Klaudt v. Flink

No. 82-247

IN THE SUPREME COURT OF THE STATE OF MONTANA

NEIL L. KLAUDT, Personal Rep. of

the Estate of SCOTT A. KLAUDT, et al.,

Plaintiffs and Appellants,

<& I

+V

j - STATE FARM MUTUAL

AUTOMOBILE INSURANCE CO.,

Defendants and Respondents.

Appeal from: District Court of the Fourth Judicial District,

In and for the County of Missoula

Honorable John Henson, Judge presiding.

Counsel of Record:

For Appellants:

Boone, Karlberg & Haddon, b~issoula,Montana

Sam Haddon argued, Missoula, Montana

For Respondents:

Hughes, Kellner, Sullivan and Alke, Helena, Montana

Stuart L. Kellner argued, Helena, Montana

!-arm.

Submitted: November 16, 1982

Decided: January 28, 1983

Mr. J u s t i c e Gene B. Daly d e l i v e r e d t h e O p i n i o n of t h e C o u r t .

This is an appeal from a final judgment entered in the

D i s t r i c t C o u r t of t h e F o u r t h J u d i c i a l D i s t r i c t , Missoula County.

S t a t e Farm M u t u a l f i l e d a m o t i o n to d i s m i s s Count I11 o f the

complaint, which named i t as d e f e n d a n t , for failure t o state a

claim on which relief could be granted. The District Court

granted t h i s m o t i o n and e n t e r e d f i n a l judgment on May 2 5 , 1982,

pursuant t o Rule 5 4 ( b ) M.R.Civ.P. The c o u r t used the language

contained in the rule i n i t s judgment and stated. "the Court,

pursuant t o Rule 54 ( b ) M.R.Civ.P., having e x p r e s s l y determined

t h a t t h e e is no j u s t r e a s o n f o r d e l a y i n e n t e r i n g f i n a l j u d g m e n t

o n s a i d C o u n t 111," Thus, c o r r e c t l y c e r t i f y i n g t h e i s s u e to t h i s

Court. The f a i l u r e o f the District Court t o provide its reasons

f o r c e r t i f i c a t i o n u n t i l a f t e r t h e n o t i c e of a p p e a l was f i l e d d o e s

n o t r e n d e r t h e c e r t i f i c a t i o n d e f e c t i v e as l o n g as t h e g u i d e l i n e s

i n r u l e 5 4 ( b ) M.R.Civ.P. have been complied w i t h . Therefore, our

p r e v i o u s c o n t r a r y h o l d i n g i n C h u r c h i l l v. Holly Sugar Corp. 1981,

-- Mont . , 629 P.2d 7 5 8 , 38 S t . R e p . 8 6 0 , t h a t no supplemen-

t a l f i n d i n g s c a n be c o n s i d e r e d a f t e r n o t i c e o f a p p e a l is f i l e d is

overruled.

As both s i d e s have aptly stated in their briefs, when con-

sidering a motion to d i s m i s s , the material a l l e g a t i o n s of the

p l e a d i n g a t t a c k e d a r e t a k e n as t r u e . P e l t o n v . Markegard (1978)

1 7 9 Mont. 102, 586 P.2d 306. Based on this rule the f a c t s of

t h i s c a s e seem t o b e :

1. That N e i l Klaudt is t h e p e r s o n a l r e p r e s e n t a t i v e of the

decedent, S c o t t A. Klaudt, and Niel and Caryl Klaudt are the

p a r e n t s of the decedent.

2. That the defendant, insured, Calvin Flink, was driving

h i s car i n which t h e d e c e d e n t was a p a s s e n g e r , a t a h i g h r a t e of

s p e e d and r o l l e d it on M u l l e n Road w e s t of M i s s o u l a .

3. That the decedent was thrown from t h e v e h i c l e and suf-

fered i n j u r i e s causing h i s death.

4. T h a t t h e d e c e d e n t was e i g h t e e n a t t h e t i m e of h i s d e a t h .

5. That following the accident defendant, Flink, admitted

responsibility for his acts in operating the vehicle.

