Opinion ID: 884407
Heading Depth: 1
Heading Rank: 4

Heading: Did the District Court err in granting Continental's Motion for Summary Judgment on the issue of which policy applies to the Herrons' claims?

Text: The District Court determined that the July 12, 1993 letter from Hartelius to Schutz constituted a claim. Hence, the court granted Continental's Motion for Summary Judgment concluding that the 1993-1994 policy, along with that policy's limits of liability, which had been diminished to $20,742.94, applied to the Herrons' claims. The Herrons contend that the 1994-1995 policy, along with that policy's $1,000,000 limits of liability, apply in this case because they did not make a claim until they filed their personal injury and loss of consortium action against Schutz on October 19, 1994. The Herrons maintain that the July 12, 1993 letter was not a claim because it did not make a demand for money or services as the term claim is defined in the policy. Furthermore, they contend that if the July 12, 1993 letter is considered a claim, then the January 22, 1992 letter from Herron to Schutz must also be considered a claim, thereby implicating the 1991-1992 policy with its $100,000 limits of liability undiminished by any prior claims. The term claim is defined at section IV of the policy as the receipt of a demand for money or services, naming you and alleging a wrongful act. The Herrons maintain that Hartelius' letter merely informed Schutz that Hartelius was representing Herron with regard to the accident and asked Schutz to contact its malpractice carrier. They assert that no demand of any kind was set forth as required by the policy. The Herrons argue that the language in the policy is ambiguous, thus Montana law requires that the terms of the policy be construed liberally in favor of the insured and strictly against the insurer. However, it is not the policy language that is ambiguous, it is the wording of the July 12th letter. As the District Court stated in its Order on Motions for Summary Judgment, [t]he rule that an insurance policy is to be construed against the insurance company does not carry over to construction of correspondence from a claimant's lawyer. If the language in an insurance policy is clear and explicit, the policy governs. See § 28-3-401, MCA. The question here is whether the July 12th letter constituted a demand for money or services as required by the policy. In the only Montana case that discusses what constitutes the making of a claim under a claims-made insurance policy, Walker v. Larson (1986), 223 Mont. 333, 727 P.2d 1321, this Court held that the letters in question did constitute a claim although the policy in that case, unlike the policy in the instant case, failed to define a claim. The Herrons cite to a New York case, In re Ambassador Group, Inc. Litigation (E.D.N.Y.1993), 830 F.Supp. 147, to support their contention that the July 12th letter was not a demand for money or services. In Ambassador, the policy at issue did not define the term claim and the court in that case held that neither of the two letters in question constituted a claim as that term is normally viewed. Notwithstanding, Ambassador is distinguishable from the instant case in that the holding in Ambassador was based on the notice provisions in the policy. The policy characterized the reporting of a claim to the insurer as giving notice and the reporting of a claim directly to the directors and officers as the making of a claim. Thus the letters in question, because they were sent to the insurer, did not constitute a claim. While the authority on this issue is divided, we conclude that the better reasoned authority holds that letters, like the one in the instant case, are claims. In Berry v. St. Paul Fire & Marine Ins. Co. (8th Cir.1995), 70 F.3d 981, the Eighth Circuit Court of Appeals ruled that a letter asking the company to forward information to its insurance carrier qualified as a claim even though it lacked a request for damages in a specific dollar amount. There the policy defined a claim as a demand in which damages are alleged. The court in that case stated: True, the letter does not request payment of a specific dollar amount, but sometimes complaints in actions actually filed in Court don't either, so this omission does not seem inconsistent with the letter's being treated as a claim. Treating the letter as other than a claim, it seems to us, requires a tortured construction of its text. Berry, 70 F.3d at 982. Furthermore, in Rentmeester v. Wisconsin Lawyers Mut. (App.1991), 164 Wis.2d 1, 473 N.W.2d 160, a case involving the same insurer, Continental, and the same definition of a claim as in the case before us on appeal, the Court of Appeals of Wisconsin held that a letter from the claimant's attorney requesting the insured to contact his insurance carrier was a claim even though the letter did not contain a specific request for damages. The Wisconsin court stated: [The] letter could only mean that the Rentmeesters planned to seek relief from Hinkfuss if they lost on appeal. Moreover, not only did [the plaintiff's attorney] term his demand a