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Curtis v. Allstate Ins. Co.
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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision:	2002 ME 9
Docket:	Wal-01-298
Argued:	December 4, 2001
Decided:	January 17, 2002




	[¶1]  Third-party plaintiffs Tammy Curtis and the Estate of Loretta
Rumney (the plaintiffs) appeal from a summary judgment entered in the
Superior Court (Waldo County, Marden, J.) granting third-party defendant
Allstate Insurance Company's motion for summary judgment on the
plaintiffs' five-count, amended, third-party complaint.  The plaintiffs argue
that the Superior Court erred in granting Allstate's motion because (1)
the undisputed facts reveal that Allstate breached the insurance contract,
violated the Unfair Claims Settlement Practices Act, 24-A M.R.S.A. § 2436-A
(2000), and violated the late pay statute, 24-A M.R.S.A. § 2436 (2000), and
(2) a genuine issue of material fact exists as to the fraud, Unfair Trade
Practices Act, 5 M.R.S.A. §§ 207, 213 (1989 & Pamph. 2001), intentional
infliction of emotional distress, and punitive damages claims.  We affirm the
grant of summary judgment.
	[¶2]  On June 23, 1997, Tammy Curtis was injured and Loretta
Rumney was killed as a result of a collision between a motor vehicle
operated by Curtis in which Rumney was a passenger and a motor vehicle
operated by Daniel Christensen.  Both Curtis and Rumney sustained damages
that exceeded $100,000.  At the time of the accident, Christensen was
insured under a policy issued by Dairyland Insurance Company with liability
limits of $20,000 per person and $40,000 per accident.  Curtis and Rumney
were insured by Allstate Insurance Company with underinsured motorist
(UM) coverage in the amount of $100,000 per person.  Allstate's insurance
policy provides that damages payable under the policy will be reduced by "all
amounts paid by the owner or operator of the uninsured auto or anyone else
responsible.  This includes all sums paid under the bodily injury liability
coverage of this or any other auto policy." 
	[¶3]  In September 1997, the attorney representing the plaintiffs
demanded in writing that Allstate pay them each $100,000 in UM benefits. 
This letter was followed by another dated October 9, 1997, which
recognized a disagreement with Allstate as to "whether [Allstate] may
deduct the entire limits of the liability coverage, even if the claimant is paid
less than the entire amount."  The letter requested that Allstate pay the
plaintiffs the undisputed amounts and agree to allow the plaintiffs to pursue
the remaining $40,000 in court.   
	[¶4]  Allstate's counsel responded agreeing to pay $160,000, the
undisputed portion of the coverage, in exchange for a release by the
plaintiffs as to that portion.  The plaintiffs' attorney forwarded to Allstate's
attorney form releases, both attorneys modified and revised the releases,
and the finished products were signed by the plaintiffs on January 2, 1998.
The plaintiffs were each paid the undisputed $80,000 by Allstate. 
	[¶5]  In February 1998, the plaintiffs' attorney advised Allstate that
he had received a settlement offer from Dairyland in the amount of $15,000
each for the plaintiffs.  He also stated in that letter that "Allstate must pay to
[Ms. Rumney's] estate and to Ms. Curtis the difference between what they
receive from Dairyland and $20,000.00," or $5000 each.  Allstate consented
by letter to the settlement, and indicated that the effect of the settlement
would be to "reduce the amount in controversy . . . from $40,000 to
$10,000."  Because another injured party objected, this settlement was
never completed. 
	[¶6]  In June 1998, Dairyland filed an interpleader complaint
seeking a determination of the rights of the various parties regarding the
$40,000 limits of Christensen's policy.  The plaintiffs answered and filed a
third-party complaint against Allstate demanding payment of the remaining
$20,000 per person balance under the UM policy.  The Superior Court
granted Allstate's motion for summary judgment and held that Allstate's
liability was the difference between the limits of the tortfeasor's liability
policy and Allstate's UM policy limits. 
	[¶7] The plaintiffs' appeal of that summary judgment was dismissed
for lack of a final judgment.  Dairyland Ins. Co. v. Christensen, 1999 ME 160,
¶ 1, 740 A.2d 43, 43.  The plaintiffs then severed the third-party action and
filed a second appeal dated December 16, 1999.  While the second appeal
was pending, the plaintiffs accepted an offer of settlement from Dairyland,
conditioned upon certain terms.  The amount of that settlement would have
reduced the disputed amounts between Allstate and the plaintiffs to
	[¶8] During the time the second appeal was pending, we decided
Saucier v. Allstate Ins. Co., 1999 ME 197, 742 A.2d 482.  Allstate's counsel
then conceded that Saucier resolved the substantive issue presented by the
plaintiffs' appeal against Allstate and offered to pay the $11,357.73
difference between Allstate's remaining UM coverage and the amount the
plaintiffs were to receive in their settlement with Christensen.  
	[¶9] The plaintiffs' attorney rejected Allstate's offer and demanded
the full amount of the remaining coverage plus interest, threatening to bring
suit if that amount was not received.  He explained his position that, under
Saucier, "the UM carrier's obligation to its insured is a primary liability for
