No. 89-027 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1989 

WILLIAM T. "BILL" HOWELL, and JENSEN HOWELL, 

Plaintiffs and Appellants, 

-vsGLACIER GENERAL ASSURANCE COMPANY and the r 

STATE OF MONTANA and its agent, THE MONTANA 0 

Z 

POTATO IMPROVEMENT ASSOCIATION, 2 .-I 

Defendants and Respondents, zD - rn 

-and- 6' .. - MONTANA INSURANCE GUARANTEE ASSOCIATON, -- - i 

a non-profit association, - , .. Plaintiff in Intervention and Respondent 

-vs- 141 : 

GRANGE INSURANCE ASSOCIATION, a corporation; and 0.' '. 

WILLIAM T. "BILL" HOWELL and JENSEN HOWELL, individuals, . 5 

Defendants In Intervention and Appellants.-i 

APPEAL FROM: District Court of the Fourth Judicial District, 

In and For the County of Missoula, 

The Honorable James R. Wheelis, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Jon R. Binney and Lon J. Dale argues; Milodraqovich, 

Dale & Dye, Missoula, Montana 

For Respondent: 

Robert Phillips argued; Snavely & Phillips, 

Missoula, Montana 

Randy J. Cox argued; Boone, Karlberg & Haddon, 

Missoula, Montana 

Filed: 

Submitted: September 25, 1989 

Decided: December 27, 1989 
Justice John Conway Harrison delivered the Opinion of the 

Court. 

This is an appeal by c ill and Jensen Howell (~owells) 

and Grange Insurance Association (Grange) from a grant of 

summary judgment in favor of respondent Montana Insurance 

Guarantee ~ssociation (MIGA), the State of Montana and the 

Montana Potato Improvement Association (MPIA). Also appealed 

is the ~istrict Court's denial of appellants' motion to stay 

pending completion of discovery and its granting of 

respondents' motion for protective order. We affirm in part, 

reverse in part and remand for further proceedings. 

Appellants present essentially two issues for review: 

1. id the court abuse its discretion in denying 

plaintiffs' motion to stay ruling pending completion of 

discovery and in granting defendants' motion for protective 

order? 

2. Did the District Court err in granting summary 

judgment in favor of defendants State of Montana, Montana 

Potato Improvement ~ssociation and plaintiff-in-~ntervention, 

Montana Insurance Guarantee ~ssociation? 

At all times material to this litigation, calendar years 

1976-1977, the Howells were Montana seed potato producers. 

The State was an insured of Glacier General under a policy 

titled "municipality comprehensive liability policy." MPIA 

is an agent of the State in seed certification matters. The 

policies insured the State against certain risks enumerated 

in policies ML101, effective July 1-June 30, 1976 and ML102, 

effective J.uly 1, 1976-June 30, 1977. Grange insured 

Howells. 

The instant action arose out of a Washington civil case 

wherein certain Washington potato farmers sought compensation 

for damages they incurred because they had. p.urchased. seed 
potatoes infected with ring rot. The ~ashington plaintiffs 

filed suit in 1979 in Washington against the Howells, certain 

~ashington warehousemen and MPIA, who had certified the seed 

potatoes. Grange, under a reservation of rights, defended 

the Howells in the Washington litigation. 

On March 20, 1981, judgment was entered in the 

~ashington litigation. The judgment in excess of $485,000 

ran directly against the warehousemen and MPIA jointly and 

severally. The Howells were found not negligent but they 

were ordered to indemnify one of the Washington warehousemen 

because of breach of warranty claims. 

On September 17, 1981, the Washington plaintiffs filed a 

complaint in Montana to enforce the judgment in Montana and 

on August 24, 1983, judgment was entered against MPIA and 

Howells. 

During the time between September 1981 and October 1983 

Grange and Howells tried to get MPIA and the State to pay 

some or all of the judgment but their efforts were 

unsuccessful. 

In October 1983, the Washington plaintiffs assigned 

their judgments to the Howells with Grange furnishing the 

entire consideration for the assignment. Grange paid the 

consideration under a reservation of rights agreement. Then 

in December 1983, Howells and Grange initiated this action. 

~uring the pendency of this action, h lacier General was 

declared insolvent and MIGA was granted permission to 

intervene. 

Discovery in this action spans several years. 

