Court: Court of Appeals for the Ninth Circuit; August 15, 2003; Federal Appellate Court
Tammy Burgett appeals a directed verdict favoring Safeco National Insurance Company, claiming violations of Montana's Unfair Trade Practices Act related to an advance pay agreement for her medical expenses following an automobile accident involving a Safeco-insured driver, Alice Gilbert. Burgett also contests the denial of her Motion for Class Certification and seeks referral of specific questions to the Montana Supreme Court. The court affirms the denial of the class certification but reverses the directed verdict on Burgett's claims under Montana Code Annotated sections 33-18-201(6) and (13), remanding for a determination of her individual damages. The court upholds the directed verdict on Burgett's punitive damages claim and denies her request for certification to the state Supreme Court.
The incident occurred on October 14, 1997, when Gilbert collided with Burgett's vehicle, leading to medical expenses that Burgett sought from Safeco. After receiving a request for payment in February 1998, Safeco sent an advance pay agreement, which Burgett refused to sign. Safeco later made a partial payment of $2,579.49 for Burgett's medical costs but disputed an additional $648.00 for later treatment, claiming the October 1998 settlement of $12,000 with Gilbert encompassed all medical expenses.
The court reviews directed verdicts de novo, affirming that such a verdict is appropriate when evidence supports only one reasonable conclusion. It references a recent Montana Supreme Court ruling establishing that insurers must pay undisputed medical expenses up to policy limits without requiring a settlement agreement. The court finds that Safeco's delayed compliance, after failing to secure a signed agreement, constitutes a violation of the Unfair Trade Practices Act, as asserted by Burgett.
Safeco's attempt to secure a settlement agreement from Burgett before paying her claims may breach the obligation to attempt in good faith to settle claims promptly and equitably, as outlined in Montana Code Annotated 33-18-201(6) and (13). The Montana Supreme Court's decision in Shilhanek v. D-2 Trucking clarifies that whether an insurer had a reasonable basis for its actions is a factual question for a jury. Consequently, there is sufficient evidence to support a claim against Safeco under these statutes, necessitating a jury trial to assess whether Safeco had a reasonable basis for its actions. If a violation is found, Burgett must prove actual damages resulting from this breach.
Furthermore, the court acknowledges that a claimant can pursue damages for an insurer's violation of specific subsections of 33-18-201. The court also references Ridley, which highlights the severe impact of unpaid medical expenses on individuals and families. On remand, the court will evaluate Burgett's evidence of actual damages. The issue of whether the violation constitutes 'actual malice' for seeking punitive damages under Mont. Code Ann. 27-1-221 is addressed, allowing for exemplary damages but not mandating them in all violation cases. However, the court finds insufficient evidence of actual fraud or malice to support punitive damages and thus affirms the district court's decision against such awards.
Additionally, the district court's denial of Burgett's class certification is upheld, as the evidence indicated only seven potential class members, making joinder practicable. The court also determined that Burgett did not satisfy the commonality and typicality requirements under Federal Rule of Civil Procedure 23, leading to the affirmation of the district court's discretion in denying class certification.
Burgett's request to refer certain questions to the Montana Supreme Court is denied. The Montana Supreme Court's recent decision in Shilhanek clarified that its 1997 Ridley decision elaborated on insurers' obligations, specifically indicating that insurers are responsible for paying only undisputed medical expenses for injured third parties. The court's ruling is affirmed in part, reversed in part, and remanded to the district court for a new trial. The document notes that it is not suitable for publication and cannot be cited in this circuit except under Ninth Circuit Rule 36-3. A form sent by Safeco to Burgett indicated that any payment would be made under the terms of the agreement, which limits Burgett's claim against Safeco to the available liability insurance amount. Punitive damages may be awarded if a defendant is found guilty of actual fraud or malice, defined under Montana law as actions taken with knowledge or disregard for the high probability of injury to the plaintiff. The permissive language in the statute indicates that a violation does not automatically result in punitive damages. As a Montana statute already addresses Burgett’s question, there is no need to certify it to the Montana Supreme Court.
