Allstate Ins. Co. v. Wagner-Ellsworth

CourtUnited States State Supreme Court of Montana
Citation188 P.3d 1042,2008 MT 240
Docket NumberNo. DA 06-0061.,DA 06-0061.
PartiesALLSTATE INSURANCE COMPANY, Plaintiff and Appellee, v. Terry WAGNER-ELLSWORTH and Tiffany Rusk, individually, and as mother and natural guardian of Brandon Rusk, Defendants and Appellants.
Decision Date08 July 2008

For Appellants: Ward E. Taleff; Taleff Law Office, Great Falls, Montana (Attorney for Appellant Wagner-Ellsworth), Roland B. Durocher; Hartelius, Ferguson, Kazda, Baker, & Durocher, P.C., Great Falls, Montana (Attorney for Appellant Rusk).

For Appellee: Mikel L. Moore; Christensen, Moore, Cockrell, Cummings & Axelberg, P.C., Kalispell, Montana.

Justice JIM RICE delivered the Opinion of the Court.

¶ 1 Terry Wagner-Ellsworth (Wagner-Ellsworth) and Tiffany Rusk (Tiffany), individually, and as mother and natural guardian of Brandon Rusk (Brandon) appeal an order entered in the Eighth Judicial District Court, Cascade County, granting summary judgment in favor of Allstate Insurance Company (Allstate). We reverse.

¶ 2 We consider the following issue on appeal:

¶ 3 Did the District Court err when it denied Wagner-Ellsworth and Tiffany's motions for summary judgment and granted summary judgment in favor of Allstate?


¶ 4 On February 22, 2000, Wagner-Ellsworth caused an automobile-pedestrian collision, striking Matthew Rusk (Matthew) as he and his brother, Brandon, crossed the street together in front of their elementary school. Matthew's mother, Tiffany, while not immediately present at the time of the accident, was arriving to pick up her sons from school and came upon Matthew while he was still lying injured on the street. Matthew suffered severe trauma and was hospitalized for an extended period of time. All of Matthew's claims stemming from the accident have been fully and finally settled and released in exchange for Allstate's payment of the per-person limit of $50,000 under Wagner-Ellsworth's policy.

¶ 5 Tiffany filed a negligence action against Wagner-Ellsworth on her own behalf and as guardian of Brandon, claiming emotional and physical injuries to herself and to Brandon. Tiffany and Brandon contend they were traumatized and suffered injury, not by being struck by the car, but rather as a result of Matthew being run over and injured. Brandon's injuries were allegedly the result of seeing his brother run over; Tiffany's injuries allegedly resulted from her arrival at the accident scene, the subsequent ambulance ride to the hospital, and her continued care of Matthew as he recovered. The complaint alleged that they both suffered physical and emotional injuries. Brandon allegedly became withdrawn and Tiffany allegedly suffered from stress, migraine headaches, a rapid heart beat when she hears sirens, physical pain, and depression. Both Brandon and Tiffany underwent therapy.

¶ 6 In response to the suit, Wagner-Ellsworth sought coverage from her liability insurer, Allstate.1 Allstate then filed this action, seeking a declaratory judgment that it was not obligated to provide a defense or coverage to Wagner-Ellsworth for Tiffany and Brandon's claims of emotional and psychological injuries and any resulting physical manifestations. The District Court granted Allstate's motion for summary judgment, and this appeal followed.


¶ 7 "We review a district court's conclusions of law to determine whether the court's conclusions of law are correct." Hern v. Safeco Ins. Co. of Illinois, 2005 MT 301, ¶ 18, 329 Mont. 347, ¶ 18, 125 P.3d 597, ¶ 18 (citations omitted). Our standard of review for an appeal from a district court's order granting summary judgment is de novo. Hern, ¶ 18.

¶ 8 Here, the issue before this Court is whether, under the terms of Wagner-Ellsworth's insurance policy, Allstate was entitled to judgment as a matter of law. "The interpretation of an insurance policy presents a question of law." Jacobsen v. Farmers Union Mut. Ins. Co., 2004 MT 72, ¶ 9, 320 Mont. 375, ¶ 9, 87 P.3d 995, ¶ 9 (citing Wendell v. State Farm Mutual Ins. Co., 1999 MT 17, ¶ 10, 293 Mont. 140, ¶ 10, 974 P.2d 623, ¶ 10). Consequently, we review whether the District Court correctly interpreted the provisions of Wagner-Ellsworth's insurance policy. Jacobsen, ¶ 9.


¶ 9 Did the District Court err when it denied Wagner-Ellsworth and Tiffany's motions for summary judgment and granted summary judgment in favor of Allstate?