6. That State Farm was defendant Flink's, insurer at the

time o f t h e a c c i d e n t .

7. T h a t F l i n k was i n t o x i c a t e d a t t h e t i m e of s a i d a c c i d e n t ,

and l a t e r pleaded g u i l t y t o a r e c k l e s s d r i v i n g charge a r i s i n g o u t

of the accident.

8. T h a t S t a t e Farm h a s d e n i e d l i a b i l i t y and h a s r e f u s e d to

negotiate.

The sole issue presented by this appeal is whether the

Montana U n f a i r Trade Practices s e c t i o n of the Insurance Code,

specifically section 33-18-201(6), MCA, gives the plaintiffs a

cause of a c t i o n a g a i n s t a defendant's i n s u r e r , which c a n be p r o -

secuted jointly with an action against the defendant insured?

This is a c a s e o f f i r s t i m p r e s s i o n i n o u r j u r i s d i c t i o n , and

centers around whether section 33-18-201, MCA, of the Unfair

T r a d e P r a c t i c e s S e c t i o n of t h e Montana I n s u r a n c e Code c o n f e r s a

private cause of action against the insurer, upon third party

claimants. In the present case the claimant is alleging a

f a i l u r e of the duty to s e t t l e under subsection ( 6 ) of section

33-18-201, MCA.

Under Montana l a w t h e d u t y t o s e t t l e h a s a l w a y s b e e n a f i d u -

c i a r y d u t y r u n n i n g f r o m t h e i n s u r e r t o t h e i n s u r e d , b y v i r t u e of

the insurance policy. Thompson v. S t a t e Farm M u t u a l A u t o m o b i l e

Ins. Co. ( 1 9 7 3 ) , 1 6 1 Mont. 207, 5 0 5 P.2d 423, ( a n d cases c i t e d

therein) . However, w e now m u s t l o o k t o see i f a c a u s e of a c t i o n

i s c o n f e r r e d upon t h i r d p a r t i e s by t h i s s t a t u t e .

T h e r e a r e no d e c i s i o n s i n t e r p r e t i n g t h i s code s e c t i o n and i t s

e f f e c t i n Montana. But, t h i s issue has arisen i n other jurisdic-

t i o n s with similar statutes. T h e r e is a s p l i t of authority in

t h o s e j u r i s d i c t i o n s as t o w h e t h e r s u c h s t a t u t e s do i n d e e d con£ e r

a p r i v a t e r i g h t o f a c t i o n on t h i r d p a r t y c l a i m a n t s f o r b r e a c h of

d u t y t o s e t t l e ; see R o y a l G l o b e I n s u r a n c e C o . v . Superior Court

of Butte County (1979)r 153 Cal.Rptr. 842, 592 P.2d 329.

Kranzush v. Badger S t a t e Mutual C a s u a l t y C o . ( 1 9 8 1 ) , 1 0 3 Wis.2d

56, 307 N.W.2d 256; Scroggins v. Allstate Insurance Co. (1979),

74 Ill.App.3d 1 0 2 7 , 30 I11.Dec. 6 8 2 , 3 9 3 N.E.2d 7 1 8 , J e n k i n s v.

J .C. Penney C a s u a l t y I n s u r a n c e Co. (1981), W.Va. , 280

S.E.2d 2522 T u f t s v. Madesco I n v e s t m e n t C o r p . (E.D.,Mo. 1981),

W e m u s t now v i e w o u r s t a t u t e and c o n s t r u e it a c c o r d i n g to o u r

r u l e s of statutory interpretation. T h e s e a r e b e s t summarized i n

Montana Power v. Cremer (1979), 1 8 2 Mont. 277, 596 P.2d 483,

where t h i s Court s t a t e d :

" [ t ] h e d e v e l o p m e n t o f t h e case law of Montana

with respect to the rules of statutory

construction may be summarized by the

following analysis. (1) Is t h e i n t e r p r e t a -

t i o n c o n s i s t e n t w i t h t h e s t a t u t e as a w h o l e ?

