INSURANCE/SETTLEMENT/EXPERT: Summary judgment as to rescission of pedestrian/auto settlement release precluded by possible mutual mistake of fact as to back problems not known at time of release… summary judgment for insurer as to medical intoxication, undue [Read more…]

WRONGFUL DISCHARGE: MSC would likely find that courts should consider whether employer was at fault for poor performance… disputed fact issues as to whether employer provided sufficient training, tools, resources to satisfactorily perform preclude summary judgment as to good cause for termination… 90-Day Performance Management Plan, although unique to fired employee, could be found by jury to be personnel policy… jury could find that employer’s alleged perversion of 90-Day Plan constituted violation of Employee Handbook… Molloy.

Delta Dental Ins. hired Douglas Weber 1/22/08 as a sales account executive. He had previously worked for Insurance Coordinators of Montana. It claims that because of the relationship between Delta and ICM, his duties were different from those of other sales account execu

tives, including having some of the duties of an account manager. On 5/24/10 Delta put him on a 90-Day Performance Management Plan which required him to improve performance and communications with ICM or face termination, and indicated that supervisor Jim Dole or Robert Budd of HR would meet with him every 30 days to discuss his progress. Delta provides 10 examples of how he failed to improve, generally that he would not return calls from ICM or follow up with requested information. He claims Delta did not provide tools, training, and resources such as software or adequate account manager training and that neither Dole nor Budd met with him to discuss how he could improve. Delta fired him 10/1/10 because of his “lack of comprehensive and timely communication.” He sued in State Court. Delta removed to this Court. It requests summary judgment and to exclude evidence alleging that it violated the performance plan.

The case raises a novel question that neither the Montana Supreme Court nor his Court has addressed: when an employee fails to satisfactorily perform his duties does the employer have good cause to discharge if the poor performance is the consequence of the employer’s failure to provide sufficient tools, training, or resources? The closest the MSC has come was in Andrews v. Plum Creek Mfg. (Mont. 2001). Plum Creek discharged Andrews, an “invoice production clerk.” Management admitted that her training was minimal, she received no evaluations, there were no written procedures governing her responsibilities, and her performance had generally been “adequate.” However, it removed her from her position because of discrepancies in her record keeping, which she claimed were the result of poor training and no written procedures. Plum Creek argued that it had good cause to discharge her regardless of whether it was at fault because she failed to satisfactorily perform — that the plain language of MCA 39-2-903(5) provides that failure to satisfactorily perform constitutes good cause to discharge, regardless of who is at fault for that failure. The MSC did not have to respond to Plum Creek’s argument because Andrews never conceded that she performed poorly, instead arguing that the record-keeping system was faulty, and therefore she had raised a material fact issue as to her performance that precluded summary judgment. Had the MSC reached Plum Creek’s argument, it likely would have rejected it. The WDA states that an employer has good cause to discharge “based on a failure to satisfactorily perform job duties.” But the grounds must also be “reasonable job-related grounds.” An employer cannot reasonably discharge an employee for poor performance if the employer is at fault for the poor performance. It would be unreasonable for a contractor to hire a worker to help build a house but not give him the tools and then fire him for failing to do his job. A software company that hires a software engineer but fails to provide a computer could not fire him for good cause. In both cases, the worker fails to satisfactorily perform, but termination would be unreasonable when the employer does not provide the opportunity or resources to satisfactorily perform. Unlike the employee in Andrews, Weber takes no issue with Delta’s allegation that he failed to satisfactorily perform, but claims he “was blamed for something that was not his fault.” Delta claims it offered training for the information system conversion; Weber claims his supervisor canceled it with no explanation and that without access to the computer systems he could only solve service problems by contacting other Delta employees in Texas, Georgia, and California. Delta takes issue with the necessity of such support as well as all the other training, tools, and resources that Weber claims he needed, and reasons that he has not produced specific factual allegations that rise to a material fact issue. Given the factual disputes, they must be construed in favor of Weber. Delta’s motion for summary judgment as to good cause is denied.

Weber also insists that Delta violated its written personnel policy. There are 2 documents that might constitute a personnel policy: the Employee Handbook for managers and Weber’s 90-Day Performance Management Plan. Delta argues that his placement on the 90-Day Plan does not involve a discharge and is therefore not relevant to his wrongful discharge claim. Weber responds that Delta’s failure to comply with the plan is what gave rise to the wrongful discharge. Delta argues that its alleged violation of the plan should be excluded from any trial because it is not a written personnel policy. Whether it is a written personnel policy is a question for the jury. “A written personnel policy does not necessarily have to be an employee handbook.” Williams (Mont. 2011); Kearney (Mont. 1994). Under Montana law, whether a document is part of an employer’s written personnel policy is a fact question. Williams. In Williams, an employee argued that a “pre-transfer evaluation form” which determined which employees would be transferred to other facilities constituted a written personnel policy. The MSC did not resolve the question, but concluded that “conflicting inferences could be drawn from [the] evidence and that reasonable persons could conclude that the evaluation form was part of Plum Creek’s written personnel policy.” Consistent with the Employee Handbook for managers, Delta employed a progressive discipline procedure by putting Weber on the 90-Day plan. Delta argues that it is not a written personnel policy because it is not a policy of general applicability to all employees. The pre-evaluation form inWilliams was also unique to Williams, and the MSC concluded that whether it was a written personnel policy was a fact question for the jury. So too here. Delta acknowledges that Weber was fired for failing to comply with the 90-Day Plan, which suggests that it recognized it as part of his progressive discipline. Thus it is inextricably linked to his discharge. Moreover, the handbook for managers states that when it uses progressive discipline it will ensure a “fair method of discipline.” A jury might conclude that Delta violated the plan and thus violated its Employee Handbook when it discharged Weber. Delta insists that the handbook language which requires “a fair method of disciplining employees” is only “aspirational,” and a “fair method” is whatever it considers is fair. That argument is one to make to a jury. The jury will decide whether the process was fair. If it was, Delta has no concern; if it was not, there will be a price to pay, determined by the jury.

Weber v. Delta Dental Ins., 40 MFR 1, 8/9/12.

Donald Jones (Hohenlohe Jones), Helena, for Weber; Gregory Black (Corette, Polhman & Kebe), Butte, and Karen Kruse (Jackson Lewis), Seattle, for Delta.

INTERPLEADER: Frivolous claims by one-time attorney/girlfriend to all proceeds of decedent’s investment account over 4 others named in TOD rejected, assessed fees/costs against her share of $2,808,425 funds… Cebull.

James LeFeber executed a Scottrade Transfer on Death Beneficiary Plan a month before his death in 2010 at age 71. His former girlfriend Kristine Davenport claims entitlement to his entire Scottrade account. The 4 others named in the TOD — Shane LeFeber, Patricia Faller, Christopher Gibbons, and Kimberly Chabot — do not contest the TOD. When Davenport refused to release Scottrade from liability if it distributed the proceeds pursuant to LeFeber’s TOD, Scottrade filed this interpleader and placed $2,808,425.21 in the Court registry and was then dismissed. Since it acted prudently, the Court ordered that it recoup its attorney fees from the interpled proceeds, reserving ruling as to whom the approximately $6,000 in fees would be charged.

Shane LeFeber is son of LeFeber’s longtime girlfriend Maggie Johnson. They moved to Florence in 1994 and were involved in litigation over the house until 2007. LeFeber and Shane remained close after the relationship ended, with Shane siding with LeFeber over his mother. LeFeber considered Shane his step-son and left him his residuary estate, oil & gas leases, and 56% of the Scottrade account. Shane spent considerable time away from his family in Oregon to care for LeFeber in Montana the last months of his life.

Faller was LeFeber’s neighbor in Florence. Over the years, and especially after Maggie left, he had holiday meals with Faller and her husband. As soon as LeFeber learned he was ill he designated her attorney-in-fact. She was named PR in his will and given his home and beloved dog and cat. Under the TOD she is entitled to 4% of the Scottrade account. She has retained counsel for this suit.

Gibbons met LeFeber in 1979 when he moved across the road from him and his parents in Idaho. LeFeber was a father figure, helping him and his brothers through difficult family times in their teen years. Gibbons avers that LeFeber’s compassion & love made an enormous difference in his life. LeFeber asked that Gibbons be there when he died and Gibbons took time away from his family and work in Idaho to care for LeFeber his last 2 months. LeFeber left 16% of his Scottrade account to Gibbons. Gibbons is pro se.

Chabot, also pro se, developed a close friendship with LeFeber after they met on the Internet in 2006. They spent 2 weeks in Hawaii and had frequent phone and email contact until he died. He left 8% of his Scottrade account to her.

