Tucker v. Farmers Insurance Exchange

                                                                                            July 22 2009



                                          DA 08-0083

                  IN THE SUPREME COURT OF THE STATE OF MONTANA

                                          2009 MT 247



PATSY ANN TUCKER, Personal Representative of
the Estate of CATHRYN CLAIRE ROSE TUCKER,

              Plaintiff and Appellee,

         v.

FARMERS INSURANCE EXCHANGE,
a Reciprocal Inter-Insurance Exchange,

              Defendant and Appellant.



APPEAL FROM:            District Court of the Fourth Judicial District,
                        In and For the County of Missoula, Cause No. DV 03-741
                        Honorable John W. Larson, Presiding Judge


COUNSEL OF RECORD:

                For Appellant:

                        Mark S. Williams, Williams Law Firm, P.C., Missoula, Montana

                For Appellee:

                        Alexander (Zander) Blewett, III, Hoyt & Blewett, PLLC, Great Falls,
Montana



                                                   Submitted on Briefs: December 24, 2008

                                                              Decided: July 21, 2009


Filed:

                        __________________________________________
                                          Clerk
Justice Brian Morris delivered the Opinion of the Court.

¶1    Farmer’s Insurance Exchange (FIE) appeals from a jury award of $516,000 in

wrongful death damages to Patsy Ann Tucker (Tucker) in the Fourth Judicial District

Court, Missoula County. The court also awarded attorney fees, costs, and accrued

interest. We affirm.

¶2    FIE presents the following issues for review:

¶3    Whether the District Court properly denied FIE’s motion for a directed verdict on

Tucker’s underinsured motorist (UIM) claim for wrongful death damages.

¶4    Whether the District Court properly applied Idaho law in determining the

wrongful death damages.

¶5    Whether the District Court correctly denied collateral source offsets from Tucker’s

wrongful death damages award.

                 PROCEDURAL AND FACTUAL BACKGROUND

The Accident

¶6    Tucker is a co-personal representative of the estate of her daughter, Cathryn Claire

Rose Tucker (Cady Tucker). Cady Tucker, age 11, died on August 15, 2002, following

an automobile accident that took place north of Seeley Lake on Montana Highway 83.

Cady Tucker lived in Idaho Falls, Idaho, with her mother and her mother’s husband,

Robert Starr (Starr), at the time of the accident. Cady Tucker’s biological father is John

Hoctor (Hoctor). Hoctor is a co-personal representative of Cady Tucker’s estate.



                                            2
¶7     Cady Tucker rode in the front seat of a vehicle owned and operated by Robert

Cushman (Cushman), a Montana resident. Jamie Robbins (Robbins), Cady Tucker’s

cousin, rode in the backseat of Cushman’s vehicle. Janie McNair (McNair), also a

Montana resident, negligently drove her vehicle over the centerline and collided head-on

with Cushman’s vehicle. Cushman and Robbins suffered serious injuries. Cady Tucker

died from her injuries after living an appreciable amount of time.

Insurance Coverage

¶8     Safeco insured Cushman under two separate policies with UIM limits of $100,000

per person and $300,000 per accident. Safeco agreed to stack the policies and paid

$200,000 to Tucker and Hoctor in equal shares of $100,000. All parties agreed that these

monies constituted survivorship damages under Montana law.              Tucker and Hoctor

divided the survivorship damages in accordance with the succession laws of Montana.

¶9     State Farm insured McNair for liability coverage of $25,000 per person and

$50,000 per accident. McNair collided with two separate vehicles in this accident.

McNair’s negligence caused the death of Cady Tucker and caused severe injuries to

Cushman, Robbins, and three passengers in the vehicle trailing Cushman’s vehicle. State

Farm admitted to McNair’s negligence. As a result, State Farm provided additional

coverage of $25,000 per person and $50,000 per accident.             State Farm divided its

$100,000 limit among the injured parties, including Cady Tucker’s heirs, with a $50,000

per person limitation. State Farm paid survivorship damages in the amount of $35,625 to

Tucker and Hoctor in equal shares of $17,812.50.
                                             3
¶10   Tucker and Hoctor agreed that the Safeco and State Farm monies constituted

survivorship damages and thus split these amounts equally as co-personal representatives

of Cady Tucker’s estate. They further agreed that any money damages received in the

future would not be divided equally as Tucker had provided a vast majority of Cady

Tucker’s financial support and care.

