Marshall v. Safeco Ins. Co. of Ill.

• Citation: 390 Mont. 358,413 P.3d 828,2018 MT 45
• Decision Date: 13 March 2018
• Docket Number: DA 17-0384
• Parties: Marcia MARSHALL, Plaintiff and Appellant, v. SAFECO INSURANCE COMPANY OF ILLINOIS, and Mid–Century Insurance Company, Defendants and Appellees.
• Court: United States State Supreme Court of Montana

390 Mont. 358

413 P.3d 828

2018 MT 45

Marcia MARSHALL, Plaintiff and Appellant,

v.SAFECO INSURANCE COMPANY OF ILLINOIS, and Mid–Century Insurance Company, Defendants and Appellees.

DA 17-0384

Supreme Court of Montana.

Submitted on Briefs: February 6, 2018

Decided: March 13, 2018

For Appellant: Lawrence A. Anderson, Attorney at Law; Great Falls, Montana, Daniel P. Buckley, Buckley Law Office, P.C.; Bozeman, Montana

For Appellees: Paul N. Tranel, Bohyer, Erickson, Beaudette & Tranel, P.C.; Missoula, Montana, Nicholas J. Pagnotta, Williams Law Firm, P.C.; Missoula, Montana

Justice Ingrid Gustafson delivered the Opinion of the Court.

¶1 Marcia Marshall (Marshall) appeals a June 8, 2017 order of the Sixth Judicial District, Park County, granting Safeco Insurance Company and Mid–Century Insurance Company's (collectively, the Defendants) motion to dismiss. We reverse and remand.

¶2 We restate the issue on appeal as follows:

1. Whether the District Court erred in granting the Defendants' motion to dismiss pursuant to M. R. Civ. P. 12(b)(6).

FACTUAL AND PROCEDURAL BACKGROUND

¶3 This case arises from a motor vehicle accident in Park County on February 14, 2010. Marshall was riding as a passenger in a car driven by Kevin Gallivan. Another individual, Peter Kirwan, owned the vehicle driven by Gallivan. Marshall alleged Gallivan's negligence caused the motor vehicle accident. Marshall suffered severe injuries resulting from the accident. Defendant Safeco insured Kirwan, the car owner. Defendant Mid-Century insured Gallivan, the driver. The Defendants provided liability coverage under each separate policy. The Defendants and Marshall entered into a settlement agreement prior to trial resolving the underlying claim.

¶4 Marshall filed an amended complaint against the Defendants on November 2, 2016. Marshall brought claims seeking declaratory judgment and violations under the Unfair Trade Practices Act (UTPA). Marshall alleged the Defendants have utilized and relied upon the collateral source statute or its principles to take a reduction against damages sustained and owed to their insureds or claimants in violation of Montana law. Specifically, Marshall alleged the Defendants used the collateral source statute to justify reduction in her damages notwithstanding the collateral source statute was inapplicable. Further, Marshall's complaint attacks the constitutionally of the collateral source statute under § 27-1-308, MCA.

¶5 The Defendants filed a joint motion to dismiss on January 20, 2017. The District Court granted the Defendants' motion to dismiss. The District Court found our decision in Miller v. State Farm Mut. Auto. Ins. Co ., 2007 MT 85, 337 Mont. 67, 155 P.3d 1278, controlling. The District Court construed "the holding of Miller as providing that an insurer's consideration of a potential future offset under the collateral source doctrine during settlement negotiations does not create a justiciable controversy." Relying on Miller , the District Court concluded Marshall's claim under the UTPA and the Declaratory Judgment Act should be dismissed. Marshall timely appeals.

STANDARD OF REVIEW

¶6 We review de novo a district court's ruling on a motion to dismiss pursuant to M. R. Civ. P. 12(b)(6). Western Sec. Bank v. Eide Bailly LLP , 2010 MT 291, ¶ 18, 359 Mont. 34, 249 P.3d 35. We construe the complaint in the light most favorable to the plaintiffs when reviewing an order dismissing a complaint under M. R. Civ. P. 12(b)(6). A district court should not dismiss a complaint for failure to state a claim unless it appears beyond doubt the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. Jones v. Mont. Univ. Sys ., 2007 MT 82, ¶ 15, 337 Mont. 1, 155 P.3d 1247. A district court's determination that a complaint has failed to state a claim for which relief can be granted is a conclusion of law which we review for correctness. Sinclair v. Burlington Northern & Santa Fe Ry ., 2008 MT 424, ¶ 25, 347 Mont. 395, 200 P.3d 46.

DISCUSSION

¶7 1. Whether the District Court erred in granting the Defendants' motion to dismiss pursuant to M. R. Civ. P. 12(b)(6).

