Howell v. State

NO. 93-254
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994

WILLIAM T. "BILL" HOWELL AND JENSEN
HOWELL AND GRANGE INSURANCE ASSOCIATION,
Plaintiffs,
v.
THE STATE OF MONTANA, and its agent,
THE MONTANA POTATO IMPROVEMENT ASSOCIATION,
Defendants, Third-Party Plaintiffs,
Respondents and Cross-Appellants,
v.
MONTANA INSURANCE GUARANTY ASSOCIATION,
Third-Party Defendant and Appellant.

APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable Ed McLean, Judge presiding.

COUNSEL OF RECORD:
For Appellant:
Robert J. Phillips; Phillips & Williams, Missoula,
Montana
For Respondents (Cross-Appellants):

William L. Crowley; Boone, Karlberg & Haddon,
Missoula, Montana

Submitted on Briefs: December 22, 1993
Decided: February 1, 1994
Filed:
Justice Karla M. Gray delivered the Opinion of the Court.

This complex litigation between the State of Montana, the
Montana Potato Improvement Association, the Montana Insurance
Guaranty Association, and others has spanned fifteen years. In the
present appeal, we are asked to determine whether the State has a
valid indemnification claim against the guaranty association for
$360,000 previously paid to an insurance company in settlement. We
affirm the determination of the Fourth Judicial District Court,
Missoula County, that the State's indemnification claim is a
covered claim but conclude that the claim is statutorily limited to
$300,000. A brief summary of the procedural history is necessary
to understand the issues currently before us.
In 1979, several Washington potato farmers filed suit against
William and Jensen Howell (the Howells) for selling seed potatoes
infected with ring rot. They also filed against the Montana Potato
Improvement Association (Potato Association) for certifying the
seed potatoes and against two Washington warehouses. A Washington
jury found the Potato Association and the two warehouses jointly
and severally liable in various degrees for $485,653.82 in damages
and $1,451.06 in costs. The Howells were not found negligent, but
the Washington court ordered the Howells to indemnify one of the
warehouses because of a breach of warranty claim.
In June of 1981, the First Judicial District Court, Lewis and
Clark County, issued a declaratory judgment finding that the Potato
Association was an agent of the State and holding that the State's
insurer, Glacier General Assurance Company (Glacier General), had

2
a duty to defend and indemnify the Potato Association under the
insurance contract between the State and Glacier General. The
Washington plaintiffs subsequently filed their judgments with the
First Judicial District Court and, in an order issued in August of
1983, that court recognized the validity of the foreign judgments
against the Potato Association in the total amount of $485,653.82,
plus costs and interest.
In October of 1983, the Washington plaintiffs assigned their
interests in the judgments to the Howells. The Howells used funds
provided under a reservation of rights agreement by their insurer,
Grange Insurance Association (Grange Insurance), to purchase the
assignments. When Glacier General failed to pay the judgments, the
Howells and Grange Insurance filed the present action in the Fourth
Judicial District Court, Missoula County, seeking to enforce the
judgments against the State, the Potato Association and Glacier
General.
After Glacier General was declared insolvent in the spring of
1985, the Montana Insurance Guaranty Association (MIGA) intervened
to defend the State and the Potato Association under a reservation
of rights, pursuant to §§ 33-10-101 et seq., MCA, of the Montana
Insurance Guaranty Association Act (the Act). On April 30, 1987,
the State, the Potato Association and MIGA entered into a written
agreement concerning the defense and indemnity of Grange
Insurance's claims against the three parties (1987 Agreement).
On October 6, 1988, the District Court granted summary
judgment in favor of the State, the Potato Association and MIGA and
against the Howells and Grange Insurance. It concluded that only

