Locke v. Estate of Davis

May 26 2015

DA 14-0332
Case Number: DA 14-0332

IN THE SUPREME COURT OF THE STATE OF MONTANA

2015 MT 141

AMY LOCKE,

Plaintiff and Appellee,

v.

ESTATE OF MARIAN DAVIS,

Defendant and Appellant.

APPEAL FROM: District Court of the Eighteenth Judicial District,
In and For the County of Gallatin, Cause No. DV 12-624A
Honorable Mike Salvagni, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Paul N. Tranel, Katie C. Guffin, Bohyer, Erickson, Beudette & Tranel, PC,
Missoula, Montana

For Appellee:

Daniel B. Bidegaray, Bert J. Certain, Bidegaray Law Firm, LLC, Bozeman,
Montana

For Intervenor:

Brooke B. Murphy, Adrianna Potts, Matovich, Keller & Murphy, P.C.,
Billings, Montana

Submitted on Briefs: February 18, 2015
Decided: May 26, 2015

Filed:

__________________________________________
Clerk
Justice Patricia Cotter delivered the Opinion of the Court.

¶1 This case arises out of a motor vehicle accident that occurred in May 2011, in Three

Forks, Montana. Marian Davis lost control of her vehicle and struck the vehicle driven by

Amy Locke. Davis suffered fatal injuries in the collision and died several hours later. Locke

also sustained injuries as well as post-traumatic stress disorder.

¶2 At the time of the accident, Davis was insured by Safeco Insurance Company under a

policy with a $100,000 per person coverage. In August 2012, Locke filed a claim for

damages against Davis’s estate in the Eighteenth Judicial District Court. Prior to trial,

Safeco paid Locke $16,306.40 for her past medical expenses. Following a three-day trial

conducted in February 2014 and addressing damages only, the jury returned a verdict

awarding Locke $400,000 in compensation for her injuries and the District Court awarded

her approximately $1,800 in costs. The Estate sought amendment of or relief from the

judgment. The District Court denied the motion. The Estate appeals. Safeco intervenes.

We affirm in part and vacate and remand in part.

ISSUES

¶3 The Estate presents the following restated issue:

¶4 Did the District Court abuse its discretion in denying the Estate’s motion to alter or

amend the judgment?

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¶5 Safeco, as intervenor, presents the following issue:

¶6 Did the District Court abuse its discretion when it made findings and conclusions that

effectively bind Safeco to a judgment in a case in which Safeco was not a named party, was

not represented by counsel, and did not appear?

FACTUAL AND PROCEDURAL BACKGROUND

¶7 On May 26, 2011, at approximately 6:15 p.m., Marian Davis was driving south on

Main Street, heading into Three Forks. Amy Locke was driving north on the same road.

Davis lost control of her car and traveled into the oncoming lane, striking Locke’s vehicle.

Both vehicles came to rest on the side of the road in a gravel lot. Davis sustained life

threatening injuries and died later that night. Locke suffered multiple physical and emotional

injuries. In July 2011, the Estate of Marian Davis (Estate) was opened. As required under

§ 72-3-801, MCA, notice to creditors was published notifying all persons with claims against

Davis to present their claims within four months of publication of notice.

¶8 In August 2012, Locke filed a complaint against the Estate alleging negligence and

negligence per se on the part of Davis. In October 2012, she filed a Statement of Damages in

which she described her injuries including a broken left hand and soft tissue injuries to her

thoracic, cervical, and left shoulder areas. She also claimed that she suffered from anxiety,

depression, irritability, and insomnia as a result of the accident. She asserted damages in

excess of $250,000. Safeco paid Locke the sum of $16,306.40 for medical expenses. Prior

to trial and on more than one occasion, Locke offered to settle her claim against the Estate

within the Safeco policy limits but Safeco rejected her offers.

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¶9 The District Court conducted a jury trial on February 25–27, 2014. The Estate

admitted Davis’s liability for causing the accident; therefore, the case was tried solely on

damages. At the conclusion of the trial, the jury awarded $400,000 plus interest to Locke for

damages suffered as a result of the accident. Judgment was entered on the same day and the

court awarded Locke $1,825.18 in costs.

¶10 On March 24, 2014, the Estate filed a motion to alter or amend the judgment under M.

