11/09/2021
DA 20-0464
Case Number: DA 20-0464
IN THE SUPREME COURT OF THE STATE OF MONTANA
2021 MT 289
JOSEPH RICHARD GOSS,
Plaintiff and Appellant,
v.
USAA CASUALTY INSURANCE COMPANY,
Defendant and Appellee.
APPEAL FROM: District Court of the Eighth Judicial District,
In and For the County of Cascade, Cause No. DDV-18-38
Honorable Gregory R. Todd, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Keith D. Marr, Conner, Marr & Pinski, PLLP, Great Falls, Montana
For Appellee:
Dave M. McLean, Ryan C. Willmore, McLean & Associates, PLLC,
Missoula, Montana
Submitted on Briefs: April 21, 2021
Decided: November 9, 2021
Filed:
c ir-641.—if
__________________________________________
Clerk
Justice Jim Rice delivered the Opinion of the Court.
¶1 Joseph Richard Goss appeals from the order entered by the Eighth Judicial District
Court, Cascade County, holding that Goss was not entitled to underinsured motorist (UIM)
and medical payments (MP) coverages under his automobile policy with USAA Casualty
Insurance Company (USAA), and granting summary judgment to USAA. We reverse in
part and affirm in part. The issue on appeal is:
Did the District Court err by concluding that Goss was not entitled to underinsured
motorist and medical payment coverages under his automobile policy with USAA?
FACTUAL AND PROCEDURAL BACKGROUND
¶2 On May 21, 2015, Diann Stevens made a left turn in front of Goss as he was riding
his motorcycle. Goss was unable to avoid a collision and his motorcycle struck the right
front portion of Stevens’ vehicle, injuring him. Stevens was issued a citation for failing to
yield to hazardous traffic when making a left turn.
¶3 At the time of the collision, Goss had four vehicles insured by USAA—a Chevrolet
Caprice, a Chevrolet Silverado 2500, a Ford Taurus, and a Jayco camper—including UIM
and MP coverages on all but the camper. USAA does not offer insurance coverage for
motorcycles in Montana, instead referring inquires to Progressive Insurance Company
(Progressive). Goss owned the motorcycle involved in the collision and insured it through
Progressive, though he did not maintain UIM or MP coverages on his Progressive
motorcycle policy.
2
¶4 The MP and UIM coverages in Goss’ USAA policy employ differing definitions
and exclusions, which in turn impact the scope of coverage, as well as the ultimate legal
analyses herein. The UIM provision of the policy provides that USAA:
[W]ill pay compensatory damages which a covered person is legally entitled
to recover from the owner or operator of an underinsured motor vehicle
because of [bodily injury] sustained by a covered person and caused by an
auto accident.
The owner’s or operator’s liability for these damages must arise out of the
ownership, maintenance or use of the underinsured motor vehicle.
¶5 For purposes of this provision, the policy defines “covered person” to include the
insured and any of the insured’s family members—whether or not a covered auto is
involved—as well as any other person occupying a covered auto. However, the UIM
coverage is narrowed by an exclusion for bodily injuries sustained “by any covered person
while occupying . . . any motor vehicle owned by you or any family member which is not
insured for UIM [coverage] under this policy.” (Emphasis added.)
¶6 The MP provision states that USAA will pay the “reasonable fee for medically
necessary and appropriate medical services . . . because of [bodily injury] caused by an
auto accident, sustained by a covered person and incurred for services rendered within three
years of the date of the accident.” Under the MP provision, a “covered person” is defined
in relation to his or her occupancy of an auto that is covered or not covered. A “covered
person” is:
1. You [the insured] or any family member while occupying your covered
auto.
2. Any other person while occupying your covered auto.
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3. You or any family member while occupying any of the following vehicles
if they are not your covered auto:
a. A private passenger auto or trailer;
b. A moving truck or moving van, but only for your personal use while
in the custody of or being operated by you or a family member; or
c. a miscellaneous vehicle having at least four wheels.
Thus, MP coverage for bodily injury sustained while occupying a vehicle not covered by
the policy is specifically contemplated but limited to designated vehicles, as further defined
by the policy, as follows: “[a] four or six wheel land motor vehicle designed for use on
public roads with a rated load capacity of no more than 2000 pounds; [a] moving van for
personal use; [a] miscellaneous vehicle having at least four wheels; or [a] vehicle used in
the business of farming or ranching.” While the insured and family members occupying
these designated noncovered vehicles are defined as “covered persons” for purposes of MP
benefits, there is no MP coverage for these persons occupying a two or three-wheeled
motorcycle.
