No. 91-564 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1993 

ST. PAUL FIRE & MARINE 

INSURANCE COMPANY, 

Plaintiff and Appellant, 

ALLSTATE INSURANCE COMPANY 

and GARY GLASSING, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Eighth Judicial District, 

In and for the County of Cascade, 

The Honorable Joel G. Roth, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Gary M. Zadick, Mark F. Higgins, Ugrin, Alexander, 

Zadick & Slovak, Great Falls, Montana 

For Respondents: 

Susan P. Roy, Garlington, Lohn and Robinson, 

Missoula, Montana 

Filed: 

Submitted: May 12, 1992 

Decided: February 19, 1993 
Justice Terry N. Trieweiler delivered the opinion of the Court. 

Plaintiff St. Paul Fire and Marine Insurance Company filed its 

complaint in the District Court for the Eighth Judicial District in 

Cascade County to recover amounts paid to its insured pursuant to 

the underinsured motorist coverage provided by its policy. St. 

Paul's claim against defendant Gary Glassing was dismissed by the 

District Court based on tbat court's conclusion that it lacked 

personal jurisdiction over Glassing. St. Paul's claim against 

Allstate Insurance Company was dismissed because of its failure to 

state an actionable claim against Allstate. From this judgment, 

st. Paul appeals. We reverse in part and affirm in part. 

The issues are: 

1. Did the District Court have personal jurisdiction over 

Gary Glassing pursuant to Rule 4B(l)(b), M.R.Civ.P.? 

2. Is an insurer which provides underinsured motorist 

coverage a third party entitled to bring a direct claim under 

§§ 33-18-201 and -242, MCA, when a primary insurer fails to 

effectuate prompt and reasonable settlement? 

FACTUAL BACKGROUND 

St. Paul's insured, Ellen Lynn, and Glassing were involved in 

a motor vehicle collision in Bozeman on June 12, 1985. A personal 

injury action was filed by Lynn against Glassing in Gallatin County 

District Court, and on November 17, 1989, judgment was entered in 

favor of Lynn in the net amount of $95,377.92. 

At the time of the underlying motor vehicle collision, St. 

Paul insured Lynn with a policy which provided coverage in the 
event that Lynn was injured by an underinsured motorist. At the 

same time, Allstate insured ~lassing against liability resulting 

from the operation of his motor vehicle. However, the limit of 

Glassing's liability coverage was $50,000. 

In the complaint which gave rise to this action, St. Paul 

alleged that pursuant to its policy of insurance with Lynn, it paid 

to her the amount of her judgment against Glassing that exceeded 

Allstate's policy limits. It alleged that the amount of that 

payment was $51,461.16. St. Paul also alleged two separate claims 

based upon its payment to Lynn. 

In its first cause of action, St. Paul alleged that by virtue 

of its payment to its insured, it became subrogated both by law and 

by the terms of its policy with Lynn to her claim against Glassing 

to the extent of its payment. It sought recovery from Glassing in 

that amount. 

In its second cause of action, St. Paul alleged that on 

several occasions prior to entry of judgment in favor of Lynn, 

Allstate refused to settle her claim against Glassing by payment of 

its policy limits to her. St. Paul alleged that by refusal to pay 

the policy limits before judgment was entered against Glassing for 

a greater amount, Allstate breached its obligation to its own 

insured and to St. Paul, and that as a result, St. Paul was 

required to pay $51,461.16 to its insured. It sought recovery of 

that amount, plus interest, from Glassing and from Allstate. 

Although the record is vague regarding dates and specific 

procedures, it appears that prior to the time this claim was filed 
in State District Court, a similar or identical claim was filed in 

the united States District Court for the District of Montana. 

Before that claim was removed to the State District Court, the 

Federal District Court dismissed St. Paul's claim against Allstate 

for the reason that it did not state a claim for which relief could 

be granted. The parties subsequently stipulated in this case that 

the prior ruling by the Federal District Court would be the law of 

the case for purposes of the State Court proceeding, and that 

dismissal of that case could be appealed to the Montana Supreme 

Court when final judgment was entered in the State District Court. 

After being served with the State Court complaint, Glassing 

moved to dismiss the claim against him for the reason that the 

District Court lacked personal jurisdiction over him. In support 

of that motion, Glassing submitted an affidavit in which he stated 

that he moved to Minnesota on July 1, 1990, had been working and 

living there since, and had no plans to return to Montana. 

On October 10, 1991, the District Court entered its order 

granting the motion to dismiss Glassing based on lack of personal 

jurisdiction. The court noted that Glassing moved from Montana to 

Minnesota on about July 1, 1990, after graduating from Montana 

State University and that this action was not filed until June 17, 

1991. The court concluded that St. Paul's subrogation claim 

against Glassing arose from the terms of its insurance contract 

with Lynn and that the claim was not based on any act of the 

defendant which occurred in Montana. Therefore, the District Court 

concluded that since the defendant could not be found in Montana 
for the purpose of establishing general jurisdiction, and did not 

come within any of the subsections of Rule 4B(1), M.R. Civ.P., there 

was no basis for asserting personal jurisdiction over him. 

