Defendant insurance companies had applied for certificates of authority to conduct business in the state of Montana, as they were contemplating doing business in the state. Although the companies had applied for the certificate of authority, they could not yet sell policies in Montana as they had not yet completed the process to do so. As of June 2008, the companies had not submitted and obtained approval of all insurance forms that would be used in Montana, nor had they submitted a list of sales agents and producers; both of these tasks were required to complete the process of obtaining authorization to conduct the business in Montana. In addition, the companies had no contracts, sales agents, employees, or offices in Montana. What the companies did do before completing the certificate of authority was appoint an agent for service of process in Montana. According to the defendants, they had merely “dipped their toes in the water” to test the idea of doing business in Montana.
In 2007, a couple who owned insurance under the companies in Colorado was in a motorcycle accident in Montana. The couple sued the defendant insurance companies for damages incurred after they were involved in the motorcycle accident in Montana, asserting that the companies were supposed to provide coverage for the state of Montana. The court dismissed the suit for lack of personal jurisdiction, as the authorization process was not complete. The plaintiffs appealed.
JUDGE MCKEOWN Title 33 of the Montana Code regulates insurance companies. A foreign corporation that seeks to transact business in Montana must obtain a certificate of authority. As part of the application process to obtain this certificate, the insurer must “appoint the commissioner [of insurance] as its attorney to receive service of legal process issued against it in Montana” and file with the commissioner the name and address to which the commissioner should forward any summons or complaint received against the insurer. The appointment of this agent is “irrevocable, binds the insurer and any successor in interest or to the assets or liabilities of the insurer, and remains in effect as long as there is in force in Montana any contract made by the insurer or obligations arising from a contract.” The plain language of the statute therefore does not answer the question of whether the appointment subjects the Companies to suit in Montana for business conducted elsewhere.
The Montana law regarding appointment of an agent for service of process does not, standing alone, subject foreign corporations to jurisdiction in Montana for acts performed outside of Montana, at least when the corporations transact no business in the state. Here, the Companies merely contemplated doing business in Montana; they are not amenable to suit in that state simply because they appointed the Commissioner of Insurance as their agent for service of process.
For general jurisdiction to obtain, the defendant’s contacts must approximate physical presence in the forum. The Companies’ contacts in Montana do not come close to meeting this standard. The Companies have no offices or employees in Montana, have made no sales in Montana, have solicited no business in Montana, and are unable to issue or sell insurance in the state. In fact, the Companies’ sole contacts with Montana are their initial Certificates of Authorization and their appointments of the Insurance Commissioner as an agent for service of process. These contacts hardly approximate physical presence and are not “continuous and systematic.” American Family has not set up a “home” in Montana. Accordingly, the court cannot exercise general personal jurisdiction over the Companies.
The Companies have dipped their toes in Montana to test the waters for doing business, but their actions do not amount to a foot planted in the state for purposes of personal jurisdiction. Under Montana law, the Companies’ acts of beginning the process of applying to do business and appointing an agent for service of process provide an insufficient basis for the exercise of personal jurisdiction.
CRITICAL THINKING:
Given what you know of the facts of the case, what evidence do you think could have led the court to rule that the insurance companies did more than just dip “their toes in Montana” and were, instead, certified to do business in the state?
ETHICAL DECISION MAKING:
In this case, the insurance companies were described as not having “set up a home in Montana.” Who are the stakeholders that may be affected by a company’s borderline authorization in a given state? What are some of the problems that can result from a company’s “testing” its business in another state, without completion of authorization?