STATE FARM MUTUAL AUTO INS v SOL

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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. i; i Justices ! No. 80-78 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981 STATE FARM MUTUAL A T ! I B L UOIOIE COMPANY, INSURANCE 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 : JAN 2 8 1987 Mr. J u s t i c e D a n i e l J . S h e a d e l i v e r e d t h e O p i n i o n o f t h e C o u r t . S t a t e Farm M u t u a l A u t o m o b i l e I n s u r a n c e Company s u e d b y i t s 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 , from an order of the Missoula dismissing its third-party County appeals District Court c o m p l a i n t which s o u g h t i n d e m n i t y from t h e u n i n s u r e d 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 m i g h t be adjudged t o owe t h e p l a i n t i f f . W hold e t h a t t h e D i s t r i c t C o u r t 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 defendant. Cindy J. Solem a s p l a i n t i f f S t a t e Farm a l l e g i n g driven by William that Solem was Schultz J. d r i v e n by H e l e n G. complaint that motorist was a personal injury the proximate to a passenger which Buckingham, alleged f i l e d a complaint against collided a car with a car an u n i n s u r e d m o t o r i s t . negligence cause Solem. in of the further It of the uninsured collision alleged The and that of 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 o f 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 o f which p r o v i d e d u n i n s u r e d m o t o r i s t c o v e r a g e i n t h e amount of $25,000/$50,000. Solem has filed suit under the 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 s of b o t h p o l i c i e s and p r a y s f o r j u d g m e n t a g a i n s t S t a t e Farm i n t h e amount o f $ 5 0 , 0 0 0 o r s u c h l e s s e r amount a s a j u r y m i g h t d e t e r m i n e . S t a t e Farm f i l e d i t s answer t o t h e c o m p l a i n t 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 , the uninsured motorist. affirmative defenses: is premature plaintiff b u t denying t h e negligence of State Farm's answer raises as (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 unless it is first determined that the 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 f r o m t h e uninsured motorist, 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 a n i n d i s p e n s a b l e p a r t y u n d e r R u l e 1 9 , M.R.Civ.P. S t a t e Farm t h e n filed a third-party c o m p l a i n t naming Helen G. Buckingham a s t h i r d - p a r t y defendant. The t h i r d - p a r t y c o m p l a i n t r e c i t e s t h e f a c t t h a t Solem h a s sued S t a t e Farm u n d e r t h e u n i n s u r e d 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 u n i n s u r e d m o t o r i s t i n v o l v e d 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 i n d e m n i t y f r o m Buckingham f o r " s u c h sums a s may b e a d j u d g e d a g a i n s t i t i n f a v o r o f C i n d y J. S o l e m , and f o r their costs." Buckingham moved against her on the t o dismiss the third-party grounds a g a i n s t h e r on w h i c h r e l i e f failed it to complaint state could be g r a n t e d . a claim 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 C o u r t 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 dismissed for t h e c l a i m a g a i n s t Buckingham. reconsideration of the order to after change its decision. 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 or declined and, the i n support of Court dismissal argument, t h i s Court District of S t a t e Farm moved i n o p p o s i t i o n t o S t a t e Farm's appeal. The s o l e i s s u e b e f o r e u s i s w h e t h e r a n i n s u r e r , s u e d by i t s i n s u r e d f o r r e c o v e r y o f u n i n s u r e d m o t o r i s t b e n e f i t s may i m p l e a d t h e u n i n s u r e d m o t o r i s t u n d e r R u l e 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 c a u s e d 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 State Farm then is responsible under uninsured injuries, motorist c o v e r a g e , t o p a y t h e amount o f t h e j u d g m e n t t o t h e e x t e n t o f the applicable coverage. Upon p a y m e n t , S t a t e Farm would t h e n be s u b r o g a t e d 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 s e e k t o e s t a b l i s h t h a t amount f r o m Buckingham. v. Mountain S t a t e s T e l . P.2d 628. We hold & Tel. S e e , Skauge ( 1 9 7 7 ) , 1 7 2 Mont. t h a t S t a t e Farm d o e s n ' t 521, 565 have t o w a i t u n t i l it p a y s 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 . R u l e 1 4 ( a ) , M.R.Civ.P., expressly grants a defendant the procedural r i g h t t o bring 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 , a n y o n e who "may b e " l i a b l e t o him. subrogation contingent even and T h i s c a n be d o n e u n d e r t h e p r i n c i p l e o f if the cannot l i a b i l i t y of be established d e f e n d a n t h a s been h e l d l i a b l e . 426 a t 664-73 at 243-46; A l s o s e e , Crosby v. Mont. been third until party the is original 1 A B a r r o n and H o l t z o f f , 5 Moore's F e d e r a l P r a c t i c e , 5 14.08, (1960); 3 Moore's the Federal Practice, S 14.10, at 281-88. B i l l i n g s Deaconess H o s p i t a l ( 1 9 6 7 ) , 149 3 1 4 , 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 h a v e allowed indemnity). r i g h t s of to implead a third party under a theory of 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 recovery against the t h i r d party, federal courts 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 I n s u r a n c e Co. defendant. (W.D. Fire & Cir. 1 9 5 8 ) , 258 F.2d 587, Ark. S e e , K i n g v . S t a t e Farm M u t u a l 1 9 6 7 ) , 274 F.Supp. 824; St. Paul M a r i n e I n s u r a n c e Co. v . U n i t e d S t a t e s L i n e s Co. 3 L.Ed.2d 574: A m e r i c a n I n s . Co. (D. 3 7 4 , c e r t . d e n . 359 U.S. Concordia College Minn. 1 9 5 3 ) , 1 4 F.R.D. v. A t l a n t i c Bldg. 9 1 0 , 79 S . C t . Corp. v. Great 403; G l e n F a l l s (4th Cir. 1 9 5 2 ) , 199 I n King v. S t a t e Farm M u t u a l I n s u r a n c e Co., supra, the I n d e m n i t y Co. Corp. (2d F.2d 60. 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 a n i n s u r e r s u e d by i t s i n s u r e d under an uninsured uninsured t o r t f e a s o r motorist provision, into the lawsuit. may bring the The c o u r t r e j e c t e d t h e a r g u m e n t ( w h i c h i s t h e same a r g u m e n t Buckingham makes here) that the insurance company has no right of action u n t i l it h a s a c t u a l l y p a i d t h e j u d g m e n t t o i t s i n s u r e d , therefore that impleader of and the uninsured motorist should n o t be p e r m i t t e d u n t i l p a y m e n t i s 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 permit 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 m o t i o n t o d i s m i s s . f i n d no a u t h o r i t y s u p p o r t i n g B u c k i n g h a m ' s position, W e and w e 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 the mistaken belief (1979), Osier t h a t C o n s o l i d a t e d F r e i g h t w a y s Corp. , Mont. 1810, mandated t h a t r e s u l t . 605 P.2d 1076, v. 36 S t . R e p . 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 o f c o n t r i b u t i o n o r i n d e m n i t y b e t w e e n j o i n t tortfeasors - p a r i delecto. in 605 P.2d a t 1 0 8 1 . Here, S t a t e Farm i s 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 - p a r i d e l i c t o in w i t h Buckingham: S o l e m ' 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 i s a c o n t r a c t a c t i o n . W h o l d t h a t S t a t e Farm may i m p l e a d Buckingham u n d e r a e theory of contingent liability based on subrogation. L i b e r a l l y allowing 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. is d e s i g n e d rule settling suit, all to to reduce m u l t i p l i c i t y of disputes arising spare an l i t i g a t i o n by from one o c c u r r e n c e unsuccessful defendant The the i n one burden of b e a r i n g a judgment a g a i n s t him w h i l e h e b r i n g s s u i t a g a i n s t someone liable to him for plaintiff 's claim, to prevent i n c o n s i s t e n t j u d g m e n t s 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 o f e f f o r t and expense. S e e , C. and P r o c e d u r e , . § W r i g h t and A. Fire supra. & 6 Federal Practice 1442 ( 1 9 7 1 ) ; See a l s o , Glen F a l l s I n d e m n i t y Co. v . A t l a n t i c B u i l d i n g C o r p . , Paul Miller, Marine I n s u r a n c e v. T h e r e i s no good s u p r a , 1 9 9 F.2d United a t 63; S t . S t a t e s L i n e s Co., r e a s o n t o a f f o r d Buckingham t h e procedural p r o t e c t i o n of being a b l e t o postpone being sued u n t i l t h e a c t i o n b e t w e e n Solem and S t a t e Farm i s c o n c l u d e d . In fact, a contrary Buckingham f r o m b e i n g holding would eliminate 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 b e t w e e n Solem and S t a t e Farm. establish not Plaintiff t h a t Buckingham n e g l i g e n t l y s h e r e c e i v e d and t h e r e f o r e , caused Solem m u s t any i n jur ies i t i s u n l i k e l y t h a t Buckingham c o u l d a v o i d an a p p e a r a n c e i n c o u r t t o t e s t i f y . The o r d e r o f party complaint the D i s t r i c t Court dismissing t h e third- is vacated. The case is remanded with i n s t r u c t i o n s t h a t t h e D i s t r i c t C o u r t 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 Concur: e ChieL Justice ......................... Justices 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 , 1 9 8 1 . 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

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