                                                                                             May 2 2013


                                           DA 12-0247

                  IN THE SUPREME COURT OF THE STATE OF MONTANA

                                           2013 MT 119



BRENDA BAILEY AND J. STANLEY BAILEY, JR.,


              Plaintiffs and Appellants,

         v.

STATE FARM MUTUAL AUTOMOBILE INSURANCE
COMPANY, MARK OLSON AND DOES 1-3,

              Defendants and Appellees.



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


COUNSEL OF RECORD:

                For Appellant:

                        Michael J. George, Lucero & George, L.L.P., Great Falls, Montana

                For Appellee:

                        Robert F. James, Jordan Y. Crosby, Ugrin, Alexander, Zadick
                        & Higgins, P.C., Great Falls, Montana



                                                    Submitted on Briefs: February 27, 2013

                                                               Decided: May 2, 2013


Filed:

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

¶1     Brenda Bailey and J. Stanley Bailey, Jr. (the Baileys) appeal from an order of the

Ninth Judicial District Court, Glacier County, granting summary judgment to State Farm

and Mark Olson (Olson) on the Baileys’ claims that State Farm and Olson negligently

failed to secure underinsured motorist (UIM) coverage for the Baileys. We reverse the

District Court’s entry of summary judgment in favor of State Farm and Olson, and

remand for further proceedings.

                                         ISSUES

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

¶3     1. Did the District Court err in granting summary judgment when it found no

genuine issues of material fact with respect to the duty of State Farm and Olson to

procure UIM coverage for the Baileys?

¶4     2.   Did the District Court err in granting summary judgment by failing to

recognize and impose a duty arising in negligence beyond a duty to procure requested

coverage?

                 FACTUAL AND PROCEDURAL BACKGROUND

¶5     On October 19, 2006, a drunk driver crossed the highway centerline and collided

head-on with the Baileys’ vehicle. The Baileys sustained very serious injuries in the

accident. Stan was flown to Harborview Medical Center in Seattle and remained a

patient there for five months. Brenda spent a significant amount of time hospitalized in

Kalispell and Cut Bank. Brenda remains wheelchair bound as a result of her injuries.

The Baileys incurred medical expenses in excess of $1,000,000.

                                             2
¶6     The Baileys moved from Oregon to East Glacier, Montana, in March 1998. The

Baileys had been State Farm customers for many years. On April 3, 1998, the Baileys

went to the Mark Olson State Farm Agency in Cut Bank, Montana, to transfer their

Oregon State Farm policy to Montana. Insurance agent Nola Peterson Softich (Softich)

assisted the Baileys. The Baileys specifically recalled presenting their Oregon State

Farm insurance cards to Softich and requesting that the same coverage they carried in

Oregon be transferred to Montana. The Baileys also maintain that they requested full

coverage.

¶7     Softich completed a computerized insurance application for each of the Baileys’

two vehicles. Each application listed twelve types of coverage and displayed a “Yes” or

“No” next to each coverage to indicate whether that coverage was selected. The State

Farm policies sold to the Baileys in Montana contained liability coverage limits of

$250,000 per person and $500,000 per occurrence for bodily injury, $100,000 for

property damage liability, $5,000 in medical payments coverage, and uninsured motorist

(UM) coverage limits of $100,000 per person and $300,000 per occurrence. On both

applications, Softich entered a “No” next to the UIM coverage. After Softich filled out

the applications, Stan signed both applications. The application contained the following

language directly above the signature line:

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


                                              3
¶8    Stan testified in his deposition that he typically did not read any insurance

documents because he relied on his agent to provide him with the important information.

Brenda recalled receiving insurance cards from State Farm, but did not recall reviewing

any policies or other information from State Farm. State Farm and Olson maintained that

the Baileys received new insurance cards and renewal notices listing the various

coverages twice every year.

¶9    Although Softich had no independent recollection of her initial interaction with the

Baileys, she testified that it was her habit and practice to always review the “ACHUW”

coverages with new customers. “ACHUW” stands for: A – liability; C – medical

payment; H – emergency towing; U – uninsured motorist; and W – underinsured

motorist. Softich claimed that UIM coverage must have been offered to the Baileys.

Softich also testified that she never advised customers to lower their UM or UIM

coverage. Olson admitted that he did not know whether the Baileys were offered UIM

coverage, but his staff is supposed to go through every coverage. The Baileys had no

specific recollection of whether the “ACHUW” coverages were discussed when they met

with Softich.

