Daniels v. Gallatin Cnty.

• Decision Date: 12 July 2022
• Docket Number: DA 21-0321
• Citation: 513 P.3d 514
• Parties: Don DANIELS, as conservator of the Estate of Sarah Daniels, Plaintiff and Appellee, v. GALLATIN COUNTY, Rick Blackwood, and John Does I-V, Defendants, and One Beacon Insurance Group, LLC, d/b/a Atlantic Specialty Insurance Company, Defendant and Appellant.
• Court: Montana Supreme Court

513 P.3d 514

Don DANIELS, as conservator of the Estate of Sarah Daniels, Plaintiff and Appellee,
v.
GALLATIN COUNTY, Rick Blackwood, and John Does I-V, Defendants,
and
One Beacon Insurance Group, LLC, d/b/a Atlantic Specialty Insurance Company, Defendant and Appellant.

DA 21-0321

Supreme Court of Montana.

Argued and Submitted: March 3, 2022
Decided: July 12, 2022

For Appellant: Peter F. Habein (argued), Dale Schowengerdt, Justin Harkins, Crowley Fleck PLLP, Billings, Montana

For Appellee: Martha Sheehy (argued), Sheehy Law Firm, Billings, Montana, Jonathan Cok, Travis Kinzler, Cok & Kinzler PLLP, Bozeman, Montana

Chief Justice Mike McGrath delivered the Opinion of the Court.

¶1 Atlantic Specialty Insurance Company (ASIC) appeals from the September 22, 2020 Memorandum and Order issued by the Eighteenth Judicial District Court, Gallatin County, determining ASIC may not claim the benefit of the $750,000 statutory cap set forth

513 P.3d 516

in § 2-9-108, MCA. In a bench trial following the court's ruling, ASIC's insured Gallatin County (the County) was found liable for over $12 million in damages to Sarah Daniels, who was injured when a county-owned snowplow ran a stop sign and collided with her vehicle. We restate the issue on appeal:

Whether the District Court erred in determining ASIC may not claim the benefit of the statutory cap set forth in § 2-9-108, MCA, but must provide coverage to the limits stated in the County's insurance policy with ASIC.

¶2 We affirm the District Court.

FACTUAL AND PROCEDURAL BACKGROUND

¶3 On January 12, 2017, Sarah Daniels sustained severe injuries when a snowplow operated by County employee Rick Blackwood ran a stop sign and collided with her vehicle. The County admitted its liability for Blackwood's act, as Blackwood was negligent and acting within the scope of his employment. The County also admitted Sarah Daniels suffered permanent and life-altering injuries and her damages exceeded $750,000.

¶4 At the time of the crash, ASIC provided insurance coverage to the County pursuant to Policy Number 791000853-0001 (the Policy), with a policy period from July 1, 2016, to July 1, 2017. ASIC does not dispute the Policy provides coverage for the snowplow and the occurrence in question. The Policy's stated limits, in relevant part, are $1.5 million in business auto coverage and $5 million in excess coverage. The Policy contains no mention of the statutory cap found in § 2-9-108, MCA. Following the crash, ASIC paid Don Daniels as the conservator of his daughter Sarah Daniels (Daniels) $750,000, the limit of the County's liability under § 2-9-108(1), MCA.

¶5 Daniels filed suit against Blackwood, the County, and ASIC alleging three counts: (1) declaratory relief against ASIC regarding insurance coverage available to indemnify the County for Daniels's claims; (2) negligence against the County; and (3) an alternative claim challenging the constitutionality of § 2-9-108, MCA, as applied.

¶6 ASIC initially moved to dismiss Daniels's declaratory claim; the District Court denied the motion. ASIC and Daniels then filed cross-motions for summary judgment. The District Court granted Daniels's motion and denied ASIC's, declaring the statutory cap found in § 2-9-108(1), MCA, did not apply and the Policy's stated limits of $1.5 million in business auto coverage and $5 million in excess coverage were available to indemnify the County for Daniels's claims. The District Court started its analysis with the Montana Insurance Code codified in Title 33, MCA. Section 33-15-302, MCA, requires an insurance contract to contain all the policy's terms, conditions, and limitations. The District Court explained the Policy contains no reference to a limit of $750,000, no reference to § 2-9-108, MCA, and no reference to statutory caps. The court concluded incorporating the statutory cap, as ASIC advocated, violates the requirement of § 33-15-302, MCA, for an insurance contract to contain all the policy's terms, conditions, and limitations. Additionally, the District Court concluded the scope of coverage provision ASIC relies on does not limit recovery under the Policy to $750,000 because under that provision ASIC must pay the amounts the County legally must pay as damages, and judgment could be entered against the County in excess of $750,000. Finally, the District Court concluded ASIC specifically agreed to provide coverage in excess of the statutory limits, as required by § 2-9-108(3), MCA, by providing the County with coverage in excess of the statutory cap for the type of personal injuries at issue in this case, without reference to the statutory cap.

¶7 The court dismissed Daniels's as-applied constitutional challenge in a separate order. After a bench trial on the negligence count against the County, the court determined Blackwood caused $12,410,016.11 in damages to Sarah Daniels. The court entered judgment against the County for $11,660,016.11, accounting for the $750,000 already paid to Daniels. ASIC now appeals the District Court's order declaring that the statutory cap found in § 2-9-108(1), MCA,

513 P.3d 517

does not apply.¹

STANDARD OF REVIEW

¶8 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 fact and entitlement to judgment as a matter of law. M. R. Civ. P. 56(c). Interpretation of an insurance contract presents a question of law, which we review for correctness. Cramer , ¶ 8.

DISCUSSION

¶9 Whether the District Court erred in determining ASIC may not claim the benefit of the statutory cap set forth in § 2-9-108, MCA, but must provide coverage to the limits stated in the County's insurance policy with ASIC.

¶10 There is no dispute ASIC provided business auto coverage and excess coverage to the County at the time of the crash that caused Sarah Daniels's injuries and that her damages are covered under the Policy. There is also no dispute the Policy provided limits of $1.5 million in auto coverage and $5 million in excess coverage. The dispute arises over whether Daniels is limited to recovering $750,000 or whether the full limits of the Policy are available. ASIC first argues its coverage is coextensive with the County's liability as the Policy provides ASIC will pay only what the County "legally must pay as damages." ASIC argues § 2-9-108(1), MCA, is not a contract term that needed to be included in the Policy, but rather a limitation on the County's legal liability. Under ASIC's theory, the statute limits the amount the County "legally must pay" to $750,000, thus it also limits coverage under the Policy.²

¶11 ASIC argues it is entitled to the benefit of the statutory cap because it did not waive it under § 2-9-108(3), MCA, the section that governs...