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

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

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

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

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

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

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

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

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

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

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

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

Summary judgment is granted for Defendants.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

TITLE INSURANCE lapsed after named insureds quitclaimed interests in property to trusts, no coverage of access claim by heirs… Cavan/Watters.

William & Esther Green purchased land east of Billings from Custer Coulee Cattle Co. 4/19/89 as joint tenants with right of survivorship. They purchased title insurance from Chicago Title Ins. of Idaho which insured against loss or damage by reason of “lack of a right of access to and from the land.” On 12/26/12 Greens created irrevocable trusts — the William S. Green Family Trust and the Esther W. Green Family Trust — and quitclaimed their individual undivided half-interests in the property to their trusts. William was the designated trustee of both trusts. The quitclaims declared that the grantor “does hereby convey, release, remise and forever quit claim unto William S. Green, Trustee…,” and that the “deed releases all interest acquired by Grantor in and to the subject property from the date hereof through and including the date of recording said deed.” The deeds were recorded 12/28/12.

Greens died in the winter/spring of 2018. On 4/11/18 the Trusts individually conveyed their interests in the property via trustee’s deeds to PR Michael Green individually and as PR of the Estate of William Green, Bradley Green, Vivian Grote, and Scott Green (“Plaintiffs”). Plaintiffs allege that they subsequently discovered that there was no legal access to the property and submitted a claim to Chicago Title. Chicago Title denied the claim 2/3/20 on the basis that “the Claimants do not qualify as insureds as defined by the Policy.” The policy defined “insureds” as:

The insured named in Schedule A, and subject to any rights or defenses the Company would have had against the named insured, those who succeed to the interest of the named insured by operation of law as distinguished from purchase including, but not limited to, heirs, distributes, devisees, survivors, personal representatives, next of kin, or corporate or fiduciary successors.

Schedule A listed “William S. Green and Esther W. Green, Husband and Wife” as the insureds. Chicago Title further explained:

By the December 28, 2012 conveyances, the Named Insureds transferred their interest in the Property to the Trusts. The Trusts are not named in Schedule A of the Policy as “insureds”, nor are they successor insureds under the above described definition of “insureds” because the transfer to the Trusts did not occur by operation of law. Upon conveyance of the Property, the Policy is terminated, but certain insuring provisions continue in favor of the Named Insureds in limited circumstances. Please refer to paragraph 2 of the Policy’s Conditions and Stipulations:

2. CONTINUATION OF INSURANCE AFTER CONVEYANCE OF TITLE

The coverage of this policy shall continue in force as of Date of Policy in favor of an insured only so long as the insured retains an estate or interest in the land, or holds an indebtedness secured by a purchase money mortgage given by a purchaser from the insured, or only so long as the insured shall have liability by reason of covenants of the estate or interest. The policy shall not continue in force in favor of any purchaser from the insured of either (i) an estate or interest in the land; or (ii) an indebtedness secured by a purchase money mortgage given to the insured.

Chicago Title concluded that there was no continuance of insurance after conveyance because Greens did not retain an interest in the property when they transferred it to the Trusts via quitclaim deed, “which does not contain any warranties or covenants of title under which the Named Insureds would have liability to the Trusts.” Thus its position was that coverage terminated upon conveyance to the Trusts, and neither the Trusts nor their successors have standing to bring a claim under the policy.

Plaintiffs sued in State Court 2/25/20. Defendants removed to this Court alleging complete diversity and amount in controversy of $87,800, and moved for summary judgment asserting that their claim was erroneously denied because William retained both a legal and equitable interest in the property such that the policy continued in force and subsequent transfers occurred as a matter of law. Defendants cross-moved for summary judgment asserting that the named insureds voluntarily conveyed their interests in the property to the Trusts and thus coverage terminated upon conveyance and Plaintiffs did not succeed to their interests by operation of law. Magistrate Cavan recommended that Plaintiffs’ motion be denied and Defendants’ motion be granted. He agreed with Defendants that when Greens transferred their interests to the Trusts and named William Green as trustee, William failed to retain an interest in the property and the voluntary conveyance terminated coverage. He also determined that because the conveyance was voluntary, Plaintiffs did not succeed to the interests of William or Esther Green by operation of law and thus Plaintiffs are not insureds under the policy. Plaintiffs objected to both determinations. (Plaintiffs also argue for the first time that Greens retained an interest in the property as beneficiaries of the Trusts. As Defendants point out, it is improper to raise new arguments in objections to a magistrate’s recommendations and within the district court’s power to reject the assertions. Friends of the Wild Swan (D.Mont. 2013). The Court rejects their beneficiary argument as improperly raised. Further, it is contrary to Montana law. Raymond George Trust (Mont. 1999) (“beneficiaries of an express trust in real property take no estate or interest in the trust property”).)