¶10   It is undisputed that the Baileys’ State Farm automobile insurance policy obtained

in Montana did not match their previous policy from Oregon. The Baileys’ Oregon

policies provided the following coverages:     (1) bodily injury liability, $300,000 per

person/$500,000 per occurrence; (2) property damage, $100,000; (3) personal injury

protection (analogous to medical payments coverage) $100,000; (4) UM, $300,000 per

person/$500,000 per occurrence; and (5) UIM, $300,000 per person/$500,000 per

                                           4
occurrence.   Notably, Oregon law mandates the UM coverage must include UIM

protection. See Or. Rev. Stat. § 742.502(2)(a). In Oregon, State Farm combines the UM

and UIM coverages and denotes both as a single “U” coverage. Olson and his staff

admitted that before becoming involved in this litigation, they were unaware that “U”

was used in Oregon to represent both UM and UIM coverage.

¶11    In May 2005, Stan called an employee of Olson, Jeannie Fetters (Fetters), on the

telephone to discuss his State Farm policy. Fetters made note of the conversation in her

records and recalled that Stan was interested in changing the deductibles on his collision

coverage and removing his emergency road service coverage. During their conversation,

Fetters reviewed his policy and mentioned to Stan that he did not have UIM coverage.

Fetters admitted that the portion of the phone conversation dealing with UIM coverage

lasted “maybe 30, 45 seconds, or a minute” and she did not discuss what UIM coverage

entailed. Fetters testified that Stan told her that he was not interested and he only wanted

to make the requested changes.

¶12    Following the automobile accident that occurred on October 19, 2006, the Baileys

learned that they had only $5,000 in medical payments coverage and did not have any

UIM coverage. In fact, the Baileys testified that they were unaware what UIM coverage

was until after the accident. The drunk driver who caused the accident carried the

statutory minimum automobile liability insurance limits. The Baileys’ medical expenses

and other damages far exceeded the liability coverage of the drunk driver.

¶13    On May 20, 2009, the Baileys filed their complaint against State Farm and Olson

alleging that Olson was negligent in failing to obtain the appropriate insurance coverages.

                                             5
The Baileys requested declaratory relief and asked the District Court to reform the

insurance policy to include UIM coverage in the same amount as their liability coverage.

The Baileys also alleged that Olson breached his fiduciary duty by failing to secure UIM

coverage and failing to advise them of the need to obtain UIM coverage. Lastly, the

Baileys alleged that Olson’s actions constituted actual malice sufficient to support an

award of punitive damages.

¶14   State Farm and Olson filed an answer to the complaint, in which they posited

various defenses.   However, they did not initially raise the affirmative defense of

comparative fault. See M. R. C. P. 8(c). State Farm and Olson later sought to amend

their answer to interpose the defense of “contributory negligence” on the part of the

Baileys. However, in light of the court’s subsequent entry of summary judgment for

State Farm and Olson, it never addressed the merits of the motion to amend.

¶15   On January 13, 2012, State Farm and Olson filed a motion for summary judgment

on all of the Baileys’ claims.    State Farm and Olson argued they were entitled to

judgment as a matter of law because the Baileys declined UIM coverage in their

insurance application and signed the application that listed the coverage limits. State

Farm and Olson contended that Stan also declined UIM coverage when Fetters pointed

out to him that he did not have UIM coverage during a phone conversation in May 2005.

Furthermore, State Farm and Olson maintained that they only owed the Baileys a duty to

obtain coverage that was requested, and they did not breach this duty. State Farm and

Olson also argued that they did not owe the Baileys a fiduciary duty.



                                            6
¶16    In response, the Baileys countered that summary judgment would be inappropriate

because genuine issues of material fact remained regarding whether the Baileys were

advised about UIM coverage.        The Baileys argued that the extent of an insured’s

obligation to read an insurance policy depends on what is reasonable under the

circumstances of each case and therefore cannot be decided as a matter of law. The

Baileys asserted that their request for the same coverage as they had in Oregon qualifies

as a request for specific insurance, so Olson’s failure to obtain the requested insurance

constitutes a breach of his duty. Though they acknowledge that this Court has not yet

recognized a fiduciary relationship between an insurance agent and a client, the Baileys

contend that the facts of their case support recognition of such a relationship.

