BUREAU OF RECLAMATION has sovereign immunity from mobile home owners’ contract claim against eviction from marina trailer court following expiration of concessionaire contract and BOR’s plans to modernize facility, HOA is not 3rd party beneficiary, has no legal right to compel BOR action on contract claim, removal of homes from federal land not a major federal action requiring NEPA analysis, TRO/preliminary injunction against eviction denied… jurisdiction over state-law claims against neighbors for septic drain field prescriptive easement/promissory estoppel denied… Lovell.

Goose Bay HOA is comprised of 31 mobile home owners who rent spaces in a 5-acre trailer court on Canyon Ferry Lake near Goose Bay Marina, a 227-acre facility owned by the US and managed by BOR. Gerald & Muriel Reller, private managers of the marina store and trailer court since 1986, allowed their concession agreement (lease & permit) to expire 12/31/12. HOA members had rented their spaces from the concessionaire pursuant to oral agreements. BOR has now decided to modernize the facility including reconstructing the septic system. It gave HOA members notice in 11/11 and 12/11 to remove their mobile homes, and also 6 months notice that it intended to terminate electric & water services by 4/1/13 and a reminder that they must remove their homes by 4/30/13. In response to the impending termination of septic service, the HOA filed a declaratory action in Montana 1st Judicial Dist 3/31/13 claiming to be 3rd-party beneficiaries of the BOR lease & permit. It alleges that the 7/00 lease & permit is void for failure of BOR to provide consideration for modifications it made to the 1986 lease, and that after judicial rescission, BOR should be compelled to renew it for 10 years. It also asserts a prescriptive easement against Lefevers, who are neighbors and private landowners, to maintain the trailer court’s septic field on their property, and that Lefevers should be estopped from demanding that the field be removed because their predecessor allegedly promised a prior concessionaire that it would be allowed in perpetuity. The State Court granted the HOA’s ex parte application for TRO the same day the complaint was filed. However, it appears that it was void or voidable because it was based on a complaint verified upon information & belief of HOA member Scott Joyner and not positively verified per MCA 27-19-303(2)(b). Forbes (Mont. 2011). This Court allowed Joyner to testify and thereby to cure that problem, but in any event the state restraining order has expired by operation of law. Following issuance of the TRO, BOR removed to this Court pursuant to 28 USC 1442 (civil action against the US or any agency thereof). The statute is to be broadly construed to favor removal, and the case will not be remanded as suggested by the HOA. A demand for declaratory judgment and specific performance of a contract filed against a US agency is properly adjudicated in a federal court. However, the Declaratory Judgment Act is permissive only. “If a district court, in the sound exercise of its judgment, determines after a complaint is filed that a declaratory judgment will serve no useful purpose, it cannot be incumbent upon that court to proceed to the merits before staying or dismissing the action.” Wilton (US 1995).

The HOA claims there are multiple factual issues that should be determined by a jury, including whether the US’ failure to renew the 2000 lease & permit was reasonable. The general rule is that there is no right to a jury trial against the US.

The 1st notable problem with HOA’s request for an injunction to prevent BOR from evicting the owners is that the concessionaire has not appeared, it has failed to renew the lease, and it has failed to fix the septic system to fulfill BOR’s condition for renewal. The 2nd notable problem is that the lease has expired and the HOA members no longer have a legal right to remain on this federal property. Nevertheless, HOA claims it has shown a likelihood of success on the merits and the possibility of irreparable injury or serious questions and a balance of hardships tipping sharply in HOA’s favor.

The 1st legal hurdle HOA members face is sovereign immunity as to their contract claim. The 43 USC 390uu, Tucker Act, Little Tucker Act, and APA waivers do not apply. HOA’s claims against BOR are contractually based because they are premised on the concessionaire contract. It presents a classic contract claim, but seeks a remedy (declaratory judgment and injunction) that is impliedly forbidden by the Tucker Act. Important public policy goals are served by strict construction of any purported waiver of sovereign immunity. The 31 HOA members obviously have a long & sentimental attachment to their trailer court, but BOR stands in the shoes of the public at large: thousands upon thousands of individuals who have an equally valid right to benefit from a modernized marina and recreation area as well as a safe & sanitary septic system. Even if the HOA were to fully litigate their claim against BOR on the merits, the Court is inclined to believe that it could not succeed given that BOR desires to redesign the marina and construct a new septic system. To let it stop a government agency in its tracks in its sincere pursuit of the public good would be mischief indeed. Even if there were a waiver of sovereign immunity, HOA could not succeed on a claim as a 3rd-party beneficiary because the concessionaire contract does not clearly give it 3rd-party beneficiary status.

