LaMere v. Farmers Ins. Exch., DA 11–0208.

• Decision Date: 01 November 2011
• Docket Number: No. DA 11–0208.,DA 11–0208.
• Parties: Lexie LaMERE and Virgil Henderson, Plaintiffs and Appellants, v. FARMERS INSURANCE EXCHANGE, Defendant and Appellee.
• Court: Montana Supreme Court

2011 MT 272

265 P.3d 617

362 Mont. 379

Lexie LaMERE and Virgil Henderson, Plaintiffs and Appellants,

v.FARMERS INSURANCE EXCHANGE, Defendant and Appellee.

No. DA 11–0208.

Supreme Court of Montana.

Submitted on Briefs Oct. 12, 2011.Decided Nov. 1, 2011.

For Appellant: Benjamin R. Graybill, Graybill Law Firm, P.C., Great Falls, Montana, Lawrence A. Anderson, Attorney at Law, Great Falls, Montana.

For Appellee: David C. Dalthorp, Gough, Shanahan, Johnson & Waterman, PLLP, Helena, Montana.

Justice PATRICIA O. COTTER delivered the Opinion of the Court.

[362 Mont. 380] ¶ 1 Lexi¹ LaMere is Virgil Henderson's daughter. In 2001, Lexi was seriously injured in an automobile accident caused by an uninsured motorist. Henderson and members of his household, including Lexi, were insured by two Farmers Insurance Exchange (Farmers or FIE) automobile insurance policies, each providing uninsured motorist protection of $25,000. In late 2001, in exchange for a full release signed by Lexi, Farmers paid $25,000 in uninsured motorist coverage under Henderson's policy insuring the vehicle involved in the accident. In April 2006, Lexi and her father sued FIE seeking uninsured motorist benefits under Henderson's second policy. The Eighth Judicial District Court entered summary judgment in favor of FIE. Lexi and Henderson appeal. We affirm.

ISSUES

¶ 2 A restatement of the issues is:

¶ 3 Did the District Court err in dismissing Lexi and Henderson's claim for stacking of uninsured motorist coverages?

¶ 4 Did the District Court err in ruling that neither Lexi nor Henderson had standing to bring a claim for medical pay coverage?

¶ 5 Did the District Court abuse its discretion when it declined to certify a putative class for claims of unjust enrichment and disgorgement of premiums?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 6 In 2001, Lexi Henderson was a passenger in a truck owned by her father, Virgil Henderson, but driven by her then-boyfriend, now-husband, Aaron LaMere. Aaron was uninsured. Through Aaron's negligence, the couple had an accident and Lexi was seriously injured. Lexi was living at home at the time and was insured under her father's FIE policies. Henderson had a policy on the truck in which Lexi had been riding (Policy # 58) and on a second newer truck (Policy # 59). Both of Henderson's liability policies with Farmers contained uninsured motorist (UM) as well as underinsured motorist (UIM) coverage but neither contained medical payment coverage.

¶ 7 Lexi made a UM claim against the FIE policy insuring the wrecked truck and on November 27, 2001, in exchange for a release of all claims arising from the accident, FIE settled Lexi's claim by paying the UM policy limit of $25,000. At the time of this settlement, both the terms of the insurance policy and the then-current law prohibited the “stacking” of insurance coverage.² Five years later—in April 2006—Lexi sued Farmers seeking to stack the UM coverage contained in Policy # 59 on top of the UM coverage she received under Policy # 58. Farmers issued a second check to Lexi in December 2006 in the amount of $25,000, the UM policy limit under Policy # 59.

¶ 8 In their second amended complaint filed in February 2007, relying on Hardy v. Progressive Specialty Ins. Co., 2003 MT 85, 315 Mont. 107, 67 P.3d 892, Lexi and Henderson requested declaratory judgment that they and similarly situated policyholders were entitled to stack “uninsured, underinsured, and medical payment coverages.” Lexi asserted she was entitled to reopen her settled claim and pursue additional damages. They also claimed that Farmers: (1) was being unjustly enriched by collecting premiums but refusing to provide full benefits under multiple policies; (2) had breached its contract with Henderson and Lexi by refusing to pay benefits for which it received consideration; (3) had breached the implied covenant of good faith and fair dealing; and (4) had exercised bad faith. Additionally, they claimed that Lexi's release constituted a unilateral mistake of law. Lexi and Henderson sought to bring all of these claims as a class action on behalf of themselves and other similarly situated policyholders.

¶ 9 In October 2008, FIE moved for partial summary judgment on Lexi and Henderson's claim for declaratory relief. Farmers also sought summary judgment on Lexi and Henderson's claims pertaining to entitlement to medical payments on the grounds that Henderson's policies did not have medical payment provisions and Lexi and Henderson had never asserted medical pay claims against Farmers. FIE argued that neither Lexi nor Henderson had standing to bring claims based upon medical payment coverage personally or as class representatives.