¶17    On February 8, 2012, the District Court held oral argument on the motion for

summary judgment. The District Court issued its order on March 19, 2012, granting

summary judgment to State Farm and Olson. The District Court framed the issue in

terms of whether the Baileys’ statements, which were not contained within the

application for insurance, could vary or alter the insurer’s obligation to procure specific

insurance. The District Court determined that the undisputed facts established that State

Farm and Olson provided the specific insurance requested by the Baileys in the insurance

application that Stan signed. The District Court reasoned that the Baileys’ request for the

same insurance as they had in Oregon cannot be construed as a specific request for UIM

coverage or medical payments coverage in excess of $5,000 because the written

application for insurance contained different terms.       After determining that existing

Montana law does not impose a heightened duty on an insurance agent, the District Court

                                              7
concluded that no fiduciary relationship existed. The Baileys appeal from the District

Court’s entry of summary judgment in favor of State Farm and Olson.

                              STANDARDS OF REVIEW

¶18    We review a district court’s ruling on a motion for summary judgment de novo,

applying the same criteria of M. R. Civ. P. 56 as the district court. Steichen v. Talcott

Props., LLC, 2013 MT 2, ¶ 7, 368 Mont. 169, 292 P.3d 458; Dubiel v. Mont. DOT, 2012

MT 35, ¶ 10, 364 Mont. 175, 272 P.3d 66. Summary judgment “should be rendered if the

pleadings, the discovery and disclosure materials on file, and any affidavits show that

there is no genuine issue as to any material fact and that the movant is entitled to

judgment as a matter of law.” M. R. Civ. P. 56(c)(3).

                                     DISCUSSION

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

¶20    Under Montana law, it is “well established that an insurance agent owes an

absolute duty to obtain the insurance coverage which an insured directs the agent to

procure.” Monroe v. Cogswell Agency, 2010 MT 134, ¶ 32, 356 Mont. 417, 234 P.3d 79;

Fillinger v. Northwestern Agency, 283 Mont. 71, 83, 938 P.2d 1347, 1355 (1997); Lee v.

Andrews, 204 Mont. 527, 532, 667 P.2d 919, 921 (1983); Gay v. Lavina State Bank, 61

Mont. 449, 458, 202 P. 753, 755 (1921). If an insurance agent is instructed to procure

specific insurance and fails to do so, he is liable for damages suffered due to the absence

of such insurance. Fillinger, 283 Mont. at 83, 938 P.2d at 1355; Lee, 204 Mont. at 532,

667 P.2d at 921; Gay, 61 Mont. at 458, 202 P. at 755.

                                            8
¶21    We have previously recognized that an insurance policy is a contract and is

therefore subject to the applicable contract law of Montana. Fillinger, 283 Mont. at 77,

938 P.2d at 1351 (citing Universal Underwriters Ins. Co. v. State Farm Mut. Auto. Ins.

Co., 166 Mont. 128, 135, 531 P.2d 668, 673 (1975)). “Every insurance contract shall be

construed according to the entirety of its terms and conditions as set forth in the policy

and as amplified, extended, or modified by any rider, endorsement, or application which

is a part of the policy.” Section 33-15-316, MCA.

¶22    While it is generally presumed that a person who executes a written contract

knows its contents and assents to them, an insured does not have an absolute duty to read

an insurance policy. Robertus v. Farmers Union Mut. Ins. Co., 2008 MT 207, ¶ 42, 344

Mont. 157, 189 P.3d 582; Thomas v. Northwestern Nat’l Ins. Co., 1998 MT 343, ¶ 28,

292 Mont. 357, 973 P.2d 804 (citing Fillinger, 283 Mont. at 78, 938 P.2d at 1352).

Instead, “the extent of an insured’s obligation to read the policy depends upon what is

reasonable under the facts and circumstances of each case.” Robertus, ¶ 42 (quoting

Thomas, ¶ 27). The relationship between the insured and the insurance agent is an

important factor to consider when examining the insured’s duty to read the insurance

contract. Fillinger, 283 Mont. at 77-78, 938 P.2d at 1352-53. Once an insured informs

an insurance agent of his insurance needs and the agent’s conduct permits a reasonable

inference that the agent is highly skilled in this area, an insured is justified in relying on

an insurance agent to obtain the coverage that the agent has represented he will obtain.

