No. 85-498 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

LINDA M. HART-ANDERSON, 

Plaintiff and Respondent, 

-vsGERALDINE C. HAUCK and STATE FARM 

INSURANCE COMPANY, 

Defendants and Appellants. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable William J. Speare, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

Christopher P. Thimsen argued for Hauck, Billings, 

Montana 

Dzivi, Conklin & Nybo; William Conklin argued for 

State Farm, Great Falls, Montana 

For Respondent: 

Crowley Law Firm; Ronald D. Lodders argued, Billings, 

Montana 

1P6j - 3 - 

Filed: 

submitted: November 24, 1957 

Decided: January 8, 1988 

-""3 ---. 

Clerk 
Mr. Justice L. C. Gulbrandson delivered the Opinion of the 

Court. 

Defendants Geraldine Hauck and her insurer, State Farm 

Insurance Company (State Farm), appeal a Yellowstone County 

District Court jury verdict and judgment which; (1) found 

Hauck negligent and 100% liable for an automobile accident 

involving the respondent/plaintiff Linda Hart-Anderson, 

(2) found that State Fa.rm had breached its statutory 

obligations to respondent under Montana.'~ Unfair Claims 

Settlement Practices Act (the Act), and (3) awarded $687 to 

respondent for property damages to her car, (4) awarded 

$25,000 to respondent as compensatory damages for emotional 

distress, and (5) awarded $687,000 to respondent as punitive 

damages against State Farm. 

A decision was entered by this Court on March 17, 1987. 

Hart-Anderson v. Hauck (Mont. 1987), 44 St.Rep. 508. 

Hart-Anderson petitioned this Court for partial 

reconsideration under Rule 34, M.R.Civ.P. The petition was 

briefed by the parties and we granted oral argument. We now 

withdraw the original opinion and issue this opinion in its 

place. 

Appellant State Farm raises the following issues on 

appeal: 

(1) whether the District Court erred in instructing 

the jury that S 33-18-201(7), MCA, applies to third party 

claimants; 

(2) whether the District Court erred in allowing 

respondent's expert witness to state legal opinions that 

State Farm violated the Act; 

(3) whether the District Court erred in prohibiting 

respondent from cross-examining plaintiff's expert witness on 

his knowledge and interpretation of case law on negligence 

and rear-end collisions; 

(4) whether the District Court erred in instructing 

the jury that a violation of the Act may be considered as 

evidence of presumed malice; 
(5) whether the District Court committed prejudicial 

error by refusing to bifurcate the trial into a negligence 

action and a bad faith action; 

(6) whether the evidence is sufficient to support the 

jury's verdict that State Farm breached obligations imposed 

by the Act; 

(7) whether the evidence is sufficient to support the 

award of $25,000 for emotional distress; 

(8) whether the District Court erred in submitting the 

issue of punitive damages to the jury and whether the 

punitive damages award of $687,000 is supported by the 

evidence ; 

(9) whether the punitive damages award violates State 

Farm's rights under the excessive fine clause and the due 

process clause of both the United States and the Montana 

Constitutions. 

Appellant Hauck raises two issues: 

(1) whether the District Court erred in instructing 

the jury that there was no preexisting damage to plaintiff's 

car ; 

(2) whether the District Court erred in instructing 

the jury that, as a matter of law, the actions of another 

driver had no bearing upon this case. 

Because of instructional and evidentiary errors, we 

reverse the judgment and remand this cause for a new trial. 

On the morning of December 6, 1982, plaintiff was 

driving her car east on Broadwater Avenue in Billings, 

Montana. Geraldine Hauck was some distance behind the 

plaintiff also driving east on Broadwater. The streets were 

very icy that morning. Plaintiff planned to turn right at 

the corner of Broadwater and Tenth Street. As she approached 

the corner, a large delivery truck entered the intersection 

from her right. Plaintiff applied her brakes causing her car 

to slide to the right. Her car hit the curb and bounced back 

into her lane of traffic. Plaintiff proceeded very slowly 

around the corner. Appellant Hauck saw that the plaintiff's 
vehicle was having trouble on the icy street. Appellant 

Hauck also planned to turn right on Tenth Street and she 

attempted to brake her vehicle to avoid the plaintiff's 

vehicle in front of her. Hauck testified that she could not 

avoid plaintiff's vehicle by passing it on the left because 

of the delivery truck, which was blocking the road on that 

side. Hauck was unable to slow her car enough to avoid 

striking t.he plaintiff' s vehicle from the rear. Hauck's 

vehicle struck the plaintiff's vehicle and pushed it across 

Tenth Street and into a car driven by Agnes Heald. No one 

suffered physical injuries. 

