Ensey v. Colorado Casualty

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No. 00-491
IN THE SUPREME COURT OF THE STATE OF MONTANA
2001 MT 152DAN ENSEY,
Plaintiff and Appellant,
v.
COLORADO CASUALTY, a
Colorado Corporation,
Defendant and Respondent.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Susan P. Watters, Judge presiding.
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COUNSEL OF RECORD:
For Appellant:
Michael K. Rapkoch, Felt, Martin, Frazier, Jacobs & Rapkoch, P.C., Billings, Montana
For Respondent:
James R. Halverson, Christie L. Hobbs, Herndon, Sweeney & Halverson, P.C., Billings, Montana
Submitted on Briefs: May 31, 2001
Decided: August 9, 2001
Filed:
__________________________________________
Clerk
Justice Jim Regnier delivered the Opinion of the Court.
1. ¶Dan Ensey appeals from orders issued by the Thirteenth Judicial District Court,
Yellowstone County, dismissing his claim against Colorado Casualty for advance
medical payments and living expenses. One issue is dispositive of Ensey's appeal:
Whether the District Court correctly determined that Colorado Casualty provided
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Ensey with a reasonable explanation for its denial of his claim for advance
payments. We affirm.
BACKGROUND
1. ¶On October 14, 1999, Ensey, an independent drywall contractor, fell from a tripod
ladder while working for Bakken Drywall at a construction site in Billings,
Montana. Shortly thereafter, Ensey, through counsel, sent a letter to Bakken Drywall
informing it of his condition and requesting that Bakken Drywall notify its insurers
of his claim. Colorado Casualty, Bakken Drywall's insurer, sent a letter to Ensey's
counsel indicating that it was performing an in-depth investigation of Ensey's claim.
2. ¶On January 21, 2000, Ensey sent a demand letter to Colorado Casualty requesting
advance payments of lost earnings and medical expenses. Ensey contended that
Colorado Casualty's liability for these damages was reasonably clear because its
insured, Bakken Drywall, breached its duty to provide safe scaffolding equipment.
In his letter, Ensey described the accident as follows: Bakken Drywall had provided
him with a Perry scaffold during the first two days of the job. On the day of his
injury, two other persons working for Bakken Drywall took the Perry scaffold which
he had been using and replaced it with two sawhorses. The time came when Ensey
needed to reach higher in order to complete his work. However, despite numerous
calls to Bakken, no appropriate replacement scaffold was supplied. Ensey used the
only available means to reach the area where he needed to work, a ladder owned by
ID Corporation. Ensey was on the second to the top rung when the ladder walked
out from underneath him causing him to fall and sustain serious injuries.
3. ¶On February 1, 2000, attorney James R. Halverson sent a letter to Ensey's counsel
stating that he had been retained by Colorado Casualty to represent the interest of
Bakken Drywall and that Ensey's demand letter had been referred to him for a
response. On March 27, 2000, Halverson informed Ensey that Bakken Drywall was
declining his request for advance payments because liability was not reasonably
clear. Halverson stated that his investigation indicated that there were multiple safe
devices available and that Mr. Ensey personally chose the ladder he used over the
other equipment that was available.
4. ¶On April 10, 2000, Ensey filed a complaint against Colorado Casualty. Ensey
claimed that he was entitled to advance payments of lost wages and medical
expenses prior to a final settlement of all of his claims pursuant to the Unfair Trade
Practices Act. Ensey claimed that Colorado Casualty had not responded to his
demand letter and sought a declaration that he was entitled to advance payments, an
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injunction compelling Colorado Casualty to make such payments, and damages. On
April 12, 2000, Ensey filed a motion for a temporary restraining order. The District
Court granted Ensey's motion and ordered Colorado Casualty to appear and show
cause why a preliminary injunction requiring advance payment of living and
medical expenses should not be granted. Upon motion by Colorado Casualty, the
District Court subsequently dissolved its temporary restraining order.
5. ¶The court held a hearing on Ensey's request for a preliminary injunction on April
25, 2000. On May 3, 2000, the court issued an order denying Ensey's preliminary
injunction. The court concluded that Ensey was not entitled to advance payments
because liability was not reasonably clear, noting that Colorado Casualty had
provided two affidavits from Ensey's co-workers which stated that other scaffolding
and equipment was available. The court determined that these affidavits created an
issue of fact with regard to Colorado Casualty's liability. The court further
determined that Colorado Casualty provided a reasonable explanation for its denial
of advance payments. Lastly, the court concluded that Ensey's contention that
Colorado Casualty did not respond to his demand letter was "disingenuous, at best."
As a result, the court determined that Ensey did not have a cause of action and
granted summary judgment in favor of Colorado Casualty. Ensey appeals.
STANDARD OF REVIEW
1. ¶We review a district court order granting summary judgment de novo applying the
same evaluation as the district court pursuant to Rule 56, M.R.Civ.P. Bruner v.
