Brodowy v. Progressive Direct Ins. Co.

1

JAMES BRODOWY and MARGARET BRODOWY, Plaintiffs, v. PROGRESSIVE DIRECT INSURANCE COMPANY, d/b/a PROGRESSIVE DIRECT AUTO, and JOHN DOES I-V, Defendants.

No. CV 22-30-H-KLD

United States District Court, D. Montana, Helena Division

September 1, 2023

ORDER

Kathleen L. DeSoto, United States Magistrate Judge

This third-party insurance bad faith action comes before the Court on the parties' cross motions for summary judgment. For the reasons discussed below, Plaintiffs James and Margaret Brodowy's (collectively “the Brodowys”) motion for partial summary judgment on liability (Doc. 27) is denied, and Defendant Progressive Direct Insurance Company d/b/a Progressive Direct Auto's (“Progressive”) cross-motion for summary judgment on all claims alleged in the Complaint is granted (Doc. 31).

I. Background^[1]

On the morning of September 24, 2019, James Brodowy (“James”) was driving his motorcycle to work in Helena, Montana when he was struck by a vehicle driven by KayDe Burkstrand. (Doc. 37 at ¶ 1). Shortly after the accident, James was life-flighted to the University of Utah Hospital in Salt Lake City. (Doc. 39 at ¶ 4). James's wife, Margaret Brodowy (“Margaret”), was not on the motorcycle or at the scene of the accident, but was able to travel with James to the hospital in Salt Lake City. (Doc. 37 at ¶ 2; 39 at ¶ 5). The Brodowys did not return from Salt Lake City until December 10, 2019. (Doc. 39 at ¶ 18). As a result of the collision, James suffered a severe spinal cord injury that has left him paralyzed from the chest down. (Doc. 39 ¶ 3). It is undisputed that Burkstrand was at fault for the accident. (Doc. 37 at ¶ 1).

At the time of the accident, Burkstrand was insured under a Progressive automobile liability insurance policy (“Policy”) with bodily injury liability limits of $25,000 per person and $50,000 per accident. (Doc. 11 at ¶ 8; Doc. 37 at ¶¶ 3-4; Doc. 39 at ¶ 7). On the evening of September 24, 2019, Margaret called Progressive and reported the accident. (Doc. 30-2 at 2). Notes by the Progressive claims processor who took Margaret's call identify the “claimant party” and the injured “claimant driver” as “Jim Brodowy.” (Doc. 30-2 at 2). As a result of Margaret's call, Progressive opened a claim and assigned the matter to claims representative Maureen Snyder (“Snyder”). (Doc. 30-2 at 2, 4).

Two days after the accident, on September 26, 2019, Snyder received a call from a representative of the University of Utah Hospital who reported that Margaret was wondering if there was any way for the hospital to bill Progressive directly. (Doc. 30-2 at 4). Snyder provided the billing address for claims and advised the caller that a liability determination was pending. (Doc. 30-2 at 4). Later that day, Snyder attempted to call Margaret and left a voicemail stating that her investigation was pending, the police report had been ordered, and that she welcomed a call back for any questions or concerns and would keep Margaret updated as she obtained more information. (Doc. 30-2 at 5; Doc. 39 at ¶ 10). Snyder's claim notes reflect that on October 1, 2019, Margaret left her a voicemail stating that James remained in the intensive care unit and that Margaret could be difficult to reach. (Doc. 39 at ¶¶ 11-12; Doc. 30-2 at 5).

Two weeks later, on October 15, 2019, Snyder indicated that medical records received directly from the providers warranted a “pl[aintiff] tender,” and also interviewed Burkstrand by telephone. (Doc. 39 at ¶ 13; Doc. 30-2 at 5-6). After the interview, Snyder noted that Progressive's insured was the proximate cause of the loss, and that she needed to complete the coverage and liability evaluation. (Doc. 39 at ¶ 13; Doc. 30-2 at 5-6). On October 22, 2019, Snyder reviewed the accident report and wrote in her claim notes: “liability complete” and “Liability Range: 100% adverse to ins[ured].” (Doc. 39 at ¶ 14; Doc. 30-2 at 6-7). That same day, Snyder sent a letter addressed to James at his home address in Helena. (Doc. 30-3). The letter stated in relevant part: “The policy limits under the Progressive policy for Kayde Burkstrand is $25,000 per person for Bodily Injury. Please find the enclosed policy Declarations Page for your reference. Progressive is now prepared to tender the full policy limit to you for the full and final settlement of your claim.” (Doc. 39 at ¶ 15; Doc. 30-3 at 2).

