Mathews v. Glacier General Assur. Co.

Decision Date28 November 1979
Docket NumberNo. 14708,14708
PartiesEmily K. MATHEWS, Plaintiff and Respondent, v. GLACIER GENERAL ASSURANCE COMPANY, Defendant and Appellant.
CourtMontana Supreme Court

Henningsen, Purcell & Genzberger, Mark A. Vucurovich argued, and James E. Purcell appeared, Butte, for defendant and appellant.

Corette, Smith, Dean, Pohlman & Allen, Kendrick Smith argued, Maurice A. Maffei argued, Butte, for plaintiff and respondent.

SHEA, Justice.

Defendant, Glacier General Assurance Company, appeals from an order of the Silver Bow County District Court granting plaintiff's motions for judgment on the pleadings, and alternatively, summary judgment, and thereby awarding her $53,224 based on a fire insurance policy covering the plaintiff's premises.

The primary question with which we are concerned is whether the plaintiff as the moving party in summary judgment carried the initial burden of proof to show that a question of material fact did not exist in relation to the defendant's pleading of an affirmative defense that plaintiff had materially altered the premises thereby materially affecting the insurance risk. There is, however, the additional question of whether the District Court properly granted judgment on the pleadings.

Because the District Court went beyond the pleadings in granting the motion for judgment on the pleadings, we conclude that his action cannot be sustained; rather, the District Court should have treated the motion as one solely for summary judgment. Moreover, because the District Court imposed the initial burden on defendant to provide proof of the affirmative defense alleged in its answer, in a situation in which it was the plaintiff who was the moving party for summary judgment, we conclude that the summary judgment order must also be reversed.

In the briefs filed before this Court, neither party has addressed the underlying pleadings and procedural problems which are necessarily involved in a determination of this case. The defendant has confined the issue to whether a material fact question exists regarding as the affirmative defense of material alteration. The question of which party has the initial burden of proving the existence or absence of a material question of fact in relation to an affirmative defense, was not discussed. Plaintiff, on the other hand, contends that she should prevail not only on the issue of summary judgment but on the court order granting judgment on the pleadings. Plaintiff did not, however, discuss the fundamental question of whether the plaintiff, as moving party for summary judgment, had the initial burden of proving that no material question of fact existed in relation to defendant's affirmative defense of material alteration. Moreover, plaintiff provided no rationale why judgment on the pleadings, in the context of this case, can be harmonized with the applicable rules of civil procedure.

A brief summary of the events leading up to the filing of this lawsuit, and a rather detailed summary of the pleadings is necessary for an understanding of the procedural state of this case at the time the District Court granted plaintiff's motions for judgment on the pleadings and summary judgment.

The defendant issued a standard fire insurance policy to the plaintiff on April 21, 1977, and later in 1977, during the term of the policy, a fire or fires occurred which severely damaged the premises. The defendant offered to settle the fire loss claim for $18,316, plaintiff refused the offer, and plaintiff then filed suit seeking to recover $67,000, the face amount of the policy, alleging that the amount of the loss actually exceeded the face amount of the policy.

In her complaint, plaintiff alleged that she owned the premises involved which were severely damaged by fire on October 3, 1977, and that a fire insurance policy issued by the defendant for the premises involved, was then in effect. She further alleged that the total loss exceeded the limits of the policy, that she had sent and defendant had received a timely sworn statement of proof of loss, and that defendant paid nothing on the loss, and that $67,000 was then due and payable. She also prayed for interest on the $67,000 from the date of the fire loss.

Defendant filed the customary motion to dismiss which was denied, and then filed its answer, which, to say the least, was not a model of clarity. Defendant admitted that a fire loss occurred during the term of the policy but denied that it occurred on October 3, 1977, and further admitted that defendant had paid nothing to plaintiff as a result of the fire loss. Defendant further alleged that it had offered to pay plaintiff the sum of $27,592 less depreciation of $9,336 and $100 deductible, but that plaintiff had refused such offer. Defendant further admitted receipt of a timely proof of loss statement sent by plaintiff, but denied that $67,000 was due and payable to plaintiff. The answer also denied any allegation not specifically admitted.

