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Hartford Insurance Company of the Midwest v. Montana State Fund

February 11, 2013

HARTFORD INSURANCE COMPANY OF THE MIDWEST
PETITIONER
v.
MONTANA STATE FUND
RESPONDENT.
IN RE: BRIAN MCKIRDY



The opinion of the court was delivered by: James Jeremiah Shea Judge

ORDER GRANTING PETITIONER'S MOTION FOR RECONSIDERATION

Summary: Petitioner moved for reconsideration of this Court's Order which denied Petitioner's cross-motion for summary judgment in part. Petitioner asked the Court to reconsider its determination that Petitioner failed to prove the third element of equitable estoppel regarding its claim against Respondent. Respondent objected to Petitioner's motion for reconsideration.

Held: Petitioner's motion for reconsideration is granted. The Court concluded that Petitioner fulfilled the third element of equitable estoppel. Therefore, the Court further considered Petitioner's arguments regarding the remaining elements of equitable estoppel and determined that Petitioner likewise fulfilled the requirements for the fourth, fifth, and sixth elements. The Court therefore determined that Respondent is equitably estopped from asserting a defense against Petitioner under § 39-71-603(2), MCA.

¶ 1 Petitioner Hartford Insurance Company of the Midwest (Hartford) moves this Court for reconsideration of its August 1, 2012, Order Denying Respondent's Motion for Summary Judgment and Granting Petitioner's Motion for Summary Judgment in Part (Summary Judgment).*fn1 Hartford contends that this Court should reconsider the Summary Judgment and conclude either that Respondent Montana State Fund (State Fund) is estopped from asserting a defense against Hartford's claim for reimbursement pursuant to § 39-71-603(2), MCA, or that § 39-71-603(2), MCA, unconstitutionally violates equal protection.*fn2 State Fund objects to Hartford's motion for reconsideration, contending that Hartford has not met the elements for equitable estoppel and further arguing that § 39-71-603(2), MCA, is constitutional.*fn3

Procedural History

¶ 2 In the underlying Summary Judgment, State Fund moved for judgment in its favor, contending that Hartford should not prevail in its indemnification claim against State Fund for benefits Hartford paid to claimant Brian McKirdy. State Fund contended that McKirdy suffered from an occupational disease. Alternatively, State Fund contended that if McKirdy suffered from an industrial injury, State Fund should be entitled to summary judgment because McKirdy failed to provide notice to State Fund within 30 days as required by § 39-71-603, MCA. Hartford objected to State Fund's motion and filed a cross-motion, contending that McKirdy suffered from an industrial injury while State Fund was the insurer at risk, and contending that State Fund should indemnify Hartford for benefits it paid to McKirdy.*fn4

¶ 3 After considering the facts and arguments, I concluded that McKirdy had suffered an industrial injury while State Fund was the insurer at risk.*fn5 After considering Hartford's equitable estoppel argument, I concluded that Hartford had not met the third element of equitable estoppel and I therefore concluded that Hartford had not proven that State Fund should be equitably estopped from refusing to indemnify it.*fn6

Analysis and Decision

¶ 4 As noted above, Hartford requests reconsideration of the Summary Judgment on two grounds: Hartford argues that it meets the elements of equitable estoppel, or alternatively, Hartford argues that § 39-71-603(2), MCA, is unconstitutional.

¶ 5 As I noted in the Summary Judgment,*fn7 in Selley v. Liberty Northwest Ins. Corp., the Montana Supreme Court stated:

As a general matter, estoppel arises when a party through its acts, conduct, or acquiescence, has caused another party in good faith to change its position for the worse. . .

[S]ix elements are necessary in order to establish an equitable estoppel claim: (1) the existence of conduct, acts, language, or silence amounting to a representation or concealment of material facts; (2) the party estopped must have knowledge of these facts at the time of the representation or concealment, or the circumstances must be such that knowledge is necessarily imputed to that party; (3) the truth concerning these facts must be unknown to the other party at the time it was acted upon; (4) the conduct must be done with the intention or expectation that it will be acted upon by the other party, or have occurred under circumstances showing it to be both natural and probable that it will be acted upon; (5) the conduct must be relied upon by the other party and lead that party to act; and (6) the other party must in fact act upon the conduct in such a manner as to change its position for the worse. A party must establish all six elements before the doctrine can be invoked. Equitable estoppel must be established by clear and convincing evidence.*fn8

¶ 6 The court further noted that wrongdoing is not necessary to invoke equitable estoppel. It explained:

Classically, the function of the doctrine of equitable estoppel is the prevention of fraud, actual or constructive. However, this does not imply that the party sought to be estopped must have possessed an actual intent to deceive, defraud or ...


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