¶ 10 In January 2009, following a hearing on Farmers' motion for partial summary judgment, the District Court granted FIE's motion as to all claims pertaining to stacking and standing; thus, the only remaining claim was for unjust enrichment. The basis for the court's ruling on stacking issues was that Lexi had settled her claim prior to our decision in Hardy; therefore, Hardy did not apply retroactively to her claim. It also held that Lexi and Henderson had no standing to pursue any claims related to medical pay since they never paid premiums for or obtained medical pay coverage.

¶ 11 In June 2009, Lexi and Henderson moved to certify a class to pursue a class action against Farmers for its alleged unjust enrichment derived from failing to pay stacking claims on UM, UIM, and/or medical payment coverages. In February 2011, after a hearing to address various outstanding motions, the District Court denied the motion to certify the class. The District Court determined neither Lexi nor Henderson were members of the class they sought to certify and represent.

¶ 12 Lexi and Henderson filed a timely appeal from the District Court's order granting Farmers' motion for partial summary judgment and the court's order denying their motion to certify a class.

STANDARD OF REVIEW

¶ 13 We review summary judgment rulings de novo. Applying the same M.R. Civ. P. 56 criteria as the district court, we determine whether the moving party has established both the absence of any genuine issues of material fact and entitlement to judgment as a matter of law. We review a district court's conclusions of law for correctness. We review a district court's findings of fact to determine whether they are clearly erroneous. Weaver v. Advanced Refrigeration, 2011 MT 174, ¶ 8, 361 Mont. 233, 257 P.3d 378 (citation omitted).

¶ 14 We review a district court's decision on a motion for class certification for an abuse of discretion. Hop v. Safeco Ins. Co., 2011 MT 215, ¶ 9, 361 Mont. 510, 261 P.3d 981 (citation omitted).

DISCUSSION

¶ 15 Did the District Court err in dismissing Lexi and Henderson's claim for stacking of uninsured motorist coverages?

¶ 16 In 2001, at the time of Lexi's accident, § 33–23–203, MCA (2001), the anti-stacking statute was in full force and effect. It provided:

Limitation of liability under motor vehicle liability policy. (1) Unless a motor vehicle liability policy specifically provides otherwise, the limits of insurance coverage available under each part of the policy must be determined as follows, regardless of the number of motor vehicles insured under the policy, the number of policies issued by the same company covering the insured, or the number of separate premiums paid:

. . . . .

(c) the limits of the coverages specified under one policy or under more than one policy issued by the same company may not be added together to determine the limits of the insurance coverages available under the policy or policies for any one accident.

¶ 17 As a result of this statute and the anti-stacking language contained in Henderson's policies, Lexi did not pursue the UM policy coverage available under Henderson's second insurance policy following her accident. With the advice of counsel, in 2001 she signed a release in return for payment of the $25,000 maximum UM coverage available under the policy insuring the truck that Aaron LaMere wrecked.

¶ 18 In 2002, Ned Hardy challenged § 33–23–203, MCA (2001). Hardy had been seriously injured in an automobile accident with an underinsured driver. After receiving $50,000 from the other driver's liability insurer, Hardy sought further recovery from his insurer, Progressive. It was undisputed that Hardy's damages exceeded $50,000. He submitted that he had three vehicles insured with Progressive and paid three separate premiums each of which paid for $50,000 in underinsured motorist protection. As a result, he opined, he was entitled to recover $150,000 from Progressive by stacking his three coverages. Hardy, ¶ 1. Hardy argued that it was against public policy in Montana for an insurance company to charge separate premiums for UIM protection for separate vehicles insured on the same policy but then refuse to stack the coverages in order to provide the insured with the greatest compensation. Hardy, ¶¶ 30–31. In an Opinion issued on April 18, 2003, we concluded that charging insurance premiums for “non-existent” coverage—second and third coverages for UIM that the insurer did not intend to pay—was indeed against the public policy in Montana. We therefore ruled that the statute precluding stacking under these circumstances was unconstitutional. Hardy, ¶¶ 37–42.

¶ 19 Subsequently, we were asked to address whether our ruling in Hardy applied retroactively to claims arising before the date Hardy was decided. In Dempsey v. Allstate Ins. Co., 2004 MT 391, ¶ 31, 325 Mont. 207, 104 P.3d 483, Tyler Dempsey, on behalf of himself and a certified class, sued Allstate for additional payments from past insurance claims denied based upon anti-stacking provisions in the policies and the pre- Hardy anti-stacking statute. After briefly reviewing the history of retroactive application of our cases, we concluded Hardy could be applied retroactively except to those “cases that became final or were...