the entire amount of the coverage (in a policy limits case).  Allstate's
obligation is, was and always has been $40,000.00  IT IS NOT $40,000.00
MINUS SOME OFFSET!"  Regarding the settlement with Dairyland, the
plaintiffs' attorney indicated his intent to abandon pursuit of the settlement,
stating that his clients would "do nothing further to negotiate or participate
in the settlement" and suggested that Allstate take over the suit in the
insureds' names under the subrogation provisions of the policy. 
	[¶10] Allstate's attorney responded by letter dated February 1, 2000,
reiterating her position "that Allstate's remaining exposure is determined
by the amounts received by your clients in the Dairyland settlement."  She
conveyed her understanding that the plaintiffs had accepted the Dairyland
settlement and stated that she would send a check in the amount of
$11,357.73 with an acknowledgment that acceptance of the check would
not preclude assertion of the plaintiffs' claims for interest and/or additional
coverage.  The plaintiffs rejected Allstate's offer, and several exchanges
between the two attorneys occurred regarding the proposed settlement of
the Dairyland interpleader action.  The Dairyland settlement efforts failed
and the case proceeded to trial, because two passengers declined the
settlement offer. 
	[¶11]  In early March 2000, Allstate offered to pay the plaintiffs
$40,000 in light of "the resulting uncertainty as to the proposed [Dairyland]
settlement."  In exchange for the $40,000 payment, Allstate's attorney
requested an assignment of the plaintiffs' claims to the Dairyland policy and
"an assurance of their full cooperation with Allstate in the pursuit of those
	[¶12]  Two checks in the amount of $20,000 were then issued by
Allstate and sent to the plaintiffs' attorney.  The two attorneys revised the
draft release and indemnity agreements that were originally drafted by the
plaintiffs' attorney, and the final drafts were signed by the plaintiffs.  The
second appeal pending before us was then voluntarily dismissed, and the
case was remanded to the Superior Court for proceedings consistent with
	[¶13]  On June 7, 2000, judgment was entered in the interpleader
action by the Superior Court, distributing the Dairyland policy limits.  In
conformity with this order, checks from Dairyland were forwarded to
Allstate one month later.{2} 
	[¶14] The plaintiffs' five-count amended third-party complaint{3}
alleges: (1) Allstate, by failing to immediately pay the $20,000 per person
claims, committed four separate violations of the Unfair Claims Settlement
Practices Act (UCSPA), see 24-A M.R.S.A. § 2436-A(1)(A)-(C), (E);
(2) Allstate violated the late pay statute by failing to pay the plaintiffs'
undisputed claims within 30 days, see id. § 2436; (3) Allstate breached the
terms of the UM contract and the provisions of the releases signed in 1998
that provide for interest on judgments; (4) by requiring the plaintiffs to sign
the 1998 releases, which relieved Allstate of its obligation to pay attorney
fees, costs and interest on the unpaid balance of their claims, Allstate
committed fraud, violated the Maine Unfair Trade Practices Act (UTPA), see
5 M.R.S.A. §§ 207, 213, violated the late pay statute, see 24-A M.R.S.A.
§ 2436, and violated the UCSPA, see id. § 2436-A(1)(A), (E); and
(5) Allstate's refusal to pay the policy limits caused the plaintiffs to suffer
severe emotional distress, which entitles them to punitive damages.
	[¶15]  Following a hearing on Allstate's motion for summary
judgment, the Superior Court in a well reasoned opinion, entered judgment
for Allstate on the plaintiffs' amended third-party complaint.  The Superior
Court found Allstate's conduct to be distinguishable from Saucier because
"Saucier contained fundamental liability issues from the first dollar" and
"there was a conclusion by the court [in Saucier] that Allstate was
deliberately disregarding its policy provisions by instructions from its
corporate leadership."  The court also found in this case that Allstate was
not unreasonable in its interpretation of case law when, prior to Saucier, it
took the position that it was entitled to offset its policy limits by the limits
of Dairyland's policy.  The court stated:
There is no evidence that Allstate was motivated by malice. 
Indeed, it very promptly paid the $80,000 to remove any
issue of fundamental coverage from the case.  It did nothing
to prolong litigation nor did it unreasonably delay matters by
insisting that it was not required, as a matter of law, to pay
its full policy limits and rely on subrogation to resolve its
dispute.  Indeed, this was clearly recognized by the claimants
when they executed the releases and received their $80,000. 
There is no evidence in this case of corporate "foot-
dragging" or any evidence that there is an unreasonable
interpretation of law or policy language.
The plaintiffs appeal from that decision.
	[¶16]  Summary judgment is properly granted when the evidence
supporting the claims of the party with the burden of proof at trial is
insufficient.  If so, the opposing party is entitled to a judgment as a matter of
law.  Dumont v. Fleet Bank of Maine, 2000 ME 197, ¶ 10, 760 A.2d 1049,
1053.  We view the evidence in the light most favorable to the nonprevailing
party and review the grant of summary judgment de novo for errors of law. 
Gove v. Carter, 2001 ME 126, ¶ 8, 775 A.2d 368, 371.

