Stutzman v. Safeco Ins. Co. of America

• Decision Date: 24 June 1997
• Docket Number: No. 96-699,96-699
• Citation: 284 Mont. 372,945 P.2d 32
• Parties: Theresa Turcotte STUTZMAN, Plaintiff and Appellant, v. SAFECO INSURANCE COMPANY OF AMERICA, Defendant and Respondent. . Heard
• Court: Montana Supreme Court

Page 32

945 P.2d 32

284 Mont. 372

Theresa Turcotte STUTZMAN, Plaintiff and Appellant, v.SAFECO INSURANCE COMPANY OF AMERICA, Defendant and Respondent.

No. 96-699.

Supreme Court of Montana.

Heard June 24, 1997.

Submitted July 22, 1997.

Decided Sept. 8, 1997.

Kenneth E. O'Brien(argued)Hash, O'Brien & Bartlett, Kalispell, for Plaintiff and Appellant.

Robert J. Phillips(argued)Phillips & Bohyer, Missoula, for Defendant and Respondent.

REGNIER, Justice.

On October 11, 1995, plaintiff and appellant, Theresa Turcotte Stutzman, formerly Theresa Turcotte, filed an action in the District Court for the Eleventh Judicial District in Flathead County against Safeco Insurance Company of America to recover underinsured motorist benefits pursuant to an automobile insurance policy issued by Safeco in hers and her husband's names.Safeco subsequently moved for summary judgment, and Stutzman filed a cross motion for partial summary judgment.On October 29, 1996, following review of the record, the District Court issued an order granting Safeco's motion, and denying Stutzman's.Stutzman appeals the District Court's order.For the reasons stated below, we affirm.

This Court finds the following two issues dispositive on appeal:

1.Did the District Court err in concluding that the exclusionary language contained in the Safeco policy's definition of an underinsured motor vehicle effectively precludes appellant from recovering underinsured motorist benefits?

2.Did the District Court err in determining that the definition of underinsured motor vehicle contained in the Safeco insurance policy does not violate public policy or the reasonable expectations of the insured?

FACTUAL BACKGROUND

The parties do not dispute the material facts in this case, as indicated by their respective motions for summary judgment.On November 5, 1992, Stutzman was injured in a single-vehicle automobile accident near Marion, Montana.At the time of the accident, Stutzman's husband, John Turcotte, was driving and Stutzman was a passenger.Due to Turcotte's negligence, the vehicle went off the road and overturned.Stutzman was damages in excess of $200,000.Turcotte was the sole owner of the vehicle involved in the accident, and Stutzman had never driven it herself.

At the time of the accident, Stutzman and Turcotte were the named insureds on an automobile insurance policy issued by Safeco.The Safeco policy had a liability coverage limit of $100,000 and an underinsured motorist benefit limit of $100,000.In June 1993, Safeco paid Stutzman the $100,000 liability limits provided for in the policy.Stutzman claims damages in excess of the $100,000 in liability coverage available, however, and is therefore seeking recovery of underinsured motorist benefits pursuant to the Safeco policy's underinsured motorist provision.

In October 1995, Stutzman filed the present action to recover underinsured motorist benefits.On May 3, 1996, Safeco moved for summary judgment on the basis that the policy's definition of underinsured motor vehicle precludes Stutzman from recovering underinsured benefits in this case.On May 20, 1996, Stutzman, in turn, moved for partial summary judgment on a number of grounds, maintaining primarily that the policy's definition of underinsured vehicle is unclear and ambiguous and stands in violation of public policy, as well as the reasonable expectations of the insured.Following review of the record, the District Court granted Safeco's motion and denied plaintiff's, concluding that the policy's exclusionary clause effectively prohibited Stutzman from recovering underinsured motorist benefits.

DISCUSSION

This Court's standard of review in appeals from summary judgment rulings is de novo.Treichel v. State Farm Mut. Auto. Ins. Co.(1997), 280 Mont. 443, ----, 930 P.2d 661, 663(citingMotarie v. Northern Montana Joint Refuse Disposal Dist.(1995), 274 Mont. 239, 242, 907 P.2d 154, 156;Mead v. M.S.B., Inc.(1994), 264 Mont. 465, 470, 872 P.2d 782, 785).This Court reviews a summary judgment order entered pursuant to Rule 56, M.R.Civ.P., based on the same criteria applied by the district court.Treichel, 280 Mont. at ----, 930 P.2d at 663(citingBruner v. Yellowstone County(1995), 272 Mont. 261, 264, 900 P.2d 901, 903).See alsoBartlett v. Allstate Ins. Co.(1996), 280 Mont. 63, ---- - ----, 929 P.2d 227, 230.

