Cramer v. Farmers Ins. Exch.
| Decision Date | 14 August 2018 |
| Docket Number | DA 17-0658 |
| Citation | 423 P.3d 1067,2018 MT 198 |
| Parties | Jamie CRAMER, Plaintiff and Appellant, v. FARMERS INSURANCE EXCHANGE, a reciprocal insurer, Defendant and Appellee. |
| Court | Montana Supreme Court |
For Appellant: Lon J. Dale, Milodragovich, Dale & Steinbrenner, P.C., Missoula, Montana
For Appellee: William J. Mattix, Crowley Fleck PLLP, Billings, Montana
¶ 1 Jamie Cramer (Cramer) appeals the entry of summary judgment in her declaratory action regarding underinsured motorist coverage (UIM) in favor of Defendant Farmers Insurance Exchange (Farmers), by the Fourth Judicial District Court, Missoula County. We reverse in part, affirm in part, and remand for further proceedings, addressing the following issues:
¶ 2 Cramer was one of five passengers in a vehicle hit by an at-fault vehicle. Cramer stipulated that the total personal damages she sustained in that accident was $75,686.81. She was apportioned $27,000 of the tortfeasor’s liability coverage limits for her bodily injury claims, as other passengers also sustained injuries, and thus the tortfeasor was underinsured by $48,686.81 as to Cramer’s damages.
¶ 3 The vehicle in which Cramer was a passenger was insured by GEICO. GEICO paid Cramer its individual UIM coverage limit of $25,000. Cramer carried personal vehicle coverage with Farmers, including medical payment (MedPay) coverage with a $100,000 limit, and UIM coverage with a $50,000 individual limit. Farmers paid Cramer $21,186.81 under her MedPay coverage. Thus, from these sources, Cramer received payments of $73,186.81, or $2,500 less than her total stipulated damages.
¶ 4 Cramer made a claim under her UIM coverage with Farmers, and two disputes arose that led Cramer to file this declaratory action. First, the parties disagreed regarding how much of the $25,000 GEICO UIM payment Farmers could offset against its own UIM obligation to Cramer. Farmers’ UIM coverage in Cramer’s policy contained the following provisions:
(Emphasis in original.) Likewise, the GEICO policy had a similar "other insurance" provision governing its UIM obligation:
If the insured has other insurance against a loss covered by the Uninsured Motorist provisions [including UIM coverage] of this policy, we will not be liable for more than our pro-rata share of the total coverage available.
(Emphasis in original.) Thus, under the "pro rata " or "proportional" UIM obligations in both policies, GEICO’s $25,000 limit and Farmer’s $50,000 limit made GEICO responsible for a one-third share, and Farmers responsible for a two-thirds share, of the damages sustained by Cramer beyond the tortfeasor’s payment. GEICO was thus obligated to pay $16,228.94, and Farmers was obligated to pay $32,457.87, of Cramer’s $48,686.81 UIM claim. However, for whatever reason, GEICO paid Cramer $25,000, or about $9,000 more than its pro rata share of Cramer’s UIM damages.
¶ 5 Cramer asserted that, despite GEICO’s excess payment, she was nonetheless entitled to collect the full two-thirds pro rata share of her UIM damages from Farmers, or $32,457.87. Farmers contended it was entitled to offset the entire GEICO payment, even though it exceeded GEICO’s UIM pro rata responsibility, entitling Cramer to only $23,686.81 from Farmers. On this issue, the District Court determined that, under Cramer’s theory, she would recover more than her stipulated damages, which the court reasoned was "neither fair nor equitable and is not permitted under Montana law."
¶ 6 Secondly, the parties disputed whether Farmers could offset its MedPay payments against its UIM obligation to Cramer. A policy section entitled, "Conditions," located at the end of Cramer’s policy and applicable to all coverages, included the following non-duplication provision:
(Emphasis in original.) This provision was further identified on page one of the policy, within the index, as "No Duplication of Benefits."
¶ 7 Cramer asserted the non-duplication provision was ambiguous and placed in an obscure location in the policy, thus violating the reasonable expectations doctrine, prohibiting Farmers from offsetting its MedPay payments, and entitling her to the full two-thirds pro rata UIM share from Farmers, or $32,457.87. Farmers contended that the provision was neither ambiguous nor obscurely placed, but validly operated to offset Farmers’ $21,186.81 in MedPay payments against its UIM obligation to Cramer. The District Court determined the non-duplication provision to be "valid, enforceable and not contrary to Montana public policy." Holding in Farmers’ favor on the two contested issues, the court entered summary judgment in favor of Farmers and ordered Farmers to pay the amount of $2,500 in UIM benefits to Cramer. Cramer appeals.
