Draggin' Y Cattle Co. v. Junkermier, Clark, Campanella, Stevens, P.C., 2017 MT 125

Background

Peters (Roger & Carrie and Draggin’ Y Cattle Co.) sued law firm Junkermier over tax services; Junkermier sought defense/indemnity from its insurer New York Marine, which reserved rights.
After remand from earlier appeals, Peters and Junkermier entered a stipulated settlement/judgment for $10,000,000 without New York Marine’s participation; New York Marine moved to intervene and contested reasonableness.
Judge George Huss, who had earlier presided post-remand, held a reasonableness hearing, found the settlement reasonable, and entered judgment against New York Marine.
New York Marine, on appeal, raised for the first time that Judge Huss had a potentially disqualifying conflict: he had earlier entered his own personal stipulated settlement with his former court reporter while the Office of the Court Administrator (OCA) (which funded his defense subject to reservation) was contesting that settlement.
This Court (in Draggin’ Y II) held Judge Huss should have disclosed his personal stipulated settlement and referred the disqualification question to a district judge under § 3-1-805, MCA; the assigned district judge concluded Judge Huss should have disqualified himself and vacated orders issued after the point of required disqualification.
The Montana Supreme Court affirmed: Judge Huss’s impartiality might reasonably be questioned under Rule 2.12(A), so he was required to recuse and the subsequent orders were vacated; the case was remanded to a new judge.

Issues

Issue	Plaintiff's Argument (Peters)	Defendant's Argument (New York Marine / Court below)	Held
Whether Judge Huss was required to disqualify under Rule 2.12(A)	Huss’s interest was remote/speculative; OCA never pursued unreasonableness and Huss’s exposure was resolved before intervention	Huss had a present, direct interest: his own stipulated settlement and pending OCA challenge overlapped the reasonableness hearing, creating reasonable questions about impartiality	Judge Huss’s impartiality might reasonably be questioned; disqualification required
Whether vacatur of Judge Huss’s post-disqualification orders was proper	Vacatur requires proof of actual personal bias or prejudice under § 3-1-805 and M.R. Civ. P. 61; Rule 2.12 cannot be used to overturn judicial rulings	Rule 2.12’s requirement to disqualify when impartiality might reasonably be questioned means a judge cannot hear the matter; orders issued after the point of required disqualification are voidable and should be vacated	Vacatur was proper; orders after the point of required disqualification were vacated
Whether Reichert (requiring substantial affected interest) controls here	Reichert makes disqualification unavailable where interest is too remote/speculative	Reichert addressed a different subsection; Rule 2.12’s overarching "might reasonably be questioned" standard governs and is broader than Reichert’s facts	Reichert not controlling; broader impartiality standard under Rule 2.12 applies
Whether disclosure alone (not recusal) was sufficient remedy	Disclosure satisfied the Code; no disqualification necessary	Disclosure is required but not dispositive; overlapping personal stake created more than a disclosure issue	Disclosure was required previously; given facts, recusal was necessary and disclosure alone insufficient

Key Cases Cited

Draggin’ Y Cattle Co. v. Addink, 2016 MT 98, 383 Mont. 243, 371 P.3d 970 (Mont. 2016) (prior opinion requiring disclosure and referring disqualification to district court)
Draggin’ Y Cattle Co. v. Addink, 2013 MT 319, 372 Mont. 334, 312 P.3d 451 (Mont. 2013) (earlier appeal in same litigation)
Reichert v. State, 2012 MT 111, 365 Mont. 92, 278 P.3d 455 (Mont. 2012) (analysis of Rule 2.12(A)(2)(c) and when interests are too remote/speculative)
Bullman v. State, 2014 MT 78, 374 Mont. 323, 321 P.3d 121 (Mont. 2014) (reversal where judge was required to disqualify under Rule 2.12)
In re B.W.S., 2014 MT 198, 376 Mont. 43, 330 P.3d 467 (Mont. 2014) (reversal where judge was required to disqualify under Rule 2.12)
State v. Dunsmore, 2015 MT 108, 378 Mont. 514, 347 P.3d 1220 (Mont. 2015) (Rule 2.12 governs disqualification questions)
Caperton v. A.T. Massey Coal Co., 556 U.S. 868 (2009) (due process context for recusal; referenced for constitutional baseline)
State v. Berdahl, 2017 MT 26, 386 Mont. 281, 389 P.3d 254 (Mont. 2017) (subsequent ruling that Judge Huss’s stipulated settlement was unenforceable against the State)
Goldman Sachs Group, Inc. v. Mont. Second Judicial Dist. Ct., 2002 MT 83, 309 Mont. 289, 46 P.3d 606 (Mont. 2002) (supervisory control and concern about validity of a judge’s involvement/decisions)