Humes v. Farmers Ins. Exch.
| Citation | 409 Mont. 295,514 P.3d 417 |
| Decision Date | 26 July 2022 |
| Docket Number | DA 21-0422 |
| Parties | Connie HUMES, Plaintiff and Appellant, v. FARMERS INSURANCE EXCHANGE and Mid-Century Insurance Company, Defendants and Appellees. |
| Court | United States State Supreme Court of Montana |
For Appellant: Keif Storrar, Doubek, Pyfer & Storrar PLLP, Helena, Montana
For Appellees: Christopher C. Voigt, Crowley Fleck PLLP, Billings, Montana
¶1 Connie Humes appeals trial rulings by the First Judicial District Court, Lewis and Clark County, excluding evidence of certain settlement amounts paid by Farmers Insurance Group, in a trial of her claims under the Unfair Trade Practices Act (UTPA). Humes also challenges the District Court's denial of her motion for a new trial, based on the same evidentiary rulings. We address the following issue:
Did the District Court abuse its discretion by excluding evidence of settlement amounts paid in a global settlement of multiple claims by Farmers Insurance Group in a subsequent trial of claims under the UTPA?
We affirm.
¶2 On November 2, 2013, Barney Benkelman rear-ended Humes’ vehicle at a stoplight in Helena, causing injury to Humes. Benkelman was covered by Farmers Insurance Exchange (FIE) for bodily injury liability, with a financial limit of $100,000. Humes was insured by Mid-Century Insurance Company (Mid-Century), including underinsured motorist coverage (UIM) with a $250,000 limit, and medical payment coverage (med-pay) with a $50,000 limit. FIE is the majority owner of Mid-Century, and is also one of the insurance exchanges comprising Farmers Insurance Group (Farmers). Mid-Century's insurance claims are adjusted by FIE employees. Farmers therefore considered the accident a "dual-insured" loss, which occurs when parties involved in the accident are insured by the same company.
¶3 Shortly after the accident, Humes made a third-party bodily injury claim against Benkelman's policy with FIE. FIE initially advanced payments for Humes’ medical bills, but it stopped paying after receiving the report of a medical examination of Humes.1 Humes retained counsel, and in February 2015 she made first-party UIM and med-pay claims under her Mid-Century policy. Mid-Century requested Humes undergo another medical examination and subsequently denied continuing med-pay benefits. Humes then filed suit (underlying action), stating claims against Benkelman for negligence (Benkelman claim), and against Mid-Century for breach of contract for denying UIM coverage (UIM claim), breach of contract for denying med-pay coverage (med-pay claim), and breach of the implied covenant of good faith and fair dealing for alleged mishandling of her first-party claims (breach of covenant claim).
¶4 In November 2017, FIE offered Humes $40,000 to settle the Benkelman claim. Humes declined the offer, and in January 2018 all parties participated in a "global mediation" session. During the mediation, FIE and Humes settled the Benkelman claim for the policy limit of $100,000. About 48 hours thereafter, Humes and Farmers settled Humes’ claims against Mid-Century for a payment of $220,000—$200,000 under the UIM policy and $20,000 under the med-pay policy. Thus, all four of Humes’ claims in the underlying action were settled for payments totaling $320,000.
¶5 In May 2018, Humes brought this action, including first and third-party claims against Mid-Century and FIE, respectively, for alleged violations of the UTPA, §§ 33-18-201 and -242, MCA. Humes alleged the insurance companies, operating together as Farmers, acted in bad faith by taking advantage of the dual-insured loss and failing to timely settle the Benkelman claim for the liability policy limit. Humes further alleged Farmers violated its duty to independently evaluate the separate first and third-party claims and intentionally undervalued the Benkelman claim to avoid exposure under Humes’ UIM policy.
¶6 In its trial memorandum filed less than a month before trial, Farmers asserted for the first time that it had paid a portion of the settlement to Humes in the underlying action with funds from its "SAE Group," a department assigned to handle bad faith claims. Farmers stated it "should be allowed to present evidence that [its] bad faith department paid an additional $50,000 on top of UIM and medical payments settlements" in the underlying settlement. Humes objected and asked the court to prohibit Farmers from using the SAE payment source as evidence it had settled Humes’ bad faith claims in the underlying action, but she asked the court to take judicial notice of the payment and permit Humes to present evidence that she had no knowledge of the payment's source. The District Court issued an order denying the parties’ requests, stating that "neither party will be allowed to introduce evidence of the underlying settlement agreement to prove matters of liability."