A.  Breach of Contract

	[¶17] The plaintiffs contend that Allstate breached the insurance
contract by not paying the full $100,000 amount in 1997 upon their
	[¶18]  Allstate's insurance policy provides that damages payable
under the policy will be reduced by "all amounts paid by the owner or
operator of the uninsured auto or anyone else responsible.  This includes all
sums paid under the bodily injury liability coverage of this or any other auto
policy."  The policy goes on to state when the damages are payable to the
We are not obligated to make any payment for bodily injury,
sickness, disease or death under this coverage which arises
out of the use of an underinsured motor vehicle until after
the limits of liability for all liability protection in effect and
applicable at the time of the accident have been exhausted by
payment of judgments or settlement.
	[¶19]  At the time Allstate paid the plaintiffs the remaining $40,000,
there was no settlement with, or judgment against, Dairyland.  Because this
time-of-payment provision is triggered only when the tortfeasor's liability
limits have been exhausted, Allstate did not breach the insurance policy by
refusing to pay the amounts in dispute until it realized that settlement
efforts with Dairyland would be abandoned. 
	[¶20] The plaintiffs claim that Greenvall v. Maine Mut. Fire Ins. Co.,
1998 ME 204, 715 A.2d 949, after remand, 2001 ME 180, --- A.2d ---,
overrides this contract provision and that Allstate was improperly requiring
settlement with the tortfeasor's insurer as a precondition to payment. 
Greenvall, however, addressed a different issue: whether an insured may
bring an action against her UM carrier without first proceeding against the
uninsured tortfeasor.  Greenvall, 1998 ME 204, ¶ 6, 715 A.2d at 952.  In
Greenvall, the insured's estate had received a $100,000 payment from the
tortfeasor's insurance company, which represented the full limits of the
tortfeasor's policy.  Id. ¶¶ 2-3, 715 A.2d at 951. 
	[¶21]  Interpreting language in the insurance policy that Maine
Mutual "will pay under this coverage only after the limits of liability under
any applicable bodily injury liability bond or policy have been exhausted by
payment of judgments or settlements," id. ¶ 7, 715 A.2d at 952, we held
that "obtaining a judgment against the tortfeasor is not the insured's sole
means of establishing legal entitlement to recover for purposes of uninsured
motorist coverage."  Id. ¶ 8, 715 A.2d at 953 (emphasis added).  This
holding does not invalidate a contract provision, such as the one at issue
here, providing that payment of damages is triggered upon the exhaustion of
the tortfeasor's policy liability limits by settlement or judgment.

B.	The Maine Unfair Claims Settlement Practices Act

	[¶22] The plaintiffs contend that Allstate committed four violations
of the Maine Unfair Claims Settlement Practices Act, 24-A M.R.S.A. § 2436-
A(1)-(2):{5} (1) knowingly misrepresenting its obligations under the insurance
contract by refusing to immediately pay the disputed $40,000, 
§ 2436­p;A(1)(A); (2) failing to acknowledge its obligation to pay and remit
the $40,000 within a reasonable time after Saucier, § 2436-A(1)(B);
(3) requiring the plaintiffs to relitigate Allstate's obligation that was, in
effect, "threatening to appeal from an arbitration award to compel them to
accept a settlement less than the amount awarded," § 2436­p;A(1)(C); and (4)
failing to pay the $40,000, which after Saucier constituted a failure to
effectuate a prompt, fair and equitable settlement of the plaintiffs' claims
without just cause, § 2436-A(1)(E).