¶7 After Stevens’ insurer paid the liability limit of Stevens’ policy to Goss, he
submitted a claim to USAA for UIM benefits. USAA initially accepted coverage, but after
tendering $25,000 in UIM benefits to Goss, reversed its determination and halted further
UIM and MP benefits. USAA did not seek reimbursement of the benefits already paid to
Goss. Goss filed suit against USAA and Stevens, alleging breach of contract and
declaratory relief claims against USAA. Both parties filed motions for summary judgment.
The District Court issued an order granting USAA’s motion for summary judgment on both
coverages, reasoning the policy “clearly excludes coverage for Goss’ accident in [the]
two-wheeled motorcycle that Goss owned but did not insure with USAA. Furthermore,
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neither the owned vehicle exclusion nor the medical payments exclusion violate[s]
Montana public policy.”
¶8 Goss appeals.1
STANDARD OF REVIEW
¶9 We review summary judgment rulings de novo, applying the same Rule 56 criteria
of the Montana Rules of Civil Procedure as the court below. Cross v. Warren, 2019 MT
51, ¶ 7,
395 Mont. 62,
435 P.3d 1202. Contract interpretation is a question of law.
Stutzman v. Safeco Ins. Co. of Am.,
284 Mont. 372, 376,
945 P.2d 32, 34 (1997).
Interpretation and application of public policy is also a question of law. State Farm Mut.
Auto. Ins. Co. v. Gibson,
2007 MT 153, ¶ 9,
337 Mont. 509,
163 P.3d 387. “We review a
district court’s conclusions of law to determine whether the court’s conclusions of law are
correct.” Gibson, ¶ 9 (citation omitted).
DISCUSSION
¶10 It is well established that when analyzing the terms of an insurance policy we look
first to the plain language of the contract itself. Monroe v. Cogswell Agency, 2010 MT
134, ¶ 15,
356 Mont. 417,
234 P.3d 79. The terms and words used in an insurance contract
are to be given their usual meaning. Section 28-3-501, MCA. We review the policy as a
whole “so as to give effect to every part if reasonably practicable[.]” Section 28-3-202,
MCA. Ambiguities in the insurance policy are construed in favor of the insured.
1
The parties stipulated to Stevens’ dismissal as a party on September 21, 2020.
5
Section 28-3-206, MCA. However, courts “will not create an ambiguity in an insurance
contract where none exists.” Stutzman, 284 Mont. at 379,
945 P.2d at 36. The existence
of an ambiguity is determined through the eyes of “‘a consumer with average intelligence
but not trained in the law or insurance business.’” Hardy v. Progressive Specialty Ins. Co.,
2003 MT 85, ¶ 14,
315 Mont. 107,
67 P.3d 892 (quoting Farmers All. Mut. Ins. Co. v.
Holeman,
1998 MT 155, ¶ 25,
289 Mont. 312,
961 P.2d 114).
¶11 After analysis of the policy language, we next consider “whether, in light of our
construction, the insurance contract violates public policy.” Monroe, ¶ 15. The purpose
of statutorily mandated insurance coverage is “to protect innocent members of the general
public injured on the highways through the negligence of financially irresponsible
motorists[,]” Horace Mann Ins. v. Hampton,
235 Mont. 354, 357,
767 P.2d 343, 344
(1989), while the purpose of supplemental coverage is “to provide a source of
indemnification for accident victims when the tortfeasor does not provide adequate
indemnification.” Bennett v. State Farm Mut. Auto. Ins. Co.,
261 Mont. 386, 389,
862 P.2d
1146, 1148 (1993) (considering UIM coverage). Mandatory coverage in Montana consists
of liability limits for bodily injury of $25,000 per person and $50,000 per accident, and a
liability limit of $20,000 for injury to or destruction of property. Sections 61-6-103, -301,
MCA. Neither MP nor UIM coverage is mandatory in Montana. Newbury v. State Farm
Fire & Cas. Ins. Co.,
2008 MT 156, ¶ 36,
343 Mont. 279,
184 P.3d 1021 (MP); Stutzman,
284 Mont. at 380,
945 P.2d at 37 (UIM). We have held that the nature of these coverages
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is nonetheless personal and portable. Hardy, ¶ 40 (UIM); Ruckdaschel v. State Farm Mut.
