CITY SIGN ORDINANCE prohibiting car lot’s balloon “wind signs” upheld… Christensen.

(The parties disagree as to some facts, none of which is essential to summary judgment. Plaintiffs argue that the Court should accept as true the facts as they have related them because the City failed to file a statement of disputed facts in response to their motion for summary judgment. The Court will not do so. Plaintiffs never filed a statement of undisputed facts, asking instead that the Court view their statement of disputed facts as itself a statement of undisputed facts. In other words, they ask the Court to view facts which are clearly in dispute as undisputed because the City did not meet requirements of a Local Rule which was not even in play.)

Since 2000, Jack Palmer has tied helium balloons to vehicles on his Carwerks used car lot, most featuring an American flag or a smiley. In 2009 Missoula enacted Ordinance 20.75.030(N) prohibiting “banners, flags, pennants, streamers, spinners or other types of wind signs.” It defines a “wind sign” as an “attention-getting device with or without copy … fastened in such a manner as to move in the wind.” Following repeated citations, Palmer and Carwerks were charged with criminal violation of the prohibition against wind signs. They allege that the City Code violated their free speech rights.

Plaintiffs argue that because the balloons are filled with helium and will float without wind, they cannot be wind signs. However, it is still a “wind sign” because it is an “attention-getting device … fastened in such a manner as to move in the wind.”

Commercial speech restrictions are generally analyzed under the Central Hudson (US 1980) test. However, where the restriction discriminates on the basis of content, heightened scrutiny applies. Sorrell (US 2011). A regulation is content-based if it “applies to particular speech because of the topic discussed or the idea or message expressed.” Reed (US 2015).

Plaintiffs argue that 20.75.030(N) is content-based because 2 other ordinances arguably draw distinctions between types of speech. They point out that 20.75.020(B) distinguishes commercial and noncommercial speech, providing that “any sign allowed under this chapter, may contain any lawful noncommercial message.” Then they point to the definition of “sign,” which exempts window displays and national flags. The City informed Plaintiffs during discovery that it was considering whether Reed mandated changes to the sign ordinances. Unlike the ordinance in Reed, 20.75.030(N) is not content-based and Plaintiffs’ citations to other regulations do not make it so. The regulations in Reed set forth a tiered approach that depended on the content they displayed. “Ideological Signs” could be as large as 20 sq ft and placed in any zoning district at any time. “Political Signs” could be up to 16 sq ft on residential property or 32 sq ft in various other zoning districts, and could be displayed only during election and campaign periods. “Temporary Directional Signs Relating to a Qualifying Event” (such as a church service) could be no more than 6 sq ft and placed in very limited areas for a matter of hours. The church could not reasonably notify the public about services except through “temporary directional signs relating to a qualifying event.” Missoula does not make any distinction based on the words or symbols that could be remedied by granting Plaintiffs’ requested relief. Even if they were correct that the 2 other ordinances are content-based restrictions on speech, they have no relevance as to whether the City can prohibit balloons as “wind signs.” Balloons with noncommercial messages — such as smiley faces flying above the lot — are as restricted as balloons with the Carwerks logo. Nor is the flag exemption relevant, as flags are allowed when affixed to poles — when they are not signs but flags — but prohibited when printed on wind signs such as the balloons. The City Code does not restrict speech on the basis of content.

Under Central Hudson, the Court must apply a 4-part test to analyze Plaintiffs’ commercial speech claims:

(1) if the communication is neither misleading nor related to unlawful activity, then it merits First Amendment scrutiny as a threshold matter; in order for the restriction to withstand such scrutiny, (2) the State must assert a substantial interest to be achieved by restriction on commercial speech; (3) the restriction must directly advance the state interest involved; and (4) it must not be more extensive than is necessary to serve that interest. Vanguard (9th Cir. 2011).

The parties do not dispute that the 1st prong is met and that the regulations implicate the 1st Amendment.

The City has demonstrated that the ordinance directly advances traffic safety and aesthetics. Its explanation is bolstered by Plaintiffs’ claim that the balloons grab the attention of potential customers. Their speculative interpretation of the City’s true reasons for the ordinance — to “make sure signs constructed of wood, glass metal, etc. are properly installed and maintained and will not blow apart in a high wind, showering folks with sign debris” — is neither logical nor supported by any facts in the record. They have not shown that the City has an unstated, less compelling reason for the ordinance. It is sufficiently tailored to the City’s interests.

