Montana Supreme Court Suggests That Insurer May Have Pre-Suit Duty To Reveal Liability Policy Limits

Wilkie v. Hartford Underwriters Ins. Co., 494 P.3d 892 (Mont. 2021). A brand-new Montana Supreme Court decision has sounded off—sort of—in the nationwide debate over whether a liability insurer has a duty to provide liability policy limits to a third-party claimant when liability is reasonably clear. In particular, the new decision says that a pre-suit failure to reveal policy limits by the insurer is not rendered moot by the insured providing the policy after suit is filed. If such a violation can be cured by simply revealing the limits or producing the policy months later or even after suit is filed, then there would be no means of enforcing such a duty.

Every day, billions of dollars-worth of insurance liability claims are negotiated between claims professionals. It is in this context that the aphorism “All anyone ever wants is a fair advantage” is shown to be empirically true. The more information you have, and the less your adversary has, the greater your advantage. When negotiating a liability or subrogation claim, knowing the policy limits the tortfeasor has in its liability policy is information you cannot afford to negotiate without. And when you don’t have it, the entire process comes to a standstill.

An unreported 9th Circuit decision has previously ruled that within the limited confines of Montana’s Unfair Trade Practices Act (UTPA), there is no duty to disclose liability policy limits in response to a third-party claimants’ requests and no violation of the UTPA for failing to do so. Bateman v. National Union Fire Ins. Co. of Pittsburgh, Pa., 423 Fed. Appx. 763 (9th Cir. 2011) (unreported), on remand 2011 WL 13202359. But the UTPA is very specific. Whether there is a pre-suit duty beyond the statutory UTPA for a liability carrier to reveal its policy limits and whether a failure to do so constitutes bad faith is at the heart of the new Supreme Court decision. The duty to reveal policy limits encompasses two separate legal issues:

  • whether there is a statute, regulation, or case decision which compels a liability carrier to reveal policy limits when requested to do so; and
  • whether a failure to reveal policy limits when asked can serve as the basis for a subsequent bad faith case should there be a verdict in excess of policy limits.

The 9th Circuit in Bateman answered the first issue. It is anticipated that, following remand, the court in Wilkie will address the second.

In Wilkie v. Hartford Underwriters Ins. Co., Wilkie was injured when Richard Sprout hit him with his truck while Wilkie was walking across the street. Sprout was insured by The Hartford under an auto insurance policy and Wilkie submitted a claim to Hartford and, after concluding that Sprout’s liability was reasonably clear, Hartford began making medical payments to Wilkie. In February of 2020, Wilkie’s counsel requested from Hartford a copy of the Policy or to “at least tell me the limit of liability insurance that applies to this claim.” An employee of The Hartford responded the next day, stating:

Mr. Wilkie is not our insured and currently has a pending Bodily Injury claim with us. I do not believe we have any obligation at this time to provide you with a copy of our insured’s policy, declaration page, or release his policy information to you, however, if you believe otherwise, please provide our office with such information for review.

Automobile Insurance PolicyWilkie’s counsel did not respond to this request for additional information and never demanded that the Sprouts provide a copy of the policy. Instead, Wilkie filed a complaint on March 30, 2020, seeking damages as well as a declaratory judgment pronouncing that Hartford, as an insurer, had a duty to provide the policy to Wilkie prior to litigation because liability was reasonably clear; or alternatively that Hartford had a duty to disclose to Wilkie the amount of insurance coverage available for his claim. Wilkie alleged that it was common practice for Hartford to refuse to disclose the policy, declarations page, or policy amounts to third-party claimants like Wilkie, which “has the effect of putting it in a more advantageous position” because it would “impose upon Wilkie the burden to negotiate from a position of ignorance, while The Hartford would negotiate with full knowledge of any issues about coverage and the amount of liability coverage available.”

Hartford responded to Wilkie’s claim on the merits, justifying its withholding of policy information by noting its duty to protect the confidential information of its insureds. Three weeks after Wilkie filed his complaint, the Sprouts’ counsel provided Wilkie with a copy of the policy and its declarations page. The Hartford then filed a motion to dismiss the complaint. It contended that Wilkie lacked any continued personal interest in the action and the District Court could not grant him any further relief. In the case, Wilkie objected, arguing that his request for declaratory relief should proceed under one of the exceptions to the mootness doctrine: voluntary cessation or wrongs capable of repetition yet evading review. The trial court concluded that the dispute was rendered moot when the Sprouts produced the policy to Wilkie and held that neither exception to the mootness doctrine applied. In dismissing the case, the trial court stated:

Issuing a ruling with regard to the specific facts presented in this case would amount to an advisory opinion. If Wilkie believes Hartford’s conduct rises to the level of bad faith, Wilkie may pursue that action. This Court will not provide an advisory opinion as a stepping stone to that litigation.

On appeal, however, the Supreme Court ruled that the trial court improperly dismissed Hartford from the action because it did not meet its burden under the voluntary cessation exception to mootness. The Supreme Court specifically found that “The Hartford did not actually voluntarily cease its conduct—rather, it pointed to the Sprouts’ voluntary production of the policy as the mootness trigger;” and that The Hartford’s position demonstrates that its actions likely are not unique to this case and are capable of being repeated. As such, it reversed the trial court and remanded the case, holding that The Hartford failed to show the inapplicability of the voluntary cessation exception by showing its conduct will not recur. Although the Supreme Court didn’t come right out and say it—and never mentioned the 9th Circuit decision in Bateman—the suggestion of the ruling is that there was legitimacy to Wilkie’s complaint.

It remains to be seen on remand whether or not the trial court will grant a judgment declaring that an insurer has a duty to provide its insured’s policy/policy limits information to a third-party claimant when the insured’s liability is reasonably clear. That said, for those watching and waiting to see what happens, the Montana Supreme Court appears to have dropped a big hint.

Nicholas Zotti practices out of MWL’s New Orleans office and is licensed in Louisiana, Washington, and Montana. For questions about subrogation in any of those jurisdictions, or in general, contact Nicholas Zotti at [email protected].

Nicholas "Nick" Zotti
Sr. Associate Attorney

Nicholas “Nick” Zotti is a litigation attorney in the New Orleans branch office of Matthiesen, Wickert & Lehrer, S.C. His practice focuses on property and casualty, workers’ compensation, and automobile subrogation cases. He is licensed to practice in the states of Louisiana, Washington, and Montana.