Court Opinion

ID: 9793697
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:51:36.095619+00
Date Added: 2024-06-11T08:06:40.810082
License: Public Domain

MR. JUSTICE WEBER
delivered the Opinion of the Court.
Appellants were involved in an automobile accident. The District Court for the Eighteenth Judicial District granted the motion of State Farm Fire and Casualty Company (State Farm) for summary judgment. It held that State Farm insurance policies held by Mr. Taylor and Mr. Hanson did not provide uninsured motor vehicle coverage for this accident. We reverse.
The issues are:
1. Did the State Farm policies provide uninsured motor vehicle coverage under the circumstances of this case?
2. Is State Farm absolved of liability because the insured violated the “no consent to settlement” exclusion of the insurance policies?
Mr. Hanson and Mr. Taylor were insured under State Farm automobile liability insurance policies. Mr. Taylor was driving a vehicle in which Mr. Hanson and Mr. Callaway were passengers. Their vehicle was rearended at a high rate of speed by Mr. Moss, who was driving a truck owned by yet another person. As a result of the accident, Mr. Hanson died and Mr. Callaway and Mr. Taylor were severely injured. Mr. Callaway, Mr. Taylor, and Mr. Hanson’s family sued Mr. Moss, and judgments were rendered. The vehicle Mr. Moss was driving was uninsured, but he personally had liability insurance. The victims settled with Mr. Moss’ insurer, which paid to his policy limit, but the judgments remain partially unsatisfied.
In this action, State Farm obtained a judgment that it was not required to apply Mr. Taylor’s and Mr. Hanson’s uninsured motor vehicle coverage to the unsatisfied portions of the judgments. The District Court held that the State Farm uninsured motor vehicle coverage did not apply where the offending vehicle was uninsured but its driver had insurance.
*217I.
Did the State Farm policies provide uninsured motor vehicle coverage under the circumstances of this case?
Uninsured motor vehicle insurance coverage must be offered by insurers in Montana under Section 33-23-201, MCA:
“No automobile liability . . . policy ... for bodily injury . . arising out of the ownership, maintenance, or use of a motor vehicle shall be delivered ... in this state, with respect to any motor vehicle registered ... in this state, unless coverage is provided [in limits of $25,000 per person as set forth in Section 61-6-103, MCA,] for the protection of persons insured . . . who are legally entitled to recover damages from owners or operators of uninsured motor vehicles . . .” There is no statutory definition of uninsured motor vehicle. Montana also requires by statute that vehicles registered and operated in the state have liability insurance coverage. Section 61-6-301, MCA.
The State Farm policy provision at issue is:
“Sec. Ill — Uninsured Motor Vehicle - Coverage U. We will pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle. The bodily injury must be caused by accident arising out of the operation, maintenance or use of an uninsured motor vehicle.
“Uninsured Motor Vehicle — means:
“1. a land motor vehicle, the ownership, maintenance or use of which is:
“a. not insured or bonded for bodily injury liability at the time of the accident . . .”
State Farm argues that the plain meaning of the policy is that when the use of an offending motor vehicle is insured (as was Mr. Moss’ use of the offending vehicle), the uninsured motorist coverage does not apply. State Farm has cited a number of cases in which it has been held that a vehicle is not an uninsured motor vehicle for purposes of insurance coverage if either the driver or the owner has insurance. See, e.g. Sorbo v. Mendiola (Minn. 1985), 361 N.W.2d 851; Stordahl v. Government Emp. Ins. Co. (Alaska 1977), 564 P.2d 63; Citizens Ins. Co. of America v. Povey (Mich.App.1982), 319 N.W.2d 341. In none of these cases was the policy provision the same as the provision in this case. Since we conclude the language of this policy is critical, the cases cited by State Farm are not decisive.
The appellants contend that under the policy, a motor vehicle is uninsured if the ownership, maintenance or use is not insured for *218bodily injury. In this instance, the ownership was not insured. As a result there is a reasonable contention that under the express provision of the policy, because the ownership was not insured for bodily injury, this is an uninsured motor vehicle. The first sentence of the provision says that State Farm will pay damages an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle. If this is an uninsured motor vehicle because of the absence of insurance covering ownership, then the first sentence requires State Farm to pay its uninsured coverage because the driver of the uninsured motor vehicle caused the damages.
The Washington courts have examined an insurance policy provision comparable to this one. That policy defined an uninsured motor vehicle as one “with respect to the ownership, maintenance or use of which there is ... no bodily injury insurance . . .” Finney v. Farmers Ins. Co. (Wash. App. 1978), 586 P.2d 519, aff’d, 600 P.2d 1272. The court held that the policy was ambiguous and the provision was subject to more than one interpretation because of the use of the disjunctive “or,” and that the clause could be interpreted to mean that a “vehicle is uninsured if there is no insurance as to either its ownership or its maintenance or its use.” Finney, 586 P.2d at 526. We agree with that rationale.
