June 4 2008
DA 07-0297
IN THE SUPREME COURT OF THE STATE OF MONTANA
2008 MT 195
MONTANA PETROLEUM TANK RELEASE COMPENSATION BOARD,
Plaintiff and Appellant,
v.
EMPIRE FIRE AND MARINE INSURANCE COMPANY,
Defendant and Appellee.
APPEAL FROM: District Court of the First Judicial District,
In and For the County of Lewis and Clark, Cause No. CDV-2003-474
Honorable Thomas C. Honzel, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
R. Allan Payne and James L. Shuler, Doney, Crowley, Bloomquist, Payne,
and Uda, Helena, Montana
For Appellee:
Susan P. Roy, Garlington, Lohn & Robinson, Missoula, Montana
Submitted on Briefs: February 6, 2008
Decided: June 4, 2008
Filed:
__________________________________________
Clerk
Justice John Warner delivered the Opinion of the Court.
¶1 Plaintiff Montana Petroleum Tank Release Compensation Board (the Board) appeals
an order from the First Judicial District Court, Lewis and Clark County, granting summary
judgment to Empire Fire and Marine Insurance Company (Empire) and denying the Board’s
motions for partial summary judgment. We affirm.
¶2 The Board raises the following issues on appeal:
¶3 1. Whether the District Court erred in holding the statute of limitations barred the
Board’s claim.
¶4 2. Whether the District Court erred in granting Empire’s motion for summary
judgment because a genuine issue of material fact existed concerning whether Empire ever
denied a claim brought by its insured.
¶5 3. Whether the District Court erred when it denied the Board’s motion to engage in
discovery following conversion of Empire’s M. R. Civ. P. 12(b)(6) motion to dismiss to a
M. R. Civ. P. 56 motion for summary judgment.
¶6 Because our resolution of the first issue is dispositive, we need not discuss the other
issues raised by Appellant.
BACKGROUND
¶7 The Montana Petroleum Tank Release Compensation Board is a state environmental
advisory board whose purpose is to protect “the public health and safety and the environment
by encouraging prompt cleanup of petroleum releases.” Safeway, Inc. v. Mont. Petroleum
Release Compen. Bd., 281 Mont. 189, 195, 931 P.2d 1327, 1330 (1997) (citing § 75-11-
301(5)(a), MCA). Among other things, the Board administers the Petroleum Tank Release
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Cleanup Fund. Owners and operators of petroleum storage tanks contribute to the Fund,
which, in turn, provides reimbursement for specified cleanup costs when their underground
tanks leak or spill. When the Board reimburses owners or operators for their cleanup costs, it
may be entitled to subrogate against any insurance carriers whose policies covered the
owners or operators for spills or leaks from their petroleum storage tanks.
¶8 This is the latest in a series of cases brought by the Board seeking payment from
insurance companies to reimburse it for payments it made to petroleum distributors and
retailers. In each of the cases, including our opinion in Mont. Petroleum Tank Release
Compen. Bd. v. Fed. Serv., 2008 MT 194, ___ Mont. ___, ___ P.3d ___, Supreme Court
cause number 06-0837, the Board reimbursed the owners of the facilities for the costs
associated with cleanup of petroleum spills.
¶9 Between January 1, 1986, and March 27, 1991, Empire provided insurance coverage
to Neil and Flora Paxson (Paxsons), who operated a gas station in Jordan doing business as
“Six D’s.” Empire also provided coverage to the Paxsons’ successor, John Currey (Currey),
who owned and operated the Six D’s business for one year beginning September 9, 1991.
¶10 In September, 1991, while Currey owned Six D’s, he discovered that petroleum had
leaked into the surrounding soil and groundwater from underground storage tanks and from
surface spills during fueling operations at Six D’s. Under Montana law, Currey was
obligated to investigate and remediate the spills. Six D’s complied and paid all necessary
cleanup costs.
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¶11 The Board reimbursed Six D’s for its costs of the cleanup. According to the District
Court, through July 11, 2006, the Board had reimbursed Six D’s approximately $216,528.
Pursuant to Admin. R. M. 17.58.332(5), upon payment to Six D’s for cleanup costs, the
Board obtained the right to seek reimbursement from Six D’s insurer.
¶12 According to Empire, Currey sent a claim to them in February, 1992. According to
the Board, Empire failed to act on the claim and almost a year later, on February 9, 1993, the
Montana State Auditor opened a file on the case in response to a complaint of non-payment
made by Currey’s lawyer.
¶13 On March 5, 1993, Empire wrote two separate letters. In the first letter, addressed to
the Montana Department of Insurance, Empire disclaimed coverage, stating: “We have
determined that there is no coverage for the damages, fines, or costs . . . under any policy
issued to the client, John Currey, d/b/a 6 Ds, Inc., . . . .” The letter was “cc-ed” to Currey’s
attorney. However, in the second letter addressed directly to Currey’s attorney, Empire
stated, “We are continuing to research our coverage, particularly under prior policies issued
by this company to Mr. and Mrs. Paxson.” Empire made no payment to Currey.
¶14 No more happened in reference to this claim for over nine years, until August 2002,
when, according to the Board, it first learned that it was eligible for reimbursement of
cleanup costs from Empire. The Board tendered a claim to Empire on August 14, 2002.
