Durbin et al v. Mountain West Farm Bureau Mutual Insurance Company

Filing 32

ORDER granting 16 Motion for Summary Judgment; denying 20 Motion for Summary Judgment; denying 27 Motion to Certify. Signed by Judge Dana L. Christensen on 8/17/2017. (ASG)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
MISSOULA DIVISION

FILED
AUG 1 7 2017
Clerk, U S District Court
District Of Montana
Missoula

CV 16-40-M-DLC

WILLIAM DURBIN and CAROL
DURBIN,

ORDER

Plaintiffs,
vs.
MOUNTAIN WEST FARM BUREAU
MUTUAL INSURANCE COMPANY,
Defendant.

Before the Court is Defendant Mountain West Farm Bureau Mutual
Insurance Company's ("Mountain West") motion for summary judgment, Plaintiff
William Durbin and Carol Durbin's ("Plaintiffs") cross motion for summary
judgment, and Plaintiffs' motion to certify motor vehicle liability insurance
stacking questions to the Montana Supreme Court. For the reasons explained
below, the Court grants Mountain West's motion for summary judgment and
denies Plaintiffs' motions.
BACKGROUND AND PROCEDURAL HISTORY

On July 10, 2014, Plaintiffs sustained personal injuries in a motor vehicle
accident. The vehicle was operated by Holly Bemer, and owned by AEC, Inc.

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Mountain West provided coverage to its insureds, Bemer and AEC, Inc., pursuant
to Policy No. BPM04242 (the "Policy"). Plaintiffs filed a civil lawsuit in the
Montana Twenty-First Judicial District, William and Carol Durbin v. Holly Berner
and AEC, Inc., Cause No. DV 14-112. The parties settled, and as part of that

agreement, Mountain West's insureds confessed judgment in the amount of
$1,500,000. 1 Mountain West paid the policy limits of$500,000 to Plaintiffs.
Here, Plaintiffs seek a declaration that the Policy's bodily injury liability
coverage "stacks," requiring payment of an additional $1,000,000 by Mountain
West. In its Counterclaim, Mountain West seeks a declaration that the Policy's
liability coverage is limited to $500,000. The parties both move for summary
judgment on this legal issue. Plaintiffs also move the Court to certify the issue of
stacking of bodily injury liability coverage to the Montana Supreme Court.
LEGAL STANDARD

A party is entitled to summary judgment if it can demonstrate 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). Summary judgment is warranted where
1

Holly Berner, AEC, Inc. and Mountain West entered into a "Settlement Agreement and
Assignment of Claims" on November 9, 2015. (Doc. 3-2.) As part of this agreement, Berner and
AEC, Inc. confessed judgment in the amount of $1,500,000, assigned their rights under the
Mountain West policy, and Plaintiffs agreed not to execute on any judgment they receive against
assets of the Defendants. This agreement further contemplated the filing of the subject action
and capped the Plaintiffs' damage recovery at $1,500,000.
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the documentary evidence produced by the parties permits only one conclusion.
Anderson v. Liberty Lobby, Inc., 4 77 U.S. 242, 251 (1986). Only disputes over

facts that might affect the outcome of the lawsuit will preclude entry of summary
judgment; factual disputes that are irrelevant or unnecessary to the outcome are
not considered. Id. at 248. In ruling on a motion for summary judgment, a court
must view the evidence "in the light most favorable to the opposing party." Tolan
v. Cotton, 134 S. Ct. 1861, 1866 (2014) (quoting Adickes v. S.H Kress & Co., 398

U.S. 144, 157 (1970)). "[T]he evidence of the nonmovant is to be believed, and
all justifiable inferences are to be drawn in his favor." Id. at 1863 (quoting
Anderson, 477 U.S. at 255).

Pursuant to Rule 15 of the Montana Rules of Appellate Procedure, a federal
district court in Montana Court may certify questions to the Montana Supreme
Court for instruction. See Mont. R. App. P. 15(3). "The decision to certify a
question to a state supreme court rests in the 'sound discretion' of the district
court." Eckard Brandes, Inc. v. Riley, 338 F.3d 1082, 1087 (9th Cir.2003)
(quoting Louie v. United States, 776 F.2d 819, 824 (9th Cir.1985)). Even where
state law is unclear, resorting to the certification process is not obligatory.
Lehman Bros. v. Schein, 416 U.S. 386, 390 (1974). "If the state's highest

appellate court has not decided the question presented, then [a United States
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District Court] must predict how the state's highest court would decide the
question." Orkin v. Taylor, 487 F.3d 734, 741 (9th Cir. 2007). In the absence of
Montana Supreme Court precedent, a federal district court sitting in Montana may
look to decisions from other jurisdictions, other relevant state cases, and secondary
sources such as the Restatement to determine how the Montana Supreme Court
would resolve the issues. Eckard Brandes, 338 F.3d at 1087.
ANALYSIS

I.