(2) Does t h e i n t e r p r e t a t i o n r e f l e c t t h e

i n t e n t of the l e g i s l a t u r e considering the

p l a i n meaning o f t h e l a n g u a g e o f t h e s t a t u t e ?

( 3 ) Is t h e i n t e r p r e t a t i o n r e a s o n a b l e so as to

a v o i d a b s u r d r e s u l t s ? and ( 4 ) H a s t h e a g e n c y

c h a r g e d w i t h t h e i n t e r p r e t a t i o n of t h e s t a t u t e

placed a construction on the Statute?

(citations omitted) ." 596 P.2d 4 8 4 .

L o o k i n g a t s e c t i o n 33-18-201, MCA, as a w h o l e , as is r e q u i r e d

when i n t e r p r e t i n g s t a t u t e s , it seems r e l a t i v e l y c l e a r t h a t t h i r d

party claimants are protected. Although all the subsections

don't specifically refer t o claimants, c e r t a i n of them d o . It

would be a b s u r d t o assume t h a t t h e l e g i s l a t u r e would i n s e r t t h e s e

w o r d s i n t o t h e s t a t u t e w i t h o u t them h a v i n g some m e a n i n g , as t h e

legislature is presumed not to pass useless or meaningless

legislation. S t a t e ex r e l . Dick I r v i n I n c . v . Anderson ( 1 9 7 4 ) ,

1 6 4 Mont. 5 1 3 , 525 P.2d 564, 570.

The i n s e r t i o n o f t h e word " c l a i m a n t " i n t h e s t a t u t e e v i d e n c e s

t h a t s u c h p a r t i e s a r e owed a n o b l i g a t i o n or d u t y u n d e r t h a t sta-

tute. When that obligation is viewed in conjunction with

section 33-10-1004, MCA, w h i c h is t h e r e m e d i e s p r o v i s i o n of the

U n f a i r T r a d e P r a c t i c e s S e c t i o n of t h e I n s u r a n c e Code, it is c l e a r

that a private cause of action can be maintained. Section

33-18-1004(5), MCA, provides:

" T h i s s e c t i o n s h a l l n o t b e deemed t o a f f e c t o r

p r e v -n t tKe %r@osiition -- f- a n y p e n- a- l t -y- p r o v i d e d

e o - .

by t h i s c o d e o r b y o t h e r l a w f o r v i o l a t i o n o f

any o t h e r p r o v i s i o n of t h i s c h a p t e r , whether

o r n o t a n y s u c h h e a r i n g i s c a l l e d or h e l d o r

such d e s i s t o r d e r i s s u e d . " (Emphasis added. )

Based on t h e above s u b s e c t i o n , it is e v i d e n t t h a t t h e insurance

commissioner's a c t i o n is n o t t h e e x c l u s i v e remedy f o r a n u n f a i r

trade practice violation. T h e r e f o r e , a c i v i l a c t i o n may be main-

tained, b e c a u s e as s e c t i o n 2 7 - 1 - 1 0 4 ( 1 ) , MCA, aptly points out a

c i v i l a c t i o n a r i s e s o u t of breach of an o b l i g a t i o n . The i n t e n t

of t h e l e g i s l a t u r e is c l e a r ; u n d e r s e c t i o n 33-18-201, MCA, an

i n s u r e r h a s a n o b l i g a t i o n t o c l a i m a n t s as w e l l as i n s u r e d s w h e r e

u n f a i r t r a d e p r a c t i c e s are c o n c e r n e d .

The third criteria of statutory interpretation is easily

satisfied as no absurd result is arrived at by allowing a

c l a i m a n t to s u e under t h e s t a t u t e . I n d e e d t h e s t a t u t e would h a v e

l i t t l e e f f e c t on s e t t l e m e n t of l a r g e claims i f a c o n t r a r y c o n c l u -

s i o n were r e a c h e d .

