No. 85-41
I N THE SUPREME COURT OF THE STATE O F MONTANA
1985
STACEY J O HUBBEL, I n d i v i d u a l l y and
as G u a r d i a n ad L i t e m of BROOKE ANNE
HUBBEL, e t a l . ,
P l a i n t i f f s and R e s p o n d e n t s ,
THE WESTERI? F I R E INSURANCE COMPANY
and STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
D e f e n d a n t and A p p e l l a n t ,
APPEAL FROM: D i s t r i c t C o u r t of t h e F o u r t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e C o u n t y of R a v a l l i ,
T h e H o n o r a b l e J a m e s B. W h e e l i s , Judge p r e s i d i n g .
COUNSEL O F RECORD:
For A p p e l l a n t :
W i l l i a m s Law Firm; R i c h a r d R a n n e y argued, ? 4 i s s o u l a ,
Montana
For Respondents:
Recht & Greef; John D. Greef argued, H a m i l t o n ,
Montana
Submitted: July 25, 1 9 8 5
Decided: September 10, 1985
Filed: SEP 1 0 4985
Clerk
Mr. Justice Frank B. Morrison, Jr., delivered the Opinion of
the Court.
State Farm Mutual Automobile Insurance Company (State
Farm) appeals the November 23, 1984, opinion and order of the
Fourth Judicial District Court holding that S t a c ~ yJo Hubbel,
individually, as personal representative of her husband's
estate and as guardian ad litem of their children, is enti-
tled to recover damages from State Farm under an insurance
policy's uninsured motorist provisions. We reverse the order
of the District Court.
Ronald L. Pearson and David Earl Hubbel were partners,
doing business as Alpine Oil. They elected to be covered by
Workers' Compensation Insurance. On April 12, 1983, while
acting within the course and scope of their employment,
Pearson and Hubbel were killed in an automobile accident.
Pearson was driving. It is alleged that Pearson's negligence
was the sole cause of the accident.
Workers' Compensation benefits were applied for and
received by the heirs and/or personal representatives of the
decedents. Thereafter, respondent, Stacey Jo Hubbel, brought
a declaratory judgment action against Western Fire Insurance,
the insurer of two vehicles owned by Alpine Oil, and State
Farm, the insurer of the vehicle involved in the fatal colli-
sion, claiming entitlement to uninsured motorist benefits
from both companies. The insurance companies denied any
obligation to respondent, claiming that neither of the two
conditions for receiving uninsured motorist benefits exists.
The parties briefed the issues. Thereafter, the trial
judge determined that the two conditions were met and that
respondent was entitled to receive the benefits. Western
Fire Insurance has since settled with respondent. State Farm
appeals, raising one issue:
"Whether respondent is legally entitled to unin-
sured motorist benefits in addition to any Workers'
Compensation benefits received when the decedent
was fatally injured by a co-employee's negligent
operation of a motor vehicle?"
Ron Pearson was the owner and operator of the vehicle
i-nvolved in the fatal collision. He purchased a standard
automobile insurance policy from State Farm to cover the
vehicle. The policy provides for uninsured motorist cover-
age. The liability and the uninsured motorist coverage
limits are legally sufficient under Montana law.
The uninsured motorist provisions of the policy and
Montana's uninsured motorist's statute, 5 33-23-201, MCA,
base payment of uninsured motorist benefits on two condi-
tions: (1) the claimant is legally entitled to recover
damages from the owner or operator of the uninsured vehicle;
and (2) the driver of the vehicle is uninsured. Oleson v.
Farmers Insurance Group (1980), 185 Mont. 164, 166, 605 P.2d
166, 167.
We find that neither of these conditions exists. There-
fore, respondent is not entitled to uninsured motorist
benefits.
I
LEGAL ENTITLEMENT TO DAMAGES
Section 39-71-411, MCA, provides that when an employer
has elected to be covered under the Workers' Compensation
Act, that Act provides the exclusive remedy available to
employees for the negligent acts of their employer. Section
39-71-412, MCA, and Madison v. Pierce (1970), 156 Mont. 209,
212-216, 478 P.2d 860, 863-866, extend this exclusive remedy
to recovery for injuries caused by the negligent acts of
co-employees. In case of an employee's death, the Act also
binds "his personal representative and all persons having any
right or claim to compensation for his injury or
death. . . ." S e c t i o n 39-71-411, MCA.
