No. 86-01 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

SAMUEL JACKSON and RITA JACKSON, 

Plaintiffs and Appellants, 

KROLL, POMERANTZ and CAMERON, 

a Law Partnership, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Joseph Gary, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Cok & Wheat; Michael E. Wheat, Bozeman, Montana 

For Respondent: 

Nash, Wellcome, Frost, Guenther & Zimmer; Page 

Wellcome, Rozeman, Montana 

Submitted on Briefs: June 20, 1986 

Decided: September 9, 1986 

qEP 9 - 1986 Filed :&- 
Mr.Justice Frank B. Morrison, Jr. delivered the Opinion of 

the Court. 

Samuel and Rita Jackson (Jacksons), sued defendant, 

Kroll, Pomerantz, and Cameron, (Kroll), a law firm with its 

principal place of business in New York, alleging conspiracy 

and violation of the Montana Insurance Unfair Trade Practices 

Act. Kroll moved to dismiss for lack of personal 

jurisdiction. Following a hearing, the Eighteenth Judicial 

District Court granted Kroll's motion and dismissed the 

complaint. This appeal follows. 

Jacksons purchased residential property in Belgrade, 

Montana. The property had been listed with Realty World Land 

Office. Elizabeth McNeal, a sales agent for Realty World, 

originally showed the property to Jacksons. She represented 

to Jacksons that the lot was 120 feet wide by 140 feet long. 

Jacksons purchased the property in May of 1982. On October 

3, 1982, Jacksons learned that the lot was only 80 feet wide 

and that the fence and sprinkler system installed by the 

previous owners encroached upon the lots on either side of 

the property. 

Jacksons notified Realty World of the discrepancy on 

October 19, 1982. Realty World was covered by an errors and 

omissions insurance policy issued by Ambassador Insurance 

Company of New York (Ambassador) . Pursuant to the policy, 

Realty World notified Ambassador of Jacksons' claim by giving 

notice to Ambassador's agent, the Kroll law firm. Kroll 

commenced investigation of the matter on behalf of 

Ambassador. On May 18, 1983, Kroll sent a letter to 

Jacksons' attorney denying liability on the part of Realty 

World. 
On November 10, 1983, Ambassador voluntarily placed 

itself into insolvency rehabilitation in the State of 

Vermont. 

Jacksons have settled with all parties concerned except 

Ambassador and Kroll. On May 8, 1985, Jacksons filed their 

complaint against Kroll law firm. Elliott Kroll filed 

affidavits in July and August of 1985, explaining Kroll's 

position. 

Elliot Kroll stated in his affidavits that the Kroll law 

firm: 

1. did not act as an insurance company but merely 

represented insurance companies; 

2. always hired local counsel to represent Ambassador 

in the various law suits filed against it; 

3. was paid by Ambassador on an interim basis, was not 

on retainer and is owed considerable money by Ambassador; 

4. owns no property or offices in Montana, retains no 

employees or agents in Montana, has no clients in Montana and 

does not regularly conduct business in Montana; 

5. would contact, by telephone or letter, the 

interested parties, informing them that Kroll was acting for 

Ambassador, ascertain the pertinent facts concerning the 

claim and report the information to Ambassador's claims 

department; 

6. never agreed to approve the payment of a claim 

unless approved by Ambassador's claim agent first; and 

7. never actually paid a claim with its own money. 

The District Court granted respondent's motion to 

dismiss holding that Rule 4B(1), M.R.Civ.P., cannot be 

extended to give Montana personal jurisdiction over Kroll. 

The District Judge found that according to Elliott Kroll's 

affidavits, the act which resulted in the tort action - the 
denial of liability on an insurance claim - was committed by 

Ambassador, not Kroll. He then went on to find that even if 

Kroll was in some way responsible, there were insufficient 

"minimal contacts" by Kroll with Montana to satisfy due 

process. 

The sole issue on appeal is whether the law firm of 

Kroll, Pomerantz, and Cameron is subject to the jurisdiction 

of the Montana Courts. 

The rules controlling when a Montana District Court may 

exercise long-arm jurisdiction are well-settled. Rule 4B(1), 

M.R.Civ.P., states: 

Rule 4B. Jurisdiction of persons. (1) Subject to 

jurisdiction. All persons found within the state 

of Montana are subject to the jurisdiction of the 

courts of this state. In addition, any person is 

subject to the jurisdiction of the courts of this 

state as to any claim for relief arising from the 

doing personally, through an employee, or through 

an agent, of any of the following acts: 

(a) the transaction of any business within this 

state; 

(b) the commission of any act which results in 

accrual within this state of a tort action; 

(c) the ownership, use or possession of any 

property, or of any interest therein, situated 

within this state; 

(d) contracting to insure any person, property 

or risk located within this state at the time of 

contracting; 

(e) entering into a contract for services to be 

rendered or for materials to be furnished in this 

state by such person; or 

(f) acting as director, manager, trustee, or 

other officer of any corporation organized under 

the laws of, or having its principal place of 

business within this state, or as personal 

representative of any estate within this state. 

