INSURANCE: Personal jurisdiction found over non-contracting GEICO entities in 2nd amended complaint challenging subrogation practices… Molloy.

James Lee Const. and James & Tracy Lee represent a putative class challenging subrogation practices of GEICO and related entities. There are 4 motions pending. This order addresses only the personal jurisdiction component of GEICO’s motion to dismiss.

The Court previously granted GEICO’s motion to dismiss the non-contracting GEICO entities for lack of personal jurisdiction based in part on rejection of boilerplate allegations of personal jurisdiction based on a conspiracy theory. (MLW 8/15/20). GEICO again seeks to dismiss the GEICO entities with which Lees do not hold an insurance policy for lack of jurisdiction under Rule 12(b)(2), arguing that the 2nd amended complaint fails to comply with Rule 8(a)(2), the law of the case doctrine forecloses Plaintiffs’ attempt to reintroduce these previously dismissed entities, and Plaintiffs’ claims are not based on GEICO Indemnity’s and GEICO Casualty’s forum-related conduct.

Although a bit unusual in the personal jurisdiction context, GEICO first relies on Rule 8(a)’s demand for “a short and plain statement of the claim” to argue that Plaintiffs’ 2nd amended complaint presents a befuddling picture of how the non-contracting GEICO entities relate to this case that is insufficient to establish personal jurisdiction. This argument is better addressed in the context of analyzing their forum-related conduct.

GEICO further argues that this Court’s order dismissing the non-contracting GEICO entities mandates dismissal. But law of the case does not apply in the context of amended pleadings following a dismissal without prejudice. Askins (9th Cir. 2018). While a defendant is free to argue that the amended pleading does not cure the deficiencies identified in the original complaint and “the district court may decide the second motion to dismiss in the same way it decided the first,” the “court is not bound by any law of the case.” Id. The Court must therefore consider personal jurisdiction over the non-contracting GEICO entities anew.

Montana courts apply a 2-step test to determine whether they have personal jurisdiction over a non-resident. Milky Whey (Mont. 2015). First, they consider whether it exists under MRCivP 4(b)(1), which subjects parties to general jurisdiction if they are “found within the state of Montana” and to specific jurisdiction “as to any claim for relief arising from the doing personally, or through an employee or agent, of any” of the enumerated acts in Rule 4(b)(1)(A)-(G). Second, courts consider whether the exercise of personal jurisdiction comports with due process.

GEICO concedes that “GEICO Indemnity and GEICO Casualty conduct insurance operations, including subrogation activities in Montana.” Thus the GEICO entities, including the non-contracting entities “transact business within Montana” MRCivP 4(b)(1)(A). Step 1 of the specific jurisdiction inquiry is therefore satisfied.

The more complicated question is whether the exercise of jurisdiction is constitutional. The Due Process Clause requires that a defendant “have certain minimum contacts with [the forum state] that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Int’l Shoe (US 1945). “Due process requires that a defendant be haled into court in a forum State based on his own affiliation with the State, not based on the random, fortuitous, or attenuated contacts he makes by interacting with other persons affiliated with the State.” Walden (US 2014). The “minimum contact” requirements must be met as to each individual defendant. Bristol-Myers (US 2017).

Plaintiffs argue that personal jurisdiction exists because they were harmed by the in-state conduct of the GEICO Payment Recovery Unit which “the participating GEICO affiliates jointly utilize, direct and support” for all their subrogation activities, including activities in Montana. GEICO responds that “Plaintiffs’ allegation that GEICO Indemnity and GEICO Casualty utilized the Payment Recovery Unit for subrogation activities on other claims with respect to other insureds is insufficient” to confer specific jurisdiction. It maintains that “Plaintiffs’ claims simply do not arise from any of GEICO Indemnity or GEICO Casualty’s forum-related conduct.” Its argument is unpersuasive in light of Ford Motor (Mont. 2019).

GEICO premises its due process argument on the ground that Plaintiffs fail to causally connect the non-contracting entities’ forum-related conduct to Lees’ specific claims, relying on the Shute (9th Cir. 1990) test which asks whether “in the absence of” the defendant’s forum activity, the plaintiff’s “injury would not have occurred.” But as Ford Motor just made clear, such a “causation-only approach” improperly narrows the inquiry: “We have never framed the specific jurisdiction inquiry as always requiring proof of causation — i.e., proof that the plaintiff’s claim came about because of the defendant’s in-state conduct.” Rather, specific jurisdiction may also exist where a claim “relates to the defendant’s contacts with the forum.”

Plaintiffs have alleged that all the named GEICO entities utilize the Property Recovery Unit and jointly developed its subrogation procedures. They have also alleged that it operates within Montana and specifically worked on Lees’ claim. GEICO concedes that both GEICO Casualty and GEICO Indemnity utilize the Unit “for subrogation recoveries of their insureds under the insurance policies.” Plaintiffs’ wrongful subrogation claims therefore at minimum “relate to” the non-contracting GEICO entities’ use of the Unit and its subrogation of insurance claims in Montana. Moreover, these claims can only be brought in Montana in light of Montana’s unique subrogation laws and the fact that Lees are Montana citizens. Given the “strong relationship among the defendant, the forum, and the litigation,” specific jurisdiction exists. Id.

GEICO’s motion to dismiss is denied insofar as it seeks to dismiss GEICO Indemnity and GEICO Casualty for lack of personal jurisdiction. Its other arguments will be addressed by separate order.

James Lee Const. and Lee v. GEICO, 44 MFR 240, 3/25/21.

Alan Lerner (Lerner Law Firm), Kalispell, Allan McGarvey & Jinnifer Mariman (McGarvey Law), Kalispell, Brian Joos & Judah Gersh (Viscomi, Gersh, Simpson & Joos), Whitefish, and Evan Danno (Danno Law Firm), Kalispell, for Plaintiffs; Courtney Henson (Snell & Wilmer – Tucson), Sheila Carmody (Snell & Wilmer – Phoenix), and Ian McIntosh & William Morris (Crowley Fleck), Bozeman, for GEICO.

