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Estate of Naomi Killsnight-Hiwalker et al v. US
FTCA/INDIANS: Material fact issues preclude summary judgment as to discretionary function exception and contributory negligence of drivers of 2 vehicles involved in high-speed pursuit Reservation accidents… Morris.
This case arises from 2 high-speed pursuits on the Northern Cheyenne Reservation which ended in the deaths of 4 people and severe injury of several others. Plaintiffs allege that BIA Officers took actions prohibited by pursuit policies, directly caused the accidents, and violated the fiduciary duty created by the trust relationship between the US and Indian Nations. The US requests summary judgment, arguing that the FTCA discretionary function exception immunizes it from liability for the officers’ actions and that the drivers’ contributory negligence entitles the US to summary judgment. Plaintiffs filed a cross-motion for summary judgment, arguing that the discretionary function exception fails as a matter of law, contributory negligence does not apply to the US’ breach of fiduciary duty, and factual disputes preclude summary judgment as to the remaining negligence claims. The Court conducted a hearing 11/13/24.
The first accident
On 7/23/18 Dispatch received 2 calls about a red pickup driving recklessly on the outskirts of Lame Deer at 4:20 p.m. It learned that the pickup belonged to Naomi Killsnight-Hiwalker. One caller reported that “a bunch of kids” were visible in the back of the pickup. One witness who watched the pursuit from the roadside, identified the passengers as “little boys” 7 to 10 years old. Dispatch radioed officers including Lt. Randy Elliott that children had been seen in the pickup. The US disputes whether officers received this transmission.
Elliott located the pickup stopped on the side of Hwy 212 just outside Lame Deer. He pulled behind it with his lights activated to “conduct a traffic stop on a vehicle reported to be driven by an intoxicated driver.” Officers knew Killsnight-Hiwalker from previous interactions and understood her to be a compliant, nonviolent arrestee. The pickup “took off.”
Elliott and Police Chief Brandon Satepauhoodle-Mikkanen pursued. Elliott radioed Satepauhoodle-Mikkanen that he intended to pass the pickup to “try to slow them down.” Satepauhoodle-Mikkanen later recalled that he replied “copy” to indicate his approval. Neither Dispatch nor Satepauhoodle-Mikkanen recorded his response to Elliott. Satepauhoodle-Mikkanen testified that the log must have failed to record it. Lane Adams, the US’ 30(b)(6) designee, testified that the log should contain a complete transcription of all radio traffic.
Elliott drove into the oncoming lane to pass and pulled alongside the pickup. He estimated that he was traveling 75-80 mph but expert testimony based on the dashcam indicates that it was closer to 96. He made eye contact with Killsnight-Hiwalker. He reported that he pulled back “35 – 50 yards” in front of the pickup. Satepauhoodle-Mikkanen estimated that 20 feet separated Elliott and the pickup when he pulled in front of it. The expert report indicates that Satepauhoodle-Mikkanen’s dashcam footage aligns with his estimate.
The maneuver by Elliott left Killsnight-Hiwalker with the sole means of escape to drive into the left lane of oncoming traffic. She pulled sharply into the left lane, overcorrected into the right lane, and lost control. Frame-by-frame analysis of Satepauhoodle-Mikkanen’s dashcam revealed that Elliott’s brake lights activated as he pulled in front of the pickup immediately before Killsnight-Hiwalker lost control and crashed. He reported that he merely took his foot off the accelerator. Call logs from responding MHP officers indicated that he had “boxed in” the pickup to stop it and described his actions as a “boxing maneuver.” The pickup rolled several times.
Killsnight-Hiwalker and her brother Morningstar Killsnight were ejected and died at the scene. The other adult, Shanda LaFranier, was also ejected but survived with severe injuries. The 3 minors in the backseat — 2 of whom were Killsnight-Hiwalker’s children and one of whom was 6 — survived with serious injuries. Killsnight-Hiwalker’s autopsy showed .485 BAC, THC, and ibuprofen. Expert analysis of the crash indicates that Elliott’s maneuver would not have allowed an unintoxicated driver sufficient time to react. The expert opined that Killsnight-Hiwalker exhibited a comparable reaction time to an unintoxicated driver.
The second accident
On 1/4/19 BIA Officer Stephen Stallings was parked outside Lame Deer on Hwy 212 when a Cadillac sedan drove by at 93 mph in a 65 zone. He activated his lights and sirens but the Cadillac failed to yield. He knew it belonged to Iva Joe Little Head because he had seen it parked at that residence. He pursued and the Cadillac accelerated to 110 mph. Stallings testified that he lost sight of it for up to 10 seconds at a time as it drove over hills and around corners between Lame Deer and Busby. He could not recall whether it turned off its lights at one point or if he lost sight of it due to the distance. He followed it for more than 20 miles.
