RULE 59 motions by both sides following rejection of $62,750 emotional damages stemming from theft of vehicle from tire shop untimely, Plaintiffs’ motion for new trial to resurrect tactically dismissed NIED claim denied… Defendant’s motion converted to 60(b)(6) to allow amendment of judgment to only $2,278.43 bailment damages… Molloy.

On 9/23/16 Randall & Claudia Childress gave their car keys to an employee in the Missoula Costco Tire Center to get their tires rotated. Before they went to pick it up their keys had been mistakenly given to a thief who drove away in their vehicle. Although it was recovered a short time later, several items were stolen including a gun, ammunition, documents containing their home address, and house keys. They sued Costco alleging (1) negligence, (2) bailment, (3) NIED, and (4) negligent training & supervision. Count 4 was disposed of before trial and Count 3 was withdrawn during settlement of instructions.

Childresses presented evidence at trial that Randall suffered from PTSD that was exacerbated by the theft and that both suffered stress, sleeplessness, fear, and nightmares. Even though the NIED claim had been withdrawn, the jury was instructed that if it found for Childresses on their negligence claim it “must determine the amount of damages” to compensate them for any parasitic damages caused, including “the mental, physical, and emotional pain and suffering experienced and that with reasonable probability will be experienced in the future.” The Missoula jury awarded Childresses $2,278.43 on their bailment claim and $62,750 on their negligence claim.

Costco appealed, primarily arguing that the negligence award should be set aside on the ground that Montana does not allow parasitic emotional distress damages for negligence causing personal property damage or loss. The 9th Circuit certified the issue to the Montana Supreme Court, which concluded that “Childresses did not establish the basis for parasitic emotional damages” by showing “a subjective relationship with the [stolen] property on a ‘personal identity’ level.” Costco (Mont. 2021) (quoting Maloney (Mont. 2000)). It concluded that “Childresses are not entitled to parasitic emotional distress damages for their underlying negligence claim” and vacated “the award of $62,750 in ‘unspecified, non-property damages.’” All other issues were considered moot. Mandate issued 11/17/21.

On remand, Childresses seek a new trial on Randall’s tactical decision at trial to withdraw his NIED claim under Rule 59(a) and Costco seeks to amend the judgment to vacate and remove the $62,750 negligence award under Rule 59(e). A hearing was held 12/20/21.

To be timely, both motions had to be filed “no later than 28 days after entry of judgment.” Rules 59(b), 59(e). That time limit is jurisdictional and cannot be extended even for good cause. Tillman (9th Cir. 2000); Rule 6(b)(2) (“A court must not extend the time to act under Rule 59(b)”); Ramos (E.D.Cal. 2021) (collecting cases). Although the parties appeared to argue at the hearing that a Rule 59 motion can be filed before judgment has been entered, they ignore the fact that the original judgment based on the jury verdict was entered 4/25/19 and that judgment remains in place. While the 9th Circuit vacated part of that judgment, it did not vacate it in its entirety and thus neither motion is timely under Rule 59. And even if Childresses’ motion were timely the Court is unlikely to grant a new trial based on counsel’s strategic decision at trial to pursue a claim with a lower burden of proof. PETA (DC Cir. 2018) (Rule 60(b)(6) “should not be employed simply to rescue a litigant from strategic choices that later turn out to be improvident”).

Nevertheless, as to Costco’s motion, an untimely 59(e) motion can be treated as a Rule 60(b) motion “if the grounds asserted in support of the Rule 59(e) motion would also support Rule 60(b) relief.” Frew (5th Cir. 2021); Lora (2d Cir. 2010); AI&E (9th Cir. 2011). Rule 60(b)(6) allows a party to seek relief from a final judgment for “any other reason that justifies relief.” “60(b)(6) is a grand reservoir of equitable power that allows courts to grant relief from a final judgment.” Henson (9th Cir. 2019). This clause should be “liberally applied, giving due regard to the sound interest underlying the finality of judgments, the district court has the power to grant relief from a judgment whenever, under all the surrounding circumstances, such action is appropriate in the furtherance of justice.” Id. The movant must show “extraordinary circumstances.” Id.