¶11   Starr had purchased two UIM policies that insured Tucker and Cady Tucker. The

first policy, Farmers Insurance Company of Idaho (FICI), insured them for $250,000 per

person. The FICI policy contained a provision that Idaho law governed the contract.

Consistent with Idaho law, the FICI policy contained a mandatory arbitration provision.

The second policy, FIE, insured both Tucker and Cady Tucker for $1,000,000 per

occurrence. Starr had purchased the FIE policy to provide excess coverage above the

FICI policy. The FIE policy contained no choice of law provision and no arbitration

provision.

¶12   Tucker initially demanded the $250,000 policy limit in UIM coverage from FICI.

John Evers (Evers), a general adjuster for FICI and FIE, initially informed Tucker that

policy exclusions in both the FICI and FIE policies barred coverage.        Evers later

confirmed the insurer’s intent, however, to address the UIM claims under both policies.

Evers opined that coverage would be subject to an offset of the amount recovered from

the tortfeasor and benefits received from Cushman’s UIM coverage. Tucker detailed the

damages that had been incurred from Cady Tucker’s death and demanded that FICI and



                                           4
FIE pay the entire limit of $1,500,000 to the co-personal representatives of Cady

Tucker’s estate.

Idaho Court Proceedings

¶13    FICI responded by filing a complaint in Bannock County, Idaho, on March 13,

2003, that sought to compel arbitration of the UIM claim. FIE joined the complaint five

days later. Three days later, on March 21, 2003, Tucker and Hoctor filed a complaint in

Montana that sought damages against McNair for negligence and asserted UIM claims

against FICI and FIE. FICI and FIE filed motions to dismiss the Montana action. The

District Court dismissed the Montana action on June 23, 2003, based on comity and the

fact that the Idaho court was considering the question of whether the insurance policies

compelled arbitration. The Idaho district court interpreted the insurance contracts and

granted FICI’s motion to compel arbitration as its insurance policy contained an express

arbitration clause. The Idaho district court denied FIE’s motion to compel arbitration as

its insurance policy did not contain an arbitration clause.

¶14    Tucker settled her claim with FICI after providing FICI with evidence that Cady

Tucker had lived an appreciable time after the accident. Tucker and Hoctor agreed to

discharge their UIM claim against FICI under Idaho law for the $250,000 policy limit.

Hoctor received $70,000 and Tucker received $180,000. The parties did not apportion

this settlement between survivorship damages and wrongful death damages. The Idaho

district court dismissed this portion of the case with prejudice on December 29, 2003.



                                              5
¶15   Tucker and Hoctor filed a second complaint in Montana on September 2, 2003,

that sought damages against FIE. FIE moved to dismiss the second Montana action on

June 30, 2004. The Montana court declined to rule on the dismissal motion and stayed

the action pending resolution of the Idaho proceedings.

¶16   FIE sought leave to file an amended complaint for declaratory relief in the Idaho

action on November 10, 2003. FIE sought a declaratory judgment to determine whether

Tucker and Hoctor could recover under the FIE’s UIM coverage and the amount of such

recovery. The Idaho district court allowed FIE leave to amend its complaint in order to

pursue a declaratory judgment “to determine whether FIE must pay [damages] and to

whom it must pay the damages.” The court refused, however, to allow FIE to determine

in such action “the amount of damages [Tucker and Hoctor] may seek from FIE in a

wrongful death action and/or breach of contract action.”

¶17   FIE appealed to the Idaho Supreme Court. The Idaho Supreme Court agreed that

no authority supported FIE’s efforts to maintain a declaratory judgment action to

determine damages when a wrongful death and survivorship action was pending in

Montana to address the identical issue. Farmers Ins. Exchange v. Tucker, 125 P.3d 1067,

1071 (Idaho 2005).

¶18   The Idaho Supreme Court admitted that FIE’s argument contained “some initial

curb appeal” as the case involved the interpretation of an insurance policy issued in Idaho

to Idaho insureds. Tucker, 125 P.3d at 1071. The court further recognized that most of

the likely trial witnesses on the damages issue lived in Idaho. The court ultimately
                                            6
determined, however, that the remaining issues in the case boiled down to the question of

how much FIE must pay under its policy.          Tucker, 125 P.3d at 1071.       The court

concluded that “the only issue of substance to be determined is the factual question as to

the amount of damages, a question which is pending in the first-filed regular action in the

state of Montana.” Tucker, 125 P.3d at 1071.