S t a c e y H u b b e l ' s e x c l u s i v e remedy i s t h a t p r o v i d e d by t h e
Workers' Compensation A c t , so neither Ron Pearson nor his
insurer is liable to respondent. Gray v. Margot Inc.
( L a . ~ p p . 1 9 8 1 ) , 408 So.2d 436, 437 - 438. Respondent h a s no
c a u s e o f a c t i o n a g a i n s t Ron P e a r s o n . Respondent t h e r e f o r e i s
n o t l e g a l l y e n t i t l e d t o r e c o v e r damages from Ron P e a r s o n o r
Pearson's insurer. C a r l i s l e v . S t a t e Department o f T r a n s p o r -
tation and Development (La.App. 1 9 8 1 ) , 400 So. 2d 284, 286.
W e a p p r o v e t h e r a t i o n a l e on which t h e Michigan C o u r t o f
A p p e a l s r e l i e d when r e s o l v i n g a s i m i l a r i s s u e . I n Hopkins v.
Auto-Owners Insurance Company (Mich.App. 2972), 200 N.W.2d
784, a n employee was injured as a r e s u l t of the negligent
d r i v i n g o f a co-employee who was a l s o a n u n i n s u r e d m o t o r i s t .
The injured employee, despite conceding his inability to
b r i n g a d i r e c t a c t i o n a g a i n s t t h e t o r t f e a s o r because of t h e
e x c l u s i v e remedy p r o v i s i o n s o f t h e W o r k e r s ' Compensation A c t ,
s o u g h t r e d r e s s from t h e u n i n s u r e d m o t o r i s t p r o v i s i o n s o f h i s
employer's insurer. I n a f f i r m i n g an a r b i t r a t o r ' s d e n i a l o f
a n y l i a b i l i t y on t h e p a r t o f t h e i n s u r e r , t h e c o u r t s t a t e d :
"Because o f t h e e x c l u s i v e n e s s o f t h e workman's
c o m p e n s a t i o n c o v e r a g e , p l a i n t i f f n e v e r had a remedy
against the tortfeasor. H e was n e v e r e n t i t l e d t o
damages from t h e n e g l i g e n t m o t o r i s t . To h o l d
o t h e r w i s e would b e t o g r a n t p l a i n t i f f a w i n d f a l l
n o t c o n t e m p l a t e d by t h e p a r t i e s when t h e y e n t e r e d
i n t o t h e i r c o n t r a c t o f i n s u r a n c e , and n o t i n t e n d e d
by t h e L e g i s l a t u r e i n i t s e n a c t m e n t s e n c o u r a g i n g
t h e u t i l i z a t i o n o f uninsured m o t o r i s t coverage
[ c i t a t i o n s omitted] " . Hopkins, 200 N.W. 2d a t 786.
Finally, we find the trial judge's reliance on this
C o u r t ' s d e c i s i o n i n S u l l i v a n v. Doe ( 1 9 7 2 ) , 159 Mont. 5 0 , 495
P.2d 193, t o be misplaced. In Sullivan, two co-employees
w e r e i n j u r e d a s a r e s u l t of a t h i r d p a r t y ' s n e g l i g e n c e . The
third p a r t y was neither their employer nor a co-employee.
Therefore, the Workers1 Compensation Act did not provide the
exclusive remedy availabl-e to plaintiffs for their injuries.
Plaintiffs could seek redress through the uninsured motorist
provisions of their employer's insurance policy.
I1
UNINSURED MOTORIST
The trial judge found Ron Pearson to be an uninsured
motorist for two reasons. First, S 39-71-411, MCA, requires
that respondent's exclusive remedy be the Workers1 Compensa-
tion Act, so Pearson1s automobile insurance is not applica-
ble. Since the insurance is not applicable, Pearson was
operating an uninsured vehicle. Second, State Farm's refusal
to provide coverage under the "bodily injury" portions of its
policy resulted in Pearson qualifying as an uninsured motor-
ist. The trial judge's analysj-s creates a "Catch-22" situa-
tion for the insurance company. First, the insurance policy
is not applicable because of the exclusive remedy set forth
in the Workers' Compensation Act. Therefore, the uninsured
motorist provision of the policy comes into play, providing
insurance coverage in violation of § 39-71-411, MCA. Second,
the insurance company1 refusal to provide coverage because
s
of the exclusive remedy provided by the Act triggers the
uninsured motorist provisions, and respondent is once again
entitled to a remedy other than that provided for in the Act.
