Ridley v. Guaranty Nat. Ins. Co.

Decision Date01 October 1997
Docket NumberNo. 96-697,96-697
Citation286 Mont. 325,951 P.2d 987
PartiesKeith RIDLEY, Plaintiff and Appellant, v. GUARANTY NATIONAL INSURANCE COMPANY, Defendant and Respondent. . Heard
CourtMontana Supreme Court

John M. Morrison (argued), Meloy & Morrison, Helena, for Plaintiff and Appellant.

Guy W. Rogers (argued) and Tiffany B. Lonnevik, Brown, Gerbase, Cebull, Fulton, Harman & Ross, Billings, for Defendant and Respondent.

Ira Eakin and Michael G. Eiselein, Lynaugh, Fitzgerald & Eiselein, Billings, for Amici Curiae Montana Trial Lawyers Association.

Mark Staples, Staples Law Office, Helena, for Amici Curiae Montana Chiropractic Association.

TRIEWEILER, Justice.

The plaintiff, Keith Ridley, filed a complaint for declaratory judgment against the defendant, Guaranty National Insurance Company, in the District Court for the First Judicial District in Lewis and Clark County. Ridley sought a District Court judgment that § 33-18-201, MCA, of the Montana Unfair Trade Practices Act requires a tort-feasor's insurer to pay the actual medical expenses of a tort victim as they are incurred when liability is reasonably clear. The District Court concluded that an insured does not have an obligation in all cases to pay an injured third party's medical expenses in advance of full and final settlement, even though liability is reasonably clear, and granted summary judgment to Guaranty National. Ridley appeals that decision. We reverse the order and judgment of the District Court.

The following issues are presented on appeal:

1. Did the District Court err when it concluded that the issue raised by Ridley's complaint was not appropriate for declaratory judgment pursuant to §§ 27-8-201 and -202, MCA, of the Uniform Declaratory Judgments Act?

2. Pursuant to § 33-18-201, MCA, of the Montana Unfair Trade Practices Act, does an insurer have an obligation to pay medical expenses as incurred by an injured third-party tort victim when the liability of its insured is reasonably clear?

FACTUAL BACKGROUND

The factual record in this case is minimal. It consists of those allegations in Keith Ridley's complaint which are admitted by Guaranty National and Ridley's affidavit. There are also a number of documents attached to Ridley's complaint, and additional documents attached to briefs filed by Guaranty National in the District Court. There is little foundation for these documents and it is unclear the extent to which they have been or should be considered. However, based on the parties' allegations and the arguments made in both the District Court and this Court, it appears that the following facts are undisputed.

Ridley was injured on November 2, 1995, when the automobile in which he was a passenger collided with a vehicle operated by Kenneth Roope who was then insured against liability by Guaranty National. The driver of Ridley's vehicle was attempting to make a left-hand turn. Roope was attempting a pass to the left side of that vehicle.

In correspondence to Ridley's attorney, Guaranty National's claims adjuster acknowledged that the company's insured was 90 percent at fault for the collision. Ridley's attorney later advised the same adjuster that his client could not afford the medical treatment that had been prescribed for the injuries caused by the collision, including an MRI exam and physical therapy, and asked that those expenses be paid by Guaranty National. He explained that because Guaranty National had admitted that it was more than 50 percent at fault for the collision, it was liable to the claimant for all of his damages pursuant to principles of joint and several liability, and advised Guaranty National that after Ridley's condition had stabilized they would discuss full and final settlement of his claims with Guaranty National.

Guaranty National's adjuster advised Ridley's counsel that no medical expenses would be paid in advance of final settlement of Ridley's claim.

Ridley filed a complaint for declaratory judgment in the District Court for the First Judicial District in Lewis and Clark County, named Guaranty National as the defendant, and asked the District Court to conclude, pursuant to § 33-18-201, MCA (Montana Unfair Trade Practices Act), that Guaranty National did have an obligation to pay medical expenses where liability is reasonably clear regardless of whether a final settlement had been agreed upon.