3
Grange Insurance, and not the Howells, owned the foreign judgments
and that, pursuant to the Act, an insurance company could not
collect from either MIGA or the insureds of an insolvent insurance
company. This Court concluded on appeal that, although the
definition of "covered claim " found in § 33-10-102(2)(b), MCA, does
not include any amount due an insurer and, therefore, prohibited
Grange Insurance from collecting from MIGA, the Act did not absolve
the tortfeasors from judgments. Therefore, we reversed the summary
judgment entered in favor of the State and the Potato Association.
Howell v. Glacier Gen. Assurance Co. (1989), 240 Mont. 383, 387,
785 P.2d 1018, 1020 (Howell I). We directed the court to enter
judgment against the Potato Association and to determine the amount
of damages for which the State was liable.
After the case was remanded, the District Court granted a
motion by the State and the Potato Association (collectively
hereafter the State) to file a third-party complaint against MIGA.
The third-party complaint alleged that:
[A]s was determined in a prior declaratory action! Cause
No. 44186 . . . , the State and [the Potato Association]
were insureds of Glacier under the contract issued by
Glacier. Also, as was determined in Cause No. 44186,
Glacier owed the [Potato Association] a duty to defend
and indemnify it under the terms of the applicable
Glacier Insurance Company policy for the matters alleged
by Grange Insurance. . . .
. . .

Under the provisions of the Montana Insurance Guarantee
Act, . . . [MIGA] stands in the shoes of Glacier and
[MIGA] has all rights, duties and obligations of Glacier
concerning the State or the [Potato Association].
. . .

One purpose of the Guarantee Act is to avoid financial

4
 loss to insure&s of insolvent insurers. Allowing an
insurance company such as Grange Insurance to recover
from the insured while refusing to allow the insured
recovery from [MIGA] defeats this purpose of the
Guarantee Act.

The complaint sought a declaratory judgment that MIGA was obligated

to indemnify the State for monies paid to Grange Insurance.

By this time, the amount of the judgment had increased through

accruing of interest to well over a million dollars. Grange

Insurance offered to settle for $360,000; the State offered to pay

$180,000, provided that MIGA would match that figure. MIGA

declined, maintaining that our decision in Howell I had absolved it
of any liability to Grange Insurance. On June 22, 1992, the

District Court approved a settlement resolving all claims between

Grange Insurance, the State and the Potato Association for

$360,000.

The State then filed a motion for summary judgment against

MIGA for indemnification of the $360,000 settlement amount, plus
costs and certain attorney's fees; MIGA responded with a cross-

motion for summary judgment. The District Court granted summary

judgment for the State, concluding that MIGA was liable for the

$360,000 settlement amount under both the Act and the 1987

Agreement. The District Court denied the State's request for

attorney's fees. Both parties appeal.

Our standard in reviewing a grant of summary judgment is the

same as that initially utilized by the trial court. McCracken v.

City of Chinook (1990), 242 Mont. 21, 24, 788 P.2d 892, 894.

Summary judgment is appropriate when the pleadings, depositions,

and other documents on file demonstrate that no genuine issue of

5
material fact exists and that the moving party is entitled to
judgment as a matter of law. Rule 56(c), M.R.Civ.P. Both parties
agree that no genuine issues of material fact exist; indeed, both
moved for summary judgment in the District Court on that basis.
Therefore, our review is whether the District Court correctly
interpreted the law. Mooney v. Brennan (1993), 251 Mont. 197, 199,
848 P.2d 1020, 1022.
The first issue before us is whether the State's claim against
MIGA for indemnification of the $360,000 paid out as settlement
monies in an action to enforce judgments against the State is a
"covered claim" as defined by the Act. MIGA raises two arguments
to support its contention that the State's claim is not covered.
First, it asserts that the claim has been paid and, therefore,
cannot constitute a covered claim. Second, it asserts that the Act
prohibits insurance companies from recovering against MIGA and the
claim in the hands of the State is, in effect, an insurance
subrogation claim. We will examine each argument in turn.
The Act is patterned after the Post-Assessment Property and
Liability Insurance Guaranty Association Model Act, which has been
enacted in some form in forty-three states. Palmer by Diacon v.
Montana Ins. Guar. Ass'n (1989), 239 Mont. 78, 81, 779 P.2d 61, 63;
55 33-10-101 et seq., MCA, Part Compiler's Comments. The
statutorily-stated purposes of the Act are:
* to provide a mechanism for payment of covered claims
under certain insurance policies to avoid excessive delay
in payment;
* to avoid financial loss to claimants or policyholders
because of the insolvencv of an insurer:
* to assist in the detection and prevention of insurer
insolvencies: and