At the time of the accident, Hauck had an automobile 

insurance policy with State Farm. Hauck promptly reported 

the accident to State Farm. On December 1.7, 1982, the 

plaintiff submitted her accident report and claim for $687 to 

State Farm. Plaintiff's initial written accident report did 

not mention that she had slid into the curb. However, 

shortly after she filed her report, the plaintiff admitted to 

State Farm's adjuster, Doyle Hailey, that she did slide into 

the curb. Hailey told plaintiff that he would only pay 50% 

of the cost of repairing her car because he believed that she 

was also negligent. Prior to this offer, Hailey did not 

interview witness Heald or the police officer who 

investigated the accident. In late December 1982, Heald 

filed her accident report and claim with State Farm. Heald 

did not see the plaintiff 's vehicle strike the curb and her 

report made no mention of that fact. 

Plaintiff believed that State Farm should pay 100% of 

her claim. An attorney called Hailey on behalf of plaintiff 

and stated that plaintiff was not negligent, that it was 

clear that Hauck was 100% liable, that the refusal to pay all 

of plaintiff's damages was unjustified, and that plaintiff 

would accept a settlement payment of 90% of her damages. In 
January 1983, Hailey telephoned the attorney, stated that 

plaintiff was 50% negligent and refused to pay plaintiff 90% 

of her damages. Plaintiff secured counsel and filed this 

action alleging that Hauck had been negligent and that State 

Farm had violated the Unfair Claims Settlement Practices Act. 

The District Court held the jury trial in this case in 

May 1985. Plaintiff's counsel read an agreed statement of 

facts into the record in the jury's presence. Among other 

things, the statement said, 

Defendant State Farm Insurance Company 

has offered to pay 50 percent of 

plaintiff ' s damage. This offer was 

communicated at the time of State Farm's 

first contact with the plaintiff and has 

never been increased or decreased. 

State Farm's counsel moved to amend the second sentence 

quoted above. He claimed he had informed plaintiff's counsel 

that he did not agree to that sentence but that his partner 

signed the statement (apparently not knowing of the dispute). 

The plaintiff filed a trial brief which admits that State 

Farm offered to settle both the bad faith action and the 

negligence action for a total of $5,000. Therefore, we find 

that the second sentence quoted above, pertaining to the 

increase or decrease of the offer, was misleading and should 

be stricken from the agreed statement of facts upon retrial. 

Appellant Hauck introduced evidence at trial. of two 

repair estimates submitted by plaintiff. One estimate was 

dated October 8, 1982, approximately two months before the 

accident occurred. That estimate was for $687. The mechanic 

who prepared that estimate testified that he believed the 

date on the estimate was mistaken. He also testified that he 

had previously said, in a statement given to Hailey, that as 

far as he could remember the estimate was written in October 

and not in December. The date of plaintiff's other estimate 
was September 15, 1982, almost three months before the 

accident occurred. The estimate was for $750. The mechanic 

who prepared that estimate testified that he did not remember 

making the estimate but admitted, at his deposition, that as 

far as he knew the date on the estimate was correct. 

The plaintiff called two expert witnesses to testify at 

trial. Albert Benoit, now retired but previously the branch 

claims manager for Farmers Insurance Group for 25 years, 

testified that Hauck was 100% at fault in the accident and 

that plaintiff was not negligent at all. Benoit testified, 

without objection, that State Farm 1. violated subsection 

(4) of the Act by refusing to pay the claim without 

conducting a reasonable investigation based upon all the 

available information, 2. violated subsection (6) of the Act 

by neglecting to attempt in good faith to effectuate prompt, 

fair and equitable settlement of the claim where liability 

was reasonably clear, and 3. violated subsection (7) of the 

Act by compelling plaintiff to institute litigation to 

recover amounts due by offering substantially less than the 

amount recovered. Earl Hanson, an experienced Billings 

attorney, also testified as an expert witness. Hanson 

testified that Hauck was clearly 100% negligent and that the 

plaintiff was not negligent in the accident. He further 

testified, over objection, that State Farm agents violated 

subsections (6), (7) and possibly (4) of the Act in the way 

they handled plaintiff's claim. 