Montana Court Proceedings

¶19    The Montana District Court held a jury trial on April 6, 9, and 10, 2007, on

Tucker’s claim for wrongful death damages. Tucker alleged that FIE was contractually

obligated under its UIM policy for her wrongful death damages. The jury awarded

Tucker damages in the amount of $516,000.

¶20    The District Court held a hearing on September 5, 2007, to address the role or

extent of collateral sources. FIE did not present any evidence or call any witnesses. FIE

instead argued that Tucker had received insurance settlements that covered the same

damages that the jury had awarded. FIE claimed that it was entitled to offsets to the jury

award for all amounts paid by other sources of insurance. The District Court determined

that FIE had failed to meet its burden of proving specific amounts that could be defined

as survivorship damages and specific amounts that could be defined as wrongful death

damages that would entitle it any offsets.

¶21    FIE sought to have the court revisit its earlier ruling that Idaho law applied to the

interpretation of the contract. The District Court affirmed that Idaho law applied to

control the legal construction and effect of FIE’s policy. The District Court pointed to
                                             7
our reliance on § 188 of the Restatement (Second) Conflict of Laws to determine the state

that possesses a materially greater interest in the particular contract issue and the

applicable state’s law in the absence of the parties’ effective choice of law.

¶22    The court considered the factors in § 188. The parties agreed that the policies had

been issued in Idaho, to Idaho residents, covering Idaho vehicles. Tucker resides in

Idaho, as did Cady Tucker. The court determined that the location of the accident and the

fact that the negligent driver was from Montana provided the only Montana connections.

The Montana driver had failed to answer the complaint. Thus, the court determined that

the action centered on the interpretation of Idaho insurance policies issued to Idaho

residents. FIE appeals.

                               STANDARD OF REVIEW

¶23    We review de novo issues of law, including a trial court’s decisions on directed

verdict, choice of law, and collateral source offset. Omimex Canada v. State, Dept. of

Revenue, 2008 MT 403, ¶ 16, 347 Mont. 176, 201 P.3d 3.

                                      DISCUSSION

¶24    Whether the District Court properly denied FIE’s motion for a directed verdict on

Tucker’s underinsured motorist (UIM) claim for wrongful death damages.

¶25    Section 27-1-513, MCA, allows the personal representative of the decedent’s

estate to maintain an action for wrongful death damages. Any damages awarded in

wrongful death causes of action are personal to the decedent’s heirs and do not belong to

the decedent’s estate. In re Estate of Lambert, 2006 MT 229, ¶ 16, 333 Mont. 444, 143
                                              8
P.3d 426. FIE concedes that Tucker had the authority to prosecute a wrongful death

action for her own damages from Cady Tucker’s death.

¶26    FIE argues, however, that its UIM policy covered only bodily injury to its insured.

FIE claims that Tucker failed to present evidence at trial of bodily injury suffered by her

as the insured person. FICI’s UIM policy provides that FICI will pay all amounts that its

insured legally would be entitled “to recover as damages from the owner or operator of

an uninsured motor vehicle because of bodily injury sustained by the insured person.”

The FICI UIM policy further provides that the “bodily injury must be caused by accident

and arise out of the ownership, maintenance or use of the uninsured motor vehicle.” The

FICI policy defines bodily injury as “bodily injury to or sickness, disease or death of any

person.” FIE added an underinsured motorist endorsement under which it “agreed that

this policy will provide Uninsured and/or Underinsured Motorist Coverage(s) payable to

you and any other insured under this policy, to the extent that either or both coverages are

a part of the underlying insurance.”

¶27    FIE contends that it added UIM coverage to its umbrella policy by endorsement.

As a result, FIE argues that its umbrella policy provides UIM coverage only to the extent

that the underlying insurance policy provides coverage. The FICI policy constitutes the

underlying policy. FIE further contends that the FICI UIM policy provides that Tucker

may recover only for bodily injury sustained by her as the insured person. FIE argues

that Cady Tucker suffered the bodily injury in this case. FIE claims that FICI covered

these bodily injury damages suffered by Cady Tucker when it settled its claim for the
                                             9
policy limit. Thus, FIE takes the position that Tucker’s survivorship claim arose from

“bodily injury” to Cady Tucker, the insured, and that claim had been covered and paid by

the terms of the UIM policy. As a result, FIE alleges that the District Court improperly

denied its motion for directed verdict in light of Tucker’s failure to establish her own

bodily injuries as part of Tucker’s wrongful death claim.

