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No. 89-027

IN THE SUPREME COURT OF THE STATE OF MONTANA

1989

WILLIAM T. "BILL" HOWELL, and JENSEN HOWELL,
Plaintiffs and Appellants,

-vs-GLACIER GENERAL ASSURANCE COMPANY and the r STATE OF MONTANA and its agent, THE MONTANA Z 0 POTATO IMPROVEMENT ASSOCIATION, 2.-I
Defendants and Respondents, zDrn
--and-..
6' -MONTANA INSURANCE GUARANTEE ASSOCIATON, ---i a non-profit association, -
,..
Plaintiff in Intervention and Respondent -vs-141 :
0.'

GRANGE INSURANCE ASSOCIATION, a corporation; and 0'. WILLIAM T. "BILL" HOWELL and JENSEN HOWELL, individuals, 5
..
Defendants In Intervention and Appellants.-i

APPEAL FROM: District Court of the Fourth Judicial District,
In and For the County of Missoula,
The Honorable James R. Wheelis, Judge presiding.

COUNSEL OF RECORD:
For Appellant:

Jon R. Binney and Lon J. Dale argues; Milodraqovich, Dale & Dye, Missoula, Montana
For Respondent:

Robert Phillips argued; Snavely & Phillips,
Missoula, Montana
Randy J. Cox argued; Boone, Karlberg & Haddon,
Missoula, Montana

Submitted: September 25, 1989
Decided: December 27, 1989
Filed:

Justice John Conway Harrison delivered the Opinion of the
Court.

This is an appeal by c ill and Jensen Howell (~owells)
and Grange Insurance Association (Grange) from a grant of
summary judgment in favor of respondent Montana Insurance
Guarantee ~ssociation (MIGA), the State of Montana and the
Montana Potato Improvement Association (MPIA). Also appealed
is the ~istrict Court's denial of appellants' motion to stay
pending completion of discovery and its granting of
respondents' motion for protective order. We affirm in part,
reverse in part and remand for further proceedings.

Appellants present essentially two issues for review:

1. id the court abuse its discretion in denying

plaintiffs' motion to stay ruling pending completion of
discovery and in granting defendants' motion for protective
order?

2. Did the District Court err in granting summary
judgment in favor of defendants State of Montana, Montana
Potato Improvement ~ssociation and plaintiff-in-~ntervention,
Montana Insurance Guarantee ~ssociation?

At all times material to this litigation, calendar years
1976-1977, the Howells were Montana seed potato producers.
The State was an insured of Glacier General under a policy
titled "municipality comprehensive liability policy." MPIA
is an agent of the State in seed certification matters. The
policies insured the State against certain risks enumerated
in policies ML101, effective July 1-June 30, 1976 and ML102,
effective J.uly 1, 1976-June 30, 1977. Grange insured
Howells.

The instant action arose out of a Washington civil case
wherein certain Washington potato farmers sought compensation
for damages they incurred because they had. p.urchased. seed

potatoes infected with ring rot. The ~ashington plaintiffs
filed suit in 1979 in Washington against the Howells, certain
~ashington warehousemen and MPIA, who had certified the seed
potatoes. Grange, under a reservation of rights, defended
the Howells in the Washington litigation.

On March 20, 1981, judgment was entered in the
~ashington litigation. The judgment in excess of $485,000
ran directly against the warehousemen and MPIA jointly and
severally. The Howells were found not negligent but they
were ordered to indemnify one of the Washington warehousemen
because of breach of warranty claims.

On September 17, 1981, the Washington plaintiffs filed a
complaint in Montana to enforce the judgment in Montana and
on August 24, 1983, judgment was entered against MPIA and
Howells.

During the time between September 1981 and October 1983
Grange and Howells tried to get MPIA and the State to pay
some or all of the judgment but their efforts were
unsuccessful.

In October 1983, the Washington plaintiffs assigned
their judgments to the Howells with Grange furnishing the
entire consideration for the assignment. Grange paid the
consideration under a reservation of rights agreement. Then
in December 1983, Howells and Grange initiated this action.
~uring the pendency of this action, h lacier General was
declared insolvent and MIGA was granted permission to
intervene.