Yellowstone County (1995), 272 Mont. 261, 264, 900 P.2d 901, 903. In Bruner, we
set forth our inquiry:
The movant must demonstrate that no genuine issues of material fact exist. Once this has
been accomplished, the burden then shifts to the non-moving party to prove, by more than
mere denial and speculation, that a genuine issue does exist. Having determined that
genuine issues of fact do not exist, the court must then determine whether the moving
party is entitled to judgment as a matter of law. We review the legal determinations made
by a district court as to whether the court erred.
Bruner, 272 Mont. at 264-65, 900 P.2d at 903 (citations omitted).
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DISCUSSION
1. ¶Did the District Court err when it determined that Colorado Casualty provided a
reasonable explanation for denying Ensey's claim?
2. ¶The Unfair Trade Practices Act provides that no person may "fail to promptly
provide a reasonable explanation of the basis in the insurance policy in relation to
the facts or applicable law for denial of a claim or for the offer of a compromise
settlement." Section 33-18-201(14), MCA. The District Court concluded that
Colorado Casualty complied with its duty to provide Ensey with a reasonable
explanation for the denial of his claim through Halverson's letter dated March 27,
2000. In this letter, Halverson informed Ensey that Bakken Drywall was declining
his request for advance payments because liability was not reasonably clear.
Halverson stated that his investigation indicated that there were multiple safe
devices available and that it was Mr. Ensey's personal choice to choose a ladder
over other available equipment.
3. ¶Ensey contends that Colorado Casualty completely failed to respond to his demand
for advance payments, let alone promptly provide a reasonable explanation for its
denial of his claim. Ensey argues that the March 27, 2000, letter from Halverson is
not evidence that Colorado Casualty complied with its duty because the letter was
from the insured, Bakken Drywall, and not the insurer, Colorado Casualty. Ensey
maintains that it would subvert the policy of the Unfair Trade Practices Act to let an
insured deny advance payments because the insurer's duty to defend the insured
could cause the insurer to assert that liability was not reasonably clear, even though
the insurer has determined that there is no defense.
4. ¶The duties created by § 33-18-201, MCA, are duties clearly owed by the insurer
and not the insured. Title 33, Chapter 18, Part 2 of the Montana Code Annotated is
entitled "Insurer's Relations with Insured and Claimant." (Emphasis added.) We
believe that in the instant case, however, Halverson's letter dated March 27, 2000, is
sufficient to be considered a response from the insurer. In a letter dated February 1,
2000, Halverson informed Ensey that he had been retained by Colorado Casualty to
represent the interest of Bakken Drywall, that Ensey's demand letter had been
referred to him for a response, and that he would be reviewing the file and
responding to Ensey's demand shortly. Ensey was well apprised that Colorado
Casualty's response to his demand was being handled by Halverson.
5. ¶Given Colorado Casualty's notice to Ensey that it was responding through
Halverson, the real issue is whether Halverson's letter contained an adequate
response. In this regard, Ensey contends that Halverson's March 27, 2000, letter was
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insufficiently detailed to be considered a reasonable explanation of Colorado
Casualty's denial of his claim. Ensey argues that Halverson's response was
conclusory in that it failed to identify other available safety devices, failed to
explain how those devices could have provided for Ensey's safety, and failed to
explain how Bakken Drywall satisfied its duties.
6. ¶Colorado Casualty responds that it provided a reasonable explanation for why it
concluded that liability was not reasonably clear. Colorado Casualty notes that
Ensey claimed liability was clear because no appropriate scaffold was supplied thus
forcing him to use an unsafe ladder. It contends that Halverson's letter to Ensey
directly responded to Ensey's claim of liability by informing Ensey that the
investigation indicated that there were multiple safe devices available to perform the
work tasks at hand and that it was Ensey's personal choice to choose the ladder he
used over the other available equipment.
7. ¶Halverson's letter dated March 27, 2000, provided, in relevant part:
Bakken Drywall respectfully declines your request for advance payments because liability
is not reasonably clear. Our investigation indicates that there were multiple safe devices
available to perform the work tasks at hand. It was Mr. Ensey's personal choice to choose
a ladder over the other equipment, [sic] that was available. If there are persons other than
Mr. Ensey who will support his position, please let us know so we may speak with them.
Again, thanks for allowing the additional time to respond.
1. ¶We believe that Colorado Casualty performed its duty to provide Ensey with a
reasonable explanation of its denial of Ensey's claim. Colorado Casualty informed
Ensey of the legal basis for its denial, namely that liability was not reasonably clear.
It also provided Ensey with the factual basis for its conclusion that liability was not
reasonably clear, informing Ensey that its investigation had revealed that other
appropriate devices were available to safely perform the work at hand but that Ensey
chose not to use them. This is not a general denial. Colorado Casualty promptly
informed Ensey that it was denying his claim and provided the specific reason for its
denial. Section 33-18-201(14), MCA, requires nothing more. Therefore, we
conclude that the District Court correctly determined that Ensey was not entitled to a
preliminary injunction or a declaratory judgment on the basis that Colorado
Casualty had failed to comply with its duty to provide a reasonable explanation of
its denial of Ensey's claim.
2. ¶Affirmed.
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/S/ JIM REGNIER
We Concur:
/S/ KARLA M. GRAY
/S/ JAMES C. NELSON
/S/ PATRICIA COTTER
/S/ TERRY N. TRIEWEILER
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