White v. State

• Decision Date: 12 July 2013
• Docket Number: No. DA 12–0216.,DA 12–0216.
• Citation: 305 P.3d 795,371 Mont. 1
• Court: Montana Supreme Court
• Parties: Kirk WHITE, Plaintiff and Appellant, v. STATE of Montana, by and through MONTANA STATE FUND, Day & Associates, Inc., Defendant and Appellee.

371 Mont. 1

305 P.3d 795

Kirk WHITE, Plaintiff and Appellant,

v.STATE of Montana, by and through MONTANA STATE FUND, Day & Associates, Inc., Defendant and Appellee.

No. DA 12–0216.

Supreme Court of Montana.

Submitted on Briefs March 27, 2013.

Decided July 12, 2013.

For Appellant: Lucas J. Foust; Foust Law Office, P.C.; Bozeman, Montana.

For Appellee: W. Anderson Forsythe; Moulton Bellingham PC; Billings, Montana.

Justice BETH BAKER delivered the Opinion of the Court.

[371 Mont. 2]¶ 1 Kirk White appeals a judgment entered by the Montana Eighteenth Judicial District Court, Gallatin County, dismissing his complaint on the merits and ordering that judgment be entered in favor of the Montana State Fund. We affirm.

¶ 2 We consider the following issues on appeal:

¶ 3 1. Did the District Court err in granting the State Fund's motion to dismiss White's claims under Montana's Insurance Code?

[371 Mont. 3]¶ 4 2. Did the District Court err in granting the State Fund's motion for summary judgment regarding White's common law claims?

PROCEDURAL AND FACTUAL BACKGROUND

¶ 5 Kirk White injured his shoulder when he fell through a deck while working at a construction site. White's employer, Trademark Construction, was insured by the Montana State Fund (State Fund). In October 2006, White reported his injury to the State Fund, which processed his workers' compensation claim and assigned it to Ann Boland, a claims examiner. Three days later, the State Fund sent White a letter stating, in part:

If you receive benefits, you must notify Montana State Fund immediately if you return to any gainful employment. Any receipt of benefits or an attempt to obtain benefits you are not entitled to for this claim, may result in legal action or criminal prosecution.

¶ 6 In February 2008, the State Fund accepted liability for White's claim after he sought medical treatment. Boland notified White by sending him a letter, which also stated:

It's important to keep me updated with your plans for returning to work. If you return to gainful employment without Montana State Fund's knowledge and continue to receive temporary total disability, permanent total disability, or rehab benefits, you may be subject to legal action or criminal prosecution.

The State Fund ultimately paid for White's two shoulder surgeries and made bi-weekly payments of $981.08 in temporary total disability benefits.

¶ 7 In August of 2008, Boland received an anonymous tip on the State Fund's hotline that White was building and selling furniture out of his home, even though he still was receiving temporary total disability benefits. Boland forwarded the tip to the State Fund's Fraud Detection and Prevention Unit.

¶ 8 Tom Disburg, a fraud coordinator for the State Fund, previously had received a tip that White was selling furniture out of his home. After Disburg learned that Boland had received a similar tip, he hired Day & Associates, a private investigative firm, to determine whether White was receiving remuneration in addition to the benefits provided by the State Fund.

¶ 9 Bob Harris, a private investigator for Day & Associates, visited with White outside of White's home and introduced himself under the pseudonym “Dan Snyder.” Harris asked how much it would cost for White to make a yard swing similar to the one in White's front yard. White replied he was unsure of the cost; he also showed Harris dressers he was constructing in his garage and various items in his house he had made. Before Harris left, he asked White to write down his number so that he could get in touch about the yard swing. About a month later, Harris called White and asked him to build him a cedar chest. White told Harris he could build the chest for $650, with half of that amount due up front, and that it would take at least a month to complete because he had other projects to finish. Harris agreed, paid White, and White gave him a hand-written receipt reflecting the terms of the agreement.

¶ 10 After Harris placed his order, Disburg referred the investigation to the Montana Department of Justice, pursuant to § 39–71–211(1), MCA, and asked that agency to “[p]lease complete the investigation and prepare for possible prosecution.” One month later, Harris traveled to White's house to pay for and pick up the cedar chest. Harris was accompanied by Gaylen Buchanan, a State Fund fraud investigator. When they arrived, White showed Harris and Buchanan three cedar chests he had completed, as well as three chests not yet finished; he invited Harristo choose a completed chest. Harris gave White the outstanding $325 and White provided Harris with a formal receipt from a receipt book. After they left with the chest, Buchanan wrote a report that detailed what had happened, which concluded the State Fund's portion of the investigation.

