Justia Montana Supreme Court Opinion Summaries

Molly and Mark Johnson were involved in a motor vehicle accident for which they were insured by State Farm. State Farm paid for most of their property losses, except for certain items. After making these payments, State Farm asserted its subrogation rights and was reimbursed by the at-fault driver’s insurer, GEICO. The Johnsons later settled with the at-fault driver and GEICO for the remaining property damage not covered by State Farm, but had to pay attorney fees from this recovery. The Johnsons then sued State Farm, alleging that State Farm’s subrogation violated the made whole doctrine by collecting from GEICO before the Johnsons were fully compensated, including attorney fees, and also brought a claim for conversion.The United States District Court for the District of Montana initially remanded the case to state court for lack of standing, finding the Johnsons had not shown a substantial risk of injury. In the Montana Eleventh Judicial District Court, the Johnsons’ amended complaints were dismissed for lack of standing, as the court found they had not sufficiently alleged that State Farm’s subrogation prevented them from being made whole. The court also dismissed the conversion claim, finding it preempted by statute and lacking standing. The Johnsons’ attempt to further amend their complaint was denied, and their petition for supervisory control to the Montana Supreme Court was also denied.The Supreme Court of the State of Montana reviewed the case and affirmed the district court’s dismissal. The Court clarified that the made whole doctrine requires an insured to be fully compensated, including attorney fees, before an insurer may subrogate. However, it held that because the Johnsons’ remaining losses were not covered by their State Farm policy, State Farm’s subrogation did not violate the made whole doctrine. The Court also affirmed dismissal of the conversion claim, as the Johnsons lacked standing. View "Johnson v. State Farm Insurance" on Justia Law

Victory Insurance Company, a Montana property and casualty insurer, issued workers’ compensation policies to several businesses in 2019. Later that year, Victory entered into an agreement with Clear Spring Property and Casualty Company to reinsure and then purchase Victory’s book of business, including the relevant policies. Victory notified its insureds by phone and sent a single email on December 31, 2019, stating that their policies would be “upgraded” to Clear Spring policies effective January 1, 2020. All policies were rewritten under Clear Spring as of that date.The Montana Commissioner of Securities & Insurance (CSI) initiated an enforcement action in December 2022, alleging that Victory had illegally cancelled its policies and could be fined up to $2.7 million. After discovery, both parties moved for summary judgment before a CSI Hearing Examiner. The Hearing Examiner found that Victory committed 165 violations of Montana’s insurance code and recommended summary judgment for the CSI. The CSI adopted this recommendation, imposing a $250,000 fine with $150,000 suspended, payable only if further violations occurred within a year. Victory sought judicial review in the First Judicial District Court, Lewis and Clark County, which affirmed the CSI’s decision.The Supreme Court of the State of Montana reviewed the case, applying the same standards as the district court. The Court held that the Hearing Examiner properly granted summary judgment because Victory’s actions constituted cancellations under the insurance code, regardless of whether they could also be considered assignments. The Court also held that Victory’s due process rights were not violated during the fine imposition process, that the statutory delegation of fine authority to the CSI was constitutional, and that Victory was not entitled to a jury trial because there were no material factual disputes. The Supreme Court affirmed the district court’s order. View "Victory Insurance v. State" on Justia Law

Roger and Therese Hutchinson purchased rural property in Madison County, Montana, in 2016, which included an easement for access via a private road. They obtained a title insurance policy from Old Republic National Title Insurance Company. Disputes arose with Nugget Creek Ranch, the owner of the adjoining property, over the use and control of gates on the easement. In 2020, the Hutchinsons sued Nugget Creek, which counterclaimed for declaratory judgment, trespass, nuisance, negligence, slander, defamation, vexatious litigation, and reverse adverse possession. The reverse adverse possession claim was dismissed by the court.The Hutchinsons requested Old Republic to defend them against Nugget Creek's counterclaims, but Old Republic denied coverage, citing policy exclusions for disputes arising from the easement and for actions taken by the insured after the policy date. The Hutchinsons filed a lawsuit against Old Republic for breach of contract and unfair claim settlement practices. The District Court granted summary judgment in favor of Old Republic, finding no duty to defend because the policy excluded coverage for disputes related to the easement and for actions occurring after the policy date.The Supreme Court of the State of Montana reviewed the case and affirmed the District Court's decision. The court held that Old Republic had no duty to defend the Hutchinsons because the policy explicitly excluded coverage for disputes arising from the easement and for actions taken by the insured after the policy date. The court also noted that the policy did not cover tort claims or actions that occurred after the policy's effective date. Thus, the court concluded that Old Republic unequivocally demonstrated a lack of coverage under the policy. View "Hutchinson v. Old Republic" on Justia Law

