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Watters v. Guaranty National Insurance Company6/6/2000
that it is "wise" to demand that the creditor, as a condition of settlement, sign a release acknowledging extinguishment of the debt).
On the other hand, several courts which have addressed factual circumstances identical to those found here have decided the issue of "full liability release in exchange for policy limits" in favor of the third-party claimant. See Blank v. USAA Property & Cas. Ins. Co. (Wis.Ct.App. 1996), 546 N.W.2d 512, 514-15 (concluding that an insurer has "no reasonable grounds to fear a bad faith claim" where policy limits of $100,000 are paid without a full release, and jury awards third-party claimant plaintiff $7.5 million); Dairyland Ins. Co. v. Herman (N.M. 1997), 954 P.2d 56, 64 (concluding that the duty to an insured does not mandate an "all-or-nothing approach" where recovery of third party likely will exceed policy limits); Thaler v. American Ins. Co. (Mass.App.Ct. 1993), 614 N.E.2d 1021, overruled by Lazaris v. Metropolitan Property & Cas. Ins. Co. (Mass. 1998), 703 N.E.2d 205.
Aside from the applicability of a "majority rule" to the factual scenario here, all of the foregoing jurisdictions are clearly distinguishable from such disputes arising in Montana. In 1987, our Legislature provided insurers such as Guaranty with the following protection from bad faith claims under either the common law or UTPA:
An insured who has suffered damages as a result of the handling of an insurance claim may bring an action against the insurer for breach of the insurance contract, for fraud, or pursuant to this section, but not under any other theory or cause of action. An insured may not bring an action for bad faith in connection with the handling of an insurance claim.
Section 33-18-242(3), MCA (emphasis added). See also O'Fallon v. Farmers Ins. Exch. (1993), 260 Mont. 233, 243-44, 859 P.2d 1008, 1014-15 (discussing the legislative history of § 33-18-242, MCA, and identifying the limitation of the types of claims that could be brought against insurers as one of its purposes). Section 33-18-242(3), MCA, is a unique feature in contrast to other states, such as Massachusetts and California, that have similar unfair trade practices acts governing their insurance businesses where bad faith claims remain virtually unimpeded.
Confronted with such statutory plain language, we will not second guess the intent of the Legislature in its desire to explicitly limit the liability of insurers. See State Bar of Montana v. Krivec (1981), 193 Mont. 477, 481, 632 P.2d 707, 710 (citation omitted). See also Meech v. Hillhaven West, Inc. (1989), 239 Mont. 21, 32, 776 P.2d 488, 494 (providing that the "law of Montana has long recognized that the courts and the legislature establish the substantive law governing tort claims"). Thus, we have stated that § 33-18-242(3), MCA, "explicitly prohibits bringing an action for bad faith in connection with the handling of an insurance claim." Dees v. American Nat. Fire Ins. Co. (1993), 260 Mont. 431, 450, 861 P.2d 141, 153 (Gray, J., concurring). We have distinguished this prohibition by concluding that the subsection "prohibits an insured, but not a third-party claimant, from bringing an action for bad faith." Brewington v. Employers Fire Ins. Co., 1999 MT 312, 13, 297 Mont. 243, 13, 992 P.2d 237, 13.
Guaranty's reasoning is therefore unclear as to how Moore, as an insured who had yet to suffer damage as a result of Guaranty's "handling" of the Watters' claim, could bring an action for "bad faith" under UTPA had Guaranty paid the undisputed full policy limits without obtaining a full release of liability on his behalf. Although providing some evidence of veiled threats of litigation asserted b
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