6
 l to provide an association to assess the cost of such
protection among insurers.
Section 33-lo-101(2), MCA (emphasis added). The Act also provides
that it is to be liberally construed to effectuate the above
purposes and that the stated purposes constitute an aid and guide
to interpretation. Section 33-lo-101(4), MCA.
MIGA is the nonprofit association of insurance companies
statutorily created to carry out the purposes of the Act:
membership in MIGA is a prerequisite to transacting insurance
business in Montana. Section 33-10-103, MCA. Once an insurer is
declared insolvent, MIGA steps into the shoes of the insolvent
insurer and "is considered the insurer to the extent of its
obligation on the covered claims and to that extent has all rights,
duties, and obligations of the insolvent insurer as if the insurer
had not become insolvent." Section 33-10-105(1)(b), MCA.
MIGA's primary statutory duty, insofar as relevant to this

appeal, is to pay covered claims arising under an insurance policy
issued by the insolvent insurer and unpaid prior to the insolvency.
Section 33-10-105(l)(a)(i), MCA, and Commission Notes thereto. A
"covered claim" is defined in pertinent part as:
an unpaid claim, including one for unearned premiums,
which arises out of and is within the coverage and not in
excess of the applicable limits of an insurance policy to
which this part applies issued by an insurer, if such
insurer becomes insolvent after July 1, 1971. . . .
Section 33-10-102(2)(a), MCA. On appeal, MIGA primarily argues
that the State's claim is not "unpaid" because Grange Insurance's
claim has been paid by the State--albeit in the reduced settlement
amount of $360,000. This contention incorrectly identifies the

7
actual llclaiml' at issue here.
Under the State's third-party complaint, the State, as the
policyholder, sought indemnification under its insurance policy
with Glacier General of settlement monies it had paid to Grange
Insurance in the action brought to enforce judgments against it.
The policy with Glacier General provided:
[Glacier General] shall pay on behalf of the insured all
sums which the insured shall become legally obligated to
pay on account of any claim for breach of duty made
against the insured if such negligent act, error or
omission is committed during the policy period . . . and
[Glacier General] shall have the right and duty to defend
any suit against the insured seeking damages on account
of such breach of duty . . . .
In the 1981 declaratory judgment, the First Judicial District Court
concluded that Glacier General had a duty to defend and indemnify
the Potato Association under the terms of Glacier General's
insurance contract with the State and stated that the Potato
Association "shall be indemnified by Glacier General. . . ." In
the present action, the District Court determined that the State's
claim for indemnity "arises out of and is within the coverage and
not in excess of the applicable limits" of the insurance policy

between the State and Glacier General. MIGA does not dispute the
question of coverage under Glacier General's policy on appeal.
Furthermore, the State's claim against MIGA for
indemnification is, indeed, "unpaid" under the Act. MIGA's focus
on the original claims--those originally held by the Washington
plaintiffs and ultimately held by Grange Insurance--is misplaced.
The only claim now before us is the State's indemnity claim against
MIGA for $360,000. As discussed above, the claim arises out of and

8
is within the coverage of the State's insurance policy with Glacier

General. Glacier General, the State's insolvent insurer, did not

pay this claim. Therefore, in the hands of the State as the

policyholder asserting a claim under its policy, this claim remains

"unpaid."