HOA filed an amended complaint following the hearing asserting that “BOR’s refusal to properly consider whether the removal of the mobile homes may result in contamination of the Goose Bay property by asbestos, chrome, mercury, lead paint or other hazardous materials is a violation of NEPA and the APA.” This is not a verified complaint, and HOA provides no material support for the allegation. To suggest that BOR cannot evict 31 unpermitted mobile homes from federal land without a full-blown EA is absurd. This is not a major federal action. Removal of the homes is to be by the private parties at their own expense. NEPA is not applicable to actions of private parties. While it is true that BOR is evicting the HOA members from this federal property, it is not true that any environmental damage caused by their removal of their mobile homes would therefore be caused by the agency. Berryessa (ND Cal. 2007), which BOR argued at the injunction hearing and is now relied on by HOA, is quite different factually, legally, and procedurally. The 7 concessionaire agreements governing operation of 7 resorts on BOR land had not expired, but BOR’s intent to evict 1,200 mobile home owners was set forth explicitly in its final ROD, which was a redesign project for the entire Lake Berryessa area, and an FEIS had been issued in what was without doubt a major federal action. The court still refused to grant a preliminary injunction compelling BOR to rescind its order to the concessionaires requiring them to issue eviction notices and instructions to the long-term permit holders to demolish their homes. The plaintiffs requested at minimum that the court let them continue to live at Lake Berryessa while their NEPA challenge ran its course. The court refused because it was “doubtful that it could order BOR to extend the current contracts or issue permits to the permittees.” Such matters were deemed to be within the agency’s discretion and beyond the reach of the court. So too here. Even were the HOA members in precisely the same circumstances as in Berryessa, the court decided in that case that “the long-term permittees’ legal right to stay on the federal land ends when their permits expire.” The HOA members’ permits already expired 12/31/12 when the lease & permit agreement expired. In any event, because removal of the mobile homes is an action by a private party and is not a major federal action, the NEPA process is not relevant to the eviction.

Since HOA’s federal claims against BOR fail entirely, diversity is lacking between HOA and Lefevers, and HOA asserts purely state law claims against Lefevers, the balance of factors (judicial economy, convenience, fairness, comity) does not favor supplemental jurisdiction over HOA’s claim for prescriptive easement and promissory estoppel.

Goose Bay HOA v. Bureau of Reclamation, MDFWP, Lefever, 40 MFR 271, 4/22/13.

Nathan Wagner (Datsopoulos, MacDonald & Lind), Missoula, for Plaintiffs; AUSA Leif Johnson; Kevin Feeback (Gough, Shanahan, Johnson & Waterman), Helena, for Lefevers.

INSURANCE: Abstention from coverage declaratory request in deference to state court church sex abuse proceedings… request to add claim arising from discovery of 1994 settlement agreement similarly denied… Lovell.

Travelers (Travelers Casualty, USF&G, St. Paul Fire) seeks a declaration that it is not obligated to defend or indemnify the Roman Catholic Bishop of Helena in pending state litigation and that any coverage that might have existed was forfeited by lack of timely notice. The Bishop urges the Court to abstain because an earlier-filed state court action raises similar or identical issues. There are 3 underlying state cases related to this declaratory action. Whalen v. Diocese of Helena is brought by 235 plaintiffs against the Bishop for injuries alleged from the 30s through the 70s. Doe v. Diocese of Helena and Ursuline Sisters is brought by 89 plaintiffs. Most significant because it is a seemingly parallel state action filed before this one is Whalen v. Catholic Mutual Relief Society (Whalen II), in which the plaintiffs claim they are 3rd-party beneficiaries of the Bishop’s policies and have vested rights in benefits. They have requested the State Court to determine the scope & extent of coverage under all policies issued by the Diocese’s insurers.