claim, this is the precise construction that Hinkfuss gave the letter. Rentmeester, 473 N.W.2d at 163. The Herrons contend that Continental's argument in the instant case that the letter is a claim shows that the policy is ambiguous because Continental's argument is exactly opposite to its argument in Rentmeester. On the contrary, as the District Court stated in its order, Continental's assertions in Rentmeester do not bind it here, [i]t is the result, not the argument, that has precedential value. Continental asserts in its brief on appeal that it is not unusual for a party to take a different position in one case than it did in a previous case and that this is particularly appropriate where the court in an earlier case rejects the party's argument. Continental contends that since the Wisconsin court struck down Continental's coverage argument in Rentmeester, it is only proper that Continental accept the law set forth in that case and adopt it as its position here. The Herrons maintain that the July 12th letter only implies that a claim will be forthcoming at some point in the future. They assert that they did not make a claim until they filed their personal injury and loss of consortium action on October 19, 1994. Contrary to the Herrons' assertions, filing the action was not sufficient to bring the claim within the 1994-1995 policy year. The policy states that coverage exists during that period when a claim is first made against the company. Filing the complaint was simply the continued pursuit of David Herron's claim originally asserted in July 1993. Where the alleged tortfeasor has reasonably been put on notice by the injured party that he intends to hold the tortfeasor responsible for his damages, it would, indeed, be anomalous to hold that a claim is, nevertheless, not made until a suit is actually filed. To do so would encourage litigation as opposed to negotiation and settlement. And, to the extent that the tortfeasor had a claims-made policy in force when he was notified, but did not have such insurance in force when the lawsuit was filed  perhaps a year or more later  then coverage would be frustrated altogether to the detriment of both the injured party and the tortfeasor. Furthermore, § 25-4-311, MCA, mandates that in actions for the recovery of money or damages for personal injury or wrongful death, the amount of damages sought may not be stated in the claim for relief. Thus, under the Herrons' interpretation of the policy language, their complaint, because it did not state a specific dollar amount, could not be considered a claim either. Even though there was no request for a specific dollar amount in the July 12th letter, the text on its face indicates that the Herrons were seeking compensatory payment, otherwise, there would be no reason for Schutz to contact his insurance carrier. As the District Court pointed out in its order, [w]hy else would a plaintiff's lawyer write to an alleged tort-feasor, ask him to contact his insurance carrier and say a claim exists, other than to make a demand for money damages. Moreover, both sides treated the matter as a claim for money damages. In addition to initially labeling the Herrons' demand as a claim, Hartelius referenced Continental's claim number in subsequent correspondence. Mary Schutz, believing the July 12th letter to be a claim, forwarded it to Baker on July 14, 1993. A notice-of-claim form was completed that same day and forwarded to Continental. Michel acknowledged the new claim by letter dated August 10, 1993, and addressed to Mary Schutz. On August 30, 1993, Hartelius provided additional information regarding the claim to Baker. Thereafter, Michel sent a letter to Hartelius requesting additional documentation regarding Schutz's alleged liability and Herron's injuries. Hartelius responded to this request by letter dated October 7, 1993, in which he included Herron's medical records and gave detailed accusations of Schutz's negligence. Nevertheless, Continental denied the claim on February 8, 1994. Taking into consideration Hartelius' letters of July 12th, August 30th, and October 7th, all of which were written and sent during the 1993-1994 policy year, clearly a claim was made. The Herrons argue that if we hold that the July 12, 1993 letter from Hartelius to Schutz constitutes a claim, then we must also hold that the January 22, 1992 letter from Herron to Schutz constitutes a claim, thus implicating the 1991-1992 policy. However, the January 22, 1992 letter did not direct Schutz to contact his insurer carrier, nor did it indicate in anyway that the Herrons intended to hold Schutz responsible for David Herron's injuries. Thus the letter does not reasonably fit within the policy definition of a claim. The reason for the January 22nd letter was simply to point out defects Herron perceived in the design and construction of the Hospital. It neither stated nor implied any other purpose. Accordingly, we hold that the District Court was correct in concluding that the July 12, 1993 letter from Hartelius to Schutz was a claim under the policy and that the 1993-1994 policy applies to the Herrons' claims.