Assignment-as-Cancellation Doctrine: Montana Supreme Court Redefines Policy Transfers in Victory Insurance v. State (2025 MT 180)

1. Introduction

Victory Insurance Company (“Victory”), a Montana property and casualty insurer, sold its workers’ compensation book of business to Clear Spring Property and Casualty Company (“Clear Spring”) effective January 1, 2020. All existing Victory policies were rewritten as Clear Spring policies after a single e-mail notice to insureds the evening prior. Three years later the Commissioner of Securities & Insurance, Montana State Auditor (“CSI”) sued administratively, alleging 165 violations of the Montana Insurance Code and proposing fines up to $4.1 million. A CSI Hearing Examiner granted summary judgment for the agency, found violations, and recommended penalties. The CSI ultimately assessed a $250,000 fine ($150,000 suspended).

Victory petitioned for judicial review and, after losing in District Court, appealed to the Supreme Court of Montana. The high court, in a unanimous opinion by Justice Shea, affirmed every aspect of the agency decision. Most notably, the Court held for the first time that assigning or rewriting an insurance policy with a new carrier constitutes “cancellation” under § 33-15-1103, MCA, thereby triggering all statutory notice and consumer-protection requirements. The decision crystallises what this commentary will label the “Assignment-as-Cancellation Doctrine.”

2. Summary of the Judgment

Issue 1 – Violations: Grant of summary judgment to the CSI affirmed. Rewriting the policies with Clear Spring amounted to “cancellation” within the meaning of §§ 33-15-1103 & 1105, MCA, and the single e-mail failed to meet statutory notice duties; the e-mail therefore also misrepresented policy terms in violation of § 33-18-202(1), MCA.
Issue 2 – Due Process & Fine: The $250,000 administrative penalty with partial suspension was upheld. The Court rejected four due-process attacks, finding ample notice, an adequate opportunity to be heard, constitutionally sufficient legislative standards in § 33-1-317, MCA, and no arbitrariness.
Issue 3 – Jury Trial: Victory had no right to a jury. The Court distinguished the U.S. Supreme Court’s 2024 decision in SEC v. Jarkesy, emphasised Montana’s historical practice, and noted that summary judgment removed any genuine issue of fact.
Result: District Court order affirmed; CSI fine stands; new doctrinal clarification issued.

3. Analysis

3.1 Precedents Cited and Their Influence

Maier v. State, 2021 MT 296 – Confirmed the plain-language approach to statutory construction. Guided the Court in reading § 33-15-1103, MCA, as an instrument for market transparency.
State v. Felde, 2021 MT 1 – Reinforced holistic reading of statutes, discouraging isolated word analysis.
Montana Sports Shooting Ass’n v. State, 2008 MT 190 – Emphasised harmonising related statutes and avoiding absurd results, shaping the broader consumer-protection purpose behind the Code.
Zirkelbach Construction v. DOWL, 2017 MT 238 – Quoted to underline parties’ freedom of contract and the significance of choosing one’s insurer, anchoring the Court’s competitive-market rationale.
Spady & Akhmedli decisions – Upheld legislative delegations so long as standards exist; used to validate § 33-1-317, MCA, against non-delegation attacks.
Munn v. Board of Medical Examiners, 2005 MT 303 – Cited (but distinguished) on sanctions imposed without mirroring Hearing Examiner recommendations.
Historic cases (Emerson, Helena Nat’l Bank) and modern Rule 56 jurisprudence – Demonstrated that courts, not juries, resolve pure questions of law, supporting denial of a jury trial.

3.2 Court’s Legal Reasoning

a. Textual and purposive reading of § 33-15-1103, MCA. The statute forbids mid-term cancellation except for listed reasons. Because neither the Code nor § 33-15-102 defines “cancellation,” the Court looked to:

The declared purpose in § 33-15-1101, MCA – to “protect the public” and enhance market choice;
Contextual statutes (§§ 1104-1106) – all requiring advance notice to safeguard consumer shopping time;
The economic reality – substitution of the insurer is not a mere contractual formality but the very product being sold.