R. Civ. P. 59(e), or alternatively for relief from the judgment under M. R. Civ. P. 60(b)(6). It

argued that the judgment should be reduced to $100,000, i.e., the limit of Davis’s auto

liability policy. The Estate asserted that under § 72-3-803, MCA, any claim arising from the

accident and seeking damages in excess of the limits of Davis’s insurance protection must be

presented within four months of the publishing of the Notice to Creditors or within one year

of Davis’s death, or it is barred. The Estate noted that Locke did not file her complaint until

August 2012, more than fifteen months after Davis’s death and over one year after the Notice

to Creditors was published. It claimed, therefore, that Locke could enforce the judgment

against the Estate “to the limits of the insurance protection only.” The Estate also contended

that the $16,306.40 Locke received in advance payments for past medical expenses should

be credited against the $100,000 limit thus entitling Locke to the remaining balance of

$83,693.60 only. The Estate also argued that Locke was prohibited from collecting a

judgment against Safeco because Safeco was not a party to the action. Locke opposed the

motion.

¶11 On April 30, 2014, the District Court denied the Estate’s motion. Relying on Goettel

v. Estate of Ballard, 2010 MT 140, 356 Mont. 527, 234 P.3d 99, the court reasoned that (1)

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Locke had offered on several occasions to settle her claim within the available policy limits

and to release the Estate and Safeco; (2) Safeco rejected the offers and forced Locke to trial;

(3) Locke obtained a $400,000 jury verdict; and (4) Safeco continued to refuse to pay the

remaining liability policy limits. The court declined to reduce the amount of the judgment.

The court also noted that under Goettel, § 72-3-803, MCA, does not protect a liability insurer

from an excess judgment and that Safeco waived the policy limits when it rejected Locke’s

offers to settle.

¶12 In May 2014, the Estate appealed the court’s April 30 order. Subsequently, we

granted Safeco’s motion to intervene. We affirm in part and vacate in part the District

Court’s April order and remand for proceedings in accordance with this Opinion.

STANDARD OF REVIEW

¶13 We review a district court’s denial of a motion pursuant to M. R. Civ. P. 59 for an

abuse of discretion. In re Marriage of Anderson, 2013 MT 238, ¶ 13, 371 Mont. 321, 307

P.3d 313.

¶14 We review a district court’s ruling on a motion pursuant to M. R. Civ. P. 60(b) based

upon the nature of the final judgment, order, or proceeding from which relief is sought and

the specific basis of the motion. Generally, we review the district court’s ruling for an abuse

of discretion. Exceptions to the general rule include motions made under Rule 60(b)(2),

(b)(4), or where relief from a default judgment is sought. Given the facts of this case, the

abuse of discretion standard applies. Orcutt v. Orcutt, 2011 MT 107, ¶ 5, 360 Mont. 353,

253 P.3d 884 (internal citations omitted).

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¶15 A district court’s interpretation of a statute is a conclusion of law which we review for

correctness. Mont. State Fund v. Simms, 2012 MT 22, ¶ 15, 364 Mont. 14, 270 P.3d 64.

DISCUSSION

¶16 Did the District Court abuse its discretion in denying the Estate’s motion to alter or
amend the judgment?

¶17 The Estate does not dispute that Locke is entitled to the $100,000 insurance policy

limit. It argues that the District Court failed to apply the plain language of § 72-3-803(3)(b),

MCA, when it allowed the entire judgment of $401,825.18, inclusive of costs and plus

interest, to stand against the Estate rather than reducing the judgment to the $100,000 auto

liability policy limit. The Estate further claims that the advance medical payments of

$16,306.40 and any costs and interest must be subsumed within the policy limits.

¶18 Title 72, Chapter 3, Part 8 of the MCA addresses, among other things, a creditor’s

claims against an estate. Section 72-3-801(1), MCA, provides:

Unless notice has already been given under this section, a personal
representative upon appointment shall publish a notice once a week for 3
successive weeks in a newspaper of general circulation in the county announcing
the personal representative’s appointment and address and notifying creditors of
the estate to present their claims within 4 months after the date of the first
publication of the notice or be forever barred.

Section 72-3-803, MCA, provides in relevant part:

(1) All claims against a decedent’s estate that arose before the death of the
decedent . . . are barred against the estate, the personal representative, and the
heirs and devisees of the decedent unless presented within the earlier of the
following time limitations:
(a) within 1 year after the decedent’s death; or
(b) within the time provided . . . in 72-3-801(1) for all creditors barred by
publication. . . .
. . .

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 (3) This section does not affect or prevent:
. . .
(b) to the limits of the insurance protection only, any proceeding to establish
liability of the decedent or the personal representative for which the decedent or
the personal representative is protected by liability insurance;
. . .

