Abbey/Land LLC v. Interstate Mechanical, Inc.
2015 MT 77
| Mont. | 2015Background
- This Montana Supreme Court case concerns Abbey/Land LLC v. Interstate Mechanical, arising from disputes over a large Shelter Island house project in Flathead County.
- Glacier Construction Partners LLC, controlled by Donald Abbey, entered a $1.4 million contract with Interstate for plumbing and HVAC, later expanded by change orders totaling about $1 million.
- Glacier and Abbey/Land settled the Flathead County action in May 2013, with Glacier confessing to a $12 million judgment in Abbey/Land’s favor and transferring certain insurer rights to Abbey/Land.
- James River Insurance Company, Glacier’s CGL insurer, moved to intervene in August 2013 to challenge the reasonableness of the confessed judgment but the district court did not rule on intervention.
- On March 17, 2014 the district court entered final judgment for Abbey/Land against Glacier for $12 million, citing reasonableness but without considering James River’s intervention or reasonableness arguments.
- The Montana Supreme Court reversed and remanded to permit James River to intervene and to determine the reasonableness and possible collusion behind the confessed judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did James River have right to intervene to challenge the confessed judgment? | James River's intervention was timely and necessary to contest reasonableness. | Abbey/Land contends intervention unnecessary since other insurers are involved separately. | Yes; intervention rights should be allowed for reasonableness review. |
| Was entering final judgment without considering intervention or reasonableness error? | The court erred by not addressing reasonableness via intervention. | Judgment should stand if confessed amount deemed reasonable; intervention not required. | Yes; judgment must be reversed for failure to address reasonableness. |
| Should the case be remanded to allow a reasonableness hearing on the confessed judgment? | Remand is needed to determine if confession was reasonable or result of collusion. | Remand unnecessary if merits already resolved. | Remand with permission to intervene and conduct reasonableness proceedings. |
Key Cases Cited
- Farmers Union Mut. Ins. Co. v. Staples, 2004 MT 108 (2004 MT) (insurer liable for defense costs and judgments when unjustifiedly denying coverage)
- Tidyman’s Management Services v. Davis, 2014 MT 205 (2014 MT) (insurer's settlement reasonableness gatekeeping and hearing)
- Nielsen v. TIG Ins. Co., 442 F. Supp.2d 972 (D. Mont. 2006) (insurer should raise reasonableness issues in underlying action)
- Aspen Trails Ranch v. Simmons, 2010 MT 79 (2010 MT) (intervention right with meaningful opportunity to participate)
- Estate of Schwenke v. Becktold, 252 Mont. 127 (1992) (education of intervention prerequisites)