Hern v. Safeco Ins. Co. of Illinois
| Decision Date | 28 December 2005 |
| Docket Number | No. 04-643.,04-643. |
| Citation | 329 Mont. 347,2005 MT 301,125 P.3d 597 |
| Court | Montana Supreme Court |
| Parties | Ardell HERN, as Personal Representative of the Estate of Becky J. Hern, Deceased, Ardell Hern, in her Individual Capacity and Robert Hern, in his Individual Capacity, Plaintiffs and Respondents, v. SAFECO INSURANCE COMPANY OF ILLINOIS, Defendant and Appellant. |
John W. Bohyer, Esq., Tammy Wyatt-Shaw, Esq., Timothy S. Peck, Esq., Phillips & Bohyer, P.C., Missoula, Montana; Jacqueline T. Lenmark, Esq., Thomas Q. Johnson, Esq., Keller, Reynolds, Drake, Johnson & Gillespie, P.C., Helena, Montana, for Appellant.
Joe Bottomly, Esq., Jeffrey D. Ellingson, Esq., Amy Eddy, Esq., Bottomly & Ellingson, PLLP, Kalispell, Montana, for Respondents.
¶ 1 Safeco Insurance Company of Illinois (Safeco) appeals multiple issues arising out of a civil jury trial held in the Twentieth Judicial District, Lake County. We affirm in part and reverse in part.
¶ 2 A restatement of the issues on appeal is:
¶ 3 Did the District Court err in granting the Herns' combined Motion for Summary Judgment and Motion to Strike Affirmative Defenses and in denying Safeco's Motion for Summary Judgment?
¶ 4 Did the District Court abuse its discretion by instructing the jury to award compensation to the estate of Becky Hern for the value of household services performed by Becky and for the loss of Becky's ability to pursue an established course of life?
¶ 5 Did the District Court abuse its discretion by instructing the jury on loss of consortium damages?
¶ 6 Did the District Court abuse its discretion by permitting the jury to apportion damages under a "special verdict" form?
¶ 7 Did the District Court err in awarding the Plaintiffs damages in excess of the $2,000,000 (two million dollar) policy limit through the addition of interest?
¶ 8 Becky Hern (Becky), the daughter of Ardell and Robert Hern (Herns), was killed in a motorcycle accident in June 1992. The motorcycle was driven by her uninsured fiancee. Becky, who was living with her parents at the time of her death, had an automobile insurance policy with American Economy Insurance Company (American Economy) that provided $300,000.00 uninsured motorist (UM) coverage. The Herns also carried a multi-car automobile insurance policy with Safeco, which insured four of their vehicles. The Safeco policy had a $500,000.00 UM limit per vehicle.
¶ 9 In March 1993, Ardell Hern, acting individually, as Personal Representative of the Estate of Becky Hern, and on behalf of the heirs, together with Robert Hern and Becky's sister, Lisa Hern, entered into a structured cash settlement with Safeco and American Economy valued at approximately $355,398.00.1 Prior to settlement, Safeco took the position that the multi-car policy purchased by the Herns provided a maximum of $500,000.00 UM coverage. Had the Herns been able to "stack" the UM coverage provided for each of their four vehicles, the maximum UM coverage would have been $2,000,000.00.
¶ 10 In 1997, several Safeco and American Economy insureds, including Steven Seltzer, filed a class action suit against these and other insurance carriers. The claimants argued that Safeco charged them multiple premiums for providing UM coverage on multiple vehicles but had no intention of providing coverage beyond that afforded to a single vehicle. In other words, they maintained that Safeco had taken the same position with the class action claimants as it had with the Herns.
¶ 11 In August 2001, the parties to the class action entered into a Settlement Agreement and Stipulated Judgment (Seltzer Settlement or Settlement). As a result of the Seltzer Settlement, insureds who purchased UM coverage for multiple cars, but whose claims were negotiated under the premise that only a single UM coverage applied, were able to have their claims reopened and readjusted. The district court defined the certified class action members as:
All Montana citizens who, prior to May 2, 1997, were insured by Safeco Insurance Company of Illinois [other insurers omitted] for uninsured motorist (UM) coverage and the named insured paid premiums on more than one vehicle under the same policy.