¶28    FIE relied upon our decision in Jacobsen v. Farmers Union Mut. Ins. Co., 2004

MT 72, 320 Mont. 375, 87 P.3d 995, before the District Court. This Court limited

“bodily injury” in Jacobsen to physical injury to a person caused by an accident. The

Court excluded emotional and psychological injuries from the definition of “bodily

injury,” “including physical manifestations resulting therefrom.” Jacobsen, ¶ 29. We

recently overruled Jacobsen in Allstate Ins. Co. v. Wagner-Ellsworth, 2008 MT 240, ¶

13, 344 Mont. 445, 188 P.3d 1042.

¶29    In Allstate we construed the term “bodily injury” within an insurance policy to

include mental or psychological injury that is accompanied by physical manifestations.

Allstate, ¶ 40. There a child had been injured severely when struck by a car. The child’s

mother and brother claimed emotional and physical injuries. Allstate, ¶ 5. The definition

of “bodily injury” in the Allstate policy included “physical harm to the body, sickness,

disease, or death.” Allstate, ¶ 40.

¶30    The Allstate policy covered the bodily injuries of the child who had been struck by

the car. Allstate, ¶ 18. The mother and brother alleged that they too had sustained

damages “because of” the child’s bodily injury and that their claims fell within the
                                            10
contract’s language that obligated Allstate to pay damages “because of [a] bodily injury

sustained by any person.” The mother and brother underwent therapy for the brother’s

withdrawal and the mother’s suffering from stress, migraine headaches, a rapid heart beat

when she hears sirens, physical pain, and depression. Allstate, ¶ 5.

¶31    We reviewed numerous decisions from other jurisdictions and recognized the

difficulty in distinguishing between injuries that have physical manifestations from those

that do not. Allstate, ¶ 41. We concluded that each case necessarily must be judged by

its own facts to determine whether the alleged injuries are sufficiently akin to physical

injuries to fall within coverage for “bodily injury.” Allstate, ¶ 42. Conditions susceptible

to medical diagnosis and treatment distinguish physical injuries from mental injuries.

Allstate, ¶ 42.

¶32    FIE opines that Tucker’s testimony at trial consisted of symptoms associated with

grief, namely sleeplessness and loss of appetite. FIE contends that these symptoms do

not constitute physical ailments and thus are distinguishable from emotional distress.

Tucker’s family and friends described her as having been socially and physically active

with no emotional or physical problems before Cady Tucker’s death. They further

testified that Tucker had virtually no relationship with her husband after the death of her

daughter. They described long hours that Tucker now spent at work and the large

amounts of time that she spent either at her daughter’s grave or honoring her daughter’s

memory in some fashion.



                                            11
¶33   Tucker’s neuropsychologist expert, Dr. Lloyd, examined and tested Tucker in

2006. Dr. Lloyd testified that four years after Cady Tucker’s death, Tucker suffered from

chronic PTSD and chronic depression as a result of seeing her daughter’s body inside of a

body bag covered in blood with the side of her face crushed. Dr. Lloyd testified that

Tucker exhibited visible signs of distress when she talked about seeing her daughter in

such a condition or the events surrounding her daughter’s death. Dr. Lloyd explained that

Tucker visibly would sweat and likely would have an increased heart rate and an

increased respiration rate. Dr. Lloyd believed Tucker had exhibited psychotic features

with her depression when she would hear her daughter’s voice, when she would see her

daughter walking beside her, or when she would see her daughter kneeling beside her

praying.

¶34   FIE’s psychiatric expert, Dr. Martin, testified that four years after Cady Tucker’s

death, Tucker suffered in varying degrees at various times from PTSD, depression,

complicated bereavement, and obsessionality. Dr. Martin noted that he agreed with Dr.

Lloyd’s examination results, except for the psychotic features associated with depression,

medication, and treatment. Both experts agreed, however, that Tucker’s emotional

problems stem from her daughter’s death and recommended future therapy.

¶35   Tucker suffered mental injuries with physical manifestations that would be

covered under the FIE’s UIM policy’s definition of “bodily injury.” Allstate, ¶ 43. We

reiterate that a court must evaluate each claim for bodily injury in the form of mental

injuries with physical manifestations on a case by case basis.       Allstate, ¶ 42.   We
                                           12
conclude, as did the District Court, that the evidence and testimony presented at trial,

both from the expert witnesses and Tucker’s family and friends, established that Tucker

suffered from mental injuries with physical manifestations. These injuries fall within

FIE’s UIM definition of “bodily injury.” Allstate, ¶ 43. The District Court properly

denied FIE’s motion for a directed verdict.

