author: JUSTICE TRIEWEILER

text:
    THE CITY OF BOZEMAN, Plaintiff, Respondent, and Cross-Appellant, v. AIU INSURANCE COMPANY, Defendant and Appellant.
    No. 93-132.
    Submitted on Briefs October 21, 1993.
    Decided December 14, 1993.
    50 St.Rep. 1605.
    262 Mont. 370.
    865 P.2d 268.

      For Defendant and Appellant: E. Lee LeVeque and L. D. Nybo, Conklin, Nybo, LeVeque & Murphy, Great Falls.
    For Plaintiff, Respondent and Cross-appellant: J. Robert Planalp and Steve Reida, Landoe, Brown, Planalp & Braaksma, Bozeman.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Plaintiff City of Bozeman brought this action in the District Court for the Eighteenth Judicial District in Gallatin County to recover attorney fees and costs incurred because of AIU Insurance Company’s refusal to represent the City on appeal in Story v. City of Bozeman (1990), 242 Mont. 436, 791 P.2d 767. The District Court concluded that AIU breached its duty to defend the City and entered judgment in favor of the City in the amount of $17,739.53. However, the City’s claim for prejudgment interest and attorney fees incurred in the present case was denied. AIU appeals from the District Court’s judgment in the City’s favor. The City cross-appeals from the District Court’s denial of its claim for prejudgment interest and attorney fees. We reverse the judgment of the District Court in favor of the City, and therefore, do not reach the issues in the City’s cross-appeal.

The issues on appeal are:

1. Did the District Court err when it concluded that AIU had a contractual obligation to defend the City of Bozeman on appeal in the case of Story v. City of Bozeman (1990), 242 Mont. 436, 791 P.2d 767?

2. Did the District Court err when it concluded as a matter of law that aside from its insurance contract, AIU specifically agreed to represent the City of Bozeman on appeal to the Supreme Court unless its investigation dictated otherwise and that no investigation was conducted?

DISCUSSION

In 1985, AIU issued a comprehensive general liability policy to the City of Bozeman which was in effect for the period from June 30, 1985, to June 30, 1986. Pursuant to the terms of that policy, the company agreed to pay on behalf of its insured:

All sums which the insured shall become legally obligated to pay as damages because of
A. bodily injury or
B. property damage
to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company’s liability has been exhausted by payment of judgments or settlements.

In other words, the policy generally covered the City against claims for bodily injury or property damage if they resulted from an occurrence. The following definitions in the policy narrowed the scope of its coverage:

“Bodily injury” means bodily injury, sickness, or a disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom;
“Property damage” means (1) physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at anytime resulting therefrom, or (2) loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period;
“Occurrence” means an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damages neither expected nor intended from the standpoint of the insured....

Specifically excluded from coverage under the policy was any liability assumed by the insured under any contract.

In addition to the general coverage set forth above, AIU’s policy of insurance with the City included a broad form comprehensive liability endorsement in which it agreed to indemnify the insured from any damages it became obligated to pay by “publication or utterance of a libel or slander or of other defamatory or disparaging material....”

In December 1986, the City was sued for damages by Mark Story based on conduct that allegedly occurred during the policy period. Story filed an amended complaint in January 1987 in which he included claims for breach of contract, breach of the implied covenant of good faith and fair dealing, constructive fraud, and defamation. Story sought contract damages, unspecified compensatory damages, and punitive damages.

The City tendered its defense in the lawsuit to AIU. In response, on January 12,1987, AIU agreed to defend the City while reserving its right to rely on all of the policy’s provisions before determining whether to extend coverage or continue representation in the future. The City was specifically advised that “[w]e do not intend to waive any provisions of the policy, and strictly reserve our rights to later decline coverage and withdraw Mr. Herndon from the defense of this action.”

On January 27,1987, AIU wrote to the City again and pointed out that pursuant to the endorsement, Story’s claim for damages based on defamation was covered under the policy, but that his other claims were not covered, based on the policy’s definition of “occurrence” which precluded coverage for intentional conduct. That letter repeated AIU’s “reservation of rights,” as did subsequent letters dated March 23, 1987, and November 12,1987.

In its letter dated November 12, AIU stated:

If at such time our position would be altered as a result of our investigation or a determination is made by the Supreme Court of Montana of such issues, we will immediately notify you, as the insured, with regard to our position.

Story’s complaint was generally based on his allegations that he had contracted with the City to construct water main improvements in August 1985; that subsequent to entering into the contract the City tried to alter the terms of the contract to Story’s detriment; that the City breached the terms of the contract; and that its engineer misrepresented Story’s performance to his bonding company, which caused him to lose his bonding. He alleged that because of the City’s breach he was still owed $230,747.17 under the terms of his contract, and that because of the City’s bad faith, he sustained unspecified general damages. Story alleged damage to his business, but alleged no property damage nor personal injury as they were defined in the AIU policy.

Story’s claim against the City went to trial, and the jury returned its verdict on March 23,1988. The jury found that the City did breach its obligation of good faith and fair dealing related to its contract with Story, but that its engineer’s letter to Story’s bonding company was not defamatory. The issue of fraud was not submitted to the jury. However, the jury did find that the City breached its contract.

The jury awarded compensatory damages in the amount of $360,000 as compensation for the City’s breach of the covenant of good faith and fair dealing. It awarded contractual damages in the amount of $13,236 based on the City’s breach of contract. It was specifically advised not to award damages for defamation if there was no finding of defamation.

Judgment was entered for Story on March 24,1988, and the City advised AIU that it wanted to appeal from the judgment. However, AIU declined to further represent the City on appeal.

Neither Story nor the City appealed from that part of the jury verdict finding that no defamation had occurred.

On appeal, this Court reversed the judgment of the District Court based upon error in the verdict form and the law of bad faith which had been applied, and remanded to the District Court for retrial. On remand, Story again alleged defamation in spite of the fact that he had not appealed from the jury’s previous finding, and AIU again assumed the City’s defense. Story’s claim was ultimately retried and appealed to this Court for a second time, as a result of which the jury’s second verdict was affirmed. Story v. City of Bozeman (1993), [259 Mont. 207], 856 P.2d 202, 50 St. Rep. 761.

On June 25, 1990, the City filed this complaint against AIU in which it alleged that pursuant to the terms of its contract of insurance, AIU had an obligation to represent it during the first appeal, and because AIU had breached that obligation, it incurred $17,499.53 in costs and fees to prosecute the appeal. The City also alleged that it had been led to believe by AIU that the company would provide a defense to the conclusion of the litigation and that the company was, therefore, estopped to terminate its defense before the litigation had been concluded.

Both parties conceded that the facts were not in dispute and moved for summaiy judgment. In support of its motion, the City primarily relied on the terms of its contract, the correspondence which was previously discussed, and the history of Story’s claim against the City, which is well documented in our previous decisions.

On January 7,1992, the District Court entered its order granting the City’s motion for summary judgment and denying AIU’s motion. As the basis for its decision, the District Court concluded that since Story was free to reallege defamation after remand following the City’s first appeal, that the City always risked liability for defamation, and therefore, that its insurer had a continuing obligation to defend it on appeal. As a second basis for its decision, the District Court concluded that the company had specifically agreed to continue its representation of the City until there was a determination by the Supreme Court, or until its investigation indicated otherwise. The District Court concluded that since no investigation had been conducted, AIU’s obligation continued pursuant to its agreement.

However, the District Court denied the City’s claim for attorney fees and costs incurred in bringing this action on the basis that there was no statutory right to fees, nor any contractual obligation to pay them.

I.

Did the District Court err when it concluded that AIU had a contractual obligation to defend the City of Bozeman on appeal in the case of Story v. City of Bozeman (1990), 242 Mont. 436, 791 P.2d 767?

It is AIU’s position that following the first verdict for Story, and during the appeal from that verdict, there were no claims being asserted against the City which were covered under its policy with AIU, and therefore, there was no longer a duty to defend. Although Story did reassert the defamation claim after remand following the first appeal to this Court, neither AIU nor the City considered that a legal possibility, as is illustrated by the City’s argument during the second appeal. Furthermore, AIU points out that as soon as the claim for defamation was reasserted against the City, it reassumed responsibility for the defense.

AIU cites Burns v. Underwriters Adjusting Company (1988), 234 Mont. 508, 765 P.2d 712, and Daly Ditches Irrigation District v. National Surety (1988), 234 Mont. 537, 764 P.2d 1276, and the Federal District Court’s decision in Aetna Casualty and Surety Company v. First Security Bank of Bozeman (D.Mont. 1987), 662 F. Supp. 1126, for the principles that under the terms of this policy there was no coverage for the claims asserted by Story, other than his claim for defamation, and that where there is no coverage, there is no duty to defend.

The City argues that an insurer’s obligation to defend a suit does not end with a successful verdict in the trial court, but includes representation on any appeal that results from the trial court’s verdict. The City contends that since we held in our second Story decision that Story could reassert his claim for defamation after remand from the first appeal, that the defamation claim had not been finally resolved, and therefore, that AIU had a continuous duty to represent the City on appeal from the first verdict.

