Robertus v. Farmers Union Mutual Insurance

June 16 2008
DA 07-0076
IN THE SUPREME COURT OF THE STATE OF MONTANA
2008 MT 207DYLLON R. ROBERTUS,
Plaintiff and Appellant,
v.
FARMERS UNION MUTUAL INSURANCE COMPANY,
Defendant, Appellee, and Cross-Appellant.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and For the County of Yellowstone, Cause No. DV 05-0257
Honorable Gregory R. Todd, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Steven J. Harman and Donald L. Harris, Cozzens, Harman, Warren & Harris,
Billings, Montana
For Appellee:
Guy W. Rogers and Matthew I. Tourtlotte, Brown Law Firm, Billings,
Montana
Submitted on Briefs: February 13, 2008
Decided: June 16, 2008
Filed:
__________________________________________
Clerk
Justice Brian Morris delivered the Opinion of the Court.
¶1 Dyllon Robertus (Robertus) appeals from an order of the Thirteenth Judicial District,
Yellowstone County, denying his motion for summary judgment. Farmers Union Mutual
Insurance Company (Farmers Union) cross-appeals from the District Court’s judgment
following a jury trial. We reverse and remand for new trial.
¶2 Robertus presents the following issues for review:
¶3 Whether the District Court properly determined that Farmers Union effectively had
notified Robertus of a change in his insurance coverage.
¶4 Whether the District Court properly determined that the modified insurance policy
precluded Robertus from stacking his underinsured motorists (UIM) coverage.
¶5 Farmers Union presents the following issues for review:
¶6 Whether the District Court properly allowed Robertus to testify regarding a claim for
future lost earning capacity.
¶7 Whether the District Court properly instructed the jury on Robertus’s future economic
losses.
¶8 Whether the District Court properly allowed a mortgage banker to testify as a non-
expert regarding interest rates as they relate to determining the value of future economic
losses.
FACTUAL AND PROCEDURAL BACKGROUND
¶9 Robertus sustained serious injuries to his back in a car accident on December 12,
1997, when he was 15 years old. Robertus had been driving a pickup truck insured under a
2
Farmers Union policy issued to his parents. The driver of the other vehicle admitted
liability. The other driver’s insurer paid Robertus and his parents the liability policy’s
$50,000 limit. Robertus’s injuries have required ongoing medical treatment at a cost far in
excess of $50,000. Farmers Union agreed to pay up to $300,000 of UIM coverage.
¶10 Robertus’s parents purchased their Farmers Union policy in December 1994. The
parties renewed the policy the following December of each year leading up to the accident.
The policy covered the Robertus family’s seven vehicles. The policy specifically included
$300,000 uninsured motorists (UM) coverage and $300,000 UIM coverage. Farmers Union
charged the Robertuses separate premiums for UM/UIM coverage for each vehicle from
1994 to 1996. Farmers Union indicated the UM/UIM charges on the policy’s declarations
page. The declarations page listed each vehicle separately along with the UM/UIM coverage
limit and the specific amount of the premium for the listed vehicle. The declarations page
appeared as follows:
¶11 Farmers Union had taken notice of the trend in Montana toward allowing stacked
payments for UM/UIM coverage where the insured had paid separate premiums for multiple
vehicles. Farmers Union modified the way that it charged policy-holders for UM/UIM
coverage in 1996 in an attempt to avoid stacking of UM/UIM coverage. Farmers Union
changed the Robertuses’ UM/UIM coverage when the parties renewed the policy in
3
December 1996. Farmers Union modified the policy’s UM/UIM coverage to charge the
Robertuses a single premium for all seven of the Robertuses’ vehicles. The change
decreased the total amount that the Robertuses paid for UM/UIM coverage for the seven
vehicles from $199 to $116. Farmers Union intended that the modified policy would limit its
UM/UIM obligation to the Robertuses to $300,000 per occurrence.
¶12 Farmers Union did not send a separate notice of the change to the Robertuses. The
policy’s declarations page provided the only indication that Farmers Union had changed the
Robertuses UM/UIM coverage. The declarations page previously had listed each vehicle
along with the amount of UM/UIM coverage for that vehicle. Farmers Union simply
replaced the column showing the separate UM/UIM premium charged for each vehicle with
the word “included.” Farmers Union listed a total UM/UIM premium amount separately at
the bottom of the list. The new declarations page appeared as follows:
¶13 Robertus brought this action against Farmers Union on March 4, 2005, alleging that
Farmers Union had failed to pay to Robertus the full amount of UIM coverage required
under the policy. Robertus moved for partial summary judgment on the issue of coverage.
