Infinity Ins. Co. v. Dodson

• Citation: 14 P.3d 487,2000 MT 287,302 Mont. 209
• Decision Date: 16 November 2000
• Docket Number: No. 99-168.,99-168.
• Parties: INFINITY INSURANCE COMPANY, Plaintiff and Respondent, v. Holly DODSON, Kortnee Azure, Martha Vannatta, Personal Representative of the Estate of Jessica Vannatta, deceased, and Josh Shelstad, Defendants and Appellants.
• Court: Montana Supreme Court

14 P.3d 487

2000 MT 287

302 Mont. 209

INFINITY INSURANCE COMPANY, Plaintiff and Respondent, v. Holly DODSON, Kortnee Azure, Martha Vannatta, Personal Representative of the Estate of Jessica Vannatta, deceased, and Josh Shelstad, Defendants and Appellants.

No. 99-168.

Supreme Court of Montana.

Submitted on Briefs August 19, 1999.

Decided November 16, 2000.

William Conklin, Conklin, Nybo, LeVeque & Lanning, Great Falls, MT, (Vannatta); Chris R. Young, Havre, MT, (Dodson and Azure) For Appellants.

Paul R. Haffeman, Dennis Tighe, Davis, Hatley, Haffeman & Tighe, Great Falls, MT, For Respondent.

Justice JAMES C. NELSON delivered the Opinion of the Court.

¶ 1 The Appellants, Holly Dodson (Dodson), Kortnee Azure (Azure) and Martha Vannatta (Vannatta), appeal an order issued by the Twelfth Judicial District Court, Hill County, which granted summary judgment in favor of Infinity Insurance Company (Infinity). We affirm in part, reverse in part, and remand.

¶ 2 Dodson and Azure are jointly represented on appeal by the same counsel, while Vannatta is represented by her own counsel. Thus, two separate sets of briefs were filed by the parties referred to herein as the Appellants. Although framed differently, the issues on appeal can be consolidated and restated as follows:

1. Did the District Court err in granting Infinity Insurance Company's prayer for Interpleader?

2. Did the District Court err by not ruling that the policy issued by Infinity Insurance Company was ambiguous and therefore unenforceable?

3. Did the District Court err in determining that Montana's vehicle insurance omnibus statutes do not require separate, full coverage for multiple insureds where each insured is liable for independent acts of negligence?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 This case arose as the result of a December 7, 1997 one-car rollover accident near Havre, Montana, in which Dodson, Azure and Josh Shelstad were injured and the driver, Jessica Vannatta, was killed.¹ The vehicle was owned by Paul R. Christeck (Christeck) and insured under his policy with Infinity, for the statutory mandatory minimum liability amount of $50,000 per accident involving two or more injured persons. Jessica Vannatta, an unlicensed 16-year-old with little driving experience, allegedly used Christeck's Ford Bronco with his permission on the day the accident occurred.

¶ 4 In the underlying action, Dodson, Azure, and Vannatta (Jessica's mother, who is serving as personal representative on behalf of Jessica's estate) alleged that Christeck negligently entrusted his motor vehicle to Jessica, and is therefore legally liable for their injuries. Dodson and Azure have further alleged that Jessica negligently operated Christeck's vehicle at the time of the accident, and is therefore legally liable for their injuries as well. (Shelstad did not appear and a judgment by default was entered against him.)

¶ 5 On November 16, 1998, Infinity and Vannatta moved for summary judgment, and on November 13, 1998, Dodson and Azure moved for declaratory judgment, which the District Court treated as summary judgment.

¶ 6 Relevant to the District Court's summary judgment inquiry were the terms of Christeck's policy with Infinity. Specifically, Christeck's policy provided him up to $50,000 in the event an "insured" was found legally liable for bodily injuries sustained in an accident involving more than one person. At issue, however, was whether this limit applied to not only him, but the driver (Jessica Vannatta) as well, meaning that Infinity by the terms of its policy would have to pay up to $50,000 on behalf of Christeck, and another $50,000 on behalf of Vannatta, for their separate acts of negligence. The Appellants maintained that the policy was ambiguous in defining "accident," and therefore should rightfully be construed in their favor. This theory was premised on the contention that Jessica Vannatta's negligence and Christeck's negligent entrustment constituted two separate "accidents" under the terms of the policy. Thus, Christeck's policy with Infinity should provide $100,000 total in liability coverage.