St. Paul appeals the dismissal of Glassing in the State 

District Court and the dismissal of Allstate by the Federal 

~istrict Court, which by stipulation became part of the final 

judgment entered in the State District Court. 

I 

Did the District Court have personal jurisdiction over Gary 

Glassing pursuant to Rule 4B(l)(b), M.R.Civ.P.? 

On appeal, St. Paul contends that Montana courts have personal 

jurisdiction over Glassing pursuanttothe Montana long-arm statute 

found in Rule 4B(l)(b), M.R.Civ.P., since its claim is based upon 

the defendant's tortious conduct committed within this state. 

Glassing denies that this state has personal jurisdiction over 

him for two reasons. First, he contends that St. Paul's suit is 

not based on his tortious conduct, but is based upon a contractual 

relationship between St. Paul and its insured which permitted St. 

Paul to pursue a claim for subrogation. Second, Glassing contends 

that even if his conduct comes within Montana's long-arm statute, 

it is unreasonable for this state's courts to exercise jurisdiction 

over him, and plaintiff's claim should be dismissed pursuant to our 

decision in Simmom v. State (l983), 206 Mont. 264, 670 P. 2d 1372. 

We conclude that St. Paul's claim against Glassing is based 

solely upon defendant's commission of acts within the State of 

Montana which resulted in the accrual of a tort action. While the 

5 
defendant is correct that St. Paul has a contractual agreement with 

its insured allowing it to pursue subrogation, the contractual 

authorization is neither necessary nor the basis for St. Paul's 

suit against Glassing. 

We have previously held that: 

Subrogation is a device of equity which is designed 

to compel the ultimate payment of a debt by the one who 

in justice, equity and good conscience should pay it. 

Bowerv.Tebbs, 132 Mont. 146, 314 P.2d 731. . . . The 

theory behind this principle is that absent repayment of 

the insurer the insured would be unjustly enriched by 

virtue of recovery from both the insurer and the 

wrongdoer, or in absence of such double recoverv bv the 

insured, the third ~artv would so free des~ite his lesal 

oblisation in connection with rt.he1 loss. [Emphasis 

added. ] 

Skaugev. MountainStatesTel. & Tel. Co. (1977), 172 Mont. 521, 524-25, 565 

We have also held that a right to subrogation, such as the one 

exercised by the plaintiff in this case, is not dependent on the 

terms of a contract. 

Subrogation in a legal sense arises upon the fact of 

payment by the insurer, rather than by contract between 

the parties. Skauge, 565 P.2d at 630. It is the 

substitution of another person in :place of the creditor, 

so that the person substituted will. succeed to the rights 

of the creditor in relation to the debt or claim. Skauge, 

565 P.2d at 630. 

McDonaldv. Grassle (1987), 228 Mont. 25, 29, 740 P.2d 1122, 1125. 

In this case, St. Paul became substituted for its insured as 

a matter of law when it paid Ellen Lynn pursuant to its insurance 

policy with her and is entitled to pursue her right to collect the 

amount of her judgment against the defendant. However, St. Paul's 
right to subrogation arises from the judgment entered in favor of 

its insured against the defendant, and that judgment is a result of 

the defendant's tortious conduct within the State of Montana. 

Since the allegations in Count I of St. Paul's complaint are 

based upon Glassing's tortious conduct committed within the State 

of Montana, we hold that Rule 4B(l) (b), M.R.Civ.P., permits the 

exercise of personal jurisdiction over Glassing by the District 

Court for the conduct complained of in the plaintiff's complaint. 

In Simmons, we held that where a nonresident defendant is not 

"presentn within the state for purposes of establishing general 

jurisdiction, each of the following criteria must be met before 

personal jurisdiction can be exercised without violating due 

process : 

(1) The nonresident defendant must do some act or 

consummate some transaction with 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. 

It is clear that the first two criteria are satisfied. 

Glassing committed a tort within Montana and St. Paul's claim 

results from that tort. 

We have held that the following factors should be considered 

to determine whether the exercise of personal jurisdiction is 

reasonable: 
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. 

Jacksonv.Krol1, PomerantzandCameron (1986), 223 Mont. 161, 166, 724 P.2d 

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

Simmons, 670 P.Z~ at 1383-85. 

We conclude that it is reasonable to exercise personal 

jurisdiction over Glassing under the circumstances present in this 

case for several reasons: There is no conflict with Glassing's 

current state of residence; Montana has a strong interest in 

adjudicating liability based upon the operation of motor vehicles 

on its roadways: and the most efficient and convenient forum within 

which to resolve the issues raised by the plaintiff's pleadings is 

the State of Montana where the witnesses to the underlying tort are 

most likely located and where the judgment in the underlying action 

has been entered. 

