NO. 94-624
IN THE SUPREME COURT OF THE STATE OF MONTANA
1995
LAURIE SIMPSON DAGEL,
Plaintiff and Respondent,
v.
FARMERS INSURANCE GROUP OF
COMPANIES/FARMERS INSURANCE
EXCHANGE,
Defendant and Appellant.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Jeffrey Sherlock, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Lyman H. Bennett, III, Morrow, Sedivy & Bennett,
Bozeman, Montana
For Respondent:
John C. Doubek, Kirk S. Bond, Small, Hatch, Doubek
& Pyfer, Helena, Montana
Submitted on Briefs: June 15, 1995
Decided: September 29, 1995
Filed:
Justice James C. Nelson delivered the Opinion of the Court.
The plaintiff, Laurie Simpson Dagel (Dagel), brought an action
in the District Court against Farmers Insurance Group of Companies
and Farmers Insurance Exchange (Farmers) seeking the benefits of
the uninsured motorist provision of the motor vehicle insurance
policy issued to her by Farmers. The District Court for the First
Judicial District, Lewis and Clark County, granted summary judgment
in favor of Dagel. Farmers appeals. We affirm.
We address the following issue on appeal:
Did the District Court err in determining that Dagel was not
required to exhaust the policy limits for uninsured motorist
coverage of the insurance policy on the vehicle she was operating
prior to making a claim for benefits under her own policy's
uninsured motorist provision?
Background Facts
On January 18, 1990, Dagel was involved in a two-vehicle
accident in Helena, Montana. The car Dagel was driving was struck
from behind by another vehicle after Dagel stopped to allow a
pedestrian to cross the street. It was later determined that the
vehicle that struck Dagel and the vehicle's driver were uninsured.
Northern Ford, the owner of the car driven by Dagel, was
covered by an insurance policy issued by Employer's Mutual
Companies (Mutual). This policy included uninsured motorist
coverage with a policy limit of $50,000. Dagel asserted a claim
against Mutual under the uninsured motorist provision of Mutual's
policy. Eventually, a settlement was negotiated between Dagel and
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Mutual in the amount of $30,000; $20,000 less than the available
policy limits.
At the time of the accident, Dagel had a motor vehicle
insurance policy with Farmers. The policy included uninsured
motorist coverage, with a policy limit of $100,000. Dagel asserted
a claim against Farmers, seeking the benefits of the uninsured
motorist provision.
On February 18, 1994, Farmers filed a motion seeking summary
judgment pursuant to Rule 56, M.R.Civ.P. Farmers contended that
because Dagel settled for less than the limits for uninsured
motorist coverage on the policy issued by Mutual, Dagel could not
recover under the uninsured motorist provision of the policy issued
by Farmers.
Farmers cited the following language from the uninsured
motorist portion of Farmers' policy to support its claim:
We will pay under this coverage only after the limits of
liability under any applicable bodily injury liability
bonds or policies have been exhausted by payment of
judgments or settlements.
Farmers contended that this language prohibited payment of benefits
to Dagel under the uninsured motorist provision of the policy
issued to Dagel by Farmers because Dagel did not "exhaust" the
limits of the uninsured motorist coverage of the Mutual policy.
On March 1, 1994, Dagel filed a cross-motion for summary
judgment on the issue of Farmers' liability under its policy. Oral
arguments were heard on June 24, 1994. On September 9, 1994, the
District Court issued its Order on Motions for Summary Judgment
denying Farmers' motion and granting Dagel's cross-motion on the
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issue of liability.
Farmers subsequently filed a Motion for Clarification
regarding the computation of damages and the District Court issued
its Order on Motion for Clarification on December 8, 1994. Farmers
appeals both orders.
Standard of Review
Our standard in reviewing a grant of summary judgment is the
same as that initially utilized by the district court. Youngblood
v. American States Ins. Co. (1993), 262 Mont. 391, 394, 866 P.2d
203, 204 (citing McCracken v. City of Chinook (19901, 242 Mont. 21,
24, 788 P.2d 892, 894). Summary judgment is proper when there is
no genuine issue as to any material fact and the moving party is
entitled to a judgment as a matter of law. Rule 56(c), M.R.Civ.P.;
Younqblood, 866 P.2d at 204.
In Montana, the interpretation of an insurance contract is a
question of law. Wellcome v. Home Ins. Co. (1993), 257 Mont. 354,
356, 849 P.2d 190, 192 (citing Truck Ins. Exchange v. Waller
(1992), 252 Mont. 328, 331, 828 P.2d 1384, 1386). We review
district court conclusions of law to determine if the court's
interpretation of the law is correct. Nimmick v. State Farm Mut.