¶19 Whereas §§ 72-3-801(1) and 72-3-803(1), MCA, require a claimant to bring a claim

within four months of publication of notice to creditors or not later than one year after the

decedent’s death, § 72-3-803(3)(b), MCA, allows a late-filing claimant to commence an

action against the decedent if the decedent was insured. Under such circumstances, however,

a claimant may not have judgment against an estate in excess of the limits of the liability

insurance policy. Consequently, the Estate is correct that Locke cannot execute against the

Estate for more than the $100,000 insurance limitation. Locke concedes this but argues that

the full judgment should remain intact because it provides the basis for her to pursue an

excess judgment against Safeco, as allowed by Goettel.

¶20 In Goettel, Goettel and Ballard were involved in an automobile accident caused by

Ballard turning in front of Goettel. Both drivers were seriously injured and Ballard later died

from his injuries. Casualty Insurance Company insured Ballard and Ballard’s policy had a

$300,000 per person limit. Goettel, ¶¶ 3, 6. Goettel did not file his claim within one year of

Ballard’s death but later petitioned the district court to reopen Ballard’s estate to enable

Goettel to pursue claims against Casualty and to seek uninsured motorist coverage from his

own insurer, Progressive Northwestern Insurance Company. Goettel, ¶ 4. The district court

granted Goettel’s petition and Goettel filed his complaint. Goettel, ¶¶ 4-5. Casualty initially

paid approximately $74,000 to Goettel for medical expenses and wage loss. Goettel, ¶ 6.

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¶21 Subsequently, Goettel offered to settle with Casualty for the remainder of the

$300,000 policy limits but Casualty rejected the offer and submitted a counteroffer. Goettel

declined the counteroffer and indicated in writing that the settlement negotiations were

terminated. Shortly thereafter, Casualty issued a check to Goettel for $226,234.46, i.e., the

remainder of the policy limits. Goettel accepted the check and cashed it but did not sign a

release. Goettel, ¶¶ 6-7. The district court then dismissed Casualty from the proceeding and

granted the Ballard estate’s motion for summary judgment. Goettel, ¶ 8. Progressive paid

Goettel the policy limits of its uninsured motorist coverage and was also dismissed from the

lawsuit. Goettel, ¶ 9.

¶22 Goettel appealed the district court’s summary judgment ruling in favor of Ballard’s

estate, arguing that the court prematurely terminated the litigation and prevented Goettel

from establishing the measure of his damages at trial. He claimed that he intended to

establish that his damages were in excess of the policy limits paid by Casualty and that

because Casualty had failed to pay the policy limits in a timely manner, it had “waived”

those limits and was liable for the excess damages. Goettel, ¶¶ 13-14. Goettel

acknowledged that he could not collect any portion of the established excess damages from

the Ballard estate because he had not complied with the one-year filing limit in § 72-3-

803(1)(a), MCA, but he argued that § 72-3-803, MCA, does not shield insurers against

excess claims brought under the Montana Unfair Trade Practices Act. We agreed, citing

Gibson v. Western Fire. Ins. Co., 210 Mont. 267, 682 P.2d 725 (1984), that

an insurer which in bad faith fails to settle a bona fide third party liability
claim against its insured, within policy coverage limits, takes the risk of a
judgment by the trier of fact in excess of the coverage limits. The effect of

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 such bad faith is to open the policy coverage limits to the extent of the trial
result.

Goettel, ¶ 19.

¶23 We concluded that “the limits of the insurance protection only” referenced in

§ 72-3-803(3)(b), MCA, may be waived by an insurer under certain circumstances, rendering

the insurer liable for an excess judgment, and that Casualty’s eventual payment of the policy

limits did not necessarily negate the insurer’s liability for an excess judgment. We ordered

the district court to allow the action to proceed and to allow Goettel to establish the amounts

of his damages. Goettel, ¶ 27.

¶24 The Estate challenges the District Court’s reliance on Goettel. While there are

similarities between these two cases, Goettel is clearly distinguishable in that Goettel had

named the liability insurance carrier, Casualty, as a party defendant in his lawsuit, whereas

Locke did not file suit against Safeco. However, insofar as Goettel addresses the limits of

recovery available against an estate by a claimant who has failed to comply with the one-year

filing limit set forth in § 72-3-803(1)(a), MCA, it is instructive.

¶25 In Goettel, we concurred with Goettel’s concession that because he had failed to

present a claim against Ballard’s estate within one year of Ballard’s death, he could recover

against the estate only to the extent that it was protected by insurance. Goettel, ¶ 17. Under

the applicable statutes, the same result is compelled here. Notwithstanding the amount of the

jury’s award, Locke is precluded from recovering against the Estate any amount in excess of

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the limits of the liability policy in the sum of $100,000.1 However, in light of the possibility

that Locke will pursue recovery of the amount of the jury’s award in excess of $100,000

against Safeco, and without comment on the merits of that possible claim, we decline to set

aside the jury’s verdict.

