King v. Geico Ins. Co.

• Decision Date: 11 December 2013
• Docket Number: Cause No. CV 12-92-BLG-RWA
• Parties: LOUISE KING, individually, and as Personal Representative of the Estate of Case Timothy King, Plaintiff, v. GEICO INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Montana

LOUISE KING, individually, and as Personal Representative of theEstate of Case Timothy King, Plaintiff, v. GEICO INSURANCE COMPANY, Defendant.

Cause No. CV 12-92-BLG-RWA

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MONTANA BILLINGS DIVISION

Dated: December 11, 2013

ORDER

I. Introduction

Plaintiff Louise King ("Louise") filed on June 18, 2012, a Complaint and Demand for Jury Trial in the Montana Thirteenth Judicial District Court, Yellowstone County, seeking a "declaration of his [sic] rights, status and legal relations with respect to Defendant GEICO Indemnity Company¹ ("GEICO") pursuant to GEICO Policy No. 4163-66-5-67[,]" and averring two additional claims for relief: Count Two (Breach of Contract); and Count Three (violations under Montana's Unfair Trade Practices Act), stemming from GEICO's failure tounconditionally pay Louise the underinsured benefits due under GEICO Policy No. 4163-66-5-67. The matter was removed to this Court on July 25, 2012. Trial is scheduled to commence on February 24, 2014,

Louise filed a Motion for Partial Summary Judgment on June 27, 2013, seeking a declaration from this Court regarding the rights and obligations of the parties under GEICO's underinsured motorist ("UIM") contract (Count One), along with this Court's judgment that, by virtue of the manner in which GEICO has handled Louise's claim, GEICO has breached its contract (Count Two) and violated subsections (1), (6), and (13) of MONT. CODE ANN. ("MCA") § 33-18-201, (Count Three)², as a matter of law. GEICO filed a Motion for Summary Judgment on July 29, 2013, arguing Louise is not entitled to the "each occurrence underinsured limits." GEICO maintains summary judgment in its favor is appropriate because under Montana law, GEICO was entitled to seek a release before paying Louise $100,000. Both motions for summary judgment are accompanied by statements of undisputed facts and supporting briefs. Louise filed a reply on August 16, 2013, and GEICO filed a reply on September 11, 2013.

Thereafter, Louise filed on October 31, 2013, a motion for oral argument,which motion the Court granted over the objection of GEICO. Oral argument was held November 25, 2013, in Billings. L. Randall Bishop of Billings, Montana argued on behalf of Louise, and Gerry Fagan of Billings, Montana argued on behalf of GEICO. The cross-motions for summary judgment are now ready for decision. For the reasons discussed below, the Court enters a declaration regarding the rights and obligations of the parties, grants Louise's request for summary judgment on her breach of contract claim, and denies summary judgment on her bad faith claims. The Court also grants GEICO's request for summary judgment on Louise's claims under MCA § 33-18-201(4), (5), and (9), and denies its Motion in all other respects.

II. Factual Background

GEICO issued a motor vehicle liability policy numbered 4163-66-55-67 ("the Policy) to Timothy King which covered two motorcycles. Pursuant to the Declaration Page, Timothy King's policy with GEICO provided the following UIM coverage on two vehicles:

Coverages

Limits and/or Deductibles

Uninsured/Underinsured Motorists

Each Person/Each Occurrence

$50,000/$100,000

"Part IV - Uninsured Motorists Coverage" of the Policy provides, in part:

We will pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by a covered person and caused by an accident . . .

* * *

The insurance afforded under this Part applies separately to each covered person, but the inclusion of more than one covered person shall not increase the limit of our liability.

Covered person, as used in this Part means:

1. You, any family member or any other person occupying your covered cycle,

2. Any person who is entitled to recover damages because of bodily injury sustained by a person described in 1 above.

Uninsured motor vehicle means a land motor vehicle or trailer of any type:

* * *

4. Which is an underinsured motor vehicle, as defined.

* * *

"Underinsured motor vehicle" means a motor vehicle with respect to which the sum of the limits of liability under all bodily injury liability bonds and insurance policies applicable at the time of the accidence is less than the limits of liability under this coverage.

(Emphasis in the Policy). The "Limits of Liability" section of Part IV of the Policy also provides, in pertinent part:

1. The limit of bodily injury liability shown on the Declarations as applying to "each person" is the maximum we will pay for all damages sustained by one person as a result of one accident covered by this Part.

