Kenneth & Kari Cross v. Warren, DA 17-0599

• Decision Date: 05 March 2019
• Docket Number: DA 17-0599
• Parties: KENNETH & KARI CROSS, Henley & Nicola Brady, and Roland & Lana Redfield, Plaintiffs and Appellants, v. Robert and Sherle WARREN; Grass Chopper, LLC; Taylor Warren and Progressive Ins. Co., Defendants and Appellees.
• Court: Montana Supreme Court

395 Mont. 62

435 P.3d 1202

2019 MT 51

KENNETH & KARI CROSS, Henley & Nicola Brady, and Roland & Lana Redfield, Plaintiffs and Appellants,

v.Robert and Sherle WARREN; Grass Chopper, LLC; Taylor Warren and Progressive Ins. Co., Defendants and Appellees.

DA 17-0599

Supreme Court of Montana.

Argued: September 21, 2018

Submitted: September 25, 2018

Decided: March 5, 2019

For Appellants: A. Clifford Edwards (argued), Roger W. Frickle, Edwards, Frickle & Culver, Billings, Montana, John C. Heenan (argued), Colin Gerstner, Gerstner Law PLLC Billings, Montana (for Lana Redfield), Shane Colton, Jaclyn S. Laferriere, Edmiston & Colton, Billings, Montana (for Henley & Nicola Brady)

For Appellees: Mark S. Williams (argued), Susan Moriarity Miltko, Williams Law Firm, Missoula, Montana (for Progressive Direct Ins. Company), Paul Haffeman, Davis, Hatley, Haffeman & Tighe, Great Falls, Montana (for Robert and Sherle Warren and Grass Chopper LLC), Tammy Wyatt-Shaw, Hammer, Quinn & Shaw, Kalispell, Montana (for Taylor Warren)

For Amici: Ann L. Moderie, Moderie Law Firm, Polson, Montana (for Montana Trial Lawyers Association), Martha Sheehy, Sheehy Law Firm, Billings, Montana (for Property Casualty Insurers Association of America)

Justice Jim Rice delivered the Opinion of the Court.

¶1 Upon the District Court's certification of the issue pursuant to M. R. Civ. P. 54(b), Plaintiffs appeal the portion of the summary judgment order entered in favor of the Defendants, which denied Plaintiffs' claim that the four separate motor vehicle liability insurance coverages purchased by Robert and Sherle Warren (Warrens) from Progressive Direct Insurance Company (Progressive), should be "stacked" for application toward Plaintiffs' injury claims. Progressive appears in defense of the District Court's order. We affirm, addressing the following issue:

Did the District Court err by denying Plaintiffs' claim to stack the Defendants' motor vehicle liability insurance coverages for application to Plaintiffs' injury claims?

FACTUAL AND PROCEDURAL BACKGROUND

¶2 On January 8, 2015, while driving a 2000 GMC Sierra pick-up truck owned by his parents, Robert and Sherle Warren, eighteen-year-old Taylor Warren caused an accident resulting in injuries to Kenneth Cross, Henley Brady, and Roland Redfield. The truck was emblazed with "Grass Chopper" insignias on its door panels. Robert Warren owned and operated Grass Chopper, LLC as a sole proprietorship, but the truck was personally owned by the Warrens. For purposes of the insurance question before us in this appeal, liability for the accident is not disputed.

¶3 At the time of the accident, Taylor Warren was an insured driver, and the truck he was driving was an insured vehicle, under a Progressive motor vehicle insurance policy purchased by the Warrens. The policy covered all four members of the Warren family and included separate liability coverages for each of the Warrens' four vehicles. Each vehicle's coverage provided identical bodily injury liability coverage limits of $100,000 for each person or $300,000 for each accident, although the premiums charged to the Warrens were different for each vehicle: Cadillac Escalade—$267; Chevy Impala—$251; Pontiac Grand Am—$184; and GMC Sierra—$249.

¶4 Following the accident, Progressive paid the limit of liability coverage, $100,000 to each of the three Plaintiffs injured in the accident (or, $300,000 total for the accident), under the Warrens' coverage on the GMC Sierra pick-up truck involved in the accident. However, Plaintiffs claimed, as set forth in their March 2016 Amended Complaint, that they were entitled to recover based upon the combined, or stacked, liability coverage limits for all four of the Warrens' vehicles, thus totaling $400,000 per person or $1,200,000 for the accident. Progressive denied Plaintiffs' claim to stack the four liability coverages, arguing that Plaintiffs had received the limits of the liability coverage available to them under the Warrens' policy. The parties filed competing motions for summary judgment on the issue.

