Finn v. Dakota Fire Insurance , 380 Mont. 481 ( 2015 )

August 26 2015
DA 15-0002
Case Number: DA 15-0002
IN THE SUPREME COURT OF THE STATE OF MONTANA
2015 MT 253
DAVID L. FINN,
Plaintiff and Appellant,
v.
DAKOTA FIRE INSURANCE COMPANY,
Defendant and Appellee.
APPEAL FROM: District Court of the Seventh Judicial District,
In and For the County of Richland, Cause No. DV 13-56
Honorable Katherine M. Bidegaray, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Robert J. Savage, Savage Law Firm; Sidney, Montana
Donald L. Harris, Tucker P. Gannett, Harris & Associates, PLLC;
Billings, Montana
For Appellee:
Kathleen L. DeSoto, Garlington, Lohn & Robinson, PLLP; Missoula,
Montana
Submitted on Briefs: July 8, 2015
Decided: August 26, 2015
Filed:
__________________________________________
Clerk
Justice Jim Rice delivered the Opinion of the Court.
¶1 David Finn appeals the order of the Seventh Judicial District Court, Richland
County, holding that he did not have insurance coverage in effect at the time he damaged
his pickup truck in an accident, due to his nonpayment of a renewal premium. We
affirm, addressing the following issue on appeal:
Did the District Court err by holding that Dakota Fire properly cancelled an
insurance policy for nonpayment of a renewal premium?
FACTUAL AND PROCEDURAL BACKGROUND
¶2 Dakota Fire Insurance Company issued an insurance policy to David Finn,
covering his 2007 Silverado pickup truck, effective from May 1, 2011, to May 1, 2012.
On March 16, 2012, Finn received a letter from EMC Insurance Companies1 advising
him he would soon be receiving an invoice for the premium necessary to renew the
policy. The letter further explained that a failure to pay the premium prior to the due date
would result in a cancellation of his policy. On March 28, 2012, Finn requested that his
new GMC Sierra 1500 truck be substituted on the policy, replacing the Silverado. EMC
made the change to his policy as requested.
¶3 On April 11, 2012, EMC sent Finn the renewal premium invoice, which instructed
him to pay the minimum amount of $131.65 by May 1, 2012, to renew his policy. Finn
did not pay by the due date. Six days later, EMC sent a notice of expiration and
cancellation summary to Finn, but offered to reinstate Finn’s coverage without
1
EMC Insurance Companies is the parent company of Dakota Fire. Because correspondence in
this case came from both companies, we use the names interchangeably throughout the opinion.
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interruption if he would pay the premium by May 18. EMC explained that if he failed to
make this payment the policy would “remain expired.” Finn wrote a check to EMC dated
May 8, but it was not received in the mail by the company until May 24. Finn states that
he failed to place a stamp on the envelope, resulting in it being returned to him by the
postal service, and requiring him to resend it.
¶4 On May 14—after EMC had sent the notice of expiration and before Finn’s
payment had arrived—Finn was involved in an automobile accident resulting in the total
loss of his truck. Two days later, Finn reported the loss to EMC. On May 24, EMC sent
a letter to Finn denying coverage for the accident, citing his failure to pay the renewal
premium by the deadline. On the same day, Finn’s check arrived at EMC’s office.
¶5 On May 24, 2013, Finn filed a complaint alleging breach of contract and
requesting declaratory relief. Following cross motions for summary judgment, the
District Court issued findings of fact, conclusions of law, and an order granting Dakota
Fire’s cross motion. The District Court determined that, had Dakota Fire received a
payment of $131.65 from Finn by May 1, 2012, Finn would have successfully renewed
the policy, and that, had Dakota Fire received a payment of $232.81 by May 18, 2012,
Finn would have successfully reinstated his policy. Because Finn failed to accomplish
either of these, “there was no automobile insurance policy in effect at the time of Finn’s
May 14, 2013, accident” and Dakota Fire “had no contractual duty to indemnify” Finn for
his losses. Finn appeals.
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STANDARDS OF REVIEW
¶6 We review orders granting summary judgment de novo. Fisher v. Swift Transp.
