Source: Montana Law Week

INSURANCE: UIM limit paid to injured motorcyclist after challenge to insurer’s reducing clause vis-à-vis separate recovery from tortfeasor’s employer.

Domino’s Pizza driver Daniel Goerss turned in front of motorcyclist Will Bakke in 5/16, throwing him 20 feet into a utility box. Bakke suffered a lumbar burst fracture, fractured
left femur, and fractured coccyx and underwent 4 surgeries.

Goerss’s insurer Progressive paid its $25,000 policy limit. Progressive was also the UIM carrier. Bakke sued Domino’s. He requested UIM from Progressive 5/24/17. Adjuster Adam McMurray in Bozeman responded 5/25 with “another copy of the policy declarations confirming the policy limit of $25,000 available as well as a copy of the UIM portion” of the policy and “please note the Limit of Liability under the coverage which
states- The damages under this Part III will be reduced by all sums:
1. paid because of bodily injury by or on behalf of any persons or organizations that may be legally responsible;
2. paid under Part I – Liability To Others; and
3. paid or payable because of bodily injury under any of the following or similar laws:
a. workers’ compensation law; or Verdict/settlement/judgment reports invited.
b. disability benefits law.

So this means that this UIM coverage will come into effect if it is proven the damages incurred exceed all underlying liability coverages. In the event the excess liability coverage with [redacted] for Domino’s is not adequate and this coverage is
triggered we will need copies of the policy declarations for all underlying liability coverages” and “I will also need the information previously requested and full documentation of all damages claimed.”

Bakke and Domino’s insurer mediated 5/9/19 and settled on undisclosed terms.

Bakke’s attorney wrote Progressive 5/22/19 reiterating his request for UIM and advising that its reliance on its reducing clause was a violation of Montana law. He advised that there was little question that Goerss is judgment proof — he was 19 when he hit Bakke’s motorcycle and is unemployed. He stated that the reducing clause is hardly clear, particularly as to how it may apply to Bakke, but that Progressive appeared to claim
that because Goerss was a Domino’s employee and because Bakke chose to pursue an independent, long, and expensive claim against Domino’s, Bakke’s UIM became excess coverage only, which would only be payable if Domino’s coverage was not enough to cover his injuries. He stated that there is no support for this argument to avoid previously paid for UIM benefits in Progressive’s declaration page or policy, and that it conflicts with a black letter Montana principle that an “insurer is under a duty to construe the factual assertions from the perspective of the insured rather than solely from the insurer’s own perspective.” Staples (Mont. 2004). He stated that it also runs afoul of Montana’s reasonable expectations doctrine, and that the reasonable expectation of Bakke’s declaration page and UIM policy for which he paid premiums would indicate that he would be entitled to $25,000 UIM after being struck by Goerss given that Goerss was underinsured as defined under the policy. He asserted that Progressive’s reducing clause is “nothing more than subrogation that Progressive is attempting to award itself” in violation of Montana’s “made whole” doctrine and is subject to the “common fund” doctrine which provides that “when a party through active litigation creates, reserves or increases a fund, others sharing in the fund must bear a portion of the litigation costs including reasonable attorneys’ fees.” Hall (Mont. 2011). He asserted that Progressive is the “passive beneficiary” of Bakke’s claim against Domino’s at no cost to Progressive, which further violates the law. He further asserted that Progressive’s interpretation of its reducing clause would result in unjust enrichment to Progressive, while Skauge (Mont. 1977) held that if one party to the insurance transaction must bear the loss, it should be the insurer, since that is the risk the insured paid it to assume.

Progressive adjuster Carla Giroux in Stevensville wrote Bakke’s attorney 5/28 “thank you for providing the additional information needed to evaluate Mr. Bakke’s injuries and potential future needs related to this pending underinsured motorist injury claim” and advising that “we have issued payment in the amount of $25,000 which represents Mr. Bakke’s underinsured motorist coverage.”