In a portion of its answer denominated as an affirmative defense, defendant alleged that plaintiff or her agents, servants or employees, before the occurrence of the fire, had caused the premises to be materially altered so as to decrease the value of the property and to materially affect the insurance risk assumed by defendant, and that plaintiff had failed to report such alterations to the defendant before the fire, as was required under the terms of the policy. We cannot determine from this alleged affirmative defense whether defendant was seeking to avoid payment altogether as a result of the alleged material alteration, or whether it was seeking merely to reduce the amount owed to plaintiff under the policy.

In essence, we cannot determine if the answer was intended to indicate that the changes in the structure had subjected the insurance company to pay a potentially higher loss, which would indicate an increase in risk, or whether the answer was intended to show that the changes in the structure had increased the chances that a fire would occur, an increase in the hazard. Neither party addressed itself to these distinctions in either the District Court or before this Court.

In its prayer for judgment, defendant simply asked that judgment be entered in favor of plaintiff for the amount of $18,316, which was the compromise offer originally offered to plaintiff. Defendant also demanded a jury trial. No additional pleadings exist in this case.

Within a week after filing its answer, defendant wrote a letter to plaintiff asking for an appraisal of the amount of the fire loss, there being a provision in the policy providing for such appraisal. Plaintiff did not respond by letter, but instead filed papers in District Court agreeing to this appraisal but also asserting that because the defendant had demanded the appraisal, such appraisal was final and binding on defendant, and no appeal was permitted. Plaintiff also alleged that all proceedings in District Court were suspended by virtue of defendant's demand for an appraisal.

Defendant filed papers in District Court asserting that any such appraisal determination could be appealed and also alleging that proceedings in District Court were not suspended because other issues remained for determination. We cannot determine from this whether defendant meant that factual issues still remained for decision, or that legal issues still remained for decision. In any event, each of the parties proceeded to select its own appraiser as permitted by the terms of the policy, an appraisal was made, and each appraiser arrived at an identical loss, in the amount of $53,844.

Upon receiving the results of the appraisal, plaintiff made her next move in District Court. She moved for judgment on the pleadings, and alternatively, for summary judgment. The basis for her motion for judgment on the pleadings is somewhat foggy, but it seems that plaintiff's essential contention was that defendant, by demanding an appraisal, had waived its right to go forward with any issues raised by the pleadings. Plaintiff also asserted that depreciation of the value of the premises in arriving at the amount of the loss was not permitted by the terms of the policy itself, nor was it permitted by applicable statutory and case law.

Plaintiff's motion for summary judgment was based on her contention that defendant's answer, combined with defendant's demand for an appraisal of the fire loss under the terms of the insurance policy, had eliminated or waived any factual controversy which might exist as to a material alteration of the premises. Specifically, plaintiff alleged that defendant was not entitled to assert the affirmative defense of material alteration for the following reasons: because defendant had alleged an offer to settle for $18,316.21 in its answer; that defendant had prayed in its answer for entry of judgment in favor of plaintiff for $18,316.21; that defendant had returned a substantial portion of the premium on the fire policy after the fire loss; that defendant had selected an appraiser-arbitrator to act with the appraiser-arbitrator selected by plaintiff; and last, by the ultimate determination of the appraiser-arbitrator assessing the actual fire loss at $53,844. Plaintiff presented no evidence by which it could be concluded that a material alteration had not in fact taken place as was alleged in defendant's affirmative defense.

Defendant filed no documents in opposition to the motions, but responded only with a brief which confined itself to the issue of summary judgment and the issue of depreciation; that is, whether defendant was bound by the appraisers' estimate of the amount of the fire loss. Defendant ignored the issue of whether plaintiff was entitled to judgment on the pleadings.

In its brief, defendant set forth the nature of the alleged material alterations asserted in its affirmative defense, which, defendant contended,...

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