The f i n a l s t e p i n i n t e r p r e t i n g t h e s t a t u t e is to see i f the

agency in charge of administering the s t a t u t e has placed any

i n t e r p r e t a t i o n on i t . N e i t h e r s i d e i n t h i s case h a s c a l l e d o u r

attention to any such interpretation, nor has our research

r e v e a l e d any.

W e t h e r e f o r e hold t h a t s e c t i o n 33-18-201(6), MCA, does create

an o b l i g a t i o n running from t h e insurer to t h e claimant. When

s u c h an o b l i g a t i o n is breached the claimant has the b a s i s f o r a

c i v i l action.

However, at this point, we must d i f f e r with the position

a d o p t e d by t h e o t h e r j u r i s d i c t i o n s w h i c h allow a n a c t i o n s u c h as

t h i s t o be p r o s e c u t e d o n l y a f t e r t h e i n s u r e d s l i a b i l i t y h a s b e e n

adjudicated. W e b e l i e v e t h a t t h e a c t i o n may be f i l e d and t r i e d

b e f o r e , c o n c u r r e n t w i t h , or a f t e r l i a b i l i t y h a s been d e t e r m i n e d .

W e see no p r o b l e m s w i t h t h e p o s s i b i l i t y o f contrary findings in

the two actions, t h e d o c t r i n e of r e s j u d i c a t a , c o l l a t e r a l e s t o p -

p e l or t h e l i k e b e c a u s e d i f f e r e n t i s s u e s a r e i n v o l v e d i n t h e t w o

cases. The i s s u e i n t h e a c t i o n a g a i n s t t h e i n s u r e r f o r v i o l a t i o n

o f t h e i n s u r a n c e c o d e i s s i m p l y an a c t i o n t o d e t e r m i n e w h e t h e r or

not the insurer violated its d u t y of f a i r dealing in settlement

n e g o t i a t i o n s w i t h t h e c l a i m a n t , w h i l e t h e a c t i o n to d e t e r m i n e t h e

ultimate liability of the driver rests on considerations of

n e g l i g e n c e and c o m p a r a t i v e n e g l i g e n c e .

The o b l i g a t i o n to n e g o t i a t e i n good f a i t h and to p r o m p t l y

s e t t l e claims d o e s n o t mean t h a t l i a b i l i t y h a s b e e n d e t e r m i n e d .

S e c t i o n 33-18-203(6) states t h a t t h e i n s u r e r ' s o b l i g a t i o n arises

when l i a b i l i t y h a s become " r e a s o n a b l y c l e a r . " In evaluating the

i n s u r a n c e c a s e , t h e j u r y m u s t d e t e r m i n e w h e t h e r t h e i n s u r e r nego-

tiated i n good f a i t h given the facts it t h e n had. T h i s con-

sideration is separate and apart from the jury's ultimate

c o n s i d e r a t i o n o f t h e merits of any g i v e n a c t i o n .

We have considered whether the r e s u l t here reached contra-

v e n e s t h e p u r p o s e of R u l e 4 1 1 , M.R.Evid., o n t h e a d m i s s i b i l i t y of

insurance. The r u l e o n l y p r o h i b i t s t h e i n t r o d u c t i o n of i n s u r a n c e

where it is o f f e r e d for the purpose of showing negligence or

liability. Here, the i s s u e s t o be tried a r e s e p a r a t e and the

r u l e is n o t v i o l a t e d .

We realize that many will view this result as harsh.

However, t h e l e g i s l a t u r e h a s r e a c t e d to w h a t it p e r c e i v e s to be

a n important problem. I n s u r a n c e c o m p a n i e s h a v e , and a r e a b l e to

exert, leverage against individual claimants because of the

disparity in resource base. J u s t i c e delayed is o f t e n justice

denied. Public policy calls for a meaningful solution. The

l e g i s l a t u r e h a s s p o k e n and w e , b y t h i s d e c i s i o n , b r e a t h l i f e i n t o

the l e g i s l a t i v e product.