Stallings reported “really light or no traffic” and “maybe 1 or 2 vehicles” on the highway. In fact, he drove past 15 vehicles during the pursuit. He requested all available assistance and that spike strips be placed as he drove into the Crow Reservation. Crow Agency Lt. James Tomahawk responded that he would set the strips at mile marker 8. Stallings continued to pursue the Cadillac.
Stallings again lost sight of the Cadillac as he ascended a hill between mile markers 10 and 9. When he crested the hill he could not “see anything on the road, like any taillights or anything.” He slowed and noticed 2 vehicle tracks in the snow. He located the Cadillac with the help of another officer. It had rolled and ejected 2 of its 3 occupants.
Stallings testified that he found Miracle Lockwood in the driver’s seat area. She crawled out the driver’s window. She said Nichole Costa was driving and that she (Lockwood) was in the front passenger seat with her seatbelt on. She survived with serious injuries.
Ko.K, one of the children who survived the accident in the red pickup, was ejected from the Cadillac, partially decapitated, and killed. Costa was also ejected with catastrophic injuries and later died. Hospital tests showed that Costa had .072 BAC a few hours after the accident and tested positive for meth.
BIA pursuit policy
The 30(b)(6) designee testified that 3 sources govern BIA pursuit policy: the 2015 edition of the BIA Handbook, DHS’s pursuit training guidelines, and Interior Department’s pursuit policy. The Handbook classifies pursuits as “use of force” and requires officers to evaluate each pursuit upon the same “objective reasonableness standard” applicable to any other use of force and:
OJS officers should make every reasonable effort to stop traffic violators. The protection of life, both civilian and law enforcement, is the foremost concern that governs this policy. Officers must balance the need to stop a suspect against the potential threat to themselves and the public created by a pursuit or apprehension.
The Handbook also notes that “no set of guidelines can address all possible circumstances so officers are expected to evaluate their actions based on whether the potential benefits outweigh the risks that are involved.” “In most instances the officer should discontinue attempting to stop the vehicle, unless pursuit guidelines are applicable.”
The Handbook contains numerous policies requiring officers to take certain actions after initiating a pursuit including “notify dispatch” of key information such as the number and description of vehicle occupants. It casts these directives in mandatory language: officers “will,” “must,” or “may not” take certain actions. One instruction mandates that a supervisor “will immediately terminate the pursuit” when it fails to comply with the Handbook’s “requirements” or when the risks of pursuit prove greater than the risk to the public created by delaying capture. Officers “will maintain proper spacing between the vehicles to allow proper braking and reaction time in the event that the lead vehicle stops, turns, or slows.” The “pursuing officer will terminate the pursuit when he/she loses sight of the fleeing vehicle for any extended period of time.”
The 30(b)(6) designee on law enforcement policy & procedure testified that BIA policy does not authorize a deadly force maneuver against a vehicle carrying children. “If the officer knows there’s 3 children in the vehicle and the supervisor knows also, they should terminate pursuit.” Use of deadly force against a 6-year-old passenger of a fleeing vehicle is prohibited. BIA policy does not permit a “boxing-in” maneuver, a “tactic designed to stop a suspect’s vehicle by surrounding it with law enforcement vehicles and then slowing all vehicles to a stop.”
The DHS training policy states that “officers should not attempt to pass the suspect vehicle or pull alongside.” BIA policy indicates that officers should consider terminating the pursuit if they lose sight of a vehicle for “more than a second or two.” Satepauhoodle-Mikkanen testified that “if the driver is known to us, there’s no need to pursue them. We’ll simply request a warrant.”
The discretionary function exception
The FTCA permits one to sue the US “under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.” 28 USC 1346(b). It imposes government responsibility for damages caused by the “misfeasance of employees in carrying out the US’ work.” Dalehite (US 1953). It aims to “establish consistency between the liability incurred by individuals and by the government for the commission of tortious acts.” Faber (9th Cir. 1995).
The discretionary function exception restores government immunity for an employee’s acts in “fulfillment of a broad policy-making duty” when the employee exercises or performs a “discretionary function or duty.” Id. This exception applies if “(1) the act or omission on which the claim is based ‘involves an element of judgment or choice’; and (2) ‘that judgment is of the kind that the discretionary function exception was designed to shield.'” Miller (9th Cir. 2021) (quoting Gaubert (US 1991). The discretionary function exception “applies only to conduct that involves the permissible exercise of policy judgment.” Berkovitz (US 1988) (emphasis added).
The US argues that the officers weighed public policy factors and correctly concluded that public safety weighed in favor of continuing the pursuits. Plaintiffs argue that the BIA’s objective standard for use of force during a pursuit, although based on several circumstance-specific factors, does not involve the kind of broad policymaking discretion immunized by the discretionary function exception. At this stage, material fact issues prevent the Court from determining whether the discretionary function exception applies or does not apply as a matter of law.