¶ 10 At the time of the accident, Wagner-Ellsworth was covered by Allstate automobile Policy No. 020343927. The policy's General Statement of Coverage declared:

If a premium is shown on the Policy Declarations for Bodily Injury Liability Coverage and Property Damage Liability Coverage, Allstate will pay damages which an insured person is legally obligated to pay because of:

a. bodily injury sustained by any person. ...

The policy defined "bodily injury" as follows:

"Bodily Injury" means physical harm to the body, sickness, disease, or death, but does not include:

a. Any venereal disease;

b. Herpes c. Acquired Immune Deficiency Syndrome (AIDS);

d. AIDS Related Complex (ARC);

e. Human Immunodeficiency Virus (HIV);

or any resulting symptom, effect, condition, disease or illness related to a. through e. listed above.

¶ 11 The District Court held that the policy language contained in Wagner-Ellsworth's liability policy did not cover Tiffany and Brandon's claimed injuries, relying on Jacobsen v. Farmers Union Mut. Ins. Co. In Jacobsen, the plaintiff attempted to collect under his own uninsured coverage for alleged emotional injuries he had suffered. Jacobsen was driving his vehicle when he encountered another vehicle traveling in the opposite direction. That vehicle suddenly crossed the center median and eventually came to rest in a wheat field on the other side of the roadway. Jacobsen stopped to help and found the driver lying unconscious in his vehicle, with blood flowing from a wound in his head. Jacobsen administered aid for several minutes, but was later supplanted by a team of paramedics. As the paramedics removed the driver from his vehicle, Jacobsen noticed a handgun underneath the driver's body. The cause of death was later determined to be a suicide. Jacobsen, ¶¶ 4-5. Jacobsen claimed that his emotional injuries as well as his resulting physical manifestations were covered under his uninsured coverage for "bodily injury."

¶ 12 After concluding there was no ambiguity in the meaning of "bodily injury," and with no prior Montana case addressing whether emotional or psychological injuries constituted "bodily injury," this Court looked to the United States District Court's holding in Aetna Cas. and Sur. Co. v. First Sec. Bank of Bozeman, 662 F.Supp. 1126 (D.Mont.1987), and concluded that the emotional injury suffered by Jacobsen, including the physical manifestations resulting therefrom, did not constitute "bodily injury" as defined in that policy.2 Jacobsen, ¶¶ 23, 29.

¶ 13 Here, the District Court reasoned:

The language in the Farmers' Union policy and the Allstate policy in question are too similar to allow this Court to overlook the Montana Supreme Court's decision in Jacobsen. The language defining "bodily injury" is unambiguous and does not include the injuries Brandon and Tiffany have claimed or any physical manifestations that may result from the psychological damages. The Court will not extend itself to create an ambiguity where there is none. While Montana law concerning insurance contracts has developed with the intention of providing fundamental protection to consumers, this does not allow this Court to simply ignore the clear terms of a contract.

We commend the District Court for its close adherence to precedent. However, after a careful review of the policy language at issue here, and of the analysis employed in Jacobsen, we ultimately conclude herein that our decision in Jacobsen was incorrectly analyzed and should be overruled, requiring reversal of the District Court. For purposes of promoting clarity, we discuss the issues raised in the following three parts.

I. Coverage of Third-Party Claims

¶ 14 Tiffany argues the District Court erred by not applying the plain language of the contract because it provides coverage for "damages" more generally, and not strictly for bodily injury. She notes that the policy requires Allstate to pay for "damages which an insured person is legally responsible to pay because of bodily injury sustained by any person...." Tiffany contends this language is broader than the policy language at issue in Jacobsen. Therefore, since Tiffany and Brandon's damages were incurred "because of" Matthew's bodily injury, she argues that their damages were covered whether or not they suffered the bodily injury themselves. Wagner-Ellsworth agrees, and likewise contends that the District Court failed to consider these material differences between the policy language in Jacobsen and her policy with Allstate.

¶ 15 In response, Allstate argues this Court's holding in Jacobsen controls the outcome of this action because, as in Jacobsen, the unambiguous definition of "bodily injury" in Wagner-Ellsworth's Allstate policy does not include emotional or psychological injuries or resulting physical manifestations. Citing Graber v. State Farm Fire and Cas. Co., 244 Mont. 265, 270, 797 P.2d 214, 217 (1990), which held an insurer was not obligated to indemnify an insured where the claims do not come within the coverage of the policy, Allstate reasons that Appellants' proffered interpretation defies common sense and ignores the "unbroken connection" in the policy language requiring the "bodily injury" to be sustained by the "any person" for whose damages the insured person may be legally obligated. Appellants' interpretation, Allstate argues, severs the link between the person who suffers the bodily injury and the person claiming damages and re-writes the policy to mean that "Allstate will pay damages which an insured person is...

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