Auto. Ins., 285 Mont. 395, 399,
948 P.2d 700, 703 (1997) (MP).
¶12 Mandatory insurance must meet the statutory coverage thresholds but, subject to the
limitations of public policy, insureds and insurers may “freely contract to produce
exclusions or limitations” regarding UIM and MP coverage. Stutzman,
284 Mont. at
380-81,
945 P.2d at 37; Newbury, ¶ 36. However, when a provision defeats coverage for
which valuable consideration has been exchanged by rendering the promised coverage
illusory or negating the personal and portable nature of the coverage, the provision violates
public policy. Hardy, ¶¶ 25-29, 40; Bennett,
261 Mont. at 389,
862 P.2d at 1148; Gibson,
¶ 11 (though many past cases “involved [UIM] coverage, we have applied the same public
policy” to MP coverage).
¶13 The parties both moved for summary judgment and did not dispute material facts.
The issue before us is whether the District Court erred by interpreting the contract and
determining its terms were not contrary to public policy. The District Court issued a
detailed opinion that reviewed the text of the insurance policy and applicable case law
before concluding that, from the perspective of an average consumer, “the insurance policy
between USAA and Goss clearly excludes coverage for Goss’ accident” on an owned,
two-wheeled motorcycle not insured through USAA. Regarding public policy, the District
Court reasoned that, because “Goss did not pay valuable consideration for [motorcycle]
coverage,” and “neither the [UIM] owned vehicle exclusion nor the [MP] exclusion violate
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Montana public policy,” the policy validly excluded both UIM and MP coverages for Goss’
claim.
¶14 USAA’s appellate argument largely aligns with the District Court, noting that “the
plain language of the policy excludes coverage for Goss” and that, in any event, USAA
does not offer motorcycle insurance in Montana. Further, USAA contends there are no
public policy concerns because “the only instance in which the exclusion at issue renders
UIM coverage unavailable is when the accident involves the insured’s own vehicle which
is not insured by USAA,” a necessary limitation to ensure that consumers cannot obtain
coverage of multiple vehicles with a single UIM policy. Goss argues that, having “paid
valuable consideration” for the “personal and portable” policies, he is entitled to both
coverages because the exclusions are contrary to public policy.
¶15 In Stutzman, a woman sued an insurance company to obtain UIM benefits for
damages she sustained in excess of the liability coverage limit after she was injured in a
single car accident caused by the negligence of her husband, who was operating the vehicle.
Stutzman, 284 Mont. at 375,
945 P.2d at 33-34. We upheld the policy’s exclusion from
UIM coverage of a vehicle “owned by or furnished for regular use of the named insured or
any relative,” declining to void the exclusion because it did not impact statutory liability
requirements, the parties were free to contract the limits on the liability coverage under the
policy, that is, insurance consumers could ameliorate the effect of the exclusion by
purchasing a policy with higher liability limits, and to hold otherwise would permit
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consumers “to substitute inexpensive underinsured motorist coverage for more expensive
liability coverage.” Stutzman, 284 Mont. at 381,
945 P.2d at 37.
¶16 While the UIM coverage at issue here likewise is not statutorily mandated, the other
factors validating the exclusion in Stutzman are absent. The USAA contract’s Part C,
governing UIM coverage, clearly provides that Goss is a “covered person” under the UIM
policy: “A. Covered person as used in this Part means: 1. You [(Goss)] or any family
member.” Exclusion B, however, eliminates coverage if Goss is damaged “while
occupying, or when struck by, any motor vehicle owned by [Goss] which is not insured for
UIM [coverage] under this policy.” Therefore, the policy conditions UIM coverage on
Goss having his motorcycle insured with USAA, but this is impossible for Goss—USAA
does not offer motorcycle coverage in Montana and Goss cannot satisfy the condition to
obtain coverage. USAA offers that the exclusion “omits from coverage a vehicle an
insured owns, but does not insure with USAA” to “promote[] individuals insuring all of
their vehicles appropriately, and for example, not insure[ing] one of seven vehicles and
reap[ing] the benefits of coverages under the one vehicle they do insure.” This otherwise
legitimate purpose, however, is defeated here because Goss had no ability to insure “all”
his vehicles, including his motorcycle, with USAA. Goss had done all he could to satisfy
the condition by insuring his other vehicles with USAA. The defeat of coverage here is
underscored by the fact, acknowledged in the briefing, that UIM coverage would have been
available had Goss been riding a motorcycle he did not own (the UIM exclusion applies to
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a covered person only when occupying “any motor vehicle owned by you or your family
member which is not insured” (emphasis added)).