Counsel for Sta-te Farm attempted to cross-examine 

Hanson as to case law involving negligence and rear-end 

collisions. After plaintiff's objection, the District Court 

refused to allow this cross-examination. Counsel for State 

Farm made an offer of proof citing two Montana Supreme Court 

cases, cases from Texas, Tennessee, and California, and 

several Montana District Court cases. 
Plaintiff also called Thomas Poindexter, an eye 

witness, to testify at trial. He testified that the delivery 

truck was a contributing factor to plaintiff hitting her 

brakes and sliding into the curb. He also testified that if 

plaintiff had not applied her brakes because of the truck, 

causing her to slide into the curb and come almost to a stop, 

that the accident would not have occurred. 

The District Court instructed the jury, over State 

Farm's objection, that subsection (7) of the Act applied to 

and protected any person, rather than only insureds. The 

District Court also instructed the jury, over objection, that 

the jury could consider a violation of the Act as evidence of 

presumed malice. The jury returned the verdict described 

above. This appeal followed. 

The first issue concerns the court's instruction to the 

jury relative to subsection (7) of the Act. Section 

33-18-201, MCA (the Act), states in pertinent part: 

No person may, with such frequency as to 

indicate a general business practice, do 

any of the following: 

(4) refuse to pay claims without 

conducting a reasonable investigation 

based upon all available information; 

(6) neglect to attempt in good faith to 

effectuate prompt, fair, and equitable 

settlements of claims in which liability 

has become reasonably clear; 

(7) compel insureds to institute 

litigation to recover amounts due under 

an insurance policy by offering 

substantially less than the amounts 

ultimately recovered in actions brought 

by such insureds; 
(9) attempt to settle claims on the 

basis of an application which was altered 

without notice to or knowledge or consent 

of the insured; 

(10) make claims payments to insureds or 

beneficiaries not accompanied by 

statements setting forth the coverage 

under which the payments are being made; 

(11) make known to insureds or claimants 

a policy of appealing from arbitration 

awards in favor of insureds or claimants 

for the purpose of compelling them to 

accept settlements or compromises less 

than the amount awarded in arbitration; 

(12) delay the investigation or payment 

of claims by requiring an insured, 

claimant, or physician of either to 

submit a preliminary claim report and 

then requiring the subsequent submission 

of formal proof of loss of forms, both of 

which submissions contain substantially 

t.he same information; 

Regarding subsection (7) of the Act and over 

appellant's objection, the trial court instructed the jury 

that: 

[N] o insurance company may, with such 

frequency as to indicate a general 

business practice, do any of the 

following: . . . Compel any person to 

institute litigation to recover amounts 

due under an insurance policy by offering 

substantially less than the amounts 

ultimately recovered in such actions. 

(Emphasis added. ) 

We set out the above subsections of the Act to 

demonstrate that the Act, by its own terms, provides certain 

protections to insureds, others to claimants and insureds, 
and another to insureds and beneficiaries. See Royal Globe 

Ins. Co. v. Superior Court, etc. (Cal. 1979), 592 P.2d 329, 

334. 

Using the analysis for statutory construction cited by 

this Court in Klaudt v. Flink (Mont. 1983), 658 P.2d 1065, 

1067, 40 St.Rep. 64, 66, we find that subsection (7) of the 

Act does not protect third party claimants. The first step 

of the analysis is whether our interpretation is consistent 

with the statute as a whole. As stated, the statute extends 

some protections to insureds, some to insureds and claimants, 

and another to insureds and beneficiaries. Our 

interpretation is consistent with these distinctions clearly 

made in the statute. The second step is whether our 

interpretation reflects the legislature's intent considering 

the plain meaning of the statutory language. The language of 

subsection (7) protects "insureds" and plainly that term 

does not include third party claimants who are not insured by 

the defendant insurance companv. The third step is whether 

the interpretation is reasonable so as to avoid absurd 

results. The statute here distinguishes between claimants, 

insureds and beneficiaries. Our interpretation here 

recognizes and defers to that distinction. As this Court 

stated in Klaudt, 658 P.2d at 1067, in holding that 

subsection (6) of the statute does protect third party 

claimants, 

It would be absurd to assume that the 

legislature would insert these words into 

the statute without them having some 

meaning, as the legislature is presumed 

not to pass useless or meaningless 

legislation. 

Plaintiff incorrectly asserts that the Klaudt Court 

held that 5 33-18-201, MCA, in its entirety, applies to, and 

protects third party claimants. The Klaudt Court addressed 
only subsection (6) of the statute. We hold that the 

District Court committed reversible error in instructing the 

jury that subsection (7) of the statute applied to any 

person. 

Our interpretation of subsection (7) of the statute is 

supported by Green v. Holm (Wash.App. 1981), 622 P.2d 869. 