Discovery in this action spans several years. Appellants deposed Thomas Haggerty; claims manager of Glacier General, in December of 1985. Later, in January of 1987, appellants deposed John Maynard. After these depositions, appellants attempted to depose J. Michael Young, Dr. Sun and James McLean, defendants ' agents. Prior to the summary
judgment motion counsel had tried to schedule these
depositions but were unable to do so because of scheduling

conflicts. Appellants filed notices of depositions for
September 19 and 26, 1988. In the meantime respondents filed
their motion for summary judgment.

Issue I

Did the court abuse its discretion in denying
plaintiffs' motion to stay ruling pending completion of
discovery and in granting defendants' motion for protective
order?

Rule 56 (f) , M.R.Civ.P. is as follows:
Should it appear from the affidavits of a
party opposing the motion that he cannot
for reasons stated present by affidavit
facts essential to justify his
opposition, the court may refuse the
application for judgment or may order a
continuance to permit affidavits to be
obtained or depositions to be taken or
discovery to be had or may make such
other order as is just.

A review of the District Court's order and opinion
discloses that the district judge did read and consider
plaintiffs' arguments. However, the District Court, in its
discretion, decided that the plaintiffs did not sufficiently
establish how that proposed discovery could precl.ude summary
judgment. A review of appellants' motion and affidavit
persuades us that the ~istrict Court did not abuse its
discretion. Further, in light of our holding on Issue 11,
reopening discovery as outlined by appellants is unnecessary.
We affirm the District Court.

Issue I1

Did the District Court err in granting summary judgment
in favor of defendants State of Montana and Montana Potato
Improvement ~ssociation and plaintiff-in-~ntervention,

Montana Insurance Guarantee Association?

The ~istrict Court found that respondents were entitled
to summary fudgment because this action is essentially a
subrogation action and the Montana Insurance Guaranty
~ssociation Act (MIGAA) prohibits recovery from MIGA by
insurance companies. We agree with the District Court as to
MIGA, but disagree with the District Co.urt1s holding as to
MPIA and the State.

MIGA

MIGAA states in pertinent part as follows:

33-10-102 (2) (b) "Covered claim" shall
not include any amount due a reinsurer,
insurer, insurance pool, or underwriting
association, as subrogation recoveries or
otherwise.

The MIGAA clearly prohibits subrogation recoveries from MIGA by an insurance company. In the instant case, the District Court correctly found dispositive the fact that Grange purchased the judgments from the Washington plaintiffs. Since Grange owns the judgments, 5 33-10-102(2)(b), MCA, bars appellants' claim against MIGA.
Appellants contend that even though Grange paid for the judgments, Grange's reservation of rights preserves the claim as Howells'. Thus, appellants argue that the Howells have a claim against MIGA which is not barred by 5 33-10-102(2) (b), MCA. However, the reservation of rights issue only determines the party (Grange or Howells) who receives payment of the judgment. The insurance coverage dispute between Grange and Howells does not impact the liability of the State
or MPIA nor does it alter the effect of Grange purchasing the
judgments. We affirm the summary judgment in favor of MIGA.

The State and MPIA

The District Court's opinion does not directly address
why it granted summary fudgment for the State and MPIA.
Apparently the District Court concluded that since
5 33-10-102(2)(b), MCA, barred recovery from MIGA, it somehow
barred recovery from the State or MPIA as well because they
are insureds of an insolvent insurer. However the District
Court erred in granting summary judgment in favor of the
State and MPIA.

The District Court's opinion, in effect, nullifies the
valid judgment that appellants hold against MPIA.
Respondents correctly argue that MIGA affords limited
protection to the insureds of insolvent insurers. However,
that limited protection does not absolve tortfeasors from
judgments against them because coincidentally their insurance
carriers become insolvent. Regardless of the effect of the
MIGAA on this litigation, appellants still hold a valid
judgment against MPIA that remains unsatisfied and judgment
should be entered against MPIA. As to the liability of the
State of Montana, we remand to the District Court for further
proceedings to determine the liability of the State of
Montana. We therefore reverse the District Court's award of
summary judgment in favor of the State and MPIA and direct
entry of summary judgment in favor of the appellants against
MPIA. Affirmed as to MIGA, reversed as to the State and
MPIA, and remandec? for further proceedings consistent with
this opinion.

9
We concur:
--.
?$hJLrp :qw,4o'
The t on or able Frank I. Haswell, Retired Chief Justice, sitting for Chief Justice J.A. Turnage

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