2. Subject to the limit stated above for each person, the limit of liability shown as applying to "each accident" is the maximum we will pay for all damages covered by this Part arising out of bodily injury in any one accident.

* * *

We shall not be obligated to make any payment because of bodily injury to which this Insurance applies and which arises out of the ownership, maintenance or use of an underinsured motor vehicle until after the limits of liability under all bodily injury liability bonds and insurance policies applicable at the time of the accident have been exhausted by payment of judgments or settlements.

(Emphasis in the Policy).

The Definition section of the Policy provides that the term "bodily injury" means "bodily injury, sickness or disease, including death which results from the injury." The Policy was in effect on August 27, 2011, when Timothy King was involved in a motorcycle collision that resulted in his death. Louise, who was married to Timothy King on the date of the accident, was not involved in the accident, did not witness the accident, and did not suffer any bodily injury as a result of the accident.

The driver who caused the accident that resulted in Timothy King's deathwas an underinsured driver within the meaning of the Policy. After learning that the driver who caused the accident was underinsured, Louise contacted GEICO and requested payment of all UIM benefits due and owing under the Policy. As noted above, the policy provides $50,000.00 in "each person" limits and $100,000 in "each occurrence" limits.

On January 10, 2012, Louise sent GEICO the following email:

I am writing to ask that we expedite the completion of this case. We have faxed and telephoned information back and forth for some time now. If you need anything further from me, please let me know. We settled the claim on the motorcycle itself back in October.

See Docket Entry No. 35-1, p. 22 of 36. During a telephone conversation on either February 17, 2012, or February 20, 2012, Janae Estill, on behalf of GEICO, offered to pay the Estate of Timothy King the full "each person" limits of $100,000 (two stacked $50,000 coverages) in exchange for a release of all other claims under the GEICO policy. Louise asked for the offer in writing and said she would let GEICO know whether or not she would accept such offer.

On February 29, 2012, Louise called GEICO back and told Janae Estill that she was not ready to accept the offer and that she was still trying to process things in her head. Louise told Estill that she would call back at a later time. GEICO subsequently received a letter from Louise dated February 29, 2012, wherein sheindicated her unwillingness to sign a release. Instead, Louise agreed to give GEICO a signed acknowledgment of receipt of payment which was attached to her letter. Louise's proposed acknowledgment of receipt read:

Louise King, individually and on behalf of the Estate of Timothy W. King, and her heirs, administrators, executors and agents, hereby acknowledge receipt of $100,000, representing underinsured motorist benefits paid under that certain insurance Policy No. 4163-66-55-67, issued by GEICO Indemnity Company to Timothy Wayne King, said benefits being due and payable as compensation for injuries and losses suffered in an automobile wreck caused by Paul Moe, an uninsured/underinsured driver, on August 27, 2011, on U.S. Highway 310, in Carbon County, Montana.

See Docket Entry No. 35-1, p. 25 of 36. In that same letter of February 29, 2012, Louise wrote: "I have decided to give GEICO 10 days from its receipt of this letter to get me a check for $100,000. If GEICO fails to do so, I will turn this whole frustrating affair over to an attorney." See Docket Entry No. 35-1, p. 24 of 36.

On March 12, 2012, Estill sent Louise the following email:

This email will confirm your letter dated 2/29/2012, I wanted you to know we need legal documentation to speak to if you are the personal representative over the estate of Timothy King, this information will be needed before any payment can be made. As far as a release being obtained, we do feel we have a right to ask for one, so please contact me so we can discuss this matter further.

See Docket Entry No. 35-1, p. 27 of 36. Estill also contacted legal counsel in Montana for further assistance with the claim.

On or about March 15, 2012, GEICO received a letter from Louise which was accompanied by documentation showing that Louise was the personal representative of the Estate of Timothy King and also indicating that she wanted to know whether GEICO would pay the $100,000 without a release. Since Louise was still refusing to sign a release, Ms. Estill sent GEICO's claim file to its Montana legal counsel for further handling.

After consultation with Montana legal counsel, GEICO issued a check to the Estate of Timothy King for $ 100,000 which was sent by GEICO's legal counsel to Louise on April 20, 2012. GEICO's counsel, John E. Bohyer explained in a letter that accompanied the check:

To be clear, you are not being asked to release any and all claims that you as an individual may have under the underinsured motorist coverage of the GEICO policy. The only release that needs to be executed by you is a release for the wrongful death and survival claims that could be advanced by the Personal Representative. This release is in return

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