ELECTIONS: Election-eve request for preliminary injunction against enforcement of political committee disclosure laws denied… Christensen.

The 3-member board of Montanans for Community Development decided 8/28/14 to circulate 2 flyers that mention Billings-area Montana legislative candidates with photos of Joshua Sizemore and Mary McNally and expressing support for the agenda of the Institute for 21st Century Energy and criticizing “environmentalists.” MCD does not intend to report its spending on the flyers, and will not mail them if it is required to comply with Montana’s election disclosure laws. It requests a preliminary injunction enjoining COPP Motl, AG Fox, and L&C Atty. Gallagher from enforcing the disclosure laws and a declaration finding them unconstitutional. The requested relief is breathtaking in its scope and, on the eve of the midterm election, would leave COPP with essentially no laws to enforce and no powers of enforcement.

MCD’s motion for preliminary injunction is denied. Montana’s political committee definitions and disclosure requirements are constitutional on their face and as applied to MCD. In Montana, the public’s right to know who is financing campaigns vastly outweighs the minimal burden imposed by the political committee disclosure requirements. None of the preliminary injunction factors weighs in favor of MCD.

Montanans for Community Development v. Motl, Fox, Gallagher, 42 MFR 92, 10/22/14.

Anita Milanovich, Bozeman, and James Bopp & Justin McAdam, Terre Haute (Bopp Law Firm), for MCD; Asst. AGs Michael Black, Patrick Risken, and Sarah Clerget.

REAL ESTATE: Freddie Mac, as possessor of property where Plaintiff fell through basement access, had duty to use ordinary care in maintaining the property in a reasonably safe condition and warn of hidden/lurking damages… unrelated buyer’s agents who had previously seen the opening did not have a duty… Molloy.

Sheri Young was visiting a residential property in Hot Springs 2/1/12 to potentially buy it as an investment. While viewing the interior of the house she fell down an unmarked/uncovered 2×3 basement access door in the middle of the floor of the utility room as she was walking across the room. On 1/30 or 1/31, while showing the property to clients unrelated to this litigation, Trudy Berge of Century 21 and Janell Clarke of Keller Williams had witnessed the uncovered access; neither closed the door or covered the opening. Freddie Mac was the owner, and pursuant to a Master Listing Agreement, Flathead Land & Home was responsible for sale, management, maintenance, preservation, and inspection of unsafe conditions. Young sued Freddie Mac, Flathead Land & Home and Dusty Dziza, Berge and Century 21, and Clarke and Keller Williams. She seeks summary judgment holding Freddie Mac liable for negligence. Berge and Clarke request summary judgment on the basis that they did not owe a duty of care.

Young’s motion for summary judgment is denied. Freddie Mac was the undisputed owner of the property and as a matter of law had a duty to use ordinary care in maintaining it in a reasonably safe condition and warn of any hidden or lurking damages. However, whether it breached this duty is a question of fact. Contrary to Young’s assertion, this is not an instance “when reasonable minds cannot differ and questions of fact can be determined as a matter of law.” The facts are analogous to Brown (Mont. 1995) in which a substitute newspaper carrier fell when he missed a step in a sidewalk. Brown reiterated the general rule that what constitutes reasonably safe premises is a question of fact and concluded that reasonable minds could differ on whether the home owner should have illuminated the approach to his home or warned of the danger. Limberhand (Mont. 1985) similarly found that a material fact issue existed as to whether an open & obvious irrigation ditch could present sufficient danger to persons using the landowners’ property so that by not taking remedial or warning measures the owners may have breached their duty to keep the premises reasonably safe. Reasonable minds could differ as to whether the uncovered opening here was a condition making the premises unsafe and as to what remedial steps Freddie Mac was reasonably required to take. There is also a material fact question as to whether the uncovered access was an obvious condition. If it was a known or obvious condition and the Plaintiff was foreseeably on the premises, Freddie Mac can escape liability unless it should have anticipated the harm despite such knowledge or obviousness. Richardson (Mont. 1997). Young contends that she did not see the opening and was not aware that it was there, but testified in her deposition that she had an unobstructed view of the room. Berge and Clarke testified that the opening was easily noticeable. Whether Freddie Mac should have anticipated that one unfamiliar with the residence would see the opening and avoid it — and therefore avoid injury — is a fact question for the jury, not the Court. Brown; Richardson (whether the possessor should have anticipated the harm depends on the “degree of ordinary care which reasonable persons would use under the same or similar circumstances”). Young argues that Freddie Mac cannot avoid its duty by hiring Flathead Land & Home to maintain the property. While that does not obviate Freddie Mac’s duty to Young, it may speak to whether it fulfilled that duty. Contrary to Young’s contentions, reasonable minds can differ as to this issue.