The parties dispute whether the circumstances of these pursuits mandated a specific, proscribed course of action and whether the officers violated that mandate. For instance, officers “will” maintain proper spacing between vehicles and terminate the pursuit if the officer loses sight of the vehicle for an extended time. Killsnight-Hiwalker maintains that Elliott left only 20 feet between the red pickup and his vehicle but Elliott testified that he believed it was 35-50 yards. Stallings lost sight of the Cadillac for up to 10 seconds at a time, but the parties dispute whether this constitutes an “extended period of time” that would require him to terminate the pursuit. The parties dispute the nature of Elliott’s “boxing-in” maneuver, whether his supervisor approved it, and whether the officers know that the red pickup carried children. Most importantly, they dispute whether these specific directives outweigh the Handbook’s more general grant of discretion for officers to “evaluate their actions based on whether the potential benefits of their actions outweigh the risks that are involved.” Material fact disputes prevent the Court from determining as a matter of law whether the discretionary function exception shields the US from liability and prove more appropriate for resolution at trial.
Contributory negligence – first accident
A plaintiff’s contributory negligence bars recovery only if the plaintiff’s negligence exceeded 50% of the fault. Larchick (Mont. 2009). Killsnight-Hiwalker offered expert testimony that Elliott’s maneuver directly caused the rollover of her vehicle. She admittedly was intoxicated. She presented evidence that she remained in control of the vehicle until Elliott passed into oncoming traffic, pulled sharping in front of her, left her only 20 feet in which to react, and slammed his brakes at speeds close to 100 mph. She alleges that BIA policy prohibits these actions due to the danger they pose to officers, fleeing drivers, and the community. Material fact issues prevent the Court from determining whether Killsnight-Hiwalker acted more negligently than the US as a matter of law.
Contributory negligence – second accident
The US filed a 3rd-party complaint for contribution against Lockwood alleging that she “may have been the driver of the vehicle being pursued,” she “had duties to the passengers in the vehicle she was driving,” she “violated the standard of care and negligently caused” the wreck, and her “negligence was the cause of the injuries to the other passengers.” It served her with a summons 1/16/23. She filed no responsive pleading. The US moved for entry of default against her 2/12/24. The Clerk entered the default 2/14. The US has not yet sought entry of judgment from the Court to determine damages.
The US now argues that “there is no genuine dispute that Costa was the driver in the second pursuit” and that the entry of default against Lockwood represents “nothing more than a possibility, a placeholder in the event the government wishes to pursue contribution against the driver in the second pursuit.” A default represents a binding adjudication of liability, not simply a placeholder. The US did not merely “wish” to pursue a contribution claim against Lockwood sometime in the future; it already has pursued this claim against her.
Moreover, to plead alternative claims for the contributory negligence of both people as potential drivers of the same vehicle would be inappropriate at the summary judgment phase. Unlike NextWave Marine (D.Or. 2020), the US does not plead separate theories of recovery, but rather separate and inherently incompatible factual bases for that recovery. It cannot argue in seeking summary judgment that Costa undisputably drove the Cadillac when it has obtained a default judgment that Lockwood drove it. It likewise cannot claim on summary judgment that no dispute exists that Costa’s alleged negligence as the driver so exceeded that of the officers as to prevail on its contributory negligence claim.
Rule 11(b)(3) requires parties to have evidentiary support, or the reasonable expectation of it, for factual allegations. The Court assumes that the US had evidentiary support to interplead Lockwood and pursue default against her as the driver of the Cadillac, and that this evidence, rather than its desire to establish an “insurance policy” against a potential loss, supports its pleadings.
In any case, whether Lockwood or Costa drove the Cadillac remains disputed, and this disputed fact remains material to establishing contributory negligence. Stearney (D.Ariz. 2019) proves informative. BIA officers responded to reports that a drunk driver in a truck ran a stop sign and caused a hit & run. The driver hit another vehicle during the pursuit, killing himself and 3 others. The district court concluded that the officer should have terminated the pursuit when all factors weighed against continuing it or were neutral. The officer followed the truck “at an average speed of 94 miles per hour for 24.6 miles with his lights and siren activated” even though it was “immediately apparent” that the officer could not overtake the truck while it was moving at more than 100 mph. The officer also “knew the truck’s owner and suspected, correctly, the identity of the driver. The district court allocated 10% of the fault to the US and 90% to the drunk driver who hit the plaintiffs’ vehicle. These factual determinations rely on the detail provided by trial. Unlike in Stearney, the US has not yet proven the identity of the driver of the Cadillac, whether the driver was impaired, or whether the driver’s actions prove more negligent than those of the officers. Material fact issues prevent summary judgment based on the Cadillac driver’s alleged contributory negligence.
The US’ motion for summary judgment is denied. Plaintiffs’ cross-motion for summary judgment is denied.
Estate of Naomi Killsnight-Hiwalker et al v. US, 45 MFR 7, 1/2/25.
John Amsden, Justin Stalpes, Sydney Best (argued) and Sam Johnston (Beck, Amsden, and Stalpes), Bozeman, and Dan Spoon & Bryan Spoon (Spoon Gordon), Missoula, for Plaintiffs; AUSA John Newman (argued), Mark Smith, and Abbie Cziok.