The unique procedural posture of this case and the ambiguity in the 9th Circuit’s disposition provide such circumstances. Its disposition declared that “the award of $62,750 in ‘unspecified, non-property damages” on the Childresses’ negligence claim is VACATED.” But it also “remanded for further proceedings.” It clearly vacated part of the judgment but left the rest of the judgment in place, intimating that some further action was required by this Court. As made clear at oral argument, both parties would agree that the judgment must be amended. Therefore an amended judgment will be entered consistent with the 9th Circuit’s order to vacate that part of the judgment awarding parasitic damages. But Childresses prevail on the verdict awarding bailment damages.

Childresses’ motion is denied without prejudice as untimely.

Costco’s motion, treated as a motion under Rule 60(b), is granted. The 4/25/19 judgment is vacated. The Clerk is directed to enter an amended judgment awarding $2,278.43 bailment damages.

Childress v. Costco, 44 MFR 261, 12/21/21.

Quentin Rhoades (Rhoades, Siefert & Erickson), Missoula, for Childresses; Susan Miltko & Tyler Smith (Williams Law Firm), Missoula, for Costco.

INSURANCE: CGL policy purchased for premises containing office, warehouse, and shop space does not cover a subsequently constructed tank wash building that was destroyed by fire… Watters.

PSC Custom dba Polar Service Center filed this suit against Hanover American Ins., Sector Corp., and St. Johns Corp. following Hanover’s denial of PSC’s claim for a fire that destroyed a Tank Wash Center building constructed after the original policy was purchased. Hanover denied the claim on grounds that the policy only covered the building described in the Declarations and not the TWC.

Sector is a property management company based in Portland and authorized to conduct business in Montana. It owns 5 acres at 1635 N. Frontage Road, Billings (the “Premises”), with a 27,525 sq ft building containing office, warehouse, and shop space. St. Johns is a Portland-based corporation that procures and manages insurance on Sector’s behalf for the Premises. PSC operates in the tank trailer and tank truck industry with commercial parts & repair services throughout the US.

In 2013 PSC entered into an agreement with Sector to lease the Premises. The lease required Sector, as landlord, to acquire fire & casualty insurance on the entirety of the Premises and any improvements thereon. Sector was to be listed as primary with PSC as an additional insured as tenant. Sector purchased CGL policies, including the policy at issue here, for the Premises beginning in 2013 and continuing through 2019.

In 2014 PSC erected the TWC on the Premises 135 feet from the office building, consisting of a metal structure with concrete floors and roll-up doors at each end. The 6,100 sq ft structure was used as a truck wash and truck tank draining/cleaning facility.

On 5/9/19 a fire & explosion occurred in the TWC resulting in its complete destruction and $412,040.05 repair costs. PSC and St. Johns submitted claims to Hanover for the loss of the structure. Hanover denied both claims, asserting that because the policy did not expressly list the TWC as a covered property on the Premises it was not covered. The Declarations list several properties owned by Sector with the Premises described as “Location 4” and further state that blanket building coverage exists for “Location 4 – Building 1.” Hanover argued that this restricted coverage to the 27,525 sq ft office/warehouse building on the Premises and did not include the TWC built after the first policy was purchased. PSC filed this action in State Court and it was removed to this Court. The parties request summary judgment.

Hanover’s fundamental argument is that the TWC is not covered because it is not listed in the Declarations. The policy lists blanket building coverage for Location 4 as “Building 1.” Hanover asserts that this applies only to the 27,525 sq ft office space/warehouse that existed on the Premises at the time coverage was purchased and because coverage did not extend to the TWC which was built a year after coverage was obtained and without its knowledge, coverage was properly denied. It argues alternatively that Sector/St. Johns did not have an insurable interest in the TWC because they did not construct or own it and that coverage does not exist for PSC under the Building & Personal Property Coverage Form because they are not a named insured.

PSC responds that the policy language includes coverage of the TWC because it states that it will cover loss or damage to “Covered Property at the premises described in the Declarations,” which it argues includes the entire 5 acres described as Location 4 including any and all buildings on that land. It primarily relies on Park Place Apartments (Mont. 2010). Alternatively it asserts that if the Court determines that the policy language does not provide coverage for the TWC it should find that the lack of a specific definition of “Building 1” and the inclusion of additions, fixtures, and installed equipment under the definition of Covered Property creates an ambiguity that must be resolved in favor of coverage.