He argued that Farmers Union’s failure to notify him properly of the change in coverage
4
rendered the policy modification void pursuant to § 33-15-1106(1), MCA (1995), thereby
entitling him to up to $2.1 million in UIM coverage.
¶14 Farmers Union filed its own motion for summary judgment. Farmers Union asserted
that it effectively had prevented stacking under the policy by charging a single premium for
each vehicle under the Robertuses’ policy. Farmers Union contended that the decreased total
UIM coverage and the modified declarations page in the December 1996 policy constituted
sufficient notice to Robertus of the change in coverage.
¶15 The District Court decided that the modified policy excluded Robertus from receiving
stacked payments pursuant to Hardy v. Progressive Specialty Ins. Co., 2003 MT 85, ¶ 47,
315 Mont. 107, ¶ 47, 67 P.3d 892, ¶ 47, in light of the fact that the policy charged a single
premium for UM/UIM coverage for all seven of the Robertuses’ vehicles. The District Court
arrived at seemingly contradictory conclusions, however, regarding whether the policy
modification constituted a change requiring notice. The court determined first that the
modification constituted a change requiring notice pursuant to Thomas v. Northwestern Nat.
Ins. Co., 1998 MT 343, ¶ 19, 292 Mont. 357, ¶ 19, 973 P.2d 804, ¶ 19. By contrast, the
District Court determined that the modification did not constitute a change requiring notice
under § 33-15-1106(1), MCA (1995). The court concluded, in any event, that Farmers
Union had satisfied any statutory notice requirement because the decrease in total UM/UIM
premiums charged and the changed format of the UM/UIM declarations page should have
put the Robertuses on notice of the change in coverage.
5
¶16 The case proceeded to trial to determine the amount of compensatory damages to
which Robertus’s injuries entitled him. Robertus based his future lost wages claim on the
fact that his injuries caused his physical capacity to deteriorate and eventually would limit
his wage-earning abilities. Farmers Union submitted its first discovery request to Robertus
on May 4, 2005, including an interrogatory regarding future lost wages. Robertus responded
on June 2, 2005, that he could not provide an answer to this interrogatory without an expert
opinion. Robertus asserted that he would supplement his answer after consulting with an
expert.
¶17 Farmers Union submitted a second interrogatory on October 25, 2006, requesting
supplemental answers, including supplementation regarding Robertus’s answers to the
interrogatory regarding future lost wages. Robertus responded on November 22, 2006, more
than two months after the close of discovery and six months after the deadline to disclose
expert testimony. He reported that he earns $65 per hour as a welder, and that he would be
required to accept significantly less if his injuries required him to quit welding in favor of
teaching high school level industrial arts. Robertus did not elaborate on how he would
present evidence of lost wages. Farmers Union filed a motion in limine to prohibit Robertus
from presenting evidence regarding his claim for future lost earning capacity without expert
testimony. Farmers Union asserted that such testimony would be speculative and lack
foundation.
¶18 The District Court allowed Robertus to testify regarding future lost wages, but it
limited his testimony to “the amount of compensation he receives currently as a welder.”
6
The court determined that Robertus lacked the qualifications to testify as to future wages,
interest rates, or other financial projections. The court ordered Robertus to rely on other
sources for any evidence regarding future wage loss. Robertus filed a brief on January 13,
2007, three days before trial that announced his intention to testify regarding the average
wage for secondary school industrial arts teachers in Montana in order to prove future lost
wages. Farmers Union responded that the brief constituted an untimely discovery response
and that the proposed evidence regarding teacher salaries lacked foundation. Farmers Union
argued that Robertus’s dilatory discovery tactics severely impaired its ability to defend as
Farmers Union had not had the opportunity to prepare witnesses, expert or otherwise, to
rebut Robertus’s vocational claims.
¶19 The District Court nevertheless allowed Robertus to testify as to the amount of
compensation that he received as a welder pursuant to the court’s instructions. Robertus’s
counsel also questioned Robertus during trial about his knowledge of teacher salaries.
Farmers Union objected for lack of foundation, speculation, and late disclosure. Robertus
presented two documents not previously disclosed to the court to demonstrate that the
information Robertus intended to present constituted a matter of public record. The first
document, from the U.S. Department of Labor website, showed the average wage for
secondary school industrial arts teachers in Montana. The second document, the Billings
Public School District Master Agreement, showed the starting salary for a beginning teacher
with a bachelor’s degree and no experience. The District Court refused to allow Robertus to
testify as to the average wage for a secondary school industrial arts teacher in Montana as
7
this information was too vague. The District Court took judicial notice of the starting salary
for a beginning teacher with a bachelor’s degree and no experience, and allowed Robertus to
testify to this information.
