Citation2010 MT 187,239 P.3d 904,357 Mont. 293
Decision Date24 August 2010
Docket NumberNo. DA 09-0500.,DA 09-0500.
PartiesLon PETERSON, Plaintiff, Appellant and Cross-Appellee, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant, Appellee and Cross-Appellant.
CourtUnited States State Supreme Court of Montana




For Appellant: Alexander (Zander) Blewett, III (argued), Kurt M. Jackson (argued), Hoyt & Blewett, PLLC, Great Falls, Montana.

For Appellee: Guy W. Rogers (argued), Matthew I. Tourtlotte, Brown Law Firm, Billings, Montana.

For Amicus: Jon T. Dyre, Crowley Fleck PLLP, Billings, Montana (for the American Insurance Association).

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

¶ 1 Lon Peterson (Peterson) appeals from a jury verdict in the Eighth Judicial District Court. The jury determined that defendant St. Paul Fire & Marine Insurance Company (St. Paul) did not violate the Montana Unfair Trade Practices Act (UTPA), Title 33, chapter 18, MCA, as alleged by Peterson. We reverse the jury's verdict and remand for a new trial in a manner consistent with this Opinion.


¶ 2 In June 2004, Peterson was involved in a head-on automobile accident with St. Paul's insured Michael Lindberg (Lindberg). The accident occurred on a dirt road in Glacier County. The road did not have a marked centerline or a posted speed limit. Peterson and Lindberg struck each other as they approached a blind curve in the road from opposite directions. Officers from the Montana Highway Patrol responded to the accident but did not issue a citation to either Lindberg or Peterson. However, immediately after the accident Lindberg reported to one of the officers that his cell phone had rung right before the accident. The officer noted that the cell phone was a contributing factor to the accident. This information was recorded in an accident report prepared by the Montana Highway Patrol. Peterson suffered broken ribs and injuries to his left knee and left hip as a result of the accident.

¶ 3 At the time of the accident, Lindberg was working for Omimex Canada, Ltd., a Canadian company operating in Montana and insured by St. Paul. After the accident, St. Paul opened a claims file on the matter, conducted an investigation, and evaluated the relative liability of Lindberg and Peterson. St. Paul ultimately hired an accident reconstruction expert, Dr. F. Denman Lee (Dr. Lee), who concluded that Peterson was in Lindberg's lane of traffic at the time of the accident. St. Paul eventually concluded that Peterson was responsible for the accident, and contends that it never conclusively determined the accident was a result of Lindberg's negligence. St. Paul denied liability on behalf of its insured and refused to pay Peterson's claims. Peterson states that his medical bills exceeded $68,000 within months of the accident.

¶ 4 In June 2005, Peterson filed suit against Omimex in federal district court in Great Falls, Montana. St. Paul hired Great Falls attorney Bill Gregoire (Gregoire) to defend Omimex. In December 2005, Peterson slipped and fell at his home as a result of his weakened condition, injuring himself further and arguably increasing St. Paul's exposure for the accident. Peterson eventually offered to settle his claims for $1.8 million dollars. St. Paul responded with an offer of $850,000. Peterson initially rejected this offer, but later agreed to accept if made in the form of an offer of judgment. In May 2007, St. Paul made an offer of judgment to Peterson for $850,000, which was accepted. On June 17, 2007, roughly three years after the accident, the federal district court entered the judgment against Omimex.

¶ 5 On June 19, 2007, Peterson filed a third-party bad faith insurance claim in Cascade County District Court against St. Paul.

Peterson alleged that St. Paul's denial of liability and its refusal to settle Peterson's claims for almost three years constituted a violation of the UTPA, and specifically § 33-18-201(6), MCA, which prohibits insurers from “neglect [ing] to attempt in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear....” Peterson alleged that liability for the accident had been reasonably clear, yet St. Paul had refused to promptly settle his claim. Peterson also alleged that St. Paul failed to conduct a reasonable investigation of the underlying accident as required under § 33-18-201(4), MCA.