¶36       Whether the District Court properly applied Idaho law to an Idaho insurance

policy.

¶37       FIE argues that this Court historically has applied Montana law to insurance

policies that provide coverage for automobile accidents that occur in Montana. FIE seeks

application of the place of performance test set forth in § 28-3-102, MCA, to determine

which state’s law governs the contract. FIE contends that Tucker argued in Idaho courts

and before the District Court here that Montana law applied to her survivorship claim.

FIE claims that Tucker received the full benefit bestowed by Montana jurisdiction and

the application of Montana law to the survivorship action. FIE thus contends that Tucker

now should not be permitted the benefit of having the District Court apply the more

favorable Idaho law to her wrongful death action.

¶38       The law of the place of performance governs a contract’s interpretation unless the

terms of the insurance contract provide otherwise. Mitchell v. State Farm Ins. Co., 2003

MT 102, ¶ 20, 315 Mont. 281, 68 P.3d 703. Tucker argues, however, that collateral

estoppel bars FIE’s challenge to the District Court’s decision to apply Idaho law.

Collateral estoppel bars litigants from reopening questions that had been essential to an
                                              13
earlier judgment. Baltrusch v. Baltrusch, 2006 MT 51, ¶ 18, 331 Mont. 281, 130 P.3d

1267.

¶39     Tucker points out that the Idaho district court interpreted the FICI and FIE

insurance contracts in accordance with Idaho law. FICI and Tucker agreed to that

interpretation in settling Tucker’s guardianship claim.     FIE did not appeal the Idaho

district court’s decision. FIE defends its failure to appeal on the grounds that it “was

merely a bystander” once the Idaho district court denied its motion to compel arbitration

of the dispute between Tucker and FIE. FIE ignores the fact, however, that it sought

further protection under Idaho law when it filed a declaratory judgment action to

determine damages.

¶40     Moreover, Tucker points to the fact that the Idaho district court inquired as to the

remaining issues to be litigated. FIE’s counsel responded that he did not “think there is

anything remaining to be litigated in Idaho because there is no coverage issue. It’s just a

question of determining what is the amount due under the policy.” Tucker, 125 P.3d at

1071. FIE’s counsel further represented that the remaining litigation involved “purely a

question of how much damages are recoverable under the facts of the case.” Tucker, 125

P.3d at 1071. We need not resolve definitively the issue of collateral estoppel, however,

as the District Court reached the correct conclusion with respect to its decision to apply

Idaho law to FIE’s UIM insurance contract.

¶41     We recently adopted the “most significant relationship” approach contained in the

Restatement (Second) of Conflict of Laws to determine the applicable state law in
                                             14
determining a choice-of-law conflict in contract disputes. Modroo v. Nationwide Mut.

Fire Ins. Co., 2008 MT 275, ¶ 50, 345 Mont. 262, 191 P.3d 389. Section 188 of the

Restatement governs situations in which the contracting parties fail to select an effective

choice of law. Modroo, ¶ 55.

¶42    In Modroo, a Ohio resident was killed in Montana and her personal representative

argued that the court should construe ambiguous choice of law language in a UIM policy

in favor of the insured. Modroo, ¶ 41. This Court’s review of Modroo’s policy’s

provisions determined that Montana law applied to Modroo’s tort claim and that Ohio

law governed the interpretation of the insurance contract. Modroo, ¶ 45. We agreed with

the district court that Montana did not have a materially greater interest in the case and

that Ohio law governed Modroo’s entitlement to UIM coverage. Modroo, ¶ 52.

¶43    We have focused on the contacts enumerated in § 188(2) of the Restatement to

determine whether Montana possesses a materially greater interest in an issue than the

parties’ chosen state: “(a) the place of contracting, (b) the place of negotiation of the

contract, (c) the place of performance, (d) the location of the subject matter of the

contract, and (e) the domicil, residence, nationality, place of incorporation and place of

business of the parties.” Keystone, Inc. v. Triad Systems Corp., 1998 MT 326, ¶ 10, 292

Mont. 229, 971 P.2d 1240. Application of these criteria reveals that Idaho possesses a

materially greater interest in the issue than Montana. Modroo, ¶ 58.