¶20 The court settled jury instructions. Farmers Union objected to Robertus’s proposed
instructions regarding future lost earning capacity based upon lack of foundation, late notice,
and speculation. Farmers Union also objected to Robertus’s proposed instructions regarding
adjustment of future economic losses to present cash value based upon lack of foundation
absent expert testimony. The District Court determined that Robertus had presented enough
evidence about future earning capacity to the jury to warrant the instructions.
¶21 Robertus’s brother, a mortgage broker, testified regarding interest rates as they relate
to determining present value of future economic losses. Farmers Union objected on the basis
that Robertus had not disclosed his brother as an expert witness. The District Court allowed
Robertus’s brother to testify as a non-expert witness regarding a fair rate of return for a safe
investment.
¶22 The jury awarded Robertus $1,375,292. Farmers Union already voluntarily had paid
$220,422 to Robertus. The court previously had limited Farmers Union’s UIM coverage to
$300,000 in light of its determination that Farmers Union’s policy modification effectively
had avoided stacking of UIM coverages. The District Court ordered Farmers Union to pay
Robertus the remaining amount of $79,577.
STANDARD OF REVIEW
8
¶23 We review de novo a district court’s decision to grant summary judgment using the
same criteria applied by the district court under M. R. Civ. P. 56. Walters v. Luloff, 2008
MT 17, ¶ 17, 341 Mont. 158, ¶ 17, 176 P.3d 1034, ¶ 17. A district court properly grants a
motion for summary judgment when no genuine issue of material fact exists and the moving
party is entitled to judgment as a matter of law. Walters, ¶ 17. We review for abuse of
discretion a district court’s determination of the admissibility of the evidence. State v.
Roedel, 2007 MT 291, ¶ 35, 339 Mont. 489, ¶ 35, 171 P.3d 694, ¶ 35.
DISCUSSION
¶24 Whether the District Court properly determined that Farmers Union effectively had
notified Robertus of a change in his insurance coverage.
¶25 The District Court addressed the parties’ summary judgment motions in a 21-page
order and memorandum. The court, in its own words, “travel[ed] through the looking glass”
to address alternate and hypothetical bases for granting partial summary judgment to Farmers
Union, in addition to reaching dispositive issues. As such, its order and memorandum
reaches several different conclusions. We shall attempt to clarify.
¶26 Whether an insurer has provided adequate notice of a change in insurance coverage
requires a two-step analysis. Contrary to the District Court’s analysis we first must
determine whether the policy modification constituted a change in coverage requiring notice
under § 33-15-1106, MCA. We then must determine whether the insurer provided adequate
notice of the change in coverage. Thomas, ¶ 29.
I.
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¶27 Section 33-15-1106(1), MCA, governs an insurer’s duty to notify an insured of
certain policy changes. Section 33-15-1106(1), MCA (1995), the version of the statute
applicable to Robertus’s claim, provides in relevant part:
If an insurer offers or purports to renew a policy but on less favorable
terms, at a higher rate, or at a higher rating plan, the new terms, rate, or rating
plan take effect on the policy renewal date only if the insurer has mailed or
delivered notice of the new terms, rate, or rating plan to the insured at least 30
days before the expiration date.
Thomas also clarified that “when an insurer renews a previously issued policy, it has an
affirmative duty to provide adequate notice to the insured of changes in coverage.”
Thomas, ¶ 19.
¶28 The District Court considered both the 1995 version of the statute and Thomas when it
addressed whether Farmers Union effectively had modified Robertus’s UIM coverage in
December 1996. The District Court asserted that this Court did not prohibit anti-stacking
clauses for UIM coverage until 1998 when it rendered its second opinion in the dispute
between Farmers Alliance Mutual Insurance Company and Kristi Holeman. Farmers
Alliance Mut. Ins. Co. v. Holeman, 1998 MT 155, 289 Mont. 312, 961 P.2d 114 (Holeman
II). The court thus reasoned that Montana law permitted stacking clauses for UIM coverage
at the time of Farmers Union’s 1996 modification. The court nevertheless determined that
the modification actually constituted a change in coverage because Dempsey v. Allstate Ins.