¶ 7 Another theory advanced by Appellants was that regardless of the language of the Infinity policy, state omnibus laws require that all insureds must carry the mandatory minimum coverage, including "permissive drivers" such as Jessica Vannatta. They contended that by limiting its liability to a maximum of $50,000 where more than one insured may be liable, the terms of Infinity's policy contravened state law as well as public policy under Montana's Motor Vehicle Safety-Responsibility Act. Appellants maintained that under the undisputed facts, state law should be construed to require that $100,000 of liability coverage be made available to the injured parties under Christeck's policy with Infinity.

¶ 8 Infinity, on the other hand, in its May 6, 1998 Complaint for Interpleader, requested that upon payment of $50,000 into the court, it should be dismissed with prejudice as a party from all claims arising from the accident. Infinity recognized that its policy limit of $50,000 would be paid, and requested that the parties and court proceed (without Infinity as a named party) to determine to whom and in what amount.

¶ 9 Infinity claimed that both its policy as well as state law is clear: $50,000 is the total coverage available for one accident, and that the number of insureds found liable under these facts is irrelevant. The policy issued by Infinity to Christeck states:

We will pay damages, except for punitive or exemplary damages, up to the policy limit shown on the Declarations Page, for which an insured person is legally liable because of bodily injury or property damage resulting from the ownership, maintenance or use of your insured car or non-owned car. The bodily injury or property damage must be caused by an accident and not be expected nor intended from the stand point of the insured person.

It is undisputed that under the policy both Christeck and Jessica Vannatta were an "insured." The policy later provides, however, that Infinity would not pay more than the maximum limit of liability regardless of the number of "insured persons."

¶ 10 Following a hearing, the District Court entered its order granting summary judgment to Infinity on February 1, 1999, which it certified as a final judgment pursuant to Rule 54(b), M.R.Civ.P.

¶ 11 The court acknowledged that no facts were in dispute, and therefore what remained were purely legal determinations. The court first determined that the Infinity policy was not ambiguous. "Any reasonable person, with no legal training, but a working knowledge of the English language, is informed that no matter how many persons are considered insureds, and no matter how many people are injured in an accident, the policy limit is $50,000."

¶ 12 The court further stated that it would be "a stretch of the word `accident' that in this incident there were in fact two accidents that triggered separate coverage, i.e. the negligent entrustment and the rollover." Although the term "accident" was not expressly defined, the court observed that the policy provided that: "All bodily injury and property damage arising out of continuous or repeated exposure to substantially the same general conditions shall be considered out of one (1) accident."

¶ 13 The court also took note of the policy provisions that stated that the $50,000 liability limit "is the maximum we will pay as damages for all bodily injury to two (2) or more persons in any one accident," and that Infinity would pay no more than this maximum regardless "of the number of vehicles described on the Declarations Page, insured persons, claims, or policies, or vehicles involved in the accident."

¶ 14 In construing Montana's mandatory vehicle insurance laws, the court stated that §§ 61-6-103 and 301, MCA, are not directed at insurance companies; rather, compliance is directed at vehicle users and owners, and therefore does not affect Infinity's obligations. The court concluded:

In this instance, both the owner and the permissive user are clearly insured as required. Payment of the limit of the policy does not leave either uninsured, it exhausts the insurance amount. The required amount of insurance is provided. While the limit is probably too low for 1997-99 costs, it is what the legislature fixed. It is not for the courts to increase it by strained interpretations of the law.

¶ 15 The court granted Infinity's motion for summary judgment, and ordered that upon payment of $50,000 to the court, Infinity would be dismissed as a party, and that its prayers for relief under its Complaint for Interpleader were granted.

¶ 16 This appeal followed.

STANDARD OF REVIEW

¶ 17 This Court reviews an order granting summary judgment under Rule 56, M.R.Civ.P., by utilizing the same criteria as the district court. See Bruner v. Yellowstone County (1995), 272 Mont. 261, 264, 900 P.2d 901, 903. Summary judgment is a remedy which should be granted when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Rule 56(c), M.R.Civ.P. The procedure should never be substituted for trial if a material factual controversy exists. See Payne Realty v. First Sec. Bank (1992), 256 Mont. 19, 24, 844 P.2d 90, 93

.

¶ 18 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. See Hicklin v.. CSC Logic, Inc. (1997), 283 Mont. 298, 301, 940 P.2d 447, 449.

DISCUSSION

¶ 19 Appellants' challenge to the District Court's interpretation of Montana's Motor Vehicle Safety Responsibility Act, enacted by the Legislature in 1951, raises a question of first impression: whether each insured under one policy, who are both found legally liable for causing one accident, must each be covered by the mandatory limits provided under § 61-6-103, MCA. In...