In Green, the court addressed a Washington administrative 

regulation on unfair insurance practice which was almost 

identical to S 33-18-201(7), MCA. The court found that the 

plaintiffs could not successfully state a claim under the 

regulation because they were third party claimants, not 

insureds. The Washington Supreme Court has since held that a 

third party claimant has no cause of action against an 

insura.nce company for unfair claims settlement practices. 

Tank v. State Farm Fire & Cas. Co. (Wash. 1986), 715 P.2d 

1133. 

The second issue is the propriety of the expert witness 

testimony. Appellants objected to attorney Hanson's opinion 

testimony that State Farm violated various subdivisions of 

the statute. Relevant Montana Rules of Evidence are: 

Rule 702. If scientific, technical, or 

other specialized knowledge will assist 

the trier of fact to understand the 

evidence or to determine a fact in issue, 

a witness qualified as an expert by 

knowledge, skill, experience, training, 

or education may testify thereto in the 

form of an opinion or otherwise. 

Rule 704. Testimony in the form of an 

opinion or inference otherwise admissible 

is not objectionable because it embraces 

an ultimate issue to be decided by the 

trier of fact. 

The Commission Comment to Rule 704, M.R.Evid., provides that: 
[Tlhe Commission intends this rule to 

follow the existj-ng Montana practice of 

not allowing the witness to give a legal 

conclusion or to apply the law to the 

facts in his answer. 

Additionally, § 25-7-102, MCA, provides that: 

[A111 questions of law, including . . . the construction of statutes and other 

writings, . . . are to be decided by the 

court . . . and all discussions of law 

are to be addressed to the court. 

With this statutory framework in mind, we examine case 

law bearing on the issue presented. In Safeco Ins. Co. v. 

Ellinghouse (Mont. 1986), 725 P.2d 217, 43 St.Rep. 1689, this 

Court recently addressed the plaintiff's use of expert legal 

testimony in an insurance bad faith case. In Safeco, 

Ellinghouse was originally sued in a negligence action. 

Safeco, his insurer, initially accepted coverage of the claim 

and retained counsel to represent him. Over a year later, 

Safeco determined that an insurance policy exclusion applied 

to the claim and that there was no coverage under the policy. 

Safeco secured Ellinghouse's signature on a "non-waiver" 

agreement and, a month later, formally denied coverage to 

Ellinghouse. Ellinghouse later secured his own counsel and 

settled the negligence claim out of court. Meanwhile, Safeco 

had filed a declaratory judgment action to determine whether 

Ellinghouse had liability coverage under the policy. 

Ellinghouse counterclaimed against Safeco for, among other 

things, bad faith. Ellinghouse introduced expert legal 

testimony that: 

[Ilt was a general principle of law that 

prejudice was always presumed to exist 

whenever a representation of coverage had 

been made and a defense provided, that 

the "courts are quite unanimous in saying 

that insurance companies must either deny 

coverage immediately or thereafter be 
estopped from doing so," and that the 

"completed operations" exclusion had "no 

application" to this case. 

Safeco, 725 P.2d at 224. There was also apparently expert 

legal testimony on what Safeco's legal duties were in the 

case, on what the legal effect of the non-waiver agreement 

was, and that Safeco wrongfully denied coverage. This Court 

held that such testimony was not reversible error under the 

unique facts of that case, given that the trial court held 

there was coverage as a matter of law. However, this Court 

said, "[als a general rule, an attorney cannot advise the 

jury as to the law of the case." Safeco, 725 P.2d at 225. 

The Second Circuit Court of Appeals in Marx & Co., Inc. 

v. Diners' Club, Inc. (2d. Cir. 1977), 550 F.2d 505, stated 

reasons which help explain the general rule later cited in 

Safeco. In Marx, the court held that the federal district 

court erred in permitting an expert witness to give his 

opinion as to the parties' legal obligation under a contract 

for registration of stock. Among other things, the expert 

opined (1) that the defendant had no legal excuses for 

nonperformance and (2) as to what was required of the 

defendant under the "best efforts" obligation under the 

contract. In condemning the testimony, the federal court 

stated: 

[Sluch testimony "amounts to no more than 

an expression of the [witness'] general 

belief as to how the case should be 

decided." McCormick on Evidence, S 12 at 

26-27. The admission of such testimony 

would give the appearance that the court 

was shifting to witnesses the 

responsibility to decide the case. 

McCormick on Evidence, S 12 at 27. It is 

for the jury to evaluate the facts in the 

light of the applicable rules of law, and 

it is therefore erroneous for a witness 
to state his opinion on the law of the 

forum. (Citation omitted.) 

Marx & Co., Inc., 550 F.2d at 510. The court further 

cautioned that, 

[Wle must be especially careful not to 

allow trials before juries to become 

battles of paid advocates posing as 

experts on the respective sides 

concerning matters of domestic law. 

Marx & Co., Inc., 550 F.2d at 511. 

Here, the jurors had the ability a.nd the competence, 

based upon their common experiences and knowledge, to decide 

whether (1) State Farm refused to pay plaintiff Is claim 

without conducting a reasonable investigation based upon all 

available information; and (2) State Farm neglected to 

attempt in good faith to effectuate a prompt, fair and 

equitable settlement of a claim in which liability had become 

reasonably clear. Hanson's challenged testimony, opining 

that State Farm violated subsections (41, (6) and (7) of the 

Act invaded the province of the jury and simply instructed 

the jury how to decide the case. That testimony was highly 

prejudicial to State Farm and, therefore, we hold that the 

District Court committed reversible error in admitting 

Hanson's legal opinions. 

Appellants did not object to the respondent soliciting 

legal. opinions from Benoit and we do not here address the 

propriety of that testimony. For a further discussion of 

expert legal testimony, see Kulak v. Nationwide Mutual 

Insurance Company (N.Y. 1976), 351 N.E.2d 735. 

The third issue concerns the District Court's ruling 

restricting State Farm's cross-examination of attorney 

Hanson. By way of qualifying Hanson as an expert legal 

witness, plaintiff elicited Hanson's testimony that he has 

practiced law for almost twenty years, that he has given 
speeches to professional organizations on topics including 

bad faith and insurance bad faith, that he had worked in the 

insurance business and that he was generally familiar with 

the principles of evaluating liability in rear-end car 

crashes. On cross-examination, Hanson agreed that he tries 

to read this Court's decisions soon after they are decided 

and that the law in most states is similar to Montana law 

with regard to rear-end collision and liability. 

State Farm's counsel then attempted to cross-examine 

Hanson about an Idaho case reported in the Pacific Reporter 

and about a Texas Court of Civil Appeals case. Counsel 

sought to show through these cases that the following driver 

in rear-end collision cases is not always 100% liable. The 

District Court sustained plaintiff's objection to this line 

of questioning. State Farm then made an offer of proof that 

various cases demonstrated that in rear-end collisions 

similar to the instant case the following driver was not 100% 

liable. The cases included reported cases from Montana, 

California, Idaho, Texas and Tennessee, Montana District 

Court decisions, and cases where Hanson's law firm took 

positions allegedly inconsistent with his testimony on 

negligence. The court refused to allow State Farm to use any 

of these cases in cross-examination. The record demonstrates 

that State Farm's attempted use of case law was designed, at 

least in part, to test attorney Hanson's expertise. 

This Court has zealously guarded the right of 

cross-examination. In this regard, we have stated: 

Rule 705, Mont.R.Evid., mandates that the 

opinion of a qualified expert is 

admissible, and if opposing counsel 

believe the opinion is not founded on 

sufficient data, cross-examination is the 

shield to guard against unwarranted 

opinions. 
Stewart v. Casey (1979), 182 Mont. 185, 193, 595 P.2d 1176, 

The right of cross-examination may not be 

unduly restricted and may extend not only 

to facts stated by the witness in his 

direct examination, but to all other 

facts connected with them which tends to 

enlighten the jury upon the question in 

controversy. 

State Highway Commission v. Bennett (1973), 163 Mont. 386, 

We hold that the District Court erred in precluding the 

cross-examination of Hanson on the Montana decisions, both 

Supreme Court and District Court, and on the cases involving 

Hanson's law firm. Appellants were entitled to test the 

knowledge, competency and qualifications of the expert 

witness. We do not rule on the use of foreign decisions as a 

District Court may properly exclude their use if they present 

evidence only repetitive or cumulative to evidence abducted 

from Montana cases. In sum, we find that Montana cases are 

preferred in cross-examination of this kind, especially where 

the expert witness has conceded his familiarity with Montana 

law. 

The fourth issue concerns the District Court's 

instructions on presumed malice. The court gave instruction 

number 27 stating: 

You are instructed that when a person 

knows or has reason to know of facts 

which create a high degree of risk of 

harm to the substantial interests of 

another, and either deliberately proceeds 

to act in conscious disregard of or 

indifference to that risk, or recklessly 

proceeds in unreasonable disregard of or 

indifference to that risk, his conduct 

meets the standard of willful, wanton, 

and/or reckless to which the law of this 
State will allow imposition of punitive 

damages on the basis of presumed malice. 

