Opinion ID: 2320872
Heading Depth: 2
Heading Rank: 2

Heading: The Maine Unfair Claims Settlement Practices Act

Text: [¶ 22] The plaintiffs contend that Allstate committed four violations of the Maine Unfair Claims Settlement Practices Act, 24-A M.R.S.A. § 2436-A(1)-(2): [5] (1) knowingly misrepresenting its obligations under the insurance contract by refusing to immediately pay the disputed $40,000, § 2436-A(1)(A); (2) failing to acknowledge its obligation to pay and remit the $40,000 within a reasonable time after Saucier, § 2436-A(1)(B); (3) requiring the plaintiffs to relitigate Allstate's obligation that was, in effect, threatening to appeal from an arbitration award to compel them to accept a settlement less than the amount awarded, § 2436-A(1)(C); and (4) failing to pay the $40,000, which after Saucier constituted a failure to effectuate a prompt, fair and equitable settlement of the plaintiffs' claims without just cause, § 2436-A(1)(E).
[¶ 23] The UCSPA provides that an insurer is liable to its insured for [k]nowingly misrepresenting ... pertinent facts or policy provisions relating to coverage at issue. Id. § 2436-A(1)(A). The plaintiffs contend that Allstate knowingly misrepresented its insurance policy because (1) Allstate knew or should have known before we decided Saucier that it was required to pay the full limits of its policy, or $100,000 per person, under Greenvall, 1998 ME 204, ¶¶ 7-8, 715 A.2d at 952, and Bazinet v. Concord Gen. Mut. Ins. Co., 513 A.2d 279, 281 (Me.1986), and (2) Allstate's obligation to pay the plaintiffs the remaining $40,000 was a legal certainty after Saucier. [6] [¶ 24] The undisputed facts reveal that Allstate did not knowingly misrepresent the terms of its policy either before or after the Saucier decision. To establish a knowing misrepresentation, a plaintiff must provide evidence demonstrating something more than a mere dispute between the insurer and insured as to the meaning of certain policy language. See Saucier, 1999 ME 197, ¶ 21, 742 A.2d at 489. Instead, to survive summary judgment the plaintiff must generate an issue of fact that the insurer knew the policy said and meant one thing but told the insured something else. See id. [¶ 25] As discussed above, Greenvall does not require the insurer to pay both undisputed and disputed amounts immediately upon demand. In Bazinet, we held that, because insurers are jointly and severally liable in cases where two or more insurance policies apply to the same loss, an insured may settle with one carrier for an amount less than that policy's limit and then proceed against her own carrier for the remainder of her damages. Bazinet, 513 A.2d at 281. Bazinet is limited to the situation in which multiple policies afford uninsured motorist coverage. It is not a global statement regarding the relationships and liabilities between insurance carriers. Contrary to the plaintiffs' contention, therefore, Bazinet does not necessarily permit an insured to obtain payment from her own insurer in place of seeking damages from the tortfeasor's insurer. [¶ 26] The plaintiffs also contend that Saucier was dispositive of the conflict between the parties regarding the $40,000 in disputed funds. In Saucier, we held that the insurance policy was properly interpreted to permit Allstate to offset only those amounts paid to its insured by the other insurance carrier. Saucier, 1999 ME 197, ¶ 16, 742 A.2d at 488. We did not reach the question presented in this case regarding the UM carrier's responsibility where no amounts have yet been paid by the tortfeasor to the insured. Allstate's insurance contract does permit it to delay payment of disputed amounts until the liability limits of the other policy (1) have been exhausted by settlement or judgment, or (2) become subject to a subrogation and cooperation agreement with the insured. Accordingly, Allstate's interpretation of its insurance contract, permitting it to offset amounts in dispute with Dairyland, did not rise to the level of a knowing misrepresentation. [¶ 27] This case is factually distinguishable from Saucier, where Allstate refused to pay even the undisputed amounts to its insured. Allstate promptly paid the plaintiffs the undisputed amounts, and based its dispute of the remaining $40,000 upon its attorney's interpretation of the policy and Maine case law. There is no evidence in the record that Allstate directed either its claim analyst or attorney to disregard the policy provisions; instead, the record reflects only a dispute of interpretation between two attorneys.
[¶ 28] The plaintiffs argue that the undisputed facts establish that Allstate failed to acknowledge its obligation to pay the additional $40,000 within a reasonable time after the Saucier decision. Section 2436-A(1)(B) provides that an insurer may be liable to its own insured for [f]ailing to acknowledge and review claims, which may include payment or denial of a claim, within a reasonable time following receipt of written notice by the insurer of a claim by an insured arising under a policy. 24-A M.R.S.A. § 2436-A(1)(B). [¶ 29] The correspondence in the record reveals that the Dairyland settlement did not fail until February 24, 2000, when two of the injured parties would not agree to its proposed terms. Allstate acknowledged its obligation to pay the full $20,000 per person on March 3, 2000, after it learned that the underlying action had not settled. The only inference to be drawn from those two facts is that Allstate was informed at some point during those eight days that the case did not settle and determined that an offer of the full amount was, therefore, appropriate. The Superior Court correctly concluded that Allstate paid the plaintiffs' claims within a reasonable amount of time.
[¶ 30] An insurer is liable under the UCSPA for [t]hreatening to appeal from an arbitration award in favor of an insured for the sole purpose of compelling the insured to accept a settlement less than the arbitration award. Id. § 2436-A(1)(C). The plaintiffs contend that the litigation regarding the remaining UM coverage after Saucier was decided in favor of the insured was equivalent to threatening to appeal from an arbitration award. [¶ 31] The language of the UCSPA provision at issue is not ambiguous: an insurer may be liable for threatening to appeal an arbitration award rendered in favor of the insured. Here, there is no arbitration award. The Superior Court was correct in granting Allstate's motion for summary judgment on this issue.
[¶ 32] The UCSPA provides that an insurer is liable if, without just cause, it fails to effectuate a prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear. Id. § 2436-A(1)(E). [A]n insurer acts without just cause if it refuses to settle claims without a reasonable basis to contest liability, the amount of any damages or the extent of the injuries claimed. Id. § 2436-A(2). The plaintiffs argue that Allstate's failure to pay the remaining $40,000 UM benefits after the Saucier decision constitutes a violation of this section. [¶ 33] Contrary to the plaintiffs' assertion, Saucier did not compel Allstate to immediately render payment to the plaintiffs in the full amount of its liability limits. We held in Saucier that, pursuant to its policy, Allstate was entitled to deduct only the amounts paid to the insured by the underinsured's carrier. Saucier, 1999 ME 197, ¶ 12, 742 A.2d at 486. The basis that Allstate's attorney asserted in the post- Saucier letters for not immediately offering the entire $20,000 per person, was that a settlement was pending in the underlying interpleader action, which would allow Allstate to offset from its liability limits the amounts received by the plaintiffs. This was a reasonable basis for contesting liability, and there is nothing in the record to contradict that basis. Accordingly, the Superior Court did not err in entering summary judgment for Allstate on this issue. [7]