DA 10-0601

IN THE SUPREME COURT OF THE STATE OF MONTANA

2011 MT 215

TIMOTHY HOP, individually and on

behalf of all others similarly situated,

 Plaintiff and Appellee,

 v.

SAFECO INSURANCE COMPANY

OF ILLINOIS,

 Defendant and Appellant.

APPEAL FROM: District Court of the Eighteenth Judicial District,

In and For the County of Gallatin, Cause No. DV-08-210C

Honorable John C. Brown, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Carey E. Matovich, Brooke B. Murphy, Matovich, Keller & Murphy, P.C.,

Billings, Montana

For Appellee:

Christopher R. Angel, Brian P. Fay, Angel, Coil & Bartlett, 

Bozeman, Montana

Submitted on Briefs: July 20, 2011

 Decided: August 30, 2011

Filed:

__________________________________________

Clerk

August 30 2011
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Justice Patricia O. Cotter delivered the Opinion of the Court.

¶1 Timothy Hop’s automobile was damaged in an accident with a Safeco insured. In 

addition to the costs of repair, Hop sought “residual diminished value” (RDV) for his 

vehicle. RDV is the difference between the value of a vehicle immediately before an 

accident and the value of the vehicle after post-accident repairs have been made. When 

Safeco failed to pay RDV, Hop moved the Eighteenth Judicial District Court to certify a 

class action against the insurer. Hop sought, on behalf of himself and all proposed class 

members, injunctive and declaratory relief and monetary damages. The District Court 

granted the motion for class certification. We reverse. 

ISSUE

¶2 A restatement of the dispositive issue on appeal is:

¶3 Did the District Court abuse its discretion by certifying Hop’s proposed class 

action?

FACTUAL AND PROCEDURAL BACKGROUND

¶4 In October 2007, Hop acquired a 2006 Chevrolet Corvette with 4,000 miles on it. 

Thirty-three days after this acquisition, on November 6, Hop’s vehicle was struck by 

another vehicle driven by Helen Flath, a Safeco insured. It is undisputed the accident 

was caused by Flath’s negligence. Damages to Hop’s car totaled approximately $8,222. 

Safeco paid the costs of the “evident reasonable and necessary repairs” to Hop’s vehicle.

¶5 In addition to the obvious physical damage to his car, Hop claimed that the vehicle 

sustained residual diminished value. He asserted that the amount Safeco paid to repair 

his car did not fully compensate him because it did not include damages for RDV. In 
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December 2007, Hop demanded RDV compensation from Safeco. Safeco agreed to 

investigate Hop’s RDV claim and sent a letter to Hop’s attorney advising him so. Safeco 

erroneously sent this letter to the wrong law firm and Hop’s attorney never received it. 

After not hearing from Hop or Hop’s attorney, Safeco closed the file on Hop’s claim in 

January 2008 without compensating Hop for RDV.

¶6 In March 2008, Hop filed a Class Action Complaint for Declaratory Relief in the 

District Court. Hop argued that Safeco had a company-wide policy of refusing to 

investigate RDV claims of third parties whose vehicles were damaged by a Safeco 

insured. Hop asserted that the many people whose vehicles were damaged by a Safeco 

insured and who were not paid RDV by Safeco constituted a class for purposes of a class 

action suit against Safeco. He sought a declaration that Safeco was required to 

investigate and pay the class members for RDV, certification of class members, an order 

requiring Safeco to identify and advise each class member of the lawsuit and potential 

entitlement to further insurance benefits, an order requiring “immediate payment to each 

and every Class Member” of the RDV of their vehicle with interest, and costs and 

attorney fees.

¶7 The District Court found that while Safeco claimed to acknowledge RDV as a 

possible element of damages in a Montana property damage claim, it does not investigate 

such claims unless a third party claimant specifically demands compensation for RDV. 

Furthermore, Safeco has no written procedures for investigating RDV claims. As a 

result, the court found, Safeco has failed to investigate and pay “virtually every RDV 

claim in Montana.”
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¶8 After analysis of M. R. Civ. P. 23(a) and (b), the District Court concluded that the 

prerequisites of Rule 23(a) were satisfied and certification of the class identified by Hop 

was appropriate under Rule 23(b)(2). Safeco appeals.