We must note, however, that the statute itself imposes

l i m i t a t i o n s on t h e p u r s u i t o f a n y s u c h a c t i o n . W e cannot ignore

t h e o r d i n a r y p l a i n meaning o f t h e w o r d s i n t h e s t a t u t e ; t h e y a r e

presumed t o have t h e i r o r d i n a r y meaning. I n R e Woodburns E s t a t e

( 1 9 5 4 ) , 1 2 8 Mont. 1 4 5 , 1 5 3 , 273 P.2d 391. Therefore, the i n i t i a l

r e q u i r e m e n t , s e t o u t i n t h e o p e n i n g c l a u s e of s e c t i o n 33-18-201,

MCA, o f s h o w i n g t h e l a c k o f good f a i t h i n s e t t l e m e n t n e g o t i a t i o n s

o r o t h e r u n f a i r t r a d e p r a c t i c e s , t o be g e n e r a l b u s i n e s s p r a c t i c e s

of t h a t p a r t i c u l a r company, m u s t be m e t b e f o r e a n a c t i o n may be

successfully maintained. A s was s t a t e d b y t h e C o u r t in Jenkins

v . J .C. P e n n e y C a s u a l t y Co., s u p r a , it is p o s s i b l e t h a t m u l t i p l e

violations occurring in the same claim c o u l d be sufficient to

show a frequent business practice, as would violations by t h e

same company i n d i f f e r e n t cases. 280 S.E.2d a t 260. Proof of

v i o l a t i o n s evidencing a general business p r a c t i c e , by t h e same

company i n d i f f e r e n t c a s e s , c a n be o b t a i n e d from o t h e r a t t o r n e y s ,

claimants, o r people having knowledge of t h e company's general

practice; Jenkins v. J.C. Penney Casualty Insurance Co., 280

The j u d g m e n t o f t h e D i s t r i c t C o u r t is r e v e r s e d and t h e c a u s e

i s remanded f o r t r i a l .

<

Justice

, R

Chief Justice -

Justices

Mr. Justice Frank B. Morrison, Jr., concurs and dissents as

follows:

I concur in the majority's holding that the statutes in

question create an independent action on behalf of a tort victim

against the tort feasor's insurer. I dissent from the holding

in the majority opinion which permits the action against the

insurer to be consolidated with the action against the tort

f easor .

The failure of insurance companies to expeditiously settle

claims gave rise to passage of the legislation now before this

Court. The majority holding in this case will certainly cause a

much more expeditious handling of claims.

I am concerned a.bout the prejudice which can result from

consolidating the two actions. Additionally, lay jurors will

have a very difficult time separating evidence which relates to

the case against the insurer from evidence which bears upon the

issues in the principle action against the tort feasor. The

likely confusion and potential prejudice lead me to oppose

consolidation.

I would reverse and remand allowing the action against the

insurance company to be brought at any time but would hold that

the action against the insurer cannot be consolidated with the

action aqainst the tort feasor.

Mr. J u s t i c e F r e d J . Weber d i s s e n t s a s f o l l o w s :

I respectfully dissent from the holding of the

m a j o r i t y t h a t s e c t i o n 33-18-201 ( 6 ) , MCA, c r e a t e s an o b l i g a -

tion running from the insurer to the noninsured claimant

( t h e claimant normally described a s a t h i r d p a r t y claimant,

as distinguished from an insured claimant), t h e breach of

which may b e t h e b a s i s o f a c i v i l a c t i o n . I f u r t h e r r e s p e c t -

fully dissent from the majority conclusion that such an

a c t i o n may be f i l e d a n d t r i e d , before, concurrent with, or

a f t e r l i a b i l i t y h a s been d e t e r m i n e d .