Davenport (aka Hawkins) is a Montana attorney who was suspended indefinitely in 1994 after being convicted of theft. In 5/06 the Montana Supreme Court transferred her to “disability/inactive,” concluding that “clear and convincing evidence does establish that Hawkins suffers from physical and mental conditions which adversely affect her ability to practice law.” Despite her disability/inactive status, she has a history of frivolous & vindictive pro se litigation. The MSC determined earlier this year that she egregiously misrepresented that she should be able to file a late appeal because her counsel died during the proceedings, when he actually died more than a year before she was required to appeal. True to form, she claims it “misunderstood the situation” and has petitioned for rehearing. In another recent case, described by the MSC as having a “mind-numbing” procedural history, she was determined to have filed affidavits in bad faith and prosecuted her appeal by merely repeating “unfounded, outrageous, and conclusory accusations against everyone involved in her case.” That was a misdemeanor prosecution for speeding and maintaining community decay, to which she responded by trying to disqualify the JP by alleging a litany of criminal & ethical misconduct. She has followed the same course in this mind-numbing proceeding. She met LeFeber in 2006 in the offices of Tip & Buley in Missoula. They were introduced by his friend and attorney Raymond Tipp. Although she now denies it, it appears that she knew he was a multimillionaire from the outset. Their relationship became romantic in 7/07, but LeFeber decided to put space in it in the fall of 2007 when she took a sudden interest in his money. There is no evidence of a romantic relationship after 2007, but she maintains that his TOD and will are invalid and she is entitled to his estate. She primarily argues that they entered into an oral contract in 2007 in which he agreed to leave her everything as long as she stayed with him “emotionally” until his death, and that he then made a new will and TOD putting this oral contract into effect. She has used her knowledge of the law to allege virtually every cause conceivable under self-serving theories of LeFeber’s estate planning, death, and cremation. She alleges that Defendants engaged in a conspiracy to interfere with the alleged oral contract and will through fraud, duress, undue influence, and breach of fiduciary duty, as well as other causes, some of which are not recognized by Montana law. Her most scandalous claims are that Defendants murdered LeFeber and spoliated the evidence by illegally cremating him to prevent him from changing the estate plan he made because of their undue influence. As discussed in this lengthy (81-page) order, all these claims are patently frivolous. Defendants seek a declaration that the account be distributed as provided in the TOD and that their attorney fees & costs be paid out of her part of the Scottrade account.

Defendants are entitled to summary judgment on all of Davenport’s claims including undue influence, fraud, civil conspiracy, duress, felonious killing, spoliation, tortious interference with contract and expectancy, breach of fiduciary duty, unclean hands, active persuasion, encouragement & inciting, unconscionable conduct, and any other cause she has alleged. All of Davenport’s motions for summary judgment are denied.

Declaratory judgment shall be entered in favor of Defendants. LeFeber’s 8/10/10 TOD and allocation of Scottrade funds pursuant to the beneficiary designations are valid, binding, and enforceable. There is no contract that supercedes or takes precedence over the TOD. Defendants are entitled to their part of the funds pursuant to the TOD undiminished by any fees or costs.

After spending considerable time with this case over the last 15 months, the Court is convinced that the only equitable solution is to tax all attorney fees against Davenport’s share of the Scottrade account. Her claims and arguments have been rejected at every stage and she has repeatedly been warned that they appeared totally frivolous and unless she was able to provide admissible evidence, costs would be paid from her share. Her conduct is even more egregious considering that she is trained as an attorney and has previously been sanctioned for frivolous and vindictive litigation. It is well-established that courts have discretion to pay the interpleader plaintiff’s fees from the fund payable to the winning claimants, against the losing claimant or between all the claimants. The usual practice is to tax the fees against the losing claimant because it necessitated the interpleader and prevents the winning claimants from obtaining the fund undiminished by the costs. Absent Davenport’s groundless claims, LeFeber’s Scottrade account would long ago have been distributed pursuant to his TOD. Although the Court is not imposing sanctions under Rules 11(b) and 56(f) because there are other provisions to ensure that Shane’s and Faller’s inheritance are not depleted by this unnecessary suit, Davenport could also be assessed fees under both of those rules. Although it seems unfair, it is well-established that pro se litigants are not entitled to attorney fee awards. Thus Gibbons and Chabot are not entitled to fees for the time expended defending against Davenport’s frivolous claims.