¶7 Humes moved for clarification of the Order, arguing it was overly broad because it could exclude introduction of any settlement offers or amounts. Humes stated she intended "to introduce settlement offers from the underlying motor vehicle crash claim not to prove liability for that underlying claim [ ] but ... to show that Farmers engaged in bad faith during the underlying claim by systematically undervaluing [her] claim." At trial, the District Court conferred with the parties about the motion, and Humes’ attorney described to the court his intended use of the settlement amount: Farmers argued that Humes was attempting to use the final settlement amount as proof Farmers To provide clarification, the District Court affirmed its exclusion of the $220,000 amount paid under Humes’ Mid-Century policy and the total amount paid for all claims of $320,000. However, the court modified its Order to permit Humes to offer evidence that Farmers initially offered $40,000 to settle the Benkelman claim, while it was authorized to offer the entire $100,000 limit to settle the claim; that resolution of the Benkelman claim for the policy limit of $100,000 allowed Humes to seek payment of additional sums under her Mid-Century policy; that Farmers had settled these additional claims for "substantially more" than the $100,000 Benkelman claim; and that Farmers had "drug its feet" by taking four years to settle all of Humes’ claims. Consequently, Humes was prohibited only from stating the specific amounts of the settlement under her Mid-Century coverage and the total Farmers had paid to settle all four claims.
¶8 Following a five-day trial, the jury determined FIE and Mid-Century did not violate the UTPA and that the insurance companies had a reasonable basis in law or fact for their conduct while negotiating Humes’ claims. See § 33-18-242(5), MCA. Humes moved for a new trial under M. R. Civ. P. 59, arguing she did not receive a fair trial because the District Court's exclusion of the $220,000 and $320,000 numerical values prevented her from proving her claim under § 33-18-201(13), MCA, which provides that an insurer violates the UTPA if it "fail[s] to promptly settle claims, if liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage." Humes again argued the excluded values showed "the degree to which FIE significantly undervalued [her] injury." The District Court denied Humes’ motion, reiterating its trial rulings. Humes appeals.
¶9 District courts have broad discretion when determining whether evidence is relevant and admissible. "Accordingly, we review a district court's evidentiary rulings for abuse of discretion." Peterson v. Doctors’ Co. , 2007 MT 264, ¶ 31, 339 Mont. 354, 170 P.3d 459 (citing Glacier Tennis Club v. Treweek Construction Co. , 2004 MT 70, ¶ 47, 320 Mont. 351, 87 P.3d 431, overruled on other grounds by Johnson v. Costco Wholesale , 2007 MT 43, ¶ 21, 336 Mont. 105, 152 P.3d 727 ). The abuse of discretion standard also applies to a district court's decision to deny a motion for a new trial based on evidentiary rulings and further requires the abuse of discretion to be " ‘so significant as to materially affect the substantial rights of the complaining party.’ " Simmons Oil Corp. v. Wells Fargo Bank, N.A. , 1998 MT 129, ¶ 18, 289 Mont. 119, 960 P.2d 291 (quoting Hansen v. Hansen , 254 Mont. 152, 160, 835 P.2d 748, 753 (1992) ). "The abuse of discretion question is not whether this Court would have reached the same decision, but, whether the district court acted arbitrarily without conscientious judgment or exceeded the bounds of reason." Vulles v. Thies & Talle Mgmt., Inc ., 2021 MT 279, ¶ 6, 406 Mont. 169, 512 P.3d 248 (citing Chipman v. Northwest Healthcare Corp. , 2012 MT 242, ¶ 17, 366 Mont. 450, 288 P.3d 193 ) (internal quotations omitted).
¶10 Humes argues the District Court's exclusion of the specific settlement values prevented her from "showing the degree to which Farmers intentionally undervalued Humes’ claim against Benkelman" and thus from proving her case under § 33-18-201(13), MCA. Farmers argues, as it did in the District Court, that the excluded settlement amounts do not accurately reflect its valuation of Humes’ injuries and, if so introduced, would have been both irrelevant and misleading because the $320,000 amount was for settlement of all four of Humes’ claims in the...
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