The ordinance is no more extensive than reasonably necessary. By prohibiting only signs that wave in the wind, the ordinance targets precisely advertisements that are most likely to distract & annoy drivers and passersby. A wealth of alternative channels remains. In fact, Plaintiffs’ argument that it is unconstitutional because it does not apply to all advertisements (such as window displays) demonstrates that the City is not attempting to foreclose all avenues of communication. Deferring to the City’s definition of the problems to be addressed, the Court cannot determine that it restricts “substantially more speech than is necessary to further” its interests in safety and aesthetics.

The City is entitled to summary judgment on Plaintiffs’ claims under the US Constitution. Nor have Plaintiffs given the Court reason to strike the ordinance under the Montana Constitution; indeed, they do not address the state constitutional issues.

Palmer and Carwerks v. Missoula, 44 MFR 39, 4/4/17.

Terry Wallace (Wallace Law Office), Missoula, for Plaintiffs; William Crowley (Boone Karlberg), Missoula, for the City.

PROCEDURE: Good cause/extraordinary circumstances not shown for modifying agreed scheduling order to extend trial date… Molloy.

A schedule was reached with the consent of counsel for each party. A firm trial date was agreed to and set for 10/24/16. At the pre-trial conference counsel were given an opportunity to discuss the likely course of the case and seek accommodation for their calendars and personal commitments. Plaintiff’s counsel now wants to abandon that scheduling order and continue the trial date at least 90 days to permit the parties to resolve discovery issues. Defendant does not object. All other dates in the scheduling order have come and gone, including the 7/1/16 discovery closed date.

Rule 16(b)(4) requires “good cause” for modifying the scheduling order. “Rule 16(b)’s `good cause” standard primarily considers the diligence of the party seeking the amendment.” Johnson (9th Circ. 1992). “Moreover,”

carelessness is not compatible with a finding of diligence and offers no reason for a grant of relief. Although the existence or degree of prejudice to the party opposing the modification might supply additional reasons to deny a motion, the focus of the inquiry is upon the moving party’s reasons for seeking modification…. If that party was not diligent, the inquiry should end.

LR 16.3(b)(1) also requires “extraordinary circumstances” and notes that “requests for continuances of trial will not be routinely granted.”

The 12/11/15 scheduling order set a discovery deadline of 7/1/16, a motions deadline of 7/29/16, and a trial date of 10/24/16. It provided that:

The parties may stipulate to the extension of any of the above deadlines that precede the motions deadline, without a court order. However, parties seeking a continuance of the motions deadline or any subsequent deadline must file a motion with the Court. Such motions will not be granted absent compelling reasons, which do not include delay attributable to the parties’ stipulated extensions.

Plaintiff submitted her combined discovery requests 3/24/16 with responses due 4/30. However, by agreement of the parties, Defendant did not answer the discovery requests until 6/30, 1 day before the close of discovery. They are now conferring about disagreements regarding Defendant’s responses, and neither has begun depositions. Of particular concern to Plaintiff’s counsel is the cost of video depositions, which he claims may be twice as expensive as routine depositions. As a result of the agreed delay, Plaintiff’s counsel now insists that the remaining deadlines cannot reasonably be met.

Counsel argue that this delay is at least partly a result of their desire to work together to avoid involving the Court in a discovery dispute. Collegiality in the practice of law is commendable but not an excuse to disregard a scheduling order. However laudable counsels’ conduct may be, it does not rise to due diligence. The scheduling order was issued nearly 7 months before the trial date. The agreed dates provided ample time to conduct discovery before the deadlines passed — deadlines to which both agreed at the pretrial conference and which are designed “to secure the just, speedy, and inexpensive determination” of this proceeding. Rule 1.

The cost of a desired form of recording a deposition does not establish a reason for delay, nor does it rise to cause necessary to justify a continuance of dates to which the parties through their counsel agreed. The FRCivP contemplate a number of inexpensive options that address the very concern expressed by Plaintiff’s counsel. “Testimony may be recorded by audio, audiovisual, or stenographic means” or “by telephone.” Rule 30(b)(3)(A), (B). The Rules thus provide inexpensive methods for depositions which should allow Plaintiff’s counsel to conduct depositions without prejudice to his client, assuming that the parties agree to discovery despite the 7/1/16 date having passed. (The parties are advised at the pre-trial conference that once the discovery date passes they are still free to continue with agreed discovery but that the Court will not entertain any discovery motions and that the close of discovery is “etched in stone” as far as the Court is concerned.)