Sector/St. Johns join in PSC’s argument that the policy language includes coverage for the TWC because the policy describes its coverage of Location 4 – Building 1 as blanket coverage and nothing in the policy expressly limits this language. They also rely on Park Place.

Park Place determined that a policy was ambiguous and ruled in favor of the insured that it covered damage to a carport despite that it was not listed as covered property in the Declarations. William Hileman (PPA) purchased an apartment building complex and hired Wilhelm to obtain insurance. The complex included the apartment building, a separate laundry/storage building, and a detached carport. Wilhelm obtained a policy from FUMI for the complex that listed the apartment building and laundry/storage building in the Declarations. The carport was not listed but both PPA and Wilhelm believed this listing unnecessary and that coverage had been obtained for the entire complex. The policy provided: “Covered property includes Buildings as described under Paragraph a. below … a. Buildings, meaning the buildings and structures at the premises described in the Declarations.” 7 years later a heavy snowfall caused the carport to collapse resulting in damage to numerous vehicles. PPA submitted a claim but FUMI denied it because the carport was not considered covered property. Judge Stadler agreed and ruled for FUMI. Park Place reversed, finding the policy language ambiguous at best:

Our initial inquiry concerns whether the carport is logically included in the definition of the insured premises. The definition of “covered property” in the Businessowners’ Coverage Form includes “buildings, meaning the buildings and structures at the premises described in the Declarations.” The logic behind FUMIC’s interpretation of this phrase does not stand up to scrutiny. FUMIC contends, in essence, that the phrase means that coverage is limited to the buildings and structures described in the Declarations, as opposed to buildings and structures at the premises described in the Declarations. FUMIC’s interpretation skips over the words “at the premises” in the definition of covered property, and would render them meaningless. It is a basic rule of construction that we must, if at all possible, interpret a contract so as to give effect to every part of the contract. FUMIC’s interpretation requires that the words “described in the Declarations” refer only to the “buildings and structures,” and not “the premises.” PPA’s interpretation of the phrase — that coverage extends to all buildings and structures which are at the premises described in the Declarations — strikes us as the more reasonable interpretation. If FUMIC’s interpretation is correct, it is certainly not unambiguously so.

While we need only conclude that the policy is ambiguous to decide the resolution of the present case, we note that the most reasonable interpretation, in our view, is that the portion of the policy attributable to the apartment building is meant to include the carport. Thus, the carport is “listed” on the Declarations page by virtue of the listing of the apartment building. As an initial matter, it is doubtful that a carport is considered a “building” at all. The Businessowners’ coverage form states that “although the words ‘building’ and ‘structure’ are not defined in the coverage form, a structure may be thought of as property erected on and attached to land that is not walled and roofed and a building is generally thought of as a walled, roofed structure.” The “insured premises” section of the Declarations page on which FUMIC places so much weight asks only for buildings, not structures, and thus the carport’s omission from the section is not as important as it is in FUMIC’s analysis. Furthermore, Wilhelm testified that attached structures such as the carport are often accounted for by simply stating the buildings to which they are attached on the Declarations page. While the carport here was not physically attached, it was located very close to the building and it seems logical that it was considered an add-on to the apartment building.

Based on this review and evidence such as inclusion of the carport’s value in the insurance appraisal, the parties’ intent when purchasing coverage, and FUMI’s internal guidelines requiring coverage on all buildings on a commercial property, the Supreme Court held that the policy was ambiguous and interpreted it in favor of the insured.

The policy language here does not contain the same ambiguities. The Court agrees with Hanover that Park Place is distinguishable. Its policy states: “We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.” The policy defines “Covered Property” as “Building, meaning the building or structure described in the Declarations, including; (1) Completed additions; (2) Fixtures, including outdoor fixtures; (3) Permanently installed: (a) Machinery; and (b) Equipment.” (emphasis added). The policy references coverage for only a single described building or structure at the covered property whereas the language in the Park Place policy provided coverage for multiple buildings and structures at the specific premises.

