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Timothy R. King v. American Family Mutual

January 31, 2011


D.C. No. 1:08-cv-00014-CSO Appeal from the United States District Court for the District of Montana Carolyn S. Ostby, Magistrate Judge, Presiding

The opinion of the court was delivered by: Judge McKeown



Submitted*fn1 June 7, 2010

Portland, Oregon

Before: Cynthia Holcomb Hall, Ferdinand F. Fernandez, and M. Margaret McKeown, Circuit Judges.

Opinion by Judge McKeown;

Dissent by Judge Fernandez


McKEOWN, Circuit Judge:

Imagine this scenario:

An out-of-state insurance company is contemplating doing business in Montana. Preliminary to any authorization to sell policies or the transaction of any business, state law requires the company to appoint the Commissioner of Insurance for service of process, which it did. Although the company began the licensure application process, the company cannot yet sell policies in Montana and has not completed the regulatory process to do so. The company has no contacts or contracts, no sales agents or producers, no employees, and no offices in Montana, nor has it filed insurance rates and other forms necessary to do business, solicited any business, advertised, sold any policies, collected any premiums, or transacted any business in Montana. The company is, in short, 99.99% "Montana free." Although it has done nothing more than dip its toe in the water to test the idea and preserve its option of doing business in Montana at some undetermined point in the future, the company now faces the prospect of being subject to general jurisdiction.

We hold that this toe-the mere appointment of an agent for service of process-does not subject the company to general personal jurisdiction in Montana. Numerous Supreme Court opinions and Montana law counsel that such testing of the waters does not constitute a generalized consent to be sued in Montana. Nor is the appointment of an agent for service of process sufficient to confer either general or specific personal jurisdiction over the company under our controlling standards. The constitutional standard of "minimum contacts" has practical meaning in the context of personal jurisdiction. Mere appointment of an agent for service of process cannot serve as a talismanic coupon to bypass this principle. We therefore affirm the district court's dismissal of this suit for lack of personal jurisdiction.


In 2007, Timothy King and his wife, Gwynne King,*fn1 were involved in a motorcycle accident in Montana. The Kings are Colorado residents who own four vehicles, all of which are garaged in Colorado and are insured under policies that were issued in Colorado by either American Family Mutual Insurance Company or American Standard Insurance Company of Wisconsin (collectively, "the Companies"). None of the insured vehicles were involved in the accident that gave rise to this dispute.*fn2 The Companies do not sell insurance policies in Montana, although the Kings' policies do provide coverage for accidents occurring anywhere within the United States.

The Companies are organized under Wisconsin state law, and their principal places of business are in Wisconsin. In 2000, the Companies began exploring the possibility of becoming authorized to issue insurance policies in Montana. As an initial step, the Companies applied for certificates of authority to transact business in the state.

In applying for the certificates, and under the governing Montana statute, the Companies executed a form appointing the Montana Commissioner of Insurance as their registered agent for service of process in Montana. See Mont. Code Ann. § 33-1-601 (2010). This appointment 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." Id.

The state issued certificates of authority to the Companies in July 2001. However, neither company has completed the process of obtaining authorization to sell insurance and transact business in Montana. Before the Companies may issue insurance policies in Montana, the Companies must also, for example, submit their rate schedules to the Insurance Commissioner, see Mont. Code Ann. § 33-16-203, submit and obtain approval of all insurance forms that will be used in Montana, see id. § 33-1-501(1)(a), and submit a list of sales agents and producers, see id. §§ 33-17-231, 33-17-236. As of June 2008, the Companies had not taken any of these steps. They had, however, paid annual fees from 2002 through 2008 in order to preserve their Montana business names and the progress made on their applications to do business in the state.

In accordance with Montana law, the Companies have not conducted any business in the state of Montana. They have no offices in Montana, no employees, agents, or officers in Montana, and have never solicited business in Montana. Between 2001 and 2007, the Companies did not issue or sell any insurance policies in Montana and did not collect any premiums in the state. Had the Companies done so, because they were not authorized to sell insurance in Montana, they would have been subject to penalties and other remedies. See Mont. Code Ann. §§ 33-1-317, 33-1-318, 33-2-118, and 33-2-119.



We review de novo the district court's ruling that it lacked personal jurisdiction over the Companies. Love v. Associated Newspapers, Ltd., 611 F.3d 601, 608 (9th Cir. 2010). Our analysis of whether the Companies' appointment of an agent for service of process is a sufficient hook for the exercise of personal jurisdiction begins with a line of venerable Supreme Court cases.

The Court first considered the issue in Pennsylvania Fire Insurance Co. of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917). In Pennsylvania Fire, the defendant insurer executed a power of attorney that made service on the superintendent of the insurance department of Missouri equivalent to personal service. 243 U.S. at 94. The Supreme Court held that the insurer's appointment of a resident agent for service of process constitutionally subjected the insurer to suit in Missouri for cases growing out of the insurer's activities both in Missouri and elsewhere. See ...

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