In its answer, Guaranty National admitted that a collision occurred on November 2, 1995, involving an automobile in which Ridley was a passenger and an automobile operated by its insured. It also admitted that its insured had the majority of fault for the accident and that it declined to pay for Ridley's ongoing medical expenses. However, it explained that its refusal was partially based on uncertainty about the causal relationship between the accident and the extent of Ridley's injuries. As an affirmative defense, Guaranty National alleged that there was no obligation pursuant to Montana law for an insurer to pay medical expenses of an injured third party before full and final settlement of that person's claim.

Both parties moved for summary judgment. Ridley's motion was denied and Guaranty National's motion was granted.

The District Court based its order on the following legal conclusions:

1. Section 33-18-201, MCA, of the Unfair Claims Practices Act, requires that plaintiff prove that the insurer's conduct complained of occur "with such frequency as to indicate a general business practice" and, therefore, even if Ridley's interpretation of the statute is correct, Guaranty National is not required in every case to make advance payment of medical expenses.

2. In this case, Guaranty National denies a causal relationship between its conduct and the full extent of Ridley's injuries; therefore, declaratory judgment will not resolve all issues before the parties and is not appropriate pursuant to the Uniform Declaratory Judgment Act.

3. The Unfair Claims Practices Act does not require an insurer to pay an injured party's medical expenses prior to final settlement in all cases, even where liability is reasonably clear.

In response to Ridley's appeal, Guaranty National concedes that the District Court erred when it concluded that he must prove a general business practice in order to state a claim pursuant to the Unfair Claims Practices Act. Guaranty National concedes that pursuant to § 33-18-242(2), MCA, a third-party claimant has an independent cause of action against an insurer for a violation of § 33-18-201(6) and (13), MCA, without regard to whether the insurer's alleged violations occurred with "such frequency as to indicate a general business practice." Therefore, we will confine our review to the last two bases for the District Court's order which granted summary judgment.

ISSUE 1

Did the District Court err when it concluded that the issue raised by Ridley's complaint was not appropriate for declaratory judgment pursuant to §§ 27-8-201 and -202, MCA, of the Uniform Declaratory Judgments Act?

"When a district court determines that declaratory relief is not necessary or proper, we will not disturb the court's ruling absent an abuse of discretion." Remington v. Department of Corr. & Human Servs. (1992), 255 Mont. 480, 483, 844 P.2d 50, 51, overruled on other grounds by Orozco v. Day (1997), 281 Mont. 341, 934 P.2d 1009, 54 St. Rep. 200. However, we review the district court's conclusions on which its decision is based, as we do all legal issues, to determine whether they have been correctly decided. See Carbon County v. Union Reserve Coal Co., Inc. (1995), 271 Mont. 459, 469, 898 P.2d 680, 686.

The District Court concluded that declaratory judgment could not be granted without a justiciable controversy and, based on our decision in Brisendine v. Department of Commerce (1992), 253 Mont. 361, 833 P.2d 1019, concluded that that requires " '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.' " Brisendine, 253 Mont. at 364, 833 P.2d at 1021. The District Court concluded that that type of relief could not be granted in this case because there were factual issues regarding the insurer's liability in addition to the legal issue raised by Ridley. Specifically, the District Court concluded that there was an issue regarding the extent to which Guaranty National's insured caused the injuries for which Ridley sought medical treatment.

On appeal, Ridley contends (1) that there was no issue regarding causation based on his uncontroverted affidavit that the injuries for which he was being treated were caused by the collision in which he was involved on November 2, 1995; and (2) that even if there were factual issues regarding causation,he is still entitled, pursuant to §§ 27-8-201 and -202, MCA, of the Uniform Declaratory Judgment Act, to have legal issues resolved when his rights, status, or legal relations are affected by statute.

Guaranty National responds that the District Court did not abuse its discretion when it refused to grant declaratory relief because a justiciable controversy is a prerequisite to such relief, and a justiciable controversy requires that the judicial determination being sought finally resolve the rights, status, or legal relations of the parties. It contends that that cannot be accomplished in this case because regardless of the court's interpretation of the Unfair Claims Practices Act, there remains an issue regarding the extent of Guaranty National's liability for Ridley's medical benefits. Guaranty National contends that the District Court correctly decided, based on our decision in Brisendine, to deny Ridley the relief he sought.

Section 27-8-201, MCA, of the Uniform Declaratory Judgment Act, provides, in relevant part,...

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