Lawson v. Federated Rural Electric Ins. Exchange and Federated Rural Electric Management Corp.
INSURANCE BAD FAITH: Amendment to add NIED and IIED to third-party bad faith claims not precluded by MCA 33-18-242(4) (2023) or futility… Johnston.
NorVal Electric Cooperative paid a total of $1,702,148.43 damages to former office manager Shalaine Lawson based on her claims that General Manager Craig Herbert subjected her to sexual comments and touching which escalated during a business trip when he suggested that they meet in his hotel room and when she sought to report his conduct he made escalating threats against her job and NorVal blocked her from complaining to other than him. Under a consent decree in a separate EEOC case approved 4/29/24, NorVal is to pay $50,000 punitives to Lawson.
Lawson then sued Federated Rural Electric Ins. Exchange and Federated Rural Electric Management Corp. asserting in her complaint filed 3/5/24 violation of §33-18-201, common law bad faith, and negligence in connection with their handling of her claims. She now seeks to add additional causes for NIED and IIED. Federated argues that MCA 33-28-242(4) (2023) precludes such claims. Lawson argues that it does not retroactively apply to her claims of negligent and intentional infliction of emotional distress. She relies on a recent order from Judge Morris in Dzintars v. Fireman’s Fund in support of her argument.
In Dzintars, Morris denied a Rule 12(b)(6) motion to dismiss plaintiffs’ claims for common law bad faith, NIED, and IIED, finding that the Legislature’s 2023 amendment to MCA 33-18-242 did not retroactively apply to such claims. The Legislature added a new subsection (4) that provides:
A third-party claimant who has suffered damages as a result of the handling of an insurance claim may bring an action against the insurer for fraud or pursuant to this section, but not under any other theory or cause of actions. A third-party claimant may not bring an action for bad faith in connection with the handling of an insurance claim.
Lawson contends that her additional negligent and intentional infliction claims should be allowed based on the same reasoning.
Federated contends that Dzintars was procedural rather than substantive. However, it was based on an analysis of the retroactive application of the new MCA 33-18-242(4). Morris reasoned:
The Montana Legislature has directed that “no law contained in any of the statutes of Montana is retroactive unless expressly so declared.” MCA 1-2-109 (2023). A presumption against retroactive application of statutes exists under Montana law. Neel (Mont. 1984); see also Boettcher (Mont. 2007) (citing Anderson (Mont. 1998) (“We will not apply a statute retroactively unless the Legislature clearly expresses its intention of such retroactive application.”). “Substantive rights between parties to an action are determined by the law in effect on the date of the injury.” Anderson (citing Cadwell (Mont. 1987)).
The Montana Legislature enacted MCA 33-18-242(4) in 2023 S.B. 165. The statute’s language does not specify that the Montana Legislature intended the statute to apply retroactively. Id. The new law prohibits the assertion of common law bad faith and infliction of emotional distress claims against third-party insurers. Montana law did not bar third parties from bringing common law bad faith claims or other claims based on the handling of insurance claims until October 1, 2023. Compare MCA 33-18-242 (2021) to MCA 33-18-242(4) (2023). Plaintiffs’ claims are not barred by §33-18-242(4) because the alleged conduct and injuries occurred in 2022.
Lawson’s proposed new claims allegedly occurred before enactment of §33-18-242(4) (2023) and therefore Federated’s reliance on this new statute is misplaced. Lawson’s proposed amended claims are to be determined by MCA 33-18-242 (2021) which does not preclude claims for negligent or intentional infliction of emotion distress that she seeks to advance in her amended complaint.
Federated further argues that Lawson’s proposed amendment is futile as emotional distress damages are available based on her previously pled UTPA claims. In determining futility, courts consider whether no set of facts can be proved that would constitute a valid and sufficient claim or defense. Miller (9th cir. 1988). The no “set of facts” standard was designed to match the standard for determining sufficiency of a pleading under Rule 12(b)(6).
A complaint may be dismissed for failure to state a claim pursuant to 12(b)(6) “only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo (9th Cir. 2008). In considering whether a complaint states a claim a court must “construe the pleadings in the light most favorable to the nonmoving party,” Capp (9th Cir. 2019), accepting as true all factual allegations in the complaint and drawing all reasonable inferences in the nonmoving party’s favor, Moreno (9th Cir. 2022).
After reviewing the proposed amendments and accepting the allegations as true, the Court finds that the amended complaint sets forth plausible claims for relief and would survive a motion to dismiss.
Federated has also failed to show that it will be prejudiced by the amendment, contending only that Lawson’s claims are redundant. Although they may be redundant of her request for emotional distress damages under her UTPA claims, redundancy is not the same as futility. The Court cannot conclude that the amended complaint is futile as it cannot determine at this juncture whether she will be able to develop facts entitling her to relief on Counts IV and V of her amended complaint or whether Federated has affirmative or other defenses to these claims.