Fillinger, 283 Mont. at 78, 938 P.2d at 1352 (citing Fiorentino v. Travelers Ins. Co., 448

F. Supp. 1364, 1369 (E.D. Pa. 1978)). The insured’s failure to read an insurance policy

                                              9
does not operate as a bar to relief as a matter of law, but it may constitute comparative

negligence. See Fillinger, 283 Mont. at 78, 938 P.2d at 1352 (citations omitted).

¶23    The District Court determined that State Farm and Olson met their initial burden

of establishing that they provided the specific insurance requested by the Baileys in their

application for insurance.    The District Court relied on the fact that the insurance

coverage requested in the insurance application was actually provided to the Baileys.

Since Stan signed the application for insurance, the District Court reasoned that the

Baileys’ request for the same insurance they had in Oregon could not be construed as a

specific request for UIM coverage and medical payments coverage in excess of $5,000.

The District Court applied the parol evidence rule and concluded that it was arguable

whether the Baileys’ oral request for the same insurance they carried in Oregon would be

admissible to alter the terms of a clear and unambiguous application and policy. The

District Court also emphasized Softich’s uncontroverted testimony that it was her normal

practice to explain the coverages to clients, and Fetter’s testimony that she later informed

Stan that he lacked UIM coverage before the accident occurred. Ultimately, the District

Court concluded that negligence could be decided as a matter of law and entered

judgment in favor of State Farm and Olson.

¶24    In Featherston by & ex rel. Featherston v. Allstate Ins. Co., 875 P.2d 937 (Idaho

1994), the Idaho Supreme Court addressed the duty owed by an insurer to an insured

when the insured transfers a policy and requests that the insurer procure the same

coverage. The insured in Featherston contacted an Allstate agent, provided the agent

with the declarations page of his Farmers Insurance policy, and requested a price quote

                                             10
for the same coverage with Allstate. Featherston, 875 P.2d at 938. After receiving a

price quote, the insured transferred his insurance policy to Allstate. Featherston, 875

P.2d at 938. The insured admitted that he never read the Allstate policy. Featherston,

875 P.2d at 938. More than five years after transferring to Allstate, a member of the

insured’s family was injured in an accident with an underinsured driver and the insured

learned that he had no UIM coverage. Featherston, 875 P.2d at 938-39. The Court

determined that “[t]he scope of Allstate’s duty depends on what the agent was asked to

provide.” Featherston, 875 P.2d at 940. It reversed the trial court’s entry of summary

judgment in favor of the insurer, concluding that a genuine issue of material fact existed

as to what coverage was requested and the consequent duty that arose as a result of that

request. Featherston, 875 P.2d at 940-41.

¶25   Our review of the record here similarly demonstrates that genuine issues of

material fact exist as to whether State Farm and Olson acted negligently in transferring

the Baileys’ Oregon policy to Montana. It is undisputed that the Baileys directed Olson’s

agent, Softich, to procure the same insurance coverage as they had in Oregon. It is also

undisputed that the Baileys’ Montana State Farm policy that they obtained through Olson

did not contain the same coverages and limits as their Oregon policy. The Montana

policy contained very high liability and UM limits, but very low medical payment

coverage and no UIM protection. Notably, none of the agents at Olson knew that Oregon

combined UM and UIM coverage and designated such coverages using different letters.

The Baileys posit that these differences between coverages caused Softich to mistakenly



                                            11
omit UIM coverage, when, given her expertise, she should have known the states handled

such coverages differently.

¶26    Softich had no specific recollection of what she discussed with the Baileys, but

testified that it was her usual practice to go through and explain each coverage with a new

client. However, Softich also testified that she would not advise clients to decrease their

coverage limits. Absent some specific recollection about what was discussed and why

the Baileys did not receive the same coverages and limits as they had in Oregon, a

genuine issue of material fact exists as to why the discrepancies in coverage occurred

when the Baileys transferred their State Farm policy to Montana.

¶27    We next turn to the District Court’s conclusion that evidence of the Baileys’ oral

statements during the meeting with Softich are arguably barred by the parol evidence

rule. Contrary to the District Court’s assertion, the Baileys’ oral request for matching

coverage in Montana is not barred by the parol evidence rule. Extrinsic evidence may be

considered “when a mistake or imperfection of the writing is put in issue by the

pleadings” or “when the validity of the agreement is the fact in dispute.”            Section

28-2-905(1)(a)-(b), MCA. The Baileys have put the validity of the insurance application

at issue by representing that they did not fill it out or understand all of its terms, and the

application did not contain the terms that they requested. Since an insurance agent has a

duty to obtain the coverage requested by a client, the Baileys’ claims that they orally

requested “full coverage” and the same exact coverage as they had in Oregon must

necessarily be considered when examining whether their insurance agent breached her

duty. Based on the evidence in the record, a jury could reasonably conclude that Softich

                                             12
transcribed different terms into the application than what the Baileys requested. The

Baileys have produced sufficient evidence to survive summary judgment.

