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Youngblood v. American States Ins. Co.12/14/1993
Submitted November 4, 1993.
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 of law provision 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 th
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