Co., 2004 MT 391, ¶ 37, 325 Mont. 207, ¶ 37, 104 P.3d 483, ¶ 37, had rendered retroactive
the prohibition on anti-stacking for UIM coverage announced in Holeman II.
10
¶29 The District Court next discussed whether the modified UIM premium charges
constituted less favorable terms, a higher rate, or a higher rating plan under § 33-15-1106(1),
MCA (1995). The court reasoned that the modification only could be considered to have
been on less favorable terms if it had been certain in December 1996 that Montana law
would allow stacking of UIM coverage. The court conceded that the modification
potentially would have had the effect of reducing Robertus’s UIM coverage from $2.1
million to $300,000.
¶30 The court examined our stacking precedent and again determined that Montana did
not recognize stacking of UIM coverage until January 1998 when this Court announced its
decision in Holeman II. The District Court decided that the modification did not present
Robertus with less favorable terms when Montana law did not entitle Robertus to stack UIM
payments, either before or after the modification. The District Court concluded therefore that
the modification did not constitute less favorable terms that would require notice under § 33-
15-1106(1), MCA (1995).
¶31 The District Court nevertheless analyzed separately the adequacy of the notice
pursuant to Thomas’s requirement and the statute’s requirement. It is true that Thomas, in
part, analyzes an insurer’s duty to notify under the common law. Thomas, ¶¶ 24-27. Thomas
provides no separate basis or separate analysis, however, for the requirement that an insurer
must provide the insured with notice of changes in coverage. The Court in Thomas rejected
the notion that an insured’s duty to read the insurance policy required a page by page
inspection as evidenced by the fact that “the requirements of § 33-15-1106, MCA (1991),
11
suggest otherwise.” Thomas, ¶ 28. The Court’s conclusion that “the insurer has the burden
to prove that it provided adequate notice of policy changes to its insured” emanated from this
statutory basis. Thomas, ¶ 29. Section 33-15-1106, MCA (1991), set forth an insurer’s duty
to provide notice of policy changes. Thomas provides additional analysis of this statutory
duty.
¶32 Robertus asserts that this Court has upheld the public policy that “an insurer may not
place in an insurance policy a provision that defeats coverage” in the context of UIM
coverage since well before 1996. E.g. Bennett v. State Farm Mut. Auto. Ins. Co., 261 Mont.
386, 389, 862 P.2d 1146, 1148 (1993). This Court considered in Bennett, upon certification
from the Ninth Circuit Court of Appeals, whether Montana public policy rendered void a
clause that prohibited stacking of UIM coverage provided by separate policies. Bennett, 261
Mont. at 388, 862 P.2d at 1147.
¶33 Bennett asserted that she was entitled to stack UIM coverage for two separate State
Farm insurance policies that covered two different vehicles after an underinsured motorist
struck and injured her. Both policies limited Bennett’s UIM coverage to $100,000 per
person and $300,000 per accident. Bennett, 261 Mont. at 388, 862 P.2d at 1147-48. The
Court affirmed longstanding Montana public policy that “an insurer may not place in an
insurance policy a provision that defeats coverage for which the insurer has received
valuable consideration.” Bennett, 261 Mont. at 389, 862 P.2d at 1148. The Court concluded
that Montana public policy renders void an insurance clause that prohibits stacking of UIM
coverage provided by separate policies from the same insurer. Bennett, 261 Mont. at 390,
12
862 P.2d at 1149. Robertus argues, therefore, that the Court’s decision in Holeman II plays
no part in the question of whether Montana law allowed stacked UIM coverage at the time of
his accident in December 1996.
¶34 Farmers Union counters that the District Court correctly concluded that Montana law
did not prohibit anti-stacking provisions for UIM coverage until the Court decided Holeman
II in 1998. Farmers Union points to the statement in Farmers Alliance Mut. Ins. Co. v.
Holeman, 278 Mont. 274, 924 P.2d 1315, (1996) (Holeman I), that the legislature had left to
policy interpretation the question of whether UIM coverage can be stacked. Farmers Union
further argues that the Court in Holeman II distinguished Bennett on the grounds that Bennett
involved two separate insurance policies. We disagree.
¶35 The Court decided Holeman I on the issue of whether the statutory prohibition against
stacking of required coverages pursuant to § 33-23-203, MCA (1995), precluded stacking of
UIM coverage. Holeman I, 278 Mont. at 275-76, 924 P.2d at 1316-17. Holman I did not
discuss whether Montana law otherwise prohibited anti-stacking provisions for UIM
coverage. The Court’s comments regarding the legislature’s intent to leave that question to
policy interpretation refers merely to the longstanding public policy affirmed in Bennett.