The policy states that coverage “shall continue in force of an insured only so long as the insured retains an estate or interest in the land.” Judge Cavan found that by transferring their interests via quitclaim deed to the Trusts, Greens relinquished any interest or estate they had in the property despite William assuming title to the property as the Trusts’ trustee. Therefore the coverage lapsed at the time of the quitclaim transfer.

Plaintiffs argue that Judge Cavan erred in his interpretation of the policy by adding restrictions that do not exist. They point to MCA 72-38-1111(2): “A conveyance of real property to a trustee designated as such in the conveyance vests the whole estate conveyed in the trustee, subject only to the trustee’s duties.” As the policy does not differentiate between what qualifies as an interest or estate in the property, they maintain that because William, as a named insured, assumed a trustee’s estate in the property, that estate suffices to continue coverage despite Greens quitclaiming their entire interests to the Trusts. The Court does not find this argument persuasive and agrees with Judge Cavan’s determination.

It is undisputed that trustees are vested with the property estate in a trust and hold legal title to that trust property. Raymond George Trust. However, Judge Cavan correctly noted that Montana law clearly differentiates between a grantee’s interest in property and a trustee’s interest or estate. MCA 72-38-1111(4) & (8), 72-38-802(1), 72-38-802(2), 72-38-507. Further, Greens expressly quitclaimed their rights in the property to the Trusts which released “all interest acquired by Grantor in and to the subject property from the date hereof.” Any and all property rights were transferred to the Trusts as separate & distinct entities with Greens reserving no interests or estates in the land. While William was named trustee of the Trusts, Greens themselves — the named insureds — retained no interest and the coverage lapsed as a result.

Judge Cavan further determined that because “the conveyance of the property by the Greens to the trusts was a voluntary conveyance to a separate and distinct entity,” the policy lapsed and Plaintiffs did not inherit the coverage by operation of law as required by the policy. Plaintiffs merely restate their original argument without any additional analysis or citation to nuanced authority. This does not constitute a valid objection. Lance (D.Mont. 2018). Therefore the Court reviews Judge Cavan’s findings for clear error and, seeing none, adopts his determination.

Judge Cavan’s proposed findings & recommendations are adopted in full. Defendants’ motion for summary judgment is granted.

Green et al v. Chicago Title Ins. et al, 44 MFR 255 & 256, Cavan’s F&R 8/31/21, Watters’s adoption order 9/30/21.

Michael McGuinness (Patten, Peterman, Bekkedahl & Green), Billings, for Plaintiffs; Gregory Schultz (Crowley Fleck), Missoula, and Whitney Kolivas (Crowley Fleck), Bozeman, for Chicago Title

ERISA: Former clinic Medical Education Specialist proved that she was totally disabled and entitled to benefits for 24-months ending 3/29/20, denial applied wrong definition of “Total Disability and Totally Disabled,” Claimant was unable to perform one or more material & substantial duties of her Regular Occupation, denial based on subjective evidence combined with perceived lack of objective evidence contrary to case law… Claimant awarded attorney fees, costs, prejudgment interest, remanded for determination of whether she met policy’s “any occupation” definition of “total disability” after 3/29/20… “paper bench trial”… Watters.

Before the Court are proposed findings & conclusions submitted by Paula Maulolo and Sun Life Assurance of Canada on Maulolo’s claim for ERISA benefits. The parties stipulated to “a paper bench trial” on the administrative record under Rule 52(a). At issue is whether Maulolo is entitled to long-term benefits under Billings Clinic’s group policy. After considering the submissions, the Court finds her to be disabled and entitled to benefits.

