Plaintiff Michael Crow filed a declaratory judgment action seeking coverage under the policy of Defendant Safeco's insured, Richard Venable, for a second automobile accident he alleges was caused by Venable. Plaintiff settled with Venable for both accidents, releasing Venable but reserving the right to pursue Defendant for a second policy limits. In its counterclaim, Defendant argues that the Plaintiff lacks standing to pursue this action due to the fact that he expressly released Defendant's insured for all claims arising out of both accidents.*fn1 Plaintiff now moves to dismiss the lack of standing allegations in Defendant's counterclaim. The motion to dismiss will be denied, but not for the reasons advanced by the Plaintiff. As explained below, the Court concludes that the release is not void under Watters. However, the Court finds that the Plaintiff has standing to proceed with his action at this time because the Court does not have before it sufficient facts to determine whether the reservation in the release provides Plaintiff with standing. Thus, the ultimate decision on Plaintiff's standing must await development of a more complete factual record surrounding the execution of the release, and specifically the reservation language contained within the release.
II. Factual and Procedural Background
This case involves two motor vehicle accidents. The first accident occurred on December 12, 2009, when Richard Venable rear-ended Plaintiff on Orange Street in Missoula, Montana. Plaintiff experienced confusion, slurred speech, and difficulty communicating shortly after the first accident. Plaintiff continued working that week despite these symptoms, and he was in a single car accident while working six days later. Plaintiff drove off the road in his work vehicle and suffered physical injuries including a global traumatic brain injury. Plaintiff alleges the second accident was caused by a left temporal lobe hemorrhage he received in the first accident. Thus, he contends Venable also caused his second accident.
Venable was the insured under a Safeco automobile insurance policy at the time of the accident that includes liability coverage up to $300,000 for "any one auto accident." (Doc. 6 at 3.) Plaintiff signed a general release of all claims for both accidents against Venable in July 2010. The release contained the following provision: "[i]t is understood and agreed that this settlement does not release any claims against any insurer, including Releasees' insurer, Safeco. These claims may include but are not limited to pursuing Safeco for a second policy limit . . . ." (Doc. 4-2 at 2.) Despite the language in the release, Defendant now alleges Plaintiff cannot bring a direct claim against it because Venable is the proper party and Plaintiff released him from all claims for both accidents.
Plaintiff filed a declaratory judgment action seeking a declaration "that the Safeco Policy provides a second limit of $300,000.00 in liability coverage for the bodily injury and resulting damages Plaintiff suffered as a result of the Second Accident for which Venable is legally liable." (Doc. 1 at 3.) Plaintiff's complaint lacks any reference to the release and the reservation of his claim "for a second policy limit" against Defendant. However, in its counterclaim Defendant relies on the release, and alleges that it constitutes a bar to the Plaintiff's claims. (Doc. 4 at 10.) Defendant attaches a copy of the written release to its answer and counterclaim. (Doc. 4-2.)
III. Motion to Dismiss Standard
Dismissal of a counterclaim is determined under the same standard as a motion to dismissa complaint. The counterclaim must allege sufficient facts "to state a claim for relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Courts generally limit their considerations to the allegations in the complaint, or here, the counterclaim. Id. at 555-559. Those allegations are accepted as true and viewed in a light most favorable to the plaintiff. Lazy Y Ranch Ltd. v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).
When "matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001). However, a court may consider material properly submitted as part of the complaint without converting the motion to one for summary judgment. United States v. Corinthian Colleges, 655 F.3d 984, 999 (9th Cir. 2011). A court may also consider unattached evidence the complaint necessarily relies upon if referenced in the complaint, central to the claim, and unquestionably authentic. Id. Plaintiffs are not required to anticipate defendants' affirmative defenses or attempt to plead around them. Gomez v. Toledo, 446 U.S. 635, 640 (1980).
Because Plaintiff is seeking dismissal of Defendant's counterclaim the counterclaim is the primary document subject to review rather than the complaint. As previously stated, Defendant attached Venable's Safeco policy and the release to its counterclaim, so those documents may be considered in deciding Plaintiff's motion to dismiss.
Defendant argues Plaintiff does not have standing because a third-party cannot bring a direct action against an insurer until liability is established. (Doc. 9 at 9.) Defendant contests liability and causation for the second accident and the release did not concede liability for the second accident. Plaintiff argues Defendant is attempting a "double cross" because it specifically permitted a reservation of a second policy limits against it in the release, but now says he lacks standing. (Doc. 10 at 1-2.) Plaintiff says he released Venable because Defendant specifically agreed to the reservation in the release. (Doc. 10 at 2.)
"[T]he long-established rule in Montana [is] that a direct action against an insurer does not lie until the liability of the insured has been established, and our further long-standing rule [is] that the injection of insurance into the action determining liability is improper." Ulrigg v. Jones, 907 P.2d 937, 943 (Mont. 1995)(internal citations omitted). This rule seeks to eliminate confusion and prejudice against the insured and the injured party. Id. Montana does allow a direct action against an ...