Accepting jurisdiction would result in unnecessary determination of state law issues and duplication of judicial effort contrary to comity and federalism. The coverage issues present state law questions. Some of the claims may eventually require determinations of novel state law questions. Travelers asserts non-declaratory judgment claims for reformation of contract and breach of contract. The reformation claim is dependent on its claim that the policy was never issued, and the breach of contract claim would be moot should the Court find that the policy was never issued. Thus these claims are closely related to and dependent on the declaratory claims. They are also declaratory in nature themselves. For instance, a declaration is sought that the 1971-73 USF&G policy affords no liability coverage and a declaration that the Bishop failed to provide timely notice. Travelers disagrees with the Court’s determination that the state action is a parallel proceeding. A parallel proceeding does not require precisely the same issues and parties; it is sufficient if they depend on the same factual circumstances. This definition in state and federal declaratory actions, in the context of multiple carriers and claimants, carries with it the benefit of avoiding inconsistent treatment of claims by similarly situated plaintiffs. Further, the Bishop asserts that it will cross-claim against its insurers in the state coverage action to resolve all coverage issues arising in Whalen and Doe. Moreover, Montana law issues will necessarily be addressed by the state coverage action. As the Bishop points out, such issues may include whether an insurer may deny coverage for sex abuse injuries committed by employees under the guise of whether the supervising church “expected or intended” the injuries, which policies are triggered by the claims of abuse, and how many times each policy must respond to each claim of abuse. It is clear that there will be significant overlap in the coverage issues affecting the insurers and the Whalen and Doe plaintiffs.

Travelers seeks to add a claim arising from its recent discovery of a 1994 settlement agreement that allegedly released St. Paul from any obligation to indemnify the Diocese for future sex abuse claims and allegedly promised that the Diocese would pay the costs of any future claims. Although framed as a non-declaratory claim (for breach of contract), this is another dependent claim that would first require determination of state law which can be raised in the state proceeding. The Court remains convinced that abstention is appropriate. Dismissed without prejudice.

Travelers Casualty & Surety, USF&G, and St. Paul Fire & Marine Ins. v. Roman Catholic Bishop of Helena, 40 MFR 232, 3/22/13.

Patrick Sullivan (Poore, Roth & Robinson), Butte, Frederick Marczyk, Philadelphia, and Robert Vinci, Florham Park, NY (Drinker Biddle & Reath), for Travelers; William Driscoll (Franz & Driscoll), Helena, and James Murray (Dickstein Shapiro), DC, for the Bishop.

INSURANCE: Insurer satisfied Endorsement by recommending settlement of $850,000 verdict by $250,000 from manufacturer and $600,000 from insurer that would satisfy parents of deceased ball player (manufacturer declined settlement, appealed, lost)… insurer satisfied post-judgment interest provision of Endorsement by offering to pay the part of the judgment within policy limits, relieved of post-judgment interest, fees… Molloy.

Brandon Patch, 18, died after being hit in the head by a ball batted off Hillerich & Bradsby’s CB-18 aluminum bat 7/25/03. His parents sued H&B in State Court asserting manufacturing & design defect and failure to warn. H&B’s ACE policy indemnified H&B for $2 million, but it had a $250,000 self-insured retention for indemnity which meant that it had to pay the first $250,000 to satisfy any judgment or settlement. The policy also provided $1 million coverage per occurrence for Allocated Loss Adjustment Expenses (attorney fees, costs, post-judgment interest). H&B had a self-insured retention for this coverage in the amount of $350,000. These coverages were governed by a “Self-Insured Retention with ALAE Limits Endorsement.” A Helena jury returned an $850,000 verdict for Patches. H&B wanted to appeal; ACE wanted to put the case to rest. It recommended that H&B pay $250,000 (the self-insured retention for indemnity) and ACE pay $600,000. H&B did not heed this recommendation. ACE took the position that under the Endorsement it could stop paying post-judgment interest and attorney fees (Allocated Loss Adjustment Expenses) because it had recommended a settlement that was acceptable to Patches. H&B pursued its appeal and lost. Patch (Mont. 2011). ACE then paid $600,000 to H&B, which ACE considered its share of the judgment. It also paid what it believed was its share of the ALAE owed up to the point that it recommended settlement. H&B filed this suit, claiming that ACE wrongly refused to pay further post-judgment interest and fees after it recommended that they pay the verdict. The Court granted summary judgment for ACE 3/7/13 with this opinion to follow.