¶ 12 Under the terms of the Settlement, the insurers were required to identify and notify the class members. The notification informed them that "if a class member was injured in an accident involving an uninsured motorist, and it is believed that the damages are in excess of the policy's UM limits for a single vehicle, and, further, if the class member wishes to have the claim reexamined," he or she could obtain a proof of claim form, complete it and submit it to the insurer. If the claim was submitted within the time required, the insurers, including Safeco, were required to reopen the claim and readjust it on the premise that the multiple UM coverages were capable of being stacked. If the claimant was subsequently dissatisfied with the readjustment, he or she could pursue legal action against the insurer.
¶ 13 Upon receipt of their notice of class member status, the Herns completed the necessary paperwork and submitted a claim for readjustment. Safeco denied the claim, presumably on the basis that the value of the Herns' claim was below the one policy limit of $500,000.00. After the Herns were notified that Safeco had denied their claim, and in accordance with the Seltzer Settlement terms, the Herns filed the instant action against Safeco, seeking full recovery of their damages.
¶ 14 The Herns filed a combined Motion for Summary Judgment and Motion to Strike Affirmative Defenses in the District Court. The Herns sought to preclude Safeco from asserting the defenses of "statute of limitations," "accord and satisfaction," and "payment and release" — affirmative defenses Safeco had preserved for future use, should they be appropriate, by declaring them in its Answer to the Herns' Complaint. Safeco had also included "estoppel," "res judicata," and "waiver" in its preserved list of defenses. Safeco subsequently filed a Cross-Motion for Summary Judgement seeking an Order that the Herns were barred from relitigating the wrongful death/survivorship action. The parties agreed that there were no genuine issues of material fact relevant to these motions, and that they were amenable to summary judgment. The District Court granted the Herns' Motion, allowing their litigation to go forward, and denied Safeco's Motion.
¶ 15 A jury trial was held from June 14-16, 2004. The jury determined that the Herns' damages totaled $3,810,034.10. Using a Special Verdict form that had been tendered by the Herns, the jury apportioned the damages as follows:
Damages for the Estate of Becky Hern
1. Loss of earning capacity of Becky Hern $ 883,000.00
2. Pain and suffering experienced by Becky Hern 35,000.00
3. Value of household services performed by Becky 140,000.00
Hern
4. Loss of established course of life for Becky Hern $1,500,000.00
Wrongful Death and Emotional Distress Damages for [Robert] and Ardell Hern
1. Loss of society, comfort care, and companionship
[Robert] $ 200,000.00
Ardell 300,000.00
2. Grief, sorrow and mental anguish
[Robert] 300,000.00
Ardell 450,000.00
3. Funeral and Burial Expenses 2,034.10
____________
Total $3,810,034.10
¶ 16 After the jury returned its verdict, which exceeded $3.8 million, the District Court entered its judgment, reducing the award to $2 million, representing the amount of money available under the four stacked policies. Subsequently, on July 28, 2004, the District Court entered an Amended Judgment. In the Amended Judgment, the District Court expressly acknowledged that Safeco had already paid the Herns $156,250.00 in UM benefits. The court therefore subtracted that amount from the $2,000,000 owed by Safeco thereby reducing the Herns' recovery to $1,843,750.00. The District Court also noted that the Seltzer Settlement imposed an obligation on Safeco to pay interest at 10% per year on a claim from the date it was originally adjusted and closed to the date of payment of the reopened claim. The court calculated that such interest on the Herns' claim from February 1993 to June 16, 2004, was $2,085,710.62. The District Court added this interest calculation plus the $1,406.71 stipulated costs of the Herns' lawsuit to the balance of the UM benefits owed to the Herns. The court then ordered Safeco to pay the total amount of $3,930,867.33.
¶ 17 Safeco appeals the District Court's denial of its Motion for Summary Judgment, the use of the special verdict form and the instructions to the jury regarding the type of damages to be awarded, and the court's imposition of prejudgment interest.
¶ 18 Our standard of review of appeals from summary judgment is de novo. We apply the same criteria applied by the district court pursuant to Rule 56(c), M.R.Civ.P. The moving party must establish both the absence of genuine issues of material fact and entitlement to judgment as a matter of law. Once the moving party has met its burden, the opposing party must present material and substantial evidence, rather than mere conclusory or speculative statements, to raise a genuine issue of material fact. We review a district court's conclusions of law to determine whether the court's...
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