Moreover, in proving that summary judgment is appropriate:

The movant must demonstrate that no genuine issues of material fact exist.Once this has been accomplished, the burden then shifts to the non-moving party to prove by more than mere denial and speculation that a genuine issue does exist.Having determined that genuine issues of material fact do not exist, the court must then determine whether the moving party is entitled to judgment as a matter of law.[This Court] reviews the legal determinations made by a district court as to whether the court erred.

Bruner, 272 Mont. at 264-65, 900 P.2d at 903.

This Court has previously recognized that the "construction and interpretation of written agreements, including contracts" such as the one here, "is a question of law for the court to decide."Klawitter v. Dettmann(1994), 268 Mont. 275, 281, 886 P.2d 416, 420(citingFirst Security Bank of Anaconda v. Vander Pas(1991), 250 Mont. 148, 152-53, 818 P.2d 384, 387);see alsoWellcome v. Home Ins. Co.(1993), 257 Mont. 354, 356, 849 P.2d 190, 192.This Court is bound to interpret the terms of this insurance policy according to their usual, common sense meaning as viewed from the perspective of a reasonable consumer of insurance products.SeeDuensing v. Traveler's Companies(1993), 257 Mont. 376, 381, 849 P.2d 203, 206(holding that "[i]n interpreting insurance contracts, the words of the policy are to be understood in their usual meaning; common sense controls.")Further, this Court may not rewrite the contract at issue, but must enforce it as written if its language is clear and explicit.Hurtt v. School Dist. No. 29, Big Horn County(1986), 222 Mont. 415, 418-19, 723 P.2d 205, 207.This Court has previously held that the interpretation of an insurance policy presents a question of law.Wellcome, 257 Mont. at 356, 849 P.2d at 192.

As noted above, the parties in the instant case do not dispute the relevant facts.Accordingly, this Court's review is limited to whether the District Court was correct in its interpretation of the terms of the Safeco insurance policy at issue and its ruling upon the parties' respective motions for summary judgment.

ISSUE 1

Did the District Court err in concluding that the exclusionary language contained in the Safeco policy's definition of an underinsured motor vehicle effectively precludes appellant from recovering underinsured motorist benefits?

Stutzman seeks a determination from this Court that she is entitled to recover underinsured motorist benefits pursuant to the Safeco policy in effect at the time of the accident.With respect to underinsured motorist coverage, the policy provides that Safeco will

pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured or underinsured motor vehicle because of bodily injury, sickness or disease, including death resulting there from, hereinafter called bodily injury, sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured or underinsured motor vehicle....

In other words, the policy provides underinsured motorist benefits if an insured sustains bodily injury caused by an underinsured motor vehicle.Here, Stutzman is an insured who claims she sustained bodily injury in a single vehicle automobile accident caused by her husband, Turcotte's, negligent driving.Turcotte owned the vehicle involved in the accident and insured it with Safeco.Accordingly, in evaluating Stutzman's entitlement to underinsured motorist benefits in this case, this Court must next determine whether the vehicle involved in the accident qualifies as an underinsured motor vehicle pursuant to the terms of the policy.

The policy defines an underinsured motor vehicle as a

motor vehicle of any type to which a bodily injury liability bond or policy applies at the time of the accident but the amount paid for bodily injury under the bond or policy to an insured is not enough to pay the full amount the insured is legally entitled to recover as damages.

But underinsured motor vehicle does not include any motor vehicle: ...(3) owned by or furnished for the regular use of the named insured or any relative....

This third exclusion, which removes from the definition of an underinsured vehicle any vehicle "owned by or furnished for the regular use of the named insured or any relative" proves critical to this Court's analysis.Indeed, the parties vigorously dispute the validity and applicability of this exclusionary provision.

Safeco contends that this exclusion clearly removes the vehicle involved in the accident from the definition of underinsured motor vehicle on two ground.First, Safeco argues the vehicle was "owned by the named insured" because it was owned by Turcotte--a named insured on the declarations page of the policy--and is thus excluded from the definition of an underinsured motor vehicle.¹Second, Safeco argues that because Stutzman and Turcotte, the vehicle's owner, were married at the time of the accident, the vehicle was owned by a relative of the named insured and is accordingly excluded from the definition of an underinsured motor vehicle.Because we find Safeco's second and alternative argument dispositive, we need not address the question of whether the vehicle was owned by the named insured as contemplated by the policy's exclusionary clause.

We conclude, as did the District Court below, that the vehicle involved in the accident was owned by a relative of the named insured and therefore cannot be considered...