This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
The Plaintiff, a passenger in her daughter-in-law's vehicle, was injured in a collision caused by an underinsured motorist. The vehicle was insured by the Defendant, Mountain States Mutual Casualty Company, which provided both medical payment and underinsured motorist (UIM) coverage. The Plaintiff settled her personal injury claim with the underinsured motorist's insurer without obtaining the Defendant's consent, as required by the UIM policy provisions (paras 2-6).
Procedural History
- District Court of Lincoln County: Granted summary judgment in favor of the Defendant, holding that the Plaintiff's failure to comply with the consent-to-settle provision barred her claim for UIM benefits (headnotes, para 1).
Parties' Submissions
- Plaintiff-Appellant: Argued that the Defendant should be estopped from enforcing the consent-to-settle provision because the Defendant failed to notify her of the UIM coverage and her obligations under the policy. She also contended that the Defendant was not prejudiced by her settlement with the underinsured motorist (paras 6, 16-17, 31-32).
- Defendant-Appellee: Asserted that the Plaintiff violated the consent-to-settle provision, resulting in presumed prejudice to its subrogation rights. The Defendant argued that the Plaintiff failed to rebut this presumption and that it had no duty to notify her of the UIM coverage (paras 7, 10, 15, 23, 36).
Legal Issues
- Did the Plaintiff violate the consent-to-settle provision of the UIM policy by settling her personal injury claim without the Defendant's consent?
- Was the Defendant substantially prejudiced by the Plaintiff's breach of the consent-to-settle provision?
- Should the Defendant be estopped from enforcing the consent-to-settle provision due to its failure to notify the Plaintiff of the UIM coverage and her obligations under the policy?
Disposition
- The Court of Appeals reversed the District Court's summary judgment in favor of the Defendant (para 48).
Reasons
Majority Opinion (Per Bustamante J., Fry J. concurring):
Violation of Policy Terms: The Plaintiff breached the consent-to-settle provision by settling her claim without the Defendant's consent, triggering a presumption of substantial prejudice to the Defendant's subrogation rights (paras 9-15).
Failure to Rebut Prejudice: The Plaintiff failed to present evidence to rebut the presumption of prejudice. Her arguments, including the claim that the release preserved the Defendant's subrogation rights and that the statute of limitations had expired, were rejected (paras 16-30).
Defendant's Duty to Notify: The Defendant failed to notify the Plaintiff, a Class 2 insured, of the UIM coverage and her obligations under the policy. The Court held that insurers have a duty to provide reasonable notice of policy terms to all insureds, including Class 2 insureds, once identified. The Defendant's failure to fulfill this duty estopped it from enforcing the consent-to-settle provision (paras 31-47).
Dissenting Opinion (Vigil J.):
Judge Vigil dissented, arguing that the Defendant had no affirmative duty to notify the Plaintiff of the UIM coverage or the consent-to-settle provision. He emphasized that the Plaintiff's failure to investigate the policy terms, despite knowing the vehicle was insured, was unreasonable. He concluded that the Plaintiff's breach of the consent-to-settle provision should not be excused, and the Defendant should not be estopped from enforcing the policy terms (paras 50-56).