Appellants deposed Thomas Haggerty; claims manager of Glacier 

General, in December of 1985. Later, in January of 1987, 

appellants deposed John Maynard. After these depositions, 

appellants attempted to depose J. Michael Young, Dr. Sun and 

James McLean, defendants ' agents. Prior to the summary 
judgment motion counsel had tried to schedule these 

depositions but were unable to do so because of scheduling 

conflicts. Appellants filed notices of depositions for 

September 19 and 26, 1988. In the meantime respondents filed 

their motion for summary judgment. 

Issue I 

Did the court abuse its discretion in denying 

plaintiffs' motion to stay ruling pending completion of 

discovery and in granting defendants' motion for protective 

order? 

Rule 56 (f) , M.R.Civ.P. is as follows: 

Should it appear from the affidavits of a 

party opposing the motion that he cannot 

for reasons stated present by affidavit 

facts essential to justify his 

opposition, the court may refuse the 

application for judgment or may order a 

continuance to permit affidavits to be 

obtained or depositions to be taken or 

discovery to be had or may make such 

other order as is just. 

A review of the District Court's order and opinion 

discloses that the district judge did read and consider 

plaintiffs' arguments. However, the District Court, in its 

discretion, decided that the plaintiffs did not sufficiently 

establish how that proposed discovery could precl.ude summary 

judgment. A review of appellants' motion and affidavit 

persuades us that the ~istrict Court did not abuse its 

discretion. Further, in light of our holding on Issue 11, 

reopening discovery as outlined by appellants is unnecessary. 

We affirm the District Court. 
Issue I1 

Did the District Court err in granting summary judgment 

in favor of defendants State of Montana and Montana Potato 

Improvement ~ssociation and plaintiff-in-~ntervention, 

Montana Insurance Guarantee Association? 

The ~istrict Court found that respondents were entitled 

to summary fudgment because this action is essentially a 

subrogation action and the Montana Insurance Guaranty 

~ssociation Act (MIGAA) prohibits recovery from MIGA by 

insurance companies. We agree with the District Court as to 

MIGA, but disagree with the District Co.urt1s holding as to 

MPIA and the State. 

MIGA 

MIGAA states in pertinent part as follows: 

33-10-102 (2) (b) "Covered claim" shall 

not include any amount due a reinsurer, 

insurer, insurance pool, or underwriting 

association, as subrogation recoveries or 

otherwise. 

The MIGAA clearly prohibits subrogation recoveries from MIGA 

by an insurance company. In the instant case, the District 

Court correctly found dispositive the fact that Grange 

purchased the judgments from the Washington plaintiffs. 

Since Grange owns the judgments, 5 33-10-102(2)(b), MCA, bars 

appellants' claim against MIGA. 

Appellants contend that even though Grange paid for the 

judgments, Grange's reservation of rights preserves the claim 

as Howells'. Thus, appellants argue that the Howells have a 

claim against MIGA which is not barred by 5 33-10-102(2) (b), 

MCA . However, the reservation of rights issue only 

determines the party (Grange or Howells) who receives payment 

of the judgment. The insurance coverage dispute between 

Grange and Howells does not impact the liability of the State 
or MPIA nor does it alter the effect of Grange purchasing the 

judgments. We affirm the summary judgment in favor of MIGA. 

The State and MPIA 

The District Court's opinion does not directly address 

why it granted summary fudgment for the State and MPIA. 

Apparently the District Court concluded that since 

5 33-10-102(2)(b), MCA, barred recovery from MIGA, it somehow 

barred recovery from the State or MPIA as well because they 

are insureds of an insolvent insurer. However the District 

Court erred in granting summary judgment in favor of the 

State and MPIA. 

The District Court's opinion, in effect, nullifies the 

valid judgment that appellants hold against MPIA. 

Respondents correctly argue that MIGA affords limited 

protection to the insureds of insolvent insurers. However, 

that limited protection does not absolve tortfeasors from 

judgments against them because coincidentally their insurance 

carriers become insolvent. Regardless of the effect of the 

MIGAA on this litigation, appellants still hold a valid 

judgment against MPIA that remains unsatisfied and judgment 

should be entered against MPIA. As to the liability of the 

State of Montana, we remand to the District Court for further 

proceedings to determine the liability of the State of 

Montana. We therefore reverse the District Court's award of 

summary judgment in favor of the State and MPIA and direct 

entry of summary judgment in favor of the appellants against 

MPIA. Affirmed as to MIGA, reversed as to the State and 

MPIA, and remandec? for further proceedings consistent with 

this opinion. 9 
We concur: 

--. 

?$hJLrp :qw,4o' The t on or able Frank I. Haswell, 

Retired Chief Justice, sitting 

for Chief Justice J.A. Turnage