Penman v. Hartford Accident and Indemnity Company
ORDER granting 2 Motion to Dismiss for Failure to State a Claim. Signed by Judge Dana L. Christensen on 10/10/2017. (ASG)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
OCT 1 0 2017
Clerk, U.S Diatfict Court
District Of Montana
KRISTINA PENMAN, as Guardian ad
Litem for K.W., a minor,
HARTFORD ACCIDENT AND
Before the Court is Defendant Hartford Accident and Indemnity Company's
("Hartford") motion to dismiss. For the reasons explained below, the Court grants
Hartford's motion to dismiss.
BACKGROUND AND PROCEDURAL HISTORY
On April 1, 2016, K. W. (a minor) was riding in the backseat of a vehicle
driven by Skyler Dodson. Dodson was stopped on Highway 93 in Lake County
waiting to tum left onto Walstad Fishing Access Road when a vehicle driven by
Eric Sams ("Sams") ran into the back of Dodson's vehicle traveling at highway
speed. Sams was cited for "Following Too Closely - Reasonable and Prudent."
Mont. Code Ann. § 61-8-329(1) (2015). Sams pled guilty to the citation.
Dodson was not cited in the accident.
The vehicle driven by Sams was insured by Hartford pursuant to a Montana
personal auto liability policy, Policy No. 41PH212387 (the "Policy"), issued to
Nadine Holder and Sallye Sams. Three vehicles were insured under the Policy,
each with a limit of$100,000 per person and $300,000 per accident. Hartford
charged Nadine Holder and Sallye Sams separate, non-uniform premiums for each
vehicle covered. On behalf of Sams, Hartford admitted fault for the accident and
paid Kristina Penman, as Guardian ad Litem for K.W. ("Penman"), the $100,000,
pursuant to the Policy's per person limit. Plaintiff filed a civil lawsuit in the
Montana Twentieth Judicial District, Kristina Penman as Guardian ad Litem for
K. W., a minor v. Hartford Accident and Indemnity Co., Cause No. DV 17-129.
Hartford removed this action to this Court pursuant to diversity of citizenship.
Here, Plaintiff seeks a declaration that the Policy's bodily injury liability
coverage "stacks" with the other two vehicles covered under the Policy, requiring
payment of an additional $200,000 by Hartford. Defendant denied Plaintiffs
claim for benefits under the other two vehicles, arguing that the Policy's liability
coverage is limited to $100,000. Defendant moves to dismiss because the law
does not allow stacking of third-party bodily injury coverage.
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain "a
short and plain statement of the claim showing that the pleader is entitled to
relief." Fed.R.Civ.P. 8(a)(2). The Federal Rules of Civil Procedure allow for
dismissal when the allegations in the pleading "fail to state a claim upon which
relief can be granted." Fed. R. Civ. P. 12(b)(6). Thus, in order to survive a
motion to dismiss, the "complaint must contain sufficient factual matter, accepted
as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (citations and quotation marks omitted). Nonetheless, a
court may dismiss a complaint if it lacks a cognizable legal theory." SmileCare
Dental Group v. Delta Dental Plan of California, Inc., 88 F.3d 780, 782-783 (9th
Cir. 1996). "All allegations of material fact are taken as true and construed in the
light most favorable to the plaintiff." Id.
Limits on Per Person Coverage
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
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.
The Court agrees that under general contract interpretation principles, the
Policy is unambiguous that the limitation of bodily injury coverage for one person
is $100,000. With respect to liability coverage, the Policy states:
Regardless the limit of liability shown in the Declarations for each
person is for Bodily Injury Liability is our maximum limit of liability
for all damages, including damages for case, loss of services or
death, arising out of bodily injury sustained by any one person in
any one auto accident. ... This is the most we will pay regardless of
the number of:
2. Claims made;
3. Vehicles or premiums shown in the Declarations; or
4. Vehicles involved in the auto accident.
(Doc. 3-1 at 20.) The Policy's limitation of liability provision is clear and
unambiguous as a matter of law and plainly prohibits stacking. There is no
dispute that this declaratory action involves only one person. (Doc. 5 at 2.)