As emphasized above, the purpose of the Act is for MIGA to pay

"covered claims" in order to avoid financial hardship for both

policyholders and other claimants when an insurance company becomes

insolvent. As an immediate result of Glacier General's insolvency,
the State has suffered a direct loss of $360,000. It is undisputed

that Glacier General would have been liable to the State in this

amount had it not been declared insolvent. Upon Glacier General's

insolvency, MIGA assumed the duties and obligations of Glacier

General to the extent of "covered claims, 'I including the duty to

indemnify the State for the monies paid to Grange Insurance. Any
other result would run contrary to the stated purpose of the Act to

protect "policvholderst' from insolvent insurers and would

completely deprive the State of the benefit of its insurance

contract with Glacier General.

The cases cited by MIGA to support its argument that the

State's claim was "paidV1 are distinguishable. In Florida Ins.

Guar. Ass'n v. Dolan (Fla. App. 1978), 355 So.2d 141, an injured

skier asserted a claim for $70,000 and obtained a judgment in that

amount against a ski resort. The resort's insurer subsequently

became insolvent and, faced with the threat of execution against
the property, the ski resort placed $70,000 in an escrow account to

which the skier had absolute and unconditional access. The injured

9
skier then asserted a claim against the Florida Insurance Guaranty
Association (FIGA). In that case, the Florida appellate court held
that the skier‘s claim was not covered because it was not an unpaid
claim. Dolan, 355 So.2d at 142. The injured party had been paid
the $70,000 and was not entitled to a double recovery.
In this case, the injured Washington plaintiffs have been paid
and, under Dolan, would not be allowed to recover against MIGA. In
Dolan, the Florida court did not consider the question of whether
the ski resort had a claim against FIGA; the ski resort was not a
party to the suit. Therefore, although Dolan does not apply to our
situation, it clarifies the meaning of "unpaid" in the definition
of a covered claim. The adjective Vnpaid" eliminates situations
like Dolan, where a stranger to the insurance policy seeks some
type of double recovery. It does not apply to this case, where an
insured has paid out settlement monies and seeks indemnification
from MIGA under its insurance policy and the Act.
MIGA also relies on King Louie Bowling Corp. of Missouri v.
Missouri Ins. Guar. Ass'n (Mo.App. 1987), 735 S.W.2d 35, which is
factually similar to the case before us but, nonetheless, mandates
a result opposite from that urged by MIGA. In Kinq Louie, the
injured plaintiffs refused to file suit against the Missouri
guaranty association when the bowling alley's insurance company
became insolvent. The bowling alley settled the claims and then
filed claims against the association for indemnification. The
Missouri Court of Appeals first explained that the purpose of the
guaranty act was to protect insureds from the effects of insolvent
insurers, a purpose which would be frustrated if an insured facing

10
a judgment was denied protection from the association. Xins Louie,

735 S.W.Zd at 39. However, the insurance policy between the
bowling alley and the insolvent insurance company did not provide

for indemnification if a lawsuit was voluntarily settled before the

insured became legally obligated to pay. Therefore, because the
association stood in the shoes of the insurer, the association was

not obligated to indemnify the bowling alley. King Louie, 735

S.W.Zd at 40.

We are faced with the opposite situation in this case. It is

undisputed that Glacier General would have been obligated to

indemnify the State if it had not become insolvent. Moreover,

unlike the bowling alley in King Louie, the State was legally

obligated to Grange Insurance because of the judgments entered
against it and our opinion in Howell I. As a result, King Louie

does not support MIGA's contention that the State does not have a

valid claim for indemnification. We conclude that the State's

claim for indemnification is "unpaid" as defined by the Act, arises

out of and is within the coverage of an insurance policy to which

the Act applies and, thus, by definition, is a '*covered claim."

MIGA also argues that the claim is essentially an insurance

subrogation claim and, therefore, under § 33-10-102(2)(b), MCA, the

State cannot seek indemnity from MIGA. We disagree. Section 33-

10-102(2)(b), MCA, provides:

"Covered claim” shall not include any amount due a
reinsurer, insurer, insurance pool, or underwriting
association, as subrogation recoveries or otherwise.

