Reisbeck v. Farmers Ins. Exch.

• Decision Date: 30 June 2020
• Docket Number: DA 19-0319
• Parties: Kirk B. REISBECK, Plaintiff and Appellant, v. FARMERS INSURANCE EXCHANGE, Defendant and Appellee.
• Court: Montana Supreme Court

400 Mont. 345

467 P.3d 557

2020 MT 171

Kirk B. REISBECK, Plaintiff and Appellant,

v.FARMERS INSURANCE EXCHANGE, Defendant and Appellee.

DA 19-0319

Supreme Court of Montana.

Submitted on Briefs: November 13, 2019

Decided: June 30, 2020

For Appellant: Dennis P. Conner, Keith D. Marr, James R. Conner, Conner & Marr, PLLP, Great Falls, Montana

For Appellee: Christopher C. Voigt, Daniela E. Pavuk, Crowley Fleck PLLP, Billings, Montana, Nicholas J. Pagnotta, Alexander Tsomaya, Williams Law Firm, P.C., Missoula, Montana

Justice James Jeremiah Shea delivered the Opinion of the Court.

¶1 Kirk B. Reisbeck appeals the January 17, 2019 order of the First Judicial District Court, Lewis and Clark County, granting Farmers Insurance Exchange (Farmers) summary judgment on Reisbeck's claim for underinsured motorist (UIM) benefits. Upon the District Court's certification as final for purposes of appeal pursuant to M. R. Civ. P. 54(b) and M. R. App. P. 6(6), we address the following issue:

Did the District Court err by granting summary judgment in favor of Farmers on Reisbeck's UIM coverage claim?

¶2 We reverse and remand for further proceedings consistent with this Opinion.

PROCEDURAL AND FACTUAL BACKGROUND

¶3 In September 2009, Darrell King rear-ended Reisbeck in Helena. Reisbeck sued King, alleging damages resulting from the injuries he sustained in the accident. King's insurer at the time of the accident was Progressive Northwestern Insurance Company (Progressive). King's liability insurance policy limits at the time of the accident were $50,000.

¶4 Reisbeck was insured by Farmers at the time of the accident. Reisbeck's policy with Farmers included UIM coverage. The UIM provisions in Reisbeck's policy provided, in relevant part:

[Farmers] will pay all sums which an insured person is legally entitled to recover as damages from the owner or operator of an UNDERinsured motor vehicle because of bodily injury sustained by the insured person.

...

[Farmers] will pay under this [UIM] coverage only after the limits of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements.

(Original emphasis omitted.)

¶5 Reisbeck notified Farmers of his lawsuit against King, and asserted that his UIM coverage may be necessary because King's liability policy limits were only $50,000. Farmers refused to pay Reisbeck anything under his UIM coverage. In September 2017, Reisbeck filed a lawsuit against Farmers to recover his UIM benefits.

¶6 In January 2018, Reisbeck's tort lawsuit against King went to trial. King was determined to be liable for the accident, but the jury awarded Reisbeck only $10,000 in damages. Reisbeck moved to set aside the verdict, contending that errors were made that prevented him from receiving a fair trial, and that the jury's damage award was unsupported by the evidence. Before the District Court entered judgment on the verdict, King offered to settle with Reisbeck for $50,000—the policy limits of King's liability coverage with Progressive. In exchange for the policy limits offer, Reisbeck agreed to dismiss his lawsuit against King, and not pursue his pending motion for a new trial or pursue an appeal. Pursuant to the parties’ stipulation, the District Court entered the following order:

The parties having so stipulated;

IT IS HEREBY ORDERED that the jury verdict entered on January 26, 2018 is hereby vacated and shall have no further force or legal effect and this action may be dismissed with prejudice having been fully settled upon the merits. Each party to bear their own costs and attorney fees.

¶7 After Reisbeck settled his case with King, Farmers moved for summary judgment on Reisbeck's UIM coverage claim in his suit against Farmers. Farmers argued that because Reisbeck had settled with King, Reisbeck's UIM claim against Farmers was barred by the doctrines of issue preclusion and claim preclusion. On January 17, 2019, the District Court granted summary judgment in favor of Farmers on Reisbeck's UIM coverage claim, determining the doctrine of issue preclusion barred Reisbeck from "relitigating the issue of damages."

STANDARDS OF REVIEW

¶8 We review a district court's summary judgment ruling de novo, using the same standard as the district courts under M. R. Civ. P. 56. Schweitzer v. City of Whitefish , 2016 MT 254, ¶ 9, 385 Mont. 142, 383 P.3d 735 (citing Lorang v. Fortis Ins. Co. , 2008 MT 252, ¶ 36, 345 Mont. 12, 192 P.3d 186 ). See also Modroo v. Nationwide Mut. Fire Ins. Co. , 2008 MT 275, ¶ 19, 345 Mont. 262, 191 P.3d 389 (citing Wendell v. State Farm Mut. Auto. Ins. Co. , 1999 MT 17, ¶ 9, 293 Mont. 140, 974 P.2d 623 ). Summary judgment is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." M. R. Civ. P. 56(c)(3).