Good cause for modification of the scheduling order has not been shown. The situation the parties find themselves in does not present the “extraordinary circumstances” required for modification of a scheduling order. Plaintiff has not shown that extraordinary discovery delays occurred despite due diligence. Neither counsel gave a reason at oral argument that keeping the earlier agreed trial date would prejudice either party. Plaintiff’s motion is denied.

DeBuff v. Walgreen, 43 MFR 394, 9/16/16.

Terry Wallace (Wallace Law Office), Missoula, for DeBuff; Kimberly More (Crowley Fleck), Kalispell, for Walgreen.

BANKING: Loan modification bait & switch negligence claims time-barred… trespass and invasion of privacy by entry onto the property survive… Christensen.

Before the Court is Bank of America NA’s motion to dismiss. Material allegations are taken as admitted and the complaint is to be liberally construed in favor of the plaintiff. Kennedy (9th Cir. 1976).

Ryan & Carey Prather bought a home in Frenchtown in the spring of 2008 for $243,079, executing a deed & note to Countrywide. Shortly after closing, Countrywide’s rights were assigned to BANA. Prathers’ initial payment was $1,868. Less than a year after closing they encountered financial difficulties when their child was born prematurely and Carey lost her job. They contacted BANA for assistance. It advised applying for HOPE for Homeowners as a preliminary step toward modification. Although they were approved for modification, BANA did not extend an offer, and then refused their further attempts to communicate about modification until 9/10 when it informed them that they were ineligible. It also advised them to apply for a modification through HAMP. They submitted 4 applications through early 2011, which BANA denied, stating that they had failed to return the requested documents, even though they had. Throughout the process BANA gave confusing and occasionally conflicting information about the status of their applications. Prathers turned to NACA in 7/11. It submitted multiple applications which were denied on the false grounds that they had failed to submit all documents. At some point BANA advised Prathers to stop making payments so they would be better qualified for HAMP. They ceased making payments. They attended a meeting with BANA in 5/12. Later that month, BANA recorded a Notice of Trustee’s sale for 10/5/12 claiming an unpaid principle of $249,911.94. It referred the loan to a foreclosure review committee 7 days later. On 6/6/12 Prathers attended a BAMA meeting at which it again advised them to stop making payments. They again complied. In 7/12 BANA informed Prathers that they were approved for a modification, but they would need to make several trial payments. The new principal would be $265,565.99 including $33,863.44 fees, costs, and delinquent & accrued interest, with a monthly payment of $1,672.08. In 11/2, following a successful trial run, BANA sent a commitment to modify their mortgage according to the same terms. Although they disliked the terms and thought BANA was responsible for most of the additional costs, they accepted the commitment, believing they had no other option. Although they have made regular payments following the modification, they have received occasional letters in which BANA represented that the modification was denied or they needed to send more documents to complete their application. Beginning in early 2013, BANA agents began entering their property to inspect and photograph their home. They felt uncomfortable with the entries and did not give consent. The entries continued until Prathers sued in 12/15. BANA seeks dismissal, arguing that Prathers’ claim for negligence is time-barred, they failed to plead duty & damages within their negligence claim, and their claims for trespass and invasion of privacy are partly time-barred and insufficiently pled.

Prathers claim that BANA breached its duty by offering the specific modification to which they agreed in 12/12, and that they realized the damages of this act only when they signed the modification, 3 years to the day before they sued, and that BANA breached its duty by engaging in bait & switch tactics beginning in 2009 and continuing well into 2015, which by itself brings their claim within the 3-year statute, and that BANA represented that the modification is “not yet complete” and since it failed to sign and return the document, it should be estopped from arguing that the modification has been accepted and is complete. BANA argues that their negligence claim necessarily accrued before Prathers signed & returned the commitment. BANA has the better argument. Its allegedly negligent conduct occurred before it offered the modification, when it counseled Prathers to stop payments and Prathers incurred interest charges. However, even if had been negligent in making the modification offer itself, a breach occurred when the offer was made. It cannot be reasonably argued that it breached its duty later by accepting Prathers’ agreement to the modification. They have not alleged damages arising from any letters BANA sent after the modification was complete, have not claimed to have been charged additional interest following the modification, have not alleged that their ownership is threatened despite compliance with modification terms, or claimed that BANA has failed to fulfill its obligations under the modification. Nor have they advanced any argument that BANA should be estopped from claiming that the statute has run because it sent letters stating that the modification is not complete. Thus as to Prathers’ claim for negligence arising from the modification, BANA’s breach occurred at the latest 11/24/12 when it offered its commitment to modify the mortgage. (The breach likely occurred earlier when it counseled Prathers to stop making payments, causing them to incur interest charges.)