(The case settled 11/5/24 in mediation with Magistrate DeSoto.)
Lawson v. Federated Rural Electric Ins. Exchange and Federated Rural Electric Management Corp., 45 MFR 6, 11/1/24.
Todd Shea (Shea Law Firm), Bozeman, for Lawson; Randy Nelson & Tom Bancroft (Nelson Law Firm), Billings, for Federated.
Todd, PR of Estate of Bordeaux v. US
SANCTIONS: Expenses/attorney fees/costs imposed against US for sending unprepared 30(b)(6) designee to deposition relating to shooting death by BIA officers… Watters.
On 12/3/21 Northern Cheyenne Tribal member Arlin Bordeaux was shot and killed by BIA officers. According to his PR Gregory Todd, Officer Gygi was the first on the scene and emptied a can of pepper spray into Bordeaux’s face and struck him in the head with a baton. Officer Deela arrived a minute later, deployed his Taser twice, and shot Bordeaux at least twice in the back. Todd alleges that the officers failed to conform to the standard of care expected of reasonable officers.
Todd informed the BIA that he intended to depose them pursuant to Rule 30(b)(6). The US did not object and designated Officer Derris Waukazoo as the 30(b)(6) designee. The deposition occurred 9/10/24. Todd now argues that the US failed to produce an adequately prepared designee who could answer the deposition inquiries, and asks the Court to impose sanctions that will remedy the prejudice caused to him and deter the US from such conduct in the future.
Todd argues that the US failed to educate and prepare the deponent to answer the deposition topics that he had noticed: (1) hiring, retention, supervision, and training of Gygi; (2) hiring, retention, supervision, and training of Deela; (3) investigation into incidents involving force by Deela; and (4) location and contents of all incident reports and Taser cam videos involving Deela. He contends that “none of these questions were remotely answered” and “the government wasted the undersigned’s time and money through the deposition.”
The US asserts that Todd failed to satisfy his burden in noticing the deposition because he did not articulate the topics with “reasonable particularity.” It argues that his topics were “overbroad, vaguely worded, and the opposite of ‘painstakingly specific.'” Todd replied that if the US believed the topics were too vague it was their responsibility to object before the deposition.
Todd argues that a party’s failure to bring a prepared witness to a 30(b)(6) deposition is equivalent to a failure to appear and therefore sanctions are appropriate. He asks the Court to impose sanctions because “(1) the conduct at issue is egregious and indefensible; (2) the government has failed to take accountability for their sanctionable conduct; and (3) the government is a frequent litigator in this Court.” The US responded that sanctions are not appropriate because Todd failed to comply with LR 26.3(c) which requires the parties to confer on all disputed issues before filing a discovery motion. Todd argues that the US incorrectly cites LR 26.3(c) because his motion is not a Rule 26 discovery motion but a Rule 37 sanctions motion to address discovery misconduct.
Topics 1 & 2
Topics 1 & 2 of the deposition inquiry were directed at the hiring process of Gygi and Deela. When asked about the hiring of Gygi, Waukazoo responded:
I’ll start with the normal process. We’ll advertise a position. Interested applicants will apply. They’ll be interviewed by the agency. Then the interview packets are sent to our district office and the agency levels will make a recommendation.
Todd’s counsel then asked Waukazoo if he could tell them anything about the hiring of Gygi in particular. Waukazoo responded:
I don’t know unless I have their interview packet because when we do the interview packets they’re sent up to our district office and I don’t have the paperwork to look at it. So if I could see the paperwork I could tell you who did the interviews. And like I said, I could have, but I can’t remember if I was involved in his interview or not.
Todd’s counsel then asked if Waukazoo had reviewed Gygi’s employment packet in preparation for his deposition. Waukazoo replied that he did not review a hiring packet and never received a hiring packet. When asked if he had any information about the hiring of Gygi or Deela he said, “I don’t have access to their background files or anything like that.”
The US had an obligation to educate Waukazoo so he could testify on behalf of the BIA and provide binding answers to the matters in the notice. But Waukazoo did not make any effort to inquire about the hiring process of Gygi or Deela or to obtain their interview packets and could not provide information requiring the hiring process for either officer. He was not an adequately prepared 30(b)(6) deponent.
Topic 4
Under BIA policy, whenever an officer deploys their Taser they are required to prepare an incident report. The tasers are also equipped with a video camera that automatically records for 1 minute following deployment. According to Deela’s Taser Log, he deployed the Taser 57 times across 36 incidents. However, the US only produced 15 incident reports and 1 Taser cam video in discovery. Topic 4 was aimed at discovering all 57 incident reports and Taser cam videos involving Deela and at determining why only 15 reports were produced.