Berge and Clarke did not owe a common law duty to Young, Flathead Land & Home, or Freddie Mac. Some jurisdictions have found that the duty of care when the alleged tortfeasor is the possessor of property extends to a real estate agent. Others have associated such a duty with a real estate agent’s relationship with a client, exclusive right to the property, contractual duty to maintain the property, and/or extensive knowledge of the property. Berge and Clarke had no discernable relationship with either the property or Young. They were not the possessors, did not have contractual rights to it, were given no specific opportunity to inspect it, and did not interact with Young. Their mere observation of the condition is insufficient to give rise to a duty. Although Schuff (Mont. 2002) held that a tortfeasor’s duty must be considered in light of his knowledge of the danger, knowledge by itself does not create the relationship upon which the duty is premised. Unlike Schuff, where the injured party was on a boat and the driver’s negligent act of driving over rocks led to the injury, there is no indication that Berge or Clarke created or caused the condition that resulted in injury. There is no indication that buyer’s agents are held to a higher standard of care vis-à-vis a listing agent/owner or a potential purchaser under the common law. Unlike seller’s agents, buyer’s agents have no control of the premises and have limited access. Realistically, a buyer’s agent has no greater control over the property than a potential buyer, and buyer’s agents and potential buyers are equally able to discover and avoid dangers. Absent a duty in the first instance, actual knowledge and foreseeability of the injury alone are insufficient to establish liability by Berge and Clarke. The hypothetical that comes to mind is that of one walking down the street who notices an uncovered man-hole. The person knows that it is likely and foreseeable that some passerby could walk into it and be harmed, but the person generally does not a duty to do anything to prevent this foreseeable injury unless she undertakes some remedial effort. Nor does public policy support imposition of a duty here. The uncertainty surrounding the nature of potential conditions and buyer’s agents’ limited access to properties (and complete lack of exposure to most of the potential purchasers) make imposition of a duty unwise. Such a notion would shift the duty to maintain a property in a safe condition from the party with the power and ability to do so to any interested visitor. Montana law places the duty of care squarely on the owner/possessor of the property, Richardson, who likely maintains insurance for this type of eventuality.

Nor do the facts trigger a statutory duty by Young. The statutes cited by Young and Flathead Land & Home reference general liability for negligence as it relates to willful acts, MCA 27-1-701, and duties owed by a buyer’s agent to the seller and the seller’s agent, MCA 37-51-313(5). The duties arising under 37-51-313(5) regard adverse material facts that may affect the buyer’s ability to purchase a property, not the property’s physical condition. Absent duty, summary judgment for Berge and Clarke is appropriate.

Young v. FHLMC, Flathead Land & Home (Dziza), Century 21 Real Estate, Berge, Keller Williams Realty Northwest Montana, and Clarke; FHLMC v. Dziza and Flathead Land & Home; 42 MFR 80, 10/15/14.

Lindsay Beck & Monte Beck (Beck & Amsden), Bozeman, for Young; Stephanie Hollar (Smith, Walsh, Clarke & Gregoire), Great Falls, for Freddie Mac; Angela Jacobs, Benjamin Hammer, and Todd Hammer (Hammer, Jacobs & Quinn), Kalispell, for Flathead Land & Home & Dziza; Robert Phillips & Christopher Fagan (Phillips Haffey), Missoula, for Berge and Century 21; William Ballew (Spoon Gordon Ballew), Missoula, for Clarke and Keller Williams.

INSURANCE: General contractor is “additional insured” under subcontractor’s CGL/umbrella policies, insurers have duty to defend subcontractor’s employee’s injury claim arising out of gas line rupture… Molloy.

WBI entered into a construction agreement with ProPipe in 8/08 to replace a gas pipeline in Richland Co. ProPipe subcontracted with Underground Boring. ProPipe was required under the construction contract to maintain liability insurance. ProPipe procured a CGL policy through Colony and a commercial excess/umbrella policy through National Union. ProPipe employee Dave Shanks ruptured an active gas line with his backhoe 11/10/08 which caused a blast wave that injured him. He sued WBI and Underground Boring in State Court. WBI tendered the claim to ProPipe and its insurers, insisting that WBI is an “additional insured” under both policies and that Shanks’s claim is covered by the construction agreement and policies. Colony denied any obligation to defend or indemnify WBI, and NU did not respond. WBI began defending the underlying suit and on 6/26/12 filed this declaratory action.