Holeman I, 287 Mont. at 281, 924 P.2d at 1320.
¶36 Holeman II also did not announce a new rule when it concluded that insurers may not
prohibit stacking of UIM coverages where one policy covered multiple vehicles. Holeman
II, ¶ 47. Farmers Union asserts that this holding constituted a new rule, and not a
continuation of Bennett’s statement of Montana public policy, as evidenced by the fact that
13
Bennett concerned stacking of UIM coverages under more than one policy. Although the
Court in Holeman II stated that Bennett was “arguably distinguishable” on its facts, the
reasoning of Bennett nevertheless governed its analysis. Holeman II, ¶ 43. The Court
rejected as immaterial the fact that two separate policies were at issue in Bennett. Holeman
II, ¶ 43. The Court concluded that “the overriding public policy considerations upon which
we relied in Bennett mandate that Holeman be permitted to stack the [UIM] coverages in this
case.” Holeman II, ¶ 44. The Court affirmed Bennett’s rule; it did not clearly distinguish
Bennett. Holeman II, ¶¶ 43-44.
¶37 Bennett affirmed Montana public policy that this Court will not enforce an anti-
stacking provision regarding UIM coverage because “an insurer may not place in an
insurance policy a provision that defeats coverage for which the insurer has received
valuable consideration.” Bennett, 261 Mont. at 389, 862 P.2d at 1148. Holeman I and
Holeman II reinforced that public policy. The factual distinctions between Bennett and
Holeman I and II did not alter this basic public policy. This basic public policy existed and
governed insurance policies like the Robertuses’ before this Court decided Bennett in 1993,
and certainly in 1996, when Farmers Union modified the Robertuses’ insurance policy.
Bennett, 261 Mont. at 388-89, 862 P.2d at 1148.
¶38 Robertus would have been entitled to stack seven UIM coverages for which he paid
separate premiums under the pre-1996 policy according to longstanding Montana public
policy. Bennett, 261 Mont. at 388-89, 862 P.2d at 1148. Stacking of the Robertuses’ seven
UIM coverages would have obligated Farmers Union to pay up to $2.1 million in UIM
14
coverage. Farmers Union admits that it intended to avoid that stacking when it modified the
policy in 1996. Avoiding stacking of the seven UIM coverages would have limited Farmers
Union’s total financial obligation to $300,000. A policy modification intended to reduce the
amount of UIM coverage to which Robertus was entitled by nearly $2 million dollars
constitutes less favorable terms that required Farmers Union to provide notice under § 33-15-
1106(1), MCA (1995).
II.
¶39 We next must analyze the adequacy of the notice that Farmers Union provided
Robertus. The District Court concluded that the changed UIM premium and the declarations
page constituted adequate notice. The court contrasted the policy change from the one in
Thomas. The Court noted that the modification in Thomas represented a subtle change to an
obscure exclusion found within the main body of the policy. Thomas, ¶ 28. The District
Court relied on the fact that the Court emphasized the obscurity of the policy modification in
Thomas by noting that it was not of a kind that could be revealed on the declarations page or
the forms and exclusions page. Thomas, ¶ 28.
¶40 The District Court also attempted to distinguish Thomas by noting that the UM/UIM
modification accompanied other obvious changes. The court pointed to the fact that
UM/UIM payments decreased from $199 to $116, and that the Robertuses’ premium for the
entire policy increased from $2,532 to $2,944. The District Court stated that it would “take
judicial notice that a $400+ increase in ones [sic] insurance premiums from year to year is
usually enough to cause one to look at the declarations page to see why.” The District Court
15
further deemed it to be reasonable to expect the Robertuses to have noticed such changes to
their UM/UIM coverage.
¶41 Robertus argues that the District Court improperly has placed upon an insured the
burden of “figuring out” that a modification to the policy exists. Robertus cites Montana
cases interpreting an earlier statutory duty to notify for the proposition that Montana law
requires more notice, including, in one instance, a separate, written summary of policy
changes. Home Insurance Company v. Pinski Bros., Inc., 156 Mont. 246, 257, 479 P.2d 274,
280 (1971); Fassio v. Montana Physicians’ Service, 170 Mont. 320, 327-28, 553 P.2d 998,
1001-02 (1976). Robertus also reasserts Thomas’s rule that “when an insurer renews a
previously issued policy, it has an affirmative duty to provide adequate notice to the insured
of the changes in coverage.” Thomas, ¶ 19.