In addition to $11,189.10 attorney fees & costs awarded to Faller and the $6,142.53 fees awarded to Scottrade, fees & costs incurred by Faller and Shane LeFeber shall be deducted from Davenport’s percentage of the Scottrade funds. Counsel for Faller and Shane shall submit bills detailing all reasonable fees & costs, and the Court will review them for reasonableness and then determine whether Defendants are entitled to pre-judgment interest. In the interests of caution, the Court intends to keep the Scottrade funds in the registry pending any appeal ruling. Since any appeal by Davenport would also be frivolous and in bad faith, the Court intends to tax attorney fees on appeal to her share of the funds.

Scottrade v. Davenport et al, 39 MFR 500, 6/5/12.

Tom Singer (Axilon Law Group), Billings, for Scottrade; Kristine Davenport, Missoula, pro se; Jeffery Oven & Michael Tennant (Crowley Fleck), Billings, for Shane LeFeber; Jon Beal & John Horrell (Beal Law Firm), Missoula, for Fallers; Christopher Gibbons, pro se; Kimberly Chabot, pro se.

PRELIMINARY INJUNCTION: Stay pending appeal in judicial political endorsement case denied… Lovell.

Sanders Co. Republican Central Committee seeks a stay pending interlocutory appeal of this Court’s denial of a preliminary injunction against the MCA 13-35-231 prohibition against political parties endorsing judicial candidates, on grounds of economy.

In the strikingly similar Renne (US 1991) the USSC stated: “The free speech issues argued in the briefs filed here have fundamental and far-reaching import. For that very reason, we cannot decide the case based upon the amorphous and illdefined factual record presented to us.” This case is set for trial 9/25/12. After the issues are tried and a well-developed record exists, an appeal may follow and complete relief be granted. This is judicial economy. The issues are significant and deserve determination based on a complete record. Motion to stay denied.

Sanders Co. Republican Central Committee v. Bullock and Murry, 39 MFR 498, 9/7/12.

Matthew Monforton, Bozeman, for the Committee: Asst. AGs Michael Black & Andrew Huff; MTLA members Amy Eddy (Bottomly Eddy & Sandler), Kalispell, and Michael Lamb (Lamb & Carey), Helena, for Intervenor/MTLA member Elizabeth Best (MSC candidate when the TRO application was filed).

INSURANCE: Trustee of trust which owned house damaged by fire not liable to gratuitous tenants for failure to insure or expedite repairs… Lynch/Molloy.

In 6/11 a fire damaged a house belonging to a trust of which Walter Wilmerding is trustee. Residents Theresa and Leah Joseph sued Wilmerding claiming he wrongfully failed to purchase homeowner’s insurance and did not timely repair the house after the fire. They asserted negligence (Count I), breach of contract (Count II), breach of the implied covenant (Count III), NIED (Count IV), IIED (Count V), and punitives (Count VI). Wilmerding moved for summary judgment on all counts except I. Magistrate Lynch recommends summary judgment as to II-V but denying it as to VI, largely because Wilmerding did not request summary judgment on the negligence claim. A review of Lynch’s findings & recommendation strongly suggested that Josephs’ negligence claim would fail because Wilmerding did not owe a duty to them. Wilmerding was invited to move for summary judgment on the absence of duty. A hearing on the motion took place 7/3. The motion for summary judgment is granted and, as a corollary, summary judgment is also granted as to the punitives claim.

Count II (breach of contract). Even assuming that Josephs had an implied contract with Wilmerding, he did not breach that contract. Any implied contract did not require him to purchase homeowner’s insurance, nor was he required to repair the house after the fire. Josephs are not entitled to relief under promissory estoppel. They did not make this claim in their complaint, the deadline for amending has passed, Rule 16(b), and they have not explained why they were unable to timely amend.

Count III (breach of the implied covenant). This fails because it is identical to the breach of contract claim — that Wilmerding failed to purchase insurance and repair the house.

Counts IV and V (NIED and IIED). Josephs were never treated for any emotional distress, and have failed to show that the alleged distress “was the reasonably foreseeable consequence” of any negligent or intentional act or omission by Wilmerding. Sacco (Mont. 1995).