¶28    Furthermore, the District Court misapprehended the effect of Stan’s signing of the

application for insurance. The insurance application was an electronic form that Softich

completed. Softich was the person who selected the coverages and limits when filling

out the form. After Softich completed the form, she printed it and Stan signed it. Given

the Baileys’ uncontroverted testimony that they requested the same coverage as they had

in Oregon and requested “full coverage,” a fact question may exist as to whether the

Baileys acted reasonably in relying upon the representations of Softich rather than

reading the application for insurance and the policy.1 As noted above, however, the

District Court never reached the question of whether State Farm and Olson may amend

their answer to allege that the Baileys’ conduct should be compared to that of State Farm

and Olson. This will be a determination for the District Court to make on remand.

¶29    The remaining issue is the phone conversation that occurred in May 2005. Fetters

testified that it was a short conversation, but her notes indicate that she mentioned to Stan

that he did not have UIM coverage. Stan testified that he was under the impression that

he had the same coverage as he had in Oregon, and therefore did not need any additional

coverage. Fetters admitted that she did not explain what UIM coverage was during this


1
  The dissent incorrectly asserts that the Court is adopting a “new, broadly-stated,
‘no-read’ principle.” This assertion is completely unfounded. As our case law clearly
establishes and as addressed in ¶ 22, the extent of an insured’s obligation to read the
policy is dictated by what is reasonable under the particular facts and circumstances of
each case. A determination of what is reasonable is, of course, a fact issue for resolution
by a jury. Thus, we do not adopt a new principle; we merely follow the law.
                                             13
phone conversation with Stan, and the Baileys maintained that they did not even know

what UIM coverage was until after the accident. The parties’ varying accounts of the

conversation further demonstrate the need to submit these factual issues to the jury.

¶30     Under the facts and circumstances of this case, State Farm and Olson have not met

their “heavy burden of demonstrating, in a manner sufficient to exclude any real doubt,”

that the Baileys did not request different insurance than what they received. Monroe,

¶ 32.   Negligence actions typically involve questions of fact and ordinarily are not

susceptible to summary judgment. Questions of fact can be determined as a matter of law

only when reasonable minds cannot differ. Meloy v. Speedy Auto Glass, Inc., 2008 MT

122, ¶ 10, 342 Mont. 530, 182 P.3d 741; Henricksen v. State, 2004 MT 20, ¶ 19, 319

Mont. 307, 84 P.3d 38. In deciding a motion for summary judgment, all reasonable

inferences must be drawn in favor of the non-moving party so that if there is any doubt as

to the existence of a genuine issue of material fact, that doubt must be resolved in favor

of the party opposing summary judgment. Lorang v. Fortis Ins. Co., 2008 MT 252, ¶ 38,

345 Mont. 12, 192 P.3d 186; Newbury v. State Farm Fire & Cas. Ins. Co., 2008 MT 156,

¶ 14, 343 Mont. 279, 184 P.3d 1021. Drawing all reasonable inferences in favor of the

Baileys, we conclude that reasonable minds could differ concerning whether State Farm

and Olson acted negligently when placing the Baileys’ coverage. Therefore, the District

Court erred in entering summary judgment in favor of State Farm and Olson on Baileys’

negligence claims.

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

                                            14
¶32    Because we reverse the entry of summary judgment and remand for trial on the

merits under the negligence theory asserted by the Baileys, we deem it unnecessary to the

resolution of this case to determine whether these circumstances may also give rise to a

heightened duty on the part of Olson. We therefore decline to address the Baileys’

second issue.

                                    CONCLUSION

¶33    For the foregoing reasons, we reverse the District Court’s grant of summary

judgment and remand for further proceedings in accordance with this Opinion.


                                                 /S/ PATRICIA COTTER


We Concur:


/S/ MIKE McGRATH
/S/ MICHAEL E WHEAT
/S/ BRIAN MORRIS




Justice Jim Rice, dissenting.