Co., 2008 MT 105, ¶ 12, 342 Mont. 335, 181 P.3d 601. The interpretation of an
insurance contract’s terms presents a question of law, and we review a district court’s
legal conclusions for correctness. Cusenbary v. United States Fid. & Guar. Co., 2001
MT 261, ¶ 9, 307 Mont. 238, 37 P.3d 67. The interpretation and application of a statute
to a particular set of circumstances are questions of law subject to de novo review for
correctness. Ramsey v. Yellowstone Neurosurgical Assocs., 2005 MT 317, ¶ 18, 329
Mont. 489, 125 P.3d 1091.
DISCUSSION
¶7 Did the District Court err by holding that Dakota Fire properly cancelled an
insurance policy for nonpayment of a renewal premium?
¶8 Section 33-23-214(1), MCA, provides that an insurer “shall renew a motor vehicle
liability policy unless it mails or delivers to the named insured . . . at least 45 days’
advance notice of its intention not to renew.” Section 33-23-214(3), MCA, adds that the
section does not apply “where the named insured has failed to discharge when due any of
the insured’s obligations in connection with the payment of premiums for the policy or
the renewal of the policy . . . .” The District Court concluded that Finn’s policy had
expired by its express terms on May 1, 2012, and that Dakota Fire had clearly informed
Finn what course of action was timely required to renew his policy and, later, to reinstate
coverage. Because Finn failed to accomplish these, Finn’s coverage expired and
“Montana’s midterm cancellation statutes do not apply to this case.”
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¶9 On appeal, Finn offers several arguments. First, Finn asserts the policy’s
automatic termination provision, which provides that a failure to accept an offer of
renewal by payment of the premium terminates the coverage, violates § 33-23-214(1),
MCA, because it conditions renewal on receiving payment prior to the expiration date.
Finn argues that the statute “requires auto insurers to make their decision to renew an
auto policy at least 45 days before the policy expires” and thus “prohibits auto insurers
from waiting until the day before the existing policy expires to decide whether to renew
that policy.” Accordingly, Finn offers that Dakota Fire was required to renew his policy
because he was not given 45 days’ advance notice of its decision not to renew, and as
such the policy was not effectively cancelled until May 18, 2012—after the date his truck
was damaged.
¶10 Second, Finn argues Dakota Fire’s actions gave the impression the policy had
been renewed, which Dakota Fire did not disavow until he reported the accident. He
notes that Dakota Fire had sent him a written renewal policy, issued proof of insurance
cards, and notified Finn’s loss payees that the policy had been renewed, leading him, his
loss payees, and law enforcement to believe a renewal policy was in effect. Finn argues
that Dakota Fire invoked its automatic termination provision to “transform” the renewal
of his policy into a mere offer of renewal to evade the statutory notice requirements for
nonrenewal and terminate his coverage.
¶11 Alternatively, Finn argues that even if he was required to timely renew the policy
to obtain coverage, he did so. Finn argues that Dakota Fire’s offer to renew was made by
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use of the billing account notice, which did “not prescribe an exclusive mode of
acceptance.” Finn reasons that, because no provision stated that acceptance of the
renewal offer could only be made by a timely payment, he had the option of accepting the
offer by any means within a reasonable time. In support, Finn cites Olsen v. Johnston,
2013 MT 25, ¶ 15, 368 Mont. 347, 301 P.3d 791, where we stated an offeree may accept
an offer in any reasonable manner where an offeror has failed to prescribe an exclusive
mode of acceptance. Thus, Finn asserts he successfully accepted Dakota Fire’s offer by
paying the premium within seven days of its due date, which is a reasonable amount of
time. Because an exclusive manner of renewal was not required, Finn argues that
§ 33-23-214(3), MCA, does not apply, as he violated no “obligation” in connection with
renewing the policy.
¶12 Lastly, Finn argues the District Court erred by accepting Dakota Fire’s position
that May 1 was the renewal premium payment deadline. Finn reasons that because the
renewal policy itself did not state a deadline for acceptance of premiums, the May 1
deadline set forth by the invoice was not binding. Finn interprets the lack of a specific
premium due date to mean that coverage was not conditioned on pre-payment, and thus,
he could make payment beyond that date without losing coverage.