The Declarations describe the Property as “Location: 4 … 1635 N Frontage Rd Billings MT 59101” and further clarify that “Insurance at the Described Premises applies only for the coverage shown below: Blanket Building For Premises … Location 4 – Building 1.” At the time that PSC purchased the policy there was only 1 building on the premises at 1635 N Frontage RD: the 27,525 sq ft office space/warehouse. The Declarations do not specifically describe Building 1 as the office space/warehouse in the policy, but it is unreasonable to interpret the description as referencing anything other than the sole building on the insured premises. Therefore, the Court finds that the policy unambiguously provides coverage to the office space/warehouse building as the only building that could be associated with the “Building 1” description in the Declarations. The remaining question is whether the policy expanded that coverage to include the later-built TWC.

As in Park Place, the policy provides coverage for more than just the described building, but that additional coverage does not extend to the TWC. Sector/St. Johns argue that the TWC qualifies as a fixture under MCA 70-15-103: “A thing is deemed to be affixed to land when it is: (1) attached to it by roots, as in the case of trees, vines, or shrubs; (2) imbedded in it, as in the case of walls; (3) permanently resting upon it, as in the case of buildings; or (4) permanently attached to what is thus permanent as by means of cement, plaster, nails, bolts, or screws.” However, they provide no support for their claim other than a general reference to the statute. The TWC was a 6,100 sq ft full metal structure with roll-up doors at each end, contained dangerous chemicals, and was used as a truck wash and truck tank cleaning facility. It was not simply a piece of personal property affixed to the premises or attached to the office space/warehouse. To classify it as a fixture connected with the existing warehouse for purposes of insurance coverage is a stretch too far.

External evidence also does not support a reasonable inference that coverage would extend to the TWC. First, unlike in Park Place, it did not exist at the time PSC purchased the policy. Second, also unlike in Park Place, no one has presented evidence that its value was included in Hanover’s appraisal of he premises. Hanover asserts without contradiction that the value of the TWC — $348,822.79 based on PSC’s requested repair costs — was never included in the appraisal of the Premises. Third, neither PSC nor Sector/St. Johns notified Hanover of the TWC’s construction or requested a change to the policy to include coverage.

The policy is unambiguous and does not include a reasonable inference of coverage for the TWC. Summary judgment for Hanover.

PSC Custom dba Polar Service Center v. Hanover American Ins., Sector Corp., and St. Johns Corp., 44 MFR 260, 12/6/21.

Adam Warren & Jordan FitzGerald (Moulton Bellingham), Billings, for PSC; Jared Dahle & Raven Venegas (Garlington, Lohn & Robinson), Missoula, for Hanover; Martin King (Worden Thane), Missoula, and Joshua Stadtler (Dunn Carney), Portland, for Sector and St. Johns.

ATTORNEY PRACTICE: Motion to dismiss because pleadings were incomplete or illegible dismissed as moot following updated service but counsel admonished that there are simpler ways to deal with problems in a collegial bar than filing snide briefing or unnecessary although technically correct motions… Molloy.

The Montana Democratic Party, Montanans for Tester, and Macee Patritti sued SOS Jacobsen and MCPP Mangan 10/12/21. Summons were issued and proof of service was provided to the Court 10/31. Defendants filed notice of limited appearance 11/3 and moved to dismiss for insufficient process and insufficient service of process under Rules 12(b)(4) & (5) premised on the fact that the pleading served on the Montana AG was incomplete and the pleadings served on Jacobsen and Mangan were illegible. Apparently the photocopier or printer must have been low on ink which caused multiple pages of the complaint to be unreadable.

While Defendants are technically correct that the summons must contain a readable copy of the complaint, Rule 4(c)(1), in a collegial bar more is expected than what is set forth in the pleadings filed by the AG’s Office. Rule 1 directs courts and litigants to construe the Rules “to secure the just, speedy, and inexpensive determination of every action.” There are occasions, such as here, where the telephone can accomplish as much or more than a diatribe focused on an easily correctable technical problem. Moreover, there is a “strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.” Eitel (9th Cir. 1986). While technically correct, the flavor of Defendants’ motion is a dark harbinger of the unwelcome idea that litigation is a zero-sum “game.” The people of Montana and the parties in this litigation are entitled to a resolution of the claims consistent with the purpose of the FRCivP and on the merits.