WBI is an additional insured under the Colony policy. Colony argues that the insurance provision of the construction agreement is ambiguous because it does not specify the minimum coverage ProPipe was to obtain and references Insurance Form 21160 which WBI failed to attach to the agreement. However, the common sense meaning of the insurance provision is ProPipe’s obligation to maintain coverage to protect WBI against liability for damages arising out of the project, regardless of the minimum coverage required by Form 21160. Colony also insists that the construction agreement required ProPipe to procure coverage for WBI with respect to liability for ProPipe’s negligence, not WBI’s own negligence. Regardless, it obligates ProPipe to procure coverage to protect WBI against liability for damages for the injury of any person “arising in any way out of, in connection with, or resulting from the work or construction provided by [ProPipe].” Colony asks the Court to create a limitation on the provision, but the language is “clear and unambiguous.” Burrell (Mont. 2010). It does not require negligence on the part of any particular party.

Because WBI is an additional insured under the Colony policy, it is also an additional insured under the NU policy. The Colony policy is listed in the Schedule of Underlying Insurance in the NU policy, which follows the terms of the underlying Colony policy. NU insists that WBI cannot qualify as an additional insured under the Colony policy because ProPipe was not required to name WBI as an additional insured where the construction agreement required only that ProPipe “maintain … minimum insurance coverage … to protect [WBI] against liability in connection with ProPipe’s work.” NU avers that “an agreement to maintain insurance that will protect an entity is not an agreement to name that entity as an additional insured under an insurance policy.” However, unlike RCS (Mass.App.Ct. 2009), which it cites, ProPipe did add WBI as an additional insured on the polices, and ProPipe does not contest that it was required to do so. While the construction agreement does not explicitly state that ProPipe must name WBI as an additional insured on its general liability policies, even construing the ambiguity against WBI instead of ProPipe, the Certificate and affidavit of ProPipe’s Project Manager and WBI’s Pipeline Engineering & Integrity Manager are sufficient to show intent of the parties to have WBI added as an additional insured. Scentry Biologicals (Mont. 2014). As strangers to the construction agreement, Colony and NU have no basis to challenge the intent of ProPipe and WBI in executing the agreement. United National (Mont. 1996).

Colony insists that it did not have a duty to defend WBI because Shanks’s claim unequivocally does not fall within the policy coverage. The cornerstone of its argument is its assertion that the complaint does not allege that WBI is vicariously liable for any actions of ProPipe or those acting on ProPipe’s behalf, but only that WBI is liable for its own acts or omissions. Its position that its additional insured endorsement does not cover the factual scenario that multiple parties, including the additional insured, may have contributed to Shanks’s injuries creates an ambiguity in its own policy, which can be construed against it. The background of the endorsement supports the conclusion that it does not restrict coverage solely to WBI’s vicarious liability for ProPipe’s acts or omissions. According to WBI, it is a form endorsement published by the Insurance Services Office, which provides that “caused, in whole or in part, by” means that the “acts or omissions of the additional insured can be a concurrent or contributing cause of the injury or damage, but a direct causal link to the named insured must be made.” Steadele (Mont. 2011). “Not only must the additional insured not be the sole cause of injury or damage, but the named insured must be at least a partial cause.” Id. This interpretation is supported by ProCon (D.Me. 2011) and Plum Creek (Mont. 2009). Because Shanks alleged that the acts or omissions of Underground Boring, an entity acting on behalf of ProPipe, was at least a partial cause of his injuries and that WBI was a contributing cause — but not the sole cause — the additional insured endorsement in the Colony policy does not preclude coverage.

Colony argues alternatively that coverage is precluded by the contractual liability exclusion: “This insurance does not apply to … `bodily injury’ or `property damage’ for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement.” However, it further states: “This exclusion does not apply to liability for damages … assumed in a contract or agreement that is an `insured contract.”’ The parties have briefed at length whether the construction agreement’s indemnification provision renders it an “insured contract” as defined by the policy. Yet, as WBI highlights, the contractual liability exclusion pertains to claims for contractual indemnity and is independent of Colony’s duty to defend WBI as an additional insured. Nevertheless, the construction agreement is an “insured contract” because the agreement pertains to ProPipe’s business, ProPipe assumed the tort liability of WBI to pay for bodily injury to a 3rd person, and Shanks’s injuries were allegedly caused in whole or in part by Underground Boring while acting on ProPipe’s behalf. Unlike cases cited by Colony in which the injured employees did not allege that the subcontractor or subcontractor were negligent and do not discuss insured contract status, the indemnity provision here is clear in that it holds WBI harmless from “any danger … by reason of any and all accidents … in any manner connected with said work … of [Pro Pipe], or any subcontractor.”