In support of its argument that AIU had a continuing duty to represent it on appeal, the City cites our decision in St. Paul Fire & Marine Insurance Company v. Thompson (1967), 150 Mont. 182, 433 P.2d 795, and numerous decisions from other jurisdictions.

We conclude that the facts in Thompson are not sufficiently on point to establish precedent for our decision in this case, and that for similar reasons, the authorities from other jurisdictions relied on by the City are unpersuasive.

In Thompson, the insured had been sued for conduct which was definitely covered under the policy. However, his insurer, after expending the limits of coverage provided for in the policy, decided that it would no longer represent its insured. We concluded that under those circumstances, the insurer’s duty to defend is in addition to its duty to indemnify and was not satisfied by the insurer’s payment of policy limits. Similarly, most of the authorities provided by the City from other jurisdictions relate to an insurer’s duty to represent its insured on appeal where the issues on appeal relate to a claim which is covered under the policy.

In this case, to determine AIU’s obligation on appeal, we must look to the terms of the policy. However, the policy only created a duty to defend any suit which sought damages on account of bodily injury or property damage caused by an occurrence, as defined in the policy. In Daly Ditches we held that where an insured’s former employee sued for breach of the covenant of good faith and fair dealing and that where the insured’s policy provided for coverage under terms identical to those in this case, the insured’s termination of its employee was not an “occurrence” under the terms of the policy, and therefore, the claim was not covered. Based on lack of coverage for the claim, we concluded in that case that the insurer had no duty to defend its insured. Daly Ditches, 764 P.2d at 1279. Likewise, in Burns, 765 P.2d at 713, we held that where there is no duty to indemnify the insured there is no duty to defend.

Under similar circumstances, the Federal District Court for the District of Montana has concluded that, based on Montana precedent, there is no duty for an insurer to defend its insured. In First Security Bank of Bozeman, a former employee sued First Security Bank for wrongful termination of her employment. She sought damages for lost wages, diminished earning capacity, harm to her reputation, and emotional distress. She also sought punitive damages. Aetna insured the bank under a comprehensive liability policy, but filed a declaratory judgment action to establish that it had no duty to defend on the grounds that the damages and injuries sought by the employee did not fall within the policy definitions of “bodily injury,” “property damage,” or “occurrence.” After reviewing our prior authorities, the district court agreed. In arriving at its conclusion, the district court stated:

Ordinarily, a liability insurer has no duty to defend an action against its insured when the claim or complaint clearly falls outside the scope of the policy’s coverage. [McAlear v. Saint Paul Insurance Company (1972), 158 Mont. 452, 456, 493 P.2d 331, 334], Where the claim against the insured sets forth facts representing a risk covered by the terms of the policy, the insurer’s duty to defend arises. Lindsay Drilling and Contracting v. United States Fidelity and Guaranty Company, [208] Mont. [91, 94], 676 P.2d 203, 205 (1984).

First Security Bank of Bozeman, 662 F. Supp. at 1128.

The district court in that case also concluded that the type of damages claimed by the employee (similar to those damages claimed by Story) did not result from bodily injury or property damage, as defined in the policy.

Likewise, in this case we conclude that AIUs duty to defend the City depended on a claim being asserted against the City seeking damages on account of conduct covered by the terms of its comprehensive general liability policy or the broad form comprehensive endorsement to that policy. During the first trial, such a claim existed based on Storys allegation that he was defamed by the City’s engineer. However, when that claim was resolved favorably to the City, and when neither Story nor the City appealed the jury’s determination that he had not been defamed, there were no issues on appeal relating to claims covered by the terms of AIU’s policy with the City. Therefore, we conclude that AIU did not have a contractual obligation under the terms of its insurance policy with the City to represent the City on appeal, and we reverse the District Court’s conclusion that it did.

II.

Did the District Court err when it concluded as a matter of law that aside from its insurance contract, AIU specifically agreed to represent the City of Bozeman on appeal to the Supreme Court unless its investigation dictated otherwise and that no investigation was conducted?

On November 12,1987, AIU wrote to the City Attorney for the City of Bozeman and reaffirmed its reservation of rights. In that letter it stated:

If at such time our position would be altered as a result of our investigation or a determination is made by the Supreme Court of Montana of such issues, we will immediately notify you, as the insured, with regard to our position.

Based on that statement, the District Court found that:

Further, AIU, through its representative, Steve Armstrong, represented to the City of Bozeman, through its representative Bruce Becker, on November 12, 1987, that defense of the matter would continue until “such time our position would be altered as a result of our investigation or a determination is made by the Supreme Court of Montana on such issues.” No investigation was conducted by AIU.

Based on that finding, the District Court concluded: “Further, AIU specifically agreed to proceed through the determination of the Supreme Court, absent an investigation. No such investigation was conducted.”

On appeal, AIU contends there was no evidence before the District Court from which it could find that no investigation was conducted by the company before it terminated its representation of the City. Therefore, AIU contends that the District Court could not find, as a matter of law, that it had breached its agreement to defend on that basis.

The City takes the position that since AIU presented no evidence that it had conducted an investigation, the District Court was correct to grant the City’s motion for summary judgment on that basis.

The problem with the City’s argument is that it ignores the rules of procedure. When a party moves for summary judgment, it has the burden of establishing that there is no issue of fact. It cannot rely on its contentions in its pleadings, or the arguments of its counsel.

In this case, there was no evidence from which the District Court could conclude that AIU conducted no investigation prior to the termination of its representation of the City. Further, reason compels the opposite conclusion.

Prior to the time that it declined to represent the City on appeal, the attorney retained and paid by AIU had prepared for trial, participated in trial, successfully defended against Story’s claim for defamation, and received the jury’s verdict. Even if we were to assume (and we have no reason in the record to do so) that no investigation was conducted by AIU prior to trial, we certainly must conclude that by the time the trial was completed, AIU and the attorney that it retained were completely familiar with all of the factual bases for Story’s claim. No further investigation could be required to comply with the representation made in AIU’s November 12, 1987, letter. Therefore, we conclude that the District Court erred when it held that AIU breached the agreement to investigate before withdrawing its defense of the City of Bozeman.

We reverse the judgment of the District Court and remand this to the District Court with instructions to enter judgment in favor of defendant. Based on this decision, it is not necessary to consider those issues raised in the City’s cross-appeal.

CHIEF JUSTICE TURNAGE, JUSTICES HARRISON, HUNT, and GRAY concur.


source: Caselaw Access Project

author: JUSTICE TRIEWEILER JUSTICE GRAY

license: Public Domain

text:
    IN THE MATTER OF INQUIRY INTO BABY GIRL JANE DOE, Youth in Need of Care.
    No. 92-567.
    Submitted on Briefs November 1, 1993.
    Decided December 7, 1993.
    50 St.Rep. 1555.
    262 Mont. 380.
    865 P.2d 1090.

      For Appellant: Stephen A. Doherty, Monteau, Guenther & Decker, Great Falls (Chippewa Cree Tribe).
    For Respondent: David G. Rice, Hill County Attorney, Patricia Jensen, Deputy County Attorney, Lawrence A. LaFountain, Havre (Guardian Ad Litem); and Thomas J. Sheehy, Big Sandy (mother).
   JUSTICE TRIEWEILER

delivered the Opinion of the Corut.

The Hill County Department of Family Services filed a petition in the District Corut for the Twelfth Judicial District in Hill County for an order terminating the parental rights of the natural parents of Baby Girl Jane Doe, granting permanent legal custody of the child to the Montana Department of Family Services (DFS), and giving the DFS the right to consent to her adoption. The Chippewa Cree Tribe of the Rocky Boy’s Indian Reservation intervened and moved for disclosure of the natural mother’s identity in order to assure that any child placement conformed to the preferences provided for in the Indian Child Welfare Act found at 25 U.S.C. §§ 1901 to 1963 (1978). The District Court denied the Tribe’s motion based on the natural mother’s stated preference for anonymity and certified its order as final pursuant to Rule 54(b), M.R.Civ.R The Tribe appeals the District Court’s order. We reverse the District Court.

The issue on appeal is whether a parent’s interest in anonymity, which is to be considered pursuant to 25 U.S.C. § 1915(c) of the Federal Indian Child Welfare Act (ICWA), prevails when in conflict with the Tribe’s right to enforce the preferences for placement of Indian children provided for in § 1915(a) and (b) of the Act.

FACTUAL BACKGROUND

Baby Girl Jane Doe was bom at the Northern Montana Hospital in Havre, Montana, on May 5, 1992. She is of Indian descent and eligible for membership in the Chippewa Cree Tribe on the Rocky Boy’s Indian Reservation.

After the child’s birth, Baby Girl Jane Doe’s mother left the hospital, refused to sign the birth certificate, and expressed the intention to relinquish her to the HUI County Department of Family Services.

