No. 8 6 - 0 1
IN THE SUPREME COURT OF THE STATE OF MONTANA
1986
SAMUEL JACKSON and RITA JACKSON,
Plaintiffs and Appellants,
KROLL, POMERANTZ and CAMERON,
a Law Partnership,
Defendants and Respondents.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Joseph Gary, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Cok & Wheat; Michael E. Wheat, Bozeman, Montana
For Respondent:
Nash, Wellcome, Frost, Guenther & Zimmer; Page
Wellcome, Rozeman, Montana
Submitted on Briefs: June 20, 1 9 8 6
Decided: September 9 , 1986
Filed :&-qEP 9 - 1986
Mr.Justice Frank B. Morrison, Jr. delivered the Opinion of
the Court.
Samuel and Rita Jackson (Jacksons), sued defendant,
Kroll, Pomerantz, and Cameron, (Kroll), a law firm with its
principal place of business in New York, alleging conspiracy
and violation of the Montana Insurance Unfair Trade Practices
Act. Kroll moved to dismiss for lack of personal
jurisdiction. Following a hearing, the Eighteenth Judicial
District Court granted Kroll's motion and dismissed the
complaint. This appeal follows.
Jacksons purchased residential property in Belgrade,
Montana. The property had been listed with Realty World Land
Office. Elizabeth McNeal, a sales agent for Realty World,
originally showed the property to Jacksons. She represented
to Jacksons that the lot was 120 feet wide by 140 feet long.
Jacksons purchased the property in May of 1982. On October
3, 1982, Jacksons learned that the lot was only 80 feet wide
and that the fence and sprinkler system installed by the
previous owners encroached upon the lots on either side of
the property.
Jacksons notified Realty World of the discrepancy on
October 19, 1982. Realty World was covered by an errors and
omissions insurance policy issued by Ambassador Insurance
Company of New York (Ambassador) . Pursuant to the policy,
Realty World notified Ambassador of Jacksons' claim by giving
notice to Ambassador's agent, the Kroll law firm. Kroll
commenced investigation of the matter on behalf of
Ambassador. On May 18, 1983, Kroll sent a letter to
Jacksons' attorney denying liability on the part of Realty
World.
On November 10, 1983, Ambassador voluntarily placed
itself into insolvency rehabilitation in the State of
Vermont.
Jacksons have settled with all parties concerned except
Ambassador and Kroll. On May 8, 1985, Jacksons filed their
complaint against Kroll law firm. Elliott Kroll filed
affidavits in July and August of 1985, explaining Kroll's
position.
Elliot Kroll stated in his affidavits that the Kroll law
firm:
1. did not act as an insurance company but merely
represented insurance companies;
2. always hired local counsel to represent Ambassador
in the various law suits filed against it;
3. was paid by Ambassador on an interim basis, was not
on retainer and is owed considerable money by Ambassador;
4. owns no property or offices in Montana, retains no
employees or agents in Montana, has no clients in Montana and
does not regularly conduct business in Montana;
5. would contact, by telephone or letter, the
interested parties, informing them that Kroll was acting for
Ambassador, ascertain the pertinent facts concerning the
claim and report the information to Ambassador's claims
department;
6. never agreed to approve the payment of a claim
unless approved by Ambassador's claim agent first; and
7. never actually paid a claim with its own money.
The District Court granted respondent's motion to
dismiss holding that Rule 4B(1), M.R.Civ.P., cannot be
extended to give Montana personal jurisdiction over Kroll.
The District Judge found that according to Elliott Kroll's
affidavits, the act which resulted in the tort action - the
denial of liability on an insurance claim - was committed by
Ambassador, not Kroll. He then went on to find that even if
Kroll was in some way responsible, there were insufficient
"minimal contacts" by Kroll with Montana to satisfy due
process.
The sole issue on appeal is whether the law firm of
Kroll, Pomerantz, and Cameron is subject to the jurisdiction
of the Montana Courts.
The rules controlling when a Montana District Court may
exercise long-arm jurisdiction are well-settled. Rule 4B(1),
M.R.Civ.P., states:
Rule 4B. Jurisdiction of persons. (1) Subject to
jurisdiction. All persons found within the state
of Montana are subject to the jurisdiction of the
courts of this state. In addition, any person is
subject to the jurisdiction of the courts of this
state as to any claim for relief arising from the
doing personally, through an employee, or through
an agent, of any of the following acts:
(a) the transaction of any business within this
state;
(b) the commission of any act which results in
accrual within this state of a tort action;
(c) the ownership, use or possession of any
property, or of any interest therein, situated
within this state;
(d) contracting to insure any person, property
or risk located within this state at the time of
contracting;
(e) entering into a contract for services to be
rendered or for materials to be furnished in this
state by such person; or
(f) acting as director, manager, trustee, or
other officer of any corporation organized under
the laws of, or having its principal place of
business within this state, or as personal
representative of any estate within this state.