ACE argues that under Pgf. h of the Endorsement it had no obligation to pay Allocated Loss Adjustment Expenses after 11/17/09 when it recommended that H&B and ACE pay the full verdict. Pgf. h, by its plain language, applies only to “settlements.” The question is whether ACE’s recommendation was a recommendation to make a “settlement.” A settlement is a “binding contractual agreement … through which the parties arrange for final disposition of the case.”Carlson (26 MFR 31). “`Contractual agreement’ refers to any enforceable contract.” Id. The question is whether Patches’ willingness to accept an agreement to pay the verdict, which ACE recommended, was a “contractual agreement.” A contract is an “agreement to do or not do a certain thing.” MCA 28-2-101;Kluver (Mont. 2012). “Sufficient cause or consideration” is an essential element. “Consideration requires that the contracting parties, each as to the other, confer some legal benefit and/or incur some detriment as an inducement to performance.” MPEA (Mont. 1995). ACE’s recommendation to H&B was a recommendation to make a settlement. Had they paid the $850,000, Patches would have received payment of the judgment without the risk of it being vacated on appeal, and H&B and ACE would have been relieved of the obligation to pay post-judgment interest, among other benefits provided by the release (e.g., a disclaimer of liability). Since ACE satisfied the requirements of Pgf. h it had no “obligation to pay any `ALAE’ incurred in excess of the `ALAE Self Insured Retention’ after the time [it] requested [H&B to] tender the remaining limits.” H&B’s reading of the “unreasonably withhold its consent” provision in Pgf. h is not reasonable. The plain language means only that H&B cannot unreasonably withhold its consent to tender the self-insured retention if ACE requests that tender. It does not mean that H&B can force ACE to continue paying ALAE as long as H&B is reasonably withholding consent to a settlement.

ACE also argues that it was excused from paying further post-judgment interest after 11/17/09 under the “post-judgment interest clause” in §I of the Endorsement because it offered to pay that part of the judgment that is within applicable limits of insurance. H&B responds by honing in on the “In such event” phrase in the preceding sentence, and argues that this entire section only applies when ACE assumes defense of the case. ACE’s position is more persuasive. This clause is a catch-all at the end of §I. It is not, for example, labeled as a specific clause that applies only when ACE assumes the defense. ACE satisfied this clause because it “paid, offered to pay, or deposited in court that part of the judgment that is within the applicable limits of insurance.” H&B reasons that because ACE offered to pay only $600,000 it did not offer to pay all of the judgment as to trigger this clause. However, ACE did not have to pay the entire judgment including H&B’s $250,000 self-insured retention, because the “applicable limit of insurance” is the amount that ACE will pay in excess of the self-insured retention. §III.2 of the Endorsement states: “The LIMITS OF INSURANCE as shown in the Declarations shall apply in excess of the `Self Insured Retention’ shown in the Declarations. You agree to assume payment of the `Self Insured Retention’.” The “part of the judgment that is within the applicable limits of insurance” is $600,000 — $850,000 minus the $250,000 self-insured retention. When ACE offered to pay that amount it was relieved from paying further post-judgment interest. Contrary to H&B’s suggestion, the Endorsement does not require ACE to have extended that offer to Patches; it only requires ACE to have made an offer to pay the applicable part of the judgment, which it did.

There is no reason the UTPA claim should not be dismissed with prejudice and all pending motions dismissed as moot. Since ACE did not breach the contractual provisions at issue it cannot be liable under the UTPA. MCA 33-18-242(5). If H&B appeals and prevails, the UTPA claim and motion to strike will, like the phoenix, be resurrected.

Hillerich & Bradsby v. ACE American Ins., 40 MFR 219, 3/26/13.

Jason Ritchie, Kyle Gray, and Scott Mitchell (Holland & Hart), Billings, for H&H; John Williams & Thomas Jones (Cozen O’Connor), Seattle, and Perry Schneider (Milodragovich, Dale, Steinbrenner & Binney), Missoula, for ACE.

BUS SOFTWARE CONTRACT: $28,409,512 verdict reduced by $9,439,756 consequential damages as precluded by contract and $70,000 lost perpetual license fees duplicative of award for lost license fees… no reduction or new trial on account of expert’s possibly weak analysis based on assumption that a rational customer would have purchased Plaintiff’s software absent Defendant’s unauthorized look-up access or had it used best efforts to sell the software… Molloy.