INSURANCE: Personal jurisdiction found over non-contracting GEICO entities in 2nd amended complaint challenging subrogation practices… Molloy.

James Lee Const. and James & Tracy Lee represent a putative class challenging subrogation practices of GEICO and related entities. There are 4 motions pending. This order addresses only the personal jurisdiction component of GEICO’s motion to dismiss.

The Court previously granted GEICO’s motion to dismiss the non-contracting GEICO entities for lack of personal jurisdiction based in part on rejection of boilerplate allegations of personal jurisdiction based on a conspiracy theory. (MLW 8/15/20). GEICO again seeks to dismiss the GEICO entities with which Lees do not hold an insurance policy for lack of jurisdiction under Rule 12(b)(2), arguing that the 2nd amended complaint fails to comply with Rule 8(a)(2), the law of the case doctrine forecloses Plaintiffs’ attempt to reintroduce these previously dismissed entities, and Plaintiffs’ claims are not based on GEICO Indemnity’s and GEICO Casualty’s forum-related conduct.

Although a bit unusual in the personal jurisdiction context, GEICO first relies on Rule 8(a)’s demand for “a short and plain statement of the claim” to argue that Plaintiffs’ 2nd amended complaint presents a befuddling picture of how the non-contracting GEICO entities relate to this case that is insufficient to establish personal jurisdiction. This argument is better addressed in the context of analyzing their forum-related conduct.

GEICO further argues that this Court’s order dismissing the non-contracting GEICO entities mandates dismissal. But law of the case does not apply in the context of amended pleadings following a dismissal without prejudice. Askins (9th Cir. 2018). While a defendant is free to argue that the amended pleading does not cure the deficiencies identified in the original complaint and “the district court may decide the second motion to dismiss in the same way it decided the first,” the “court is not bound by any law of the case.” Id. The Court must therefore consider personal jurisdiction over the non-contracting GEICO entities anew.

Montana courts apply a 2-step test to determine whether they have personal jurisdiction over a non-resident. Milky Whey (Mont. 2015). First, they consider whether it exists under MRCivP 4(b)(1), which subjects parties to general jurisdiction if they are “found within the state of Montana” and to specific jurisdiction “as to any claim for relief arising from the doing personally, or through an employee or agent, of any” of the enumerated acts in Rule 4(b)(1)(A)-(G). Second, courts consider whether the exercise of personal jurisdiction comports with due process.

GEICO concedes that “GEICO Indemnity and GEICO Casualty conduct insurance operations, including subrogation activities in Montana.” Thus the GEICO entities, including the non-contracting entities “transact business within Montana” MRCivP 4(b)(1)(A). Step 1 of the specific jurisdiction inquiry is therefore satisfied.

The more complicated question is whether the exercise of jurisdiction is constitutional. The Due Process Clause requires that a defendant “have certain minimum contacts with [the forum state] that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Int’l Shoe (US 1945). “Due process requires that a defendant be haled into court in a forum State based on his own affiliation with the State, not based on the random, fortuitous, or attenuated contacts he makes by interacting with other persons affiliated with the State.” Walden (US 2014). The “minimum contact” requirements must be met as to each individual defendant. Bristol-Myers (US 2017).

Plaintiffs argue that personal jurisdiction exists because they were harmed by the in-state conduct of the GEICO Payment Recovery Unit which “the participating GEICO affiliates jointly utilize, direct and support” for all their subrogation activities, including activities in Montana. GEICO responds that “Plaintiffs’ allegation that GEICO Indemnity and GEICO Casualty utilized the Payment Recovery Unit for subrogation activities on other claims with respect to other insureds is insufficient” to confer specific jurisdiction. It maintains that “Plaintiffs’ claims simply do not arise from any of GEICO Indemnity or GEICO Casualty’s forum-related conduct.” Its argument is unpersuasive in light of Ford Motor (Mont. 2019).

GEICO premises its due process argument on the ground that Plaintiffs fail to causally connect the non-contracting entities’ forum-related conduct to Lees’ specific claims, relying on the Shute (9th Cir. 1990) test which asks whether “in the absence of” the defendant’s forum activity, the plaintiff’s “injury would not have occurred.” But as Ford Motor just made clear, such a “causation-only approach” improperly narrows the inquiry: “We have never framed the specific jurisdiction inquiry as always requiring proof of causation — i.e., proof that the plaintiff’s claim came about because of the defendant’s in-state conduct.” Rather, specific jurisdiction may also exist where a claim “relates to the defendant’s contacts with the forum.”

Plaintiffs have alleged that all the named GEICO entities utilize the Property Recovery Unit and jointly developed its subrogation procedures. They have also alleged that it operates within Montana and specifically worked on Lees’ claim. GEICO concedes that both GEICO Casualty and GEICO Indemnity utilize the Unit “for subrogation recoveries of their insureds under the insurance policies.” Plaintiffs’ wrongful subrogation claims therefore at minimum “relate to” the non-contracting GEICO entities’ use of the Unit and its subrogation of insurance claims in Montana. Moreover, these claims can only be brought in Montana in light of Montana’s unique subrogation laws and the fact that Lees are Montana citizens. Given the “strong relationship among the defendant, the forum, and the litigation,” specific jurisdiction exists. Id.

GEICO’s motion to dismiss is denied insofar as it seeks to dismiss GEICO Indemnity and GEICO Casualty for lack of personal jurisdiction. Its other arguments will be addressed by separate order.

James Lee Const. and Lee v. GEICO, 44 MFR 240, 3/25/21.

Alan Lerner (Lerner Law Firm), Kalispell, Allan McGarvey & Jinnifer Mariman (McGarvey Law), Kalispell, Brian Joos & Judah Gersh (Viscomi, Gersh, Simpson & Joos), Whitefish, and Evan Danno (Danno Law Firm), Kalispell, for Plaintiffs; Courtney Henson (Snell & Wilmer – Tucson), Sheila Carmody (Snell & Wilmer – Phoenix), and Ian McIntosh & William Morris (Crowley Fleck), Bozeman, for GEICO.