The Court rejects Colony’s argument that coverage is precluded by comp exclusivity. Nothing in MCA 39-71-411 precludes a party from being covered as an additional insured under an employer’s policy. Liberty Mutual (9th Cir. 2012).

Like Colony, NU insists that although “vicarious liability imputed to the putative additional insured for the conduct of the named insured falls within the scope of additional insured coverage … liability caused by the putative insured’s own negligent conduct is not covered.” The cases it cites are either distinguishable or inapposite. Again, both requirements of the endorsements are met where Shanks alleges that Underground Boring’s acts & omissions caused, at least in part, his injuries, and he does not allege that WBI’s acts & omissions were the sole cause. NU would also have the Court read into the policy a vicarious liability limitation, which is not justified.

NU ultimately concedes that where Colony owes a duty to defend, it too owes a duty to defend. But it argues that it does not owe WBI a current duty to defend unless and until Colony’s limits are exhausted. Such a position is not without risk. A determination on allocation of defense costs between Colony and NU is reserved pending further briefing on this issue and further notification of the status of the underlying suit.

Because the Court is unaware of any determination of WBI’s liability in the underlying suit, resolution of the indemnity obligation of Colony and NU is premature.

WBI Energy Transmission v. Colony Ins. and National Union Fire Ins., 42 MFR 56, 9/29/14.

Eric Henkel & Fred Simpson (Reep, Bell & Laird), Missoula, for WBI; Brian Taylor (Hall & Evans), Billings, for Colony; Amy Duerk & Robert Phillips (Phillips Haffey), Missoula, Joseph Lang (Bates Carey Nicolaides), Chicago, and Matthew Fink (Nicolaides Fink Thorpe Michaelides Sullivan), Chicago, for NU.

JUDICIAL STANDARDS COMMISSION preliminarily enjoined from contempt proceedings if Plaintiff discloses complaint against Judge and letter notifying of dismissal… Christensen.

Dan Cox, Libertarian nominee for US Senate in 2012, filed a complaint with the Judicial Standards Commission against a state district judge in 6/13. The JSC determined that no ethical violation or misconduct in violation of the CJE had occurred and dismissed the complaint. It reminded Cox of its Rule 7(c) confidentiality requirements adopted pursuant to MCA 3-1-1105(2). Cox’s attorney asked the JSC if it intended to subject Cox to contempt proceedings if he published his complaint and letter informing him of the dismissal. The JSC responded that it would appoint a judge to conduct a contempt hearing if Cox breached confidentiality of the complaint. Cox intends to seek recall of the judge named in the complaint as well as oppose the judge if he/she seeks reelection, and desires to publish the complaint and JSC letter as part of his election efforts, but will not do so while there remains a contempt threat. He requests a preliminary injunction to enjoin the JSC from prosecuting him for publishing the complaint and letter.

Cox makes a colorable claim that his 1st Amendment rights have been infringed. He is restricted by threat of civil or criminal prosecution from criticizing government officials and a government body for political reasons. Political speech “occupies the core of the protection afforded by the First Amendment.”McIntyre (US 1995). Defendants fail, under strict scrutiny, to justify the restrictions on his speech. They assert state interests favoring confidentiality including that it encourages filing of complaints and protects against possible judicial recrimination, protects judges against unwarranted complaints, maintains confidence in the judiciary by avoiding premature announcement of frivolous complaints, and facilitates the JSC’s work by allowing judges faced with justified complaints to resign or retire. These are the same interests advanced by the losing party in Landmark Communications (US 1978). Montana, like Virginia, has an interest in protecting the reputation of its judges and enhancing the public’s perception of the judiciary. However, USSC cases have clearly established that injury to official reputation is not a basis for “repressing speech that would otherwise be free.” Sullivan (US 1964).

Defendants make little attempt to independently meet their burden of proof. Critically, none of the cases they cite, nor any the Court can find, provides any support for their position that a perpetual ban on Cox publishing his dismissed complaint and the dismissal letter is consistent with 1st Amendment rights. Indeed, the case which appears to provide them the most promise, Kamasinski (2nd Cir. 1994), makes absolutely clear that such a perpetual ban violates the 1st Amendment. It held that a limited ban on disclosure of the fact of filing a complaint or the fact that testimony was given was consistent with the 1st Amendment, but only while an investigation was ongoing. “Once the JRC has determined whether or not there is probable cause that judicial misconduct has occurred, even Connecticut’s most compelling interests cannot justify a ban on the public disclosure of allegations of judicial misconduct.”Id. Other courts have come to the same conclusion. The JSC concedes that Cox may freely criticize the judge and publicly raise the same issues, subject to defamation laws, but maintains that state interests are served by prohibiting him from disclosing existence of the complaint and its dismissal. Even case law cited by Defendants is directly at odds with their position. The Court concludes that Cox is likely to succeed on the merits of his as-applied challenge.