Auto. Ins. Co. (Mont. 1995), 891 P.2d 1154, 1156, 52 St.Rep. 208,
209 (citing Steer, Inc. v. Department of Revenue (1990), 245 Mont.
470, 474-75, 803 P.2d 601, 603).
Discussion
Did the District Court err in determining that Dagel was not
required to exhaust the policy limits for uninsured motorist
coverage of the insurance policy on the vehicle she was operating
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prior to making a claim for benefits under her own policy's
uninsured motorist provision?
Montana's uninsured motorist statute, § 33-23-201, MCA, bases
payment of uninsured motorist benefits on two conditions: (I) 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. Hubbel v. Western Fire Ins. Co. (1985), 218
Mont. 21, 23, 706 P.2d 111, 112 (citing Oleson v. Farmers Insurance
Group (1980), 185 Mont. 164, 166, 605 P.2d 166, 167). The language
"legally entitled to recover" means that the insured must have a
cause of action against the tort-feasor and must be able to
establish fault and the existence of damages. State Farm v. Estate
of Braun (1990), 243 Mont. 125, 128, 793 P.2d 253, 254. The basic
purpose of the uninsured motorist statute is to provide protection
for the automobile insurance policyholder against the risk of
inadequate compensation for injuries or death caused by the
negligence of financially irresponsible motorists. Hubbel, 706
P.2d at 113 (citing Sullivan v. Doe (1972), 159 Mont. 50, 60, 495
P.2d 193, 198). We have previously stated that this Court does not
support provisions placed on uninsured motorist coverage which
restrict or thwart available liability coverage that the insured
would be entitled to in an accident. Guiberson v. Hartford Cas.
Ins. Co. (1985), 217 Mont. 279, 289, 704 P.2d 68, 74.
Farmers admits that if Dagel had exhausted coverage on the
Mutual policy, there would be no question that the uninsured
motorist coverage provided by the Farmers' policy would be
available to Dagel. Farmers contends that the uninsured motorist
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coverage under Farmers' policy was unavailable to Dagel because
Dagel settled with Mutual for an amount less than the available
liability limits under Mutual's policy. Dagel did not "exhaust"
Mutual's policy limits as required by Farmers' policy. We do not
address Farmers' contention that Mutual's policy is "primary" and
Farmers' policy is "excess," as we find the interpretation of the
exhaustion clause to be the dispositive issue in this case.
Dagel contends that the exhaustion clause in Farmers' policy
is unenforceable here because of the language of the clause itself.
The clause provides:
We will pay under this coverage only after the limits of
liability under any applicable bodily injury liability
bonds or policies have been exhausted by payment of
judgments or settlements. [Emphasis added.1
Dagel argues that the only possible claim she could have made
against a bodily injury liability policy would have been against
one held by the driver of the other vehicle.
We find Dagel's argument persuasive. In this case there was
no other bodily injury liability policy in effect that applied to
Dagel's injuries because the driver of the other vehicle was
uninsured. In interpreting insurance contracts, the words of the
policy are to be understood in their usual meaning; common sense
controls. Duensing v. Traveler's Companies (1993), 257 Mont. 376,
381, 849 P.2d 203, 206 (citing James v. Prudential Ins. Co. (1957),
131 Mont. 473, 477, 312 P.2d 125, 127).
The Farmers' policy defines an "uninsured motor vehicle" as
one which is "not insured by a bodily injury liability bond or
policy at the time of the accident." Accordingly, under Farmers'
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own definition, since the vehicle that injured Dagel was uninsured,
there was no bodily injury liability bond or policy applicable to
Dagel's injuries at the time of the accident. Exclusions and words
of limitation in a policy must be strictly construed against the
insurer. Leibrand v. Nat. Farmers Union (Mont. 1995), 898 P.2d
1220, 1223, 52 St.Rep. 557, 559, (citing Bauer Ranch, Inc. v.
Mountain West Farm Bureau (1985), 215 Mont. 153, 156, 695 P.2d
1307, 1309).
Accordingly, we hold that the District Court correctly
determined that the exhaustion clause in the Farmers' policy was
inapplicable in the present case and that Dagel is entitled to
recover under the uninsured motorist provision of the Farmers'
policy.
Since neither party argued either for or against the District
Court's determination of the portion of damages to be allocated to
Affirmed.
We Concur:
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September 29, 1995
CERTIFICATE OF SERVICE
I hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:
Lyman H. Bennett, III.
MORROW, SEDIVY & BENNETT, P.C.
P.O. Box 1168
Bozeman, MT 59771-1168
JOHN C. DOUBEK
SMALL, HATCH, DOUBEK & PYFER
P.O. BOX 236
HELENA, MT 59601
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA