State Farm Mutual Auto. Ins. v. Sol

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. Justices ! i; i No. 80-78 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981 STATE FARM MUTUAL A T ! I B L UOIOIE INSURANCE COMPANY, 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 , appeals from an order of the Missoula County District Court dismissing its third-party 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 f i l e d a complaint against S t a t e Farm a l l e g i n g that Solem was a passenger in a car driven by William J. Schultz which collided with a car d r i v e n by H e l e n G. Buckingham, an u n i n s u r e d m o t o r i s t . The complaint alleged that the negligence of the uninsured motorist was a proximate cause of the collision and of personal injury to Solem. It further alleged that 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 , b u t denying t h e negligence of the uninsured motorist. State Farm's answer raises as affirmative defenses: (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 is premature unless it is first determined that the plaintiff 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 t o dismiss the third-party complaint against her on the grounds it failed to state a claim a g a i n s t h e r on w h i c h r e l i e f could be g r a n t e d . 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 t h e c l a i m a g a i n s t Buckingham. S t a t e Farm moved for reconsideration of the order of dismissal and, after argument, the District Court declined to 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 t h i s Court i n support of or 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 injuries, State Farm then is responsible under uninsured 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. S e e , Skauge v. Mountain S t a t e s T e l . & Tel. ( 1 9 7 7 ) , 1 7 2 Mont. 521, 565 P.2d 628. We hold t h a t S t a t e Farm d o e s n ' t 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. 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 subrogation even if the l i a b i l i t y of the third party is contingent and cannot be established until the original d e f e n d a n t h a s been h e l d l i a b l e . 1 A B a r r o n and H o l t z o f f , 5 426 a t 664-73 (1960); 3 Moore's F e d e r a l P r a c t i c e , 5 14.08, at 243-46; Moore's Federal Practice, S 14.10, at 281-88. A l s o s e e , Crosby v. B i l l i n g s Deaconess H o s p i t a l ( 1 9 6 7 ) , 149 Mont. 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 been allowed to implead a third party under a theory of indemnity). 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 r i g h t s of 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 defendant. S e e , K i n g v . S t a t e Farm M u t u a l I n s u r a n c e Co. (W.D. Ark. 1 9 6 7 ) , 274 F.Supp. 824; St. Paul Fire & 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. (2d Cir. 1 9 5 8 ) , 258 F.2d 3 7 4 , c e r t . d e n . 359 U.S. 9 1 0 , 79 S . C t . 587, 3 L.Ed.2d 574: Concordia College Corp. v. Great A m e r i c a n I n s . Co. (D. Minn. 1 9 5 3 ) , 1 4 F.R.D. 403; G l e n F a l l s I n d e m n i t y Co. v. A t l a n t i c Bldg. Corp. (4th Cir. 1 9 5 2 ) , 199 F.2d 60. 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 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 motorist provision, may bring the uninsured t o r t f e a s o r into the lawsuit. 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 , and therefore that impleader of 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 . We 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, 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 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. v. Osier (1979), Mont. , 605 P.2d 1076, 36 S t . R e p . 1810, mandated t h a t r e s u l t . 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. The rule is d e s i g n e d to reduce m u l t i p l i c i t y of l i t i g a t i o n by settling all disputes arising from one o c c u r r e n c e i n one suit, to spare an unsuccessful defendant the 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. W r i g h t and A. Miller, 6 Federal Practice and P r o c e d u r e , . § 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 . , s u p r a , 1 9 9 F.2d a t 63; S t . Paul Fire & Marine I n s u r a n c e v. United S t a t e s L i n e s Co., supra. T h e r e i s no good 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 holding would not eliminate Buckingham f r o m b e i n g 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. Plaintiff Solem m u s t establish t h a t Buckingham n e g l i g e n t l y caused any i n jur ies s h e r e c e i v e d and t h e r e f o r e , 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 the D i s t r i c t Court dismissing t h e third- party complaint 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