INSURANCE: Claims against mother of death shooter who was forbidden to possess firearms not covered by business policies… Cavan.

Raymond Hansen shot and killed Terry Klein Sr. 8/23/16 in Richland Co. as Klein was operating an excavator repairing a canal. Klein’s PR Jason Klein sued Hansen and his mother Lola (“Hansen”) alleging that she had breached her duty to keep his firearms away from him following his 2007 federal guilty plea to addict in possession of firearms and sentence prohibiting him from owning, using, or being in constructive possession of firearms. It is disputed whether the murder weapon was one of the guns he relinquished to his parents. Hansens say it was not; law enforcement concluded that it was a .45 semi-automatic which does not match the guns he surrendered. Raymond, then 36, was sentenced by Judge Simonton to 100 years at MSP, no parole for 25 years.

According to Raymond, his father had taken his guns and he knew where they were at his father’s residence but he was unable to access them. Lola and her husband Arnold’s bar & casino were insured by Employers Mutual Casualty under a CGL policy and commercial umbrella policy. Lola tendered defense and indemnification of the suit to EMC, which agreed to defend pursuant to reservation. It seeks a declaration that no coverage for the claim exists under the policies because the allegations bear no relationship to the conduct of Hansen’s bar & casino business. Lola moved to stay or dismiss this case pending resolution of the underlying action or for summary judgment on EMC’s duty to defend, and EMC requests judgment on the pleadings on the duty to defend and the duty to indemnify.

EMC initially construed the underlying complaint as alleging that Lola “was negligent in storing firearms at her residence or allowing access by Raymond Hansen to guns on the property where her residence is located.” It further asserted that the complaint alleged that “Raymond Hansen took possession of one or more firearms from Lola Hansen’s personal residence or property.” However, the complaint does not actually specify that Hansen negligently stored the firearms at her residence, or that Raymond obtained the gun used in the killing from Hansen’s personal residence or property. It only alleges in a broad manner that Hansen was negligent in storing them. Apparently recognizing this issue, EMC’s briefing asserts that “the underlying complaint in no way implicates Hansen’s conduct of her business.” It points out that the complaint never alleges that Raymond was acting as an employee of Hansen’s business when he killed Klein, that Hansen assumed responsibility for keeping certain firearms from him in furtherance of the conduct of her business, or that her business conduct imposed a duty on her to keep firearms from her son.

EMC’s revised observation is correct. The complaint is wholly silent as to the involvement of Hansen’s business. There is nothing in it that remotely suggests that her business is connected to the alleged conduct. Even assuming that the attached affidavit raises a factual dispute as to whether Raymond could access firearms at his parents’ residence, the dispute does not involve or implicate Hansen’s business.

In light of the complaint’s silence, Hansen essentially invites the Court to speculate that there might be facts that could show that the underlying allegations were somehow connected to her business. But the Montana Supreme Court has made clear that an insured’s duty to defend is not triggered “by speculating about extrinsic facts and unpled claims regarding potential liability.” Weitzel (Mont. 2016). Rather, “where the insurer has no knowledge of facts outside the complaint that may potentially trigger coverage, the complaint and the policy constitute the universe with regard to the insurer’s duty to defend.” Id. Twite (Mont. 2008) (“If the facts alleged in the complaint do not come within the policy’s terms, then there is no duty to defend.”); Graber (Mont. 1990) (“the insurance company must look to the allegations of the complaint to determine if there is liability coverage,” and “where the complaint alleges events not within the coverage of the policy then the insurer has no duty to defend.”).

Application of this principle is exemplified by Rumph (Mont. 2007). A passenger injured in a 1-vehicle rollover sued the driver (Alex), the driver’s father (Nathan), and Nathan’s businesses. In an amended complaint, the passenger alleged that Alex was too intoxicated to safely drive the pickup and had rendered the seatbelts inoperable by installing large speakers in the rear seat, thereby exacerbating the injuries. One of Nathan’s businesses was an auto repair garage that was insured under a FUMI Commercial Lines Garage Policy. Because neither the complaint nor the amended complaint raised facts that implicated Nathan’s auto repair business, FUMI denied coverage. The insured’s attorney Brad Anderson subsequently discovered additional facts that he argued brought the accident under the garage policy. He asserted that the seatbelts had been disabled in Nathan’s garage with Nathan’s tools and materials. He also characterized Alex as an employee of the garage and contended that the pickup was a shop vehicle used for garage-related errands. FUMI thereafter provided a defense under reservation and sought declaratory relief. Judge Day granted summary judgment for FUMI. On appeal, the insureds argued that the amended complaint, considered “together with” or “coupled with” the additional facts that Anderson had uncovered, established that the accident was covered under the garage policy because it arose from “garage operations.” The Supreme Court rejected the argument, noting that the amended complaint made no reference to Nathan’s garage, that Alex had allegedly disabled the seatbelts in the garage with the garage’s tools, that Alex was Nathan’s employee, or that the pickup was used as a shop vehicle. It explained that FUMI was only required to look at the allegations in the amended complaint to determine if coverage existed and that it was “irrelevant that the amended complaint ‘together with’ additional facts may have triggered coverage under the garage liability policy” and:

Based on the facts alleged in the Nielson’s amended complaint, FUMI correctly determined that the accident was outside the garage coverage, as no reference was made to anything remotely “necessary or incidental to a garage business.” In other words, there was an “unequivocal demonstration” that the Nielsen’s claim was not covered by Nathan Rumph’s Commercial Lines Garage Policy.

Likewise here, the underlying complaint does not reference anything remotely related to the conduct of Hansen’s business. Accordingly, just as in Rumph, EMC has unequivocally demonstrated that the complaint against Hansen does not fall within the policy’s coverage.