¶44    The parties agree that the policies had been issued in Idaho, to Idaho residents,

providing coverage to Idaho vehicles. Idaho constitutes the place of contracting and the
                                            15
place of negotiating the contract. Modroo, ¶ 60. These contacts bear little significance

when considered separately, but gain importance based on their relationship to the

contract issue involved and the other contacts. Modroo, ¶ 60; Restatement (Second) of

Conflict of Laws § 188 cmt. e.      Here the location of the subject matter bears no

significance. The subject matter of an insurance contract does not constitute a specific

physical thing or a localized risk. Modroo, ¶ 60; Restatement (Second) of Conflict of

Laws § 188 cmt. e.

¶45   Montana admittedly constitutes the “place of performance” as the accident

occurred in Montana, the drivers of the vehicles in the accident were Montana residents,

and these vehicles were insured in Montana. The place of performance bears little weight

in choice-of-law determinations, however, when the place of performance is uncertain or

unknown at the time of contracting. Modroo, ¶ 62; Restatement (Second) of Conflict of

Laws § 188 cmt. e.

¶46   Montana constituted a potential place of performance as FIE agreed to pay UIM

damages for “accidents, occurrences, and losses [which] occur within the United States . .

. .” Montana did not become the place of performance, however, until Cady Tucker’s

accident occurred and Tucker’s claims arose. We therefore accord this contact little

weight as Montana’s status as the place of performance was uncertain or unknown at the

time of contracting. Modroo, ¶ 62; Restatement (Second) of Conflict of Laws § 188 cmt.

e.



                                           16
¶47    We are left to resolve a dispute that centers on the interpretation of the Idaho

insurance policies issued to Idaho residents by corporations doing business in Idaho.

Montana’s interest in this dispute derives solely from its status as the place of

performance. This fact does not create a materially greater interest in this dispute among

Idaho parties that would warrant applying Montana law. We agree with the District

Court that Idaho law applies to control the legal construction and effect of FIE’s policy.

Modroo, ¶ 63; Restatement (Second) of Conflict of Laws § 188.

¶48    Whether the District Court correctly denied collateral source offsets from

Tucker’s wrongful death damages award.

¶49    FIE claims that Tucker’s award must be reduced by $298,433.35 to reflect all prior

liability and UIM insurance payments already paid by the primary insurance policies.

FIE contends that its policy constitutes an excess “umbrella” insurance policy that

contractually requires it to receive credit for all amounts previously paid by other sources

of insurance. In the alternative, FIE argues the applicability of the collateral source

statute that allows offsets by law. Section 27-1-308(1), MCA, provides that “a plaintiff’s

recovery must be reduced by any amount paid or payable from a collateral source that

does not have a subrogation right.”      Section 27-1-308(3), MCA, requires a jury to

determine its award without consideration of any collateral sources. After the jury award,

however, the trial judge must hold an evidentiary hearing to determine the existence and

amount of collateral sources. Section 27-1-308(3), MCA.



                                            17
¶50    The District Court scheduled an evidentiary hearing to determine the existence and

amounts of any collateral sources received by Tucker. The court stated at the outset of

the hearing that it was looking for “hard evidence, not presumptions or formulas or -- but

hard evidence that any of these settlements included a specific amount that can be utilized

as a collateral source.” A most unusual proceeding ensued. FIE relied generally on

affidavits submitted by several of its agents. The District Court deemed the affidavits to

be inadmissible and FIE has not appealed this ruling. Tucker’s counsel was sworn as a

witness and testified as to his interpretation of many of the exhibits introduced by FIE.

Tucker also called as a witness counsel for Hoctor, the other co-personal representative of

the estate of Cady Tucker.     Hoctor’s counsel provided his interpretation of various

settlement agreements among Tucker, Hoctor, FICI, Safeco, and State Farm.

¶51    The District Court determined that FIE had the burden of providing evidence and

proving the amount of offset to which it was entitled. Tucker had pursued two separate

claims, a survivorship claim and a wrongful death claim. The District Court concluded

that FIE had failed to meet its burden to prove sufficiently that Tucker had received

duplicative damage awards.

¶52    FIE claims that the District Court erroneously placed the burden on it to establish

the allocation of damages between survivorship and wrongful death. FIE further claims

that Tucker received double recovery based upon the District Court’s erroneous finding

that it could not allocate between the amount of survivorship and wrongful death

damages that Tucker had received. FIE admits that the defendant bears the burden of
                                            18
proving the existence of collateral source offsets. FIE argues, however, that once the

initial burden is met, the burden should shift to Tucker to establish the amount of the

offsets. FIE claims that it met its initial burden simply by proving that Tucker’s earlier

settlements had included wrongful death damages. The burden shifted to Tucker at that

point, according to FIE, to allocate her previously received settlements.