Billings Clinic employed Maulolo from 2008 as Internal Medicine Residency Program Administrator, Organizational Development Consultant, and Medical Education Specialist. She also owned a jiu-jitsu dojo with her husband.

She first sought medical care for radiating back & leg pain in the spring of 2016 after years of pain symptoms. The pain affected her homelife and activities. She lost 140 pounds over 7 years from exercise but now found her capabilities limited. A 12/3/16 MRI revealed a sacral cyst at L5-S1. She underwent injections, electrical stimulation, and bed rest, and ultimately opted for a drain in the cyst. The drain improved radicular symptoms but caused intense sacral pain. On 2/2/17 she had a shunt installed and experienced relief for 48 hours. However, the incision began building fluid, causing positional headaches, and did not result in lasting relief. She continued to work and integrated various measures to find comfort such as a standing desk or lying down for brief periods.

Maulolo had the cyst removed in 8/17 by Dallas neurosurgeon Dr. Feigenbaum who identified it as a sacral meningeal cyst. She took medical leave and by the end of August had made “slow but steady” progress with use of medication but still had sacral and leg pain. Dr. Kari Kale in Billings noted in 10/17 that she was “still in lots of pain, but gradually improving,” had increased steps to 8,000 – 10,000 per day, could not stay in one position too long, and used a “sit to stand desk at work.” Maulolo reported to Kale in 11/17 that her pain was worsening, activities increased it, and work was difficult.

Kale referred Maulolo to pain specialist Michael Schabacker who documented her reports of “persistent deep aching and stabbing pain in the lower reaches of her lumbar spine” that “radiates distally into her lower extremities but does not follow a radicular pattern.” He further documented severe and incapacitating pain that was creating “substantial despair in her life” including dependence on family for household duties like cooking and concluded: “Clearly, the impact of this chronic pain condition on her life both at home and at work is dramatic.” He increased her Oxycontin and Oxycodone and referred her to Giancarlo Barolat in Denver for possible spinal cord stimulation therapy.

Billings Clinic had provided accommodations including a special chair, a standing desk, a conference room to lie down, and a yoga mat to lie down in her office. In 12/17 she requested to work from home. Billings Clinic denied her request based on the requisites of her job description such as attending meetings, escorting medical students and residents, and other in-person tasks.

Maulolo was informed 1/5/18 that her 12 weeks of leave was expiring 1/8, she may be placed on inactive status for up to 12 weeks, and she may be eligible for long-term disability under Billings Clinic’s Sun Life group policy. She applied for long-term disability 1/10/18 and resigned 1/12.

She underwent percutaneous placement of a temporary spinal cord stimulator in 4/18, initially reporting near-complete relief, and considered a permanent stimulator for which Barolat opined she was a “great candidate.” On 6/19/18 he implanted a permanent stimulator.

In a follow-up with Schabacker’s nurse 8/1/18 Maulolo reported her frustration with the stimulator; while some improvement had occurred, it was not what she had hoped. She felt the pain was well-managed when immobile but worsened with activity and included new pain in her thorax.

2 weeks later Schabacker noted that Maulolo was “a viable candidate for application disability given the substantial impairment in function chronic pain condition has imparted. It is apparent she is substantially limited functionally.” He reiterated his opinion in a 2/19 letter that she was disabled as of 12/29/17. SSA determined that she was disabled as of 1/5/18.

Sun Life was unable to make a disability determination based on its initial processing of Maulolo’s claim. It interviewed her 1/25/18 during which she disclosed that she had 2 jobs in addition to Medical Education Specialist at Billings Clinic: the jiu-jitsu dojo that she co-owns with her husband and a sales-commission job with health coaching company Optavia. It further determined “in lieu of an ISO search a background check given the claim circumstances would be best.” No explanation was given as to what “claim circumstances” prompted the background check. It obtained a background check investigation from PHOTOFAX which revealed details of her day-to-day life from recreation to social media posts and interviews with neighbors. The investigator summarized the neighbors’ observations as confirming her injuries, surgeries, and activity level pre- and post-injury.