¶13 Dakota Fire responds that § 33-23-214(3), MCA, specifically contemplates and
applies to the situation here. It argues that the statute explicitly obviates notice
requirements in situations where an insured fails to pay a premium to renew his policy,
stating that “an insurer cannot be in violation of this statute if it has offered to renew, and
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the insured himself fails to avail himself of that offer by failing to pay the renewal
premium.” Even so, Dakota Fire points out that Finn was given notice of EMC’s intent
to renew on March 16, 2012—45 days preceding the date of renewal—and undisputedly
failed to pay on time. Thus, alternatively, even if Dakota Fire had been bound by the
45-day statutory notice requirement for nonrenewal, it argues that its actions satisfied the
statute.
¶14 As to Finn’s argument that EMC did not prescribe an “exclusive mode of
acceptance” of the renewal offer, Dakota Fire first notes that the argument is raised for
the first time on appeal, but further answers that EMC made very clear that renewal of
Finn’s policy was contingent on payment by May 1 and that Finn was given prior notice
twice of this due date. Another notice was given to Finn offering to reinstate the policy
so long as payment was received by May 18. Again, Finn failed to make timely payment.
Regarding Finn’s argument that he was not required to prepay the premium to secure
coverage, Dakota Fire cites the language of its automatic termination provision, which
states that a failure to pay a renewal premium when due results in a rejection of the offer
to renew. Because the invoice clearly stated payment was required by May 1, Dakota
Fire contends coverage expired at that time and, because Finn failed to pay the premium
to reinstate without a lapse in coverage, there was no policy in effect at the time of the
accident.
¶15 We conclude that Finn’s arguments are defeated by the plain language of the
notice documents and the statute. Finn’s attempt to splice the wording of § 33-23-214(3),
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MCA, so that his obligation to pay the noticed premium here is not included within an
“insured’s obligations in connection with the payment of premiums for the policy or the
renewal of the policy,” is unavailing. Clearly, it is included, which eliminates the 45-day
notice requirement for nonrenewal that is applicable in other contexts.
¶16 On March 16, EMC notified Finn of its intent to renew by sending him a renewal
policy and notifying him that he would be receiving an invoice. He received the
promised invoice on April 11, which again advised him to pay “at least the minimum due
to avoid cancellation of coverage.”2 Finn did not pay. Dakota Fire was then entitled to
cancel coverage under the terms of § 33-23-214(3), MCA, because Finn had “failed to
discharge” his obligation in “connection with the payment of premiums for . . . the
renewal of the policy.” Six days later, notice of the cancellation of coverage was
conveyed to Finn in a notice of expiration, wherein Dakota Fire unequivocally stated that
the policy had expired on May 1, but that coverage would be continued without
interruption if the premium due was received by “12:01 A.M. standard time on 5/18/12.”
Again, Finn failed to comply—payment was not received by that time and date. This was
not an issue of nonrenewal, because by then the policy had already been cancelled. No
link in this chain of events violated Montana law.
¶17 While it is true that Dakota Fire proceeded through this process on the assumption
that Finn would renew or reinstate the policy, and therefore sent a renewed policy and
2
In the March 16 notice, EMC advised Finn that “[f]ailure to pay the renewal premium amount
on or before the due date stated in the invoice will result in the cancellation of your insurance
policy.”
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notices to Finn and his loss payees, this was done as a service to Finn. Otherwise, Dakota
Fire could not have effectuated renewal of the policy and provided the new policy and
proof of renewal for Finn’s use by the date of renewal. However, Dakota Fire included
the necessary notices of nonrenewal and cancellation to effectuate termination of
coverage in the event the payment was ultimately not timely made.
¶18 Affirmed.
/S/ JIM RICE
We concur:
/S/ LAURIE McKINNON
/S/ BETH BAKER
/S/ PATRICIA COTTER
/S/ MICHAEL E WHEAT
/S/ JAMES JEREMIAH SHEA
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