¶53    The parties cite numerous cases from other jurisdictions regarding which party

should bear the burden of proof in demonstrating an entitlement to an offset. See, e.g.,

Litho Color, Inc. v. Pacific Employers Ins., 991 P.2d 638 (Wash.App. Div.1 1999) (cited

by FIE) and PSE v. Alba General Ins. Co., 68 P.3d 1061 (Wash. 2003) (cited by Tucker).

These cases allegedly offer conflicting holdings and competing rationales.

¶54    Tucker cites to Hornung v. Estate of Lagerquist, 155 Mont. 412, 420, 473 P.2d

541, 546 (1970), for the general proposition that the burden of proving an offset rests on

the party who seeks an offset. FIE does not dispute Hornung’s continuing vitality on this

general point, but argues that it fails to address a situation where a party seeking an offset

has demonstrated the existence of settlement funds to the other party from other sources

and the other party has failed to allocate these other settlement funds. FIE argues that the

burden of allocating those settlement funds for collateral source offsets shifts to the

recipient of those settlement funds.

¶55    We also note that this Court faced a related claim in Cottrell v. Burlington

Northern R. Co., 261 Mont. 296, 863 P.2d 381 (1993). The jury returned a general

verdict in excess of $1.3 million. The plaintiff had sought lost wages of $862,230 and
                                             19
general damages from $700,000 to $1,000,000 for pain and suffering. The defendant

railroad sought to offset the jury’s general verdict by the amount of lost wages advanced

by the defendant to the plaintiff and for medical bills paid by plaintiff’s medical insurer.

¶56    The Court agreed with the plaintiff that it could not make an exact apportionment

of the jury's verdict between general damages and wage loss. The jury's verdict exceeded

$1.3 million. The Court nevertheless reasoned that the difference between the jury’s

verdict and the plaintiff’s claim of general damages up to $1,000,000 meant that “at least

$300,000 of [plaintiff’s] recovery had to be compensation for wage loss.” Cottrell, 261

Mont. at 309, 863 P.2d at 389. As a result, the Court remanded to the district court to

determine the exact amount of the offset to which the defendant railroad was entitled

based on its advancement of lost wages to the plaintiff. Cottrell, 261 Mont. at 309, 863

P.2d at 389.

¶57    The Alaska Supreme Court cited to Cottrell in Turner v. Municipality of

Anchorage, 171 P.3d 180, 191 (Alaska 2007), for the proposition that “an offset would

not be granted absent some positive proof that the defendant's payments coincided with

the jury award.” We agree. FIE cites several cases from other jurisdictions where the

courts have determined that the plaintiff, who was a party to the earlier settlement, was in

a better position to allocate the proceeds. See, e.g., Mobil Oil Corp. v. Ellender, 968

S.W.2d 917 (Tex. 1998); Knox v. County of Los Angeles, 109 Cal. App. 3d 825, 836 (Cal.

Ct. Apps. 1980). Tucker argues, however, that the same Idaho counsel represented FICI

and FIE in the settlement negotiations. FICI settled with Tucker and Hoctor for the
                                             20
$250,000 policy limit. Tucker received $180,000 and Hoctor received $70,000. Tucker

points out that FICI, represented by the same counsel as FIE, made no attempt to

apportion the settlement between the survivorship action and the wrongful death action.

Tucker argues that FIE’s counsel made no effort to apportion in order to gain possible

leverage in the subsequent negotiations regarding the wrongful death claim.

¶58   FIE cannot claim to be in the position of an outsider to the settlement, similar to

the defendants in Mobile Oil and Knox, with no control over its allocation among

Tucker’s claims. FIE has failed to meet its burden under Cottrell and Hornung to present

“some positive proof” that FICI’s settlement proceeds of $250,000 covered the same

damages awarded by the jury for Cady’s wrongful death. Turner, 171 P.3d at 191. We

affirm the District Court’s decision to provide FIE with no offset with respect to Tucker’s

$180,000 share of the $250,000 settlement proceeds received from FICI.

¶59   We turn then to the remaining settlements between Tucker and Safeco and State

Farm. Tucker and Hoctor each received $100,000 from Safeco. All of the parties to the

settlement agreed that the proceeds constituted survivorship damages under Montana law.