On May 8, 1992, the Hill County Attorney filed a petition for temporary investigative authority and protective services with the District Court in Hill County on behalf of the Hill County Department of Family Services. He alleged that Baby Girl Jane Doe was dependent, or in danger of becoming dependent within the meaning of § 41-3-102, MCA, by reason of her mother’s conduct and intentions and alleged that the child’s father was unknown. The petition asked that the Hill County Department of Family Services be granted authority to take the child from the hospital for placement in a foster home until the mother could sign a relinquishment of parental rights, and that the public defender be appointed as the child’s guardian ad litem. On that same date, the District Court issued its order finding Baby Girl Jane Doe dependent within the meaning of § 41-3-102, MCA, granting the Hill County Department of Family Services authority to take her from the hospital for placement in a foster home, and appointing a guardian ad litem.

On May 10,1992, court records indicate that the DFS entered into an agreement with a married couple residing in Helena, Montana, who agreed to accept the child on a foster care basis until she was available for final adoption. The agreement expressed an understanding that the DFS did not yet have legal authority to consent to adoption because, among other reasons, tribal consent had not yet been obtained, and the foster parents expressed an understanding that the child may yet have to be removed from their home and placed elsewhere.

On May 20,1992, the child’s natural mother filed with the District Court an affidavit waiving all parental rights, relinquishing custody of her child to the DFS, and consenting to her adoption without further notice or consent. She indicated in her affidavit that she had been advised of the Indian Child Welfare Act, but for reasons of privacy, wished to remain anonymous and requested that the court not contact her family or Tribe concerning placement. A minute entry also indicates that she appeared in court that day, along with the county attorney, and her child’s guardian ad litem. She was advised of her rights and the consequences of her relinquishment. The court then concluded that her relinquishment, waiver, and consent were given knowingly and of her own free will.

On that date, the court also indicated that the temporary order for protective services would remain in effect until the child was placed permanently for adoption, but that the Chippewa Cree Tribe should be notified that a child eligible for enrollment as a member was being adopted.

On June 11, 1992, the Tribe was formally notified that voluntary child custody proceedings were now pending in the District Court for Hill County and was advised of its right to intervene in the proceeding pursuant to 25 U.S.C. § 1911. The Tribe was advised that the potential outcome of the proceedings, unless there was intervention, would be an order awarding permanent legal custody to the DFS, which would then place the child in a permanent adoptive home.

On June 11, 1992, the District Court issued its order in which it held that Baby Girl Jane Doe was a youth subject to termination of the parent-child relationship within the meaning of § 41-3-609, MCA, and that her best interest would be served by declaring her in need of care and awarding her custody to the DFS, along with lawful authority for that agency to consent to her adoption. Based on that conclusion, the District Court set a hearing on the DFS’s petition for permanent custody of Baby Girl Jane Doe. Notice of that hearing was also sent to the Tribe.

On June 23, 1992, the Chippewa Cree Tribe of the Rocky Boy’s Reservation moved to intervene in this matter for the purpose of assuring compliance with the ICWA. That motion was later granted by the District Court.

On August 18, 1992, at the hearing held to consider the DFS petition for permanent custody, the Tribe requested information about the identity of Baby Girl Jane Doe’s natural mother and her family so that it could determine whether the child could be placed with her extended family pursuant to the preferences provided for in 25 U.S.C. § 1915(a) and (b). Since the Tribe’s request conflicted with the mother’s request for anonymity, the District Court ordered further briefing. After consideration of the parties’ arguments, the District Court concluded that the mother’s right to anonymity, provided for in 25 U.S.C. § 1915(c) outweighed the Tribe’s interest in enforcing the statutory preferences for placement, and denied the Tribe’s motion to reveal the mother’s identity.

The District Court concluded that, while bound by the preferences provided in 25 U.S.C. § 1915(a), it also had to give consideration to the parent’s request for anonymity under 25 U.S.C. § 1915(c). It further concluded that based on the notice provided to the Tribe, and the information it had already received about the pre-adoptive family, it had the ability to satisfy itself that the applicable preferences were being considered by the court and to propose a more appropriate placement if it desired to do so. The court concluded that the purposes of the ICWA could be satisfied without revealing the identity of Baby Girl Jane Doe’s natural mother. The court also concluded that identity of the child’s father was unknown.

Final judgment was entered denying the Tribe’s motion, and that judgment was certified as final pursuant to Rule 54(b), M.R.Civ.R The Tribe then appealed from the District Court’s order.

DISCUSSION

Does a parent’s interest in anonymity, which is to be considered pursuant to 25 U.S.C. § 1915(c) of the Federal Indian Child Welfare Act (ICWA), prevail when in conflict with the Tribe’s right to enforce the preferences for placement of Indian children provided for in § 1915(a) and (b) of the Act?

The Indian Child Welfare Act was enacted by Congress in 1978 for the principal purpose of protecting the integrity of Indian tribes by preventing, where possible, the removal of Indian children and placement in non-Indian homes. After extended hearings over a number of years, Congress made the following findings set forth at 25 U.S.C. § 1901, which formed the basis for enactment of the ICWA:

(2) that Congress ... has assumed the responsibility for the protection and preservation of Indian tribes and their resources;
(3) that there is no resource that is more vital to the continued existence and integrity of Indian tribes than their children ...
(4) that an alarmingly high percentage of Indian families are broken up by the removal, often unwarranted, of their children from them by nontribal public and private agencies and that an alarmingly high percentage of such children are placed in non-Indian foster and adoptive homes and institutions; and
(5) that the States, exercising their recognized jurisdiction over Indian child custody proceedings through administrative and judicial bodies, have often failed to recognize the essential tribal relations of Indian people and the cultural and social standards prevailing in Indian communities and families.

In 25 U.S.C. § 1902 Congress also set forth a specific declaration of congressional policy which was as follows:

The Congress hereby declares that it is the policy of this Nation to protect the best interests of Indian children and to promote the stability and security of Indian tribes and families by the establishment of minimum Federal standards for the removal of Indian children from their families and the placement of such children in foster or adoptive homes which will reflect the unique values of Indian culture, and by providing for assistance to Indian tribes in the operation of child and family service programs. [Emphasis added]. Section 1911(c) of the Act provided that:
In any State court proceeding for the foster care placement of, or termination of parental rights to, an Indian child, the Indian custodian of the child and the Indian child’s tribe shall have a right to intervene at any point in the proceeding.

In order to make intervention more meaningful, § 1912(c) provides that:

Each party to a foster care placement or termination of parental rights proceeding under State law involving an Indian child shall have the right to examine all reports or other documents filed with the court upon which any decision with respect to such action may be based.

It is apparent from the plain language of the aforementioned statutes that a principal purpose of the ICWA is to protect the stability of Indian tribes by preventing adoption of Indian children by non-Indians where placement in Indian families is possible. It is also apparent that by granting tribes the right to intervene as parties in any proceeding involving the placement of Indian children, Congress intended to recognize the strong interest of tribes, as distinct from their individual members, in the placement of Indian children. Congress’s intent is further clarified by 25 U.S.C. § 1915 which gives rise to the dispute in this case. Subsections (a) and (b) of § 1915, which are relied on by the Tribe, provide in relevant part as follows:

(a)... In any adoptive placement of an Indian child under State law, a preference shall be given, in the absence of good cause to the contrary, to a placement with (1) a member of the child’s extended family, (2) other members of the Indian child’s tribe; or (3) other Indian families.
(b)... In any foster care or pre-adoptiveplacement, a preference shall be given, in the absence of good cause to the contrary, to a placement with —
(i) a member of the Indian child’s extended family,
(ii) a foster home licensed, approved, or specified by the Indian child’s tribe;
(iii) an Indian foster home licensed or approved by an authorized non-Indian licensing authority; or
(iv) an institution for children approved by an Indian tribe or operated by an Indian organization which has a program suitable to meet the Indian child’s needs. [Emphasis added].

Subsection (c) of § 1915, which was invoked by Baby Girl Jane Doe’s natural mother and relied on by the District Court, provides in relevant part that:

Where appropriate, the preference of the Indian child or parent shall be considered: Provided, That where a consenting parent evidences a desire for anonymity, the court or agency shall give weight to such desire in applying the preferences.

On appeal, the Tribe contends that its right to intervene and advocate enforcement of the statutory preferences for placement is meaningless when the first preference is for placement with the child’s extended family and the court will not reveal the identity of the child’s natural parent.

TheDFS, on the other hand, asserts, and the District Court agreed, that the natural parent’s interest in anonymity has greater significance and it is binding on the court when it is invoked.

In order to reconcile two provisions of the ICWA, which are potentially in conflict, we must determine how to best effectuate the principal purpose for which the Act was created. Since we are construing a federal act, we look for guidance to the United States Supreme Court’s leading and most recent interpretation found in Mississippi Band of Choctaw Indians v. Holyfield (1989), 490 U.S. 30, 109 S.Ct. 1597, 104 L. Ed. 2d 29. In that case, twin babies were born to Indian parents who were residents of their reservation. The birth took place at a point 200 miles distant from the reservation. The parents consented to adoption by non-Indian parents, and an adoption decree was entered in the state court.

