State Farm Fire & Cas. Co. v. Ward
| Decision Date | 15 July 2021 |
| Docket Number | CV 21-07-M-KLD |
| Citation | 549 F.Supp.3d 1238 |
| Parties | STATE FARM FIRE & CASUALTY COMPANY, Plaintiff, v. Jay H. WARD and Laura A. Ward, Defendants. |
| Court | U.S. District Court — District of Montana |
Martha Sheehy, Sheehy Law Firm, Billings, MT, for Plaintiff.
Alexander Blewett, III, Hoyt & Blewett, Great Falls, MT, for Defendants.
This declaratory judgment action comes before the Court on cross-motions for summary judgment by Plaintiff State Farm Fire & Casualty Company ("State Farm") and Defendants Jay H. Ward and Laura A. Ward ("the Wards"). (Docs. 10 and 12). For the reasons set forth below, State Farm's motion is granted and the Wards’ cross-motion is denied.
On May 24, 2020, Jay Ward was operating a tractor and negligently injured his spouse, Laura Ward. (Doc. 9, at 2). At the time of the accident, the Wards were insured under a homeowners policy issued by State Farm ("the Policy"). (Doc. 6, at 2). The Policy provides a personal liability coverage limit of $300,000 per occurrence and a medical payments limit of $1,000. (Doc. 6, at 1-2). The Policy excludes personal liability coverage and medical payments coverage for "bodily injury to any insured." (Doc. 1-1, at 38). It is undisputed that Laura and Jay Ward are "insureds" under the Policy. (Doc. 6, at 3).
On January 11, 2021, State Farm commenced this declaratory judgment action against the Wards based on diversity jurisdiction. (Doc. 1, at 2). Because Laura Ward is an "insured" under the Policy, State Farm alleges that the exclusion for "bodily injury to any insured" precludes all coverage for the injuries she sustained in the accident on May 24, 2020. (Doc. 1, at 4, ¶ 17). Thus, State Farm seeks a declaratory judgment that the Policy does not provide liability coverage or medical payments coverage to the Wards for damages sustained by Laura Ward as a result of Jay Ward's negligence. (Doc. 1, at 5; Doc. 11, at 2).
State Farm moves for summary judgment on the ground that the Policy's exclusion for "bodily injury to any insured" expressly precludes all coverage for Laura Ward's injuries. The Wards cross-move for summary judgment on the ground that the Policy violates the Montana Property and Casualty Insurance Policy Language Simplification Act, Mont. Code Ann. § 33-15-333 et. seq. ("the Simplification Act"), thereby invalidating the exclusion State Farm is relying on to deny coverage.
Under Federal Rule of Civil Procedure 56(a), a party is entitled to summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The party seeking summary judgment bears the initial burden of informing the Court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of any genuine issue of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A movant may satisfy this burden where the documentary evidence produced by the parties permits only one conclusion. Anderson v. Liberty Lobby Inc. , 477 U.S. 242, 251, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
Once the moving party has satisfied its initial burden with a properly supported motion, summary judgment is appropriate unless the non-moving party designates by affidavits, depositions, answers to interrogatories or admissions on file "specific facts showing that there is a genuine issue for trial." Celotex , 477 U.S. at 324, 106 S.Ct. 2548. The party opposing a motion for summary judgment "may not rest upon the mere allegations or denials" of the pleadings. Anderson , 477 U.S. at 248, 106 S.Ct. 2505.
In considering a motion for summary judgment, the court "may not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Prods. , 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) ; Anderson , 477 U.S. at 249-50, 106 S.Ct. 2505. The Court must view the evidence in the light most favorable to the non-moving party and draw all justifiable inferences in the non-moving party's favor. Anderson , 477 U.S. at 255, 106 S.Ct. 2505 ; Betz v. Trainer Wortham & Co., Inc. , 504 F.3d 1017, 1020-21 (9th Cir. 2007).
When presented with cross-motions for summary judgment on the same matters, the court must "evaluate each motion separately, giving the non-moving party the benefit of all reasonable inferences." American Civil Liberties Union of Nevada v. City of Las Vegas , 333 F.3d 1092, 1097 (9th Cir. 2003).