STANDARD OF REVIEW

¶9 We review a district court’s decision on a motion for class certification for an 

abuse of discretion. Gonzales v. Mont. Power Co., 2010 MT 117, ¶ 10, 356 Mont. 351, 

233 P.3d 328 (citing Ferguson v. Safeco Ins. Co. of Am., 2008 MT 109, ¶ 10, 342 Mont. 

380, 180 P.3d 1164). 

DISCUSSION

¶10 Did the District Court abuse its discretion by certifying Hop’s proposed class 

action?

¶11 In his Class Action Complaint, Hop contends that Safeco is violating the Unfair 

Trade Practices Act (UTPA), Title 13, chapter 18, MCA. Referencing RDV claims, Hop 

maintains that Safeco has “with such frequency as to indicate a general business practice” 

failed “to adopt and implement reasonable standards for the prompt investigation of 

claims arising under insurance policies,” and has “refuse[d] to pay claims without 

conducting a reasonable investigation based upon all available information.” Section 33-

18-201(3) and (4), MCA. 

¶12 Safeco counters that Hop may not sue the insurer directly until he has met the 

applicable statutory requirements. Section 33-18-242(1), MCA, provides that insureds 

and third parties may bring an independent action against an insurer for violations of 

certain subsections of § 33-18-201, MCA, including but not limited to § 33-18-201(4), 
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MCA, i.e., refusal to pay claims without a reasonable investigation. While § 33-18-242, 

MCA, allows for independent actions, it places some restrictions on these cases. One 

such restriction applies to Hop’s claim. 

¶13 We glean from the record before us that Hop has filed a complaint against Flath 

for additional damages but has not yet served her, nor have Hop and Safeco on behalf of 

Flath reached a settlement of Hop’s underlying claim for RDV damages to his vehicle. 

Seemingly, this would be a bar to Hop’s present third party UTPA claim because 

§ 33-18-242(6)(b), MCA, provides that “[a] third-party claimant may not file an action 

under this section until after the underlying claim has been settled or a judgment entered 

in favor of the claimant on the underlying claim.” 

¶14 Hop, however, argues that the requirements of § 33-18-242(6)(b), MCA, are 

inapplicable because he is seeking declaratory relief under the Uniform Declaratory 

Judgments Act (UDJA), Title 27, chapter 8, MCA. He relies upon Ridley v. Guaranty 

Natl. Ins. Co., 286 Mont. 325, 951 P.2d 987 (1997), for the proposition that he may bring 

his declaratory judgment action despite the absence of any judgment in or settlement of 

his underlying claim. 

¶15 In Ridley, Ridley was injured in an automobile accident that was primarily caused 

by the negligence of the other driver, an insured with Guaranty National Insurance 

Company. Guaranty acknowledged its liability but refused to pay Ridley’s medical 

expenses in advance of final settlement of Ridley’s claim. Ridley, 286 Mont. at 328, 951 

P.2d at 989. Ridley sued under both UDJA §§ 27-8-201, -202, MCA, and UTPA 

§ 33-18-201, MCA, and the district court ruled in favor of Guaranty. This Court 
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reversed, holding that, under §§ 33-18-201(6) and (13), MCA, of the UTPA, an insurer is 

obligated to pay an injured third party’s medical expenses before final settlement if 

liability is reasonably clear. Ridley, 286 Mont. at 334, 951 P.2d at 992. Ridley

subsequently has been interpreted to allow a declaratory judgment proceeding—before an 

underlying § 33-18-242(6)(b), MCA, case is completed—for advance payment of 

expenses “not reasonably in dispute.” Safeco Ins. Co. v. Eighth Jud. Dist. Ct., 2000 MT 

153, 300 Mont. 123, 2 P.3d 834; DuBray v. Farmers Ins. Exchange, 2001 MT 251, 307 

Mont. 134, 36 P.3d 897.

¶16 Hop insists that he is not seeking monetary damages in a bad faith action pursuant 

§ 33-18-242, MCA; rather, he is seeking declaratory and injunctive relief. He asserts that 

“[t]he Ridley related [sic] relief that [he] and the class seek is but a small portion of the 

relief” being sought. Hop’s protests notwithstanding, and acknowledging Hop’s requests 

for declaratory and injunctive relief, the fact remains that Hop is also undeniably seeking 

monetary damages in the form of RDV for himself and all proposed class members. We 

therefore must determine whether the type of damages Hop is seeking is akin to the 

advance payment of expenses not reasonably in dispute, as allowed in Ridley. 