¶34    In my view, the record establishes that the District Court correctly granted

summary judgment to the Defendants.

¶35    “The party moving for summary judgment has the initial burden of proving that no

genuine issues of material fact exist. . . . The burden then shifts to the non-moving party

to prove by more than mere denial and speculation that a genuine issue of material fact


                                            15
exists.” Brown & Brown of MT, Inc. v. Raty, 2012 MT 264, ¶ 17, 367 Mont. 67, 289 P.3d

156 (citing Myers v. Dee, 2011 MT 244, ¶ 10, 362 Mont. 178, 261 P.3d 1054). State

Farm presented sufficient evidence to carry its initial burden, demonstrating from the

record that it had obtained the insurance coverage the Baileys had requested. The Court’s

analysis impliedly reaches that conclusion also. Opinion, ¶¶ 23, 25, 30. However,

although Baileys demonstrated a genuine issue of material fact with regard to some of

State Farm’s evidence, they failed to satisfy their burden to demonstrate a genuine issue

as to the entirety of State Farm’s evidence, and thus failed to carry their burden.

¶36    State Farm presented the testimony of Nola Softich, who testified that it was her

custom and practice to provide a new customer with the “goldenrod pamphlet,” which

was “included with every packet” given to customers. This pamphlet described all the

coverages available for purchase from State Farm.          Softich always reviewed those

coverages with the customer, including uninsured and underinsured motorist coverages.

This is evidence of the standard procedure Softich would have followed when meeting

with the Baileys on April 3, 1998. As the District Court noted, the Baileys offered no

evidence to specifically refute Softich’s testimony that these coverages had been

discussed. However, the Baileys did testify that they gave their insurance card to the

agency and requested the same coverages as they had in Oregon. Softich testified that

she has never advised an insured to decrease uninsured or underinsured coverage. This

evidence about the parties’ initial conversation reflects a genuine issue of fact about what

understanding arose from that conversation. If there was no further evidence, denial of

summary judgment would be appropriate.

                                             16
¶37    Based on that initial conversation, Softich then prepared two applications for

coverage on Baileys’ two vehicles. The applications were one-page printed forms that

listed 12 coverages in column form.       The heading of this column was “Coverages

Available.” Next to the column of available coverages was another column with the

heading “Selected?” Under this heading, a “Yes” or “No” was entered next to each

coverage indicating whether or not the applicant had selected that coverage. On both

applications, the word “No” appeared next to the coverage for underinsured motor

vehicle. However, the coverages were not identical on each application. A different list

of coverages was selected for each vehicle, although UIM coverage was selected for

neither vehicle. At the bottom of each application, as the Court notes in ¶ 7 of the

Opinion, the form stated that the applicant was applying “for the insurance indicated,”

that the applicant had read the form and the statements were correct, and that the

applicant had personally selected the coverages. Stan Bailey signed both applications.

These documents are the result of the parties’ initial conversation on April 3, 1998.

¶38    The Court cites the principle that an insured does not have an absolute duty to read

an insurance policy. Opinion, ¶ 22. On the basis of this principle, the Court apparently

excuses any obligation on the part of the Baileys to read or be accountable for the signed

applications and statements made therein. However, we have applied the “no read”

principle only in cases where an insurer made changes within the body of a policy and the

insured was not otherwise notified of the change. Robertus, ¶ 42; Thomas, ¶¶ 26-27;

Fillinger, 283 Mont. at 78-79, 938 P.2d at 1352. Never before have we held that an

insurance applicant has no obligation to read a one-page application form that plainly

                                            17
lists coverage choices and on which the applicant certifies that he has read the form and

made the coverage choices as indicated. The Court cites no authority for this principle.

The Court also holds that Baileys’ statement about wanting the same coverage as they

had in Oregon is not barred by the parol evidence rule because, by merely alleging they

did not understand its terms, the Baileys have made a proper challenge to “the validity of

the insurance application” prepared by Softich. Opinion, ¶ 27. Such a weak factual

assertion should not be permitted to create a genuine issue of fact about the signed

applications. “To raise a genuine issue of material fact, the proffered evidence must be

‘material and of a substantial nature, not fanciful, frivolous, gauzy or merely

suspicious.’” Estate of Willson v. Addison, 2011 MT 179, ¶ 14, 361 Mont. 269, 258 P.3d

410. “Generally speaking, once an agreement is reduced to writing, it is considered to

contain all terms of the agreement and extrinsic evidence concerning the intentions of the

parties is not admissible. Section 28-2-905(1), MCA.” McCulley v. Am. Land Title Co.,

2013 MT 89, ¶ 33, ___ Mont. ___, ___ P.3d ___. On this record, I would conclude that

the Baileys did not present sufficient evidence to create a genuine factual issue about the

signed applications, which were individually prepared for each of the Baileys’ two

vehicles after the parties’ initial conversation, and signed by the Baileys underneath

language stating that they had read the form and chosen the coverages as indicated.