¶9 The party seeking summary judgment has the initial burden of establishing the absence of genuine issues of material fact and entitlement to judgment as a matter of law. Schweitzer , ¶ 9. Where the moving party demonstrates no material factual dispute exists, the burden then shifts to the nonmoving party to present specific, material, and substantial evidence, rather than mere conclusory or speculative statements, to raise a genuine issue of material fact. See Schweitzer , ¶ 9. "If no genuine issue of material fact exists, then we, like a district court, determine if the moving party is entitled to judgment as a matter of law." Schweitzer , ¶ 9.

¶10 A district court's application of the doctrines of issue preclusion or claim preclusion are issues of law which we review de novo for correctness. Brilz v. Metro. Gen. Ins. Co. , 2012 MT 184, ¶ 13, 366 Mont. 78, 285 P.3d 494 (citing Touris v. Flathead Cty. , 2011 MT 165, ¶ 10, 361 Mont. 172, 258 P.3d 1 ; Estate of Eide v. Tabbert , 272 Mont. 180, 183, 900 P.2d 292, 294-95 (1995) ).

¶11 The interpretation of an unambiguous insurance contract presents a question of law which we review de novo for correctness. Modroo , ¶ 37 (citing Wendell , ¶ 10 ).

DISCUSSION

¶12 Did the District Court err by granting summary judgment in favor of Farmers on Reisbeck's UIM coverage claim?

¶13 The related common law doctrines of issue preclusion and claim preclusion (also known as collateral estoppel and res judicata, respectively) exist to preclude future litigation of a final judgment. Denturist Ass'n of Mont. v. State , 2016 MT 119, ¶ 10, 383 Mont. 391, 372 P.3d 466 (citing Baltrusch v. Baltrusch , 2006 MT 51, ¶¶ 15-18, 331 Mont. 281, 130 P.3d 1267 ). The doctrines share the purposes of "prevent[ing] parties from waging piecemeal, collateral attacks on judgments, thereby upholding the judicial policy that favors a definite end to litigation," and "conserv[ing] judicial resources and encourag[ing] reliance on adjudication by preventing inconsistent judgments." Denturist , ¶ 10 (citing Baltrusch , ¶ 15 ).

¶14 "Although similar, the two doctrines are not the same." Denturist , ¶ 10. Issue preclusion "bars the same parties or their privies from relitigating issues in a second suit that is based upon a different cause of action." Denturist , ¶ 12 (emphasis added). Issue preclusion applies when the following four elements are satisfied:

(1) The issue decided in the prior adjudication is identical to the issue raised in the action in question;

(2) There is a final judgment on the merits in the prior adjudication;

(3) The party against whom preclusion is now asserted was a party or in privity with a party to the prior adjudication; and

(4) The party against whom preclusion is now asserted was afforded a full and fair opportunity to litigate the issue which may be barred.

See Denturist , ¶ 12. All elements of issue preclusion must be satisfied for the doctrine to apply. Gibbs v. Altenhofen , 2014 MT 200, ¶ 21, 376 Mont. 61, 330 P.3d 458.

¶15 Claim preclusion "bars a second suit involving the same parties or their privies based on the same cause of action." Denturist , ¶ 11 (emphasis added). Claim preclusion also bars those issues "that could have been litigated in the prior cause of action." Denturist , ¶ 11 (emphasis in original). Claim preclusion exists when the following five elements are satisfied:

(1) The parties or their privies are the same; (2) The subject matter of the present and past actions is the same;

(3) The issues are the same and relate to the same subject matter;

(4) The capacities of the parties are the same to the subject matter and issues between them; and

(5) A final judgment on the merits has been entered.

Denturist , ¶ 11. All elements of claim preclusion must be satisfied for the doctrine to apply. See Schweitzer , ¶ 19.

¶16 Though not within the context of issue preclusion or claim preclusion, we have expressly rejected the argument that Farmers advances in this case—that an insured's settlement of a claim with a third-party tortfeasor forecloses the insured's UIM claim against his own insurer. See Farmers Alliance Mut. Ins. Co. v. Holeman , 1998 MT 155, ¶ 21, 289 Mont. 312, 961 P.2d 114. We held in Holeman that an insured's settlement and release of the third-party tortfeasor "does not preclude her from establishing, in a separate action against Farmers Alliance, fault and damages on the part of [the third-party tortfeasor]." Holeman , ¶ 27 (emphasis added). We have repeatedly held that a claim for UIM benefits is a contract dispute which we recognize as a distinct contractual matter that implicates a different set of facts involving the interpretation of an insurance contract. See Holeman , ¶ 21 ("Although we ... recognize that underinsured motorist coverage is, to an extent, of a derivative nature, we conclude an insurer's liability for underinsured motorist benefits in any given case arises from the terms of the insurance contract, and its contractual relationship with its insured."); Dill v. Mont. Thirteenth Jud. Dist. Court , 1999 MT 85,...