Hansen argues nevertheless that an insurer cannot ignore knowledge of facts which may give rise to coverage simply because those facts are not alleged in a complaint, and therefore EMC is charged with knowledge of facts beyond the pleadings, including those set forth in her Statement of Undisputed Facts. However, her business is mentioned in only 2 instances in the Statement, and neither alleges or implies that she took possession of Raymond’s firearms in furtherance of the conduct of her business.

First, Hansen states that Raymond was an “occasional employee” of her business and did maintenance as needed.

Her testimony actually states that he had not worked for Hansens for several months prior to the shooting of Klein, but even had he been so employed, she has offered no theory under which this fact could potentially bring the claim within coverage. That Raymond occasionally did maintenance at Hansen’s business does not render storage of his firearms within the conduct of her business. There is no indication that he was acting as an employee at the time of the shooting or that Hansen in any way assumed responsibility for the firearms in furtherance of the conduct of her business.

Second, Hansen states that she cleared the firearms and ammunition out of Raymond’s residence “perhaps with the assistance of an employee of” her business. Again, she actually testified that she was uncertain who assisted her with the task: “I’m guessing — no, I’m not supposed to guess. I would have to speculate, because it could have been an employee from the South 40 and I don’t recall.” To survive summary judgment a party must set forth “non-speculative evidence of specific facts.” Frost (D.Mont. 2020); Cafasso (9th Cir. 20110. Hansen’s testimony that she does not recall who may have assisted her in removing the guns, but that it could have been an employee of her business, is entirely speculation and conjecture. But even if true, that an employee may have assisted in removal of the firearms does not make such removal or storage related to or in furtherance of the conduct of her business.

This case falls squarely within the 2nd Revelation Industries (Mont. 2009) scenario: “The complaint alleges facts that do not come within the coverage of the liability policy and the insurer has no knowledge of any other facts that could result in coverage.” EMC has no duty to defend.

Having determined that EMC has no duty to defend, the Court likewise finds that it has no duty to indemnify. “A conclusion that there is no duty to defend compels the conclusion that there is no duty to indemnify.” Wessel (Mont. 2020). Nor do the Brillhart (US 1942) factors discourage exercise of jurisdiction, as urged by Hansen. First, “the Ninth Circuit instructs that where a federal court is deciding an issue of insurance coverage or another ‘routine issue of state law,’ it is a ‘rare circumstance’ where a court should decline jurisdiction because state law supplied the law governing the decision.” Rick’s Auto Body (D.Mont. 2017). Second, there is no particular evidence that EMC was forum shopping. Finally, EMC is not a party to the underlying action and there is no parallel state declaratory action pending.

Hansen also argues that the policies violate MCA 33-15-337(2) because they failed to include a “notice section of important provisions” and the umbrella policy also failed to “include a table of contents.” Citing Crumley’s (Mont. 2008), Hansen argues that EMC’s failure to comply with the Simplification Act renders its policy defenses ineffective and the Court should therefore refuse to enforce the language defining “who is an insured” and find that it has a duty to defend. It is requesting the Court to disregard the definitional phrase “but only with respect to the conduct of a business of which you are the sole owner” or “but only with respect to the conduct of your business.” The Court declines to do so.

First, the Simplification Act provides that it is “not intended to increase the risk assumed under policies subject to [the Act].” Application of the Act as requested by Hansen would do exactly that. Second, this case is substantially different from Crumley’s, which involved an action to recover costs of cleanup and corrective action for a diesel tank leak. The Court found that the insurer’s failure to highlight the 120-hour notice provision in a table of contents or notice section violated the Act and that the notice provision was therefore void and unenforceable. It did not elaborate on what provisions are sufficiently “important” to requirement mention in a table of contents or notice provision. The EMC provisions defining “who is an insured” are not extensions of coverage or endorsements excluding coverage and did not require any action by Hansen to implement or maintain coverage, and thus Crumley’s does not compel the conclusion that its failure to highlight the definition in a separate notice section violates the Act. Nor does the Court read Crumley’s to mean that the general absence of a table of contents in the umbrella policy warrants rewriting the policy to include risks that are clearly beyond its intended scope.

EMC’s motion for judgment on the pleadings is granted.

Employers Mutual Casualty v. Hansen, 44 MFR 239, 3/15/21.

James Zadick (Ugrin Alexander Zadick), Great Falls, for EMC; John Wright (Halverson, Mahlen & Wright), Billings, for Hansen.

SEX DISCRIMINATION: $61,725 fees, $4,301.34 costs plus prejudgment/post-judgment interest awarded following affirmation of MHRA award of $50,000 emotional distress damages for hostile work environment occasioned by conduct of “sex pest” toward gay female… Molloy.

This administrative review case stems from claims that Amy Lowery, who had been Sarens USA’s Regional Marketing Manager in Missoula, brought against Sarens for hostile work environment, discriminatory discharge, and retaliation. Hearing Officer Caroline Holien sustained Lowery’s claim of a hostile work environment suffered due to comments by Country Manager Mark Watson in Houston (whose nickname in the office was “sex pest” due to his conduct toward female employees) including referring to Lowery as a “dyke” and awarded her $50,000 in emotional distress damages. (MLW 10/5/19). The parties appealed to the Montana Human Rights Commission which affirmed Holien’s decision. Following a hearing 1/8/21, this Court affirmed the agency decision and remanded the issue of attorney fees. The Clerk entered a $50,000 judgment in Lowery’s favor. Lowery requested that the judgment be amended to award interest and attorney fees. The Court agreed to determine a fee award in the first instance. Lowery requests $76,410 fees and $6,271.38 costs. Sarens opposes the motion. The parties also provided further briefing on interest. The 1/8 judgment will be amended to include pre- and post-judgment interest, a fee award of $61,725, and a cost award of $4,301.34. Sarens filed notice of appeal 3/2/21 appealing the 2/2/21 judgment. “If a party files a notice of appeal after the court announced or enters a judgment — but before it disposes of [a motion to alter or amend a judgment] — the notice becomes effective to appeal a judgment or order, in whole or in part, when the order disposing of the last such remaining motion is entered.” FRAP 4(A), (B)(i). Thus the Court retains jurisdiction to address the motions.