Plaintiffs’ updated service has mooted Defendants’ motion to dismiss. But this case is far from over and in a collegial bar there are simpler ways to deal with problems in litigation than filing snide briefing or unnecessary although technically correct motions. The parties are directed to focus on the legal issues and avoid subsidizing their arguments with vexatious rhetoric. Some of the lawyers on both sides may be new to the practice of law in Montana, but getting off on the wrong foot is not a good way to begin a case. Counsel should keep in mind that this case will be tried on the merits and in the courtroom, not in the newspapers.

Defendants’ motion to dismiss is denied as moot.

Montana Democratic Party, Montanans for Tester, and Patritti v. SOS Jacobsen and MCPP Mangan, 44 MFR 259, 11/16/21.

Abha Khanna (Elias Law Group), Seattle, and Mike Meloy (Meloy Law Firm), Helena, for Plaintiffs; Brent Mead (AG’s Office).

FALSE ARREST claims against officer, City,and Prosecutor stemming from dismissed DUI arrest of traffic stop “spectator” dismissed on summary judgment… Cavan.

On the evening of 1/16/19 Livingston officers were conducting an investigation of a 911 call regarding a fight at a gas station. All 4 officers on duty responded. While en route, Officer Steve Kunnath was notified that the individuals in the altercation had left in separate vehicles and one had been stopped near Lewis and 11th. He changed course to respond as a backup. When he arrived he stayed back and monitored the area to provide safety for officers on the scene. The stopped vehicle had only 1 occupant. The others involved in the fighting had not been located. The suspect in the traffic stop was known to be involved in drug activity.

At 9 p.m. John Rawlings was driving his Jeep Cherokee on West Park when he encountered the traffic stop. He “circled back” and parked in front of a closed restaurant a block from the officers standing by their vehicles. Kunnath saw him parked there. The fact that he was parked near the investigation, the nearby businesses were closed, there were no houses in the area, and the vehicle did not drop anyone off and no one got out raised some concern for officer safety. After watching the officers for 10 minutes Rawlings drove around the triangle-shaped block and repositioned closer to the officers with his headlights pointed at them. He disputes that his lights were on but acknowledged in his deposition that there was a possibility that they were on and that an officer could be concerned that a car shining its lights toward the officer could present some risk to officer safety.

After waiting a few minutes, Sgt. Wayne Hard instructed Kunnath and Officer Jason Gunderson to approach Rawlings. They walked up to his car. Kunnath advised him that they wanted to make sure he was not involved with the prior incident or the suspect in the traffic stop. Rawlings explained that he was “seeing what was going on.” Kunnath said it was okay to watch. He Kunnath observed Rawlings’s bloodshot eyes, smelled alcohol, and saw an open beer container in the console with a cork in it. Rawlings said he used the bottle as an ashtray. Kunnath indicated that Rawlings appeared a little confused. Gunderson also smelled alcohol and observed containers in the back seat which appeared to be Guinness beer. (Rawlings disputes that they could have smelled alcohol because he was smoking a cigarette and that “alcohol has no smell.” His assertions are not supported by any authority or evidence that alcohol has no smell or that it could not have been detected on him.)

Kunnath asked Rawlings if he had consumed alcohol and Rawlings said he had one drink at the Chop House around 5 or 7 that evening. Kunnath knows from training and experience that individuals who have been DUI may downplay the amount of alcohol they consumed. Rawlings conceded at his deposition that it was possible that he had a martini and another vodka drink that night. Kunnath asked him to exit and perform field tests and based on the results and after conferring with Gunderson, asked Rawlings to take a PBT. Rawlings responded that he “would prefer not to.” Kunnath and Gunderson concluded that there was probable cause to arrest Rawlings for DUI. At the jail he declined a breath test and was charged with DUI. Immediately following his release he obtained a blood test which came back negative. Rawlings’s attorney supplied the test results to City Prosecutor Jay Porteen who declined to dismiss the charge. Rawlings pled not guilty and the charge was dismissed on Porteen’s request 5/21/19.

On 9/17/19 Rawlings filed this action alleging civil rights claims under §1983 against Kunnath, Livingston, and Porteen, state law claims for false imprisonment against Kunnath, respondeat superior against Livingston, and actual malice/punitives and negligence against Porteen. Defendants request summary judgment.

