Plaintiff Robert Mears filed a claim for policy benefits with his insurer, Defendant Safeco Insurance Company of Illinois ("Safeco"), after being hit by a car while crossing the street. He eventually accepted a settlement offer of $21,015.58 in exchange for his agreement to "release [Safeco] from liability under the policy." The oral agreement was reached over the phone in a recorded conversation. Mears subsequently signed off on a check from Safeco that included the notation, "FULL AND FINAL SETTLEMENT OF ALL CLAIMS."
Eight months later, Mears learned from his doctor that he had severe stenosis and disc herniation in his back, a condition that required surgery and other treatment costing at least $150,000. He now claims these back problems are related to the 2008 accident, and he seeks to set aside the telephonic release. The only relief he wants at this time is a declaratory judgment.
There are currently six pending motions in the case: the parties' cross-motions for summary judgment and Defendant's motions to reopen the summary judgment briefing, to compel discovery responses, for leave to file discovery responses, and to exclude certain evidence from trial. The motions are denied and granted as set forth below.
On September 18, 2008, Plaintiff Robert Mears was crossing the street outside the crosswalk when he was hit by a car driven by a high school student, Devin James Awbery. He was hospitalized and treated for fractures of his right sacrum and right superior and inferior pubic rami (pelvic injuries) and the right transverse process of his L-5 vertebra. He also suffered a bone bruise on his left leg, a sprained wrist, and broken teeth. (Claims File, doc. 13-4 at 1, 10.)
At the time, Mears was insured with Safeco Insurance Company of Illinois ("Safeco"). His policy included medical payments coverage in the amount of $1,000.00 and underinsured motorist coverage in the amount of $300,000.00. (Aff. Vern Schneider, doc. 20-2, ¶ 5.) Awbery's vehicle was insured by AIG. (Id. at ¶ 14.)
Mears first contacted Safeco regarding the accident on April 26, 2009. (Id. at ¶ 7.) His claim was assigned to two adjusters. Either Kimmee Patawaran (id. at ¶ 8) or Michelle Galloway (Plaintiff's SUF, doc. 13 at ¶ 11; Letter to Mears from Michelle Galloway, doc. 26-18) was assigned to handle Mears's claim for medical payments coverage. Vern Schneider was assigned to handle the claim for uninsured or underinsured motorist coverage. (Aff. Schneider, ¶¶ 8--9.)
Schneider and Mears first talked on May 18, 2009. Schneider then took Mears's recorded statement on May 20 or 21. (Defendant's SUF, doc. 26 at 6 n. 1.) Among other things, Mears explained that he had last sought medical treatment for his injuries in December of 2008, that his back "gets stiff every once in a while," and that he had not received treatment for that. (Recorded Statement of Robert Mears, doc. 26-17 at 25, 17.) Schneider also learned that Mears had not yet filed a claim with AIG, Awbery's insurer. Schneider contacted AIG to initiate the process and began his own investigation of the accident. (Aff. Schneider, ¶¶ 14--15.)
On July 18, 2009, Mears sent a hospital bill to Michelle Galloway at Safeco. He stated that its balance was outstanding and he had been "paying on it as I can afford." (Claims File, doc. 13-4 at 7.) The statement indicated that the total medical bill was $6,849.45, that insurance paid $4,512.09, that Mears had paid $397.36, and that Mears still owed $1,850.00. (Id. at 6.)
Ten days later, Safeco paid Mears the $1,000 limit available under his medical payments coverage. A letter accompanying the check stated:
The policy limits of your Medical coverage are $1,000.00. We issued a payment to you in the amount of $1,000.00 on July 28, 2009. With that payment, your limits for this coverage were exhausted. Under the terms of your current policy, we are unable to make any additional payments. Bills for additional medical expenses will need to be submitted to your health insurance carrier. Please send them a copy of this letter. (Doc. 26-18.) The payment was to reimburse him for medical expenses that his health insurance had not covered. (Claims File, doc. 13-4 at 11.)
On September 17, 2009, Mears settled his claim with AIG for the $25,000 limit of liability under that policy. (Aff. Schneider, ¶ 17.) He believes that he signed a Release of All Claims, but insists that he did not understand he was releasing the Awberys from further liability for the accident. (Transcr. Depo. Mears 127:20--128:11.)
Mears's underinsured motorist claim with Safeco was still pending when he reached the deal with AIG. Schneider valued the underinsured claim as having a settlement value, before any deductions for other insurance payments and comparative liability, of $37,500 to $47,500. (Bodily Injury Evaluation, doc. 26- 16.) After deducting $25,000 for the AIG payment and 30% to 70% for comparative fault, he estimated a settlement range of $4,307.94 to $20,551.62.*fn1
(Id.) He noted that Mears's medical bills since the accident totaled $6,859.45, that Mears had not received any medical treatment since December 2008, and that "probable dental repair work remains outstanding." (Id.) He also noted that Mears had not yet provided documentation of his medical bills or lost wages. (Id.)
Mears and Schneider spoke on December 8, 2009, and Mears expressed interest in settling his claim. Schneider declined to make a settlement offer at that time, stating he first need documentation of Mears's alleged lost wages and additional medical bills and the settlement release with AIG. (Aff. Schneider, ¶¶ 19--20; Claims File, doc. 13-4 at 12.) Mears emailed his medical bills and an Earnings Statement to Schneider on January 3, 2010. (Claims File, doc. 13-4 at 8.) Later, he admitted in his deposition that he had not incurred any wage loss as a result of the accident. Depo. Mears, doc. 26-1 at 31.