¶42 Thomas considered whether a common law principle obligating an insured to read and
examine the insurance policy tempers the insurer’s duty to notify. Thomas, ¶ 26. The Court
affirmed that “the extent of an insured’s obligation to read the policy depends upon what is
reasonable under the facts and circumstances of each case.” Thomas, ¶ 27 (citing Fillinger v.
Northwestern, 283 Mont. 71, 77, 938 P.2d 1347, 1351-52 (1997)). The Court determined
that an insured does not have an absolute obligation to read a renewed insurance policy page
by page to discover policy changes. Thomas, ¶ 28. The Court concluded that the statute
instead imposed upon the insurer the burden to prove that it had provided to its insured
adequate, affirmative notice of policy changes. Thomas, ¶¶ 25, 29.
16
¶43 Farmers Union argues that the District Court correctly distinguished Thomas based
upon the nature of the modification at issue. The Court in Thomas stated that “a fair
comparison of the policies . . . would reveal no significant changes in either the declaration
page or the second page which scheduled the forms and exclusions.” Thomas, ¶ 28. The
District Court determined, and Farmers Union argues on appeal, that, here, by contrast, the
change itself should have put the Robertuses on notice to an extent that relieves the insurer of
providing additional notification.
¶44 We refuse to interpret Thomas so narrowly. The Court cited Fillinger for the
proposition that “the extent of an insured’s obligation to read the policy depends upon what
is reasonable under the facts and circumstances of each case.” Thomas, ¶ 27. Fillinger
determined that the facts and circumstances include the nature of the relationship between
the parties. Fillinger, 283 Mont. at 77-78, 938 P.2d at 1351-52. The relationship involves
whether the insured is an “‘unsophisticated individual[] who know[s] nothing about
insurance,’” an “‘experienced business person[] knowledgable about insurance,’” or a “‘large
corporation[] with batteries of lawyers.’” This reasoning also considers the complexity of
the provision at issue. Fillinger, 283 Mont. at 78, 938 P.2d at 1352 (quoting Martini v.
Beaverton Ins. Agency, Inc., 838 P.2d 1061, 1067 (Ore. 1992)).
¶45 The modification to the Robertuses’ policy appeared on the declarations page and
accompanied a decrease in the amount that Farmers Union charged for UIM coverage and a
$400 increase in the total premium. Farmers Union did not bury the modification deep
within the policy. The modification cannot be considered, however, a simple, easy concept
17
to understand. To the contrary, the modification concerned stacking of UIM coverage for
multiple vehicles covered under a single policy. Nothing in the record indicates that
Robertus and his parents are experienced business people with knowledge of insurance, or a
large corporation with batteries of lawyers. Fillinger, 283 Mont. at 78, 938 P.2d at 1352.
The District Court unreasonably expected the Robertuses to grasp the significance of the
policy changes based solely on the declarations page and the changed cost of the overall
premium.
¶46 Section 33-15-1106(1), MCA (1995), imposed upon Farmers Union an affirmative
duty to provide the Robertuses with adequate notice of a change in coverage that resulted in
terms less favorable to the insured. Thomas, ¶¶ 28-29. The modified declarations page and
modified amount that Farmers Union charged for the policy, standing alone, did not
constitute adequate notice based upon the facts and circumstances of this case. We conclude
that § 33-15-1106(1), MCA (1995), rendered ineffective the modification inserted into the
Robertus’s renewed insurance policy in December 1996 based upon Farmers Union’s failure
to provide adequate notice pursuant to Montana law. Thomas, ¶¶ 28-29. We need not
address whether the District Court properly determined that the modified insurance policy
precluded Robertus from stacking his UIM coverage in light of the fact that we determine
that Farmers Union did not effectively modify Robertus’s UIM coverage.
¶47 Whether the District Court properly allowed Robertus to testify regarding a claim for
future lost earning capacity.
18
¶48 Farmers Union claims that Robertus’s late discovery responses resulted in substantial
prejudice to its defense. Farmers Union asserts that it could not reach a settlement as it had
no opportunity to evaluate Robertus’s claim for future lost earning capacity. Farmers Union
points out that it was unable to assess Robertus’s future lost wages claim, and, therefore, it
could not conduct further discovery and obtain an expert to rebut Robertus’s testimony.
Farmers Union asserts that Robertus’s dilatory discovery tactics amount to a blatant abuse of
discovery.