Negligence. Josephs do not argue that Wilmerding owed them a fiduciary duty by virtue of his trustee status. That duty is owed to the trust beneficiaries. MCA 72-34-103; Hofer (Mont. 2005). Montana courts consider, in determining whether a duty exists, whether imposition of a duty comports with public policy and whether the defendant could reasonably have foreseen that his conduct could have resulted in injury to the plaintiff. In weighing policy considerations, they are to consider moral blame, prevention of future harm, burden on the defendant, consequences to the public, and availability & cost of insurance for the risk. Policy considerations weigh against imposing a duty to purchase homeowner’s insurance. Wilmerding allowed Josephs to live at the house rent free, and they essentially took it “as is.” Although every property owner has a duty to exercise “ordinary care or skill in the management of the person’s property,” MCA 27-1-701, there is a difference between making your property safe for others and insuring it in case it is not. Insuring property does not prevent harm that might be caused by its condition (e.g., insurance does not prevent house fires). Property insurance simply indemnifies the owner for that harm. That is not to say that 3rd parties never benefit from property insurance. A plaintiff in a premises liability case generally hopes that the owner has insurance so there is money from which to recover damages. However, the cause of action lies in the dangerous condition, not availability or procurement of insurance. Thus a property owner has no “moral blame” for failing to purchase property insurance which, by design, protects the owner and not 3rd parties. Unlike unsafe property, failure to purchase insurance does not pose a risk to 3rd parties. Failure to purchase insurance simply means that 3rd parties cannot look to insurance as a source from which to recover damages; they must look elsewhere (e.g., the owner’s personal money or property). In the same vein, failure to purchase insurance does not prevent future harm caused by the property’s condition. Fisher (Mont. 2008). It simply protects the property owner in case of future harm. A duty to purchase property insurance would place an expensive burden on owners. (The duty to purchase vehicle insurance is a statutory, not common law, duty, but even so, a suit claiming that failure to buy auto insurance caused damage in an MVA would also be futile.) Wilmerding might have been less likely to gratuitously allow Josephs to live at the house had he been required to insure it. The trust owned the house; there was no secured interest by a lender. While the trust beneficiaries may have claims based on trust law, the gratuitous occupants do not. Policy considerations also weigh against a duty by Wilmerding to more expeditiously repair the home after the fire. The parties have not argued that they had a rental agreement, which might trigger the statutory duty of a landlord to maintain and repair the house. MCA 70-24-303(1)(c). Even without the repairs (which were eventually made), the house was apparently habitable. Wilmerding could have ordered Josephs to leave at any time (setting aside any promissory estoppel or similar arguments), forcing them to leave an otherwise habitable house with nowhere to go instead of making repairs sooner. Few would dispute that greater “moral blame” would attach to that action compared to letting Josephs remain and later making the repairs. My reasoning is not intended to minimize the difficulties Josephs might have faced as a result of the fire, but their suit is analogous to suing someone for giving a bad gift. Assuming that one receiving a gift is not harmed by the gift, there is no legal remedy for receiving a bad gift; the only remedy is to not accept it. West (9th Cir. 1963) (applying Hawaii law and observing that a gratuitous occupant “receives the use of the premises as a gift, and comes under the old saying that you may not look a gift horse in the mouth.”). As to foreseeability, failure to purchase homeowner’s insurance creates a risk for the homeowner, not a 3rd party who has no contractual interest in the home. Even when there is a contractual relationship, such as landlord-tenant, the landlord does not have a common law duty to insure the property for the benefit of the tenant. Josephs were not in the “zone of risk” because Wilmerding’s failure to purchase homeowner’s insurance was not their risk to bear; it was Wilmerding’s risk as the trustee. His failure to timely repair the home arguably creates some risk to Josephs, but it is outweighed by the greater risk that he could have forced them to leave an otherwise habitable home instead of choosing to make the repairs sooner. Moreover, they were not foreseeable plaintiffs because they lived at the house “as is.” Absent an obligation to let them continue living at the house, there was no obligation to expeditiously make repairs for their benefit. Since they have no viable claims for actual damages, they have no claim for punitives. Lynch’s findings & recommendations are adopted in full as to Counts II-V. Summary judgment for Defendants on all counts. Jury trial set for 7/16/12 is vacated.

Joseph v. Wilmerding, 39 MFR 487, 7/9/12.

Johnna Baffa, Joshua Van de Wetering, and Laura Reed (Van de Wetering & Baffa), Missoula, for Josephs; Jeffry Foster & Maxon Davis (Davis, Hatley, Haffeman & Tighe), Great Falls, for Wilmerding.