A Missoula jury awarded Education Logistics of Missoula and affiliate Logistics Management of Mercer Island $28,409,512 for failure of Laidlaw Transit to promote Edulog’s computerized bus routing software to Laidlaw’s school district customers in the US and Canada 1/11/03-8/12 pursuant to a 1992 agreement and for providing unlicensed access to districts. The jury found that Laidlaw breached the contract with Edulog by failing to use its “best efforts” to promote the use of the Edulog software and failed to prove by a preponderance of the evidence that any breach was excused by prior material breach or estoppel, and awarded $8,596,956 lost license fees, $8,596,956 lost annual license maintenance fees, $70,000 lost perpetual license fees, and $9,460,000 lost royalties. It found that Laidlaw breached the contract by providing districts unlicensed access to the Edulog software and that the breach was not excused by prior material breach or estoppel, and awarded $842,800 lost license fees and $842,800 lost annual maintenance fees. The Court entered judgment for Plaintiffs for $28,409,512. (MLW 11/24/12). Prior to close of the case, Laidlaw moved for JML as to whether the annual license & maintenance fees constituted consequential damages that should be excluded. The Court advised that it was reserving ruling as to consequential damages until after the verdict. Laidlaw also moved for JML as to Neil Beaton’s expert testimony, arguing that it should be excluded for a variety of reasons. He was allowed to testify following a Rule 104 hearing. While I expressed reservations as to some of his assumptions, I determined that it was a matter of weight as opposed to admissibility.

Some of Laidlaw’s arguments here present a unique situation — some either were or were not raised in its summary judgment briefing but were not raised in its 50(a) motion. Edulog argues that those arguments are waived. However, if a party raises a pure question of law before the case goes to the jury it does not need to raise them in a 50(a) or 50(b) motion to preserve them for appeal, Cochran (9th Cir. 2000), because a pure question of law does not implicate sufficiency of the evidence presented to the jury. Moreover, the 7th Circuit has held that a judge may revisit after trial issues raised at the summary judgment stage “if he has a conviction at once strong and reasonable that the earlier ruling was wrong, and if rescinding it would not cause undue harm to the party that benefitted from it.”Avita (7th Cir. 1995) (citing Arizona (US 1983). Laidlaw is now asking to revisit questions that it raised in its summary judgment motion but which the Court at the time determined it did not need to resolve. It did not raise those arguments in its 50(a) motion, but it did raise them in its 50(b) motion. It is unnecessary to resolve what standard applies to these arguments because they fail on the merits under any standard.

Laidlaw argued before and at trial that annual license & maintenance fees should be excluded because they are consequential damages, recovery of which is barred by the Agreement. Edulog insists that the award is for general damages. General damages are “damages the law would impute as the natural, necessary and logical consequence of the wrong or breach;” consequential damages are “the natural but not necessary result of the wrong or breach.” Byrum (Mont. 2007). Consequential damages must be “contemplated” at the time of contracting. McEwen (Mont. 2012). The Agreement makes no mention of annual license & maintenance fees. For instance, it does not require payment for annual license & maintenance fees. They are not the “natural, necessary and logical consequence of” Laidlaw’s breach of the Agreement. Edulog argues that they are not merely fees for upgrades & maintenance, but are license fees required for a district to continue as a licensed user, which Laidlaw has an ongoing duty to promote. However, nothing in the plain language of §4.7.3 which Edulog cites implies that it will continue to charge districts annual license & maintenance fees after the district has purchased a license. If anything, it prohibits such ongoing charges — the license is granted to the district “without further charge.” The fact that Edulog was able to recover annual license & maintenance fees from the districts does not mean that the Agreement expressly permitted them. Nothing in the agreement suggests that lost annual license & maintenance fees are a “natural, necessary and logical consequence” of Laidlaw’s breach of the Agreement. The conclusion here is that they are consequential damages expressly barred by §13.0: “LAIDLAW SHALL NOT BE LIABLE FOR INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES.” But these fees are not likely even consequential damages — there is no evidence that the parties “contemplated” them at the time of contracting — and if anything, terms of the contract suggest that Edulog could not charge such fees. So even if the lost annual license & maintenance fees are the natural but not necessary result of the breach, Edulog could not recover them because there is no evidence that the parties “contemplated” them at the time of contracting.