Sun Life nevertheless rejected Maulolo’s claim 3/13/18:

We have determined that the medical evidence does not support that you would be precluded from performing the Material and Substantial Duties of your Own Occupation as Medical Education Specialist I throughout and beyond the Elimination Period. As such, you do not meet the definition of Total Disability and benefits are denied.

“Own Occupation” is not defined in the policy or rejection letter. They define “Elimination Period” as

the number of consecutive days of Disability, shown in the Benefit Highlights, which must be completed before we will pay you the benefit. No benefits will be paid to you for any portion of your Disability that occurs during your Elimination Period.

Maulolo’s Elimination Period ran 1/29/17 through 3/29/18. The policy defines “Total Disability” and “Totally Disabled” as

during the Elimination Period and the next 24 months you are unable to perform one or more of the material and substantial duties of your Regular Occupation.

After 24 months of receiving Total and Partial Disability benefits combined, Total Disability and Totally Disabled means you are unable to perform with reasonable continuity any Gainful Occupation for which you are or could become reasonably qualified for by education, training and experience.

Total Disability must be caused by an Accident or Sickness and must commence while you are insured under the Policy.

Maulolo appealed 3/22/18 and included medical records from 10 additional providers which Sun Life forwarded to Dr. Germaine Rowe who noted that the clinical evidence supported her physical condition as functionally impaired and concluded that “from the perspective of Pain Medicine, the medical data supports that the claimant has remained functionally impaired from 12/29/17 to the present.” But she also found that Maulolo had the ability to perform certain activities such as sitting 6 hours per 8-hour day; walking & standing 60 minutes/hr at a time, 8 hours total per day; and lifting & carrying 50 pounds occasionally and 25 pounds frequently. (Sun Life also referred Maulolo’s records for a psychiatric opinion but denial of benefits based on psychiatric conditions is not raised in this action.)

Maulolo’s appeal was denied 7/3/18 on grounds of insufficient evidence to support continuous “Total Disabled” throughout the Elimination Period. The denial omitted Rowe’s finding that the medical data supported functional impairment 12/18/17 onward. Maulolo contacted Sun Life to dispute the decision and to assert that Dr. Barolat had additional records supporting her disability. Sun Life agreed to consider Barolat’s records and arrange for Rowe to speak with him. Barolat later confirmed the contents of his discussion with Rowe but corrected a mischaracterization, circling the statement “You stated that the claimant can work a job with prolonged sitting or lifting” and hand-wrote: “I believe I stated that the claimant needs a FCE to evaluate the extent of her work capabilities/limitations.” Rowe confirmed Maulolo’s functional impairment from 12/29/17 to 7/23/18.

Maulolo told Sun Life that she would try to obtain an FCE from Schabacker on her next visit. On 9/1/18 he noted that “it is apparent she is substantially limited functionally.” He appears to write that an FCE was not necessary but the note is unclear: “I do not believe that FCE is nothing very.” Sun Life did not request Maulolo to undergo an FCE and she never underwent one.

Rowe issued an addendum 10/3/18 which included Barolat’s additional reporting but did not alter Rowe’s conclusion relating to the Elimination Period which included sitting 6 hours per 8-hour workday; walking & standing 60 minutes/hr at a time and 8 hours total per 8-hour workday; lifting & carrying 50 pounds occasionally & 25 pounds frequently; and bending, squatting, climbing, kneeling frequently.

Sun Life denied Maulolo’s appeal 10/9/18 based “on the opinion of Dr. Rowe,” concluding that while Maulolo had experienced 2 closed periods of disability she failed to demonstrate disability during the Elimination Period and she was ineligible because her coverage had ended 12/28/17, the last full day of work, and she was no longer “actively at work.” It also concluded that her medical limitations “would not prevent you from performing the duties of your Regular Occupation as an Administrative Assistant (classified as requiring a sedentary physical exertion level).” It also explained that she had exhausted her administrative remedies regarding the disability decision “from a physical condition(s) perspective.

Maulolo sued 6/13/19 seeking relief from wrongful denial of benefits under 29 USC 1132(a)(1)(B).

Maulolo has met her burden to establish total disability, that is, “during the elimination Period and the next 24 months [she was] unable to perform one or more of the material and substantial duties of [her] Regular Occupation.”