Lowery originally sought post-judgment interest from 9/20/19 (the date of Holien’s decision). Following the Court’s request for additional briefing, she now seeks prejudgment interest from 10/21/19 (the date her right to recover vested following Holien’s decision) through 1/8/21 (the date of this Court’s judgment) and post-judgment interest from 1/9 until the judgment is satisfied. Sarens concedes that she is entitled to post-judgment interest from 2/13/20 (the date of the HRC’s decision) onward but insists that she is not entitled to prejudgment interest.

Thus there are 3 contenders for the operative “judgment”: Holien’s 9/20/19 decision (which vested 10/21/19), the HRC’s 2/13/20 final agency decision, and this Court 1/8/21 judgment. Although the answer is far from clear, this Court’s 1/8 judgment makes the most sense. Both the state and federal post-judgment interest statutes refer to interest following a court’s decision. MCA 25-9-204 (“The clerk shall include in the judgment entered up by the clerk any interest on the verdict or decision of the court, from the time it was rendered or made.”); 28 USC 1961(a) (“Interest shall be allowed on any money judgment in a civil case in a district court.”). “In diversity cases such as this one, the court looks to state law to determine the rate of prejudgment interest while federal law determines the rate of post judgment interest.” Lagstein (9th Cir. 2013). It would be impossible for the federal rate to kick in any earlier than this Court’s judgment because the case was not yet in Federal Court and might never have been. Thus the relevant “judgment” for interest purposes was entered 1/8.

Because post-judgment interest is awarded as a matter of right under 28 USC 1961 after that point, the question is whether Lowery is entitled to prejudgment interest. She is. Sarens argues that she is not entitled to such interest because it was not pled. However, her 3/10/20 petition requests the full award amount “with interest.” Sarens next argues that such interest is not appropriate under MCA 27-1-210 because the amount was disputed. But prejudgment interest here is governed by MCA 27-1-211:

Each person who is entitled to recover damages certain or capable of being made certain by calculation and the right to recover that is vested in the person upon a particular day is entitled also to recover interest on the damages from that day except during the time that the debtor is prevented by law or by the act of the creditor from paying the debt.

“There are three prerequisites to recovery under this statute. First, an underlying monetary obligation must exist. Second, the amount of recovery must be capable of being made certain. Third, the right to recover must vest on a particular day.” Edwards (Mont. 2009). Thus “the accrual start date for prejudgment interest necessarily varies depending on the particular facts and circumstances of each case.” Warrington (Mont. 2020).

All 3 prerequisites are met here as of 10/21/19. Holien issued her decision finding for Lowery 9/20/19. She awarded $50,000 in emotional distress, a fixed sum. She gave Sarens 30 days to pay the award. Thus Lowery is entitled to prejudgment interest from 10/21/19 to 1/8/21 at the Montana rate.

The 1/8 judgment shall be amended to award prejudgment interest from 10/21/19 to 1/8/21 at the Montana rate, MCA 25-9-205(1), and post-judgment interest from 1/9/21 until paid at the federal rate, 28 USC 1961.

Lowery seeks $76,410 fees and $6,271.38 costs for 254.7 hours at $300/hr. Sarens argues that this “is excessive and should be significantly reduced.” Fees are awarded in the amount of $61,727 and costs in the amount of $4,301.34.

Sarens argues that Lowery’s fee request should be rejected as untimely under MCA 49-2-505(8) (“An action for attorneys’ fees must comply with the Montana Rules of Civil Procedure.”) and pursuant to those rules, a request for fees must be by motion and “be filed no later than 14 days after the entry of judgment.” MRCivP 54(d)(2)(i). Sarens argues that because Lowery failed to request fees within 14 days of Holien’s decision or the HRC’s FAD, her request is untimely, However, the operative judgment is the Court’s 1/8/21 judgment. Even though Rule 54(a) defines “judgment” as “any order from which an appeal lies,” which could include the agency’s decisions, the 54(d)(2) requirement that fees be pursued through a “motion” does not line up with the §49-2-505(8) provision that a prevailing party can bring an “action for attorney fees” in the district court. Ultimately, because Lowery filed her motion for fees 8 days after this Court’s judgment, her request is timely.

“In a diversity action the question of attorney’s fees is governed by state law.:” Klopfenstein (9th Cir. 1979). Montana recognizes 2 methods of calculating fees: “the lodestar method, which involves multiplying the number of hours reasonably spent on the case by an appropriate hourly rate in the community for such work” and “the percentage recovery method, which authorizes fees to be paid from a percentage of a common fund or a contingency fee agreement.” Gendron (Mont. 2020). Although both parties argue the motion under the lodestar method, it appears that Lowery’s counsel was under a pseudo-contingency agreement: “Our fee agreement provided that I be paid either 40% of the total recovery after a contested case hearing, or my hourly rate of $250 per hour, whichever is greater.” 40% of Lowery’s award is $20,000. Under the lodestar method, counsel seeks $76,410 for 254.7 hours at $300/hr.

“Ordinarily, when lawyers undertake a representation on a contingency amount, they bargain for a percentage of recovery that accounts for the risk of nonrecovery.” Buckman (Mont. 1989); Wight (Mont. 1983). But the only risk here under the agreement was that his client may not prevail. Should she prevail, counsel was entitled to reasonable fees by statute, determined through the lodestar or cost recovery analysis. (This can be compared to a contingency agreement in cases that do not invoke a fee-shifting statute, such as product liability, in which there is the risk of no recovery and the risk of limited recovery.) In turn, those fees would be paid by the opposing party. Knowing this, it is a bit strange that counsel demanded the “greater” of a contingency or hourly fee arrangement, especially because even if Lowery’s recovery was significant, the amount fixed by a contingency is not binding on the court in awarding fees as it retains discretion in considering a reasonable fee award. Gendron. And the factors relevant to a percentage of recovery calculation are similar to those reviewed under the lodestar method. Id.; Stimac (Mont. 1991). Thus the Court will apply the lodestar calculation but will also consider counsel’s shift of the risk and fixed fee amount. Id. (the court has discretion to adopt a calculation method that reflects a reasonable award).