Using these cues, the Court concluded that an assignment can constitute a cancellation because it displaces the insured’s chosen carrier and therefore implicates the same consumer-protection concerns.

b. Misrepresentation finding under § 33-18-202(1), MCA. Once policy rewriting was deemed cancellation, Victory’s e-mail stating that coverage had been upgraded without disclosing termination was a material omission, supporting summary judgment on misrepresentation.

c. Due Process analysis. The Court applied a classic two-step test—notice and an opportunity to be heard (Geil line of cases):

Victory had notice of potential fines up to $2.7 million in the 2022 charging document.
Victory could (but did not) introduce penalty-mitigation evidence during discovery and briefing; its inability to inject new evidence post-record did not deny due process.

On the non-delegation claim, the Court applied the Duck Inn / Spady three-part test (policy, rationale, guidance) and found the $25,000-per-violation ceiling a sufficiently definite standard.

d. Jury-trial holding. Article II, § 26 of the Montana Constitution preserves only those jury contexts existing in 1889/1972. Historically, when only legal issues remained, judges could direct verdicts or grant nonsuits—precursors to modern summary judgment. Therefore, disposing of the case via summary judgment left no factual questions for a jury, distinguishing Jarkesy and eliminating any state constitutional violation.

3.3 Potential Impact on Future Litigation and Practice

Insurance transactions: Carriers can no longer rely on “assignment of book” language to avoid cancellation protections. Any transfer resulting in a new insurer must comply with statutory notice, timing, and renewal restrictions or risk significant fines.
Regulatory strategy: The CSI and analogous regulators gain a clear blueprint to police portfolio transfers, likely encouraging pre-clearance filings and detailed policyholder outreach.
Administrative penalties: The Court’s blessing of § 33-1-317, MCA, as a constitutional delegation fortifies agencies’ leverage to impose per-violation fines up to the statutory maximum.
Civil-procedure dynamics: The opinion showcases that summary judgment within administrative hearings— followed by limited judicial review—survives jury-trial challenges, reinforcing efficiency in agency enforcement actions.
Legislative awareness: Should the Legislature disagree with the new doctrine, it must amend the Insurance Code expressly distinguishing assignments from cancellations; until then, Victory governs.

4. Complex Concepts Simplified

Cancellation vs. Assignment: Cancellation ends a policy before its term; assignment transfers contractual rights to another entity. Post-Victory, Montana treats the latter as the former when the insured’s carrier changes.
Summary Judgment (Rule 56): A procedure allowing a court to decide a case without trial when no material facts are disputed and only legal questions remain.
Due Process: Constitutional guarantee of fair notice and meaningful opportunity to present one’s case before being deprived of property (here, money via fine).
Non-Delegation Doctrine: Principle that the Legislature cannot confer unchecked law-making power on agencies; upheld when statutes provide clear policies, reasons, and standards.
Arbitrary and Capricious: A decision is arbitrary if it lacks a rational connection between facts found and choices made; capricious if it is impulsive or without thought. The Court found the CSI's penalty rational and explained.

5. Conclusion

Victory Insurance v. State (2025 MT 180) announces a watershed rule: when an insurer rewrites or assigns policies to a new carrier, the action is deemed a “cancellation,” requiring full statutory compliance with notice and consumer-protection mandates. The decision:

Clarifies the breadth of § 33-15-1103, MCA, aligning it with pro-competition legislative goals;
Endorses the CSI’s enforcement powers and constitutional fine-setting discretion;
Confirms that summary judgment in administrative proceedings negates jury-trial claims when no facts are in dispute.

For insurers, regulators, and practitioners, the ruling demands heightened diligence in portfolio sales, mergers, and policy migrations. In the broader legal landscape, it exemplifies Montana’s fidelity to statutory purpose over form and reinforces the judiciary’s willingness to treat market-based consumer interests as legally cognisable rights.