Neither party contends Kroll is "found within the state
of Montana." Therefore, in order for jurisdiction to lie,
Kroll must have done "personally, through an employee, or
through an agent", any of the above-described acts. In their
complaint, Jacksons contend that through Kroll's relationship
with Ambassador, Kroll had the authority to and "did in fact
participate in, manage and make command decisions concerning
the evaluation and processing of Jacksons' claim"; that these
acts constituted the practice of the business of insurance;
and that Kroll's practice of the business of insurance
violated the Montana Unfair Trade Practices Act in that Kroll
wrongly and in bad faith denied liability on their claim.
These contentions, if true, constitute acts on which a tort
action could be based. See Gould v. Mutual Life Insurance
Co. of New York (Wash.App. 19841, 683 P.2d 207.
Motions to dismiss, of which this is one, have
the effect of admitting all well-pleaded
allegations in the complaint. In considering the
motion, the complaint is construed in the light
most favorable to the plaintiff, and all
allegations of fact contained therein are taken as
true. (Citations omitted.)
Willson v. Taylor (Mont. 19811, 634 P.2d 1180, 1182, 38
Kroll attempts to refute the facts alleged in Jacksons'
complaint through affidavits. Affidavits may be used to help
determine personal jurisdiction issues under motions to
dismiss. Knoepke v. Southwestern Railway Co. (~ont.1 9 8 0 ) ~
620 P.2d 1185, 1188, 37 St.Rep. 1910, 1914. However,
affidavits may not be used by a defendant for the sole
purpose of refuting the factual allegations in the complaint
in order to deny plaintiffs their day in court. Harrington
v. Holiday Rambler Corp. (1974), 165 Mont. 32, 37, 525 P.2d
556, 558-559. Because Elliott Kroll's affidavits were used
for exactly this purpose, we refuse to consider them. The
contentions in Jacksons' complaint are accepted as true for
purposes of determining whether jurisdiction lies.
Since the contentions in Jacksons' complaint constitute
acts upon which a tort action could be premised, we hold that
Kroll comes within Montana's long-arm jurisdiction statutes.
Rule 4B(1), M.R.Civ.P. However, our inquiry does not end
here. We must next decide the most important question,
whether the exercise of long-arm jurisdiction over Kroll
would "comport with traditional notions of fair play and
substantial justice." Simmons v. State of Montana (Mont.
In Simmons, supra, we adopted the test developed by the
Ninth Circuit Court of Appeals in Data Disc, Inc. v. Systems
Technology Assoc., Inc. (9th Cir. 1977), 557 F.2d 1280,
1287, for determining when exercise of our long-arm
jurisdiction will be commensurate with defendant's due
process rights. When, as here, the non-resident defendant's
activities within Montana are not so "substantial" or
"continuous and systematic", as to subject defendant to
general jurisdiction, the following three criteria must be
met:
1. The non-resident defendant must do some act or
consummate some transaction within the forum or
perform some act by which he purposefully avails
himself of the privilege of conducting activities
in the forum, thereby invoking its laws.
2. The claim must be one which arises out of or
results from the defendant's forum-related
activities.
3. Exercise of jurisdiction must be reasonable.
Simmons, 670 P.2d at 1378, 40 St.Rep. at 1656.
In order to determine whether exercise of jurisdiction
would be reasonable, we must examine such factors as:
1. The extent of defendant's purposeful
interjection into Montana;
2. The burden on defendant of defending in
Montana ;
3. The extent of conflict with the sovereignty of
defendant's state;
4. Montana's interest in adjudicating the dispute;
5. The most efficient resolution of the
controversy;
6. The importance of Montana to plaintiff's
interest in convenient and effective relief; and
7. The existence of an alternative forum.
See Taubler v. Giraud (9th Cir. 1981), 655 F.2d 991, 994, and
Simmons, 670 P.2d at 1383-1385, 40 St.Rep. at 1661-1664.
The trial judge erred in holding that Kroll's due
process rights would be violated should Montana exercise
jurisdiction. If, as the complaint alleges, Kroll conducted
the investigation on behalf of the insurance company and made
the decision to deny liability, Kroll "purposely availed
itself of the privilege of conducting business in Montana"
and committed a tort which accrued in Montana. Under Montana
law, the act causing the injury (the decision to deny
liability) need not occur in Montana as long as the tort
accrues here. See Bullard v. Rhodes Pharmacal Co., Inc.
(D.Mont. 1967), 263 F.Supp. 79, 82, and Scanlan v. Norma
Projektil Fabrik (D.Mont. 1972), 345 F.Supp. 292, 293.
In addition, exercise of jurisdiction over Kroll is
reasonable. If Kroll arranged with Ambassador to make
decisions with respect to Ambassador's liability throughout
the country, Kroll "purposefully interjected" itself into
those states where the effects of such decisions are felt,
including Montana. If Kroll "purposefully interjected"
itself into Montana, the burden and inequity of requiring
Jacksons to prosecute this action in New York would be far
greater than that of requiring Kroll to defend itself in
Montana. Finally, jurisdiction is reasonable because Montana
has a great interest in regulating bad faith by insurance
companies in the state.
The decision of the trial judge is reversed and the
We concur:
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