Her Elimination Period ran 12/29/17 through 3/29/18. She provided records for 7 visits with healthcare providers during the period. After her initial denial she submitted additional records when she realized she was not limited to only 3 records (the number of spaces on the form). The records depict chronic back problems including surgical removal of a cyst and installation of a spinal stimulator and severe pain. Chronic pain clearly affected her ability to work, especially when accommodations were no longer helpful or feasible, by 1/18. Thus she decided to leave Billings Clinic “due to feeling she is unable to manage work physically.” Billings Clinic denied her final request for accommodation (work from home) because her position as “Medical Education Specialist requires you to attend meetings, take minutes, cover phones and escort medical students and residents.” Thus she was no longer capable of performing “one of more of the material and substantial duties” of her job.

The records also extensively document her discomfort with sitting and preference to stand amid pain & discomfort for periods as short at 10 minutes, casting doubt on Sun Life’s finding on her ability to do sedentary work. Her pain physician Dr. Schabacker further explicitly supported her claimed disability, and SSA separately determined her disabled and entitled to SSD. A plan administrator’s disregard for SSA’s contrary determination is another of the case-specific factors courts may weigh when reviewing a benefit determination. Montour (9th Cir. 2009). Maulolo’s condition appears to have been substantially unchanged from when she left her employment through the final rejection of her claim.

Sun Life’s supposition that Maulolo was capable of sedentary work — that she could sit for 6 hours; lift, carry, pull, and push 50 pounds occasionally; and frequently bend, squat, climb, and kneel — is directly contradicted by her medical records. Multiple physicians observed her discomfort with sitting and preference to stand amid pain & discomfort. Sun Life itself reported in its initial denial letter that she may:

occasionally walk, sit, push, pull. May not bend, squat, climb, twist, kneel or crawl. Lift/carry indicated 0 lbs. Comments must be able to change positions every 10 minutes, sit to stand. Dr. Kale also noted despite surgery pain continues has difficulty maintaining position >10 minutes.

Her medical records clearly state that she cannot sit 6 hours a day; lift or carry 50 pounds occasionally; or bend, squat, climb, twist, kneel, or crawl frequently,” as Sun Life’s reviewing physician Dr. Rowe suggests.

Sun Life proffers no evidence to contradict Kale, Schabacker, or NP Lisa Guthrie’s observations relating to Maulolo’s discomfort sitting or disability. In fact, its own private investigator appears to confirm her transformation from a “very active and health-conscious individual” to someone with back issues who “may go on long term disability.” While this observation is not medical by nature, contemporaneous observations by neighbors support her change in circumstances.

Sun Life’s denial of Maulolo’s claim did not apply the same definition of “Total Disability and Totally Disabled” found in Billings Clinic’s policy as stated in the rejection letter. The policy clearly requires the claimant to be “unable to perform one or more of the material and substantial duties of your Regular Occupation.” The rejection letter states: “The medical evidence does not support that you would be precluded from performing the Material and Substantial Duties of your Own Occupation.”

Maulolo’s debilitating pain prevented her from performing “one or more” of the duties in her Regular Occupation-equivalent as an Administrative Assistant, which typically requires sedentary exertion. She could not sit for 6 hours/day or bend, squat, climb, twist, kneel, or crawl. Further, the difference in the amount of duties she could not perform — “one or more” v. “material and substantial duties” — is inaccurate per plan language.

Sun Life’s proposition that Maulolo’s records were devoid of any objective evidence of functional impairment and consisted entirely of self-reported pain, which her physicians then adopted to support her claim of disability is unconvincing and contrary to 9th Circuit precedent. “A disability insurer cannot condition coverage on proof by objective indicators where the condition is recognized yet no such proof is possible.” Holmgren v. Sun Life (ND Cal. 2018) (Cruz-Baca (9th Cir. 2017)). Indeed, Sun Life’s reliance on objective evidence to deny benefits for a claimant with chronic pain was roundly rejected in Holmgren and is no more convincing here. Holmgren noted that “the Ninth Circuit has found that chronic pain, like that of which plaintiff complains, ‘is an inherently subjective condition.'” (Quoting Cruz-Baca).