	1.	Knowing Misrepresentation

	[¶23]  The UCSPA provides that an insurer is liable to its insured for
"[k]nowingly misrepresenting . . . pertinent facts or policy provisions
relating to coverage at issue."  Id. § 2436-A(1)(A).  The plaintiffs contend
that Allstate knowingly misrepresented its insurance policy because
(1) Allstate knew or should have known before we decided Saucier that it
was required to pay the full limits of its policy, or $100,000 per person,
under Greenvall, 1998 ME 204, ¶¶ 7-8, 715 A.2d at 952, and Bazinet v.
Concord Gen. Mut. Ins. Co., 513 A.2d 279, 281 (Me. 1986), and (2) Allstate's
obligation to pay the plaintiffs the remaining $40,000 was a legal certainty
after Saucier.{6} 
	[¶24]  The undisputed facts reveal that Allstate did not knowingly
misrepresent the terms of its policy either before or after the Saucier
decision.  To establish a knowing misrepresentation, a plaintiff must provide
evidence demonstrating something more than a mere dispute between the
insurer and insured as to the meaning of certain policy language. 
See Saucier, 1999 ME 197, ¶ 21, 742 A.2d at 489.  Instead, to survive
summary judgment the plaintiff must generate an issue of fact that the
insurer knew the policy said and meant one thing but told the insured
something else.  See id. 
	[¶25]  As discussed above, Greenvall does not require the insurer to
pay both undisputed and disputed amounts immediately upon demand.  In
Bazinet, we held that, because insurers are jointly and severally liable in
cases where two or more insurance policies apply to the same loss, an
insured may settle with one carrier for an amount less than that policy's
limit and then proceed against her own carrier for the remainder of her
damages.  Bazinet, 513 A.2d at 281.  Bazinet is limited to the situation in
which multiple policies afford uninsured motorist coverage.  It is not a global
statement regarding the relationships and liabilities between insurance
carriers.  Contrary to the plaintiffs' contention, therefore, Bazinet does not
necessarily permit an insured to obtain payment from her own insurer in
place of seeking damages from the tortfeasor's insurer.
	[¶26] The plaintiffs also contend that Saucier was dispositive of the
conflict between the parties regarding the $40,000 in disputed funds.  In
Saucier, we held that the insurance policy was properly interpreted to
permit Allstate to offset only those amounts paid to its insured by the other
insurance carrier.  Saucier, 1999 ME 197, ¶ 16, 742 A.2d at 488.  We did
not reach the question presented in this case regarding the UM carrier's
responsibility where no amounts have yet been paid by the tortfeasor to the
insured.  Allstate's insurance contract does permit it to delay payment of
disputed amounts until the liability limits of the other policy (1) have been
exhausted by settlement or judgment, or (2) become subject to a subrogation
and cooperation agreement with the insured. Accordingly, Allstate's
interpretation of its insurance contract, permitting it to offset amounts in
dispute with Dairyland, did not rise to the level of a knowing
	[¶27] This case is factually distinguishable from Saucier, where
Allstate refused to pay even the undisputed amounts to its insured.  Allstate
promptly paid the plaintiffs the undisputed amounts, and based its dispute
of the remaining $40,000 upon its attorney's interpretation of the policy
and Maine case law.  There is no evidence in the record that Allstate
directed either its claim analyst or attorney to disregard the policy
provisions; instead, the record reflects only a dispute of interpretation
between two attorneys.

	2.	Failure to Pay Within a Reasonable Time

	[¶28] The plaintiffs argue that the undisputed facts establish that
Allstate failed to acknowledge its obligation to pay the additional $40,000
within a reasonable time after the Saucier decision.  Section 2436-A(1)(B)
provides that an insurer may be liable to its own insured for "[f]ailing to
acknowledge and review claims, which may include payment or denial of a
claim, within a reasonable time following receipt of written notice by the
insurer of a claim by an insured arising under a policy."  24-A M.R.S.A.
§ 2436-A(1)(B).  
	[¶29]  The correspondence in the record reveals that the Dairyland
settlement did not fail until February 24, 2000, when two of the injured
parties would not agree to its proposed terms.  Allstate acknowledged its
obligation to pay the full $20,000 per person on March 3, 2000, after it
learned that the underlying action had not settled.  The only inference to be
drawn from those two facts is that Allstate was informed at some point
during those eight days that the case did not settle and determined that an
offer of the full amount was, therefore, appropriate.  The Superior Court
correctly concluded that Allstate paid the plaintiffs' claims within a
reasonable amount of time.
	3.	Threatening to Appeal From an Arbitration Award

	[¶30]  An insurer is liable under the UCSPA for "[t]hreatening to
appeal from an arbitration award in favor of an insured for the sole purpose
of compelling the insured to accept a settlement less than the arbitration
award."  Id. § 2436-A(1)(C). The plaintiffs contend that the litigation
regarding the remaining UM coverage after Saucier was decided in favor of
the insured was equivalent to threatening to appeal from an arbitration
	[¶31] The language of the UCSPA provision at issue is not ambiguous:
an insurer may be liable for threatening to appeal an arbitration award
rendered in favor of the insured.  Here, there is no arbitration award.  The
Superior Court was correct in granting Allstate's motion for summary
judgment on this issue.
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