MIGA concedes that neither the State nor the Potato Association is

a reinsurer, insurer, insurance pool or underwriting association.

11
 The rules of statutory construction require the language of a
statute to be construed according to its plain meaning; if the
language is clear and unambiguous, no further interpretation is
required. GBN, Inc. v. Dep't of Revenue (1991), 249 Mont. 261,
265, 815 P.2d 595, 597. Applying those principles, we conclude
that 5 33-10-102(2)(b), MCA, does not apply to this claim. The
State is asserting its claim as the insured, the policyholder,
under its insurance policy with Glacier General.
Additionally, MIGA argues that our decision in Howell I
requires us to conclude that the State's claim is not a covered
claim. We disagree. In Howell I, we explicitly stated that the
Act prohibited an insurance company, Grange Insurance, from
recovering subrogation benefits from MIGA based on 5 33-10-
102(2)(b), MCA. We also stated that Grange Insurance was not
prohibited from recovering from the State and the Potato
Association as tortfeasors. Howell I, 785 P.2d at 1020. We did
not address the issue of whether the State and the Potato
Association could recover from MIGA on a separate indemnification
claim. As emphasized above, the present claim arises from the
State's third-party complaint against MIGA based on the State's
insurance contract with Glacier General; the third-party complaint
was filed after our decision in Howell I and is unrelated to the
issues resolved in that case.
In sum, we conclude that the State's claim against MIGA for
indemnification of the $360,000 is a "covered claim" under 5 33-10-
102(2)(a), MCA. As a result, we need not discuss issues raised by
the State concerning the contractual waiver of MIGA's defenses and

12
alleged constitutional violations. However, two final issues
remain for our review: we must determine whether the Act limits
MIGA's liability to $300,000 for this claim and whether the State
is entitled to certain attorney's fees.
Regarding the limitation issue, the District Court recognized
that § 33-lo-105(l)(a)(ii), MCA, limits MIGA's liability for each
covered claim to $300,000. It reasoned, however, that the original
claims against the Howells involved ten separate plaintiffs and
concluded that the statutory limitation did not apply. We conclude
that the court erred.
As discussed above, the State holds and asserts one covered
claim against MIGA--the indemnification claim which would have been
submitted to Glacier General under its insurance contract absent
Glacier General's insolvency. Section 33-lo-105(1)(a)(ii), MCA, is
clear and unambiguous: it expressly limits MIGA's liability to
$300,000 for each covered claim. We conclude, therefore, that the
State's indemnification claim is limited to $300,000.
As a final matter, the State argues that it is entitled to
recover attorney's fees incurred in defending against the claims of
Grange Insurance after MIGA withdrew its defense. On February 15,
1990, this Court denied the petition for rehearing in Howell I,
which held that Grange Insurance could not recover from MIGA. One
month later, MIGA sent notice to the State and the Potato
Association that it was withdrawing its defense in the matter,
asserting that this Court's decision in Howell I absolved it of any
further obligation to indemnify the State or the Potato Association
as a result of the claims made by Grange Insurance.

13
 Regarding this issue, the District Court concluded that, under
the Act, MIGA had a duty to defend the insured and to accept a
reasonable settlement offer in appropriate cases. It then
determined that MIGA's decision to withdraw its defense based on
Howell I was in bad faith because Howell I did not address the
issue of MIGA's obligation to the State. Therefore, the court
concluded that MIGA breached the 1987 Agreement and violated the
Act by refusing to defend the State. However, the District Court
went on to explain that 3 33-10-110, MCA, which grants MIGA
immunity from liability for all actions done in the performance of
its duties, provided MIGA with complete immunity from damages
resulting from the breach of a statutory or contractual duty.
The longstanding rule in Montana is that, absent statutory or
contractual authority, attorney's fees will not be awarded.
Goodover v. Lindey's, Inc. (1992), 255 Mont. 430, 445, 843 P.2d
765, 774; Bitney v. School Dist. No. 44 (1975), 167 Mont. 129, 137,
535 P.2d 1273, 1277; Ehly v. Cady (1984), 212 Mont. 82, 100, 687
P.2d 687, 696. If such authority exists, the awarding of
attorney's fees is a matter of the district court's discretion.
Grenfell v. Duffy (1982), 198 Mont. 90, 96, 643 P.2d 1184, 1187.
Our review of a district court's legal conclusion that no basis for
attorney's fees exists, however, is plenary. See Steer, Inc. v.
Dep't of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603.
It is clear that neither the State's insurance policy with
Glacier General, the 1987 Agreement, nor the Act specifically
authorize an award of attorney's fees to the State. The State does
not contend otherwise. Thus, the State has not established a basis