Chronic pain is clearly one condition for which courts have not required objective evidence and the 9th Circuit has repeatedly held that “the lack of objective physical findings” is in and of itself insufficient to justify denial of disability benefits. Eisner (ND Cal. 2014) (citing Salomaa (9th Cir. 2011)). Other circuits agree. “It has long been the law of this Circuit that ‘the subjective element of pain is an important factor to be considered in determining disability.'” Valentine (ED NY 2015); Connors (2nd Cir. 2001).

Maulolo has met her burden of proof by a preponderance of the evidence that she was totally disabled and entitled to disability benefits for the 24 months ending 3/29/20. Sun Life’s denial applied the wrong definition of “Total Disability and Totally Disabled.” Maulolo was unable to perform one or more material and substantial dues of her Regular Occupation. Its denial based on her proffering of subjective evidence combined with a perceived lack of objective evidence runs contrary to case law.

Maulolo’s Long Term Disability claim must be remanded to Sun Life for a determination of whether she met the policy’s “any occupation” definition of “total disability” after the 24 months ending 3/29/20. Saffle (9th Cir. 1996).

Judgment is entered in Maulolo’s favor for total disability benefits for the 24 months ending 3/29/20 with reasonable attorney fees, costs, and prejudgment interest under 29 USC 1132(g)(1).

Maulolo v. Billings Clinic and Sun Life Assurance of Canada, 44 MFR 254, 9/9/21.

Caitlin Boland Aarab & Samir Aarab (Boland Aarab), Great Falls, for Maulolo; Mikel Moore (Moore, Cockrell, Goicoechea & Johnson), Kalispell, for Sun Life.

INSURANCE: Putative class Plaintiffs’ request for declaratory judgment as to GEICO’s subrogation practices preempted by UTPA, but amendment permitted to bring proper UTPA claim… Molloy.

James Lee Const. and James & Tracy Lee seek to represent a putative class challenging subrogation practices of GEICO and related entities by utilization of its Payment Recovery Unit. GEICO seeks a judgment on the pleadings pursuant to Rule 12(c) insofar as Plaintiffs “seek, on behalf of themselves and a putative class, declaratory, injunctive, and supplemental relief by reason of Defendants’ alleged ‘wrongful subrogation.’” According to GEICO, the “wrongful subrogation” claim derives from the handling of their insurance claim and is therefore preempted by MCA 33-18-242(3). GEICO is correct.

UTPA §33-18-242(3)limits claims an insured can bring against an insurer:

An insured who has suffered damages as a result of the handling of an insurance claim may bring an action against the insurer for breach of the insurance contract, for fraud, or pursuant to this section, but not under any other theory or cause of action.

This Court previously determined that because Plaintiffs’ wrongful subrogation claim qualifies as claims handling, their originally pled conversion claim was preempted. GEICO argues that their claim for declaratory & injunctive relief based on wrongful subrogation is similarly preempted. That argument is persuasive.

This Court has repeatedly “found declaratory relief to be an unavailable cause of action for statutory bad faith violations.” Woodman (D.Mont. 2021) (collecting cases); Drange (D.Mont. 2020) (“The UTPA neither creates a right of action for declaratory judgment, nor does it allow for declaratory or injunctive relief.”). Bateman (9th Cir. 2011) affirmed this Court’s dismissal of a declaratory judgment claim on the ground that “Plaintiffs seek a declaration that Defendant violated the UTPA, a statute that provides relief only in the form of money damages.”

Plaintiffs insist the caselaw is more nuanced and that the Montana Supreme Court distinguishes between a declaration of rights & duties under the UTPA (potentially allowed) and the declaration of a violation of the UTPA (not allowed). They are correct insofar as it has permitted a declaratory action to proceed to determine when a UTPA claim may be brought. Safeco (Mont. 2000) (interpreting MCA 33-18-242(6)(b) which provides that a “third-party claimant may not file an action under this section until after the underlying claim has been settled or judgment entered in favor of the claimant on the underlying claim”). Plaintiffs are misguided in their attempt to fit this case into a similar category. Because they seek a declaration that GEICO’s operation of the Property Recovery Unit violates Montana’s made-whole rule, a claims handling matter, their claim runs afoul of §33-18-242(3).