Prathers argue that they could not have realized damages before they signed and returned the modification commitment 12/14/12. BANA asserts that the interest accrued in the years leading to the modification, and that the modification simply mitigated their preexisting liabilities. Prathers suggest thatPederson (Mont. 2012) stands for the proposition that damages stemming from a loan agreement are never realized until the agreement is perfected by the lendee’s signature. However, Pedersons’ alleged injury arose from the high interest rate and short term of the loan, while Prathers’ arose when interest accrued on their mortgage in the time leading to the modification. When they signed the modification, they merely agreed to pay money they already owed. Their damages were realized before BANA extended the modification offer.

Prathers argue that even if their damages were realized before they signed the modification, their claim did not accrue until they sued. Because they do not dispute that BANA initiated the alleged pattern of negligence in 2009 when they first sought a modification, this theory can succeed only under the continuing tort doctrine, which “applies to a temporary injury that gives rise to a new cause of action each time it repeats.” Burley (Mont. 2012). The “dispositive factor” as to whether a tort is temporary or permanent is “reasonable abatability.” Id. The defendant’s unwillingness to correct a correctable problem may fairly be seen as the tort for statute of limitations purposes. The allegations against BANA are of a permanent tort. By the time it sent the modification offer in 11/12, the parties’ course of conduct had “stabilized” and any damages were “reasonably certain.” Christian (Mont. 2015). The Court cannot reward them for sleeping on their rights. They claim that BANA’s negligence is reasonably abatable because it can modify their loan at any time and forgive the interest charges. This misstates Montana law. If nothing more were required than ability to give the plaintiff the relief she seeks, every tort would be a continuing tort and the policy underlying statutes of limitations would be frustrated.

Because Prathers’ negligence claim is time-barred, their claim for punitives fails as a matter of law.

BANA argues that Prathers failed to set forth sufficient allegations to support trespass. The parties do not dispute that the deed allows it to inspect the property if it is vacant or abandoned or if the loan is in default. Prathers suggest that the loan was not in default. (Whether it was in default after they agreed to the modification is not entirely clear from the pleadings.) They also argue that even if the deed authorized BANA’s inspection, it did not allow unauthorized entry, harassment, or intimidation. They clearly allege that BANA’s agents intentionally entered the property. Branstetter (Mont. 1986). The dispute is ultimately whether the property was in their “exclusive possession” such that its entries were unlawful. Id. Both parties cite this Court’s order in Paatalo (D.Mont. 2012) in which the mortgagor sued the bank for trespass. Because there was no dispute that the loan was in default, the bank was entitled to summary judgment. It remains disputed whether Prathers defaulted after the modification and whether the deed authorized the entries by BANA’s agents. Prathers have raised a plausible claim for trespass.

BANA argues that Montana does not recognize “intrusion of privacy,” or that if it is actually a claim for invasion of privacy it should be dismissed because the deed authorized its entry. Prathers agree that their claim is for invasion of privacy and argue that it should go to a jury to determine whether BANA’s entries and their resulting emotional distress were reasonable. The claim is conjoined with their trespass claim. They allege that BANA agents entered without their consent to take pictures of the house, at times when their children were in the yard or when they had recently left. They claim to have been harassed, resulting in tension, anxiety, distress, and humiliation. Montana law allows recovery for invasion of privacy from one who “wrongfully intrudes into one’s private activities in such a manner as to outrage or cause mental suffering, shame, or humiliation to a person of ordinary sensibilities.” Kandarian (Mont. 1994). Montana’s recognition of the tort derives from Housh (Ohio 1956) in which an overzealous creditor made frequent calls to the plaintiff, her employer, and her rooming house as part of a “pattern to harass and humiliate the plaintiff and cause her mental pain and anguish and cause her emotional disturbance for the purpose of coercing her to pay the debt.” Prathers have brought a plausible claim for invasion of privacy. A dispute remains as to whether BANA had a right to enter the property, and in any event, such a right would not excuse its actions if they rose to harassment. It is not incredible that a creditor’s entries on one’s property would be embarrassing to the ordinary person. Factual disputes remain as to whether those entries were wrongful, whether they were intrusions on Prathers’ private activities, and whether they would disturb the emotions of one of ordinary sensibilities.

Prather v. Bank of America, 43 MFR 373, 8/22/16.

Brian Miller (Morrison, Sherwood, Wilson & Deola), Helena, for Prathers; Mark Etchart (Browning, Kaleczyc, Berry & Hoven), Helena, for BANA.