Mitchell v. State Farm Ins. Co., 02-052.

Citation315 Mont. 281,68 P.3d 703,2003 MT 102
Decision Date24 April 2003
Docket NumberNo. 02-052.,02-052.
PartiesCharles MITCHELL, Plaintiff and Appellant, v. STATE FARM INSURANCE COMPANY, Defendant and Respondent.
CourtUnited States State Supreme Court of Montana

Steve Fletcher, Bulman Law Associates, P.L.L.P., Missoula, Montana, For Appellant.

Gary Kalkstein, C.J. Johnson, Kalkstein Law Firm, P.C., Missoula, Montana, For Respondent.

Justice TERRY N. TRIEWEILER delivered the Opinion of the Court.

¶ 1 The Appellant, Charles Mitchell, filed a complaint for declaratory judgment with the District Court for the Fourth Judicial District in Missoula County. The complaint requested that the District Court determine that he was entitled to coverage from State Farm insurance policies pursuant to which he was an "insured." Both parties filed motions for summary judgment and oral argument was held. Following oral argument, the District Court issued an Opinion, Order and Declaratory Judgment in favor of State Farm. Mitchell appeals from that order. We reverse the judgment of the District Court.

¶ 2 The dispositive issues on appeal are:

¶ 3 1. Did the District Court err when it applied California law to determine whether Mitchell was entitled to underinsured motorist coverage?

¶ 4 2. Did the District Court err when it concluded that the limitations in the State Farm policies do not violate public policy?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 5 On July 27, 1998, the Appellant, Charles Mitchell, was injured while a passenger in a vehicle driven by Brook Tebb and insured by Glen and Linda Haas. Mitchell alleged that he suffered approximately $25,000 in medical expenses and alleged damages from loss of wages, for pain and suffering, and for future medical expenses. Mitchell's claim for damages related to pain and suffering, wage loss and future medical expenses, along with the seriousness of Mitchell's injuries remain disputed by State Farm. Following the accident, Mitchell settled with Farmer's Insurance, the insurer of the Haas vehicle, for the vehicle's policy limit of $50,000.

¶ 6 Mitchell is insured by his parents' State Farm insurance policies. Approximately $25,000 of Mitchell's medical bills were covered by his parents' medical expenses coverage. Mitchell's parents reside in California, and insure five vehicles through State Farm, which are registered, owned, operated, and garaged in California. A separate premium was paid for uninsured motorist coverage for each vehicle. The insurance policy declarations pages indicate that uninsured motorist coverage in the amount of $30,000 per person and $60,000 per accident is provided for four vehicles, and coverage in the amount of $50,000 per person and $100,000 per accident is provided for the fifth vehicle. Separate premiums were charged for each coverage.

¶ 7 Each policy provides in part:

Where coverage applies:
The coverages you choose apply:

1. in the United States of America, its territories and possessions, or Canada; or

2. while the insured vehicle is being shipped between their ports.

....
UNINSURED MOTOR VEHICLE—COVERAGE U You have this coverage if "U" appears in the "Coverages" space on the declarations page.

We will pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle. The bodily injury must be caused by an accident arising out of the operation, maintenance or use of an uninsured motor vehicle.

IF THE DAMAGES ARE CAUSED BY AN UNDERINSURED MOTOR VEHICLE THERE IS NO COVERAGE UNTIL:

1. THE LIMITS OF LIABILITY OF ALL BODILY INJURY LIABILITY BONDS AND POLICIES THAT APPLY HAVE BEEN USED UP BY PAYMENT OF JUDGMENTS OR SETTLEMENT TO OTHER PERSONS:

....
Uninsured Motor Vehicle under coverage U—means:

1. A land motor vehicle, the ownership, maintenance or use of which is:

(a) not insured or bonded for bodily injury liability at the time of the accident; or

(b) insured or bonded for bodily injury liability at the time of the accident; but

(1) the limits of liability are less than required by the financial responsibility act of the state where your car is mainly garaged ...

2. an underinsured motor vehicle as defined [in this provision]....

....
Underinsured Motor Vehicle—means a land motor vehicle, the ownership, maintenance or use of which is:

1. insured or bonded for bodily injury liability at the time of the accident, but

2. the limits of the liability are less than the limits of liability of this coverage.

....
Limits of Liability Under Coverage U

4. The limits of liability are not increased because:

(a) more than one vehicle is insured under this policy....

....