The tribe to which the parents belonged moved the court to vacate the adoption decree on the ground that under the ICWA exclusive jurisdiction was vested in the tribal court. That motion was denied on the basis that the children’s parents had gone to great lengths to see that they were born off the reservation and had expressed a preference for the adoption that was decreed. The Mississippi Supreme Court affirmed the decision of its chancery court, and the U.S. Supreme Court granted plenary review.

In its decision to reverse the Mississippi court, the U.S. Supreme Court discussed at length the legislative history of the ICWA. Based on that histoiy, it concluded that:

The most important substantive requirement imposed on state courts is that of § 1915(a), which, absent “good cause” to the contrary, mandates that adoptive placements be made preferentially with (1) members of the child’s extended family, (2) other members of the same tribe, or (3) other Indian families.
The ICWA thus, in the words of the House Report accompanying it, “seeks to protect the rights of the Indian child as an Indian and the rights of the Indian community and tribe in retaining its children in its society.” House Report, at 23, U.S. Code Cong. & Admin. News 1978, at 7546. It does so by establishing “a Federal policy that, where possible, an Indian child should remain in the Indian community,” ibid., and by making sure that Indian child welfare determinations are not based on “a white, middle-class standard which, in many cases, forecloses placement with [an] Indian family.” [Emphasis added].

Mississippi Choctaw, 490 U.S. at 36-37, 109 S.Ct. at 1602, 104 L. Ed. 2d at 39.

In arriving at its decision, the U.S. Supreme Court found it necessary, as we must, to reconcile the rights and preferences of individual tribal members with the clear statutory rights of the tribe. In doing so, it made the following points, which are set forth at length because of their particular significance to our conclusion:

Nor can the result be any different simply because the twins were “voluntarily surrendered” by their mother. Tribal jurisdiction under § 1911(a) was not meant to be defeated by the actions of individual members of the tribe, for Congress was concerned not solely about the interests of Indian children and families, but also about the impact on the tribes themselves of the large numbers of Indian children adopted by non-Indians. See 25 U.S.C. §§ 1901(3) [25 U.S.C.S. § 1901(3)] (“[T]here is no resource that is more vital to the continued existence and integrity of Indian tribes than their children”), 1902 (“promote the stability and security of Indian tribes”). The numerous prerogatives accorded the tribes through the ICWA’s substantive provisions, e.g., §§ 1911(a) (exclusive jurisdiction over reservation domiciliarles), 1911(b) (presumptive jurisdiction over non-domiciliaries), 1911(c) (right of intervention), 1912(a) (notice), 1914 (right to petition for invalidation of state-court action), 1915(c) (right to alter presumptive placement priorities applicable to state-court actions), 1915(e) (right to obtain records), 1919 (authority to conclude agreements with States), must, accordingly, be seen as a means of protecting not only the interests of individual Indian children and families, but also of the tribes themselves.
In addition, it is clear that Congress’ concern over the placement of Indian children in non-Indian homes was based in part on evidence of the detrimental impact on the children themselves of such placements outside their culture. Congress determined to subject such placements to the ICWA’s jurisdictional and other provisions, even in cases where the parents consented to an adoption, because of concerns going beyond the wishes of individual parents. As the 1977 Final Report of the congressionally established American Indian Policy Review Commission states, in summarizing these two concerns, “frjemoval of Indian children from their cultural setting seriously impacts a long-term tribal survival and has damaging social and psychological impact on many individual Indian children.” Senate Report, at 52.
These congressional objectives make clear that a rule of domicile that would permit individual Indian parents to defeat the ICWA’s jurisdictional scheme is inconsistent with what Congress intended. See In re Adoption of Child of Indian Heritage, 111 N.J. 155, 168-171, 543 A.2d 925, 931-933 (1988). The appellees in this case argue strenuously that the twins’ mother went to great lengths to give birth off the reservation so that her children could be adopted by the Holyfields. But that was precisely part of Congress’ concern. Permitting individual members of the tribe to avoid tribal exclusive jurisdiction by the simple expedient of giving birth off the reservation would, to a large extent, nullify the purpose the ICWA was intended to accomplish. [Footnotes omitted; Emphasis added].

Mississippi Choctaw, 490 U.S. at 49-51, 109 S.Ct. at 1608-10, 104 L. Ed. 2d at 47-48.

It is clear from the legislative findings and expression of policy, and the U.S. Supreme Court’s application of the ICWA in Mississippi Choctaw, that the principal purposes of the Act are to promote the stability and security of Indian tribes by preventing further loss of their children; and to protect the best interests of Indian children by retaining their connection to their tribes.

The principal statutory method by which these purposes are achieved is the order of preferences set forth in 25 U.S.C. § 1915(a) and (b), and the Tribe’s right to intervene in order to enforce those preferences. While a parent’s wish for anonymity can be considered where not otherwise in conflict with the Act’s principal purposes, it cannot be allowed to defeat the purposes for which this Act was created.

To give primary importance to the mother’s request for anonymity would defeat the Tribe’s right to meaningful intervention and possibly defeat application of the clear preference provided by statute for placement of Baby Girl Jane Doe with a member of her extended family.

The dissent concedes that the Tribe had a right to intervene in this proceeding and that the order of preference applies to either adoptive placement, pre-adoptive placement, or placement for foster care. However, the dissent contends that since the DFS already obtained a temporary custody award and placed the child in foster care before the Tribe was notified and had an opportunity to object, that the Tribe cannot now object to an improper placement, even though they are now a party to this action. The dissent goes on to argue that the court had not yet considered permanent adoptive placement, and therefore, the Tribe’s concerns about the mother’s identity are premature. However, the Tribe’s rights would be hollow indeed if they were lost by failure of the State to timely notify it of foster placement. Furthermore, the proceeding which gave rise to this appeal was not just a proceeding for termination of parental rights — it was also a proceeding to show cause why permanent custody of Baby Girl Jane Doe should not be awarded to the DFS with authority to consent to her adoption without further notice. The possible outcome from this proceeding was pre-adoptive placement of the child with the DFS on a permanent basis, as opposed to the temporary custody which had previously been granted. This is exactly the kind of pre-adoptive placement contemplated by 25 U.S.C. § 1915(b).

Therefore, we reverse the order of the District Court and hold that 25 U.S.C. § 1915(a) and (b) requires that in this proceeding the Chippewa Cree Tribe of the Rocky Boy’s Indian Reservation be informed of the identity of Baby Girl Jane Doe’s natural mother and her extended family. To the extent possible, without interfering with the aforementioned rights of the Tribe, the natural mother’s right to privacy should be respected throughout these proceedings.

This case is remanded to the District Court for further proceedings consistent with this opinion.

JUSTICES HUNT, NELSON and WEBER concur.

JUSTICE GRAY

concurring in part and dissenting in part.

I agree entirely with the Court’s determination that the Tribe’s right to enforce the preferences for placement of Indian children provided in the Indian Child Welfare Act outweighs a parent’s request for anonymity. To allow a parent’s wish for anonymity to outweigh the Tribe’s right to ensure that the statutory preferences are applied would defeat the purposes of the Act.

I respectfully dissent, however, from the Court’s holding that the Act requires that the identity of Baby Girl Jane Doe’s mother be revealed “in this proceeding.” As the Court correctly states, § 1911(c) gives the Tribe the right to intervene in this proceeding for termination of parental rights. It is my view, however, that the proceeding at issue here is neither an adoptive placement under § 1915(a), nor a foster care or pre-adoptive placement under § 1915(c). No placement

— either foster care, pre-adoptive placement, or adoptive placement — is occurring in this proceeding for termination of parental rights. Pursuant to Montana procedures, the foster care or pre-adoptive placement occurred almost immediately after Baby Girl Jane Doe’s birth. No court proceedings were necessary for that placement under Montana law.

The adoption proceeding concerning this child is yet to come. Indeed, given Montana statutes and the location of the residence of the potential adoptive parents, the actual adoption proceeding will take place in another judicial district. It is in that proceeding, I submit, that the Tribe can and should assert its rights to the identity of this child’s mother in order to ensure proper application of the Act’s preferences. Requiring the Tribe to do so at that point is entirely consistent with both the Act and the U.S. Supreme Court’s conclusion in Mississippi Choctaw, quoted by the Court today, that “[t]he most important substantive requirement on state courts is that of § 1915(a), which, absent ‘good cause’ to the contrary, mandates that adoptive placements be made preferentially with (1) members of the child’s extended family, (2) other members of the same tribe, or (3) other Indian families.” (Emphasis added.) For that reason, I believe that it is inappropriate to consider the merits of the issue raised by the parties, namely, whether the interests of the Tribe in knowing the identity of the parent outweigh the parent’s interest in anonymity.

JUSTICE HARRISON joins in the foregoing concurrence and dissent of JUSTICE GRAY.

CHIEF JUSTICE TURNAGE joins in the opinion of JUSTICE GRAY.


author: JUSTICE NELSON

text:
    ALFRED YOUNGBLOOD and MARY ANN YOUNGBLOOD, Plaintiffs and Appellants, v. AMERICAN STATES INSURANCE COMPANY, an Indiana Corporation, Defendant and Respondent.
    No. 93-225.
    Submitted November 4, 1993.
    Decided December 14, 1993.
    50 St.Rep. 1601.
    262 Mont. 391.
    866 P.2d 203.