Snyder sent the Brodowys a follow up email on December 16, 2019. (Doc. 39 at ¶ 16; Doc. 30-2 at 12). Snyder reiterated that Burkstrand's Progressive policy “carries a $25,000 per person limit for bodily injury and this policy limit was offered to you in October 22^nd correspondence.” (Doc. 39 at ¶ 16; Doc. 30-2 at 12). Snyder stated she was “aware that the medical expenses far exceed this policy limit,” and advised the Brodowys that if they had any applicable underinsured motorist bodily injury coverage she would be happy to coordinate with their “insurance carrier for any necessary documentation they may need to process their claim for you.” (Doc. 39 at ¶ 16; Doc. 30-2 at 12). Snyder explained that she had not received “any medical claim liens or subrogation interests that must be protected upon settlement, so upon acceptance/confirmation from you, I can issue the $25,000 payment to you and have it mailed straight away.” (Doc. 39 at ¶ 16; Doc. 30-2 at 12).

On December 21, 2019, the Brodowys responded to Snyder by email stating that they “would like to accept the $25,000” and asking Progressive to send the check to their Helena address. (Doc 39 at ¶ 23; Doc. 30-2 at 13). On January 2, 2020, Progressive mailed a letter addressed to James and enclosed a check for $25,000 made out to both James and Margaret. (Doc. 39 at ¶¶ 24-25; Doc. 30-1 at 2; Doc. 33-6). The letter stated:

We have reached an agreement for the complete and full settlement of your Bodily Injury claim only. Payment in the amount of $25,000 is enclosed. This concludes the handling of your claim. No further payments can be made by Progressive for any loss-related medical expenses or injury compensation.

Enclosed is also an Injury Release form, sent on behalf of our insured, for your signature and return. Please be advised that the settlement is not contingent on you signing the release, and the payment can be processed without the release being executed.

(Doc. 30-1 at 2). The enclosed release listed both James and Margaret, and would have discharged Burkstrand from “any and all claims....” resulting from the accident in consideration for Progressive's $25,000 payment. (Doc. 30-6).

Progressive's next communication with the Brodowys came by way of a January 30, 2020, letter from their attorney. (Doc. 37 at ¶ 19; Doc. 33-7). The letter returned Progressive's $25,000 check and asked Progressive to confirm coverages.

(Doc. 37 at ¶ 19; Doc. 33-7). On February 7, 2020, Progressive responded with a copy of the Policy's declarations page, a certified copy of the Policy, and a confirmation that it was unaware of any other applicable coverage. (Doc. 37 at ¶ 20; Doc. 33-8). During an email exchange on April 3, 2020, the Brodowys' attorney advised Snyder that he would be sending a settlement demand in the near future. (Doc. 33-2 at 17). Snyder followed up with another email on June 16, 2020, asking counsel for an update on the timeframe of the Brodowys' anticipated settlement demand. (Doc. 37 at ¶ 21; Doc. 33-2 at 18).

On July 20, 2020, counsel sent Progressive a demand letter on behalf of both James and Margaret. (Doc. 33-9). The letter demanded $50,000 to resolve their respective claims against Burkstrand, in exchange for a full release of Burkstrand. (Doc. 33-9; Doc. 37 at ¶ 23). Progressive received the demand letter on July 27, 2020, and seven days later it tendered payment of policy limits in the amount of $50,000. (Doc. 33-2 at 20-24; Doc. 39 at ¶ 28; Doc. 37 at ¶ 26).

The Brodowys filed this action in state court on September 29, 2021, and Progressive timely removed the case to this Court based on diversity jurisdiction pursuant to 28 U.S.C. §§ 1332(a), 1441, and 1446. (Doc. 1, Doc. 1-1). The Complaint asserts claims for violations of Montana's Unfair Trade Practices Act (“UTPA”), Mont. Code Ann. §§ 33-18-101 et seq. (Count 1), common law bad faith (Count 2), breach of the covenant of good faith and fair dealing (Count 3), and punitive damages (Count 4). (Doc. 10).

The Brodowys move for partial summary judgment on liability under the UTPA, reserving issues of causation and damages for trial. (Doc. 27). Progressive argues the undisputed evidence demonstrates that it did not act in bad faith, and cross-moves for summary judgment on all claims. (Doc. 31).

II. Legal Standard

Under Federal Rule of Civil Procedure 56(a), a party is entitled to summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” The party seeking summary judgment bears the initial burden of informing the Court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of any genuine issue of material fact. Celotex Corp. v. Cattrett, 477 U.S. 317, 323 (1986). A movant may satisfy this burden where the documentary evidence produced by the parties permits only one conclusion. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 251 (1986).

A moving party who does not have the ultimate burden of persuasion at trial may carry its initial burden of production in one of two ways: “the moving party may produce evidence negating an essential element of the nonmoving party's case, or, after suitable discovery, the moving party may show that the nonmoving party...