As argued by Plaintiffs, Safeco rejected Safeco’s attempt to argue that the plaintiff’s declaratory judgment action was “nothing more, really, than a UTPA claim under a different name.” Rather, it concluded that the declaratory action was limited to a determination of “those medical expenses, under Ridley, a third-party claimant is unequivocally entitled to prior to settlement or entry of judgment.” It cautioned that

the District Court did not determine that Safeco violated UTPA, or acted in bad faith, or that the ordered payment of advance medical payments constitutes a money judgment for “damages” in the ordinary sense. To the contrary, the District Court merely removed all uncertainty and controversy over the issue of when the inevitable policy proceeds are due.

In contrast, Plaintiffs specifically seek a declaration that GEICO’s operation of its PRU violates the UTPA. The references to such relief are legion. More specifically, they seek declarations that:

(a) the contract provision under which GEICO asserts their subrogation claim does not permit subrogation not conforming to Montana’s made-whole rule; (b) the statutes which authorize subrogation by insurers do not permit subrogation not conforming to Montana’s made whole rule; (c) all subrogation amounts taken before the insureds’ losses were accounted for and the insureds were made whole, together with interest or earnings thereon, are and remain the property of the insured; (d) GEICO’s subrogation taken in violation of the requirements of Montana’s made-whole rule are improper invasion of and impairment of the rights of Plaintiffs and each member of the Class; (e) GEICO’s subrogation practices constitute violations of the duties enumerated above; (f) GEICO has been unjustly enriched by wrongful subrogation; (g) GEICO holds the proceeds of the wrongful subrogation in constructive trust for the owners of the tort claim.

Plaintiffs’ argument about the time of the unlawful conduct does not change the nature of their claim. Even assuming that a request for prospective relief avoids UTPA’s bar on declaratory actions, no such request is made here. Because their claim is an argument under the UTPA — not an argument about the UTPA — it is barred by §33-18-242(3).

That conclusion is consistent with this Court’s recent case law. In Woodman, the insured filed an action for declaratory relief seeking full long-term disability benefits under her policy. Her insurer argued that her claim for declaratory relief was preempted by the UTPA: “because Woodman seeks a declaration that her interpretation of the policy language is correct, she is requesting nothing more than a judicial determination that her claims for violation of the UTPA and breach of contract have merit.” Notably, her claim for declaratory relief neither cited the UTPA nor requested a declaration that specific provisions had been violated. Nevertheless, the Court found that “the substance of Woodman’s request for declaratory relief attacks Standard’s handling of her insurance claim” and therefore a declaration to that effect would impermissibly tread the same ground covered by the UTPA. The same is true here.

Plaintiffs further argue that even if their declaratory action falls under the limitations of §33-18-242(3), it is really a breach of contract claim that can proceed under the UTPA. They may be right if they had pled a breach of contract claim. They did not.

Ultimately, Plaintiffs’ request for declaratory relief is preempted by the UTPA. While they present good arguments for how a claim could avoid the statutory bar, those arguments are immaterial based on how their claim is currently pled. And because they cannot bring this claim on their own behalf, they are precluded from bringing it on behalf of a putative class. Moe (D.Mont. 2020); Standford (9th Cir. 2010) (“When a named plaintiff has no cognizable claim for relief, he cannot represent others who may have such a claim.”). Nevertheless, GEICO failed to articulate a legitimate reason why Plaintiffs should not be given the opportunity to bring a proper UTPA claim. Accordingly, this count is dismissed with leave to amend.

Because Plaintiffs’ class claim does not survive the above ruling, their motion for certification is denied as moot. Nevertheless, 2 observations are appropriate. First, it is rare that a case can be read only one way and recognizing that fact can only strengthen an advocate’s position. Second, regardless of whether such circumstances exist here, subrogation is lawful in certain circumstances pursuant to VanOrden (Mont. 2014). Thus Plaintiffs can neither presume that GEICO’s subrogation recoveries equate to numerous class members nor define their class to include all instances of subrogation. Their putative class does both.

James Lee Const. v. GEICO, 44 MFR 253, 9/9/21.

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