Hicklin v. CSC Logic, Inc.
| Decision Date | 07 August 1997 |
| Docket Number | No. 96-529,96-529 |
| Citation | 54 St.Rep. 675,283 Mont. 298,940 P.2d 447 |
| Parties | Milton E. HICKLIN, Plaintiff and Appellant, v. CSC LOGIC, INC., A Texas Corporation, d/b/a, Logic Management Services, Inc., and the Pennsylvania Life and Health Insurance Guaranty Association, Defendants and Respondents. |
| Court | Montana Supreme Court |
John M. Morrison; Meloy & Morrison; Helena, for Plaintiff and Appellant.
Sarah R. Saldana and Anne Hilbert; Baker & Botts; Dallas, TX; and Mark S. Williams; Williams & Ranney; Missoula, for CSC Logic, Inc.
Stephen M. Frankino; Hughes, Kellner, Sullivan & Alke; Helena, for Pennsylvania Life & Health.
The appellant, Milton E. Hicklin, filed a complaint in the District Court for the First Judicial District in Lewis & Clark County in which he sought damages from the respondents, CSC Logic, Inc. ("CSC") and the Pennsylvania Life and Health Insurance Guaranty Association ("PLHIGA"), pursuant to § 33-18-242, MCA. The respondents failed to appear. On that basis, the District Court entered a default judgment against the respondents and awarded damages to Hicklin. When Hicklin sought to supplement the record, the respondents appeared and moved the District Court to vacate the default judgment entered against them. The District Court granted that motion. Hicklin appeals. We reverse the judgment of the District Court and remand the case to that court for proceedings consistent with this opinion.
The sole issue on appeal is whether the District Court erred when it concluded that it lacked subject matter jurisdiction to entertain Hicklin's claim and, on that basis, granted the respondents' motion to vacate the default judgment entered against them.
In 1989, Milton Hicklin purchased a vehicle for which financing was provided by First Interstate Bank of Billings. The loan was taken on May 31, 1989, and was to be repaid by monthly payments, the last of which was due on June 15, 1994. To insure repayment of the loan, Hicklin purchased a disability insurance policy from the Life Assurance Company of Pennsylvania ("LACOP"), for which he paid a single, lump-sum premium. In return, LACOP agreed to make monthly payments to First Interstate in the amount of $251.92 in the event that Hicklin became disabled.
On January 10, 1991, the Commonwealth Court of Pennsylvania declared LACOP insolvent. The liquidation order appointed the Pennsylvania Insurance Commissioner "liquidator" of LACOP's property, assets, contracts and rights of action. Pursuant to the Pennsylvania Life and Health Guaranty Association Act (see 40 P.S. § 1801, et seq.), the Commissioner assigned its statutory duties to PLHIGA, an unincorporated association created by statute which guarantees the obligations of insolvent health and life insurance companies. The liquidation order, therefore, gave PLHIGA control of LACOP's assets and directed PLHIGA to proceed with the liquidation of LACOP in accordance with Article V of Pennsylvania's Insurance Department Act, codified at 40 P.S. §§ 221.1-221.63.
In an undated letter, PLHIGA informed Hicklin that LACOP had been declared insolvent. The letter further advised him that PLHIGA had assumed LACOP's contractual obligations, including his disability policy, and that any inquiries regarding his policy or benefits should be directed to CSC, a Texas corporation acting as a third-party administrator.
In February 1993, Hicklin underwent a microsurgical laminotomy, following which he was disabled. Accordingly, he submitted a claim for disability insurance payments. PLHIGA and CSC accepted liability and began making payments to First Interstate on his behalf. However, of the seventeen remaining payments, fourteen were delinquent. Additionally, PLHIGA and CSC refused to make the final payment.
On August 2, 1994, Hicklin filed a complaint in the District Court. He claimed that PLHIGA's and CSC's claims-handling practices violated provisions of the Montana Unfair Trade Practices Act, found at § 33-18-201, MCA, and that those violations caused him substantial harm, including delayed credit for a home he was building and, therefore, increased building costs for financing and materials. On that basis, he asserted that he was entitled to compensatory and punitive damages.
PLHIGA and CSC were both served with notice, but failed to appear. Accordingly, Hicklin filed a notice of default. Again, however, both defendants failed to respond. The District Court entered a default judgment and, after a hearing, issued its findings of fact and conclusions of law regarding liability and damages. The District Court determined that Hicklin is entitled to damages in the following amounts: $36,000 for lost interest; $8,000 for increased cost of lumber; $251.92 for the final loan payment; $140 in late payment penalties; and $10,000 for emotional distress. The District Court also awarded him punitive damages pursuant to § 27-1-221, MCA.
Hicklin attempted to enforce his judgment. He was informed, however, that a specific finding with regard to jurisdiction would facilitate his effort to enforce the judgment against CSC. On that basis, Hicklin filed a motion to supplement the District Court's findings of fact and conclusions of law.
Respondents subsequently appeared for the first time and moved the District Court to vacate the default judgment entered against them. In support of that motion, they asserted that the Montana District Court does not have subject matter jurisdiction over Hicklin's claims and, therefore, that the default judgment entered against them is void and must be vacated.
The District Court agreed with the respondents and, on that basis, granted respondents' motion pursuant to Rule 60(b)(4) and (6), M.R.Civ.P.
Did the District Court err when it concluded that it lacked subject matter jurisdiction to entertain Hicklin's claim and, on that basis, granted respondents' motion to vacate the default judgment entered against them?
When we review a district court's conclusions of law, our standard of review is plenary and we must determine whether the court's conclusions are correct as a matter of law. Carbon County v. Union Reserve Coal Co. (1995), 271 Mont. 459, 469, 898 P.2d 680, 686; In Matter of Kovatch (1995), 271 Mont. 323, 326, 896 P.2d 444, 446; Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603.
The January 10, 1991, liquidation order which declared LACOP insolvent appointed the Pennsylvania Insurance Commissioner "liquidator" of LACOP's property, assets contracts, and rights of action. Pursuant to the Pennsylvania Life and Health...
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