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Brenda Bailey and J. Stanley Bailey, Jr v. State Farm Mutual Automobile Insurance

May 2, 2013

BRENDA BAILEY AND J. STANLEY BAILEY, JR., PLAINTIFFS AND APPELLANTS,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, MARK OLSON AND DOES 1-3, DEFENDANTS AND APPELLEES.



APPEAL FROM: District Court of the Ninth Judicial District, In and For the County of Glacier, Cause No. DV-09-18 Honorable Laurie McKinnon, Presiding Judge

The opinion of the court was delivered by: Patricia Cotter

Submitted on Briefs: February 27, 2013

Decided:

Filed:

Clerk

Justice Patricia O. Cotter delivered the Opinion of the Court.

¶1 Brenda Bailey and J. Stanley Bailey, Jr. (the Baileys) appeal from an order of the Ninth Judicial District Court, Glacier County, granting summary judgment to State Farm and Mark Olson (Olson) on the Baileys' claims that State Farm and Olson negligently failed to secure underinsured motorist (UIM) coverage for the Baileys. We reverse the District Court's entry of summary judgment in favor of State Farm and Olson, and remand for further proceedings.

ISSUES

¶2 The Baileys raise the following two issues on appeal:

¶3 1. Did the District Court err in granting summary judgment when it found no genuine issues of material fact with respect to the duty of State Farm and Olson to procure UIM coverage for the Baileys?

¶4 2. Did the District Court err in granting summary judgment by failing to recognize and impose a duty arising in negligence beyond a duty to procure requested coverage?

FACTUAL AND PROCEDURAL BACKGROUND

¶5 On October 19, 2006, a drunk driver crossed the highway centerline and collided head-on with the Baileys' vehicle. The Baileys sustained very serious injuries in the accident. Stan was flown to Harborview Medical Center in Seattle and remained a patient there for five months. Brenda spent a significant amount of time hospitalized in Kalispell and Cut Bank. Brenda remains wheelchair bound as a result of her injuries. The Baileys incurred medical expenses in excess of $1,000,000.

¶6 The Baileys moved from Oregon to East Glacier, Montana, in March 1998. The Baileys had been State Farm customers for many years. On April 3, 1998, the Baileys went to the Mark Olson State Farm Agency in Cut Bank, Montana, to transfer their Oregon State Farm policy to Montana. Insurance agent Nola Peterson Softich (Softich) assisted the Baileys. The Baileys specifically recalled presenting their Oregon State Farm insurance cards to Softich and requesting that the same coverage they carried in Oregon be transferred to Montana. The Baileys also maintain that they requested full coverage.

¶7 Softich completed a computerized insurance application for each of the Baileys' two vehicles. Each application listed twelve types of coverage and displayed a "Yes" or "No" next to each coverage to indicate whether that coverage was selected. The State Farm policies sold to the Baileys in Montana contained liability coverage limits of $250,000 per person and $500,000 per occurrence for bodily injury, $100,000 for property damage liability, $5,000 in medical payments coverage, and uninsured motorist (UM) coverage limits of $100,000 per person and $300,000 per occurrence. On both applications, Softich entered a "No" next to the UIM coverage. After Softich filled out the applications, Stan signed both applications. The application contained the following language directly above the signature line:

I apply for the insurance indicated and state that (1) I have read this application, (2) my statements on this application are correct, (3) statements made on any other applications on this date for automobile insurance with this company are correct and are made part of this application, (4) I am the sole owner of the described vehicle except as otherwise stated, and (5) the limits and coverages were selected by me.

¶8 Stan testified in his deposition that he typically did not read any insurance documents because he relied on his agent to provide him with the important information. Brenda recalled receiving insurance cards from State Farm, but did not recall reviewing any policies or other information from State Farm. State Farm and Olson maintained that the Baileys received new insurance cards and renewal notices listing the various coverages twice every year.

¶9 Although Softich had no independent recollection of her initial interaction with the Baileys, she testified that it was her habit and practice to always review the "ACHUW" coverages with new customers. "ACHUW" stands for: A -- liability; C -- medical payment; H -- emergency towing; U -- uninsured motorist; and W -- underinsured motorist. Softich claimed that UIM coverage must have been offered to the Baileys. Softich also testified that she never advised customers to lower their UM or UIM coverage. Olson admitted that he did not know whether the Baileys were offered UIM coverage, but his staff is supposed to go through every coverage. The Baileys had no specific recollection of whether the "ACHUW" coverages were discussed when they met with Softich.

¶10 It is undisputed that the Baileys' State Farm automobile insurance policy obtained in Montana did not match their previous policy from Oregon. The Baileys' Oregon policies provided the following coverages: (1) bodily injury liability, $300,000 per person/$500,000 per occurrence; (2) property damage, $100,000; (3) personal injury protection (analogous to medical payments coverage) $100,000; (4) UM, $300,000 per person/$500,000 per occurrence; and (5) UIM, $300,000 per person/$500,000 per occurrence. Notably, Oregon law mandates the UM coverage must include UIM protection. See Or. Rev. Stat. § 742.502(2)(a). In Oregon, State Farm combines the UM and UIM coverages and denotes both as a ...


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