Laidlaw also claims that $26,723,912 — all but the $842,000 for lost license fees on Edulog’s unauthorized look-up access claim — are consequential damages. It insists that the $26,723,912 was for anticipated lost profits from hypothetical transactions with 3rd parties, while the $842,000 resulted from transactions that actually occurred and were direct damages. It argues that the $70,000 for lost perpetual license fees was an alternative to an award for lost full license fees. Edulog did not object to this proposition that awards for both would be duplicative, and its expert testified to that effect. Thus it is unnecessary to resolve whether the lost perpetual license fees are consequential damages. This leaves the lost license fees and lost royalties associated with the best efforts claim. These damages are not consequential; they are general. Laidlaw relies on several cases and secondary sources standing for the “hornbook” proposition that lost profits are consequential damages. It is unclear which hornbook it is reading because the law is at odds with its argument. While lost profits may be consequential damages, they are not necessarily consequential damages. They may be recovered as direct damages in some circumstances, such as when profits are the object of and inducement to the contract. Green (Mont. 1962); Carlson (Mont. 1910). The same is true in other jurisdictions. The royalties and license fees were the very objects of the Agreement, and they induced Edulog to enter the Agreement.

Laidlaw argues that Beaton’s economic analysis was “speculative, scientifically unsupported, legally unsupportable, mathematically and mechanically unreliable, highly prejudicial, and could not provide evidentiary support for the verdict.” It argues that his analysis was merely of lost profits, which the Court had earlier precluded in its summary judgment. The question of lost profits was addressed in the order only in the context of Alan Hess’s report, which focused on forecasted lost profits but was not tied to specific customers. The gist of Hess’s reasoning was that Edulog’s profits had declined while competitor VersaTrans’s had increased, so Laidlaw’s conduct must have been the cause. His opinion testimony was properly excluded. The Court expressly treated his “lost profits” analysis separately from the look-up-access and best-efforts damages analyzed by Beaton, and never concluded that his analysis concerned only “lost profits” and would have been excluded by the summary judgment order. Significantly, Laidlaw treated the lost profits damages calculated by Hess — which were expressly excluded — separately from the look-up-access and best-efforts damages calculated by Beaton. Beaton testified that his analysis was based on an assumption that 100% of Laidlaw’s customers would have purchased Edulog’s software had it used its best efforts and not granted unauthorized access. Laidlaw argues that this assumption is wholly unsupported by any evidence. While there may be some weaknesses in his opinion — perhaps serious weaknesses — those problems go to weight, not admissibility. Laidlaw’s counsel shrewdly challenged him in voir dire and cross, asking whether customers always made rational decisions and, if not, how he could assume that 100% of Laidlaw’s customers would have acted rationally and purchased Edulog’s software and would all of them have thought Edulog was a superior product. Beaton stuck to his guns, claiming that every customer would have purchased Edulog’s software. Laidlaw’s counsel thoroughly communicated these critiques to the jury. The verdict arguably shows that the cross had a significant impact in that the jury awarded less than half the damages that Beaton estimated. The verdict is well within the jury’s prerogative, given the conflicting proof. Laidlaw also argues that Beaton’s “acceleration assumptions” had no basis in fact. They concern the statute of limitations that apply to Edulog’s claims — Edulog can recover only for breaches that occurred before 1/11/03. Laidlaw’s counsel asked probing questions on cross as to whether Beaton was accelerating installation dates to get around the statute of limitations, and in closing attacked his acceleration assumptions. Beaton’s assumption might be fragile and is, perhaps, weakly supported, but Laidlaw sharply cross-examined him and exposed its view of the weakness to the jury, which was instructed not to consider any breaches that occurred prior to 1/11/03. Beaton admitted that there were math and mechanical errors in his schedule of damages. Laidlaw’s counsel thoroughly highlighted these errors on cross and in closing. They go to weight, not admissibility. Beaton testified over objection about First Student/Laidlaw’s 2012 revenues & profits. Laidlaw contends that this was prejudicial and warrants a new trial. Edulog counters that it was based solely on a stipulated exhibit and Laidlaw opened the door because it claimed it did not have the revenue to perform under the contract. The first rationale is dispositive. Beaton’s testimony was based solely on a stipulated exhibit.

In arguing that the award as to best efforts and unauthorized look-up access is not supported by substantial evidence, Laidlaw essentially re-hashes its closing arguments. As Edulog discusses in response, there is evidence on which a reasonable jury could have based its award. Moreover, while it awarded the same damage amounts across different categories, that correctable error alone does not warrant a new trial. Except as discussed above, the Court will not 2nd-guess the jury’s calculation of damages.

Education Logistics and Logistics Management v. Laidlaw Transit, 40 MFR 242, 4/1/13.

Ronald Bender & Matthew Cuffe (Worden Thane), Missoula, and Samuel Bull & Charles Nomellini (Foster Pepper), Seattle, for Plaintiffs; Debra Parker, Missoula, and James Jordan & Devon Sharp (Munsch Hardt Kopf & Harr), Dallas, for Laidlaw.

