Court Opinion

ID: 4963000
Source: CourtListenerOpinion
Date Created: 2021-09-24 15:23:06.537433+00
Date Added: 2024-06-11T08:15:56.074570
License: Public Domain

CLIFFORD, J.,
with whom SAUFLEY, C.J., and ALEXANDER, J., join, dissenting.
[¶ 14] The Court construes 24-A M.R.S. § 4443(1) (2006), the nonduplication of recovery or exhaustion provision of the Maine Insurance Guaranty Association (MIGA) statute, as not applying to claims against a third party insurer. Because, in my view, that construction of section 4443(1) is contrary to the language and purpose of the statute creating MIGA, I respectfully dissent.
[¶ 15] MIGA was created to protect injured persons by providing funds to compensate them for their damages claims against responsible parties when the insurers providing coverage for those injuries become insolvent. See Jackson Brook Inst., Inc. v. Me. Ins. Guar. Ass’n, 2004 ME 140, 861 A.2d 652. We have described MIGA as the “guarantor of last resort” because MIGA is required to pay the damages of an injured claimant only when the claimant is prevented from recovery by the insolvency of an insurance carrier, and only when the claimant has no other source of recovery for damages. Id. ¶ 12, 861 A.2d at 656; Ventulett v. Me. Ins. Guar. Ass’n, 583 A.2d 1022, 1023 (Me.1990).
[¶ 16] The requirement that a claimant exhaust all sources of recovery in section 4443(1) means that MIGA is protected from paying a claim when there is a sol*209vent insurance company that has collected premiums to provide coverage for the claimant’s loss, and the coverage of that policy is available to compensate the claimant. Pursuant to section 4443(1), a claimant is required to first seek compensation from such an insurer available to compensate for the suffered damages, and must “exhaust that coverage” before looking to MIGA for funds. Jackson Brook, 2004 ME 140, ¶ 12, 861 A.2d at 657. Section 4443(1) specifically provides:
Any person having a claim against an insurer under any provision in an insurance policy, other than that of an insolvent insurer, which is also a covered claim, shall be required to exhaust first the person’s right under the policy. Any amount otherwise payable on a covered claim under this subchapter shall be reduced by the amount of any recovery under the insurance policy.[6]
24-A M.R.S. § 4443(1).
[¶ 17] Unlike other provisions in the MIGA statute, section 4443(1) does not distinguish between first party and third party insurers, and contains no limitations or exclusions on the exhaustion requirement based on the status of the claimant as a third party. Title 24-A M.R.S. § 4443(3), for example, requires that a claimant must pursue a claim against a guaranty association of another state before seeking recovery from MIGA “except that, if it is a first party claim for damage to property with a permanent location,” the claimant must seek recovery first from the guaranty association of the location of that property. 24-A M.R.S. § 4443(3) (2006) (emphasis added). Likewise, 24-A M.R.S. § 4435(4)(B) (2006) refers to certain “first-party claims” as being excluded from the obligations of MIGA.
[¶ 18] Although the Legislature was thus well aware of the difference between first party and third party insurance coverage, section 4443(1) makes no such distinction between first party and third party insurers. I would conclude that it neither excludes claims covered by third party insurers from the requirement that the claims be exhausted, nor limits the application of the exhaustion requirement to claims against first party insurers.
[¶ 19] Moreover, in Jackson Brook, we applied the exhaustion requirement of section 4443(1) to a claim against a third party liability insurer providing coverage against directors’ and officers’ liability; we held that MIGA was not hable for damages because the claimant failed to exhaust all of the claimant’s rights against a solvent liability insurer.7 Jackson Brook, 2004 ME 140, ¶¶1, 13, 861 A.2d at 654, 657.
[¶ 20] In this case, Dr. Oldham and Dr. Pierce were each responsible for the total damages to the Beanes. See 14 M.R.S. § 156 (2006) (providing for joint and several liability). The Beanes had claims against both doctors for their damages. Both doctors had insurance coverage. Dr. *210Pierce’s insurer, PHICO Insurance Company, became insolvent. Dr. Oldham, however, had insurance coverage with a solvent insurer whose policy covered the Beanes’ claim against Dr. Oldham in the amount of $1,000,000. Despite the fact that the Beanes have damages exceeding $1,000,000, the Beanes settled the claim against Dr. Oldham for $600,000, leaving $400,000 of coverage for their claim that was not exhausted by the settlement. Recovery against MIGA is precluded unless a claimant has “no other source of recovery for damages.” Jackson Brook, 2004 ME 140, ¶ 12, 861 A.2d at 656 (emphasis added). Because there is $400,000 from Dr. Oldham’s solvent insurer that is available as a potential source of recovery for damages suffered by the Beanes, section 4443(1), the exhaustion provision, when properly construed, precludes their recovery against MIGA. Accordingly, I would affirm the judgment of the Superior Court.

. By its plain language, section 4443(1) requires, by the use of the mandatory term “shall,” that all claimants seeking MIGA coverage must exhaust the recovery available "from any other insurance sources.” Ventulett v. Me. Ins. Guar. Ass'n, 583 A.2d 1022, 1024 (Me.1990).

. A liability insurer is a third party insurer:
[A] first party insurance policy provides coverage for loss or damage sustained directly by the insured (e.g., life, disability, health, fire, theft and casualty insurance). A third party liability policy, in contrast, provides coverage for liability of the insured to a "third party” (e.g., a CGL policy, a directors and officers liability policy, or an errors and omissions policy).
Montrose Chem. Corp. v. Admiral Ins. Co., 10 Cal.4th 645, 42 Cal.Rptr.2d 324, 332, 913 P.2d 878 (1995).