Schneider left Mears a message to contact him on February 5, 2010, and called again on February 8, 2010. Some of the conversation was recorded, and the transcription is copied in full below:
VS: Okay. Uh, this is Vern Schneider. And today's date is February 8, 2010. And the time is 1:40 p.m. Mountain Standard Time. This is in regard to the settlement of an underinsured motorist claim presented by Robert Mears. The prince, the company name is Safeco Insurance Company of Illinois. Okay. The underinsured motorist coverage section ... First of all, excuse me. Uh, Robert, do you understand that this conversation is being recorded?
VS: And is it with your permission?
VS: And would you state your name please?
VS: Okay. According to our records, uh, the date of the accident was September 18, 2008, is that correct?
VS: Okay. The underinsured, insured motorist coverage section of you policy obligates Safeco Insurance Company of Illinois, to pay for injuries you received in an automobile accident if an underinsured automobile driver is legally liable for them. You have made a claim against Safeco Insurance Company of Illinois, under the coverage, under that coverage, with respect to an accident which occurred on September 18, 2008 at Lewistown, Montana. Uh, involving a vehicle being driven by uh, (transcriber note: all proper names not spelled are typed as they sound) Devon James Alberry. Uh, we have investigated the accident and received information concerning your injures and are now in a position to make you an offer to settle your claim for bodily injury. We believe a payment of $21,015.58 would be fair. And we would offer to pay this amount to you in return for your agreement to release Safeco Insurance Company of Illinois from liability to you under our policy because of this accident. Is this an offer which you are willing to accept?
(Recorded Statement of Robert Mears, doc. 13-2.) In addition, Schneider claims in his affidavit that "[i]t was [his] practice to confirm with an insured or claimant, before taking an oral release, that the individual understood that Safeco was paying money in exchange for a full and final release of all claims. Only after receiving confirmation from the insured/claimant that he or she understood that the release was full and final would I initiate the recording." (Aff. Mears, ¶ 25.)
Mears says he was driving at the time of the conversation. (Aff. Mears, ¶ 23.) He claims that the reception was bad, that his attention was divided, and that he did not hear everything Schneider was saying. (Id. at ¶¶ 23--27.) In particular, he denies hearing that the settlement was offered in return for his agreement to release Safeco from liability. (Id.) In contrast, Schneider and Safeco's transcriptionist report that they did not notice the reception was bad (Aff. Schneider, ¶ 24; Aff. Connie Corcoran, ¶¶ 7--8), and Schneider attests that Mears did not ask any questions and did not tell him that he was on the road, that his attention was divided, or that he could not hear or understand the conversation (Aff. Schneider, ¶ 24).
Safeco sent Mears a check for the $21,015.58. (Claims File, doc. 13-4 at 14.) "FULL AND FINAL SETTLEMENT OF ALL CLAIMS" was printed on the check between Safeco's address and the "Pay to the Order of" line. (Id.) Mears claims he did not see the notation when he deposited the check. (Aff. Mears, ¶ 29.)
Eight months later, on October 23, 2010, Mears went to a chiropractor because of pain in his lower back. (Gallatin Valley Chiropractic treatment note, doc. 26-13.) He told Dr. Rising that the pain started after he worked on a chain-link fence the week before. (Id.) He also told the chiropractor that he had healed "100%" from being struck by the car in 2008 and that his doctor had "confirmed the fracture healed correctly." (Id.) Rising provided chiropractic treatment to Mears five additional times. In the six visits, Mears did not relate any of his symptoms to the accident nor did he suggest that his back pain started earlier than previously reported. Mears's last session with Rising was on November 5, 2010.
On October 29, 2010, Mears went to the emergency room because of perceived weakness and numbness in his leg. (Emergency Room Notes, doc. 26-14.) The doctor noted that Mears divulged that he "has never had a history of sciatica before" and that he had "recovered from [the 2008 accident] without any chronic pain issues." (Id.) The doctor diagnosed acute sciatica and referred him to Dr. Steven Speth, a surgeon. (Id.)
Dr. Speth performed an MRI, which revealed extruded disc fragments at L3-4, L4-5, and L5-S1. The severe stenosis and disc herniation required surgery, which was performed in November 22, 2010.
The additional chiropractic, surgical, and other medical care cost Mears approximately $150,000, but he did not submit the bills to Safeco for payment when they were incurred. His attorney informed Safeco about the back surgery in December of 2010.
On February 28, 2011, Rising had a telephone conversation with Mears in order to obtain "a more clear history of the accident and condition." Depo. Dustin Rising, doc. 39-1 at 17. During this conversation, Mears told Rising that he had been experiencing low back pain every since the accident and that he had been managing the pain by taking up to 12 ibuprofen each day. He also told Rising that he did not have any significant low back pain before the accident, that he did not have a history of back pain, and that he had been unable to fish or hunt since the accident. In his deposition, Rising agreed that this information was totally different from what Mears had told him during the six treatment sessions in the fall of 2010 and from what Mears had written on his patient intake form. Rising did not treat Mears following this phone call.
March 7, 2011, Rising wrote a letter to Mears's counsel opining that the September 2008 accident "was the primary cause of the injuries to his lower back that ultimately required ...