Considering the totality of circumstances known to Kunnath, he could have reasonably concluded that there was a fair probability that Rawlings was DUI. Rawlings argues that Kunnath lacked probable cause because he was not exhibiting staggered movements, obscene language, or obnoxious & aggressive behavior. But Montana law does not require one to be in a falling-down, out-of-control state of intoxication to be arrested for DUI. MCA 61-8-401(3)(a) only proscribes operating a vehicle with “diminished” faculties. Rawlings displayed several universally accepted observable indicators of impairment. His contention that there is no evidence that he failed the field tests is contradicted by the undisputed facts. The only test he attempts to dispute is the HGN but he cited no evidence to support his assertion that Kunnath did not properly administer it. He argues that “just an ashtray” supported Kunnath’s suspicion that he was impaired, but the undisputed record demonstrates several other observable indicators including alcohol containers in the back seat, his watery bloodshot eyes, his confusion, and his admission to consuming alcohol that evening. Even without the odor of alcohol or the HGN, the totality of the remaining circumstances supports a finding that Kunnath had probable cause to arrest him. Rawlings contends that the blood test he obtained after he was released demonstrated that he was not under the influence of alcohol or any other substance. But the results were not available to Kunnath at the time of arrest and therefore do not undermine the conclusion that Kunnath could have reasonable concluded that there was a fair probability that he was impaired.

Rawlings’s contention raised for the first time in his response brief that Kunnath violated his 1st Amendment rights by arresting him is misplaced, inapplicable to the claims he actually asserted, and will be disregarded. Bullard (CD Cal. 2015) (“It is well-settled in the Ninth Circuit that parties generally cannot assert unpled theories for the first time at the summary judgment stage.”); Wasco (9th Cir. 2006) (“Summary judgment is not a procedural second chance to flesh out inadequate pleadings.”).

Based on the undisputed facts, Kunnath had probable cause to arrest Rawlings for DUI and thus did not violate his constitutional rights. It is unnecessary to reach the “clearly established” prong of the qualified immunity test. Kunnath is entitled to qualified immunity and summary judgment on Rawlings’s §1983 claim.

Since Kunnath had particularized suspicion to investigate Rawlings for DUI and probable cause to arrest him, his restraint cannot support a false imprisonment claim. (Kunnath is also immune from individual liability under MCA 2-9-305(5) as his actions were performed in the course & scope of his employment as a law enforcement officer for Livingston.)

Since Kunnath’s conduct did not deprive Rawlings of a constitutional right, his §1983/Monell (US 1978) claim against Livingston based on Kunnath’s implementation of a city policy or custom or Livingston’s inadequate hiring & supervision of Kunnath necessarily fails.

Rawlings seeks to hold Livingston vicariously liable for false imprisonment based on Kunnath’s arrest and malicious prosecution based on Porteen’s continued prosecution. But Kunnath did not engage in any wrongful conduct that can be imputed to Livingston and Rawlings has conceded his §1983 and negligence claims against Porteen.

Summary judgment is granted for Defendants.

Rawlings v. Kunnath, Livingston, and Porteen, 44 MFR 258, 9/23/21.

Jami Rebsom (Rebsom Law Firm), Livingston, and Suzanne Marshall (Marshall Law), Bozeman, for Rawlings; Harlan Krogh & Haley Ford (Crist Krogh Alke & Nord), Billings, for Kunnath; Randall Nelson & Tom Bancroft (Nelson Law Firm), Billings, for Livingston and Porteen.

FOREIGN ADOPTION: Delaware/Illinois adoption agency had duty of care for Chinese child placed in Montana… Montana has personal jurisdiction over agency in suit alleging torture by Ranch for Kids… Morris.

Dexxon Butler was born in China in 2002. His parents abandoned him as an infant and the Chinese government assumed his care. Dr. Patrick & Tari Butler of Illinois adopted him in 2015 via Madison Adoption Associates, a Delaware not-for-profit corporation specializing in intercountry adoptions. Its agreement required participation in China-mandated post-adoption reports which its Illinois office prepared.