Under the lodestar method, the 7 Plath (Mont. 2003) factors guide determination of the number of hours reasonably expended. An award must be based on competent evidence and supported by an adequate rationale. Gendron.

As to the Plath factors, counsel successfully litigated at least one of Lowery’s claims through a contested case hearing, a full review by the HRC, and another full review by this Court. He took multiple depositions and extensively briefed the legal and factual basis multiple times. Although not factually complex, the case involved numerous witness reports and statements, some of which were conflicting or inconsistent. Marshalling the record for the contested hearing and litigating this case therefore took skill and time. Employment discrimination is also a nuanced area of the law. Thus, with minor adjustment, counsel spent a reasonable amount of time on this case.

Sarens argues that counsel’s hour entries are vague and non-descriptive, specifically challenging generic entries such as “phone call” or “review email.” However, attorneys are merely required to identify the “general subject matter of their time expenditures.” Hensley (US 1983); Fox (US 2011) (in determining fees, courts “need not and indeed should not, become green-eyeshade accountants as the essential goal is to do rough justice, not to achieve auditing perfection”). While many of counsel’s entries are broad, that does not mean they cannot be evaluated in the context. For example, numerous unidentified phone calls billed at 0.1 to 0.6 hours make sense in the context of discovery. No specific entries are rejected on these grounds.

Lowery also seeks to recover fees for drafting and filing the present motion for fees & costs. Generally, “the prevailing party is not entitled to fees-for-fees.” Swapinski (Mont. 2015). Although there is an exception if fees are provided for by statute, id., the award is still discretionary under §49-2-505(8). Thus, even if recoverable, Lowery’s request for fees for fees totaling 7.8 hours is rejected. This does not mean that she is precluded from seeking fees associated with a successful appeal.

Sarens argues that Lowery’s fee award should be limited to services related to her hostile work environment claim, the only claim on which she prevailed. Montana follows a 2-step approach to determine whether a fee award should be adjusted to reflect success on some claims but not others:

First, did the plaintiff fail to prevail on claims that were unrelated to the claims on which he succeeded? Second, did the plaintiff achieve a level of success that makes the hours reasonably expended a satisfactory basis for making a fee award? Laudert (Mont. 2001); Hensley.

“Distinctly different claims for relief based on different facts and legal theories which are unsuccessful should be excluded from a reasonable fee calculation.” Id. But cases “involving a common core of facts or those based on related legal theories are not as easily separable. Id. “In these situations, the district court should move to the second step and focus on the overall significance of the relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation.” Id.

Sarens focuses on the 1st inquiry, arguing that Lowery succeeded only on her claim for hostile work environment, which is legally and factually distinct from her claims for retaliation and discriminatory discharge. While it is correct that her hostile environment claim was centered on Watson’s conduct while her other 2 claims focused more on the company’s conduct, that does not obviate the common facts underlying her claims. As outlined in this Court’s 1/8 opinion, her claims are interrelated. (Sarens attempts to argue that her claims regarding discharge and pretext were based on an affidavit that was “proven untruthful” and were so unsupported that they were never going to succeed. However, had either this Court or the HRC been the decider in the first instance, Lowery may have succeeded on additional claims.)

Under the 2nd consideration, “the result is what matters” and “even if a plaintiff does not prevail on every claim raised, if the plaintiff achieves significant success, all hours reasonably expended on litigation should be included with the attorney fee award.” Laudert. While a reduction may be justified if a plaintiff has achieved only “limited success,” success is not only measured in money damages. Id. The amount of damages “is only one of many facts that a court should consider in calculating an award of attorney’s fees.” Id. In an HR case such as this, courts “examine success not only in terms of the direct benefit to the plaintiff but also whether the claimant’s actions further effectuated the purpose for which the statute was enacted.” Id.

As a result of Lowery’s claim, Sarens was required to consult an attorney “to develop and implement policies for the identification, investigation and resolution of complaints of discrimination that includes training for its broad members, managers, and supervisors to prevent and timely remedy sexual discrimination on the job.” These policies must provide that “employees will receive information on how to report complaints of discrimination” and “must be approved by the Montana Human Rights Bureau.” Id. Thus this case benefitted all of Sarens’s employees in Montana and sent a message to other employers regarding workplace misconduct. Thus even though Lowery was awarded only $50,000 on one claim, she achieved a level of success necessary to support a full fee award. Id. For the same reason, the Court rejects Sarens’s request that her fee be reduced by 75% “based on Lowery’s vague billing.”

After briefing her motion for fees and further addressing interest, Lowery submitted an affidavit requesting payment for an additional 19.6 hours. That request is rejected. She is not entitled to fees for fees, which is the bulk of the 19.6 hours. Moreover, to the extent that work can be attributed to briefing the interest issue, counsel should have been cognizant of the interest statutes and their application when he pled such relief. Put differently, the additional time counsel spent educating himself on this area of the law is “excessive, redundant, or otherwise unnecessary.” Hensley.

Under the lodestar method, “the reasonable hourly rate is calculated according to the prevailing market rates in the relevant community.” Abbey/Land (Mont. 2019). In his pseudo-contingency, counsel agreed to $250/hr, but now seeks $300 since his rate changed during the litigation. He argues that $300 is appropriate based on his 26 years of experience with these types of cases when compared to rates awarded to others with less experience. However, his agreement to $250 reflects his acceptance of that market rate for this type of case. He “shifted” the risk by assuring the highest fee award possible by explicitly requiring his rate of $250. That rate is therefore reasonable. This does not foreclose Lowery from seeking a higher rate for counsel’s work on appeal.