¶39    Thereafter, the Baileys paid premiums for the next seven years and received

insurance coverage cards, policies and booklets. The Baileys received new insurance

cards at least two times a year for each policy, listing their coverages. They also received

renewal notices two times a year for each policy, with each notice listing the coverages

                                            18
and charges for each coverage. The Baileys simply allege that they didn’t read any of

these and the Court, apparently under the new, broadly-stated, “no-read” principle,

accepts this excuse and gives no significance to this evidence. However, this is further

evidence that State Farm provided the coverages that the Baileys had requested.

¶40    Then, in 2005, Stan called the agency and talked to Jeannie Fetters to make some

changes in his coverages. In that conversation, Fetters pointed out to Stan that he did not

have UIM coverage, and Stan responded he did not want to add that coverage, but, rather,

only wanted to make the changes he had called about. Fetters specifically remembered

the conversation and also made notes about the conversation in State Farm’s master

record.   Baileys offered no contradictory evidence.     However, the Court, citing the

Baileys’ assertion that “they did not even know what UIM coverage was until after the

accident,” concludes that there are “varying accounts” about this conversation. Opinion,

¶ 29. This is incorrect. Baileys offered nothing in contradiction to the very specific and

recorded evidence offered by State Farm about this conversation. Baileys’ statement

merely claims ignorance about the nature of UIM insurance—again, “gauzy” and

speculative evidence—and nothing about the conversation.

¶41    To further rebut the evidence of this 2005 event, the Court again cites Stan’s

abiding belief that he had the same coverage as he had in Oregon. The Court’s reliance

on Stan’s Oregon coverage pales when it is recalled that the Baileys made that request

seven years earlier in 1998, thereafter signed contrary application forms, paid contrary

premiums, and received contrary coverage notices until 2005, when Stan called to change

their coverages. By then, the “Oregon request” was long past and there is no evidence

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that Stan was still trying to obtain the same coverage he had in Oregon. As we have

recently stated, when reviewing the record for purposes of summary judgment, it is

important to recognize the “chronology of events” that the evidence demonstrates.

McCulley, ¶ 35.

¶42    I would conclude that the Baileys did not carry their burden to demonstrate

genuine issues of material fact and that State Farm was entitled to summary judgment as

a matter of law. I would affirm the District Court.



                                                 /S/ JIM RICE




Justice Beth Baker, dissenting.

¶43    I agree with Justice Rice that the District Court did not err in granting summary

judgment to State Farm on this record. I write separately because of my concern that the

Court has in fact imposed a heightened duty on an insurance agent, despite its statement

to the contrary. Opinion, ¶ 32.

¶44    Baileys raised, as their second issue on appeal, the claim that State Farm and

Olson had “a duty to advise the Baileys regarding UIM coverage,” and they urge this

Court to “expand an agent’s duty beyond a mere duty to procure” the insurance requested

by the insured. They cite numerous cases from other jurisdictions in which courts have

held that an insurance agent’s duty is not limited to responding to a specific request for

coverage, but that an agent may be liable under theories of professional negligence for


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failing to recommend UIM coverage or advise the insured of coverage needs. They also

point out “that no such heightened duty of care has yet been recognized under Montana

law.” Monroe v. Cogswell Agency, 2010 MT 134, ¶ 31, 356 Mont. 417, 234 P.3d 79. By

finding a factual issue for trial on the basis that Fetters did not explain UIM coverage

when Stan called her in May 2005 to change his coverages (Opinion, ¶ 29), the Court is

at least implicitly ruling that Olson and his agents had a heightened duty to advise or

offer specific coverages, just as Baileys have requested. Without expressly so holding,

the Court’s ruling today will generate additional confusion in the law regarding the scope

of an insurance agent’s duty to the insured.



                                                    /S/ BETH BAKER




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