14
upon which attorney's fees ordinarily could be awarded in Montana.
The State argues, however, and the District Court agreed, that
MIGA violated the Act and breached the 1987 Agreement by
withdrawing its defense. Thus, according to the State, the damages
it sustained in the form of attorney's fees incurred in defending
against the Grange Insurance judgments are recoverable. In this
case, we need not address whether the District Court correctly
found breaches of both MIGA's statutory and contractual duties.
Regardless of whether MIGA breached the 1987 Agreement or violated
the Act, the District Court correctly determined that the State is
not entitled to recovery of the attorney's fees it seeks.
We note initially that the attorney's fees sought do not come
within the statutory definition of a covered claim contained in §
33-10-102, MCA. Glacier General's policy does not contain an
attorney's fees provision: thus, the fees do not "arise out of" and
fall "within the coverage" of an insurance policy to which the Act
applies. Section 33-10-102(2)(a), MCA. Therefore, MIGA's
statutory duty to pay covered claims does not apply to these
attorney's fees.
In addition, the attorney's fees sought by the State are in
the nature of damages for breach of both statutory and contractual
duties separate and apart from its covered claim. However, nothing
in the Act imposes liability on MIGA for such damages. Indeed, we
agree with the District Court that 5 33-10-110, MCA, provides MIGA
with immunity from liability for the attorney's fees in this case.
Section 33-10-110, MCA, provides:
[tlhere shall be no liability on the part of and no cause

15
 of action of any nature shall arise against any member
insurer, the association or its insurance producers or
employees, the board of directors, or the commissioner or
his representatives for any action taken by them in the
performance of their powers and duties under this part.
Statutes must be construed according to the plain meaning of
their language. Norfolk Holdings, Inc. v. Dep't of Revenue (1991),
249 Mont. 40, 43, 813 P.2d 460, 461. Further, it is our duty to
interpret individual sections of an act in such a manner as to
ensure coordination with the other sections of the act. State v.
Meader (1979), 184 Mont. 32, 37, 601 P.2d 386, 389. In doing so,
a statute will not be interpreted to defeat its evident object or
purpose: the legislative objective is of prime consideration in
interpreting statutes. Lewis and Clark County v. Dep‘t of Commerce

(1986), 224 Mont. 223, 227, 728 P.2d 1348, 1351.
On its face, 5 33-10-110, MCA, could be read to preclude the
assertion of any liability against MIGA, even the statutory
obligation to pay covered claims imposed by § 33-10-105(1)(a), MCA.
Such an interpretation, however, would render the entirety of the
Act, and its primary purpose of avoiding financial loss to
claimants or policyholders caused by the insolvency of an insurer,
a nullity. See Lewis and Clark, 728 P.2d at 1351. We decline to
interpret § 33-10-110, MCA, in such a manner.
On the other hand, the legislature clearly intended to
preclude liability for, and claims based on, actions taken by MIGA
in the performance of its duties. Section 33-10-110, MCA. Reading
this statute together with the purposes of the Act and MIGA's clear
statutory duty under § 33-10-105, MCA, to pay covered claims, we
conclude that the legislature intended to preclude liability