Topic 4 specified that there would be an inquiry into the location of all the incident reports and videos. When asked why, if Deela deployed his Taser 36 times, the BIA only provided 14 incident reports, Waukazoo responded that he was not sure why only those reports were created, he was not aware of any other reports, and he had not made any inquiries to discover why only those reports had been created.
The US contends that the topic of the “location and contents of all incident reports and taser cam videos involving Officer Deela” does not necessarily include the issue of why the US has not produced more incident reports. This argument is unconvincing as Todd had already been provided with 15 incident reports via discovery. Therefore a deposition topic aimed at the location of all incident reports can only be interpreted as an inquiry into what happened to the remaining reports.
The US had an obligation to educate Waukazoo so he could testify on behalf of the BIA and provide binding answers to the matters in the notice. But he admitted that he did not make any effort to enquire as to why incident reports had only been created for part of Deela’s Taser deployments. He was not an adequately prepared 30(b)(6) deponent.
The US cannot object to the contents of the deposition inquiry after the deposition took place
The US argues that Todd failed to satisfy his burden of specifying the topics of inquiry with “reasonable particularity.” Whitting (D.Ariz. 2013). It maintains that the topics were overbroad, vaguely worded, and the opposite of “painstakingly specific.” Todd replied that if the US didn’t understand the topics noticed they should have objected prior to the deposition and to do so now is the type of “discovery games and gamesmanship” that Rule 30(b)(6) is designed to prevent. Further, the enumerated topics were not “dragnet questions” designed to trip up the witness, but 4 simple topics that the designee was unprepared to address.
A Rule 30(b)(6) notice must describe “with reasonable particularity the matters for examination.” Pioneer Drive (D.Mont. 2009). But the US raises this argument too late. If it felt that the inquiries were “ambiguous or overly broad” they should have sought a protective order under Rule 26(c). By failing to object prior to (or even at) the deposition, it cannot attempt to excuse its inadequate preparation by now pointing to problems in the notice. Id.
Further, the Court agrees with Todd that the inquiries were not “dragnet questions.” They were straightforward and focused on the hiring process and employment actions of 2 BIA officers. Waukazoo’s inadequacy was not due to his inability to answer overbroad and vague questions, but to his failure to make an adequate effort to educate himself on the topics listed.
Availability of Rule 37 sanctions
Rule 37(d) grants courts discretion to impose sanctions if a party fails to attend its own deposition. Many courts treat failure to produce a prepared and educated 30(b)(6) witness as tantamount to a nonappearance at a deposition, meriting sanctions. If the designee “is not knowledgeable about relevant factors, and the principal has failed to designate an available, knowledgeable, and readily identifiable witness, then the appearance is, for all practical purposes, no appearance at all.” Resol. Trust (5th Cir. 1993).
Meet & confer requirement
LR 26.3(c)(1) provides that the court will deny any discovery motion unless the parties have conferred concerning all disputed issues before the motion is filed. Rule 37(b) does not contain a meet & confer requirement for motions for sanctions. Caekert (D.Mont. 2024) (citing Acosta (D.Ariz. 2018). “The rationale for this exception is that the parties would have already met and conferred before obtaining the first discovery order — which the opposing party has then [allegedly] violated — and that a second meet and confer is therefore not warranted.” Id. (citing Baicker-Mckee & Janssen Federal Civil Rules Handbook). The rationale for absence of a meet & confer requirement in Rule 37(b) justifies not imposing a meet & confer requirement on this motion.
Appropriate sanctions
Todd does not specify what sanctions he thinks are appropriate but asks the Court to impose severe sanctions because “(1) the conduct at issue is egregious and indefensible; (2) the government has failed to take accountability for their sanctionable conduct; and (3) the government is a frequent litigator in this Court.”
Rule 37(b) provides a wide range of sanctions for failure to comply with discovery orders. Sumitomo (9th Cir. 1980):
“In ascending order of harshness, the district court may: require the delinquent party or his attorney to pay the reasonable expenses, including attorney’s fees, incurred by the innocent party as a result of the failure to obey the order; strike out portions of pleadings; deem certain facts as established for purposes of the action or preclude admission of evidence on designated matters; dismiss all or part of the actions; or render a default judgment against the disobedient party.” (citing Cline (2nd Cir. 1979).
Sumitomo found severe sanctions appropriate because the government disregarded the discovery order for 18 months and sanctions had already been imposed and the “effectiveness of and need for harsh measures is particularly evident when the disobedient party is the government.”
Although the offending party here is the US, severe sanctions are not warranted. Unlike in Sumitomo, the US has not disregarded previous discovery motions nor has it already been sanctioned. The sanctions should deter the US’ conduct and remedy the prejudice it caused Todd. It must pay Todd the expenses reasonably related to the 9/12/24 deposition and reasonable costs & attorney fees incurred in bringing the instant motion. The Court will permit the parties to extend the discovery deadline if they find it necessary to take a new 30(b)(6) deposition.
Todd, PR of Estate of Bordeaux v. US, 45 MFR 5, 11/18/24.