¶ 8 We review a district court’s grant of summary judgment de novo , using the same M. R. Civ. P. 56 criteria applied by the district court. Winter v. State Farm Mut. Auto. Ins. Co. , 2014 MT 168, ¶ 9, 375 Mont. 351, 328 P.3d 665 (citations omitted). A moving party is entitled to summary judgment when the party demonstrates both the absence of any genuine issues of material fact and entitlement to judgment as a matter of law. Winter , ¶ 9 (citations omitted). Here, there are no disputes of fact; only the interpretation of an insurance policy is presented for review. The interpretation of an insurance contract is a question of law, which we review to determine if the district court’s conclusions are correct. Winter , ¶ 9 (citations omitted).
¶ 9 1. Did the District Court err by holding Farmers could offset its UIM obligation to Cramer dollar-for-dollar with GEICO’s entire UIM payment?
¶ 10 Cramer argues the District Court misapplied the pro rata policy language by permitting Farmers to offset the entire GEICO UIM payment, dollar-for-dollar from Farmers’ UIM obligation. She contends that, applying the policy as written, she is entitled to the two-thirds pro rata payment and that no exclusion in the policy permits Farmers to offset the entire GEICO payment.
¶ 11 The District Court reasoned that "[t]he purpose of UIM coverage is to make sure that a person injured in an automobile accident receives, as near as possible, full compensation for their damages when the tortfeasor fails to carry sufficient liability limits[,]" concluding that "[t]he insured plaintiff is not entitled to recover more than the amount of his or her uncompensated damages." Similarly, Farmers argues Cramer’s position "is contrary to the intent and purpose of UIM coverage," because it would "provide a windfall or allow a double recovery." Notably, however, Farmers cites no language in its policy that prohibits such a double payment.
¶ 12 "[A]n insurer’s liability for underinsured motorist benefits in any given case arises from the terms of the insurance contract...." Mecca v. Farmers Ins. Exch. , 2005 MT 260, ¶ 14, 329 Mont. 73, 122 P.3d 1190 (citations omitted). In Winter , we noted that Montana law authorizes insurers to add exclusions to their polices to "prevent duplicate payments for the same element of loss," Winter , ¶ 21 (quoting § 33-23-203(2), MCA ), but held there was "no basis in contract law, insurance law, or public policy for a blanket rule prohibiting duplicate insurance coverage when the parties have not expressly agreed to such a limitation and the insured has paid for the coverage." Winter , ¶ 26. Exclusions or limitations that prevent double recovery "must be clear and unequivocal; otherwise, the policy will be strictly construed in favor of the insured." Winter , ¶ 13 (quoting Christensen v. Mountain W. Farm Bureau Mut. Ins. Co. , 2000 MT 378, ¶ 27, 303 Mont. 493, 22 P.3d 624 ). Thus, the question here is whether clear and unambiguous policy language permits Farmers to offset its UIM obligation dollar-for-dollar with the entire GEICO UIM payment.
¶ 13 "We accord the usual meaning of the terms and the words in an insurance contract, and we construe them using common sense." Meadow Brook, LLP v. First Am. Title Ins. Co. , 2014 MT 190, ¶ 14, 375 Mont. 509, 329 P.3d 608 (citations omitted). We read an insurance policy as a whole, and if possible, will reconcile its various parts to give each meaning and effect. Farmers All. Mut. Ins. Co. v. Holeman , 1998 MT 155, ¶ 25, 289 Mont. 312, 961 P.2d 114 (citations omitted). Ambiguities in an insurance contract are construed against the insurer. Holeman , ¶ 25 (citations omitted).
¶ 14 As quoted above, the UIM provision in Cramer’s policy provides that Farmers "will pay all sums which an insured person is legally entitled to recover as damages" from the tortfeasor. Cramer and Farmers have stipulated Cramer’s damages...
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Daniels v. Gallatin Cnty.
...We review a district court's grant of summary judgment de novo, applying the criteria of M. R. Civ. P. 56. Cramer v. Farmers Ins. Exch., 2018 MT 198, ¶ 8, 392 Mont. 329, 423 P.3d 1067. Summary judgment is appropriate where the movant establishes the absence of genuine issues of material fac......