Defendants’ argument that Cox cannot show irreparable harm because he can already engage in political speech in that he is free to criticize the judge in other ways and publicly disclose the substance of his complaint, not just the complaint itself, misses the point that he desires to criticize the judge and the JSC which he believes failed to adequately investigate his complaint. He apparently wants to make the case to voters that because the JSC will not remove the judge, the electoral process is the only means to accomplish this. Whether such message will persuade the voters is unclear, but it is political speech nonetheless. Defendants’ argument that the fact of filing should be confidential even while the substance of the complaint can be disclosed also undercuts their purported justification for the restriction in the first place. Stilp (3rd Cir. 2010). Cox is likely to suffer irreparable harm absent an injunction.

The Court cannot find any cases where a court has found that a plaintiff is likely to succeed on the merits of a 1st Amendment claim but then found that the balance of hardships favors the defendant, and Defendants have provided no authority supporting their position. Regardless, the balance of the hardships tips in favor of Cox. Defendants wrongly claim that confidentiality in all judicial proceedings will be lost if the Court issues the injunction. However, the motion only seeks to enjoin Defendants from contempt proceedings against him if he publishes his complaint and the dismissal letter. Defendants rightly point out the benefits to the public interest in maintaining confidentiality in judicial review proceedings generally, but the public interest in maintaining confidentiality at this stage is severely limited, while the public interest in preserving 1st Amendment freedoms in political speech is well-established.

Cox has made adequate showing on all 4 preliminary injunction factors. He may publish his complaint and dismissal letter and Defendants are enjoined from punishing him for contempt.

Cox v. JSC Members McLean, Jones, Valgenti, Murphy, and Schleif, 42 MFR 39, 9/30/14.

CERCLA: ASARCO’s request for contribution from Atlantic Richfield for $99,294,000 paid under 2009 consent decree for East Helena Site barred by 3-year statute… Christensen.

ASARCO operated a lead smelter at East Helena 1888-2001. Atlantic Richfield’s predecessor Anaconda Co. operated a zinc fuming plant on land leased from ASARCO 1927-72. ASARCO purchased the zinc plant in 1972 and operated it until 1982. Operations released numerous hazardous substances, causing EPA to add the site to the CERCLA Superfund in 1984. ASARCO and EPA entered into several consent decrees including one dated 5/5/98 that resolved claims for multiple violations of the RCRA and CWA and which transferred site-related cleanup to the RCRA program. ASARCO filed Ch. 11 in 2005. The US and Montana filed proofs of claim and entered into 2 settlements as to the East Helena Site, the 2nd of which was a consent decree in 6/09 which resolved ASARCO’s environmental labilities to the governments at several sites including East Helena and created a custodial trust and trust account for each of the Montana properties. It also required ASARCO to transfer all property rights & interests in the East Helena Site to the trust and pay $99,294,000 into the trust account for that Site. Bankruptcy Court approved ASARCO’s reorganization plan in 11/09. ASARCO filed this complaint in 6/12 seeking contribution pursuant to CERCLA for the $99,294,000. Atlantic Richfield seeks summary judgment that CERCLA’s 3-year statute for such contribution claims began to run upon entry of the 1998 decree, and that the 2009 decree does not create any specific or new obligations as to the East Helena Site that were not covered in the 1998 decree.

Because ASARCO failed to file a claim for contribution within 3 years of the 1998 consent decree, its contribution action is time-barred pursuant to CERCLA §113(g) (3)(B). The 2009 consent decree does not create any additional work or liability as to the East Helena Site outside of the 1998 consent decree, and ASARCO has failed to raise any genuine issues for trial. Dismissed.

ASARCO v. Atlantic Richfield, 42 MFR 15, 8/26/14.

Greg Evans & Laura Brys (Integer Law), LA, and Adam Duerk (Milodragovich, Dale & Steinbrenner), Missoula, for ASARCO; Randy Cox & Randy Tanner (Boone Karlberg), Missoula, William Duffy, Kenzo Kawanabe, and Ben Strawn (Davis Graham & Stubbs), Denver, and Elizabeth Temkin (Temkin Wielga & Hardt), Denver, for Atlantic Richfield.