¶8 Marshall argues the District Court erred in dismissing her declaratory judgment claim. Marshall asserts the District Court incorrectly applied Miller to conclude Marshall did not allege a justiciable controversy. Marshall contends that Miller is distinguishable due to the procedural posture. The Defendants maintain the District Court correctly dismissed Marshall's declaratory judgment claim. The Defendants argue Miller is controlling and therefore Marshall's declaratory judgment claim failed to allege a justiciable controversy.

¶9 The District Court concluded declaratory judgment could not be granted without a justiciable controversy and, based on our decision in Miller , concluded a justiciable controversy did not exist. The Uniform Declaratory Judgments Act provides a district court with the "power to declare rights, status, and other legal relations whether or not further relief is or could be claimed." Section 27-8-201, MCA. A district court "may refuse to render or enter a declaratory judgment or decree where such judgment or decree, if rendered or entered, would not terminate the uncertainty or controversy." Section 27-8-206, MCA. A justiciable controversy must exist before a court may exercise jurisdiction under the Declaratory Judgments Act. Northfield Ins. Co. v. Ass'n of Counties , 2000 MT 256, ¶ 10, 301 Mont. 472, 10 P.3d 813.

¶10 The test to determine whether a justiciable controversy exists requires the following:

First, a justiciable controversy requires that parties have existing and genuine, as distinguished from theoretical, rights or interests. Second, the controversy must be one upon which the judgment of the court may effectively operate, as distinguished from a debate or argument invoking a purely political, administrative, philosophical or academic conclusion. Third, it must be a controversy the judicial determination of which will have the effect of a final judgment in law or decree in equity upon the rights, status or legal relationships of one or more of the real parties in interest, or lacking these qualities be of such overriding public moment as to constitute the legal equivalent of all of them.

We apply the justiciable controversy test to actions for declaratory judgment to prevent courts from determining purely speculative or academic matters, entering anticipatory judgments, providing for contingencies which may arise later, declaring social status, dealing with theoretical problems, answering moot questions, or giving abstract or advisory opinions.

Northfield Ins ., ¶ 12 (internal citations omitted).

¶11 In Miller , we determined Miller's declaratory judgment action failed to allege a justiciability controversy. Miller , ¶ 19. Miller was involved in a motor vehicle accident resulting in injury. Miller brought suit against the negligent driver. Miller , ¶ 3. State Farm and Miller engaged in settlement negotiations. State Farm offered to settle the claim with Miller. State Farm's offer reflected a reduction based on the collateral source statute. Miller , ¶ 4. The parties did not enter into a settlement agreement. Miller , ¶¶ 4, 16, 18. Miller then filed an action for declaratory judgment arguing State Farm impermissibly considered the collateral source statute during settlement negotiations. Miller , ¶ 4. Miller did not allege UTPA violations. Miller , ¶¶ 13, 16. State Farm moved for summary judgment arguing a justiciable controversy did not exist. The District Court granted State Farm's motion.

Miller , ¶ 4.

¶12 On appeal, we held Miller's declaratory action claim failed to allege a justiciable controversy. Miller , ¶ 19. We determined Miller improperly brought the declaratory action while settlement negotiations were still ongoing. Miller , ¶ 16. We recognized Miller did not allege any UTPA violations, and thus, was not litigating a claim under any existing rights or interests provided for by the UTPA.¹ Miller , ¶¶ 13, 16. We further refused to dictate what factors a party may or may not consider while engaging in a voluntary settlement process because our opinion would be advisory. Miller , ¶¶ 16, 18. Accordingly, a judgment would not have the effect of a final judgment on any rights, status or legal relationship of the parties because State Farm could simply withdraw its offer and provide a different basis for its offer and Miller could still refuse the offer. Miller , ¶ 18. Thus, our analysis was contingent on the fact Miller and State Farm were engaged in ongoing settlement negotiations when Miller sought the court's intervention.

¶13 The procedural posture of this case distinguishes it from Miller . Unlike Miller , Marshall is litigating a claim under existing rights or interests provided for in the UTPA. Marshall and the Defendants entered into and completed a settlement. Once the Defendants entered into a settlement with Marshall, the insurers became subject to the UTPA. Under the UTPA, insurers have duties and obligations regarding their settlement practices to an insured or third-party claimant. Section 33-18-201, MCA. Thus, the parties have existing and genuine rights arising from the UTPA. Therefore, we determine the first requirement to find a justiciable controversy is met.

¶14 Moreover, a judgment in this case would determine the parties' respective rights and obligations. Unlike Miller , Marshall is not seeking a declaratory judgment too early in the proceedings, which would only serve as an advisory opinion. A declaratory judgment rendered in Miller would not have resolved the controversy because State Farm could have offered something different and Miller could have still rejected the offer. Here, settlement was agreed upon by the parties. Marshall received the settlement. A judgment in Marshall's case would determine the parties' rights, status, or legal relationship by deciding whether the Defendants...