement” used in subsection Act, Unfair Trade Practices itself, does not However, define the term “settlement.” settlement (1979) defined in Webster’s Collegiate Dictionary New as “an bestowing act of giving possession or legal If sanction ....” obligation defendant had an pay plaintiff pursuant to the terms of Bennyhoff, settling obligation clearly should not require obtaining greater protection than he was to, entitled based on the amount of he had purchased. The majority relies on Thompson v. State Farm Mutual Insurance Co. 207, 423, 161 Mont. 505 P.2d proposition for the requires settlement agreement to release the settlor. using precedent that case as for the result in arrived at this case is an example lifting language from one context transposing it to totally totally unrelated set of purpose. circumstances for a different That case had nothing to do with the issue this case.
The issue in Thompson was whether or not an insurer had damaged by failing its insured against to settle a claim its insured within the policy limits. The evidence party making the third the claim insured, the insured had never offered to release the if Therefore, even the limits had paid. any damage been insured was not a result of the insurer’s failure to settle.
A release was never in Thompson discussed in the context of what “settlement” only means. A release was in Thompson discussed in the damage had fact caused context ofwhether the defendant’s conduct *9 to its insured. context has no relevance to
The discussion of settlement in that statutory duty settlement under the created defining meaning the of that duty in the critical the the Obviously this case. release was to in A release has sought Thompson. to on its insurer impose insured to obligation imposed pay do on the insurer nothing to 33-18-201(6), MCA. of available under amounts only by party appears case to this Court either which to cited obligation in the remotely point determining be on in the defendant’s (Cal. Midcentury App. v. Insurance Co. circumstances Wooster 1990) reason, For is not Rptr. 271 Cal. 664. some this case even Dist. majority opinion. in the discussed Wooster, he alleged purchased that had an plaintiff
In liability policy insurance from the defendant which re- automobile behalf, quired only pay that the not on his but defendant him, alleged defending him. that his insurance also defend He while policy to limits agreement entered into a settlement company obtaining party release of all claims that the third who had without a had him. this conduct injured been He contended that duty negligent. faith the insurer That good breached the of by summary in trial court and judgment claim was dismissed Fourth District. appealed Appeals to the California Cometof it insurer had an appeal, On was the contention his position of financial advantage to take of the claimant’s obligation policy to proceeds distress and use the available would the insured protect extract a release from the claimant which he the claimant. any obligations from further had to to court Appeals remanded the trial be- The California Court to insured ofsettlement keep cause the insurer had failed informed have to resolve his negotiations which would allowed insured obligations same time that the insurer’s were personal at the That held that: satisfied. court participate an a chance to give
An insurer’s failure to insured joint amounts negotiating a settlement ofthe limits by paid limits have to be in excess of which will to may duty of a owed personally constitute breach insured insured.
Wooster, Rptr. 271 Cal. 668. case, that court purposes more this importantly own Unfair of California’s applying provision an identical found when an not excuse a release would Act, absence Trade Practices In due. indisputably were proceeds duty pay policy to insurer’s decision, that court stated: to this language relevant in this concerns of defendants’ Contrary implications to the either insurer must withhold not held that the regard, we have injured policy limits from complete payment of or partial of time unlimited amount the insured an so as to allow claimant limits ofboth the into settlement coerce the claimant fly in the holding would Such a amounts. in-excess-of-pohcy-limits insurers the Insurance imposed upon statutory duties face of of action private cause longer claimants no have Although Code. (Moradi-Shalal v.Fireman’s Code section 790.03 under Insurance 116, 758 287, 250 Rptr. Cal. 46 Cal.3d Companies Fund Ins. (h)(5) of that duty, under subdivision 58), still have a P.2d insurers fair, and prompt, to effectuate section, “attempt[] good faith *10 liability has become in which settlements of claims equitable reasonably clear.” insurer, faced an when it is merely held that
Instead we have limit, it is and when policy amounts over the with a claim for pays if it of its insured even general a unable to obtain pay that it intends to limits, let its insured know must policy thereof, with cooperate and must limits, portion the final policy or to opportunity insured a reasonable give insured and the claim. joint a settlement of attempt to make participate Wooster, Rptr. 271 Cal. 673-74. an insurer to that to allow agree
I the California court the sole injured claimant for limits to an policy withhold he amounts that into settlement of coercing a claimant purpose of limits, spirit violates entitled to over and above may be exactly what 33-18-201(6), that is MCA. letter of and the case. in this opinion with its majority accomplished has him protected Bennyhoff purchased $100,000. he did When Erich in the amount of claims Erich might cause any damages he liability personal he assumed policy. of that in excess Bennyhoff it assumed to sold the the defendant
When under that amounts due under Montana law responsibility nor obligation, no reasonably clear. It had liability was policy when those law to withhold nor Montana either the any right into injured claimant leverage an in order to undisputed amounts settlement or might of amounts that be due from waiver over and policy proceeds. above the decision, majority again
As result of this of this Court has statutory rewritten law so it accords with its own notions of public notions, again, greater protection Those once afford wrongdoers than to innocent victims. reasons,
For these I opinion majority. dissent from the would remand this case to the District Court for trial on the merits 33-18-201(6) plaintiffs claims under MCA. §§ foregoing
JUSTICE HUNT concurs in the dissent of JUSTICE TRIEWEILER.