Opinion ID: 884857
Heading Depth: 1
Heading Rank: 3

Heading: issues

Text: ¶ 12 Did the District Court err when it concluded that § 33-18-242, MCA preempted a claim for the common law tort of bad faith by third-party claimants? ¶ 13 The legislature enacted the Unfair Trade Practices Act to prohibit unfair or deceptive acts or practices. See § 33-18-101, MCA. Unfair claim settlement practices are prohibited. See § 33-18-201, MCA. The statute at issue in this case, § 33-18-242, MCA, provides: (1) An insured or a third-party claimant has an independent cause of action against an insurer for actual damages caused by the insurer's violation of subsection (1), (4), (5), (6), (9), or (13) of XX-XX-XXX. (2) In an action under this section, a plaintiff is not required to prove that the violations were of such frequency as to indicate a general business practice. (3) An insured who has suffered damages as a result of the handling of an insurance claim may bring an action against the insurer for breach of the insurance contract, for fraud, or pursuant to this section, but not under any other theory or cause of action. An insured may not bring an action for bad faith in connection with the handling of an insurance claim. (4) In an action under this section, the court or jury may award such damages as were proximately caused by the violation of subsection (1), (4), (5), (6), (9), or (13) of XX-XX-XXX. Exemplary damages may also be assessed in accordance with 27-1-221. (5) An insurer may not be held liable under this section if the insurer had a reasonable basis in law or in fact for contesting the claim or the amount of the claim, whichever is in issue. (6)(a) An insured may file an action under this section, together with any other cause of action the insured has against the insurer. Actions may be bifurcated for trial where justice so requires. (b) A third-party claimant may not file an action under this section until after the underlying claim has been settled or a judgment entered in favor of the claimant on the underlying claim. (7) The period prescribed for commencement of an action under this section is: (a) for an insured, within 2 years from the date of the violation of XX-XX-XXX; and (b) for a third-party claimant, within 1 year from the date of the settlement of or the entry of judgment on the underlying claim. (8) As used in this section, an insurer includes a person, firm, or corporation utilizing self-insurance to pay claims made against them. (Emphasis added.) Subsection (1) specifically provides both an insured and a third-party claimant an independent cause of action. Subsection (3) limits an insured, but not a third-party claimant, to a cause of action for breach of the insurance contract, for fraud, or pursuant to this section, i.e., § 33-18-242, MCA. Subsection (3) also prohibits an insured, but not a third-party claimant, from bringing an action for bad faith. The term third-party claimant simply does not appear in subsection (3). ¶ 14 We construe a statute by its terms. Section 1-2-101, MCA. We do not insert what has been omitted or omit what has been inserted. Section 1-2-101, MCA. We cannot insert the term third-party claimant into § 33-18-242(3), MCA. Therefore, we conclude that § 33-18-242, MCA does not prohibit a third-party claimant from bringing an action for common law bad faith. ¶ 15 The Defendants contend that we have applied § 33-18-242(3), MCA to a third-party claim based on the adjustment of a worker's compensation case in Grenz v. Orion Group, Inc. (1990), 243 Mont. 486, 795 P.2d 444, and that Grenz prohibits a third-party claimant from pursuing an action for common law bad faith. However, we were not asked to decide in Grenz whether common law bad faith actions were preempted by § 33-18-242(3), MCA. We were asked to decide whether a third-party claim based on improper adjustment could be brought prior to the resolution by settlement or judgment of the underlying claim. We held that it could not, whether based on statute or common law bad faith. Grenz, 243 Mont. at 490-91, 795 P.2d at 446-47. Therefore, Grenz is not applicable to the facts before us in this case. ¶ 16 Brewington contends his claim is based on the common law tort of bad faith, not on § 33-18-242, MCA. He alleges that the Defendants engaged in a continuing course of tortious conduct which has breached the Defendants' duty of good faith and fair dealing that the Defendants owed to [him]. He contends that Hayes v. Aetna Fire Underwriters (1980), 187 Mont. 148, 609 P.2d 257 and Vigue v. Evans Products Company (1980), 187 Mont. 1, 608 P.2d 488, establish a common law cause of action for bad faith, which was not affected when the legislature passed § 33-18-242, MCA. We agree. ¶ 17 In Hayes and Vigue, we held that an injured worker covered by the Workers' Compensation Act could assert a separate claim in the District Court for damages when the insurer and its adjuster allegedly committed intentional torts and acted in bad faith in adjusting and processing his claim. Hayes, 187 Mont. at 157, 609 P.2d at 262; Vigue, 187 Mont. at 7, 608 P.2d at 491. ¶ 18 Previously in this opinion, we concluded that § 33-18-242, MCA, by its terms, does not prohibit a third-party claimant from bringing an action for bad faith. When the common law is not in conflict with a statute, the common law applies. Section 1-1-108, MCA; see also O'Fallon v. Farmers Ins. Exch. (1993), 260 Mont. 233, 244, 859 P.2d 1008, 1015. ¶ 19 For these reasons, we hold that the District Court erred when it concluded that § 33-18-242, MCA prohibited the Plaintiff from pleading the common law tort of bad faith.