That standard is a correct statement of the law under Owens 

v. Parker Drilling Co. (Mont. 1984), 676 P.2d 162, 41 St.Rep. 

66. The controversy here arises from the court's instruction 

number 29, which states: 

If you find that State Farm Insurance 

Company has violated the Unfair Claims 

Settlement Practices Act, then such 

violation may be considered by you as 

evidence of presumed malice, as that term 

is defined in these instructions. 

State Farm argues that this instruction allows the jury to 

disregard the Owens standard and predicate a finding of 

presumed malice upon a statutory violation alone. We agree. 

Conceivably, a jury could use the challenged instruction to 

perform an "end-run" around the Owens standard for presumed 

malice. Moreover, the Owens Court addressed the newly 

formulated standard for presumed malice and stated: 

The standard is equally applicable to 

statutory violations and other wrongful 

conduct. Thus, where a statute is 

designed to protect the substantial 

interests of a person from a high degree 

of risk, and the statute is violated 

either intentionally or recklessly, a 

jury question of punitive damages is 

raised. (~mphasis in original.) 

Owens, 676 P.2d at 165. Owens requires an intentional or 

reckless statutory violation for the issue of punitive 

damages to go to the jury. The instruction here allows the 

jury to consider a statutory violation as evidence of 

presumed malice. Thus, the jury could find that State Farm 

had negligently violated the Unfair Claims Settlement 

Practices Act and they could further consider that negligent 

violation as evidence of presumed malice. That is not the 
law under Owens. We hold that the District Court erred in 

giving instruction number 29. 

The fifth issue is whether the District Court should 

have bifurcated this trial into a negligence action and a bad 

faith action. Given our holding today, we need not address 

the propriety of the District Court's refusal to bifurcate. 

Upon retrial, this action will be bifurcated and tried in 

accordance with our decision in Fode v. Farmers Ins. Exchange 

(Mont. 1986), 719 P.2d 414, 43 St.Rep. 814. 

Because we remand this cause for a new trial on all 

issues, we decline to address issues six, seven, eight and 

nine listed above and the two issues raised by appellant 

Hauck. 

Reversed and remanded. 

pi? L \ 

Justice/ 

We concur: 

Justices 
Mr. Justice John C. Sheehy, dissenting: 

This reversal is a follow-up from the unfortunate 

decision of this Court in Safeco Ins. Co. v. Ellinghouse 

(1986), 725 P.2d 217, 43 St.Rep. 1689. This reversal evinces 

growing elitist philosophy this Court, distrust 

juries which bodes no good for insurance claimants in this 

state. 

We begin with the flat statement that Geraldine C. Hauck 

was 100% negligent in causing the accident. The jury said 

so. A. G. Benoit, a top flight adjuster for one of the 

largest underwriting concerns in Billings said so. Earl 

Hanson, an attorney representing both insurance companies and 

both insurance claimants, said so. This Court said so in 

McDonough v. Smith under facts nearly identical: 

Defendant contends, however, that his evidence 

tended to show that the damage to plaintiff's car 

was caused by plaintiff's own negligence. True, 

the answer of the defendant contained such a 

charge, but there is an entire absence of any 

evidence to support such allegation. Under the 

record presented here, the jury would not have been 

warranted in finding for the defendant on any 

theory, except that his car did not strike that of 

plaintiff. There was no evidence from which the 

jury could have determined that the damage to 

plaintiff's car resulted from any other cause than 

that it was struck by the defendant. If they could 

have found that the cars did not collide, then the 

reason why plaintiff's car struck the fence 

resulting in the damage complained of would have 

rested in conjecture and speculation. 

McDonough v. Smith (1930), 86 Mont. 545, 551, 284 P. 542, 

The jury verdict answered the following questions: 

1. Do you find that Defendant Mrs. Hauck was 

negligent and that her negligence was a proximate 
cause of the property damage suffered by the 

Plaintiff, Linda Hart-Anderson? Yes X 

2. Do you find that Plaintiff Linda Hart-Anderson, 

was negligent, and that her negligence was a 

proximate cause of the property damage she 

suffered? No X 

3. If your answer to both 1 and 2 was "yes" then 

assign a percentage to each of them apportioning 

the negligence which proximately caused the 

accident between them in the following blanks: 

Mrs. Hauck 100% 

Mrs. Hart-Anderson 0% 

4. What is the amount in dollars of damage to Mrs. 

Hart-Anderson's car which was caused by this 

accident? $687.00 

5. Did State Farm Insurance Company breach the 

obligations imposed by the Unfair Claims Settlement 

Act of Montana as given to you in the instructions? 

