No. 89-186
IN THE SUPREME COURT OF THE STATE OF MONTANA
DAVID ALARIC PALMER, a protected
person by MARTHA ROSE DIACON,
his conservator,
Plaintiff and Respondent,
-vs-
MONTANA INSURANCE GUARANTY ASSOCIATION,
Defendant and Appellant.
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Thomas McKittrick, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Sidney R. Thomas and Ramona R. Heupel; Moulton Law
Firm, Billings, Montana
For Respondent:
Dennis Patrick Connor, Great Falls, Montana
John C. Risjord, Overland Park, Kansas
Submitted on Briefs: Aug. 10, 1989
Decided: September 5, 1989
Filed:
Justice L. C. Gulbrandson delivered the Opinion of the Court.
This case involves the interpretation of an offset
provision of the Montana Insurance Guaranty Association Act.
The Montana Insurance Guaranty Association appeals from entry
of judgment by the Eighth Judicial District Court, Cascade
County, Montana, in favor of respondent, David Palmer. This
action, filed on behalf of Palmer, a protected person, sought
declaratory relief to have determined whether the Montana
Insurance Guaranty Association (MIGA) is obligated to pay
Palmer its statutory limit of $300,000. The District Court
concluded MIGA was obligated to pay Palmer its statutory
limit. We reverse.
The facts underlying this action are more fully set
forth in Palmer by Diacon v. Farmers Ins. Exchange (Mont.
1988), 761 P.2d 401, 45 St.Rep. 1694, but the essential facts
are these. Palmer suffered severe head injuries in a
motorcycle accident in 1984. He sought recovery for his
damages, stipulated to exceed $1,000,000, from both his
uninsured motorist carrier and Abaddon Products Company,
Inc., the manufacturer of the motorcycle helmet he was
wearing at the time of the accident.
Abaddon, an Idaho corporation, carried $1,000,000 in
insurance coverage through its primary insurance carrier,
Ideal Mutual Insurance Company. Ideal became insolvent,
which triggered coverage of MIGA. Because Abaddon is an
Idaho corporation, Palmer was required to make his claim
first against the Idaho Insurance Guaranty Fund, as mandated
by S 33-10-115(2), MCA, which provides:
Any person having a claim which may
be recovered under more than one
insurance guaranty association or its
equivalent shall seek recovery first from
the association of the place of residence
of the insured ...
Palmer filed this declaratory judgment action to have
determined whether the coverage limits of MIGA could be
stacked with the amounts received from the Idaho Insurance
Guaranty Fund. MIGA argues that $ 3 3 - 1 0 - 1 1 5 ( 2 ) , MCA,
requires an offset of the Idaho Fund contribution against its
statutory maximum. The offset provision of $ 3 3 - 1 0 - 1 1 5 (2),
MCA, provides:
Any recovery under this part shall
be reduced by the amount of recovery from
any other insurance guaranty association
or its equivalent.
The District Court concluded the Idaho payments were to
be offset against the unpaid claim, rather than against
MIGA's limits. In its Order granting summary judgment, the
District Court concluded:
[TIhe sentence " [a]ny recovery under this
part shall be reduced by the amount of
recovery from any other insurance
guaranty association or its equivalent"
means simply that the total value of
PALMER'S claim, that is the value of the
total amount payable as damages for
claimant's injuries caused by the covered
occurrence, shall be reduced by the
amount the claimant has recovered from
the Idaho guaranty fund.
Judgment for $ 3 0 0 , 0 0 0 was entered in favor of Palmer on
February 6, 1 9 8 9 and this appeal followed. MIGA raises these
issues for our review:
1. Was the Montana Insurance Guaranty Association
entitled to offset amounts Palmer received from the Idaho
Insurance Guaranty Fund against its statutory maximum?
2. Was the Montana Insurance Guaranty Association
entitled to offset amounts Palmer received under his
uninsured motorist policy?
Respondent has received the Idaho statutory maximum,
$300,000, from the Idaho Insurance Guaranty Fund. The issue
presented here is whether MIGA is obligated for the residual
unpaid portion of Palmer's claim, which the parties have
stipulated exceeds MIGA's statutory limit of $300,000.
Respondent argues MIGA is obligated to pay the unsatisfied
portion of the claim because Montana's statutes do not
prohibit stacking of insurance guaranty association limits.
Respondent supports his position by emphasizing the declared
purpose of the guaranty association as stated in
§ 33-10-101 ( 2 ) , MCA:
The purpose of this part is to
provide a mechanism for the payment of
covered claims under certain insurance
policies to avoid excessive delay in
payment and to avoid financial loss to
claimants or policyholders because of the
insolvency of an insurer, to assist in
the detection and prevention of insurer
insolvencies, and to provide an
association to assess the cost of such
protection among insurers.
Respondent argues the act is an assurance that the
duties and obligations of the insolvent insurer will be
satisfied. Therefore, to give effect to the act's purpose,
respondent argues, the District Court was correct to conclude
the payments paid by the Idaho Insurance Guaranty Fund are to
be offset against the total claim, rather than against MIGA's
statutory limit. We disagree.