¶26 The Estate also argues on appeal that the District Court abused its discretion when it

refused to reduce Locke’s $100,000 liability policy recovery against the Estate by the

amount of advance medical expense payments Safeco paid to Locke in the sum of

$16,306.40. Locke counters that because the jury’s award did not apportion any sums to past

or future medical expenses, there should be no offset. We disagree. The full limits of

liability under the policy were $100,000, and there was no separate coverage available for

medical payments. Therefore, the District Court abused its discretion in refusing to reduce

the Estate’s $100,000 liability to Locke by the amount of the advance payments.

¶27 Accordingly, we vacate the District Court’s April 30, 2014 order and remand. Upon

remand, the court is directed to issue a new order which will: (1) uphold the jury award of

$400,000 and the court’s award of costs; (2) expressly provide that Locke is precluded from

executing against the Estate for any amount in excess of the $100,000 in insurance proceeds

and that the Estate is relieved from any judgment in excess of $100,000; (3) offset the

$100,000 insurance limits by the amount of advanced medical payments Locke has received;

and (4) preclude Locke from collecting any additional costs, fees, and interest over the

$100,000 policy limit from the Estate.

1
This interpretation and application of § 72-3-803(3)(b), MCA, is consistent with that of other
jurisdictions with similarly-worded statutes. See Corlett v. Smith, 763 P.2d 1172, ¶¶ 10-11 (N.M.

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¶28 Did the District Court abuse its discretion when it made findings and conclusions that
effectively binds Safeco to a judgment in a case in which Safeco was not a named
party, was not represented by counsel, and did not appear?

¶29 As noted above, Safeco was not a named party in the action of Locke v. Estate of

Davis. Nonetheless, in its order denying the Estate’s post-trial motions, the District Court

concluded that Safeco had refused to settle Locke’s claims against the Estate within policy

limits and had “forced” her to trial. The court also concluded that even after Locke obtained

a jury verdict in the sum of $400,000, Safeco continued to refuse to pay the remaining policy

limits. The court concluded that Safeco had opened up the policy limits when it had rejected

Locke’s offer of settlement, and that, under § 72-3-803(3)(b), MCA, the “limits of the

insurance protection only” language of the statute may be waived and require imposition of

liability against the insurer for an excess judgment. The court observed that Safeco had

demanded that Locke file a notice of satisfaction of judgment for an amount less than the

amount of the judgment that she rightfully obtained, before it would pay her the remaining

balance of the policy limits. Given these circumstances, the court refused to alter or amend

the judgment.

¶30 After the Estate filed its notice of appeal, Safeco sought intervention in the appeal,

arguing that the District Court’s determination that it had waived its policy limits and could

be liable for the excess verdict against the Estate was improper. Safeco argued that it should

not be bound by a District Court order and judgment assessing its conduct when it was not a

party to the proceedings below and was not represented by counsel. Locke objected to the

motion to intervene, but the Estate did not. We granted Safeco’s motion.

App. 1988), and Harden v. Allstate Ins. Co., 883 F. Supp. 963, 974-75 (D. Del. 1995).

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¶31 Safeco maintains in its brief on appeal that the District Court erroneously made

determinations about Safeco’s ostensible misconduct during the underlying proceeding that

could subject the insurer to excess judgment liability. Safeco argues that the contents of the

court’s April Order are not binding on it because the District Court did not have jurisdiction

to enter judgment against it as a non-party. It asserts that to the extent the order may be

construed as adjudicating an issue that was not before the court, the order should be vacated.

¶32 We agree with Safeco. Safeco was not a party to the trial proceeding. There is

accordingly no record establishing the grounds for Safeco’s refusal to settle within policy

limits, establishing that it engaged in misconduct constituting bad faith, or supporting a

determination that Safeco has waived its policy limits by virtue of its conduct. The District

Court therefore erred in making these findings against Safeco. Accordingly, upon remand,

the District Court’s revised order shall not include any findings or conclusions regarding

Safeco’s conduct.

CONCLUSION

¶33 For the foregoing reasons, we vacate the District Court’s April 30, 2014 Order and

remand to the District Court for issuance of an amended order in accordance with this

Opinion.

/S/ PATRICIA COTTER

We Concur:

/S/ MIKE McGRATH
/S/ BETH BAKER
/S/ JIM RICE
/S/ LAURIE McKINNON

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