No. 90-149
IN THE SUPREME COURT OF THE STATE OF MONTANA
1990
SAMUEL J. GRENZ,
Plaintiff and Appellant,
ORION GROUP, INC., THE FIRE AND CASUALTY
INSURANCE COMPANY OF CONNECTICUT, DON
MACMILLAN, EDWARD EBERLY, E. CRAIG DAUE,
and the Law Firm of GARLINGTON, LOHN and
ROBINSON,
Defendants and Respondents.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead,
The Honorable Michael H. Keedy, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Samuel J. Grenz, Whitefish, Montana (Pro Se)
For Respondent:
Sherman V. Lohn, Missoula, Montana; G. Richard
Dzivi, Great Falls, Montana; Susan J. Rebeck, Great
Falls, Montana
Submitted on Briefs: May 24, 1990
Decided: July 12, 1990
Justice Fred J. Weber delivered the Opinion of the Court.
Samuel J. Grenz (Mr. Grenz), pro se, appeals from the
dismissal of his complaint by the District Court for the Eleventh
Judicial District, Flathead County. We affirm.
The sole issue before us is whether the District Court erred
in dismissing Mr. Grenzl complaint.
On August 22, 1984, Mr. Grenz was injured while working for
American Stud Company in Flathead County, Montana. The employer
was enrolled under Workers1 Compensation Plan 11. The insurer
assumed liability for the injury and paid compensation and medical
benefits to and for Mr. Grenz. Mr. Grenz received temporary total
disability benefits. In June of 1987, the law firm of Garlington,
Lohn and Robinson (GLR) was hired by the insurer to review Mr.
Grenzl claim. Mr. Daue, a partner in GLR, assumed responsibility
for the file. Mr. Daue requested that Mr. Grenz and his claim be
submitted to the Northwest Medical Evaluation Panel for an
evaluation of his disability. Mr. Grenz did not contest the
insurer's right to require him to submit to such an evaluation.
On the basis of extensive medical, psychological, and vocational
data that had been received, Mr. Daue recommended to the insurer
that Mr. Grenzl benefits could be reduced from temporary total
disability to permanent partial disability. Subsequently, on
August 24, 1988, Mr. Grenzt benefits were reduced as recommended.
Subsequent to the reduction in his benefits, Mr. Grenz
proceeded pro se and requested a mediation of his claim. The
mediation was held and ultimately Mr. Grenzl temporary total
disability benefits were reinstated on December 15, 1988,
retroactive to August 24, 1988.
In December 1988, Mr. Grenz requested a lump sum advance of
more than $70,000 of his benefits, attorney fees and a statutory
penalty. A hearing was held in the Workers1 Compensation Court on
February 7, 1989. It determined that Mr. Grenz was entitled to a
lump sum advance to pay his real estate taxes that were due and
owing. However, it denied a lump sum conversion of his future
compensation benefits to pay off his existing loans which were
current; to pay a balloon payment due in September, 1990; to
purchase a hot tub for his home; or to restore his 1964 ~ontiac.
The penalty issue was not addressed.
In April 1989, Mr. Grenz filed a petition in which he renewed
his request for a penalty. He based his claim for a 20% penalty
on four grounds: (1) that the insurer wrongfully reduced his
benefits from temporary total to permanent partial during the
period from August 24, 1988, to December 16, 1988; (2) that the
insurer unreasonably used the Northwest Panel Medical Evaluation
to justify the reduction in benefits; (3) that the insurer
unreasonably delayed payment of a lump sum advance; and (4) that
the insurer unreasonably delayed payment of benefits from September
12, 1988, through October 28, 1988.
The insurer moved to dismiss the petition and to stay
discovery. The motion to stay was granted but the court
specifically declined the motion to dismiss in an effort to provide
some leniency to Mr. Grenz who was appearing pro se.
Finally, on September 7, 1989, the Workerst Compensation Court
dismissed the petition without prejudice, stating:
[Mr. Grenz] wrote to the Court on his own behalf advising
that he wished to ttwithdrawlt petition and amended
his
petitions relative to the issues now before the Court in
this proceeding.
Since both the insurer and [Mr. Grenz] have
essentially moved the Court for dismissal of these
proceedings .. . the petition and amended petition in
the above entitled matter are DISMISSED.
There never was any determination by the Workers1 Compensation
Court that the insurer had acted unreasonably in the reduction of
benefits from total to partial and Mr. Grenz has continued to
receive temporary total disability benefits. As a result, on May
2, 1990, Mr. Grenz again petitioned the Workers1 Compensation
Division for an advancement of lump sum benefits based on permanent
total disability calculated throughout his future work life
expectancy. Mr. Grenz also alleged bad faith, entitlement to lump
sum benefits and entitlement to a penalty. That petition was not
yet resolved at the time of this appeal.
In September 1989, Mr. Grenz filed a pro se complaint in the
District Court alleging bad faith resulting from intentional torts
and abuse of the workerst compensation system in delaying the
payment of his benefits. He further alleged he was entitled to a
penalty for the insurer's wrongful refusal to pay benefits in a
lump sum. The ~istrictCourt accepted an amended complaint and a
second amended complaint, but denied a third amended complaint.