For these reasons, we conclude that Montana's long-arm statute 

provides a basis for exercising personal jurisdiction over Glassing 

and that the exercise of personal jurisdiction under the 

circumstances in this case is reasonable. The District Court's 
judgment dismissing plaintiff's complaint against Glassing based on 

lack of personal jurisdiction is, therefore, reversed. 

I I 

Is an insurer which ~rovides underinsured motorist coverage a 

third party entitled to bring a direct claim under 35 33-18-201 and 

-242, MCA, when a primary insurer fails to effectuate prompt and 

reasonable settlement? 

St. Paul next contends that its insured, Ellen Lynn, had a 

third-party claim against Allstate pursuant to 55 33-18-201 and 

-242, MCA, because of Allstate's repeated refusal to settle her 

claim for its policy limits prior to a jury trial and a verdict in 

her favor. St. Paul contends that just as it is subrogated by law 

to Lynn's claim against Glassing, it is an equitable subrogee of 

Lynn with regard to her statutory third-party claim against 

Allstate. 

In support of its argument, St. Paul cites this Court to 

numerous opinions from other jurisdictions which have held that 

where a primary insurance carrier negligently and in bad faith 

fails to settle a claim against its insured within the insured's 

primary policy limits, and a judgment is then entered against its 

insured for an amount greater than the policy limit so that the 

insured's excess liability carrier becomes responsible for payment 

of the excess amount, the excess carrier is equitably subrogated to 

the rights of the insured and entitled to maintain an action for 

bad faith against the primary carrier. See Continental Casualty Co. v. 
Reserve Ins. Co. (Minn. 1976) , 23 8 N. W. 2d 862 ; Valentine v. Aetna Ins. Co. (9th 

Cir. 1977), 564 F.2d 292; Centenniallns. Co. v. LibertyMutualIns. Co. (Ohio 

1980), 404 N.E.2d 759. 

St. Paul contends that even though it is not an excess 

liability carrier, the issue is the same, the public policy is the 

same, and this Court should, therefore, allow equitable subrogation 

for an underinsurance carrier under the circumstances in this case. 

There is merit to St. Paul's argument, and under other 

circumstances, this Court would consider St. Paul's argument. 

However, determinative of our holding in this case is the fact that 

even in the cases relied upon by St. Paul the primary insurer had 

no independent duty to the excess insurer. The courts which have 

allowed excess carriers to sue primary carriers for unreasonable 

refusal to settle claims have allowed them to do so by holding that 

the excess insurer is equitably subrogated to the rights of the 

insured against the primary insurer. See Windt, Insurance Claims 

and D~SDU~~S at 411 & n. 92 (2d ed. 1988). Therefore, even if we 

were to allow equitable subrogation for an underinsurance carrier 

against a primary carrier who unreasonably refused to settle a 

claim within policy limits and thereby exposed the underinsurance 

carrier to liability for the excess amount of the judgment, the 

underinsurance carrier has no greater rights than can be asserted 

by its insured. As we held in McDonald, subrogation is: 

[Tlhe substitution of another person in place of the 

creditor, so that the person substituted will succeed to 

the rights of the creditor in relation to the debt or 

claim. 
McDonald, 740 P.2d at 1125. 

Pursuant to Rule 202 (b) (6), M.R.Evid., we take judicial notice 

that Lynn sued Allstate for unreasonable refusal to settle her 

claim against its insured in Cause No. CV-91-12-BU-PGH in the 

United States ~istrict Court for the District of Montana in the 

Butte Division. Although the particulars of that claim are unknown 

to this Court, the claim was resolved by stipulation between the 

parties and Lynn's claim against Allstate was dismissed with 

prejudice on July 29, 1991. Pursuant to that dismissal, Lynn has 

no further claim against Allstate, and therefore, there is no claim 

to which St. Paul can be equitably subrogated. 

Even though Lynn's claim against Allstate had not been 

dismissed with prejudice at the time the Federal District Court 

dismissed St. Paul's claim against Allstate, nor at the time St. 

Paul subsequently refiled its claim against Allstate in the State 

District Court, Lynn's subsequent stipulation renders St. Paul's 

appeal moot. 

There is no indication that St. Paul's claim against Allstate 

is based upon an assignment of any first-party claim that Glassing 

might have pursuant to Gibson v. Western Fire Insurance Company (1984) , 2 10 

Mont. 267, 682 P. 2d 725. Therefore, by this decision, we do not 

determine the merits of any such claim. 

For these reasons, we affirm the judgment of the ~istrict 

Court dismissing St. Paul's claim against Allstate in Count I1 of 

the plaintiff's complaint. We reverse the ~istrict Court's 
judgment dismissing Count I ofthe plaintiff's complaint and remand 

this case to the District Court for further proceedings consistent 

with this opinion. 

Chief Justice