I agree with t h e conclusion of the majority that the

rules of statutory interpretation to be applied are

c o r r e c t l y summarized i n Montana Power v . Cremer ( 1 9 7 9 ) , 182

Mont. 277, 596 P.2d 483. However, t h e m a j o r i t y o p i n i o n h a s

f a i l e d t o p r o p e r l y a p p l y t h e f i r s t two r u l e s o f t h e Cremer

summary:

" ( 1 ) Is t h e i n t e r p r e t a t i o n c o n s i s t e n t

w i t h t h e s t a t u t e a s a whole? ( 2 ) Does

t h e i n t e r p r e t a t i o n r e f l e c t t h e i n t e n t of

the legislature considering the plain

meaning o f t h e l a n g u a g e o f t h e s t a t u t e ? "

W a r e r e q u i r e d t o c o n s i d e r t h e s t a t u t e a s a w h o l e and

e

the plain meaning of the language. The provisions in

question a r e contained i n t h e Unfair Trade P r a c t i c e s chapter

o f t h e Montana I n s u r a n c e Code. The g e n e r a l p u r p o s e s o f t h i s

p a r t i c u l a r c h a p t e r a r e d e s c r i b e d i n s e c t i o n 33-18-101, MCA:

"The p u r p o s e o f t h i s c h a p t e r i s t o r e g u -

l a t e t r a d e p r a c t i c e s i n t h e business of

insurance . . . by d e f i n i n g . . . all

s u c h p r a c t i c e s i n t h i s s t a t e w h i c h con-

s t i t u t e u n f a i r methods of c o m p e t i t i o n o r

u n f a i r o r d e c e p t i v e a c t s o r p r a c t i c e s and

by p r o h i b i t i n g t h e t r a d e p r a c t i c e s s o

defined o r determined."

The p r o h i b i t i o n a g a i n s t u n f a i r m e t h o d s i s d e s c r i b e d i n

s e c t i o n 33-18-102, MCA:

"(1) No person shall engage . . . in any

trade practice which is defined in this

chapter as or determined pursuant to this

chapter to be an unfair method of compe-

tition or an unfair or deceptive act or

practice in the business of insurance."

The "person" referred to in the preceding section is

defined by section 33-1-202, MCA, to include an insurer,

company, reciprocal or interinsurance exchange, corporation,

or other legal entity. The defendant insurance company

therefore fits the definition of a "person" in that section.

I fail to see how the statutory language of section

33-18-201, MCA, can be construed to create an obligation

running from the insurance company to a third party

claimant. It states:

"Unfair claim settlement practices pro-

hibited. No person may, with such

frequency a s t o i n d i c a t e a g ------

--- ....................... eneral

business practice, do any of the

following:

"(6) neglect to attempt in good faith to

effectuate prompt, fair, and equitable

settlement of claims in which liability

has become reasonably clear;" (Under-

scoring added.)

In substance this provides that an insurance company

cannot engage in a general business practice of denying lia-

bility where such liability is reasonably clear.

Section 33-18-201, MCA, contains fourteen paragraphs

which set forth unfair claims settlement practices. Other

sections in the chapter set forth prohibitions against

misrepresentation, false advertising, twisting, publishing

false financial statements, unfair discrimination as to

rates, preferred rates as to fictitious groups, no rebates,

illegal dealings in premiums, extension of credit to policy

holders, defaming an insurer, boycott, coercion or intimi-

dation, false applications, restrictions on solicitation,

and a number of other activities. See sections 33-18-202 to

33-18-501, MCA. This is a very comprehensive list of unfair

trade practices in the business of .insurance.

Nowhere in this extensive statutory framework of

unfair trade practices is there a specific provision

granting to either insureds or third party claimants the

right to bring an action to enforce any of the provisions of

this chapter. Sections 33-18-1001 to 1005, IJICU, set forth

enforcement provisions which essentially grant to the

insurance commissioner the power to examine the actions of

insurance companies and to seek cease and desist orders.

The ultimate penalties for violation of a cease and desist

order include fines of up to $1,000 for each day with a

total penalty not to exceed $10,000. In addition, section

33-1-104, MCA, provides that each violation of the Insurance

Code "in addition to any administrative penalty" upon

conviction shall be punishable by a fine of not less than

$50 or more than $1,000 or in by imprisonment in the county

jail for not less than thirty days or more than ninety days

or by both fine and imprisonment.