“An ambiguous provision in an insurance policy is construed against the insurance company. A clause in an insurance policy is ambiguous when different persons looking at it in the light of its purpose cannot agree upon its meaning, [citation omitted.] If the language is unambiguous, and subject to only one meaning, there is no basis for the interpretation of policy coverage under the guise of ambiguity.”
Bauer Ranch v. Mountain W. Farm Bur. Mut. Ins. (Mont. 1985), [215 Mont. 153,] 695 P.2d 1307, 1309, 42 St.Rep. 255, 257. This policy does not clearly state whether it provides uninsured motor vehicle coverage when the driver is insured but the ownership of the vehicle is not. We conclude that the policy is ambiguous. We therefore interpret the policy to provide coverage. We hold that the State Farm policies provided uninsured motor vehicle coverage under the circumstances of this case.
II
Is State Farm absolved of liability because the insured violated the “no consent to settlement” exclusion of the insurance policies?
*219State Farm argues that even if this Court concludes the insurance policies provided coverage under the uninsured motor vehicle provisions, there is no insurance coverage because the appellants settled with Mr. Moss’s insurance company without State Farm’s consent. State Farm cites the policy provision that:
“THERE IS NO COVERAGE:
“1. FOR ANY INSURED WHO, WITHOUT OUR WRITTEN CONSENT, SETTLES WITH ANY PERSON OR ORGANIZATION WHO MAY BE LIABLE FOR THE BODILY INJURY.” This Court has held that an insurance policy clause which prohibited the insured from obtaining a judgment against liable parties is void. In Dominici v. State Farm Mutual Automobile Ins. Co. (1964), 143 Mont. 406, 408 and 411-12, 390 P.2d 806, 807 and 809, this Court stated:
“The insurance contract further contained an exclusion whereby the above-mentioned coverage would not apply “(a) to bodily injury to an insured . . . with respect to which such insured, his legal representative or any person entitled to payment under this coverage [if he or they] shall, without written consent of the company, make any settlement with or prosecute to judgment any action against any person or organization who may be legally liable therefor; . . . (Emphasis supplied.)
“The problem to be resolved here is what effect, if any, did the judgments taken by each plaintiff have upon the rights and obligations of the insured and insurer in light of the ‘no judgment’ clause of the insurance contract? State Farm contends that no action can now lie against them because there has not been full compliance with the terms of the policy. Plaintiffs rely upon the prohibition contained in R.C.M. 1947, Section 13-806. This statute states:
“ ‘Every stipulation or condition in a contract by which any party thereto is restricted from enforcing his rights under the contract, by the usual proceedings in the ordinary tribunals ... is void.’
“It is plaintiffs’ position that State Farm agreed to pay all sums plaintiffs were legally entitled to recover (up to and including the limits of the policy coverage) from an uninsured motorist; and, the ‘no judgment’ clause would restrict plaintiffs from enforcing these rights. Therefore, this clause in the policy would be void under section 13-806.
“We hold with the contentions of plaintiffs . . . .”
State Farm argues that the no-consent-to-settlement clause does *220not restrict insureds’ access to the courts and thus does not violate the Dominici rule. Instead, State Farm argues, it protects the insurer’s right of subrogation. It is technically correct that the holding in Dominici was that the ‘no judgment’ provision unlawfully restricted the plaintiffs access to the courts. A ‘no settlement’ clause does not directly limit access to the courts. However, the rationale in Dominici was that the ‘no judgment’ clause would restrict the insureds from enforcing their rights under the insurance contract.
“This Court does not support provisions placed on uninsured motorist coverage which restrict or thwart available liability coverage that the insured would be entitled to in an accident.” Guiberson v. Hartford Cas. Ins. Co. (Mont. 1985), [217 Mont. 279,] 704 P.2d 68, 74, 42 St.Rep. 1196, 1203. In Guiberson, this Court nullified an insurance policy provision which would have denied uninsured motor vehicle coverage where the uninsured driver did not have the insured’s consent to operate the vehicle. We conclude that enforcement of the no-consent-to-settlement clause here would result in a backing away from the mandatory offering requirement of the uninsured motor vehicle statute. It would also place control of efforts to collect from the responsible party in the hands of the insurer.
The central purpose of the clause is to provide uninsured motor vehicle coverage for which the insured has paid a premium. The insurance company is obligated to furnish uninsured motor vehicle coverage, whether it can obtain subrogation or not. While we do not deny the insurer’s right to subrogation, we will not allow the right to subrogation to negate the required offering of uninsured motor vehicle coverage. Under these circumstances, we conclude that the no-consent-to-settlement clause is void.
We therefore reverse the decision of the District Court.
MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, MORRISON and HUNT concur.