Yes X 

6. Did such breach proximately cause damage to 

Linda Hart-Anderson? Yes X 

7. What is the dollar amount of damages suffered 

by Linda Hart-Anderson for emotional distress as 

defined in these instructions, if any? $25,000.00 

8. Is Linda Hart-Anderson entitled to receive 

punitive or exemplary damages from State Farm 

Insurance Company under the instructions given you 

on punitive or exemplary damages? Yes X 

If "yes" then in what amount? $687,000.00 

Under 33-18-201, MCA, it is an unfair claims 

settlement practice for an insurance company to fail to 

acknowledge and act reasonably promptly upon communications 

with respect to claims under insurance policies; to refuse to 

pay claims without conducting a reasonable investigation 

based upon all available information; to neglect to attempt 

in good faith to effectuate prompt, fair and equitable 
settlements of claims in which liability has become 

reasonably clear; and to compel insureds to institute 

litigation and recover amounts due by offering substantially 

less than the amounts ultimately recovered in actions brought 

by such insureds. 

The majority opinion takes umbrage in finding that the 

District Court instructed the jury that an insurance company 

should not compel any person, and not just insureds, to 

institute litigation in order to recover what is justly due 

that person. The majority finds that the legislature did not 

"intend" to so protect third party claimants, but only 

intended to protect "insureds." I submit that such intent is 

not what is to be deduced from the whole of S 33-18-201, MCA, 

which in broad and repetitive language steps out to protect 

Montana persons dealing with insurance companies, both 

insureds and third party claimants. What legislative intent 

can be distinguished as different when the legislature 

provides that it is not good faith if the insurer neglects to 

effectuate prompt, fair and equitable settlements and also 

provides that insureds should not be forced to go to court to 

collect their due claims? If an insurance company neglects 

to effectuate prompt, fair and equitable settlement of claims 

where liability has become reasonably clear, is it not simply 

an extension of that neglect to compel third party claimants 

to go to court or else accept less than is due them? The 

ignominious result of the majority opinion is that now the 

District Court cannot instruct the jury that it is bad faith 

for an insurer to force a third party claimant to go to court 

to collect his claim, even though by so doing, the insurer 

"neglects to attempt in good faith to effectuate prompt, fair 

and equitable settlements" and fails "to acknowledge and act 

reasonably promptly upon communications with respect to 

claims." The kind of nitpicking indulged by the majority in 
determining the legislative intent of S 33-18-201(7), MCA, 

confounds the intent and purpose of the statute. 

The majority objects to the statement of the District 

Court, read to the jury that: 

Defendant State Farm Insurance Company has offered 

to pay 50% of plaintiff's damage. This offer was 

conununicated at the time of State Farm's first 

contact with the plaintiff and has never been 

increased or decreased. 

The statement read by the District Court is absolutely 

true. It was the refusal of the insurance company to 

recognize its 100% obligation for the plaintiff's damages 

that brought about the lawsuit. That is what the District 

Court was informing the jury. It would have been improper 

for the District Court to read to the jury a statement that 

later the insurer tried to settle both the bad faith action 

and the negligence action for a total of $5,000. The latter 

figure was simply an offer of compromise which would be 

inadmissible in any event. 

Two things may be said with respect to the majority 

opinion and its treatment of the Earl Hanson testimony. 

First, all of the things to which Hanson testified were also 

testified to by the lay insurance adjuster, A. G. Benoit. No 

objection was made on appeal to the testimony of A. G. 

Benoit. Yet, this Court reverses on the testimony given by 

Earl Hanson, which is clearly compatible with the 

unobjected-to testimony of A. G. Eenoit. 

Second, the cross-examination of Earl Hanson as proposed 

by the insurer's attorney was properly denied by the District 

Court. Allowance of such cross-examination would have meant 

that the jury would be trying not only the facts of this case 

but the facts in other reported cases in this state and other 

states which were not relevant to the issues presented here. 

The District Court should be sustained in its statement which 
in essence told the insurer's attorney that the jury in this 

case was going to try one set of facts and one set of facts 

only. 