The purpose of the chapter is to regulate trade

practices. The prohibition is against an insurance company

engaging in trade practices which are unfair or deceptive as

described. Of particular significance is the prohibition

against an insurance company neglecting to effectuate

settlement of claims "with such frequency as to indicate a

general business practice." When followed by enforcement

sections which require action by the commissioner of

insurance only, I must conclude that the interpretation of

t h e m a j o r i t y is n o t c o n s i s t e n t w i t h t h e s t a t u t e a s a whole

a s is r e q u i r e d under Cremer. I further conclude t h a t t h e

majority opinion does not reflect the intention of the

l e g i s l a t u r e when we s t u d y t h e p l a i n m e a n i n g o f t h e s t a t u t o r y

language. The m a j o r i t y o p i n i o n i g n o r e s t h e a b s e n c e o f any

provision in the legislation granting a right of s u i t by

e i t h e r the insureds or t h i r d party claimants. This readily

c o u l d have been i n s e r t e d by t h e l e g i s l a t u r e h a d t h a t been

its intent.

The m a j o r i t y h a s d i s r e g a r d e d t h e r u l e c o n t a i n e d i n o u r

r e c e n t opinion of S t a t e o f Montana e x r e l . Palmer & Conrad

v. H a r t ( 1 9 8 2 ) , Nont. 1 - I?. 2d , 39 St.Rep.

2277, i n which w e s t a t e d :

" T h i s C o u r t must a s c e r t a i n and d e c l a r e

t h e s u b s t a n c e of t h e s t a t u t e it con-

strues. W may n o t i n s e r t w h a t h a s b e e n

e

omitted. Section 1-2-101, MCA.

C h e n n a u l t v. S a g e r ( 1 9 8 8 ) , Mon t .

, 610 P.26 1 7 3 , 1 7 6 , 37 S t . R e p . 8 5 7 ,

861."

The m a j o r i t y opinion has inserted into the statute

e l e m e n t s w h i c h had b e e n o m i t t e d by t h e l e g i s l a t u r e . Regard-

l e s s of our v i e w p o i n t s on the equities of enabling third

party claimants t o sue i n s u r a n c e companies, we should not

presume to insert into a statute that which has been

omitted. Such action is for the legislature, not this

Court.

In the i n t e r e s t of brevity, I will not attempt to

analyze the various cases on t h e q u e s t i o n of the private

r l g h t o f a c t i o n by t h i r d p a r t y c l a i m a n t s f o r b r e a c h o f d u t y

t o settle, a s c i t e d i n t h e majority opinion. I do note t h a t

t h e l e a d i n g c a s e i n C a l i f o r n i a , R o y a l G l o b e I n s u r a n c e Co. v .

Superior C o u r t of B u t t e County (1979), 153 Ca1.Rptr. 842,

592 P.2d 329, is based upon a statute with significant

differences from o u r Montana code s e c t i o n s , none o f which

have been analyzed o r consi~eredin the majority opinion.

The dissent in R o y a l G l o b e I n s u r a n c e Co. c o n t a i n s many of

t n e a r g u m e n t s which I believe t o be p e r s u a s i v e . This is

summarized i n t h e f o l l o w i n g q u o t a t i o n f r o m 592 P.2d a t 340:

" I f , a s t h e m a j o r i t y a s s e r t s , t h e Legis-

l a t u r e had i n t e n d e d t o c h a n g e t h e c o u r s e

o f C a l i f o r n i a l a w 180 d e g r e e s and t h e r e -

a f t e r t o impose upon c a r r i e r s c i v i l l i a -

b i l i t y t o injured third persons for

f a i l i n g t o settle claims against t h e i r

i n s u r e d , t h e n s u r e l y much more d i r e c t a n d

p r e c i s e l a n g u a g e would h a v e b e e n s e l e c t -

-"

ed. (Underscoring added.)