Timothy Bechtold (Bechtold Law Firm), Missoula, and John Heenan (Heenan & Cook), Billings, for Todd; AUSA John Newman.
Dzintarses v. Fireman’s Fund Ins., Illinois Union Ins., Allied World Ins.
INSURANCE BAD FAITH: 3rd-party common law claims stemming from delayed payment of settlement of DUI bicycle death not barred under MCA 33-18-242(4) (2023)… Court adopts majority federal rule allowing pleading of punitives in initial complaint even though contrary to MCA… Morris.
Leverich Partners Inc. (“SAV”) held its holiday party 12/14/19 at an event center in Bozeman run by Baxter Main LLC. Bartenders from the Robin Bar served alcohol. SAV employee Chad Basaites consumed alcohol to intoxication and left in his Jeep around 10:30. He drifted across the fog line and struck Alexa Dzintars who was riding home from work on her bicycle. She died at the scene.
Fireman’s Fund issued a commercial liability policy to Baxter. Illinois Union issued a liquor liability policy that covered Robin Bar. Allied World issued an additional policy that covered Robin Bar.
Alexa’s parents Egon & Rita Dzintars sued Baxter, Robin Bar, Basaites, and SAV in State Court. Illinois Union and Allied World retained counsel to defend Robin Bar. The parties settled in mediation 8/17/22.
Egon Dzintars signed the release and sent it to the parties. Baxter and Robin Bar responded a week later with a new release with a term that the parties had not discussed prohibiting Dzintarses from pursuing other proceedings and restricting them from using any information in the suit to Defendants’ detriment. The mediator and Dzintarses’ counsel advised that the new term posed ethical and logistical problems.
SAV sent a settlement check 8/26/22 pursuant to the release signed by Dzintarses. Baxter, Robin Bar, and Plaintiffs agreed on 9/12/22 to a modified version of the term proposed by Baxter and Robin Bar. Dzintarses’ counsel wrote the insurers 9/14/22 and 9/19/22 advising them of their obligation to pay the settlement by 9/21/22 pursuant to the agreement. They failed to make payment by that date. Dzintarses’ counsel wrote the insurers 9/22 advising that pressuring them to agree to the new, unbargained-for release terms by delaying payment constituted bad faith.
Baxter and Robin Bar represented at a hearing on the motion to enforce the agreement that no settlement had been reached. Judge John Brown took the motion to enforce the settlement under advisement 9/27/22. Robin Bar and Baxter sent an email 2/1/24 offering to settle with the standard release previously proposed by Dzintarses. Illinois Union and Allied World sent settlement checks 2/13/24. Fireman’s Fund sent its check 3/6/24. Plaintiffs now have sued the insurers alleging unfair trade practices in violation of MCA 33-18-201, common law bad faith, NIED, IIED, and punitives.
Fireman’s Fund and Illinois Union move to dismiss for failure to state a claim. The Court held a hearing 8/26/24.
I. Whether MCA 33-18-242(4) bars Plaintiffs’ claims for common law bad faith, NIED, and IIED
MCA 33-18-242(4) (2023) reads:
A third-party claimant who has suffered damages as a result of the handling of an insurance claim may bring an action against the insurer for fraud or pursuant to this section, but not under any other theory or cause of action. A third-party claimant may not bring an action for bad faith in connection with the handling of an insurance claim.
Plaintiffs are 3rd-party claimants because they are suing the insurers of another party rather than their own insurer. Their common law bad faith claim is based on the insurers’ handling of their claim. Their claims for infliction of emotion distress likewise relate to the insurers’ handling of the claim and their failure to make the settlement payment.
Plaintiffs argue that the Legislature did not enact 33-18-242(4) until 2023 and it was not in effect at the time of the failure to settle under the agreement. They argue that the Legislature did not explicitly make it retroactive. They argue that a presumption against retroactivity supports denial of the motion to dismiss.
“No law contained in any of the statutes of Montana is retroactive unless expressly so declared.” MCA 1-2-109 (2023). A presumption against retroactive application of statutes exists under Montana law. Neel (Mont. 1984); Boettcher (Mont. 2007) (citing Anderson (Mont. 1998) (“We will not apply a statute retroactively unless the Legislature clearly expresses its intention of such retroactive application.”)). “Substantive rights between parties to an action are determined by the law in effect on the date of the injury.” Anderson (citing Cadwell (Mont. 1987)).
§33-18-242(4) was enacted in 2023. Its language does not specify that the Legislature intended it to apply retroactively. The new law prohibits the assertion of common law bad faith and infliction of emotional distress claims against 3rd-party insurers. Plaintiffs’ bad faith and infliction claims are based on conduct and injuries that occurred in 2022. Montana law did not bar 3rd parties from bringing common law bad faith or other claims based on handling of insurance claims until 10/1/23. Plaintiffs’ claims are not barred by §33-18-242(4).