Tucker’s counsel testified at the hearing on offsets that the parties agreed that the

settlement proceeds were intended to compensate Cady Tucker’s estate for the

survivorship claim. FIE failed to present any evidence at the hearing on offsets to refute

this agreement. Once again FIE failed to meet its burden under Cottrell and Hornung to

present “some positive proof” that Safeco’s settlement proceeds of $100,000 covered the

same damages awarded by the jury for Cady’s wrongful death. Turner, 171 P.3d at 191.
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We affirm the District Court’s decision to provide FIE with no offset with respect to

Tucker’s $100,000 share of the $200,000 settlement proceeds received from Safeco.

¶60   Finally, Tucker and Hoctor divided evenly a $35,625 settlement with State Farm.

Tucker points to the fact that she and Hoctor, as co-personal representatives of Cady

Tucker’s estate, divided evenly the State Farm settlement proceedings as evidence of the

fact that the settlement proceeds covered their survivorship claims. Her counsel testified

at the hearing on offsets that the settlement proceeds were intended to compensate Cady

Tucker’s estate for the survivorship claim. FIE offered no evidence at the hearing to

contradict this claim. We affirm the District Court’s decision to provide FIE with no

offset with respect to Tucker’s share of the $35,625 settlement proceeds received from

Safeco.

¶61   Affirmed.

                                         /S/ BRIAN MORRIS

We Concur:

/S/ W. WILLIAM LEAPHART
/S/ JAMES C. NELSON
/S/ PATRICIA COTTER




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Justice John Warner concurs.

¶62    I concur with the Court’s opinion. I write to explain why I concur with the Court

on Issue 2.

¶63    FIE appeals the District Court judgment, inter alia, because even though the tort

case was tried in Montana using Montana law as it relates to tort damages, Idaho law was

applied by the District Court to increase the judgment by $328,939.39 in pre-judgment

interest and $281,646.46 as attorney fees. Neither of these amounts would be awarded

under Montana law.

¶64    FIE argues Tucker is judicially estopped from the application of Idaho law to the

insurance contract because in the Idaho courts she argued Montana law applies, and in

the Montana courts she argues Idaho law applies.

¶65    The doctrine of judicial estoppel precludes a party to an action from taking a

position inconsistent with the party’s prior judicial declarations. State v. Darrah, 2009

MT 96, ¶ 12, 350 Mont. 70, 205 P.3d 792 (citing Vogel v. Intercontinental Truck Body,

Inc., 2006 MT 131, ¶ 10, 332 Mont. 322, 137 P.3d 573). It is an equitable doctrine

intended to protect courts from being “manipulated by chameleonic litigants who seek to

prevail, twice, on opposite theories.” Nelson v. Nelson, 2002 MT 151, ¶ 20, 310 Mont.

329, 50 P.3d 139. The party claiming judicial estoppel must show that:

       (1) the estopped party had knowledge of the facts at the time he took the
       original position;
       (2) the estopped party succeeded in maintaining the original position;
       (3) the position presently taken is inconsistent with the original position;
       and
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       (4) the original position misled the party so that allowing the estopped party
       to change its position would injuriously affect the adverse party.

Darrah, ¶ 12 (citing Vogel, ¶ 10).

¶66     In my view, judicial estoppel would preclude use of the “most significant

relationship” approach of the Restatement (Second) of Conflict of Laws § 188, which we

adopted in Modroo, if Tucker took inconsistent positions in Idaho and Montana relating

to the interpretation of FIE’s contract of insurance. However, a careful examination of

the record reveals that Tucker did not take inconsistent positions concerning the

application of Idaho law to the insurance contract.

¶67    In its briefing in the Idaho courts, Tucker was fearful that FICI would convince an

arbiter that Idaho law should be applicable to liability and damage issues and therefore

strenuously argued against arbitration. Still, in discussing the stacking of UIM coverage,

Tucker argued in the Idaho courts that she could recover interest and attorney fees under

Idaho law, in addition to tort damages under Montana law. In her complaint in Montana,

Tucker alleged Idaho law applied to the insurance contract, and prayed for interest and

attorney fees under Idaho law.       Tucker’s position in Idaho was consistent with her

position in Montana and FIE was not misled so as to change its position. Thus, the

doctrine of judicial estoppel does not apply to bar Tucker’s claim under Idaho law for

pre-judgment interest and attorney fees.

¶68    I agree with the Court’s analysis under § 188 of the Restatement (Second) of

Conflict of Laws. In relation to the insurance contract, the parties’ contacts with Idaho


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are more significant than with Montana. And, as judicial estoppel does not apply, I

concur with the Court’s decision.


                                         /S/ JOHN WARNER


Justice Jim Rice joins in the foregoing concurrence.


                                         /S/ JIM RICE




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