¶ 11 Based on information provided by the State Fund, the Department of Justice Division of Criminal Investigation (DCI) applied for a warrant to search White's home. Montana First Judicial District Court Judge Dorothy McCarter signed the warrant and three DCI agents, as well as local law enforcement, searched White's home in December 2008. The DCI agents seized a receipt book that reflected sales White had made and other paperwork. These documents established that, while receiving temporary total disability benefits, White sold the chest to Harris for $650, he sold a bench to his physical therapist for $350, and he received a vacuum cleaner worth $899.99 in exchange for working at a vacuum cleaner store.

¶ 12 The DCI agents provided the fruits of the search to Assistant Attorney General Deborah Butler. Butler determined that, based on her review of the materials seized by DCI and those provided by the State Fund, probable cause existed to file charges. First Judicial District Court Judge Kathy Seeley granted Butler's motion to file an information and, on March 3, 2009, Butler filed an information charging White with theft, a felony, in violation of § 45–6–301(5)(b), MCA. The information stated that White “failed to disclose to the State Fund that while on temporary work restriction, he built and sold furniture and worked in a retail store in exchange for remuneration, while also receiving approximately $2,242 in temporary total disability benefits from [the] State Fund.” White was tried on charges of theft in Lewis and Clark County and a jury found him not guilty in January 2010.

¶ 13 The State Fund terminated White's temporary total disability benefits shortly after the DCI searched his home. In March 2010, two months after he was acquitted, White and the State Fund settled White's workers' compensation claim for a lump sum payment of $32,500.

¶ 14 White filed suit against the State Fund and its private investigators, Day & Associates, in May 2010. In his amended complaint, White alleged that the defendants violated eight sections of Montana's Insurance Code regarding unfair claim settlement practices. He also pleaded a variety of common law causes of action, including bad faith, malicious prosecution, negligent infliction of emotional distress, and intentional infliction of emotional distress. The District Court granted the State Fund's motion to dismiss Counts One through Eight of White's complaint for failure to state a claim pursuant to M.R. Civ. P. 12(b)(6), as well as the State Fund's and Day and Associates' motions for summary judgment on the remaining counts in the complaint. White appeals only the District Court's rulings in favor of the State Fund.

STANDARD OF REVIEW

¶ 15 We review de novo a district court's ruling on a motion to dismiss for failure to state a claim pursuant to M.R. Civ. P. 12(b)(6). Ming Da Situ v. Smole, 2013 MT 33, ¶ 11, 369 Mont. 1, 303 P.3d 747. We accept as true the complaint's factual allegations and, when evaluating the motion, we consider the complaint in the “light most favorable” to the plaintiff. Tally Bissell Neighbors, Inc. v. Eyrie Shotgun Ranch, LLC., 2010 MT 63, ¶ 15, 355 Mont. 387, 228 P.3d 1134. A district court should not dismiss a complaint for failure to state a claim “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief.” McKinnon v. Western Sugar Coop. Corp., 2010 MT 24, ¶ 12, 355 Mont. 120, 225 P.3d 1221. The district court's determination that a complaint failed to state a claim presents a conclusion of law, which we review for correctness. McKinnon, ¶ 12.

[371 Mont. 6]¶ 16 We review a district court's ruling on motions for summary judgment de novo, applying the same M.R. Civ. P. 56(c) criteria as applied by the district court. Turner v. Wells Fargo Bank, N.A., 2012 MT 213, ¶ 11, 366 Mont. 285, 291 P.3d 1082 (citing Ternes v. State Farm Fire & Cas. Co., 2011 MT 156, ¶ 18, 361 Mont. 129, 257 P.3d 352). Summary judgment is appropriate only when the moving party demonstrates both the absence of any genuine issue of material fact and entitlement to judgment as a matter of law. Turner, ¶ 11. A district court's conclusion that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law is a legal conclusion we review for correctness. Turner, ¶ 11.

DISCUSSION

¶ 17 Issue One: Did the District Court err in granting the State Fund's motion to dismiss White's claims under Montana's Insurance Code?

¶ 18 Counts One through Eight of White's complaint were based on provisions of Montana's Insurance Code contained in § 33–18–201, MCA. The State Fund, in its motion to dismiss, argued that those eight counts failed as a matter of law because Title 33 of the Montana Code Annotated “explicitly does not apply to the State Fund,” as stated in § 33–1–102(5), MCA. In his response, White conceded that although “a plain reading of the statute would lead one to believe that [Title 33] does not apply to the Montana State Fund,” the legislative history of the statute indicates the Legislature did not intend for that result.

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