The l a s t p a r a g r a p h o f the majority opinion holds t h a t

proof of v i o l a t i o n s e v i d e n c i n g a g e n e r a l b u s i n e s s p r a c t i c e

is r e q u i r e d b e f o r e a n a c t i o n c a n b e s u c c e s s f u l l y m a i n t a i n e d .

This recognizes the statutory prohibitions, including t h a t

in section 33-18-201(6), MCA, which p r o h i b i t an insurance

company from engaging in the prohibited claim settlement

practices "with such frequency as to indicate a general

business practice." The further result of the majority

holding is t h a t t h e f i r s t p e r s o n t o b e s o m i s t r e a t e d by a n

insurance company would be unable to recover because he

could n o t prove a g e n e r a l b u s i n e s s p r a c t i c e . Presumably t h e

first "few" p e r s o n s s o m i s t r e a t e d by an i n s u r a n c e company

could not recover until the mistreatment had become so

c o n s i s t e n t a s t o become a g e n e r a l b u s i n e s s p r a c t i c e . Had i t

been the i n t e n t i o n of the l e g i s l a t u r e t o g r a n t a r i g h t of

action t o the plaintiff, i t seems a b s u r d t o s u g g e s t t h a t t h e

f i r s t few m i s t r e a t e d p e r s o n s h a v e no c a u s e of a c t i o n b e c a u s e

of t h e absence of a general busines practice. I suggest

this interpretation violates the third rule of statutory

c o n s t r u c t i o n i n Cremer:

" ( 3 ) Is t h e i n t e r p r e t a t i o n r e a s o n a b l e s o

a s t o avoid absurd r e s u l t s ? "

I n a d d i t i o n , I j o i n i n t h e d i s s e n t of J u s t i c e M o r r i s o n

i n which he would n o t p e r m i t a n a c t i o n a g a i n s t t h e i n s u r e r

t o be c o n s o l i d a t e d w i t h t h e a c t i o n a g a i n s t t h e t o r t f e a s o r .

T h i s would a l s o be c o n s i s t e n t w i t h R u l e 411, Mont.R.Evid.,

a s s t a t e d i n DIHoodge v. McCann ( 1 9 6 8 ) , 1 5 1 Mont. 353, 433

P.2d 477, where t h i s C o u r t s t a t e d :

" O r d i n a r i l y i n j e c t i o n of t h e f a c t t h a t

t h e d e f e n d a n t i s p r o t e c t e d by l i a b i l i t y

insurance i n t o such a c a s e , d i r e c t l y o r

i n d i r e c t l y , by e v i d e n c e , a r g u m e n t s , o r

remarks c o n s t i t u t e s r e v e r s i b l e e r r o r . "

I would a f f i r m t h e D i s t r i c t C o u r t .

Mr. J u s t i c e D a n i e l J . S h e a d i s s e n t s a s f o l l o w s :

I join in t h e d i s s e n t of Justice Weber. I further

a g r e e w i t h J u s t i c e s M o r r i s o n and Weber that t h e c l a i m s of

t h e t h i r d p a r t y s h o u l d n o t be p e r m i t t e d t o be j o i n e d with

and t r i e d w i t h t h e a c t i o n a g a i n s t t h e c l a i m e d t o r t f e a s o r .

By interpreting the statutes as permitting third party

claims against insurance companies who insure an alleged

t o r t f e a s o r , w e have i g n o r e d t h e p l a i n woraing of t h e U n f a i r

Trade P r a c t i c e s chapter of t h e Montana I n s u r a n c e Code. In

resorting t o the so-called r u l e s of statutory construction

t o reach this result, t h e m a j o r i t y h a s f u r t h e r i g n o r e d and

t o r t u r e d t h e r u l e s of s t a t u t o r y c o n s t r u c t i o n . The r e s u l t i s

j u d i c i a l l e g i s l a t i o n run rampant.

A