6. If the damages are caused by an underinsured motor vehicle, the most we pay will be the lesser of:

(a) the difference between the limits of liability of this coverage and the amount paid to the insured by or for any person or organization who is or may be held legally liable for the bodily injury; or

(b) the difference between the amount of the insured's damages for bodily injury, and the amount paid to the insured by or for any person or organization who is or may be held legally liable for the bodily injury.

If There Is Other Uninsured Motor Vehicle Coverage:

4. If the insured sustains bodily injury while occupying a vehicle not owned by you, your spouse or any relative and:

(a) such vehicle is not described on the declarations page of another policy providing uninsured motor vehicle coverage; and

(b) its driver is:

(1) you, your spouse or any relative, or

(2) any other person not insured under another such policy.

then

(a) the total limits of liability under all applicable policies issued by us shall not exceed that of the one with the highest limit of liability....

We note that, by the terms of the policies, the uninsured motorist provision includes underinsured motorist coverage.

¶ 8 State Farm denied Mitchell's request for underinsured coverage. It reasoned that the Haas vehicle's $50,000 liability coverage matched the highest single uninsured motorist coverage and, therefore, it was not "underinsured" pursuant to the underinsured motorist definition.

¶ 9 Mitchell requested that the District Court determine that State Farm's denial of coverage violated public policy and determine the amount of coverage he was entitled to receive pursuant to the policies. The parties filed motions for summary judgement and oral argument was held on January 25, 2001.

¶ 10 The District Court issued its Opinion, Order and Declaratory Judgement on November 14, 2001. The District Court was asked to address the following issues: 1) Is the definition of "underinsured motorist" coverage in the California State Farm Policy invalid as against Montana public policy; 2) If Mitchell is entitled to underinsured motorist coverage from his parents' State Farm policy, is he allowed to stack the underinsured motorist coverage provided by all five of his parents' vehicles; and 3) If Mitchell is not permitted to stack the five coverages, is he entitled to recover $50,000 based on the highest vehicle coverage provided to his parents for one vehicle?

¶ 11 Before addressing the specific issues raised by Mitchell, the District Court determined that California, rather than Montana law controlled. The District Court concluded that, according to California law, the policies were valid and that Mitchell was not entitled to underinsured motorist coverage from his parents' State Farm insurance policies. It, therefore, awarded summary judgment to State Farm.

STANDARD OF REVIEW

¶ 12 This Court reviews an appeal of summary judgment de novo. Motarie v. Mont. Joint Refuse Disposal (1995), 274 Mont. 239, 242, 907 P.2d 154, 156

. We apply the same Rule 56, M.R.Civ.P., criteria applied by the district court. Bruner v. Yellowstone County (1995), 272 Mont. 261, 264, 900 P.2d 901, 903. Rule 56, M.R.Civ.P., provides that:

the judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

¶ 13 The party moving for summary judgment has the initial burden of establishing the absence of genuine issues of material fact. Bruner, 272 Mont. at 264, 900 P.2d at 903. If that burden is met, the burden shifts to the nonmoving party to raise a genuine issue of material fact by more than mere denial or speculation. Bruner, 272 Mont. at 264, 900 P.2d at 903. Once a court determines that no genuine factual issues exist, it must determine whether the moving party is entitled to judgment as a matter of law. Bruner, 272 Mont. at 264-65, 900 P.2d at 903. This Court reviews the legal conclusions made by a district court to determine if they are correct. Bruner, 272 Mont. at 265, 900 P.2d at 903.

DISCUSSION

ISSUE 1

¶ 14 Did the District Court err when it applied California law to determine whether Mitchell was entitled to underinsured motorist coverage?

¶ 15 Mitchell contends that the District Court erred when it concluded that California law governed whether he was entitled to underinsured motorist coverage. He maintains that Restatement (Second) of Conflict of Laws § 6(1) (1971), requires that a court follow § 28-3-102, MCA, where, as in this case, there is a conflict between California law and Montana law.

¶ 16 Generally, conflicts between an insured and an insurer are resolved by contract law rather than tort law. State Farm v. Estate of Braun (1990), 243 Mont. 125, 127, 793 P.2d 253, 254. However, the analysis used to determine which state's law applies to a particular case is the same for contract and tort law. Phillips v. General Motors Corp., 2000 MT 55, ¶ 23, 298 Mont. 438, ¶ 23, 995 P.2d 1002, ¶ 23. Consistent with our decisions in Phillips and Casarotto v. Lombardi (1994), 268 Mont. 369, 886 P.2d 931, the District Court applied the Restatement (Second)...

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