In this case, the plaintiff, Shandor S. Badaruddin, was sanctioned by the Nineteenth Judicial District Court, Lincoln County, for his conduct as defense counsel in a criminal trial involving his client, Kip Hartman, who faced multiple felony charges related to securities and insurance fraud. The trial was conducted under strict time constraints due to the COVID-19 pandemic, and the court allocated equal time for both the prosecution and defense. Badaruddin was accused of mismanaging his allotted time, leading to a mistrial declaration by the District Court.The District Court found that Badaruddin had deliberately delayed the trial, which led to the mistrial. Consequently, the court imposed monetary sanctions amounting to $51,923.61 against Badaruddin for the costs associated with the trial. Badaruddin appealed the sanctions, arguing that he was not given adequate notice of the court's concerns and that his actions were not deliberate but rather a result of the challenging circumstances.The Supreme Court of the State of Montana reviewed the case and noted that the U.S. District Court had previously ruled that the mistrial declaration was erroneous. The U.S. District Court found that Badaruddin's actions did not constitute deliberate delay and that his efforts to manage the trial time were competent. The U.S. District Court's ruling was affirmed by the U.S. Court of Appeals for the Ninth Circuit, which held that Hartman could not be retried due to double jeopardy protections.Given the federal court's findings, the Supreme Court of Montana concluded that there was no basis for the sanctions under § 37-61-421, MCA, as there was no multiplication of proceedings. The court reversed the District Court's sanction order, determining that the costs incurred were not "excess costs" as defined by the statute. View "Badaruddin v. 19th Judicial District" on Justia Law

The Supreme Court of the State of Montana affirmed a lower court decision that granted Dr. Gregory S. Tierney's motion to dismiss a medical malpractice lawsuit filed by Janice M. Dodds for insufficient service of process. Dodds initially filed the suit against Dr. Tierney and Benefis Health System in 2013, alleging medical malpractice related to a knee replacement surgery. She failed to serve the defendants in time. Dr. Tierney later filed for bankruptcy, which invoked an automatic stay, halting the lawsuit. After his bankruptcy discharge, Dodds attempted to serve Dr. Tierney but failed to do so within the required 30-day timeframe following the discharge.Dodds further sought to join Dr. Tierney's malpractice insurance company as the real party in interest, but the court denied the motion. Upon review, the Supreme Court found that Dodds had not proven Dr. Tierney's liability, thus the insurer had no duty to indemnify him. The court also rejected Dodds' argument that Dr. Tierney lacked standing after his Chapter 7 discharge. The court held that Dr. Tierney maintained a personal stake in demonstrating he was not liable for medical malpractice and that his insurer would only have a duty to indemnify him once Dodds proved her malpractice claims. View "Dodds v. Tierney" on Justia Law

The Supreme Court of the State of Montana affirmed a lower court's decision that an insurance agency, Rames Inc., formerly known as Central Insurance Agency, had a duty to procure additional insurance coverage for a construction company, TCF Enterprises Inc., also known as Malmquist Construction. Rames was found to have breached that duty, thereby breaching the standard of care and negligently misrepresenting that it had obtained the coverage. The court also found that the policy's professional services exclusion would not have barred coverage for defense and indemnity. The dispute arose after Malmquist was sued by a developer due to a construction defect and realized it wasn't covered as an additional insured under a subcontractor's insurance policy as it had believed. Rames had been told by the subcontractor to add Malmquist as an additional insured, but it failed to do so. The jury awarded damages to Malmquist in the amount of $1,022,257.85. Rames appealed, but the Supreme Court upheld the lower court's decision. View "TCF Enterprises, Inc. v. Rames, Inc." on Justia Law