The majority objection to the giving of court's 

instruction no. 29, set forth in the majority opinion, is 

only further quibbling. Instruction no. 29 has to be read in 

conjunction with instruction no. 27. Instruction no. 29 

merely told the jury that violations of the Unfair Claims 

Settlement Practice Act could be considered by them as 

evidence of presumed malice, "as ---- that term is defined in - 

these instructions. " (Emphasis added. ) Instruction no. 27 

told the jury that if the defendant "recklessly proceeds in 

unreasonable disregard or indifference to [the] risk [of 

harm] , his conduct meets the standard of willful, wanton 

and/or reckless to which the law of this State will allow 

imposition of punitive damages on the basis of presumed 

malice." The two instructions read together state the law. 

There is no question that the insurer in this case proceeded 

deliberately and intentionally to refuse to pay the full 

damages to which Linda Hart-Anderson was entitled. The 

majority would require the jury to attempt to determine 

punitive damages in a vacuum without consideration of the 

violations of the Unfair Claims Settlement Practice Act. 

That requirement is absurd. 

The majority have withdrawn from their original opinion 

their conm~ent on instruction no. 30. The court in this case 

properly instructed the jury, in instruction no. 30: 

More than one person may be responsible for causing 

injury. If you find that the defendant, Geraldine 

Hauck, was negligent and that her negligence 

proximately caused the plaintiff ' s property damage 

it is not a defense that some third person may also 

have been negligent. 

It was following instruction no. 30, that the court gave 

instruction no. 31, which stated: 
You are instructed that the actions of the driver 

of the Consolidated Freightways truck have no 

bearing upon this case as a matter of law. That is 

to say, the liability, if any, of Geraldine Hauck 

for the damage to Linda Hart-Anderson's car is not 

reduced or eliminated by the fact that the driver 

of the Consolidated Freightways truck may also have 

been at fault. 

Those instructions, read together properly state the law of 

this case. Consolidated Freightways was not a party to this 

action. Under the theory of joint and several liability, 

Geraldine Hauck, if liable, was liable for all of that 

portion of negligence that the jury assigned to her. In that 

light, jury instruction no. 30 was perfectly proper and 

should be given again on retrial with instruction no. 31. 

More than ever, this case points up the necessity of 

this Court examining the duty of insurance companies toward 

third party claimants in the light of the mandatory insurance 

law. Section 61-6-301, MCA. As I pointed out in my dissent 

in Fode v. Farmers Insurance Exchange (Mont. 1986), 719 P.2d 

414, 419, 43 St.Rep. 814, 820, the purpose of the mandatory 

insurance law is to protect third party motorists on our 

highways. The duty of the insurer to protect third party 

claimants and not harass them or refuse to pay their just 

claims is of greater import under mandatory insurance laws. 

The rights of the third party claimant now in automobile 

accident cases arise not merely through the insurance 

contract between the other motorist and his company hut 

through the determination of the legislature that the general 

traveling public is to be protected. It is worth repeating 

the statement in Ferguson v. En~ployers Mutual Cas. Co. (S.C. 

1970), 174 S.E.2d 768, 771: 

The primary purpose of a compulsory motor vehicle 

liability insurance is to compensate innocent 

victims who have been injured by the negligence of 

financially irresponsible motorists. Its purpose 

is not like that of ordinary liability insurance to 
save harmless the tort feasor himself. The injured 

person's rights against the insurer are not derived 

through the insured as in the case of voluntary 

insurance. They are statutory and become absolute 

on the occurrence of an injury covered by the 

policy. (Citation omitted.) 

In the absence of federal regulation of insurance companies' 

settlement practices, and the incomplete and limited 

statutory reach of state regulation, this Court has a duty to 

protect motorists from the unfair practice that was exhibited 

by State Farm in this case. Damages of $687 may not loom 

large in the state's economy, but are important to the person 

involved. If the person involved has a choice of either 50% 

of his damages or going to court, it is more than likely that 

going to court will be out of the question because of the 

upfront costs that are necessary. The protection of Linda 

Hart-Anderson for one-half of $687 may not seem terribly 

important, but the multiplication of Linda Hart-Andersons by 

several hundred throughout the State of Montana every year 

has substantial importance. The jury decided not to condone 

this business practice of State Farm Mutual. The jury took a 

proper course in awarding punitive damages. It is a 

regrettable action for this Court to set aside that award for 

the flimsy reasons given. I 

,c$a-7/.. " ('-, , t, ,& *JW] 

Justice 1- 

(/ 

Mr. Justice William E. Hunt, Sr.: 

I concur in the foregoing dissent of Mr. Justice Sheehy.