¶5 Noting that this Court had not ruled that third-party liability coverages were stackable, the District Court cited the rulings of federal courts applying Montana law to the issue, which had denied stacking. The court reasoned that Montana cases requiring stacking of first-party coverages were inapplicable because first-party and third-party coverages were fundamentally different, that only named insureds could stack their coverages, that third-party liability coverage was not personal and portable like first-party coverage, and that prohibition upon the stacking of third-party liability coverage did not render the Warrens' policy's coverage illusory. The District Court concluded that, "[b]ecause third party liability coverages are not stackable in Montana, § 33-23-203, MCA, Montana's anti-stacking statute, seems ill-suited when applied to an insurer that is attempting to avoid the stacking of third party liability limits," noting the Insurance Commissioner had promulgated instructions, pursuant to the statute, for filing of rates for stacking of first-party coverages, but not third-party coverages. Therefore, the District Court granted summary judgment to the Defendants.

¶6 Plaintiffs appeal.

STANDARD OF REVIEW

¶7 We review de novo a district court's ruling on summary judgment. City of Missoula v. Mt. Water Co ., 2016 MT 183, ¶ 19, 384 Mont. 193, 378 P.3d 1113.

DISCUSSION

¶8 Plaintiffs argue the District Court erred by failing to apply § 33-23-203, MCA, to the question of stacking the third-party liability coverage claimed here. Plaintiffs characterize the statute as having been changed by 2007 amendments from "an anti-stacking statute into a pro-stacking statute," which now requires coverages to be stacked unless the insurer takes affirmative action otherwise. The oft-amended provision now states, in relevant part:

(1) Unless a motor vehicle liability policy specifically provides otherwise, the limits of insurance coverage available under each part of the policy must be determined as follows, regardless of the number of motor vehicles insured under the policy, the number of policies issued by the same company covering the insured, or the number of separate premiums paid:

...(c) the limits of the coverages specified under one policy or under more than one policy issued by the same company may not be added together to determine the limits of insurance coverages available under the policy or policies for any one accident if the premiums charged for the coverage by the insurer actuarially reflect the limiting of coverage separately to the vehicles covered by the policy and the premium rates have been filed with the commissioner.

Section 33-23-203, MCA. Plaintiffs note the statute's term, "motor vehicle liability policy," is defined in § 33-23-204, MCA, and includes liability coverages, which vehicle owners are required to provide, in a minimum amount. See § 61-6-103, -301, MCA. In full, that definition states:

(2) "Motor vehicle liability policy" means a policy of automobile or motor vehicle insurance against liability required under Title 61, chapter 6, parts 1 and 3 , and all additional coverages included in or added to the policy by rider, endorsement, or otherwise, whether or not required under Title 61, including, without limitation, uninsured, underinsured, and medical payment coverages.

Section 33-23-204(2), MCA (emphasis added).

¶9 Thus, Plaintiffs argue the statute "applies to all automobile insurance coverages, including liability coverages," (emphasis in original), and that the District Court erred because "a Montana court may not properly reject, as somehow ‘ill-suited,’ application of this controlling Montana statute." Then, Plaintiffs contend Progressive failed to satisfy the requirements under subsection 203(1)(c) to foreclose stacking of coverages, because it did not charge a premium to "actuarially reflect the limiting of coverage separately to the vehicles covered by the policy," and file those premium rates "with the commissioner." See § 33-23-203(1)(c), MCA. Consequently, Plaintiffs argue the liability coverages on all four of Warrens' vehicles must be stacked.

¶10 Progressive answers that Plaintiffs' characterization of § 33-23-203, MCA, as a re-made, "pro-stacking" statute, is "overreaching," and argues the statute has always been an anti-stacking statute, and remains so. Noting the syntax of subsection 203(1)(c), "the limits of coverages ... may not be added together ... if ...," followed by rate and filing requirements, Progressive argues the plain language "provides one, non-exclusive.... constitutionally permissible" method for insurers to foreclose stacking in light of this Court's holding partially striking down the statute as unconstitutional in Hardy v. Progressive Specialty Ins. Co. , 2003 MT 85, ¶ 38, 315 Mont. 107, 67 P.3d 892. Noting this Court's precedent has never permitted "stacking for non-insureds seeking benefits under a policy they did not purchase," and the history of § 33-23-203, MCA, as an anti-stacking statute, Progressive contends "the only reasonable explanation is the Legislature intended to continue prohibiting stacking," and provided insurers "a way to prevent stacking that Montana common law would otherwise require," but "create[d] no rule requiring stacking." Progressive argues this interpretation is consistent with the statutory scheme in Title 61 setting mandatory minimum automobile coverage limits, because an automatic stacking rule would effectively mandate additional coverage for everyone with more than one insured vehicle. Progressive further offers its interpretation is consistent with the remaining provisions of § 33-23-203, MCA, which include the following:

(1)(a) the limits of insurance coverage available for any one accident are the limits specified for each coverage available under the policy insuring the motor vehicle involved in the accident;

(1)(b) if the motor vehicle

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