Stacking of Bodily Injury Coverages
The usual principles of contract interpretation apply in this case. It is well-

established in Montana that the "construction and interpretation of a contract is a
question of law" for the court to decide. Corporate Air v. Edwards Jet Center, 190
P .3d 1111, 1120 (Mont. 2008). When "the language of an agreement is clear and
unambiguous, and as a result, susceptible to only one interpretation, the court's
duty is to apply the language as written." Rich v. Ellingson, 174 P.3d 491, 495
(Mont. 2007). The court is to '"give effect to the mutual intention of the parties as
it existed at the time of contracting, so far as the same is ascertainable and
lawful."' Corporate Air, 190 P .3d at 1120 (quoting Mont. Code Ann. §
28-3-301). To that end, the court must read the contract as a whole, giving
"effect to every part if reasonably practicable, each clause helping to interpret the
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other." K&R Partnership v. City of Whitefish, 189 P.3d 593, 600 (Mont. 2008)
(quoting Mont. Code Ann.§ 28-3-202). If the terms of a contract are clear, "the
court must determine the intent of the parties from the wording of the contract
alone." Rich, 174 P.3d at 495.

A.

Limitation of a single claim

First, Mountain West argues that its Policy clearly limits coverage to
$500,000 per accident, regardless of the number of autos covered or premiums
charged. The Policy defines an "accident" as a "continuous or repeated exposure
to the same conditions resulting in 'bodily injury' or 'property damage."' (Doc. 31 at 17.) The Policy further states on the Declaration Page that the "LiabilityCombined Single Limit" is "$500,000." (Doc. 3-1at6.) Thus, Mountain West
contends that because the parties agree that only one accident caused the
Plaintiffs' injuries, the "combined single limit" of $500,000 for the one accident is
the limit Mountain West is obligated to pay under the Policy.
The Court agrees that under general contract interpretation principles, the
Policy is unambiguous that the limitation of bodily injury coverage for one
accident is $500,000. With respect to liability coverage, the policy states:

C.

Limits of Insurance.

Regardless of the number of covered "autos", "insureds", premiums
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paid, claims made or vehicles involved in the "accident", the most we
will pay for the total of all damages ... resulting from any one
"accident" is the Limit of Insurance for Liability Coverage shown in
the Declarations.
(Doc. 3-1 at 13). There is no dispute that this declaratory action involves only one
accident. (Doc. 12 at 2.) Pursuant to Montana law, if a motor vehicle liability
policy provides for a limitation of liability, then the anti-stacking statute does not
apply. Mont. Code Ann.§ 33-23-203(1) (2015). The clear and unambiguous
Policy language here limits the total bodily injury coverage per accident to
$500,000. Thus, the Court finds that the Policy clearly states that there is a
monetary limit for bodily injury coverage per accident, and that the insurer will
not allow stacking liability coverage if the incident involves only one accident.

B.

"Insureds" under the Policy

Next, Mountain West claims that the Plaintiffs are not "Insureds" under the
Policy. The Policy's "Section II - Liability Coverage" defines an "Insured" as:
1.

Who is An Insured
The following are "insureds":
a. You for any covered "auto",
b. Anyone else while using with your permission a covered "auto"
you own, hire or borrow except: ... ,
c. Anyone liable for the conduct of an "insured" described above
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but only to the extent of that liability.
(Doc. 3-1 at 10.) Mountain West contends that the Plaintiffs are not named
Insureds, permissive users, or liable for the conduct of an insured. Thus, if they
are not "insureds," the Plaintiffs cannot stack coverage here.
United States District Court Judge Brian Morris decided this exact issue in

Hecht v. Mountain West Farm Bureau Mut. Ins. Co., CV 15-40-GF-BMM, Doc.
28 (March 3, 2016). In Hecht, Judge Morris found that "Montana law allows a
claimant to stack multiple insurance coverages only if the claimant can show that
he or she qualifies as an "insured" under all of the coverages to be stacked." Id.
(citing Lierboe v. State Farm Mut. Auto. Ins. Co., 73 P.3d 800, 803 (Mont. 2003)).
The Montana Supreme Court in Lierboe refused to allow the claimant to stack
medical payment coverage provided under two insurance policies because she
qualified as an "insured" under only one of the policies. Id. Thus, the Court
found that Lierboe had no expectation of coverage under the policy as she was not
a qualified insured, and that the anti-stacking holding in its previous ruling,