Where, as here, a declaratory judgment action is in federal court based on diversity jurisdiction, the propriety of granting declaratory relief is a procedural matter to which federal law applies but the underlying substantive issues are governed by state law. Paul Evert's RV Country, Inc. v. Universal Underwriters Ins. Co. , 2016 WL 3277175, *2 (E.D. Cal. June 14, 2016) (citing Golden Eagle Ins. Co. v. Travelers Cos. , 103 F.3d 750, 752 (9th Cir. 1996), overruled on other grounds by Govt. Employees Ins. Co. v. Dizol , 133 F.3d 1220 (9th Cir. 1998) ). Thus, the Court applies Montana law to all substantive legal issues. See Medical Laboratory Mgmt. Consultants v. American Broadcasting Companies, Inc. , 306 F.3d 806, 812 (9th Cir. 2002).
It is settled law in Montana that the interpretation of an insurance contract presents a question of law. Scentry Biologicals, Inc. v. Mid-Continent Cas. Co. , 374 Mont. 18, 319 P.3d 1260, ¶ 25 (2014). A court interpreting an insurance policy is to read the policy as a whole and, to the extent possible, reconcile the policy's various parts to give each meaning and effect. Kilby Butte Colony, Inc. v. State Farm Mut. Auto. Ins. Co. , 389 Mont. 48, 403 P.3d 664, ¶ 10 (2017). The court must interpret the terms of the "insurance policy according to their usual, common sense meaning as viewed from the perspective of a reasonable consumer of insurance products." Allstate Ins. Co. v. Wagner-Ellsworth , 344 Mont. 445, 188 P.3d 1042, ¶ 16 (2008) (quoting Stutzman v. Safeco Ins. Co. of America , 284 Mont. 372, 945 P.2d 32, 34 (1997) ). In doing so, the court "may not rewrite the contract at issue, but must enforce it as written if its language is clear and explicit." Allstate Ins. Co. , at ¶ 16.
"Unambiguous insurance provisions are to be enforced unless the provision violates public policy or is against good morals." Fisher ex rel. McCartney v. State Farm Mutual Auto Ins. Co. , 371 Mont. 147, 305 P.3d 861, 868 (2013). If the terms of an insurance policy are ambiguous, however, that ambiguity must be strictly construed against the insurer. Stutzman , 945 P.2d at 34. "An ‘[a]mbiguity exists only when the contract taken as a whole or in its wording or phraseology is reasonably subject to two different interpretations.’ " Farmers Alliance Mut. Ins. Co. v. Holeman , 289 Mont. 312, 961 P.2d 114, ¶ 25 (1998).
The parties dispute whether the Policy complies with the Simplification Act, and whether the "bodily injury to any insured" exclusion is enforceable. Because the Policy includes a table of contents and notice section of important provisions, and because the "bodily injury to any insured exclusion" is not sufficiently "important" to require specific mention in the table of contents or notice section, the Policy complies with the Simplification Act and the exclusion is enforceable.
In moving for summary judgment, State Farm begins with the premise that, under Montana law, the Policy's "bodily injury to any insured" exclusion is a valid and enforceable limitation on coverage. State Farm relies on Fisher , in which the Montana Supreme Court upheld a similar exclusion in a personal umbrella liability policy. In Fisher , the plaintiff was injured as a result of her husband's negligent operation of a vehicle. Fisher , 305 P.3d at 865. The policy contained an exclusion for "bodily injury or personal injury to any insured," and defined an "insured" to include relatives of the named insured who resided in the same household. Fisher , 305 P.3d at 865. The plaintiff's husband was identified as the named insured on the policy's declarations page. Fisher , 305 P.3d at 865. The Court found that the plaintiff was an "insured" because she was related by marriage to the named insured and they primarily resided in the same household. Fisher , 305 P.3d at 865. Because the plaintiff was an insured, the Court held that the policy excluded coverage for the plaintiff's injuries. Fisher , 305 P.3d at 865.
After determining that the policy excluded coverage on its face, the Court considered whether public policy or principles of contract interpretation prohibited enforcement of the exclusion. Fisher , 305 P.3d at 865. First, the Court concluded that the reasonable expectations doctrine did not apply because the exclusion "clearly demonstrated an intent to exclude coverage" for the plaintiff's claim. Fisher , 305 P.3d at 867. The Court also concluded that the exclusion did not violate two Montana statutes requiring certain minimum levels of automobile liability insurance, Fisher , 305 P.3d at 869-71, and did not "undermine the made-whole doctrine, constitute illusory coverage that defeats coverage for which the insurer has received valuable consideration, or violate public policy in any other way." Fisher , 305 P.3d at 867. Finally, the Court held that the exclusion was not unconscionable. Fisher , 305 P.3d at 872-73.
State Farm argues that Fisher is controlling, and asks the Court to find as a matter of law that the Policy's "bodily injury to any insured" exclusion is valid and enforceable. As the Wards make clear in response,...
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