¶15 On August 6, 2003, a year after filing its demand for reimbursement against Empire,
the Board filed suit. Empire denied the Board’s claim a year later, on August 23, 2004.
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¶16 The Board moved for partial summary judgment in the District Court and Empire
moved to dismiss the Board’s complaint pursuant to M. R. Civ. P. 12(b)(6). The District
Court referred to matters outside the pleadings in considering Empire’s motion to dismiss
and thus treated the motion as one for summary judgment. The District Court granted
Empire’s motion for summary judgment and denied the Board’s summary judgment motion.
The Board now appeals.
STANDARD OF REVIEW
¶17 We review a district court’s grant of summary judgment de novo, applying the same
criteria as the district court pursuant to M. R. Civ. P. 56(c). Oster v. Valley Cnty., 2006 MT
180, ¶ 9, 333 Mont. 76, ¶ 9, 140 P.3d 1079, ¶ 9. Summary judgment is appropriate when
there are no genuine issues of material fact and the moving party is entitled to judgment as a
matter of law. M. R. Civ. P. 56(c).
DISCUSSION
¶18 By virtue of Admin. R. M. 17.58.332(5), the Board is Six D’s subrogee. As subrogee,
the Board stands in the shoes of the subrogor. Mont. Petroleum Tank Release Compen. Bd.
v. Crumley’s, Inc., 2008 MT 2, ¶ 61, 341 Mont. 33, ¶ 61, 174 P.3d 948, ¶ 61. Thus, the
Board is subject to the same statute of limitations as Six D’s. See St. Paul Fire & Marine
Ins. v. Glassing, 269 Mont. 76, 81, 887 P.2d 218, 221 (1994) (citation omitted).
¶19 The Board argues that pursuant to footnote 4 in Mont. Petroleum Tank Release
Compen. Bd. v. Capitol Indemnity, 2006 MT 133, 332 Mont. 352, 137 P.3d 522, the statute
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of limitations for its indemnification claim against Empire was tolled until Empire denied the
claim. Footnote 4 in Capitol Indemnity states:
As a practical matter, for the insured to bring an action for payment under an
insurance policy, the insurer would first need to deny payment. Thus upon the
submission of a claim by the insured party, the statute of limitations is tolled
until the claim is denied by the insurer.
¶20 In granting summary judgment to Empire, the District Court followed our holding in
Capitol Indemnity, wherein we concluded that the statute of limitations for an indemnity
claim by the Board began to run when the claim had accrued – e.g., when Currey discovered
the leak – not when the insurer denied the claim. The basis for our holding in Capitol
Indemnity was that if the statute of limitations did not begin to run until the insurer had
denied the claim it would “effectively nullify” the purpose of a statute of limitations and the
plaintiff could sue at any time in the future simply by delaying presentation of its claim.
Capitol Indemnity, ¶ 18. This holding is affirmed in Mont. Petroleum Tank Release Compen.
Bd. v. Fed. Serv., 2008 MT 194, ___ Mont. ___, ___ P.3d ___, Supreme Court cause number
06-0837.
¶21 However, according to the Board, in this case the District Court was required to apply
the above-quoted footnote 4 from Capitol Indemnity. The Board argues that footnote 4
constitutes a statement of the law to the effect that the statute of limitations was tolled
because although a claim had been made against the insurer, Empire, Empire had not yet
denied it. We disagree.
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¶22 Footnote 4 constitutes obiter dicta. Such dicta is not persuasive authority for deciding
an issue before this Court. State v. Marble, 2005 MT 208, ¶ 26, 328 Mont. 223, ¶ 26, 119
P.3d 88, ¶ 26. Indeed, footnote 4 conflicts with the holding of Capitol Indemnity--that the
statute of limitations for an indemnification claim begins to run from the time the actual
claim accrues. The Board asks us to apply dicta from a footnote which directly conflicts
with the actual holding of the case. This we decline to do.
¶23 The Board argues that if a period of limitations commences when a claim accrues and
the limitations period is not tolled during the time between when a claim is made and when it
is denied, insurers would be encouraged to drag out claims as long as possible until the
period of limitations expires, thereby preventing a prospective plaintiff from filing suit.
However, the Board cites no authority which says that an insured may not file suit until a
claim is denied. Control over when to commence an action to recover under an insurance
policy is in the hands of the insured, who may file a complaint at virtually any time within
the requisite period of limitations. In the event an insurer attempts to prolong the claim
review process, the onus is on the insured to file a complaint before the statute of limitations
runs.
¶24 The District Court correctly applied our holding in Capitol Indemnity that the period
of limitations began when the claim accrued. Thus, the Board’s complaint, which was filed
in August, 2003--almost 12 years after Currey discovered the leak and the claim accrued--
was barred by the eight-year statute of limitations for a contract action. Because this issue is
dispositive, we need not reach the other issues the Board raises.
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¶25 Affirmed.
/S/ JOHN WARNER
We Concur:
/S/ JAMES C. NELSON
/S/ PATRICIA COTTER
/S/ W. WILLIAM LEAPHART
/S/ BRIAN MORRIS
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