Ruckdaschel v. State Farm Mut. Auto. Ins. Co., 948 P.2d 700 (Mont. 1997), did
not apply. Lierboe, 73 P.3d at 803. Judge Morris also acknowledged that in

Chi/berg v. Rose, 903 P .2d 13 77, 13 80 (Mont. 1995), the Montana Supreme Court
determined that "[the claimant] was a passenger who neither had 'reasonable
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expectations' of coverage under the policy nor did he qualify as an insured spouse
or family member under more than one policy." Id. Consequently, when
reviewing Montana case law, Judge Morris found that Hecht failed to qualify as an
insured under the Policy and was not entitled to stack the policy liability
coverages.
Similarly, in Morris v. Bishop and Progressive Northwestern Insurance

Company, CV 16-6-BU-SHE, Doc. 64 (November 2, 2016), United States District
Court Judge Sam Haddon found that the third-party claimant was not an "insured"
under the policy. Judge Haddon determined that under the Progressive policy, the
only "insured" was Bishop, who was the named "insured," and that Robinson
(who died as a result of the accident and was being represented by his estate) "was
not using a vehicle listed as a covered auto under the Policy at the time of the
accident, was not a relative of Bishop, and did not incur vicarious liability." Id. at
5-6. Judge Haddon also addressed the issue of assignments. He found that even
though the plaintiffs were assigned the rights of the first-party claimant pursuant
to the underlying stipulated judgment, "[P]laintiffs are persons entitled by law
only to seek the benefits of third-party coverage available to Bishop under the
Insuring Agreement." Id. at 7. Judge Haddon concluded that notwithstanding the
assignment, the plaintiffs could not claim status as first-party claimants. Id. at 8.
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Here, reading the plain language of the Policy, the Plaintiffs are not named
in the Policy as "Insured" persons and were not driving the insured vehicle as
permissive users at the time of the accident. They are simply third-party claimants
entitled to bodily injury coverage in the stated amount of $500,000.
Thus, regardless of Plaintiffs' status, whether they are third-party claimants
or assignees stepping into the shoes of the insureds, they are not "Insured" persons
under the Policy, and thus are not entitled to stack the bodily injury liability
coverage. Consequently, Mountain West's motion for summary judgment is
granted. 2
C.

Equitable Estoppel

To the extent that Plaintiffs argue that Mountain West should be equitably
estopped from challenging Durbin' s assigned status as an "Insured" under the
Policy, that argument is without merit. Mountain West does not challenge the
Plaintiffs' assigned status or the validity of the assignment. Mountain West
merely contends that as assignees, they are not automatically transformed into
"Insured" persons and nowhere in the settlement agreement did Mountain West
agree to designate William Durbin or Carol Durbin as an "Insured."

2

The Court need not address the issue of whether Montana Code Annotated §
33-23-203, Montana's anti-stacking statute, applies.
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The Settlement Agreement and Assignment of Claims, states that:
(c) Defendants hereby assign to Plaintiffs all of their rights arising under
and related to Mountain West Farm Bureau Mutual Insurance Company
Policy No. BPM04242, and any other policy of insurance held by
Defendants, and any excess coverage under such policies, to the extent such
policies may provide coverage for the acts and omissions that are the subject
of the Civil Cause identified above. This assignment includes any and all
claims at law and in equity including, but not limited to, those regarding
insurance coverage, procurement or claims handling practices, including,
but not limited to, any claims for negligence, negligent misrepresentation,
breach of contract, breach of the implied covenant of good faith and fair
dealing, violations of the Montana Unfair Claims Practices Act, and
common law bad faith.
(Doc. 3-2 at 4.) The Court finds that the assignment does not specifically
designate the Plaintiffs as "Insureds." Therefore, Mountain West is not equitably
estopped from making the argument that the Plaintiffs are not Insureds under the
Policy.

II.

Certification to the Montana Supreme Court
Pursuant to the Court's analysis above, the question of stacking of bodily

injury liability coverage is not appropriate to certify to the Montana Supreme
Court. The Court analyzed similar case law and determined the issues through
basic contract and statutory interpretation, as did Judges Morris and Haddon in the
previously discussed cases. Thus, Plaintiffs' motion to certify is denied.
Accordingly, IT IS ORDERED that:

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(1) Defendant's motion for summary judgment (Doc. 16) is GRANTED.
(2) Plaintiffs' cross motion for summary judgment (Doc. 20) is DENIED.
(3) Plaintiffs' motion to certify a question of law to the Montana Supreme
Court (Doc. 27) is DENIED.
(4) The Clerk of Court is directed to enter judgment in favor of Defendant
and against Plaintiffs. This case is CLOSED.
DATED this L-=rftaay of August, 2

~s~trict

Dana L.
United States District Court

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Judge