Defendants filed a motion to dismiss, contending that there is a
statutory remedy which a workerst compensation claimant must follow
if he believes the workers1 compensation insurer acted unfairly.
In short, defendants argued that Mr. Grenzl claim was premature
because Mr. Grenz must first file his complaint with the Workers1
Compensation Court to determine if defendants acted unfairly
pursuant to XXX-XX-XXXX, MCA, and there must be a determination
prior to an action in District Court.
Agreeing, the District Court stated:
[Mr. Grenz] is now receiving compensation benefits at
the level of temporary total disability, retroactive to
the date of reduction; and, his disability rating has
not been finalized. There has been no determination from
the Worker's Compensation Court or any other court that
the disability rating from the Northwest Panel and the
subsequent (temporary) reduction in benefits was
improper.
...
[wlhen Plaintiff contends that the Defendants failed to
pay benefits at the temporary total disability level
"without conducting a reasonable investigation based upon
all available information," and that they !@neglectedto
attempt in good faith to effectuate prompt, fair and
equitable settlements of claims in which liability has
become reasonably clear," the statutory bar of S33-18-
242(6)(b), M.C.A. is triggered. There, the legislature
has seen fit to bar even the filing of a bad faith claim
in the adjustment of insurance coverage until the
underlying claim has been settled or a judgment entered
in the claimant's favor.
In the absence of a determination by the Workers1 Compensation
Court as to whether the disability rating and subsequent temporary
reduction in benefits was improper, the District Court dismissed
Mr. Grenzt complaint. Mr. Grenz appeals the dismissal of his
complaint.
Did the District Court err in dismissing Mr. Grenz I complaint?
Relying on Vigue v. Evans Prod. Co. (1980), 187 Mont. 1, 608
P.2d 488 and Hayes v. Aetna Fire Underwriters (1980), 187 Mont.
148, 609 P.2d 257, Mr. Grenz contends that this action should not
be barred from the District Court. He urges under these cases he
may maintain an action against the insurer based on intentional
torts because it as an independent action which does not arise out
of an employment relationship.
The insurer relies on Fode v. Farmers Ins. Exch. (1986), 221
Mont. 282, 719 P.2d 414, for the proposition that a bad faith claim
cannot be pursued until the resolution of the underlying claim.
Mr. Daue and GLR make the same argument and also assert that Mr.
Grenz has no legal authority to make a third-party claim against
them, as the defense counsel of the insurer. They assert that 833-
18-242(1), MCA, specifies that the independent action arises only
against "an insurer". Thus, Mr. Daue and GLR ask this Court to
affirm the dismissal against them with prejudice. They contend
that not only must this action await resolution in the Workerst
compensation Court, but that 833-18-242 (1), MCA, does not create
a cause of action against an insurertsdefense counsel.
A complaint should not be dismissed for failure to state a
claim upon which relief may be granted unless it appears certain
that the plaintiff is entitled to no relief under any set of facts
which could be proved in support of his claim. Larson v. First
Interstate Bank of Kalispell (Mont. 1990), 786 P.2d 1176, 47
St.Rep. 344. However, as the ~istrictCourt correctly pointed out,
in the light of a specific statute relating to the claim, dismissal
may be appropriate. See Hasbrouck v. Krsul (1975), 168 Mont. 270,
541 P.2d 1197.
The ~istrictCourt further stated:
Plaintiff's complaints all sound in bad faith in the
ltadjusting" or handling of his claim that he is
temporarily totally disabled. There is nothing in either
the Worker's Compensation Act or the Unfair Trade
Practices Act barring the application of 533-18-201,
M.C.A. et seq. to worker's compensation claims.
Inferentially referring to Visue and Haves, the District Court
stated:
The Supreme Court, in holding that an injured worker has
a separate cause of action for the commission of torts
occurring during the settlement of his claim, based the
right on the fact that the action does not arise out of
an employment situation. In this way the worker's
compensation claimant is in no different position than
the injured third-party claimant in an automobile
insurance case.
The court then dismissed Mr. Grenz' action ''pending determination
by the Worker's Compensation Court whether the disability rating
and subsequent temporary reduction in benefits was improper."
Section 33-18-242, MCA, provides for an independent action by
a third-party claimant against an insurer for actual damages caused
by the insurer. However 533-18-242(6)(b) states:
A third-party claimant mav not file an action under this
section until after the underlvins claim has been settled
or a judsment entered in favor of the claimant on the
underlying claim. (emphasis added).
We conclude that the District Court properly dismissed Mr.
Grenz' complaint based upon the foregoing statute. As stated in
Visue and Hayes an independent action may lie after the underlying
claim has been settled or a judgment entered in Mr. Grenzl favor.
We therefore hold that the District Court did not err in dismissing
Mr. Grenz' complaint.
Section 33-18-242, MCA, creates a cause of action against an
l1insurerl1. An llinsurern
includes a person, finn, or corporation
utilizing self-insurance to pay claims made against them. Section
33-18-242 (8), MCA. The law firm and its attorneys defending the
insurer do not fall under this definition. Therefore, we hold that
the dismissal of the complaint was proper. We further hold that
the dismissal shall be with prejudice as against Mr. Daue and
Garlington, Lohn and Robinson as to a claim under 533-18-242(6),
MCA .
Affirmed.
We Concur: