Title: STATE FARM MUTUAL AUTO INS v SOL

State: montana

Issuer: Montana Supreme Court

Document:

IN THE SUPREME COURT OF THE STATE OF MONTANA No. 80-78 STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant and Third-Party Plaintiff, CINDY J. SOLEM, Plaintiff and Appellant, HELEN G . BUCKINGHAM, Third-Party Defendant and Respondent. O R D E R The above-captioned opinion shall be amended to read as follows: Page 5, lines 9, 10, 11, 12 and 13 from the top shall read: ". . . 1810, mandated that result. But that case held only that impleading parties not sued by the plaintiff, for purposes of contribution, is not proper. This is a subrogation case based on contract, and Osier has no application." DATED this 3_td day of February, 1981. Justices ! i i ; No. 80-78 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981 STATE FARM MUTUAL A U T O ! I I O B I L E INSURANCE COMPANY, Defendant and Third-Party Plaintiff, CINDY J. SOLEM, Plaintiff and Appellant, vs. HELEN G. BUCKINGHAM, Third-Party Defendant and Respondent. Appeal from: District Court of the Eighth Judicial District, In and for the County of Missoula, Montana Honorable Jack L. Green, Judge presiding. Counsel of Record: For Appellant: Williams Law Firm, Missoula, Montana Berger, Anderson, Sinclair and Murphy, Billings, Montana For Respondent: Garlington, Lohn and Robinson, Missoula, Montana Submitted on briefs: July 11, 1980 ~ecided : J A N 2 8 1987 Mr. J u s t i c e Daniel J. Shea d e l i v e r e d t h e Opinion of t h e Court. S t a t e Farm Mutual Automobile I n s u r a n c e Company sued by its i n s u r e d under an uninsured m o t o r i s t p r o v i s i o n , a p p e a l s f r o m a n o r d e r o f t h e M i s s o u l a C o u n t y D i s t r i c t C o u r t d i s m i s s i n g its t h i r d - p a r t y complaint which sought indemnity from t h e uninsured m o t o r i s t f o r any l i a b i l i t y t h e i n s u r a n c e company might be adjudged t o owe t h e p l a i n t i f f . W e hold t h a t t h e D i s t r i c t Court e r r e d i n n o t a l l o w i n g S t a t e Farm t o implead t h e t h i r d - p a r t y d e f e n d a n t . Cindy J. Solem a s p l a i n t i f f f i l e d a complaint a g a i n s t S t a t e Farm a l l e g i n g t h a t Solem was a passenger i n a c a r d r i v e n by William J. S c h u l t z which c o l l i d e d w i t h a c a r d r i v e n by Helen G. Buckingham, an u n i n s u r e d m o t o r i s t . The complaint a l l e g e d t h a t t h e n e g l i g e n c e o f t h e uninsured m o t o r i s t was a proximate cause o f t h e c o l l i s i o n and o f p e r s o n a l i n j u r y t o Solem. I t f u r t h e r a l l e g e d t h a t both Solem and S c h u l t z were i n s u r e d a t t h e t i m e of t h e c o l l i s i o n under s e p a r a t e p o l i c i e s of i n s u r a n c e w i t h S t a t e Farm, each of which provided uninsured m o t o r i s t coverage i n t h e amount o f $ 2 5 , 0 0 0 / $ 5 0 , 0 0 0 . Solem h a s f i l e d s u i t u n d e r t h e uninsured m o t o r i s t p r o v i s i o n s of b o t h p o l i c i e s and p r a y s f o r judgment a g a i n s t S t a t e Farm i n t h e amount o f $50,000 o r such l e s s e r amount a s a j u r y might determine. S t a t e Farm f i l e d its answer t o t h e complaint a d m i t t i n g t h a t t h e c o l l i s i o n occur r e d , b u t denying t h e n e g l i g e n c e of t h e uninsured m o t o r i s t . S t a t e Farm's answer r a i s e s a s a f f i r m a t i v e d e f e n s e s : (1) t h a t t h e s u i t a g a i n s t S t a t e Farm is p r e m a t u r e u n l e s s it is f i r s t d e t e r m i n e d t h a t t h e p l a i n t i f f is l e g a l l y e n t i t l e d t o r e c o v e r damages from t h e uninsured m o t o r i s t , and ( 2 ) t h a t t h e u n i n s u r e d m o t o r i s t is an i n d i s p e n s a b l e p a r t y under Rule 19, M.R.Civ.P. S t a t e Farm t h e n f i l e d a t h i r d - p a r t y complaint naming Helen G. Buckingham a s t h i r d - p a r t y d e f e n d a n t . The t h i r d - p a r t y complaint recites t h e f a c t t h a t Solem has sued S t a t e Farm under t h e uninsured p r o v i s i o n s o f t h e p o l i c y and t h e n a l l e g e s t h a t Buckingham is t h e uninsured m o t o r i s t involved i n t h e c o l l i s i o n mentioned i n Solem's complaint. S t a t e Farm t h e n seeks indemnity from Buckingham f o r "such sums a s may be adjudged a g a i n s t it i n f a v o r o f Cindy J. Solem, and f o r t h e i r c o s t s . " Buckingham moved t o d i s m i s s t h e t h i r d - p a r t y complaint a g a i n s t her on t h e grounds it f a i l e d t o s t a t e a c l a i m a g a i n s t her on which r e l i e f could be g r a n t e d . Buckingham and S t a t e Farm f i l e d b r i e f s . The D i s t r i c t Court o r i g i n a l l y d e n i e d t h e motion t o d i s m i s s , b u t t h e n r e v e r s e d i t s e l f and d i s m i s s e d t h e c l a i m a g a i n s t Buckingham. S t a t e Farm moved f o r r e c o n s i d e r a t i o n of t h e o r d e r o f d i s m i s s a l and, a f t e r a r g u m e n t , t h e D i s t r i c t C o u r t d e c l i n e d t o c h a n g e i t s d e c i s i o n . P l a i n t i f f , Solem, h a s n o t s u b m i t t e d a b r i e f w i t h t h i s Court i n s u p p o r t o f o r i n o p p o s i t i o n t o S t a t e Farm's a p p e a l . The s o l e i s s u e b e f o r e u s is whether an i n s u r e r , sued by its i n s u r e d f o r r e c o v e r y o f uninsured m o t o r i s t b e n e f i t s may implead t h e uninsured m o t o r i s t under Rule 1 4 ( a ) , M.R.Civ.P. I f p l a i n t i f f e s t a b l i s h e s t h a t Buckingham was n e g l i g e n t and caused t h e a c c i d e n t r e s u l t i n g i n p l a i n t i f f ' s i n j u r i e s , S t a t e Farm t h e n is r e s p o n s i b l e under uninsured m o t o r i s t c o v e r a g e , t o pay t h e amount of t h e judgment t o t h e e x t e n t o f t h e a p p l i c a b l e coverage. Upon payment, S t a t e Farm would t h e n be subrogated t o t h e r i g h t s o f p l a i n t i f f Solem and may seek t o e s t a b l i s h t h a t amount from Buckingham. See, Skauge v. Mountain S t a t e s T e l . & T e l . ( 1 9 7 7 ) , 172 Mont. 521, 565 P.2d 628. W e hold t h a t S t a t e Farm d o e s n ' t have t o w a i t u n t i l it pays a judgment o b t a i n e d b e f o r e it h a s a r i g h t t o b r i n g Buckingham i n t o t h e l a w s u i t . Rule 1 4 ( a ) , M.R.Civ.P., e x p r e s s l y g r a n t s a d e f e n d a n t t h e p r o c e d u r a l r i g h t t o b r i n g i n t o t h e l a w s u i t as a t h i r d - p a r t y d e f e n d a n t , anyone who "may be" l i a b l e t o him. T h i s can be done under t h e p r i n c i p l e of s u b r o g a t i o n even i f t h e l i a b i l i t y o f t h e t h i r d p a r t y is c o n t i n g e n t and c a n n o t be e s t a b l i s h e d u n t i l t h e o r i g i n a l d e f e n d a n t h a s been h e l d l i a b l e . 1 A Barron and H o l t z o f f , 5 426 a t 664-73 ( 1 9 6 0 ) ; 3 Moore's F e d e r a l P r a c t i c e , 5 14.08, a t 243-46; Moore's F e d e r a l P r a c t i c e , S 14.10, a t 281-88. Also s e e , Crosby v. B i l l i n g s Deaconess H o s p i t a l ( 1 9 6 7 ) , 149 Mont. 314, 426 P.2d 217 ( h o l d i n g t h a t d e f e n d a n t s h o u l d have been allowed t o implead a t h i r d p a r t y under a t h e o r y of i n d e m n i t y ) . Under a t h e o r y o f s u b r o g a t i o n t o t h e i n s u r e d ' s r i g h t s of r e c o v e r y a g a i n s t t h e t h i r d p a r t y , f e d e r a l c o u r t s have r e g u l a r l y p e r m i t t e d t h e i n s u r e r t o implead t h a t p a r t y as a t h i r d - p a r t y d e f e n d a n t . See, King v. S t a t e Farm Mutual I n s u r a n c e Co. (W.D. Ark. 1 9 6 7 ) , 274 F.Supp. 824; S t . P a u l F i r e & Marine I n s u r a n c e Co. v. United S t a t e s L i n e s Co. (2d C i r . 1 9 5 8 ) , 258 F.2d 374, c e r t . den. 359 U.S. 910, 79 S.Ct. 587, 3 L.Ed.2d 574: Concordia C o l l e g e Corp. v. G r e a t American I n s . Co. ( D . Minn. 1 9 5 3 ) , 14 F.R.D. 403; Glen F a l l s Indemnity Co. v. A t l a n t i c Bldg. Corp. ( 4 t h C i r . 1 9 5 2 ) , 199 F.2d 60. I n King v. S t a t e Farm Mutual I n s u r a n c e Co., s u p r a , t h e c o u r t s p e c i f i c a l l y h e l d t h a t an i n s u r e r sued by its i n s u r e d u n d e r a n u n i n s u r e d m o t o r i s t p r o v i s i o n , may b r i n g t h e u n i n s u r e d t o r t f e a s o r i n t o t h e l a w s u i t . The c o u r t r e j e c t e d t h e argument (which is t h e same argument Buckingham makes h e r e ) t h a t t h e i n s u r a n c e company h a s no r i g h t of a c t i o n u n t i l it h a s a c t u a l l y p a i d t h e judgment t o its i n s u r e d , and t h e r e f o r e t h a t impleader o f t h e u n i n s u r e d m o t o r i s t s h o u l d n o t be p e r m i t t e d u n t i l payment is made. 274 F.Supp. a t 826. W e a l s o r e j e c t t h i s argument. W e a r e persuaded t h a t t h e b e t t e r p r a c t i c e is t o p e r m i t impleader i n such p r a c t i c e s , and t h e r e f o r e t h a t t h e t r i a l c o u r t e r r e d i n g r a n t i n g Buckingham's motion t o d i s m i s s . W e f i n d no a u t h o r i t y s u p p o r t i n g Buckingham's p o s i t i o n , and we f u r t h e r n o t e t h a t t h e t r i a l c o u r t g r a n t e d t h e motion under t h e m i s t a k e n b e l i e f t h a t C o n s o l i d a t e d Freightways Corp. v . Osier ( 1 9 7 9 ) , Mont. , 605 P.2d 1076, 36 St.Rep. 1810, mandated t h a t r e s u l t . But t h a t c a s e h e l d o n l y t h a t t h e r e is no r i g h t of c o n t r i b u t i o n o r indemnity between j o i n t t o r t f e a s o r s - i n p a r i d e l e c t o . 605 P.2d a t 1081. Here, S t a t e Farm is n o t a t o r t f e a s o r and o b v i o u s l y i s n ' t i n p a r i d e l i c t o - w i t h Buckingham: Solem's a c t i o n a g a i n s t S t a t e Farm i s n ' t a t o r t a c t i o n ; r a t h e r , it is a c o n t r a c t a c t i o n . W e hold t h a t S t a t e Farm may implead Buckingham under a t h e o r y o f c o n t i n g e n t l i a b i l i t y b a s e d o n s u b r o g a t i o n . L i b e r a l l y a l l o w i n g impleader of c o n t i n g e n t l y l i a b l e p a r t i e s is c o n s i s t e n t w i t h t h e u n d e r l y i n g p u r p o s e s of Rule 14. The r u l e is designed t o reduce m u l t i p l i c i t y o f l i t i g a t i o n by s e t t l i n g a l l d i s p u t e s a r i s i n g from one o c c u r r e n c e i n one s u i t , t o s p a r e an u n s u c c e s s f u l d e f e n d a n t t h e burden o f b e a r i n g a judgment a g a i n s t him w h i l e he b r i n g s s u i t a g a i n s t someone l i a b l e t o him f o r p l a i n t i f f ' s c l a i m , t o p r e v e n t i n c o n s i s t e n t judgments on t h e same f a c t s , and t o s e t t l e t h e u l t i m a t e l i a b i l i t y f o r a c l a i m w i t h a minimum of e f f o r t and expense. S e e , C. Wright and A. M i l l e r , 6 F e d e r a l P r a c t i c e and Procedure, . § 1442 ( 1 9 7 1 ) ; See a l s o , Glen F a l l s Indemnity Co. v. A t l a n t i c B u i l d i n g Corp., s u p r a , 199 F.2d a t 63; S t . Paul Fire & Marine I n s u r a n c e v. United S t a t e s L i n e s Co., s u p r a . There is no good r e a s o n t o a f f o r d Buckingham t h e p r o c e d u r a l p r o t e c t i o n o f b e i n g a b l e t o postpone being sued u n t i l t h e a c t i o n between Solem and S t a t e Farm is concluded. I n f a c t , a c o n t r a r y h o l d i n g would n o t e l i m i n a t e Buckingham from being a t l e a s t i n d i r e c t l y involved i n t h e s u i t between Solem and S t a t e Farm. P l a i n t i f f Solem must e s t a b l i s h t h a t Buckingham n e g l i g e n t l y caused any i n j u r ies s h e r e c e i v e d and t h e r e f o r e , it is u n l i k e l y t h a t Buckingham could avoid an appearance i n c o u r t t o t e s t i f y . The o r d e r of t h e D i s t r i c t Court d i s m i s s i n g t h e t h i r d - p a r t y complaint is v a c a t e d . The c a s e is remanded w i t h i n s t r u c t i o n s t h a t t h e District Court r e q u i r e Buckingham t o answer S t a t e Farm's t h i r d - p a r t y complaint. F - 1 W e Concur: C h i e L J u s t i c e ......................... J u s t i c e s T h i s c a s e was s u b m i t t e d p r i o r t o J a n u a r y 5, 1981. Mr. Justice John C. Sheehy, specially concurring: I agree with the result reached in the foregoing opinion, which is the only proper result in the posture of the case as it is received from the District Court by this Court What puzzles me is the fact that the insured sued his insurer in the first instance by a direct action to establish liability against the uninsured motorist. I believe all insurance companies writing uninsured motorist coverage in this state use a common form for such coverage, last amended, I believe, in 1966. Under that common form, the insured injured motorist may, after notice to his insurance company, sue the responsible uninsured motorist to determine the extent of the uninsured motorist's legal liability, if they are not otherwise able to agree. Until the legal liability of the uninsured motorist is determined, which in turn determines the liability of the insurer, a direct action against the insurer, in my opinion, is premature. Suit first against the uninsured motorist would be in conformance with the long-established rule in Montana that a direct action against an insurer does not lie until the liability of the insured has been established, Conley v. U.S.F. & G. Co. (1934), 98 Mont. 31, 37 P.2d 565, Cummings v . Reins (1910), 40 Mont. 599, 107 P. 904, and our further long-standing rule that the injection of insurance into the action determining liability is improper. Vonault v . O'Rourke (1934), 97 Mont. 92, 33 P.2d 535. If plaintiff here had properly sued Buckingham to determine liability in the first place, the problem of this cause would not have arisen. Justice