These results are contrary to the intent of the Legisla-
ture in creating the uninsured motorist provisions. This
Court discussed two reasons for the provisions in Sullivan,
supra.
"The basic purpose of this statute is obvious - to
provide protection for the automobile insurance
policyholder against the risk of inadequate compen-
sation for injuries or death caused by the negli-
gence of financially irresponsible motorists."
Sullivan, 159 Mont. at 60, 495 P.2d at 198.
Pearson was not a financially irresponsible motorist. As
discussed earlier, he was covered by legally adequate automo-
bile insurance policies. He was an insured motorist.
"The legislative purpose behind the enactment of
such statutory provisions on 'uninsured motorist'
coverage is equally clear. It is simply to place
the injured policyholder in the same position he
would have been if the uninsured motorist had
liability insurance. . . ."Sullivan, 159 Mont. at
60, 495 P.2d at 198.
A corollary to this principle is that uninsured motorist
provisions should not be used to place an injured claimant in
a better position than he would be under the ordinary provi-
sions of an existing insurance policy. As State Farm states
on page ten of its brief, "[wlhether or not Hubbel can recov-
er judgment for his damages against Pearson does not depend,
and is not affected, by whether or not Pearson had liability
insurance." Rather, recovery by Hubbel from Pearson is
dependent on, and denied by, the exclusive remedy provisions
of the Workers' Compensation Act.
Reversed and remanded for entry of an order consistent
with the law set forth in this opinion.
We concur:
Mr. Justice John C. Sheehy, dissenting:
I dissent. I would affirm the District Court and. hold
that plaintiffs are entitled to recover from State Farm
Mutual Automobile Insurance Company under the uninsured
motorist provisions of its policy issued to Ron Pearson.
The majority opinion puts an exception in § 33-23-201,
MCA, the uninsured motorist coverage statute, that was not
placed there by the legislature. The Court-made exception
holds that employees in the course of their employment who
are injured or killed by the negligent acts of their
co-employees have no right to claim uninsured motorist
coverage benefits even under their own policies. The
exception is all-inclusive: there could be no recovery from
policies of insurance provided by the employer, the injured
employee, nor the negligent co-employee. I do not accept
that holding.
The public policy of this State is expressed in §
33-23-201, MCA, stating:
. .
No automobile liability
delivered .. . . policy .
in this State,
shall be
unless . .. . .
coverage is provided therein . for the . .
protection of persons insured thereunder who are
legally entitled to recover damages from owners or
operators of uninsured motor vehicles ...
Here the heirs of David Hubbel are "legally" entitled to
recover damages for their decedent against Ron Pearson's
estate. This was made clear in a recent case involving the
same insurance company, State Farm Automobile Insurance
Company v. Baldwin (Ala. 1985), 470 So.2d 1230. The facts in
Baldwin are right in line with the facts in this case.
Baldwin, an army sergeant, was riding a motorcycle when a
U.S. government vehicle operated by White, a civilian
employee of U.S. Government, collided with Baldwin's
motorcycle. All parties conced-ed that the accident was
caused by White's negligence. Under the Federal Tort Claims
Act, 28 U.S.C.A., S 1346, as interpreted in Feres v. United
States (1950), 340 U.S. 135, 71 S.Ct. 153, 95 L.Ed. 152,
Baldwin cannot recover from either the United States of
America or its employee-agent, Wh.ite.
It is noteworthy that the situation of Baldwin is
exactly the situation in the case at bar. In Baldwin, the
plaintiff Baldwin could not recover from the government or
its employee because of the Feres doctrine. In the case at
bar, the heirs of Hubbel could not recover against his
employer or his co-employee because of the exclusivity
provisions in the Workers' Compensation Act.
The Baldwin court discussed what the words "legally
entitled" meant in the Alabama uninsured motorist statute.
It said:
"One must, then, make a determination as to what
the words, 'legally entitled to recover damages,'
mean. They mean that the insured - -be able to
must - -
establish fault on the part - - uninsured
of the
motorist, which --
rise to damages, - - - be
and must
able to prove the extent of those damages.
-- In a.
direct action by the insured against the insurer,
the insured had the burden of proving in this
regard that the other motorist was uninsured,
legally liable for damage to the insured, and the
amount of this liability. Note that the insurer
would have available, in addition to policy
defenses, the substitute defenses that would have
been available to the uninsured motorist . . ."