¶17 Consequently, regarding UIM, Goss was “without meaningful choice at the time the
parties entered the insurance contract at issue” because he was unable to satisfy USAA’s
condition for coverage. Stutzman, 284 Mont. at 381,
945 P.2d at 37. While USAA is free
to decline to insure motorcycles, or to require that an owned vehicle be insured with USAA,
it cannot then exclude coverage on the ground the insured failed to have his vehicle insured
with USAA when that is impossible. We conclude that such an exclusion of coverage by
way of an unattainable condition precedent is contrary to public policy. See Gibson, ¶ 11
(citing Hardy, ¶ 40; Bennett,
261 Mont. at 389,
862 P.2d at 1148) (“a provision that defeats
coverage for which valuable consideration has been received violates Montana public
policy.”).2
¶18 Turning to the MP coverage, which is governed by a differing provision, we reach
a different conclusion. Unlike the UIM coverage, which defined Goss as a “covered
person” and then excluded him by an unattainable condition, the plain language of the MP
coverage does not define Goss, even though he is the named insured, as a “covered person”
unless he satisfies the definitional requirements of “occupying [a] covered auto” or, under
2
This case is thus distinguishable from Hamilton v. Trinity Universal Ins. Co.,
465 F. Supp. 2d
1060 (D. Mont. 2006), wherein the United States District Court for the District of Montana upheld
a similar owned-vehicle exclusion. Hamilton,
465 F. Supp. 2d at 1065-66. There, however, the
owned vehicle was insurable under the insured’s policy, but the insureds elected not to purchase
coverage for it. See Hamilton,
465 F. Supp. 2d at 1061-62.
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the facts here, occupying a non-covered auto that is a “private passenger auto or trailer”;
“a moving truck or moving van, but only for [his] personal use” while in his custody or
being operated by him; or “[a] miscellaneous vehicle having at least four wheels.”
Critically, therefore, the consideration Goss paid for the policy included MP coverage for
occupancy of a noncovered vehicle only under these enumerated circumstances, which he
did not satisfy while riding his motorcycle, and thus cannot claim coverage. While he
argues the defeat of coverage and the personal and portable nature of MP coverage as
public policy concerns, public policy is not violated by a denial of coverage where
compensation has not been paid for the coverage, even when the nature of the coverage is
personal and portable. See Cross, ¶ 17 (“We have found coverage to be ‘personal and
portable’ when it applies in ‘all circumstances,’ or, in other words, is applicable without
regard to the ownership or use of a motor vehicle.”); Bennett, 261 Mont. at 389,
862 P.2d
at 1148 (declaring coverage was “personal” because it “does not depend on the insured
person occupying an insured vehicle.”); Jacobson v. Implement Dealers Mut. Ins. Co.,
196
Mont. 542, 547,
640 P.2d 908, 912 (1982) (uninsured motorist coverage is personal and
portable because “[t]here is no requirement that the insured be occupying an insured
vehicle.”). Here, the policy’s clear terms establish there is no MP coverage for Goss while
occupying a motorcycle, and consideration was not exchanged to obtain this coverage.
This is a permissible limitation on non-mandatory MP coverage, for which USAA and
Goss may “freely contract.” Stutzman,
284 Mont. at 380-81,
945 P.2d at 37. We conclude
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the District Court did not err by entering summary judgment in favor of USAA regarding
the MP coverage.
¶19 The District Court’s entry of summary judgment is affirmed as it relates to MP
coverage. We reverse the District Court’s entry of summary judgment in USAA’s favor
regarding UIM coverage and remand for entry of judgment in favor of Goss.
/S/ JIM RICE
We concur:
/S/ MIKE McGRATH
/S/ JAMES JEREMIAH SHEA
/S/ INGRID GUSTAFSON
/S/ DIRK M. SANDEFUR
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