¶17 We conclude Hop’s reliance on Ridley in an attempt to bypass the provisions of 

§ 33-18-242(6)(b), MCA, is misplaced. Hop is seeking money damages that are readily 

distinguishable from the types of advance damages paid in Ridley, DuBray and Safeco, 

i.e., medical expenses and lost wages not reasonably in dispute. We reasoned in Ridley 

that where an insured tortfeasor is clearly at fault and the medical bills and lost wages 

incurred by the claimant are plainly ascertainable, public policy dictates that mandatory 
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liability insurance pay such expenses in a timely fashion so as not to “devastat[e] . . . a

family of average income.” Ridley, 286 Mont. at 335. Medical expenses must be 

promptly paid and wage loss promptly reimbursed so as not to overwhelm an injured 

accident victim. RDV, on the other hand, is not an indisputable out-of-pocket item of 

damages; the failure to pay it promptly will neither destroy a person’s credit nor impose 

financial stress. 

¶18 When considering what type of damages Ridley contemplates as being 

immediately payable by the insurer, and thus allowable without there first being a third 

party action resolved by settlement or judgment, DuBray is instructive. DuBray, like 

Hop, filed a declaratory action in which he also sought damages. We held in DuBray that 

medical expenses and lost wages are the types of obligations that are “not reasonably in 

dispute,” and are therefore payable promptly before settlement or judgment of the 

underlying claim. DuBray, ¶ 14. However, we affirmed the district court’s dismissal of 

DuBray’s request for other actual damages such as compensation for pain, discomfort, 

mental distress, and punitive damages. We said that “the general and punitive damages 

DuBray sought in his complaint were not authorized pursuant to Ridley.” DuBray, ¶ 16. 

Thus, to the extent his complaint for declaratory judgment also sought general damages, 

we affirmed the decision of the district court to dismiss DuBray’s declaratory action in 

part “on the basis that DuBray’s complaint was effectively a bad faith action barred by 

§ 33-18-242(6)(b), MCA.” DuBray, ¶ 1. 

¶19 Similarly, RDV does not qualify as the type of damage that must be paid in 

advance as “not reasonably in dispute.” Unlike medical expenses and wage loss, lack of 
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advance payment of RDV will not financially overwhelm an accident victim. Moreover, 

such claims are wholly subjective in nature and not plainly ascertainable in amount. 

Furthermore—and again unlike the instance of medical bills and lost wages—this Court 

has not yet addressed the question of whether insurers in Montana have an obligation to 

pay RDV claims at all, much less in advance. This being so, Ridley and DuBray do not 

support Hop’s contention that he may seek RDV under the UDJA without first meeting 

the requirements of § 33-18-242(6)(b), MCA. Therefore, Hop’s UTPA claim against 

Safeco for RDV is not ripe for adjudication.

¶20 Returning to M. R. Civ. P. 23(a), one of the requisites of the rule is that the claims 

of the representative party must be typical of the claims of the class. There cannot be 

typicality sufficient to satisfy the rule unless the named representative has individual 

standing to raise the legal claims of the class. Prado-Steiman v. Bush, 221 F.3d 1266, 

1279-80 (11th Cir. Fla. 2000). As the foregoing discussion demonstrates, Hop has not 

yet met the requirements of § 33-18-242(6), MCA. He therefore does not have individual 

standing to raise his claim, nor does he have the requisite typicality to raise a claim on 

behalf of the class he purports to represent. 

CONCLUSION

¶21 For the foregoing reasons, we conclude the District Court abused its discretion in 

certifying a class action before Hop had satisfied the statutory requirements to bring an 

individual third party action against Safeco. We therefore reverse the District Court’s 

order granting Hop’s motion for certification and remand with instructions to dismiss 

Hop’s class action without prejudice.
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/S/ PATRICIA COTTER

We concur:

/S/ JAMES C. NELSON

/S/ MICHAEL E WHEAT

/S/ BETH BAKER

/S/ JIM RICE