DEFAULT JUDGMENT: $75,000, §1983, deprivations by private prisoner transporter… Lynch/Molloy.

Magistrate Lynch. Russell Avery was arrested in Iowa on a warrant from Missoula Co. for rape and assault. He was transported to the Missoula jail by Extradition Transport, arriving 10/6/11. According to Avery, he was shackled continuously during the 8-day transport, not given an opportunity to shower, not given proper hygiene, denied access to a restroom up to 8 hours at a time, he and the 5 other prisoners were told to urinate in water bottles, and the transport did not stop at any jail or related facility to allow an opportunity for shower, sleep, or rest until 10/5, at which time an inmate escaped in ND and Avery and the others were transported to a jail until 8 a.m. the next day where they were allowed to shower and sleep. He contends that he has scars on his wrists & ankles and the pain was “terrible beyond description,” and he also suffered stress, anxiety, and mental anguish. Extradition was served with his summons & complaint by the Marshals Service 4/30/12. It did not appear or answer and the Clerk entered default 7/11. At issue is whether default judgment should be entered.

Default judgment factors include: (1) the possibility of prejudice to the plaintiff, (2) the merits of the substantive claim, (3) sufficiency of the complaint, (4) the sum of money at stake, (5) the possibility of a dispute as to material facts, (6) whether the default was due to excusable neglect, (7) the strong policy underlying the FRCivP favoring decisions on the merits. McCool (9th Cir. 1986). The Court previously found that the 1st, 3rd, and 6th, factors have been met. There is no indication that Extradition’s default is due to excusable neglect or that the material facts are subject to dispute since it has not presented a defense or otherwise communicated with the Court. It does not appear that litigation of the merits will be possible due to its refusal to litigate.

To state a claim under §1983 a plaintiff must allege that a right secured by the federal Constitution or laws was violated by one acting under color of state law.West (US 1988). Although Extradition is a private company, it was performing an “exclusive government function,” something it could not have done without authorization from the state. Lugar (US 1982). Therefore it will be presumed that it was a state actor. Melesko (US 2001) (state prisoners enjoy right of action against private correctional providers under §1983). Various courts have allowed §1983 claims against private prisoner transport services. It will also be presumed that Avery was a pretrial detainee, so that his claims arise under the 14th Amendment. Mink (9th Cir. 2003). The 8th Amendment requires that prison officials take reasonable measures for inmate safety. Farmer (US 1994). An official violates the 8th when the deprivation is objectively sufficiently serious and the official is subjectively deliberately indifferent to safety. “Only those deprivations denying `the minimal civilized measure of life’s necessities’ are sufficiently grave to form the basis of an Eighth Amendment violation.” Wilson (US 1991). A court should consider the circumstances, nature, and duration of deprivation of such necessities as shelter, food, clothing, sanitation, medical care, and personal safety. Johnson (9th Cir. 2000). Given the duration of deprivations claimed by Avery, the Court finds that Extradition was deliberately indifferent to his safety and he was denied “the minimal civilized measure of life’s necessities.” Wilson.His well-pled allegations, taken as true in light of the entry of default, are sufficient to entitle him to damages. “It is a familiar practice and an act of judicial power for a court upon default, by taking evidence when necessary or by computation from facts of record, to fix the amount which the plaintiff is lawfully entitled to recover and to give judgment accordingly.” Pope (US 1944). His requested $750,000 is not supported by the evidence; $75,000 is appropriate. Recommended, $75,000 default judgment.

 

– – – 

Judge Molloy. The Court agreed with Judge Lynch’s conclusion that default judgment should be entered against Extradition and that it violated his 8th Amendment rights, but ordered a hearing on damages, which was held 2/7/13. Avery appeared by video from MSP and described his trip and suffering. Asked why he believed $750,000 is appropriate, he said it is simply a starting point for a reasonable award. In light of the pleadings and his testimony, Lynch’s recommended $75,000 is reasonable & appropriate. Lynch’s Findings & Recommendations are adopted in full. The Clerk is directed to enter default judgment against Extradition in the amount of $75,000.

Avery v. Extradition Transport, Lynch’s F&R, 40 MFR 184, 11/28/12; Molloy’s order, 40 MFR 192, 2/7/13.

Russell Avery, MSP, pro se.