The Montana Insurance Guaranty Association Act,
§ 33-10-101, MCA, et seq., was adopted in 1971 from the model
act designed by the National Association of Insurance
Commissioners. The Montana act provides for the creation of
the Montana Insurance Guaranty Association, a non-profit
unincorporated l e g a l e n t i t y consisting of insurers licensed
t o t r a n s a c t b u s i n e s s i n Montana. While t h e p u r p o s e o f t h e
act is to "avoid financial loss" to claimants and
policyholders because of t h e insolvency of an i n s u r e r , the
b r e a d t h o f t h i s announced g o a l i s l i m i t e d by t h e t e r m s o f t h e
statute. Section 33-10-105, MCA, provides that the
association shall:
( a ) b e o b l i g a t e d t o t h e e x t e n t of
the covered claims ... but
- - such
o b l i g a t i o n s h a l l i n c l u d e -- amount
only t h a t
- -c h c o v e r e d c l a i m which i s i n e x c e s s
of ea
- $100 - i s l e
o f - - and - - s s t h a n $ 3 ~ , ~ 0 . . .
(Emphasis added. )
Recovery u n d e r t h i s a c t , t h e r e f o r e , i s l i m i - t e d t o a n amount
which e x c e e d s $100 b u t i s l e s s t h a n $ 3 0 0 , 0 0 0 . The s c o p e of
MIGA's coverage is additionally limited by the offset
p r o v i s i o n s o f S 33-10-115, MCA:
(1) Any p e r s o n having a claim
a g a i n s t a n i n s u r e r u n d e r any p r o v i s i o n i n
an insurance policy other than a policy
o f a n i n s o l v e n t i n s u r e r which i s a l s o a
covered claim shall be required to
exhaust first his right under such
policy. Any amount p a y a b l e - -a c o v e r e d
on
c l a i m u n d e r L ~ a r s h a l l - r e d u c e d bv
this t be
t h e amount - - r e c o v e r y u n d e r s u c h
o f any
insurance policy.
( 2 ) Any p e r s o n h a v i n g a claim
which may b e r e c o v e r e d u n d e r more t h a n
one i n s u r a n c e guaranty a s s o c i a t i o n o r i t s
e q u i v a l e n t s h a l l s e e k r e c o v e r y f i r s t from
t h e a s s o c i a t i o n of t h e place of residence
of t h e insured ... Any r e c o v e r y u n d e r
t h i s p a r t s h a l l b e r e d u c e d - -e amount
by t h
o f r e c o v e r y frof;;
- any o t h e r i n s u r a n c e
g u a r a n t y a s s o c i a t i o n - -s e q u i v a l e n t .
o r it
(Emphasis added. )
MIGA's statutory obligations are not as broad as Palmer
suggests. The act's purpose language, while very broad,
cannot be given the "effect" as Palmer construes it, in light
of the unambiguous language which defines and limits MIGA's
obligations.
The framers' comments to this offset provision of the
Model Act support our conclusion that payments from another
association are offset against the $300,000 limit of MIGA's
obligation:
This subsection does not prohibit
recovery from more than one Association,
but it does describe the Association to
be approached first and then requires
that any previous recoveries from like
Associations must be set off against
recoveries from this ~ssociation.
(Emphasis added. )
It is the duty of this Court to give effect to the
purpose of a statute. LaFountaine v. State Farm Mut. Auto.
Ins. Co. (1985), 215 Mont. 402, 698 P.2d 410. However, if
the intent of the legislature can be determined from the
plain meaning of statutory words, we will go no further or
apply any other means of interpretation. Phelps v. Hillhaven
Corp. (Mont. 1988), 752 P.2d 737, 45 St.Rep. 582. We
conclude that this language of the statute is clear and
unambiguous.
The conclusion reached here is not contrary to the
permitted stacking provisions of the statute. Since recovery
from other States' insurance guaranty funds may not reach
MIGA's statutory limit of $300,000, any difference is
recoverable under Montana's Act, up to the $300,000 limit.
The Montana Insurance Guaranty Association was not
adopted as a form of reinsurance for every insurer who
becomes insolvent. Rather, it is clear the Association was
established to soften resulting hardship which may be
encountered, under limited circumstances, by a policy holder
or claimant when an insurer become insolvent.
Because we have concluded MIGA is entitled to offset
the $300,000 paid by the Idaho Fund, we need not address
Palmer's second issue relating to an offset of his uninsured
motorist coverage.
Reversed and remanded for
accordance with this opinion.
I
We concur:
w
Justices
Justice John C. Sheehy did not participate in this
Opinion.
Justice William E. Hunt, Sr., dissenting.
I dissent. The purpose of the offset provisions
provided in § 33-10-115, MCA, is to offset amounts received
from solvent insurers and other state guaranty associations
against the value of a covered claim, thereby preventing a
claimant from recovering more than the total value of the
claim. The purpose of the provisions is not to offset
amounts received from solvent insurers and other state
guaranty funds against the Montana Insurance Guaranty
Association's $300,000 liability limit.
The Montana Insurance Guaranty Association Act is to be
liberally construed to prevent a claimant's financial loss
because of a failed insurer. The act is not to be read
restrictively to protect MIGA at the expense of injured
claimants. The guaranty association is already protected by
the $300,000 liability limit written into the statute.
I would affirm the District Court.