¶49 The Court in Morris v. Big Sky Thoroughbred Farms, 1998 MT 229, 291 Mont. 32,
965 P.2d 890, concluded that the plaintiffs had abused the discovery process when they
repeatedly had evaded a request for an admission that a civil rights claim did not apply to
one of the defendants. Morris, ¶¶ 2-3, 16. The Court upheld the district court’s imposition
of discovery sanctions against the plaintiffs after two months had passed since the
defendants’ final request for admission. Morris, ¶¶ 4, 18. The Court concluded that the
district court appropriately had sanctioned the plaintiffs for abusing the discovery process
whether the plaintiffs’ discovery deficiencies resulted from tactical trickery or mere
carelessness. Morris, ¶ 16.
¶50 Discovery serves to “promote the ascertainment of truth and the ultimate disposition
of the lawsuit in accordance therewith . . . [by] assuring the mutual knowledge of all relevant
facts gathered by both parties which are essential to proper litigation.” Massaro v. Dunham,
184 Mont. 400, 405, 603 P.2d 249, 252 (1979) (citing Hickman v. Taylor, 329 U.S. 495, 507,
67 S. Ct. 385, 392 (1947)). Adherence to discovery and pre-trial procedures produces a
19
“‘fair contest with the basic issues and facts disclosed to the fullest practicable extent.’”
Richardson v. State, 2006 MT 43, ¶ 22, 331 Mont. 231, ¶ 22, 130 P.3d 634, ¶ 22 (quoting
United States v. Procter & Gamble, 356 U.S. 677, 682, 78 S. Ct. 983, 986-87 (1958)). This
Court follows “a strict policy that dilatory discovery actions shall not be dealt with
leniently.” Morris, ¶ 13 (internal citation omitted).
¶51 Robertus provided an incomplete answer to Farmers Union’s May 4, 2005, request for
information regarding his claim for future lost wages. Robertus failed to consult an expert
and to supplement his answer as he had promised in his initial response. Robertus finally
answered Farmers Union’s second interrogatory requesting supplemental answers relating to
future lost wages on November 22, 2006, more than two months after the close of discovery
and six months after the deadline to disclose expert testimony. Robertus’s answer discussed
future lost wages, but it failed to elaborate on how he would present evidence of future lost
wages at trial. Robertus did not disclose his intention to testify himself regarding future lost
wages until three days before the start of trial.
¶52 Robertus’s conduct amounted to dilatory discovery tactics. This conduct prevented
Farmers Union from assessing the merits of the Robertus’s case. Farmers Union could not
prepare adequately its defense, could not conduct follow-up discovery, and could not obtain
its own expert to rebut Robertus’s testimony regarding future lost wages in time for trial.
The District Court abused its discretion when it allowed Robertus to testify regarding his
claim for future lost earning capacity. Morris, ¶ 18; Roedel, ¶ 35. We remand for a new trial
20
on damages in light of the prejudice that Farmers Union suffered. We need not address
Farmers Union’s two additional cross-appeal issues for this reason.
¶53 We reverse and remand for further proceedings consistent with this opinion.
/S/ BRIAN MORRIS
We Concur:
/S/ KARLA M. GRAY
/S/ JAMES C. NELSON
/S/ PATRICIA COTTER
/S/ JOHN WARNER
Justice W. William Leaphart, dissenting in part and concurring in part.
¶54 I dissent as to the question of whether the District Court properly allowed Robertus to
testify regarding a claim for future lost earning capacity. I concur in the Court’s analysis of
the other issues.
¶55 Robertus’s actions in the discovery phase of the litigation do not rise to the level of
abuse discussed in Richardson v. State, 2006 MT 43, 331 Mont. 231, 130 P.3d 634.
Robertus eventually provided responses to Farmers Union’s specific request for
supplementation, including information about his new full time job. Contrary to Richardson,
Farmers Union did not seek a motion to compel; Robertus did not fail to respond to a court
order. Richardson, ¶¶ 7, 13. Farmers Union did not move to seek clarification of Robertus’s
21
answers as it could have under M. R. Civ. P. 37(a)(2), and (3) nor did it ask that discovery be
reopened to allow further depositions or ask that the trial be postponed.
¶56 I cannot conclude that the District Court abused its discretion when it allowed
Robertus to testify as to future lost earnings despite his late discovery responses. State v.
Roedel, 2007 MT 291, ¶ 35, 339 Mont. 489, ¶ 35, 171 P.3d 694, ¶ 35.