      For Plaintiffs and Appellants: John M. Morrison (argued), Morrison Law Office, Helena.
    For Defendant and Respondent: Stuart L. Kellner & Stephen M. Frankino (argued), Hughes, Kellner, Sullivan & Alke, Helena.
   JUSTICE NELSON

delivered the Opinion of the Court.

Plaintiffs Alfred Youngblood (Alfred) and Mary Ann Youngblood (Mary Ann) appeal an order of the First Judicial District Court, Lewis and Clark County, denying their motion for summary judgment and granting Defendant’s (American States) motion for summary judgment. We reverse.

The issues on appeal are as follows:

1. Is the choice oflawprovision in Alfred’s insurance policy, which allows American States to subrogate pursuant to Oregon law, enforceable?

2. Does the subrogation clause at issue violate Montana’s public policy?

American States issued an automobile liability insurance policy to Alfred in Oregon. The policy contained a personal injury protection (PIP) endorsement issued in Oregon, and required subrogation of medical pay benefits pursuant to Oregon law. Alfred is a resident of Oregon and Mary Ann is a resident of Washington.

On June 24,1990, Mary Ann and her parents, Alfred and Vivienne Youngblood, were traveling in Montana. They were rear-ended by a Montana truck which was insured by National Farmers Union Standard Insurance Company (National). Mary Ann was injured and American States paid approximately $10,000 in PIP benefits to her health care providers to cover some of her medical expenses.

Thereafter, Mary Ann settled her claims with National for $85,229.50. Mary Ann paid one-third of that amount in attorney’s fees, $1,000 in costs, and $5,437.50 to Union Life Insurance Company (Mary Ann’s health insurance company) in a compromise settlement of that company’s subrogation claim. American States sought to recover, via subrogation, from Mary Ann the payments it made on her behalf under the PIP endorsement of the policy issued to Alfred. Mary Ann refused to remit these funds and, on May 4, 1992, Alfred and Mary Ann filed their complaint for declaratory relief, seeking a ruling that the place of performance of the American States insurance policy was Montana, the state in which the accident occurred. Alfred and Mary Ann further requested a ruling that the medical payment subrogation provisions of Alfred’s insurance policy were void as against public policy so that American States had no valid subrogation interest for the amounts paid under that insurance policy to Mary Ann.

All parties filed motions for summary judgment and, on March 25, 1993, the District Court issued its order denying Alfred’s and Mary Ann’s motion and granting American States’ motion. In essence, the District Court held that a choice of law provision in the PIP endorsement was enforceable against Mary Ann and required application of Oregon law, which permitted medical pay subrogation. From that order, Alfred and Mary Ann appeal.

Our standard in reviewing a grant of summary judgment is the same as that initially utilized by the district court. McCracken v. City of Chinook (1990), 242 Mont. 21, 24, 788 P.2d 892, 894. Summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Rule 56(c), M.R.Civ.P.

I — CHOICE OF LAW PROVISION

The interpretation of an insurance contract in Montana is a question of law. Wellcome v. Home Ins. Co. (1993), 257 Mont. 354,_, 849 P.2d 190, 192. In general, unless the terms of the insurance contract provide otherwise, the law of the place of performance controls its legal construction and effect, while the law of the place where the contract is made governs on questions of execution and validity. Kemp v. Allstate Ins. Co. (1979), 183 Mont. 526, 533, 601 P.2d 20, 24; Section 28-3-102, MCA. Here, the general policy language in the insurance contract requires American States to pay whatever damages are required in Montana; that is, the contract is to be performed in Montana. Therefore, unless a contract term provides otherwise, Kemp and § 28-3-102, MCA, require the application of Montana law because the contract was to be “performed” in Montana. In this case, however, the insurance contract contains a choice of law provision which requires the application of Oregon subrogation law. In pertinent part, that provision provides as follows:

Reimbursement and Trust Agreement. In the event of payment to any person of any benefits under this endorsement:
(a) the Company shall be entitled to reimbursement or subrogation in accordance with the provisions of ORS 743.825, ORS 743.830, or Section 8 of Chapter 784 Laws, 1975;...

We have previously held that, if a contract’s terms are clear and unambiguous, the contract language will be enforced. Keller v. Dooling (1991), 248 Mont. 535, 539, 813 P.2d 437, 440; Section 28-3-401, MCA. The only exception to enforcing an unambiguous contract term is if that term violates public policy or is against good morals. Steinke v. Boeing Co. (D. Mont. 1981), 525 F.Supp. 234, 236. Here, the insurance contract clearly provides for subrogation pursuant to Oregon law, and expresses the intention of the parties to apply Oregon law no matter where the accident occurred or where the contract is to be performed. Therefore, the choice of law provision will be enforced unless enforcement of the contract provision requiring application of Oregon law as regards subrogation of medical payments violates Montana’s public policy or is against good morals. We must, therefore, analyze whether the Oregon law subrogation provision violates Montana’s public policy or is against good morals.

II — VIOLATION OF PUBLIC POLICY

Mary Ann contends that the subrogation clause at issue is not enforceable in Montana because it violates public policy — a rule which has been adopted and discussed in prior case law. We agree, although some further discussion and clarification of that case law is necessary.

Subrogation is an equitable doctrine which is not dependent on any contractual relationship between the parties and is not dependent on privity. Bower v. Tebbs (1957), 132 Mont. 146, 155, 314 P.2d 731, 736. The purpose of subrogation is to prevent injustice by “compel[ling] the ultimate payment of a debt by one who, in justice, equity, and good conscience, should pay it. It is an appropriate means of preventing unjust enrichment.” Bower, 314 P.2d at 736.

Our past decisions have, on occasion, confused subrogation with assignment; however, there is an important legal distinction between the two concepts.

Subrogation is the substitution of another person in the place of the creditor, so that the person substituted will succeed to the rights of the creditor in relation to the debt or claim, and is an act of the law growing out of the relation of the parties to the original contract of insurance, and the natural justice or equities arising from the fact that the insurer has paid the insured, rather than a right depending upon the contract. On the other hand, an assignment of a right or claim is the act of the parties to the assignment, dependent upon actual intention, and necessarily contemplating the continued existence of the debt or claim, the whole of which is assigned.
When there is an assignment of an entire claim there is a complete divestment of all rights from the assignor and a vesting of those same rights in the assignee. In the case of subrogation, however, only an equitable right passes to the subrogee and the legal title to the claim is never removed from the subrogor, but remains with him throughout.

Skauge v. Mountain States Tel. & Tel. Co. (1977), 172 Mont. 521, 526, 565 P.2d 628, 630-31.

Montana law has long held that a property damage claim is assignable, while a cause of action growing out of a personal right, such as a tort, is not assignable. Caledonia Ins. Co. v. Northern Pac. Ry. Co. (1905), 32 Mont. 46, 49, 79 P. 544, 545. Notwithstanding, and because we have, on occasion, blurred the distinction between subrogation and assignment, there has been some confusion between the assignment of a personal injury claim and subrogation of a personal injury claim. See Allstate Ins. Co. v. Reitler (1981), 192 Mont. 351, 628 P.2d 667.

With some exceptions, subrogation against an insured is allowed if that insured has been made whole and has been fully compensated, which compensation includes costs and attorney’s fees. Skauge, 565 P.2d at 632. However, an insurance company is only allowed to subrogate to the amount it actually paid. Farmers Ins. Exchange v. Christenson (1984), 211 Mont. 250, 254, 683 P2d 1319, 1321.

At issue here is one of the exceptions under Montana law to the general rule allowing subrogation. We have previously refused to allow subrogation of medical payment benefits. In Reitler, Welton sustained personal injuries and incurred medical expenses after she was hit from behind by a vehicle driven by Reitler. Welton was insured by Allstate Insurance Company (Allstate), which paid her $2,000 in medical benefits. Allstate sent a notice of subrogation to Reitler’s insurer, Farmers Insurance Exchange (Farmers). Thereafter, Welton settled her claim with Farmers for $9,500, and Farmers obtained a release from Welton. Allstate then filed an action against Farmers for the amount of its subrogated interest against Welton. Reitler, 628 P.2d at 668. We held that medical payment subrogation clauses are invalid, due in part to public policy considerations. Those public policy considerations included the following: (1) the insured has paid a premium for medical payment coverage; (2) the insured person is the one likely to suffer most if medical payments received must be repaid out of a third-party recoveiy; and (3) the tortfeasor’s carrier may consider that the injured person has already been paid medical expenses and can make a smaller offer which allows that such payment has already been made. Reitler, 628 P.2d at 670.