Based on a total hour calculation of 246.9 and a rate of $250, Lowery is awarded $61,725 in fees. While a lodestar amount may be adjusted using a “multiplier” based on factors not considered in the initial calculation, Blum (US 1984), no such adjustment is warranted here. The amount does not have to be proportionate to the damages awarded. Bachmeier (Mont. 2021) (affirming damages award of $100,000 and fees/cost award of $360,072.65). And there is no indication that Lowery frivolously extended the case.

Sarens argues that Lowery is seeking costs not recoverable under Montana Law: costs associates with travel and related to her unsuccessful petition for review. Lowery responds that her costs are not limited by Montana’s cost statute. Neither party addresses the applicable law. In diversity actions, an award of costs is generally a procedural matter governed by federal law. Stender (10th Cir. 2020) (Colorado’s general laws for assessing costs did not apply in diversity case). But “there are limited circumstances in which costs become a substantive matter, namely a federal court sitting in diversity will award costs in accordance with federal law unless a state provision allows for the awarding of costs as part of a substantive, compensatory damages scheme.” Gardner (ND Cal. 2016). That is not the case here.

In Montana, costs are governed by MCA 49-2-505(8) & 25-10-201 and MRCivP 54(d)(1), which all simply allow the Court to award costs. As in Stender, “nothing about the [Montana] statutes indicates a judgment about the scope of state-created rights or remedies.” These statutes apply in every case. Thus federal law controls. 28 USC 1920 provides an exclusive list of items for which a party may recover and does not include attorney travel. Id. $1,374.79 costs associated with counsel’s travel to Houston and mileage are therefore rejected. Sarens further argues that Lowery should not be able to recover her $595.25 filing fees associated with her petition for review in member case CV 20-60-M on the ground that she did not “prevail” on that petition. That argument is persuasive. She is awarded $4,301.34 costs.

Lowery v. Sarens USA, 44 MFR 238, 3/12/21.

Philip Hohenlohe (Hohenlohe Law Office), Helena, for Lowery; Micah Dawson (Fisher & Phillips), Denver, for Sarens.

WRONGFUL DEATH: Claims against trucking company and driver by PR of passenger killed when car lost control on rainy interstate and crossed median into path of truck exceeding speed limit 2-5 mph rejected on summary judgment… Molloy.

Deborah Alteneder was driving a Chevrolet Impala east on I-90 in 6/17 with her fiancé Josh Creel as passenger. She lost control in the rain and slid through the 38-foot median and onto the westbound lane and collided with a Kenworth T800 operated by Mark Loy and owned by Active Truck Transport. Creel and Alteneder died at the scene. Creel’s PR John Creel sued Loy and ATT alleging negligence, wrongful death, survivorship, and loss of consortium, focusing primarily on Loy’s speed which was recorded at 67-70 mph just prior to the crash. Defendants seek summary judgment on the grounds that Loy’s alleged negligence did not cause the MVA and that Alteneder’s conduct severed the chain of causation. They argue that Loy’s speed was irrelevant because Alteneder lost control and entered his lane, making her negligence “the direct and only cause of the crash.” Plaintiff responds that Loy exceeded the appropriate speed and could have otherwise avoided the accident, relying primarily on the analysis & conclusions of commercial trucking expert Lew Grill.

According to the MHP report it was 50 degrees and rainy. Alteneder and Creel were headed from Missoula to Butte to visit her sister. Loy was headed from Miles City to Spokane hauling another semi. Near mile marker 135.85 the Impala negotiated a left curve before entering a straight, level part of I-90. Loy was attempting to pass a semi driven by Carl Booth. The road was wet with ruts that allowed for standing water in both lanes, but was straight and level on both the east and west directions and the lanes were separated by a grassy unprotected median. The speed limit was 80 for vehicles and 65 for trucks. Although somewhat unclear, the report states that “Alteneder lost control of the Impala, overcorrected steering to the left, and began sliding counterclockwise towards the median.” She spun through it and entered the westbound lane into the oncoming traffic. The front of Loy’s truck struck the Impala’s driver’s side, pushing Alteneder into the passenger side.

Booth observed the Impala “lose control” and that it appeared to be traveling “fast.” He said it started turning when the front tire came off the road and the tail spun around, and that it was airborne in the median. Loy said he saw the red vehicle lose control and a back-end slide to the right and that it happened very fast.

The rain made it difficult to mark the scene and officers were only able to complete part of the Total Station measurements the day of the accident and the Impala was too damaged to download its crash data. A Total Station was completed based on further measurements the next day.

The MHP attributed all fault to Alteneder, stating that Loy was not distracted, his vision was not obscured, and he provided “no contributing action.” Its report states that neither Alteneder nor Loy had any drugs or alcohol in their systems, and concludes:

The major contributing factors of this crash are driving too fast for conditions, and excessive steering input. The ruts in the eastbound lanes allowed for pooling water. The tread depth on the tires of the Impala were above the wear bar, however, three out of the four tires measured just 4/32; the forth tire was measured at 8/32. The combination of tread depth, water on the roadway and the vehicles speed exceeded the driver’s ability to maintain control. When control was lost, the driver’s input caused the sedan to cross the median into the path of oncoming traffic.

According to the crash data from Loy’s truck, he was traveling 67-70 mph and did not engage his brakes until 1 second before impact.

Grill opined that Loy “caused his own preventable collision” because, inter alia, had he “operated at a safe and reasonable speed he would have had the time and opportunity to see the hazards in front of him” and “according to industry standards, this collision was preventable.”

While Plaintiff shows that Loy’s speed and operation of his truck may have increased the risk of harm to others on the highway, he presents no evidence that those conditions caused the accident. The analysis is somewhat complicated by the fact that no fault is attributable to Creel and thus comparative negligence plays no role. Faulconbridge (Mont. 2006) (“A driver’s negligence cannot be imputed to a passenger for the purpose of comparative negligence.”). Even so, Plaintiff fails to raise a genuine fact issue that Loy’s alleged negligence contributed to the accident or that he should have reasonably anticipated Alteneder’s conduct.

