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O'fallon v. Farmers Insurance Exchange8/30/1993
Submitted on Briefs June 11, 1992.
Plaintiffs brought this action to recover damages based upon defendants' alleged violation of § 33-18-201, MCA, and for malicious prosecution. The District Court dismissed both claims pursuant to Rule 12(b)(6), M.R.Civ.P., for failure to state a claim upon which relief can be granted. Plaintiffs appeal from the judgment entered pursuant to the District Court's order of dismissal. We reverse the District Court.
The issues are:
1. Did the District Court err when it dismissed, with prejudice, plaintiffs' claim for malicious prosecution?
2. Did the District Court err when it dismissed, with prejudice, plaintiffs' claim for damages pursuant to §§ 33-18-201 and -242, MCA?
3. Did the District Court err when it held that Terry Falcon, the claims adjuster employed by Farmers Insurance Exchange, was individually liable for his bad faith adjustment of plaintiffs' claim pursuant to § 33-18-201, MCA?
FACTUAL BACKGROUND
The following facts are taken from plaintiffs' complaint; and for purposes of reviewing the District Court's order dismissing the complaint pursuant to Rule 12(b)(6), M.R.Civ.P., they are assumed to be true. Hoveland v. Petaja (1992), 252 Mont. 268, 270-71, 828 P.2d 392, 393.
On August 31, 1990, Collin J. O'Fallon and Harold Case were operating their motor vehicles in the City of Missoula and were stopped in a line of cars waiting for a red light to change at the intersection of Orange Street and Third Avenue South. Alfreda Case was riding as a passenger in Harold's car.
While plaintiffs were waiting for the light to change, Teddy Burgmaier approached them from behind in an extremely intoxicated condition and smashed into the Case vehicle, causing it to smash into O'Fallon's vehicle. As a result of the collision, both O'Fallon and Alfreda sustained physical injuries.
At the time of Burgmaier's collision with plaintiffs, he was insured against liability arising out of the operation of his motor vehicle by defendant Farmers Insurance Exchange. Defendant Terry Falcon was a claims agent for Farmers who had the responsibility for investigating this collision and adjusting the claims against Burgmaier.
On February 8, 1991, O'Fallon and Alfreda filed a complaint against Farmers and Burgmaier in the District Court for the Fourth Judicial District in Missoula County in an effort to recover damages for their physical injuries.
On March 25, 1991, the attorneys hired by Farmers filed a counterclaim against O'Fallon, alleging that he negligently caused the collision and requesting contribution or indemnity for any damages that Burgmaier would be liable to pay as a result of Alfreda's claim against him. A third-party complaint alleging similar grounds for relief was filed against Harold.
In this case, plaintiffs allege that the counterclaim and third-party complaint filed in the underlying personal injury action were instigated by Farmers and Falcon and were filed with malice and without probable cause. They also allege that those claims were terminated in favor of plaintiffs and that they suffered damages as a result of defendants' malicious prosecution.
For a second cause of action, plaintiffs allege that the conduct of Farmers and Falcon, as set forth above, violated their statutory duties pursuant to § 33-18-201(4) and (6), MCA, to conduct a reasonable investigation and settle their claims in good faith after liability had become reasonably clear.
Both defendants moved to dismiss plaintiffs' complaint for failure to state a claim upon which reli
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