Unfortunately, we also reasoned that a subrogation clause has the effect of assigning a part of the insured’s right to recover against a third party tortfeasor and, the assignment of a personal injury claim being prohibited, we held that medical payment subrogation clauses in insurance contracts were invalid. Reitler, 628 P.2d at 670. The result reached in Reitler was correct, not because there was a prohibited assignment of a personal injury claim, but because of the public policy reasons expressed therein as outlined above, and because Allstate’s right to reimbursement via subrogation was dependent upon the ability of the indemnified party to sue the tortfeasor. Welton, however, had already settled, thus precluding suit by Allstate.

The latter conclusion is clear from our holding in St. Paul Fire & Marine Ins. Co. v. Allstate Ins. Co. (1993), 257 Mont. 47, 847 P.2d 705. In St. Paul, Lynn, insured by St. Paul Fire and Marine Insurance Company (St. Paul), and Glassing, insured by Allstate Insurance Company (Allstate), were involved in a motor vehicle accident. Allstate refused to settle Lynn’s complaint, and Lynn succeeded in obtaining a jury verdict in her favor against Glassing. St. Paul, 847 P.2d at 705-06. Lynn also filed an action in federal court against Allstate for unreasonable refusal to settle her claim. That claim was resolved by stipulation between the parties and Lynn’s claim against Allstate was dismissed with prejudice. St. Paul, 847 P.2d at 709. During these legal proceedings between Lynn and Allstate, St. Paul filed a complaint against Allstate and Glassing to recover amounts paid to Lynn pursuant to an underinsured coverage policy. St. Paul, 847 P.2d at 707. St. Paul’s complaint against Allstate was eventually dismissed because of its failure to state an actionable claim. Because Lynn’s claim against Allstate had been dismissed with prejudice, Lynn had no further claim against Allstate, and, thus, there was no claim against which St. Paul could subrogate. Under the doctrine of subrogation, St. Paul “stepped into the shoes” of Lynn. St. Paul had no independent right to sue Allstate under a subrogation theory once Lynn settled. St. Paul, 847 P.2d at 709. We further held that St. Paul did have a cause of action against Glassing, as Lynn had not stipulated or settled with him. St. Paul, 847 P.2d at 709.

The holding of Reitler was further developed and discussed in Christenson. In that case, Christenson, an uninsured motorist, caused an accident and his passenger, Hinckley, was injured. Farmers Insurance Exchange (Farmers) insured Hinckley and paid $7,000 on her claim under an uninsured motorist provision. As required by the policy, Hinckley assigned her personal injury action to Farmers as part of a subrogation clause. Farmers then filed an action against Christenson for $7,000. Christenson, 683 P.2d at 1320. In that case, we addressed whether Farmers could subrogate against Hinckley’s personal injury action after it paid her claim pursuant to an uninsured motorist policy. We held that Farmers, the uninsured motorist carrier, could make payment to Hinckley, and when she settled her claim or obtained a judgment against a third party, Farmers could subrogate and collect back the amount paid to Hinckley. Christenson, 683 P.2d at 1322. Again, while Farmers was entitled to subrogate against its insured’s tortfeasor, by upholding the assignment of Hinckley’s claim to Farmers, we allowed the indemnifying carrier to sue the tortfeasor in its own name and, thus, potentially and improperly split Hinckley’s cause of action against the tortfeasor. Farmers should have been allowed to sue, but only in the non-settling indemnified party’s name under a subrogation theory.

American States argues that, because of our reasoning and holding in Christenson, which as indicated above, was flawed, Reitler should not be applied to invalidate the subrogation clause at issue here. However, while Christenson limited our holding in Reitler to medical payments paid by an insurance company, Christenson did not overrule Reitler, contrary to American States’ argument. If the principles of assignment and subrogation had been properly applied in those two cases, there is no conflict.

The “blurring” of the distinction between an assignment and subrogation, in our decisions in Reitler and Christenson, and the misapplication of those concepts in those cases, was unfortunate. There is a definite, legal distinction between the two doctrines, and, in Reitler and Christenson, we erred in reasoning otherwise. Despite that, the public policy considerations underlying our decision in Reitler were correct then and are equally valid here.

As stated above, the public policy considerations underpinning Reitler were three-fold: (1) the insured paid a premium for medical payment coverage; (2) the insured is the one likely to suffer most if medical payments received must be repaid out of a third-party recovery; and (3) the tortfeasor’s carrier may consider that the injured person has already been paid medical expenses and can make a smaller offer which allows that such payment has already been made. Reitler, 628 P.2d at 670. In this case, all of those considerations are present. Here, Alfred paid a premium to American States to obtain the PIP endorsement. Clearly, Mary Ann, as one of the insured parties under the policy, would suffer a financial hardship if the PIP benefits she received had to be paid out of her settlement. This is especially true given Mary Ann’s assertion that, when she settled with National, the medical expenses paid by American States were specifically excluded from the settlement, and National’s claims representative made a smaller offer based on the fact that Mary Ann would not, presumably, have to repay those medical benefits to American States.

American States, nevertheless, argues that § 33-23-203, MCA, specifically allows the subrogation that is attempted here. This statute provides, in pertinent part:

(2) A motor vehicle liability policy may also provide for other reasonable limitations, exclusions, or reductions of coverage which are designed to prevent duplicate payments for the same element of loss.

American States has provided no legal authority or legislative history which would lead to the conclusion that subrogation is intended to work as a limitation, exclusion or reduction of coverage. Subrogation is a term of art and, had the legislature intended to include subrogation in this statute, it could have easily provided for the same. For example, see § 33-22-1601, MCA. Upon a plain reading of the statute, we are not persuaded that subrogation was intended to be or should be “read into” this statutory provision.

American States also argues that § 33-22-1601, MCA, allows subrogation in this case. That statute provides, in pertinent part:

A disability insurance policy subject to this chapter may contain a provision providing that... the insurer is entitled to subrogation.

However, § 33-1-206(2), MCA, defines medical benefits issued incidental to and part of vehicle insurance as “casualty” insurance and specifically excludes such benefits from the statutory requirements governing disability insurance. In addition, § 33-22-101(1), MCA, specifically states that Chapter 22, which governs disability insurance, does not apply to any policy of liability insurance. In this case, we are dealing with a PIP endorsement in an automobile liability insurance policy. Clearly, § 33-22-1601, MCA, does not apply to the insurance policy at hand.

We reaffirm our decision in Reitler and hold that subrogation of medical payment benefits in Montana is void as against public policy. Here, the choice of law provision in the insurance contract would result in medical payment subrogation under Oregon law. Because such subrogation violates Montana’s public policy, that term of the insurance contract at issue here is not enforceable. See Steinke, 525 ESupp. at 236.

Reversed.

CHIEF JUSTICE TURNAGE, JUSTICES HARRISON, HUNT, TRIEWEILER, GRAY, and WEBER concur.


text:
    STATE OF MONTANA, Plaintiff and Respondent, v. CHRIS ANDREW GREYTAK, Defendant and Appellant.
    No. 93-079.
    Submitted on Briefs October 21, 1993.
    Decided December 14, 1993.
    50 St.Rep. 1610.
    262 Mont. 401.
    865 P.2d 1096.

      For Defendant and Appellant: Leo J. Gallagher, Attorney at Law, Helena.
    For Plaintiff and Respondent: Hon. Joseph P. Mazurek, Attorney General, Cregg Coughlin, Asst. Attorney General, Helena. Mike McGrath, Lewis and Clark County Attorney, Carolyn Clemens, Deputy County Attorney, Helena.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Defendant Chris Andrew Greytak was charged with burglary, kidnapping, and sexual intercourse without consent in the District Court for the First Judicial District, in Lewis and Clark County. He was found guilty of all three charges by a jury on September 30,1992, and now appeals that conviction. We affirm the District Court.

The following issues are before this Court:

1. Did the District Court err when it overruled defendant’s objection during the prosecutor’s cross-examination of defendant’s witness?

2. Did the District Court err when it denied defendant’s motion for a mistrial on the grounds of prosecutorial misconduct?

3. Did the District Court err when it excluded evidence that the complaining witness had, prior to this incident, accused a person other than defendant of raping her?

On April 23, 1992, defendant was charged with burglarizing the home of his former girlfriend, A.B., in violation of § 45-6-204, MCA; kidnapping her in violation of § 45-5-302, MCA; and having sexual intercourse with her without her consent in violation of § 45-5-503, MCA. He admitted having had intercourse, but stated that it was consensual, and therefore, pled not guilty to each of the charged offenses on May 6,1992.

On August 27,1992, the court granted the State’s motion in limine to preclude defendant from introducing evidence that A.B. had made prior accusations of sexual assault concerning defendant and persons other than defendant.

Defendant made a motion in limine to prohibit the prosecutor from bolstering A.B.’s credibility through A.B.’s therapist. At trial, outside the presence of the jury, defense counsel stated his concerns on the record that the prosecutor would similarly attempt to bolster AJB.’s credibility through expert testimony of an investigating police officer. The judge and the prosecutor acknowledged the impropriety of this approach and the prosecutor agreed not to ask the police officer whether he believed A.B. was truthful about being raped. The testimony of the police officer was admitted without objection. However, during the cross-examination of a lay witness called by defendant, questions were permitted which defendant now contends violated the partie’s tacit understanding that A.B.’s credibility could not be bolstered through the testimony of third parties.