While the facts stretch the “foreseeable zone of risk,” Fisher (Mont. 2008), to its logical limit, Loy owed other motorists a duty to drive in a “careful and prudent manner and at a reduced rate of speed no greater than is reasonable and prudent under the conditions,” §61-8-303(3). Similarly, ATT owed a duty to maintain the vehicle and ensure that Loy had proper training and licensing.

Defendants’ primary argument is that even assuming that Loy exceeded the posted limit and therefore breached his statutory and common law duties, his speed did not cause the accident, but Alteneder’s negligence was the sole cause. Plaintiff argues in response that Loy has presented no evidence that speed was not a factor and that Plaintiff’s expert will opine that if Loy had been driving at a safe and reasonable speed “this crash would not have happened.” But Plaintiff’s evidence speaks to duty and breach, not causation. While he has presented sufficient evidence to raise a genuine fact issue as to the former, he has not as to the latter.

Plaintiff presents evidence that Loy exceeded the posted limit by 2-5 mph. He therefore breached his statutory duty not to exceed the posted limit. Plaintiff further argues that he exceeded the appropriate speed for the wet and rainy road conditions, which is governed by a “reasonable and prudent” person standard. §61-8-303(3). He insists that Loy, as a commercial trucker, should have reduced his speed by 1/3, relying on Grill’s analysis and conclusions. According to Grill, Loy should have been traveling slower given the wet conditions, as speed and road conditions affect sight lines and stopping distance. He further opined that Loy should not have undertaken to pass Booth. Considering the wet and rainy road, this is sufficient to raise a genuine dispute of whether Loy breached his duty of care. Nevertheless, Plaintiff fails to raise a genuine issue as to whether ATT breached its duty of care. While Grill opines that it had a duty to ensure that its drivers were aware of regulations and operated in compliance, there is no evidence that it failed to do so here, nor is there evidence that Loy was not properly trained or unaware of the CDL Manual. Grill simply outlines the regulations without connecting them to Defendants, and thus Plaintiff fails to raise a genuine dispute as to ATT for its own negligence or as to Loy for lack of training.

That leaves causation as it relates to Loy’s driving — first, “whether the defendant’s negligent act was a cause-in-fact of the plaintiff’s injury” and second, “whether the defendant’s act was a proximate cause of the plaintiff’s injury.” Fisher.

While Defendants cannot dispute that the impact of Loy’s truck resulted in Alteneder and Creel’s deaths, they dispute that Loy’s speed or lack of vigilance played a role. They persuasively argue that Plaintiff fails to show that but-for Loy’s allegedly negligent conduct the accident would not have occurred. Grill states that Loy had a duty to “keep a proper lookout in order to perceive hazards in front of him” and recommends that drivers “look at least 12 to 15 seconds ahead” and prepare for potential areas for “conflict” such as intersections, merges, slow traffic, and accident scenes.” But nowhere in his report — or in the MHP report — does it indicate that Loy’s sight lines were obstructed or that he could not stop within that distance. To the contrary, the MHP report states that the road was straight and level and Loy told officers that he saw the Impala traveling on the other side of the median and lose control. Thus there is no evidence that he failed to keep a proper lookout or take reasonable steps to avoid “conflict.” While he was apparently legally passing Booth, neither Plaintiff nor Grill present evidence as to Booth’s speed. Although Grill states that passing on wet roads should only be done when “necessary,” he provides no other context for that assessment. Thus while speed and road conditions could affect sight lines leading to injury, there is no evidence that they did so here.

The same holds for Grill’s opinions on braking distance and impact damage. He states that higher speeds “greatly increase the severity of crashes and stopping distances,” 60 mph can result in an impact and braking distance 9 times greater than 20 mph, and wet roads can double the braking distance, and recommends that drivers on wet roads reduce their speed by 1/3. But these statements and generic measurements similarly lack a nexus to the facts. He does not discuss the length of Loy’s stopping distance in fact or compare it to a reasonable stopping distance, nor does he posit on the variable damage to the Impala or Creel’s injuries. Rather, the evidence presented by Plaintiff relates to whether Loy breached a duty owed to Creel; it does not establish a causal link between the alleged breaches of duty and the harm. Butts (WD Penn. 2010) (discussing this distinction in the context of a fall down a stairway). Grill’s conclusions are generic at best: slower, safer driving prevents accidents. But his opinion that Loy could and should have avoided the accident altogether is merely speculation. Plaintiff ultimately fails to present any evidence that a change in Loy’s speed or driving would have altered the outcome, and has therefore failed to “offer substantial evidence of one of the essential elements of his negligence claim,” making summary judgment appropriate. Not Afraid (Mont. 2015).

But even if Plaintiff successfully raised a genuine dispute as to cause-in-fact, proximate cause forecloses recovery. Defendants are correct that Alteneder was negligent per se in entering Loy’s lane and her actions constitute an independent, intervening cause that severed the chain of causation. §61-8-321. While intervening acts that are foreseeable do not breach the chain of causation, Fisher, and while foreseeability is generally a jury question and may be resolved on summary judgment only “where reasonable minds may reach but one conclusion,” id., reasonable minds could certainly foresee that speeding on a wet road could result in an accident. And rainy conditions may impair a driver’s ability to see obstacles or control his vehicle. But the intervening cause here (Alteneder losing control and crossing the median) was not the foreseeable result of Loy’s alleged traveling too fast for conditions. Because he could not reasonably anticipate Alteneder’s conduct, it broke the chain of causation. Reasonable minds could reach but one conclusion: Creel’s injuries were not foreseeable and substantially caused by Loy’s alleged negligence.

Defendants’ motion for summary judgment is granted. The Clerk is directed to enter judgment and close the case.

Creel v. Loy and Active Truck Transport, 44 MFR 237, 3/10/21.

Jacqueline Lenmark & Murry Warhank (Jackson, Murdo & Grant), Helena, and Charles Oswald & Martha Starkey (Harrison & Moberly), Carmel, Indiana, for Creel; Adam Shaw & Shane MacIntyre (Brown Law Firm), Missoula, for Defendants.