Recently in a related case, the undersigned held that stacking does not apply
to third-party liability coverage. See Durbin v. Mountain West Farm Bureau
Mutual Ins. Co., 16-40-M-DLC, Doc. 32, (August 17, 2017). This Court found
that "[p]ursuant to Montana law, if a motor vehicle liability policy provides for a
limitation of liability, then the anti-stacking statute does not apply." Durbin, Doc.
32 at 6.
Similar to the policy in Durbin, the Policy here provides for a limitation of
liability that prohibits stacking of third-party coverage. The clear and
unambiguous Policy language here limits the total bodily injury coverage per
person to $100,000. Thus, the Court finds that the Policy clearly states that there
is a monetary limit for bodily injury coverage per person, and that Hartford will
not allow stacking liability coverage if the incident involves only one person.
"Insureds" under the Policy
Next, Hartford claims that the Plaintiffs are not "Insureds" under the Policy.
The Policy's "PART A-Liability Coverage" defines an "Insured" as:
"Insured" as used in this Part means:
1. You or any family member for the ownership, maintenance
or use of any auto or trailer.
2. Any person using your covered auto.
3. For your covered auto, any person or organization but only
with respect to legal responsibility for acts or omissions of a
person for whom coverage is afforded under this Part.
4. For any auto or trailer, other than your covered auto, any
other person or organization but only with respect to legal
responsibility for acts or omissions of you or any family
member for whom coverage is afforded under this Part....
(Doc. 3-1 at 18.) Hartford contends that neither the Plaintiff nor K.W. are named
Insureds, permissive users, or are liable for the conduct of an insured. Further, the
Plaintiff does not allege that she or K.W. qualify as an "Insured" under the Policy.
Thus, since they are not "Insureds," neither the Plaintiff nor K.W. can stack
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 ifthe 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 1377, 1380 (Mont. 1995), the Montana Supreme Court
determined that "[the claimant] was a passenger who neither had 'reasonable
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
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.
Furthermore in Durbin, the undersigned relied on Morris and Hecht, and
agreed that if a plaintiff is not a qualified "Insured" person under the Policy, the
plaintiff is "not entitled to stack the bodily injury coverage." Durbin, Doc. 32 at 9.
Here, reading the plain language of the Policy, neither the Plaintiff nor K.W.
were named in the Policy as "Insured" persons and neither were driving the
insured vehicle as permissive users at the time of the accident. Plaintiff, on behalf
of K.W., is simply a third-party claimant only entitled to bodily injury coverage
for K.W. in the stated amount of$100,000.
Additionally, the facts presented in this case are even less favorable to
stacking third-party liability than those presented in Morris, Durbin, and Hecht.
In Morris and Durbin, the Courts found that stacking was inapplicable even
though the insured had assigned its rights in the policy to the plaintiff. Morris,
Doc. 64 at 2; Durbin, Doc. 32 at 9. In Hecht, Judge Morris also found that
stacking was inapplicable even though the insurance company charged identical
premiums for the recreational vehicles at issue. CV 15-40-GF-BMM, Doc. 28 at
1. Here, in contrast, there has been no assignment of rights by the Insured to the
Plaintiff. Further, each vehicle under the Policy has its own premium assigned to
it by assessing the individualized risk of the vehicle. Thus, the third-party liability
coverages in this case are even more directly tied to the specific vehicles under the
Policy, and therefore should not be stacked.
Thus, because Plaintiffs are not "Insured" persons under the Policy, they are
not entitled to stack the bodily injury liability coverage. 1
Because third party liability coverages are not stackable in Montana, Montana Code
Annotated § 33-23-203 is inapplicable when applied to an insurer that is attempting to avoid the
stacking of third party liability limits. Thus, the Court need not further address Montana's antistacking statute.
Accordingly, IT IS ORDERED that:
(1) Defendant's motion to dismiss (Doc. 3) is GRANTED.
(2) The Clerk of Court is directed to enter judgment in favor of Defendant
and against Plaintiffs. This case is CLOSED.
DATED this I 0
~ay of October, 20
Dana L. Christensen, Chief District Judge
United States District Court
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