4707 So.2d 1233. (Emphasis added.)
The Alabama Supreme Court went on to note that State
Farm wanted not only to use the substantive defenses
available to White and the United States Government, but also
to assert the immunity defense afforded by the Feres
doctrine. The Alabama Court held that such application of
the Feres doctrine to prevent the recovery of uninsured
motorist benefits violated Alabama's legislative policy. It
refused to allow State Farm to apply the Feres doctrine to
avoid liability under the uninsured motorist coverage
statute.
We should reach the same result here. The only defenses
available to State Farm which we should allow should relate
to defenses as to legal liability on the part of Pearson (for
example comparative negligence) or policy defenses which
relate to the coverage itself. Otherwise, the legislative
policy declared in S: 33-23-201, MCA, is impaired. We noted
in Sullivan v. Doe, relied on by the majority, that " [tlhe
majority of jurisdictions outside Montana declare void those
clauses which purport to limit liability not expressly
authorized by statute." 159 Mont. at 63, 495 P.2d at 200.
Moreover, the majority members are uninstructed as to
the underlying facts and the effect of the holding in
Sullivan v. Doe. In that case, both Sullivan and Miller had
recovered a judgment against John Doe, an unknown uninsured
motorist. Sullivan and Miller were both policemen who were
riding in a police car in Butte at the time of the incident.
Sullivan was driving with Miller a passenger beside him in
the front seat. The police car was owned and provided by the
City of Butte which also carried an automobile insurance
policy on the police car containing an uninsured motorist
endorsement with Glacier General Insurance Company. In
addition Sullivan carried his own policy with an uninsured
motorist endorsement with Hartford Accident Indemnity
Company. Miller carried a policy with an uninsured motorist
endorsement with State Farm Mutual Automobile Insurance
Company.
When the case reached this Court on appeal, this Court
determined that Sullivan, the driver of the automobile, was
negligent as a matter of law, and therefore set aside his
judgment against the unknown uninsured motorist. This Court,
however, sustained the judgment that Miller had obtained,
since as a passenger in the police car, the negligence of
Sullivan in operating the police car was not imputed to
Miller. In holding for Miller, this Court decided that the
City of Butte's Glacier General insurance policy containing
uninsured motorist coverage applied and that in addition
Miller could recover from his own insurer, State Farm Mutual,
for an additional uninsured motorist coverage benefit.
Thus, Miller was in exactly the same position that the
heirs of Hubbel are in this case. Miller had been injured by
his co-employee, Sullivan, and Miller was held entitled to
recover uninsured motorist coverage benefits against the
policy provided by his employer, the City of Butte. Miller
also recovered Workers' Compensation benefits. Further
Miller recovered from the insurer under his own policy for
the legal liability of the unknown uninsured motorist.
In Sullivan, both insurers Glacier General and State
Farm contended that because Miller had recovered Workers'
Compensation, they were entitled. to an offset to the extent
of the Workers' Compensation that he ha.d received. This
Court held that such a holding would reduce or limit his
"eligible uninsured motorist coverage" by deduction of
payments from other insurance which was adverse to Montana's
uninsured motorist coverage law.
Without stating so, the majority members have overruled
Sullivan v. Doe, supra. They have ignored the legislative
policy to provide uninsured motorist coverage, which we have
heretofore strongly supported.
The basic fault in the reasoning of the majority members
in this case is they have regarded the interpretation of the
Workers' Compensation Act and the Uninsured Motorist Coverage
Act from the viewpoint of the insurer, and not from the
viewpoint of the claimant. To State Farm Mutual, Pearson is
not uninsured, because its policy does provide liability
coverage to him. To the Hubbel claimants, however, Pearson
is uninsured, because through a legal technicality, much the
same as the Feres doctrine, the Hubbel heirs cannot obtain a
judgment against Pearson which could be satisfied under the
liability portion of the State Farm Policy. If State Farm is
caught in a Catch-22, the Hubbel heirs are caught in a
Catch-44, a double whammy. State Farm gets to keep the money
for which it collected a premium; the Hubbel heirs do not get
to collect anything under the uninsured motorist coverage.
The district judge here correctly decided to support the
legislative policy of this State. I would affirm the holding
of the district judge.
Justice
Mr. Justice John Conway Harrison, dissenting:
-
I concur in the dissent of Mr. Justice Sheehy.
F
Justice