¶ 6 St. Paul answered and denied the allegations. During discovery, Peterson obtained the claims file from St. Paul. Based on a review of the claims file, Peterson concluded that Gregoire and the claims adjusters who worked on the case had determined that Lindberg was at least 50% liable for the accident. Since a determination of at least 50% liability would mean that Lindberg would ultimately be liable for the accident under principles of comparative negligence pursuant to § 27-1-702, MCA, 1 Peterson contended that St. Paul had in fact determined that liability for the accident was “reasonably clear,” yet wrongfully refused to pay his claims. St. Paul disputed these contentions. St. Paul conceded that there was mention of 50-50 liability in the claims file, but argued it never conclusively determined that Lindberg was at least 50% liable. Instead, based on the investigations conducted by its claims adjusters and the findings of Dr. Lee, St. Paul continued to assert that Peterson had caused the accident by driving over the centerline of the dirt road into Lindberg's lane.

¶ 7 St. Paul filed a motion for summary judgment, arguing that Lindberg's liability was never “reasonably clear.” The District Court denied the motion, and also held that St. Paul's offer of judgment was not an admission of reasonably clear liability in the underlying case. Prior to trial, Peterson moved for a preliminary ruling that 50% negligence on behalf Lindberg for the accident constitutes liability for St. Paul as a matter of law, and would therefore constitute “reasonably clear liability” under the UTPA. The District Court denied Peterson's motion, holding that the issue of reasonably clear liability should be decided by the jury. The District Court prohibited Peterson from arguing to the jury that a finding of 50-50 negligence between Lindberg and Peterson would constitute negligence as a matter of law.

¶ 8 Peterson also sought an order in limine prohibiting St. Paul from relying on prejudicial and inadmissible evidence to justify its denial of liability and refusal to promptly and fairly settle his claim. Specifically, Peterson sought an order prohibiting any evidence that neither driver received a citation for the accident, whether the Highway Patrol could determine a point of impact for the accident, and whether Peterson “habitually” drove in the center of the road. The District Court denied the motion.

¶ 9 Additionally, Peterson filed a pretrial motion in limine arguing that Gregoire acted as St. Paul's agent in his defense of the underlying federal court negligence suit. Peterson contended that St. Paul was vicariously responsible for Gregoire's post-filing conduct which perpetuated St. Paul's pre-filing denial of all liability and its refusal to settle. The District Court denied this motion as well and also refused a related jury instruction on this issue.

¶ 10 A jury trial on Peterson's UTPA claims was held on August 17-21, 2009. The jury heard testimony from Peterson, Lindberg, and Gregoire, and other lay witnesses. Richard Allums (Allums) and Dale Reed (Reed), claims adjusters for St. Paul, testified as well. Additionally, plaintiff's expert Rick Anderson (Anderson) testified about standards used by insurance companies when adjusting and investigating claims. The District Court did not allow St. Paul's accident reconstruction expert Dr. Lee to testify at trial.

¶ 11 During the settlement of jury instructions, the District Court refused the following proposed jury instruction requested by Peterson: “Under the Montana Unfair Trade Practices Act, liability in a claim is reasonably clear if the defendant insured's negligence is 50% or greater.” The District Court ultimately gave the following jury instructions covering the contested issue of reasonably clear liability in this case:


When liability for a car accident is reasonably clear and it is reasonably clear that a medical expense and/or economic loss are causally related to the accident in question, an insurance company has an obligation under the Montana Unfair Trade Practices Act to promptly pay those medical expenses and economic losses.


Liability need not be certain in order to be reasonably clear.


In order to assist you in your determination as to whether liability was reasonably clear you are instructed that:

Every person is responsible for injury to the person [or property] of another, caused by his/her negligence. Negligence is the failure to use reasonable care. Negligence may consist of action or inaction. A person is negligent if he/she fails to act as an ordinarily prudent person would act under the circumstances.

Negligence on the part of the plaintiff does not bar his/her recovery unless such negligence was greater than the negligence of the defendant. However, the total amount of damages that plaintiff would otherwise be entitled to recover will be reduced by the court in proportion to the amount of negligence attributed to the plaintiff.

¶ 12 Peterson also sought a jury instruction that stated Lindberg was required to operate his motor vehicle at a “reasonable and prudent” speed under the circumstances, since the dirt road where the accident happened did not have a posted speed limit. Peterson contended at trial that Lindberg was driving from 40-55 m.p.h., while Peterson was travelling between 10-15 m.p.h. The District Court refused to give this instruction....

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