16
against MIGA for claims other than "covered claims" as defined in
the Act.
Although we have not interpreted 5 33-10-110, MCA, previously,
other states have concluded that similar versions of the guaranty
act provide immunity for guaranty associations from those claims
which do not qualify as "covered claims." In Pannell v. Missouri
Ins. Guar. Ass'n (MO. App. 1980), 595 S.W.2d 339, for example, the
insured brought a claim against the Missouri Insurance Guaranty
Association for "vexatious refusal to pay," a statutory cause of
action under the Missouri Insurance Code. In concluding that the
trial court erred in submitting the claim to the jury, the Missouri
Court of Appeals focused on the tightly restricted authority of the
association that required it to pay only "covered claims" and the
immunity provision that insulated the association from liability
for actions taken by it in the performance of its powers and
duties. Pannell, 595 S.W.2d at 352.

In Vaughn v. Vaughn (Wash. App. 1979), 597 P.2d 932, the
Washington court held that damages for bad faith did not constitute
a "covered claim" under the guaranty act. Therefore, the guaranty
association was not liable for such damages. Vaushn, 597 P.2d at
934. The Maryland Court of Appeals similarly concluded that
although attorney's fees were available under the Public
Information Act, the immunity provision of the guaranty act
precluded an award of attorney's fees against the Maryland
Insurance Guaranty Association. A.S. Abel1 Publishing Co. v.
Mezzanote (Md. 1983), 464 A.2d 1068, 1075.
Further, in Isaacson v. California Ins. Guar. Ass'n (Cal.

17
1988), 750 P.2d 297, the insured sued the California Insurance
Guaranty Association (CIGA) for compensatory and punitive damages
under three tort theories. The Supreme Court of California held
that the legislative intent behind California's Guaranty Act
indicated that CIGA was immune from tort liability for its conduct
relating to the handling of the claims under all three theories.
Focusing on CIGA's limited authority to disburse funds only for
"covered claims" and to collect only those funds necessary for the
payment of "covered claims," the court reasoned that CIGA did not
stand in the shoes of the insolvent insurer for all purposes, but
only regarding "covered claims."
Finally, we agree with the rationale expressed by the
Mississippi Supreme Court in Bobby Kitchens, Inc. v. Mississippi
Ins. Guar. Ass'n (Miss. 1989), 560 So.2d 129. In concluding that
the immunity provision precluded punitive damages against the
guaranty association, the Mississippi court explained:
It does appear that MIGA received protection from the
statutory limitations and restrictions . . . This
protection is not unintended by the legislative
enactment. . . . The sole purpose of the statute [the
act] is to protect the insured from insolvent insurance
companies and to require the financially healthy
insurance companies to involuntarily contribute to
protect the public. The statutes are of good purpose.
Because of MIGA's involuntary nature the Legislature
rightfully placed limitations on the liabilities of
Association members.
Bobby Kitchens, 560 So.2d at 135.
Applied to this case, MIGA is liable for the covered claim
under the State's insurance policy with Glacier General, as
provided in §§ 33-10-102 and -105, MCA. MIGA is not, and cannot
be, liable for the attorney's fees requested by the State because

18
those fees do not constitute a covered claim, as defined in 5 33-

10-102, MCA, and MIGA is immune from other liability for its
actions pursuant to § 33-10-110, MCA. We hold that the District
Court did not err in concluding that the State could not recover

the attorney's fees it incurred in defending against Grange

Insurance.

Affirmed in part, reversed in part and remanded for further

orders consistent with this opinion. _ "

We

19
 February 1, 1994

CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:

Robert J. Phillips, Esq.
Phillips & Williams, P.C.
201 W. Main
Missoula, MT 59802

William L. Crowley, Esq.
Boone, Karlberg & Haddon
201 W. Main, Ste. 301
Missoula, MT 59807-9199

WILLIAM GJANOULIAS
Dept. of Administration
Tort Claims Division
Mitchell Bldg.
Helena, MT 59620

ED SMITH
CLERK OF THE SUPREME COURT
STAT&OF MONTANA