/S/ W. WILLIAM LEAPHART
Justice Jim Rice, concurring in part and dissenting in part.
¶57 I concur with the Court’s resolution of the cross appeal, but dissent from the Court’s
reversal of the District Court on the appeal issues. I do not believe that Farmers Union was
required to provide notice of the 1996 change in the method it calculated Robertuses’
premium for UIM coverage.
¶58 The Court reasons that Holeman II “did not announce a new rule” permitting stacking
of single-policy coverages because previous, generalized public policy statements against
provisions which “defeat[ed] coverage for which the insurer has received valuable
consideration,” ¶ 36, were sufficient enough to communicate the specific message that anti-
stacking provisions would not be enforced. According to the Court, even though the
Robertuses’ pre-1996 policy contained an explicit anti-stacking provision, “Robertus would
have been able to stack seven UIM coverages for which he paid separate premiums under the
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pre-1996 policy,” ¶ 38, despite the fact that no case or statute then permitted Robertus to
ignore the anti-staking provision of his single policy. In my view, this is not a fair rendering
of the law as it stood in 1996 and places a divination requirement upon Farmers Union which
is unreasonable.
¶59 The pre-1996 policy contained express anti-stacking language notifying the Robertus
family that only one $300,000 payment was available under their single Farmers Union
policy. At the time Farmers Union changed its pricing structure to charge a single premium
for UIM coverage on all vehicles, Montana law had not prohibited this anti-stacking
provision. Bennett, decided in 1993, did not apply to this policy. Although we offered the
observation eleven years later in Dempsey that anti-stacking policies had been “discouraged”
in Bennett, the actual holding in Bennett permitted stacking of two separate policies for
which separate premiums were paid. Bennett, 261 Mont. at 390, 862 P.2d at 1149 (“Bennett
could reasonably expect to recover damages up to the limit of both policies under which she
was an insured and for which separate premiums had been paid.”) Beyond that, Bennett’s
general statement of public policy, that “an insurer may not place in an insurance policy a
provision which defeats coverage,” Bennett, 261 Mont. at 389, 862 P.2d at 1148, was
certainly not a broad prohibition against all anti-stacking provisions. Indeed, two years later,
we rejected stacking of coverages in Chilberg v. Rose, 273 Mont. 414, 417, 903 P.2d 1377,
1379 (1995), because the injured party was a passenger in a vehicle owned by an individual
with three separate policies covering three separate vehicles. Holeman I, decided in 1996,
merely determined that § 33-23-203, MCA, did not prohibit stacking of UIM coverages.
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Holeman I did not hold that UIM coverages could be stacked if separate premiums were
charged for each vehicle and, as the Court correctly observes, “Holeman I did not discuss
whether Montana law otherwise prohibited anti-stacking provisions for UIM coverage.” ¶
35. Nonetheless, the Court concludes that a clear rule had somehow emerged from this
uncertain precedent so that Holeman II “did not announce a new rule.” I must disagree.
There remained uncertainty in the law which generated considerable litigation over this
issue. It was not until 1998, when Holeman II held that UIM coverages could be stacked
because “separate premiums were charged for coverage of each motor vehicle listed within
the policy,” Holeman II, ¶ 47, that the rule applicable to this case emerged. That was after
Farmers Union had changed the premium structure of the Robertus policy.
¶60 The Court’s decision begs an interesting practical question. Given the facial validity
of the pre-1996 policy under then-existing law, just what notice would Farmers Union have
been required to give of the policy change at that time? Are insurance companies really
required to give notice that they are revising a policy in a manner which does not change
existing coverages, but so that, in the event the law changes in the future, the coverages in
the policy will remain the same as currently provided? Are they supposed to notify insureds
of policy changes made for the purpose of confirming an existing belief that an explicit
provision of the policy which requires payment of the UIM limits only once is legal?
Neither statute nor caselaw require that insurers give notice of such “nonchanges” in policy
coverages for the purpose of satisfying potential future legal developments. Here, the Court
takes the easy way out—it declares that Farmers Union’s notification of the change in
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premium was “inadequate,” but offers not insight regarding how Farmers Union could have
provided “adequate” notice under the law as it existed in 1996.
¶61 Farmers Union should not be held retroactively liable for its failure to comply with a
rule pronounced subsequent to its actions in 1996. Although Dempsey made the stacking
rule retroactive, the purpose of retroactivity is to apply the rule to pending cases—it does not
require that Farmers Union bear responsibility for a rule announced years after it acted. I
would affirm the District Court.
/S/ JIM RICE
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