On the morning following this exchange, outside the presence of the jury, defendant’s attorney moved for a mistrial, based on the prosecutor’s examination. The District Court denied the motion and offered jury instruction No. 2A in which it cautioned the jury to disregard the prosecutor’s remarks. After consideration of the evidence, the jury found defendant guilty of each offense charged. Defendant was sentenced to 36 years in prison with five years suspended and designated a dangerous offender.

I.

Did the District Court err when it overruled defendant’s objection during the prosecutor’s cross-examination of defendant’s witness?

The objection took place in the following context:

Q. [By Ms. Clemens] Do you remember in our conversation, Scott,
I asked you the question why [A.B.] would make this up? Remember that?
A. [By Witness Duthie] Vaguely.
Q. Okay. Do you remember what you said to me in response to that?
MR. GALLAGHER: Your Honor, calling for speculation.
THE COURT: Overruled. Go ahead.
A. [By witness] Not really. I just said I dont know why.
Q. Okay. Do you remember making the statement to me that [A.B.] wouldnt go this far with this if it weren’t true ?
A. No, I didn’t say that.
Q. You never said that?
A. No.
[Emphasis added].

Defendant contends that the question “do you remember making the statement to me that [A.B.] wouldnt go this far with this if it weren’t true” was improper impeachment which had the effect of bolstering A.B.’s credibility. The State responds that the question to which defendant objected did not call for the witness to speculate, and therefore, that an objection on the grounds of speculation was improper. Furthermore, the State maintains that the objection was untimely.

To preserve an objection for appeal, a party must object in a timely manner and state the specific ground for the objection unless the specific ground was apparent from the context. Rule 103, M.R.Evid. We conclude that the prosecutor’s question was not improper for the reason urged at the time of trial and that the reason raised for the first time on appeal was not apparent from the context in which the question was asked. Therefore, we conclude that the District Court did not err by overruling defendant’s objection.

II.

Did the District Court err when it denied defendant’s motion for a mistrial on the grounds of prosecutorial misconduct?

The standard of review for denial of a motion for mistrial is whether there is clear and convincing evidence that the trial court’s ruling is erroneous. See State v. Benton (1992), 251 Mont. 401, 404, 825 P.2d 565, 567-68. There must be a manifest necessity to declare a mistrial and a defendant must have been denied a fair and impartial trial. Benton, 825 P.2d at 567.

After reviewing the record, we conclude that the prosecutor’s remark could have had little, if any, effect on the jury’s decision and that defendant fails to meet his burden of showing clear and convincing evidence of error by the District Court. As the State points out, the witness answered the question in the negative and had previously testified that he was a friend of both defendant and A.B. Moreover, the District Court issued an instruction cautioning the jury not to consider the statements of counsel as evidence. “An error in the admission of evidence may be cured if the jury is admonished to disregard it.” State v. Conrad (1990), 241 Mont. 1, 19, 785 P.2d 185, 190. See also, State v. Kolberg (1990), 241 Mont. 105, 785 P.2d 702. We agree with the District Court that the circumstances of this case did not warrant a mistrial and conclude that defendant received a fair and impartial trial.

III.

Did the District Court err when it excluded evidence that the complaining witness had, prior to this incident, accused a person other than defendant of raping her?

Rulings on evidence are left to the sound discretion of the trial court and will not be overturned by this Court absent a showing of manifest abuse. State v. Van Dyken (1990), 242 Mont. 415, 435, 791 P.2d 1350, 1362-63, cert. denied, 498 U.S. 920, 111 S.Ct. 297, 112 L.Ed.2d 251.

Defendant argues that the purpose of introducing the evidence was to show that A.B. was a manipulative woman who said untrue things and had a motive to make similar allegations against him. Moreover, he argues that granting the State’s motion in limine deprived him of constitutional rights.

The District Court granted the State’s motion in limine to exclude reference to previous accusations of rape made by A.B. on the basis of State v. Anderson (1984), 211 Mont. 272, 686 P.2d 193. There, we held that evidence of prior accusations made by the complaining witness of sexual assault is inadmissible if the alleged accusations have not been proven false by adjudication or admission of the witness. Anderson, 686 P.2d at 200. In this case, A.B. denied accusing anyone other than defendant of raping her. A police report contained in the record indicates that the individual she allegedly accused denied that he had raped A.B. or that she had accused him of doing so. In State v. Van Pelt (1991), 247 Mont. 99, 104, 805 P.2d 549, 552, this Court stated that “any accusations or allegations the victim has made of prior sexual conduct must have been proven to be false or admitted to be false before it is admissible.” That threshold requirement was not met in this case.

We hold that the District Court did not abuse its discretion when it excluded the evidence of prior rape allegations.

We affirm the judgment of the District Court.

JUSTICES HUNT, GRAY, NELSON and WEBER concur.


author: CHIEF JUSTICE TURNAGE

text:
    IN THE MATTER OF THE SEWARD CLARK McKITTRICK TRUST
    No. 93-151.
    Submitted on Briefs November 5, 1993.
    Rehearing Denied Jan. 6, 1994.
    Decided December 14, 1993.
    50 St.Rep. 1613.
    262 Mont. 406.
    865 P.2d 1099.

      For Appellant: Eula Compton, Missoula.
    For Respondent: Jock B. West and Bruce O. Bekkedahl, Billings. Cynthia R. Woods, Billings. Earl J. Hanson, Billings.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

This is an appeal from the District Court for the Thirteenth Judicial District, Yellowstone County. Trustee Leon McKittrick and intervenors Leo, Larry, Lew and Lynn McKittrick appeal a judgment upholding the validity of the revocable trust created by their father, Seward Clark McKittrick, before his death. We affirm.

We restate the issues as:

1. Are certain of the District Court’s findings clearly erroneous?

2. Did the court err in rejecting the claim of undue influence?

3. Did the court err in excluding evidence of possible attorney/cult member involvement in the creation of the trust?

4. Did the court err in refusing to permit expert examination of a trust draft offered by Barbara McKittrick?

Seward Clark McKittrick (Clark) died in May 1990 at age sixty-six, of cancer. He and his wife, Barbara, had been married for over forty years and had seven sons, all of whom were adults at the time of Clark’s death. Five of those sons, Leo, Larry, Lew, Lynn, and Lundell, are intervenors in this action. Another son, Leon, is the trustee of the Seward Clark McKittrick Revocable Trust. Lonny, the seventh son, is not a party to these proceedings. The position of Leon is adverse to Barbara’s position in this action. The position of Leo, Larry, Lew, and Lynn (the adverse intervenors) is also adverse to Barbara’s position. Lundell’s position is aligned with that of Barbara.

Clark and Barbara lived modestly during Clark’s lifetime. Barbara devoted most of her time to running their household and raising their sons. Clark worked in a corporate warehouse business in Billings, Montana, in which he and Barbara owned half the stock. In late 1989, the McKittrick family was aware that Clark was suffering from terminal cancer. Clark discussed the idea of setting up a revocable living trust with Leon, a licensed attorney in California, and Leo, an accountant. On March 12, 1990, Clark, Barbara, and Lundell met with a representative of Legal Tech, a Billings, Montana, firm specializing in the estate and tax business. An acquaintance of Leo’s worked at the firm, and Leo had recommended it to Clark. As a result of the meeting, Legal Tech prepared drafts of a trust, a will, a living will, and a durable power of attorney for Clark.

On April 11, 1990, Clark’s physical condition deteriorated and he was admitted to a Billings hospital. Attorney Gil Kelling, who often worked with Legal Tech, met with Clark and Barbara in the hospital to complete Clark’s estate planning documents. Barbara is the initial beneficiary of the trust. Clark wanted Leon to act as trustee. Barbara, who was worried that Leon would not adequately provide for her perceived needs, preferred Lundell. After the discussions, Kelling inserted in the trust a power of withdrawal on the part of Barbara, Leon was named as trustee, and Barbara was given a limited power of appointment. Kelling testified at trial that he did not completely read the revised trust instrument to Clark but that he discussed with Clark the various provisions, including Barbara’s power of withdrawal. Clark signed the final form of the trust and other documents on April 12,1990.

Clark and Barbara executed a stock power to transfer the stock in the warehouse business to Leon, as trustee. After Clark’s death, a buyout of Clark and Barbara’s stock in the warehouse was arranged from the proceeds of life insurance, for a total price of $1,090,000. Clark and Barbara also transferred to the trust their home, which they owned jointly, and another piece of undeveloped real property. The trust provisions at issue in this litigation read:

THIRD: Upon my death, if my wife, Barbara E. McKittrick, survives me... the assets of the trust (including assets received by the Trustee under my Last Will) shall be held, managed and distributed in accordance with the following provisions:
A. The Trustee shall pay to my wife the net income of the trust not less often than quarter-annually so long as my wife lives. Also, during the life of my wife, the Trustee shall distribute to her from the principal of the trust such further amounts as the Trustee may deem necessary or proper to provide for her support, maintenance and health; and, in exercising such discretionary power, the Trustee may, but need not, consider any other resources available to my wife and shall give primary consideration to her needs and desires. In addition, my wife shall have the right at any time to withdraw such amounts from the principal of the trust (even to the point of completely exhausting the same) as my wife shall determine. [Emphasis supplied.]
B. Upon the death of my wife, the accrued, but unpaid, income shall be paid to the estate of my wife and the then remaining assets shall be distributed among my then living descendants in such amounts and upon such terms as my wife shall appoint by specific reference to this limited power in her Last Will. To the extent that my wife does not exercise such limited power of appointment, such assets shall be added to the principal of the trusts created under the provisions of paragraph FOURTH hereof.