The insurers alternately argue that Plaintiffs’ claims are barred under MCA 33-18-242(7)(b) & 33-18-242(8)(b). §33-18-242(7)(b) reads: “A third-party claimant may not file an action under this section until the underlying claim has been settled or a judgment entered in favor of the claimant on the underlying claim.” The insurers contend that settlement occurred when the parties signed the settlement release and payment was made in 2024.
Claims accrue when the parties exchanged the oral settlement agreement, not when payment or release was executed. Carlson (D.Mont. 1999) (aff’d 9th Cir. 2001). The parties reached a settlement agreement 8/17/22. Any claims originating from the settlement thus accrued in 2022. Plaintiffs’ claims are not barred by §33-18-242(7)(b).
§33-18-242(8)(b) limits 3rd-party claimants in “an action under this section to 1 year from the date of the settlement of or the entry of judgment on the underlying claim.” (Emphasis added.) The insurers argue that the 1-year statute bars Plaintiffs’ claims if they accrued in 2022.
§33-19-242(8)(b) “does not apply to the common law tort of bad faith.” Brewington (Mont. 1999). §27-2-204(1) governs common law bad faith and breach of the covenant of good faith & fair dealing. Id. (quoting Egeland (Mont. 1999). The statute remains 3 years. Id.; §27-2-204(1). Plaintiffs’ claims are common law claims and accrued 8/17/22. They are not barred because the 3-year statute has not run.
II. Whether Plaintiffs have improperly pled their punitives claim
MCA 33-18-242(5) permits recovery of punitives for statutory bad faith claims. However, §27-1-221(5) provides that “a request for an award of punitive damages may not be contained within an initial pleading filed by a party with the court.” A party may move to amend their pleadings to add a claim for punitives “any time after the initial pleading is filed and discovery has commenced.” Id. The party must “submit affidavits and documentation supporting the claim for punitive damages.” Id. The Court may allow the claim only if that supporting documentation “sets forth specific facts supported by admissible evidence adequate to establish the existence of a triable issue on all elements of a punitive damages claim.” Id.
Plaintiffs argue that §27-1-221(5) represents a procedural rule that does not apply under the Erie doctrine in this Court. “Under the Erie doctrine, federal courts sitting in diversity apply state substantive law and federal procedural law.” Gasperini (US 1996). Several district courts have addressed whether a state law regarding pleading of punitives proves substantive or procedural. Most of them have concluded that a state law barring pleading of punitives in the initial pleading proves procedural and conflicts with the FRCivP. (Citing 4 cases.) TRC (D.Colo. 2007) concluded the opposite and applied state law to dismiss punitive claims raised in an initial pleading.
This Court joins the majority of federal district courts in concluding that §27-1-221(5) represents a procedural rule. “When confronted with an Erie question, we first ask whether a Federal rule of Civil Procedure or a federal law governs.” Orange Co. (CD Cal. 2017). If a FRCivP governs, the Court “will apply that rule — even in the face of a countervailing state rule — as long as it is constitutional and within the scope of the Rules Enabling Act.” Id.
FRCivP 8(a)(3) permits the claimant to seek punitives in the initial pleading. It requires claimants to include in their complaint “a demand for the relief sought, which may include relief in the alternative or different types of relief.” This rule is permissible and does not require a claimant to plead punitives expressly in their complaint. MCA 27-1-221(5) prohibits something that FRCivP 8(a)(3) allows. The FRCivP governs whether a claimant may assert a punitives claim in their initial pleading. Blazer (10th Cir. 1952) (“While the substantive right to recover on his claim is governed by state law, the form or mode of his claim for relief is a matter of Federal procedure, under which no technical forms of pleading are required.”) The Court must apply that rule unless it violates the Constitution or the Rules Enabling Act. A FRCivP does not violate the Enabling Act so long as it “really regulates procedure.” Shady Grove (US 2010). “If it governs only ‘the manner and the means’ by which the litigants’ rights are ‘enforced,’ it is valid; if it alters ‘the rules of decision by which the court will adjudicate those rights,’ it is not.” Id. (quoting Murphree (US 1946).
Rule 8(a)(3) governs how parties can plead a claim for punitives. It does not govern whether punitives are available, the burden of proof, or other substantive concerns. It permits the assertion of a punitives claim in an initial pleading and does not violate the Rules Enabling Act. It accordingly governs and MCA 27-1-221(5) does not bar Plaintiffs’ claim.
Dzintarses v. Fireman’s Fund Ins., Illinois Union Ins., Allied World Ins., 45 MFR 4, 9/30/24.
John Amsden, Justin Stalpes, and Sydney Best (argued) (Beck, Amsden & Stalpes), Bozeman, for Dzintarses; Jean Faure (argued) (Faure Holden), Great Falls, for Fireman’s Fund; Elizabeth Lund (Berg Lilly), Bozeman, for Illinois Union; Randy Nelson & Tom Bancroft (Nelson Law Firm), Billings, for Allied.
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