Defendant Maryland Casualty Company has filed a motion to dismiss Plaintiff Michael Crow's action for failure to state a claim. Defendant's motion will be denied regarding coverage under the underinsured motorist ("UIM") policy and granted regarding coverage under the medical payment endorsement. Plaintiff's allegation that his head injury sustained in the first accident was an "accident" covered under Defendant's underinsured motorist policy raises a plausible claim for relief. Defendant did not waive its right to assert the employee exclusion to medical payments by its prior payment to Plaintiff, however, so Plaintiff is not entitled to further medical payments under the policy.
I. 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 was examined by a doctor the following day who determined he suffered neck and back pain with muscle spasm. He also began having cognitive difficulties including slurred speech and memory problems. Plaintiff continued working for GPM Heating and Cooling as an HVAC technician that week despite these symptoms, and he was in a single car accident while working six days after the first accident. Plaintiff blacked out and drove off the road in his work vehicle, suffering physical injuries including a global traumatic brain injury. A CT scan demonstrated a bleed on the left side of his brain.
Neurologist Sherry Reid opined regarding Plaintiff's injuries that "the left temporal lobe hemorrhage was a direct result of the first motor vehicle accident on a more probable than not basis. The second motor vehicle accident caused a global traumatic brain injury. This most likely aggravated his symptoms from the first accident." (Doc. 1 at 3.) 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 insured by Safeco who paid the limits of his policy as settlement of all claims for both accidents and release of the Venables. In the release, Crow reserved his claims against Safeco for a second policy limits. Plaintiff has a pending declaratory judgment action against Safeco in this court seeking coverage for a second policy limits. See Crow v. Safeco, CV-12-71-M-DLC. Crow alleges the policy limits paid by Safeco were insufficient to cover the full amount of his damages. Thus, based on Crow's allegations in the complaint, Venable is an underinsured motorist.
At the time of Plaintiff's second accident, his employer was insured by Defendant Maryland Casualty Company under a commercial policy. Plaintiff seeks UIM benefits under Defendant's policy based on his allegation that the injuries from the first accident caused the second accident. Plaintiff also seeks a declaration that he is entitled to medical payments under Defendant's policy. For purposes of this motion to dismiss, the parties stipulate that Defendant paid Plaintiff the $5,000 medical payment limits for the second accident. (Doc. 22 at 10.) The parties further stipulate the payment was made without a reservation of rights and with Defendant's knowledge that Plaintiff was within the course and scope of his employment when the second accident occurred. (Doc. 22 at 10.)
Defendant contends there is no UIM coverage because Plaintiff alleges the first accident caused the second accident, and Plaintiff was not driving a work vehicle during the first accident, and therefore he was not an insured under the policy. Defendant further argues that it has no obligation to make medical payments under the policy due to the employment exclusion. Defendant asserts it did not waive its defenses to medical payment coverage by making the $5,000 policy limits payment because waiver cannot create coverage that does not otherwise exist.
On the other hand, Plaintiff alleges he is covered under Defendant's UIM policy because the first accident caused a brain hemorrhage he was continuously exposed to until six days later when his symptoms caused the second accident. Plaintiff argues Defendant waived the employment exclusion by its prior payment. He now seeks further medical payments by stacking the coverage available under the policy.
II. Motion to Dismiss Standard
To survive a motion to dismiss for failure to state a claim, a complaint 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. 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 pleadings 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). The Court will consider the policy attached to Defendant's motion in deciding this motion to dismiss.
Defendant's arguments are based on the narrow proposition that because Plaintiff alleges the first accident caused the second accident, only the first accident may be considered in determining coverage under its policy. This analysis misconstrues Plaintiff's allegations, which are taken as true. Plaintiff alleges he is covered under Defendant's policy because Venable's negligence proximately caused the second accident and Venable's liability insurance did not cover the full extent of his damages for both accidents. Resolution of Defendant's motion requires consideration of the circumstances of both accidents.
Insurance contract interpretation is a question of law resolved by the Court. The words in an insurance contract are "given their usual meaning and construed using common sense." Hardy v. Progressive Specialty Ins. Co., 67 P.3d 892, 897 (Mont. 2003). "An ambiguity exists where the contract, when taken as a whole, is reasonably subject to two different interpretations. Whether an ambiguity exists is determined through the eyes of 'a consumer with average intelligence but not trained in ...