In a dispute arising from a failed subdivision in Missoula County, Montana, a group of property purchasers, led by Gilbert and Judith Johnston, claimed that Flying S Title and Escrow, Inc., breached a purported contract to provide title insurance for the properties they bought. The properties were originally platted as lots, but the purchasers believed that they would eventually be reconfigured into larger parcels. However, the necessary infrastructure was not installed and the amended plat was never recorded, so the parcels never came into existence. The purchasers claimed that pro forma documents provided by Flying S constituted a contract to insure the parcels. The Supreme Court of Montana disagreed, ruling that the pro forma documents did not constitute a contract, but were merely an offer to issue a title insurance policy for the parcels, subject to the terms stated in the documents. The court noted that a contract for title insurance could not exist under the pro forma documents because the parcels, and the title thereto, never existed. Furthermore, the court found that Flying S had not been unjustly enriched by the purchasers' premium payments because it had provided, as agreed, title insurance for the transaction completed by the purchasers to buy the lots. Therefore, the court affirmed the lower court's decision in favor of Flying S Title and Escrow, Inc. View "Johnston v. Flying S Title & Escrow, Inc." on Justia Law

The Supreme Court affirmed the judgment of the district court issuing an order awarding the Estate of Thomas Ronan the insurance proceeds of a house that was destroyed by fire, holding that the district court did not err.When Janet Le Ora Ronan died, she left a holographic will specifically devising her interest in a farm to Thomas "with him having preference to keeping the house [and] farmstead...." After the district court adopted a stipulated settlement agreement (SSA) setting forth the terms as to how to distribute the estate the house was destroyed in a fire. Thomas later died. Appellants had previously insured the house with Janet's estate as the insurance beneficiary, and the insurance company issued $169,089 for the house and $15,250 for personal property destroyed in the fire. The district court relied on the doctrine of equitable conversion to award Thomas's estate the insurance money. The Supreme Court affirmed, holding that the district court (1) did not err in distributing the insurance proceeds according to Montana residuary law or the SSA; and (2) did not err by relying on the doctrine of equitable conversion to distribute the insurance proceeds in furtherance of Janet's intent in specifically devising the house to Thomas. View "In re Estate of Ronan" on Justia Law

The Supreme Court affirmed the order of the district court granting a summary judgment motion filed by Petitioners and two insurers, Farmers Insurance Exchange and Truck Insurance Exchange (collectively, Insurers), and denying Respondent's cross-motion for summary judgment, holding that the district court did not err by finding that Insurers had no duty to defend Respondent under the terms of the relevant insurance policies.After a complaint in the underlying lawsuit alleging slander, malicious prosecution, and bodily injury was amended to add Respondent as a defendant Respondent tendered the complaint to Farmers seeking defense and indemnity under a series of homeowners insurance policies and commercial general liability policies. Later, the Insurers filed a declaratory judgment action seeking a judicial determination that they were not obligated to defend and indemnity Respondent. The district court found that Insurers had no duty to defend Respondent under any of the policies. The Supreme Court affirmed, holding that Respondent failed to meet his burden of demonstrating that the claims fell within the scope of coverage of any of the policies at issue. View "Farmers Insurance Exchange v. Minemyer" on Justia Law

The Supreme Court affirmed the judgment of the district court denying a writ of prohibition of administrative proceedings initiated by the Montana Commissioner of Securities and Insurance, holding that the district court did not err in denying the writ of prohibition.The Commissioner issued a notice of proposed agency action and opportunity for hearing, alleging that Victory Insurance Company violated various provisions of the Insurance Code, including the requirements to provide the Commissioner access to certain managing general act (MGA) records "in a form usable to the commissioner." Victory responded by filing for a writ of prohibition seeking to halt the proceedings. The district court denied the writ. The Supreme Court affirmed, holding (1) the Commissioner's proceedings were within the agency's jurisdiction; (2) Victory had a legal remedy by way of appeal of the Commissioner's decision; and (3) Victory's federal litigation addressing a different legal issue did not have preclusive effect. View "Victory Insurance Co. v. Downing" on Justia Law