3 months after Dexxon arrived Butlers determined that caring for him was too substantial a burden and sent him to a group home in Idaho. 5 months later the home notified Butlers that it would not be able to continue caring for him. Madison “worked diligently” to assist Butlers in selecting a new facility. They chose the Ranch for Kids in Lincoln Co., which Madison described as “a compassionate treatment program for children” and “a bridge of hope and healing for hurting families.” Madison’s 1-year report to China concluded that it helped “determine the best placement for Dexxon” and that Ranch for Kids “has a highly trained staff” which is “committed to providing a safe environment for Dexxon.”

Dexxon’s conservator Kristin Mayer sued Madison for negligence alleging that Ranch for Kids physically & emotionally tortured children including Dexxon. Staff allegedly strangled him to unconsciousness, psychologically abused him, withheld food & medical treatment, and provided minimal education.

During Dexxon’s 4 years at Ranch for Kids, Madison remained in electronic contact with staff. It claimed to receive weekly reports regarding his health and reported social improvement and good health to China. Its employees never personally observed his health and never traveled to Montana. It completed “home visits” required by China by meeting with Butlers in Illinois despite noting that Butlers were not in more than “minimal” contact with Dexxon.

Dexxon was rescued from Ranch for Kids as part of a police raid in 7/19. Butlers refused to allow him to return to their home and so Dexxon became a ward of Montana and currently is in a group home in Great Falls.

Madison moves to dismiss under Rule 12(b)(6), arguing that it owed no legal duty to Dexxon and was not required to conduct a firsthand investigation of his health and wellbeing. Mayer alleges that it owed him both a statutory and common law duty to adequately investigate and accurately report his health and wellbeing. The Court held a hearing on the motion 9/14/21.

The China Center for Children’s Welfare & Adoption is the Chinese authority for purposes of the Hague Adoption Convention. The CCCWA requires that foreign adoption organizations comply with its regulations & requirements including that post-adoption reports be “real, specific and comprehensive. The social worker should prepare the report based on the actual visits, recording faithfully what he or she sees and hears in the family and reflecting objectively the changes of the adoptive family after the adoption and the life and growth of the adopted child.” Those obligations create a statutory duty. To the extent that Madison failed to “actually visit” Dexxon, provide “real” reports, or record faithfully what its social workers “see and hear,” it breached that statutory duty. Mayer alleges that it failed to accurately report and investigate Dexxon’s health and wellbeing including that it never conducted a firsthand visit after he left Butlers’ home. She alleges sufficient facts to establish a potential breach of the statutory duty owed to Dexxon.

Montana law also supports a common law duty owed by adoption agencies to act reasonably and protect the health of the child. Montana’s fundamental principle of tort law is clear:

Where a person undertakes to do an act or discharge a duty by which the conduct of another may be properly regulated and governed, he is bound to perform it in such a manner that those who are rightfully led to a course of conduct or action on the faith that the act or duty will be duly and properly performed shall not suffer loss or injury by reason of negligent failure so to perform it. Stewart (Mont. 1936).

An adoption agency plays a unique and fundamental role in the life of an adopted child. It may at times be the primary caregiver or overseer of the child’s health & safety. Adoption agencies connect all parties and may determine or play a role in determining where and how a child lives. Particularly in the case of international adoption, the child may be reliant on the agency to observe the child’s mental wellbeing. In that instance, the agency may furnish the child’s only contact capable of speaking with the child in their native language.

Where an adoption agency undertakes a role in a child’s life — whether required by statute, contract, as a necessity of the adoption process, or voluntarily — an obligation arises. Madison argues that no common law duty should exist here. But to relieve an adoption agency of the duty to act without negligence toward a child in its care would relieve it of the same level of care expected from any person. Fisher (Mont. 2008) (“At the most basic level, we all share the common law duty to exercise the level of care that a reasonable and prudent person would under the same circumstances.”). When one willingly accepts a responsibility toward another, Montana law expects that the actor will act as a reasonable and prudent person would in the commission of that responsibility. Id. Madison was allegedly acting as overseer of Dexxon’s health. To the extent that it acted negligently in its oversight, it breached its duty of care. Id.