The adverse intervenors point out that the underlined portion of paragraph THIRD(A), the power of withdrawal in favor of Barbara, was not present in earlier drafts of the trust, nor was the limited power of appointment in paragraph THIRD(B). They further point out that, if Barbara exercises the power of withdrawal, tax advantages of the trust are destroyed.

A substantial amount of evidence at trial related to alleged cult membership and activities carried on by Clark, Barbara, and their son Lundell. Beginning in the early 1980s, Clark, Barbara, and Lundell attended meetings with a group described by Barbara and Lundell as a Bible study grouj^and described by Leon and the adverse intervenors as a cult. Leon and the adverse intervenors claimed that David H. Colville was the cult leader. They introduced into evidence a text co-authored by Colville, Life Force in the Great Pyramids. Matters discussed in the book and studied by the group involved biorhythms, pyramids, and issues relating to inanimate objects possessing energy and “blowing” people. (“Blowing” is “a person’s natural harmonic balance with nature being altered in a negative fashion.”)

Over the years, Clark and Barbara displayed behavior described by the District Court as “bizarre” and “consistent with cult membership.” For example, they had the insulation removed from their home because it was “blowing” them. In the months prior to Clark’s hospitalization, Clark and Barbara were not living in their home and were secretive with the members of their family other than Lundell concerning their whereabouts.

In September of 1990, after Leon, as trustee, refused certain requests by Barbara for funds, Barbara demanded all of the assets in the trust, relying upon her power of withdrawal. Leon’s resistance to her demand led to this litigation. Leon and the adverse intervenors claim the language in the trust document granting Barbara a power of withdrawal is inconsistent with other portions of the document, for tax planning reasons. They further claim Clark was subjected to undue influence by Barbara and other cult members and that there was actual or constructive fraud in the creation of the final trust document.

Following a nonjury trial, the District Court found in favor of Barbara. As to the alleged cult activity, the court stated,

[ajlthough this activity seems abnormal and although the study group’s methodology appears consistent with cult activity, the Court cannot on this basis make any adverse findings related to the validity, construction or interpretation of the trust.

The court noted that even Leon’s testimony concerning his conversations with his father after the trust document was signed supports the position that Clark was aware of and understood Barbara’s power of withdrawal under the trust document.

The evidence also included the testimony of Clark’s treating physician that he was competent and “his thinking was intact” on the day he signed the trust and other documents, and the testimony of a witness to the signing of the trust that Clark was of sound mind and that she observed no undue influence. The District Court upheld the validity of the Seward Clark McKittrick Revocable Trust. Leon and the adverse intervenors appeal.

I

Are the District Court’s findings clearly erroneous?

In Interstate Production Credit v. DeSaye (1991), 250 Mont. 320, 820 P.2d 1285, this Court adopted a three-part test for determining whether findings of fact are clearly erroneous.

First, the Court will review the record to see if the findings are supported by substantial evidence. Second, if the findings are supported by substantial evidence we will determine if the trial court has misapprehended the effect of evidence. ... Third, if substantial evidence exists and the effect of the evidence has not been misapprehended the Court may still find that “[A] finding is clearly erroneous when, although there is evidence to support it, a review of the record leaves the court with the definite and firm conviction that a mistake has been committed.”

Interstate Production, 820 P.2d at 1287.

Leon and the adverse intervenors challenge the following specific findings of the District Court: (1) that Clark and Barbara owned sixty-five shares of stock in the warehouse business; (2) that “several drafts” of the McKittrick trust were prepared; (3) that attorney Kelling met with Clark more than once; (4) that attorney Kelling discussed the various trust provisions with Clark; (5) that Exhibit 9 was the trust agreement signed by Clark; (6) that the McKittrick Trust creates a “coherent plan;” and, (7) that the trust represents a natural disposition for Clark.

We have reviewed the record. The arguments of Leon and the adverse intervenors concerning the above findings depend on their inferences from and interpretations of those findings. In some instances, even if their arguments were correct, the points they make are ultimately irrelevant. Our review reveals that the findings themselves are supported in the record. We do not believe the District Court has misapprehended the effect of the evidence or that a mistake has been made. We therefore hold that the challenged findings are not clearly erroneous.

II

Did the court err in rejecting the claim of undue influence?

Elements to be considered in a claim of undue influence are: (1) a confidential relationship between the person attempting to exert influence and the trustor; (2) the physical condition of the trustor as it affects his ability to withstand the influence; (3) the mental condition of the trustor as it affects his ability to withstand the influence; (4) the unnaturalness of the disposition as it relates to showing an unbalanced mind or a mind easily susceptible to undue influence; and, (5) the demands and importunities as they may affect that particular trustor, taking into consideration the surrounding circumstances. Cameron v. Cameron (1978), 179 Mont. 219, 229, 587 P.2d 939, 945.

In this case, the District Court found:

Concerning the issue of undue influence, the Court finds that there is a failure by trustee and the adverse intervenors to prove its existence. The discussions between Barbara and [Clark] leading to execution of the trust document were appropriate discussions made under the circumstances between the two parties who had an ownership interest in the assets intended to be placed in the trust. There was no confidential relationship existing between Barbara and [Clark] in this context. The physical and mental condition of [Clark] was appropriate to withstand any claimed undue influence. The disposition was natural in allowing his surviving spouse control over the trust estate.

As to the first element, Leon and the adverse intervenors claim a confidential relationship does not require that the partie’s relationship be confidential as to the specific property at issue. They state, without citation to authority, that the husband and wife relationship is traditionally a confidential relationship in all aspects.

Any presumption of a confidential relationship between Clark and Barbara was diminished by evidence that Clark generally did not discuss business or family financial matters with Barbara, but instead reserved those responsibilities solely for himself or discussed them with his sons. Moreover, all of the elements listed above, not just the presence of a confidential relationship, are considered in a claim of undue influence. The record supports the court’s findings regarding Clark’s physical and mental condition and the naturalness of the disposition in allowing the surviving spouse the option of control over the trust estate. We hold that the court did not err in rejecting the claim of undue influence.

Ill

Did the court err in excluding evidence of possible attorney/cult member involvement in the creation of the trust?

According to an offer of proof by Leon and the adverse intervenors, an unnamed witness was prepared to testify that the witness visited Clark in the hospital; that, during the visit, three other people stopped in to see Clark; and, that Clark introduced one of the three visitors, a woman, as a member of his church and an attorney. The District Court disallowed the testimony.

Decisions regarding the admission of evidence are subject to a standard of review of abuse of discretion. State v. Hall (1990), 244 Mont. 161, 169, 797 P.2d 183, 188. In this case, the offer of proof was that the woman introduced in the hospital room was an attorney, not that she in any way influenced or advised Clark or Barbara in regard to the terms of the trust. The court disallowed the testimony on grounds that the witness had not been disclosed and that the proposed testimony was cumulative and of questionable relevance. We hold that the District Court did not abuse its discretion in refusing to allow this unnamed witness to testify.

IV

Did the court err in refusing to permit expert examination of a trust draft offered by Barbara McKittrick?

The adverse intervenors proposed to have a document expert examine a document purported by Barbara to be a draft of the McKittrick trust. The draft contained the right of withdrawal, but did not name a trustee. Leon and the adverse intervenors claim this proves the draft is a forgery, because of other testimony that Leon was named as trustee before the right of withdrawal was added to the trust. In an offer of proof, the intervenors stated that their document expert would testify that it did not appear that the draft document was prepared on the same laser printer as was the final trust.

In an order entered with its findings, conclusions, order, and judgment, the District Court stated

Any determination would at best be inconclusive. The matter had been scheduled for trial for some period of time and this exhibit is not determinative in the findings of fact and conclusions of law filed concurrently by the Court. An examination of this document would create additional expense and delay in reaching a determination of the issues. No one has suggested an arrangement that the Court would deem appropriate for transmittal of the document to an expert.

For all of these reasons the motion should be denied.

As stated in Issue III, our standard of review on evidentiary questions is whether the District Court abused its discretion. We hold that no abuse of discretion has been shown in the denial of the request for examination of the document.

Barbara asks that this Court assess sanctions against Leon and the adverse intervenors pursuant to Rule 32, M.R.App.R, for the costs of this appeal, on grounds that the appeal was taken without substantial or reasonable grounds. Under the circumstances of this case, we decline to so order.

Affirmed.

JUSTICES HARRISON, HUNT, TRIEWEILER, and GRAY concur.