Neither party contends Kroll is "found within the state 

of Montana." Therefore, in order for jurisdiction to lie, 

Kroll must have done "personally, through an employee, or 

through an agent", any of the above-described acts. In their 

complaint, Jacksons contend that through Kroll's relationship 

with Ambassador, Kroll had the authority to and "did in fact 

participate in, manage and make command decisions concerning 
the evaluation and processing of Jacksons' claim"; that these 

acts constituted the practice of the business of insurance; 

and that Kroll's practice of the business of insurance 

violated the Montana Unfair Trade Practices Act in that Kroll 

wrongly and in bad faith denied liability on their claim. 

These contentions, if true, constitute acts on which a tort 

action could be based. See Gould v. Mutual Life Insurance 

Co. of New York (Wash.App. 19841, 683 P.2d 207. 

Motions to dismiss, of which this is one, have 

the effect of admitting all well-pleaded 

allegations in the complaint. In considering the 

motion, the complaint is construed in the light 

most favorable to the plaintiff, and all 

allegations of fact contained therein are taken as 

true. (Citations omitted.) 

Willson v. Taylor (Mont. 19811, 634 P.2d 1180, 1182, 38 

Kroll attempts to refute the facts alleged in Jacksons' 

complaint through affidavits. Affidavits may be used to help 

determine personal jurisdiction issues under motions to 

dismiss. Knoepke v. Southwestern Railway Co. (~ont. 1980)~ 

620 P.2d 1185, 1188, 37 St.Rep. 1910, 1914. However, 

affidavits may not be used by a defendant for the sole 

purpose of refuting the factual allegations in the complaint 

in order to deny plaintiffs their day in court. Harrington 

v. Holiday Rambler Corp. (1974), 165 Mont. 32, 37, 525 P.2d 

556, 558-559. Because Elliott Kroll's affidavits were used 

for exactly this purpose, we refuse to consider them. The 

contentions in Jacksons' complaint are accepted as true for 

purposes of determining whether jurisdiction lies. 

Since the contentions in Jacksons' complaint constitute 

acts upon which a tort action could be premised, we hold that 

Kroll comes within Montana's long-arm jurisdiction statutes. 

Rule 4B(1), M.R.Civ.P. However, our inquiry does not end 
here. We must next decide the most important question, 

whether the exercise of long-arm jurisdiction over Kroll 

would "comport with traditional notions of fair play and 

substantial justice." Simmons v. State of Montana (Mont. 

In Simmons, supra, we adopted the test developed by the 

Ninth Circuit Court of Appeals in Data Disc, Inc. v. Systems 

Technology Assoc., Inc. (9th Cir. 1977), 557 F.2d 1280, 

1287, for determining when exercise of our long-arm 

jurisdiction will be commensurate with defendant's due 

process rights. When, as here, the non-resident defendant's 

activities within Montana are not so "substantial" or 

"continuous and systematic", as to subject defendant to 

general jurisdiction, the following three criteria must be 

met: 

1. The non-resident defendant must do some act or 

consummate some transaction within the forum or 

perform some act by which he purposefully avails 

himself of the privilege of conducting activities 

in the forum, thereby invoking its laws. 

2. The claim must be one which arises out of or 

results from the defendant's forum-related 

activities. 

3. Exercise of jurisdiction must be reasonable. 

Simmons, 670 P.2d at 1378, 40 St.Rep. at 1656. 

In order to determine whether exercise of jurisdiction 

would be reasonable, we must examine such factors as: 

1. The extent of defendant's purposeful 

interjection into Montana; 

2. The burden on defendant of defending in 

Montana ; 

3. The extent of conflict with the sovereignty of 

defendant's state; 

4. Montana's interest in adjudicating the dispute; 

5. The most efficient resolution of the 

controversy; 
6. The importance of Montana to plaintiff's 

interest in convenient and effective relief; and 

7. The existence of an alternative forum. 

See Taubler v. Giraud (9th Cir. 1981), 655 F.2d 991, 994, and 

Simmons, 670 P.2d at 1383-1385, 40 St.Rep. at 1661-1664. 

The trial judge erred in holding that Kroll's due 

process rights would be violated should Montana exercise 

jurisdiction. If, as the complaint alleges, Kroll conducted 

the investigation on behalf of the insurance company and made 

the decision to deny liability, Kroll "purposely availed 

itself of the privilege of conducting business in Montana" 

and committed a tort which accrued in Montana. Under Montana 

law, the act causing the injury (the decision to deny 

liability) need not occur in Montana as long as the tort 

accrues here. See Bullard v. Rhodes Pharmacal Co., Inc. 

(D.Mont. 1967), 263 F.Supp. 79, 82, and Scanlan v. Norma 

Projektil Fabrik (D.Mont. 1972), 345 F.Supp. 292, 293. 

In addition, exercise of jurisdiction over Kroll is 

reasonable. If Kroll arranged with Ambassador to make 

decisions with respect to Ambassador's liability throughout 

the country, Kroll "purposefully interjected" itself into 

those states where the effects of such decisions are felt, 

including Montana. If Kroll "purposefully interjected" 

itself into Montana, the burden and inequity of requiring 

Jacksons to prosecute this action in New York would be far 

greater than that of requiring Kroll to defend itself in 

Montana. Finally, jurisdiction is reasonable because Montana 

has a great interest in regulating bad faith by insurance 

companies in the state. 

The decision of the trial judge is reversed and the 
We concur: /-