The Montana Supreme Court has recognized “a cause of action for negligent misrepresentation in the adoption context” in order to “promote public policy and ensure that ‘adoptive parents assume the awesome responsibility of raising a child with their eyes wide open.’” Jackson (Mont. 1998) (Roe (Ill. 1992). The adoptive parents in Jackson alleged negligence after an adoption agency failed to disclose the likelihood of a child’s congenital mental impairment. The Montana Supreme Court held that adoption agencies assume a common law duty to refrain from negligent misrepresentations when they volunteer information to adoptive parents and that the Uniform Adoption Act of Montana imposed a duty to fully & accurately disclose all relevant information to the adoptive parents. It first turned to the law of neighbor jurisdictions. Multiple states have established that where an adoption agency or welfare department negligently places a child, the agency or department owed that child a duty of care.

Madison cites TSB (Ind. 1990) as an example of a sister state finding against a duty between an adopted child and the adoption agency. However, it ruled that no duty exists on the part of a child adoption agency to a child “when the agency is not engaged in placing the child for adoption.” It concluded that the agency, which provided names of adoption-seeking parents to the child’s grandmother but refused to assist with the actual adoption, had not participated in the placement and thus owed no duty to the child when the adoptive parent physically abused the child. The case turned on whether “the party being charged with negligence had knowledge of the situation or circumstances surrounding that relationship.” The relationship between the child and agency did not control. TSB suggests that the agency would have possessed a duty to the child if it had assisted in the placement. It is thus not contradictory to the many other states that have found a duty between adoption agency and adopted child.

Madison argues that this duty exists only when the agency has custody over the child. Legal custody undeniably would establish a duty of care, but it is not the only relationship that may create a duty. An adoption agency may not have legal custody but may still determine placement or provide oversight of the child, which also confers a unique duty of care.

Madison also argues lack of foreseeability of harm to Dexxon. However, few harms are as foreseeable as those resulting from negligent oversight of a child. Madison reasonably should have foreseen that negligence in its common law or statutory duties could cause injury to Dexxon.

Plaintiff has alleged sufficient facts to establish breach of Madison’s statutory and common law duty to Dexxon. Madison’s motion to dismiss for failure to state a claim is denied.

Madison also argues that the Court lacks personal jurisdiction. It states that it is not licensed to do business in Montana and none of its agents set foot in the State. It correctly notes that electronic communications between an out-of-state service provider and a party in Montana are not alone sufficient to establish personal jurisdiction under Montana’s long-arm statutes. Threlkeld (Mont. 2000). However, it fails to recognize that the alleged harm-causing act is the omission of its duty to reasonably oversee Dexxon’s wellbeing. It “rendered” that omission from the location of the adopted child. The requirement that it reasonably evaluate his health represents the service at issue rather than the composing of its reports. That its agents allegedly never set foot in Montana fails to defeat this Court’s exercise of personal jurisdiction when a primary reason that it allegedly breached its duty to Dexxon is its alleged failure to set foot in Montana.

Asserting jurisdiction over Madison comports with due process. It availed itself to Montana jurisdiction by accepting the responsibility of supervising Dexxon’s wellbeing after he was transferred to Ranch for Kids. It possessed a duty of care to him and took on additional post-adoption reports after he was placed at Ranch for Kids.

Madison compares itself to the insurer in Rush (US 1980) which had no control over the location of its covered driver and thus no contacts to the state where the driver caused an MVA. However, Madison stated plainly in reports to China that it assisted in the decision to place Dexxon at Ranch for Kids. Even had it not “worked diligently” to assist in the placement, it availed itself to Montana by continuing its statutory and contractual obligation to Dexxon in Montana. Unlike the insurer in Rush, the firsthand evaluations contemplated by CCCWA regulations required Madison to visit Dexxon in Montana. Its own website states that the “child will be observed by a knowledgeable social worker who will provide feedback about your child’s transition.” It cannot observe what it cannot “see and hear,” and the necessary observations required it to enter Montana.

This Court properly maintains personal jurisdiction over Madison. Its motion to dismiss is denied.

Mayer as conservator for Butler v. Madison Adoption Associates, 44 MFR 257, 10/1/21.

Colin Gerstner (Gerstner Adam Law), Billings, and John Heenan (Heenan & Cook), Billings, for Mayer; Jean Faure (Faure Holden), Great Falls, for Madison.